Obamacare 2.0

In the September 2013 Health Matters we published an article titled “What We Think Will Happen” one week before the launch of the Affordable Care Act (ACA) and healthcare.gov. The article made several predictions, including: #1 “There are going to be computer glitches. It’s guaranteed,” and #2 “Enrollment will ebb and flow, but spike in December.”

A few weeks later—with healthcare.gov inoperable due to persistent glitches and only a few dozen Utahns enrolled in new ACA insurance—we wished our predictions had not been so accurate. And like we suspected, Utahns waited until the last minute to enroll.

The second open enrollment period begins in two months on November 15. So we decided to issue a new round of five predictions about healthcare.gov and Utah’s 2015 insurance marketplace.

Here we go again:

Prediction #1: Premiums for Utah’s insurers will rise, but still be among the lowest in the nation

Some things are more than predictable. They are absolute certainties.

First, Michael Bay movies will have more explosions than plot twists.

Second, in 2015 BYU will be the nation’s most “Stone-Cold-Sober School” for the 18^th year in a row.

Third, premiums for health insurance will go up every year.

We predict Utah’s 2015 insurance premiums on healthcare.gov will increase a weighted average of 7% to 10% compared to 2014 prices. Note: This prediction is for health insurance sold on the individual marketplace, not employer-sponsored or small group insurance (those plans are sold outside of healthcare.gov).

How did we arrive at this prediction?

First, we analyzed the initial rate filings from Utah insurance companies. Based on this early and incomplete data, we calculated a weighted increase of 6.21% in individual policies. That figure is calculated from the “Submitted” or “Under Review” rates (not yet approved) from 11 insurance companies representing 103,000 policyholders in Utah. Some of these rates are for ACA insurance sold on healthcare.gov, and others are for pre-ACA 'grandfathered' insurance plans sold in the private market.

Second, we consulted with the propeller heads at the accounting firm PriceWaterhouseCoupers (PWC). PWC is tracking rate changes across the country. As of mid-September, the average (national) increase is 7.0%, and the average 2015 monthly premium across all metal tiers (without subsidies) is around $379 (as of 9/12/14). For Utah, they predict an average premium increase of 5.3%.

We will all learn more this Thursday morning at the legislature’s Health Reform Task Force meeting (agenda) when the Utah Department of Insurance (DoI) releases preliminary information about Utah’s 2015 rates. We anticipate that the DoI will reveal the names of the insurance companies who want to offer plans on Utah's healthcare.gov and Avenue H in 2015, and some of their initial rates and premiums. In fact, we expect the DoI to release a document that looks a lot like this summary page from August 2013—which lists the names of the insurers and the high/low rates of the “silver level” insurance plans for specific ages. This factual information will be very valuable as we prepare for the next open enrollment period, and we appreciate that the DoI’s efforts to make this information available to consumers.

Prediction #2: Utah will continue to enjoy competitive and inexpensive marketplaces

If you exit a highway and see just one gas station, you know you will pay more to fill up your tank. But if you spot three gas stations, you will pay less because each station is competing for your business (unless they are colluding).

The same logic works for health insurance. States like Utah with multiple insurance companies participating on healthcare.gov tended to enjoy lower premiums than states with a more limited selection, like Alabama, Rhode Island, and West Virginia (pdf).

In 2014 six insurance companies (Altius Health Plans, Arches, BridgeSpan, Humana, Molina Healthcare, and SelectHealth) participated in Utah’s individual insurance marketplace (healthcare.gov), and three (Arches, SelectHealth, and United HealthCare) offered plans on Avenue H. The marketplaces in rural Utah counties had fewer insurance companies participating, but no Utah county had less than four insurers.

We expect at least five of those six insurers to continue to participate in Utah’s marketplaces, and we also anticipate that one or two new insurers will come in. We will learn more at this Thursday’s Health Reform Task Force meeting, and receive a final list on November 5^th when plans must formalize their participation.

In 2014 Utah enjoyed some of the lowest insurance premiums in the nation. So even if our rates rise, we think Utahns will still pay less for health insurance than the vast majority of other states. That’s because Utah will retain the factors that kept our rates low last year: a competitive insurance marketplace; a healthy population; and lower rates of alcohol and tobacco usage.

