10 questions to consider following the ACA's first open enrollment period

Now that the first open enrollment under the Affordable Care Act (ACA) is behind us, I expect many questions to come up over the coming months about the relative success of the law to date, and what lies ahead. Here are what I consider to be the top 10, in descending order of importance:

1. Will other states follow California's lead on the ACA? California invented modern health insurance in the 1930s, employer-based insurance in the 1940s, organized medical groups, managed care and many other innovations in the decades after. And it embraced the ACA far sooner and more enthusiastically than any other state. California officials applied for and received a waiver from the feds to expand Medicaid eligibility a couple of years before it actually kicked in. And enrollment through the Covered California exchange not only greatly exceeded projections, but represents about 20 percent of the total nationwide enrollment (the state itself has only 10 percent of the U.S. population). I had a chance to sit down with Covered California's Executive Director Peter Lee last week. He told me that he regularly speaks with heads of the other states' exchanges, as well as officials from HealthCare.gov. Hopefully, his state's success will rub off.

2. How many states will expand Medicaid in the coming year? I project two at the most. Pennsylvania is the mostly likely candidate, followed by Maine, which will be under greater pressure since its neighbor New Hampshire just expanded its Medicaid eligibility. But expect an avalanche in 2016 and beyond, as more hospital lobbies figure out how to lean on their statehouses, large low-wage employers such as Wal-Mart chime in about their cost differentials across state borders and the fiscal benefits of expanding Medicaid become clearer.

3. Will there be a big enrollment churn due to non-payment of premiums? Some experts say as many as 15 percent of those who purchased coverage through the exchanges could wind up disenrolled due to non-payment of premiums--nearly 1 million people. Other factors come into play aside from inability to afford payments, such as people with individual coverage getting jobs with health insurance, or people purchasing two policies at once because they can't make up their mind, Lee says. Nevertheless, he expects a 15 percent disenrollment rate would be the worst-case scenario, and the number will likely be lower. And the ACA rules on premium payments are pretty lenient (I am still officially enrolled in my old Blue Shield of California plan, even though I haven't given the health plan any money since last fall). That means there will be plenty of opportunities for enrollees to catch up.

4. Will there be a disproportionate share hospital (DSH) fix for hospitals? Hospitals in states that have not expanded Medicaid eligibility under the ACA face a double-whammy: not only do they lose revenue from additional enrollment, but the government will also cut DSH program payments. It will be interesting to see if Congress comes up with a DSH patch as reliably as it does with a sustainable growth rate payment formula patch.

5. What's actually going on with accountable care organizations (ACOs)? There's been an enormous amount of media coverage on ACO formation, but do these organizations actually save money and improve care as promised? It's time to take a closer look.

6. What will happen with healthcare costs? They've been inching up at historic lows in recent years, something the ACA's foes attribute to the lingering effects of the Great Recession. This will be the first year the healthcare reform law will play a role. The economic data I pore over from the Bureau of Labor Statistics every month suggests to me that prices will not increase dramatically anytime soon.

7. Will the ACA's backers double down on the law? The Democrats face projections that they could lose the Senate in the mid-term elections, with the ACA as the major campaign issue. However, there are still seven months until election day, an eternity in politics. Therefore the logical choice at this point is to fiercely support the law and point out how it will help Americans live longer and healthier lives. For the moment, the ACA's creators are backing away from the law or suggesting dubious improvements--such as delaying the individual mandate or allowing insurers to sell policies across state lines--a strategy that will become a self-fulfilling prophecy.

8. Will premiums in the next open enrollment period go up dramatically? ACA foes express concerns that the competitive premiums offered by many plans were a "come-on" and that they will go up in the coming years. But considering how the insurers have championed the ACA as a big boost for their business, it seems unlikely they'd shaft all their new customers right out of the gate--income-based premium subsidies protect many insurers and those subsidies would blunt any increases they receive in the coming year. Moreover, a new report by Moody's suggests that it's more likely that hospitals will cut negotiated rates in order to get more exchange business, a practice that would help keep premiums in check.

9. What mergers will occur in the coming year? All of the reports suggest that the ACA will prompt more mergers among hospitals and providers. There are bound to be at least one or two eyebrow-raising deals that will occur over the next 12 months. Expect them to occur in the states not expanding Medicaid; failure to expand puts hospitals under more financial pressure and makes them more likely to seek out a partner.

10. Will any other states open up their own exchanges or move to the federal exchange? Unlikely for the former; Oregon is a likely candidate for the latter. --Ron(@FierceHealth)

 

 

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