It looks as though change will continue to be a constant in the health insurance industry in 2016.
After all, this is the age of the Affordable Care Act, a massively disruptive force that continues to shape the healthcare sector in unexpected ways, even as the law itself evolves. Then there's the specter of a certain election coming up in the fall.
But even beyond policy-mandated shifts, market forces and the rise of consumerism have forced health insurers to rethink how their businesses work and how they engage with members and providers. And in 2016, those trends will continue.
For a reporter like myself--and healthcare consumer who recognizes the industry still has much to improve--this is all good news. Change can be unnerving, though, and I find the best way to deal with it is to get a sense of what's coming, even if predictions can be problematic.
With that in mind, here are 10 of the biggest stories that the editors of FierceHealthPayer believe will shape the health insurance industry in the coming year:
1. Outcome of the mega-mergers. If the mere announcement that Aetna and Humana as well as Anthem and Cigna planned to merge was enough to captivate the industry in 2015, these deals are only going to rise in prominence in 2016. The Department of Justice and state authorities have the final say on whether the mergers are allowed to proceed, but providers, consumer groups, politicians and even shareholders are sure to continue to weigh in, as well. And if the deals do get the green light, the stakes will be high for companies to properly execute consolidation. Both pairs of insurers have said they expect a decision from regulators in the second half of the year.
2. The 2016 election. Politics' influence on the health insurance industry will loom larger than ever this year as Democrats and Republicans vie to replace the ACA's chief architect, President Barack Obama. Healthcare policy has already made its way into early campaigning, with GOP candidates sharing how they'd repeal and replace the ACA. Democratic candidate Bernie Sanders has touted a single-payer system, while Hillary Clinton has criticized the ACA's Cadillac tax, the pending insurer mergers and the rising cost of prescription drugs. And while the campaign rages on, congressional Republicans plan to move forward with a bill to repeal large swaths of the ACA, even as the recent budget deal has postponed some of its key taxes.
3. UnitedHealth's role on the ACA exchanges. The nation's largest insurer made waves in late November when it adjusted its earnings outlook to account for losses in ACA plans, leading many to wonder if its view that the individual marketplace is unsustainable has merit. While other insurers have made it clear they're willing to wait until the marketplace stabilizes, UnitedHealth's decision about whether to offer exchange plans in 2017 could serve as a major turning point. In the meantime, expect each major insurer's quarterly earnings updates to be closely watched for more signs of trouble.
4. The fate of consumer operated and oriented plans. With a variety of factors working against them, many CO-OPs began a downward spiral in 2015. Only 11 of the original 23 remain, and 10 of those have lost more than $21 million. With risk corridor payments expected to continue to fall short for the 2015 benefit year and policymakers unclear about what to do about the CO-OPs' struggles, the future of the small nonprofit insurers looks grim even as some CO-OP leaders have formed a coalition to advocate for policy changes. It also remains to be seem how continuing CO-OP failures will impact the still-volatile ACA exchanges.
5. Debate over narrow networks. A trend driven in part by the ACA, the rise of narrow provider networks will continue to be a hot-button topic in 2016. In response to concerns about the practice, state insurance commissioners and the federal government have proposed more network-adequacy controls--the latter receiving industry pushback. Carefully designed tiered networks such Horizon Blue Cross Blue Shield of New Jersey's Omnia Network also have come under fire from hospitals. But with insurers increasingly pressured to keep premiums low and cut overall costs, narrow networks may well be the new normal.
6. Criticism of nonprofit insurers' surpluses. The year 2015 was not an easy one for some large Blue Cross and Blue Shield plans. Blue Shield of California lost its long-held tax-exempt status in March, and has come under fire from advocacy groups and the state ever since. Then in late December, Health Care Service Corp. drew scrutiny over its $9 billion surplus. The heat on such plans isn't likely to dissipate in 2016, and may even increase in the highly charged political environment leading up to the presidential election.
7. Increased focus on value-based care. However the policy winds blow, the healthcare industry's transition from volume to value is certain to continue, with health insurers playing an increasingly active role in cutting costs and improving quality. As four of the country's largest insurers make their case for why their mergers will benefit consumers, the stakes are even higher for them to prove they can play a critical role in helping members access care to improve health. Expect to see Medicaid managed care play a major role in innovation, and accountable care organization agreements will continue to proliferate.
8. Outcry over rising prescription drug costs. Already a major political issue, the drug-cost debate will intensify in 2016. And insurers are likely to seize upon the changing tide of public opinion to pressure the pharmaceutical industry into value-based pricing agreements. Yet at least one expert has already made the case that insurers themselves may share blame for rising drug costs, making it an even trickier issue for the industry to navigate.
9. Evolution of the payer-provider relationship. Even as they fight to block health insurers from merging, providers seem more willing than ever to join forces with their usual traditional foes in order to adapt to the shifting healthcare landscape. The same goes for insurers, which find that coordinating care with hospitals and doctors can be a sound business strategy. The two sides will continue to compete, however, in the lucrative Medicare Advantage sector, where provider-sponsored plans are proliferating.
10. The disruptive influence of technology. The health insurance sector has seen a slew of tech-driven startups determined to upend the status quo--a trend that will continue as long as the fundraising dollars keep flowing. Even entrenched, traditional payers such as Aetna are constantly revamping their strategies for connecting with consumers through mobile devices. Finally, the federal government's ongoing effort to improve Healthcare.gov will prove to the industry how critical a role technology plays in consumer engagement.
Of course, if there's one major lesson I've learned while covering the health insurance industry, it's that it's wise to expect the unexpected. So there's sure to be plenty in store that will come as a surprise in the coming year. But like all forms of change, better to embrace than fear the unknown. Here's to a productive--and interesting--2016. - Leslie @HealthPayer