An organization supported by the Robert Wood Johnson Foundation, State Coverage Initiatives (SCI), has issued a new paper, “Health care reform and American federalism: The next inter-governmental partnership.” SCI has also launched a blog called “Speaking of States.” Specifically, the SCI paper looks at the state-federal relationship as it pertains to Medicaid expansion, health insurance exchanges, and care management.
The paper raises some interesting points and puts us in mind of several considerations that we have previously blogged about:
The question of how federal and state governments might work better together in a reformed system will no doubt take on increased importance as the reform conversation continues.
Electronic Health Records, Exchanges, Regulation
co-op, federalism, geographic cost disparity
Weeks of closed-door meetings with members of the Senate Finance Committee may be coming to a head this week. Apparently the public plan and an employer mandate are not in the Finance Committee’s compromise bill and co-ops and certain insurance market reform are in. The details regarding inclusion of an individual mandate are still unclear.
As the details come out—and finally there are some specifics from Kent Conrad—it may be worthwhile to review what we know about healthcare co-ops, specifically how they behave in the presence or absence of a mandate. This is excerpted from a recent Q&A with Milliman principal Jim O’Connor on the topic:
Q: How would co-ops be affected by the presence of an individual or employer mandate?
A: It is probably valuable to first clarify some language. An “individual mandate” is a requirement that everyone obtain health plan coverage. An “employer mandate” is a requirement imposed on employers. Neither should be confused with a “benefit mandate,” which requires that health plans cover certain types or levels of benefits.
Individual and/or employer mandates, if constructed correctly, would likely bring a positive impact on the healthcare market overall, compared to a guaranteed issue environment without any such mandates. Contrary to popular opinion, a proportionately large number of the uninsured are relatively healthy. Bringing all of these uninsureds into the market would not only result in a positive impact on insurers overall in a guaranteed issue environment, but also help redirect people to more appropriate and less costly healthcare provider settings (e.g., uninsureds would no longer need to go through a hospital emergency room to get to see a doctor for routine and non-urgent care). However, it should be noted that although the uninsured utilize considerably fewer healthcare services (partially because they tend to be healthy, but also because they defer treatment as long as they can), when they get coverage they are likely to utilize an increased level of services, at least temporarily. This additional utilization would need to be anticipated.
If open enrollment periods were required, a sound mechanism to pool high risks of the unhealthy would help stabilize the market and financial operations of both co-ops and traditional commercial insurers. This could be done through high-risk pools or through a risk-adjuster mechanism similar to that used by the Medicare Advantage program. Depending on the effectiveness of the risk-adjuster method, health plans might not need to increase rates in anticipation of biased adverse selection. A mandatory high-risk pool might have a similar effect, especially if consistent government support were used to help fund the pool. By contrast, a voluntary high-risk pool, funded only by the insurers participating, would likely not be as successful in lowering rates.
Read the entire interview
Mandates, Reform, Universal coverage
co-op, Jim O'Connor, Mandates
Senator Kent Conrad recently introduced what he characterized as a compromise on the contentious issue of having a public plan under healthcare reform: a healthcare co-op. This interview with Milliman principal Jim O’Connor analyzes the co-op concept in more detail.
Q: What is a co-op and how does it differ from a public option?
A: A cooperative health plan, or co-op, is member-controlled rather than government-controlled, and is typically not a for-profit corporation. A co-op must negotiate its payment or reimbursement rates for hospitals and physicians in the market, and cannot dictate them through legislation and regulation like the government could under a public plan. With a co-op, the roles of government regulator and health plan providing coverage are kept separate. The co-op concept is oriented around member decision-making and control, distinguishing it from for-profit insurance carriers. Because it would compete against for-profit and other heath carriers, however, a co-op must offer products that are attractive to the public in a marketplace with choices and must employ prudent rating and enrollment practices if it is to be successful. Determining any requirements or restrictions on those practices, as they apply to all health plans, is one of the many important questions under reform.
Read more…
Competition, Government, Reform, Uninsured
Association Health Plans, co-op, Competition, cooperative, Group Health, Jim O'Connor
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