In the first part of our series, we have covered how enrollment statistics can be broken to determine the current action points for the government. In this second part, we are going to cover the trends that will take root after the closure of the next enrollment period, just in the beginning of 2015. Let’s take a look.
1) Will there be rate increases in 2015 – The rate mechanics are still not very clear, mainly because of different exchanges in picture and the collective impact on federal and state exchanges through rate increases, if any. However, one thing is certain that after seeing rates across the industry, there will be some market consolidation. Those players which priced their offerings too high are going to cut down the costs to meet the market median, while those that priced their products too low will increase their costs and match the market standards. Naturally, when most players get into this game, increases or decreases are inevitable. Even if a rate increase comes into play, it should not be more than 10 percent. Since not much actionable data would be available by the time the rate revision cycle kicks in May 2015, the claim data would not have a drastic impact on the rate increase. Another reason that hints that rate increases should not be more than 10 percent is the fact that any increase over that calls for a federal review, and with lack of usable claim data to defend their move, health plans would not be aligned toward increasing rates beyond the 10 percent threshold.
2) Can health plans exit the exchange market in 2015 – The chances of health plans moving out of Obamacare prematurely are very low. By 2015, most health plans will not have a reason to move out of a substantial market Obamacare has become. Combining the individual and small business health insurance market, a lot is on stake for health plans that think of moving out of the arena. Also, most health plans believe that Obamacare will not be repealed, and is here to stay. The only thing they are counting on is evolution of the act, which will gradually take it toward a powerful health reform it is meant to become. Between evolution and market size, health plans are expected to stay in the market, as opposed to earlier fears of them dropping out shortly.
3) Backend reconciliation system is a top priority for the government – Reconciliation of data between federal system and health plans has become the top priority for the administration. The reconciliation system is in the works and the federal government and carriers have been in constant discussion over how they want to shape the system. This is a mammoth task that is going to absorb a lot of federal effort in the months to come. Since this reconciliation solution officially renews the system by removing the patchwork done in December 2013 to keep the exchanges running, it is going to take a lot of accounting and movement of sensitive data in the system. The administration means to accomplish this by the close of the second enrollment period in February 2015.
4) 2015 will be a crucial year for Obamacare claims and costs outlook – The new health insurance reform is going to have widespread effect on the way claims and costs work in the industry. However, we won’t have a clear picture of the claims mechanism by 2016. The claims and costs are tied together, and 2015 should give the first glimpse into the claims experience for the 2014 enrollment data. Similarly, the entry of newly insured in the second enrollment period is going to add to this uncertainty, and we should have a clear picture by 2016, when the industry would have stabilized and enrollments would have brought in some actionable claim data for determination.
At the verge of the first successful enrollment period, we are still far away from seeing the full effects of Obamacare on the nation’s health insurance scene. As more data comes into play and the $20 billion reinsurance scheme ends in 2016, we would be closer to determining the highs and lows. As of now, we are beginning to scratch the surface of the benefits and challenges Obamacare will bring to the table in the next few years. There is still a lot left to happen.