Prediction #3: This open enrollment season is going to be different from last year

We won’t tell who coined the saying that history repeats itself, “the first time as tragedy, the second time as farce,” but we bet his economic theories aren’t being taught at the Challenger School.

If last October's healthcare.gov website debacle was tragedy, then we can hope the hurdles this fall will be more comical.

Here are three reasons why “Open Enrollment 2” will be different.

First, we’re going to be working with two populations this year: 1) People renewing their ACA insurance; 2) People seeking insurance for the first time. This new wrinkle will require insurance brokers and the navigators at Take Care Utah to master two workflows at the same time. There could also be overlap as consumers with existing insurance seek to add or subtract new family members to their policies.

Second, we believe the uninsured people seeking new insurance this fall will be different from last year. The "early adopters" already enrolled last year. We believe this year's "secondary-adopters" will be 1) less sick, 2) less educated about the ACA, 3) more hostile to Obamacare. They might also be employees of small businesses who discontinued their employer-sponsored healthcare to send their workers to healthcare.gov. One population we will seek out are Utahns with pre-ACA 'grandfathered' plans who might be paying more for their insurance than they would if they transitioned to an ACA plan on healthcare.gov. We estimate that ad additional 50,000 to 75,000 Utahns are currently over-paying for their health insurance.

Third, enrollment experts will be getting more tax questions this fall. That’s because anyone who received premium subsidies through healthcare.gov will receive a new IRS Form 1095-A that indicates the amount they received. Other new tax forms will be sent to people who purchased insurance outside of healthcare.gov or are insured by their employer (see below).

Form 1095-A: If you purchased health insurance through your state exchange or the federal Marketplace, you will receive this form indicating your coverage.

Form 1095-B: This form will come directly from the health insurance company if you sought private insurance outside of the state exchanges.

Form 1095-C: If your employer furnishes your health insurance, it will provide you with a 1095-C indicating your coverage.

Source: Nerd Wallet

To prepare for the impending collision between health insurance and federal taxes, we are forging new relationships with tax preparers and CPAs here in Utah at the national level. Although the 2014 tax season will be made more complicated by the ACA, we predict it will follow the 80/20 rule: 80% of consumers will breeze through it, and 20% will have a nightmare experience.

Whether consumers encounter a nightmare scenario depends on if they: 1) Received premium subsidies through healthcare.gov; 2) Predicted their 2013 income accurately or made adjustments during the year; 3) Seek expert help from TakeCareUtah.org and tax professionals early in the process and before deadlines.

Prediction #4: There will be more healthcare.gov glitches

At midnight on November 15th someone deep in a secret underground bunker in Bethesda, MD will flip a switch to activate healthcare.gov.

But will it work?

So far, insurance industry officials are expecting hiccups, but not a crippling meltdown like happened last year.

We think that's an accurate prediction.

By February and March of 2014, healthcare.gov was working smoothly for 80% of the consumers we helped at TakeCareUtah.org. The other 20% needed extra assistance because of glitches related immigration status, employment status, credit history, or bad computer karma. But the vast majority of these glitches could be resolved by workarounds that our team developed, or borrowed from other states.

But we also anticipate new glitches will occur. For instance, 84,000 Utahns will be trying to renew or change the ACA policies they purchased last year. If these consumers switch their coverage, some insurers are worried that their old policies won't be cancelled--and that consumers will be paying for double coverage. When Modern Healthcare covered this potential glitch in a recent article, they quoted Utah-based Arches Health Plan CEO Shaun Greene describing this scenario as a “customer service nightmare."

Prediction #5: People will wait to the last minute to sign up.

This prediction we can guarantee.

Here’s a fact: More Utahns signed up for ACA insurance during March 2013 (31 days) than in the previous five months (151 days) of open enrollment. We expect the same last-minute rush to continue into 2015.

But with only three months of open enrollment (compared to six months last year), each deadline is going to be more important—and much busier. Plus, for the 84,000 Utahns renewing or switching their existing ACA insurance, their deadline to ensure continuous coverage will be December 15th. Mark your calendars and get ready: The key deadlines for the next open enrollment period will be December 15^th; January 15^th, and February 15^th.

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