Economist: Obamacare needs changes

The federal government’s health insurance marketplace is in need of major structural changes to get costs under control, according to a Blue Cross Blue Shield of Louisiana economist.
The economist, Michael Bertaut, was the guest speaker during Monday’s St. Mary Industrial Group meeting at the Petroleum Club of Morgan City.
From 2014 to the end of 2015, company officials in Louisiana signed up 85,000 people, most of whom had never had health insurance before, through the federal government’s health insurance exchanges, he said.
Blue Cross has lost $200 million in Louisiana in the past two years selling products on healthcare.gov, Bertaut said. The company is going to raise rates 25 to 30 percent this year on healthcare.gov as a result.
Officials underestimated how much it would cost to care for the new population of customers by 80 percent, despite estimating the population’s costs would be 20 percent higher than Blue Cross’ general population.
Insurers have “gotten very little traction” to get the government to make necessary structural changes to how healthcare.gov is run, he said.
Some of the necessary changes include enforcing special enrollment periods, properly age rating insurance, limiting exemptions to the individual mandate and making sure insurers can get money from reinsurance programs.
When the federal government started healthcare.gov, there was supposed to be just a three-month window each year for people to buy health insurance, unless someone has a special reason. But “the special reasons aren’t being enforced,” he said.
The average special enrollee uses over four times the care of people who are already in the pool, and they only stay for five months.
“What we’ve got is a population of people who’ve figured out the system. They get sick, have a health care concern. They jump in. They get well. They leave. You can’t have insurance like that,” Bertaut said.
Also, the age rating system isn’t appropriate. The average 64-year-old uses seven times as much health care as a 21-year-old, but lawmakers set the age rating cost ratio at 3-to-1. The average 25-year-old is spending 75 percent too much for insurance so that a 60-year-old can get an 18 percent break, he said.
“That was a political decision, not an economic decision, and it’s one of the reasons why we can’t build a stable risk pool,” Bertaut said.
In 2014, there were three exemptions to the individual mandate, including being low-income and living in a state that hadn’t expanded Medicaid, being a member of a Native American tribe, or being a member of a health care sharing ministry. There are now 27 exemptions to the individual mandate, Bertaut said.
“This is not motivating young folks to buy insurance as it should. It is full of exemptions,” Bertaut said.
As part of the health insurance law, health insurers counted on a reinsurance program to help them get paid if they lose a lot of money. About $2.5 billion in potential subsidy money isn’t being used.
A U.S. Department of Health and Human Services spokesman said there are already several reinsurance programs in place.
HHS recently announced a series of actions to strengthen the marketplace risk pool, including improving special enrollment period.
According to HHS, measures to strengthen the risk pool included:
—Curbing abuses of short-term plans that exploit gaps in current rules to use medical underwriting to keep some of the healthiest consumers out of the Affordable Care Act’s single risk pool.
—Improving the risk adjustment program to more accurately reflect the cost of partial-year enrollees and to incorporate prescription drug use data that provide a more complete picture of enrollees’ health status. These improvements will ensure that the program continues to work as intended to compensate issuers with higher-risk enrollees and thereby help issuers sustainably serve all types of consumers.
—Helping consumers who turn 65 make the transition to Medicare, so that older consumers are served by the program designed for them and their health needs.
—Beginning full implementation of the Special Enrollment Confirmation Process. That process would ensure that eligible individuals continue to have access to coverage through Special Enrollment Periods but prevents people from misusing the system to enroll in coverage only if they get sick.
—Improving the resolution of data matching issues, which benefits the risk pool because it keeps eligible consumers, often younger and healthier consumers less motivated to overcome obstacles such as extra paperwork, from losing coverage mid-year.
—New outreach to uninsured people who paid the individual responsibility penalty. This fall, HHS will conduct outreach to individuals and families who paid the fee for being uninsured, or claimed an exemption from that fee, for 2015. This new outreach strategy will let HHS directly reach millions of people who were recently uninsured and may newly appreciate the value of marketplace coverage.