Health Insurance Marketplaces: What's Next?

On Tuesday, October 1st, a major component of the Affordable Care Act (ACA) was realized with the launch of open enrollment in the Health Insurance Marketplaces. Websites and phone lines were overloaded due to the high volume of interest as some individuals tried to enroll and others were simply interested in learning the options and prices. The launch was a culmination of years of preparation by government, providers, social workers and insurers.

Insurers were faced with particularly difficult questions, as other key regulations will become effective in 2014; specifically, the elimination of annual spending limits on an individual and no denial of coverage for those with pre-existing conditions. Both of these provisions underscore the uncertainty of enrolling previously uninsured individuals, especially those who have postponed surgery and maintenance of chronic conditions now anxious to obtain coverage.

The next measure of success for the marketplaces will be the number of individuals who purchase insurance, with most recent estimates at 7 million in 2014 and growing to 22 million in 2020. Enrollment is largely dependent on three factors:

• Functionality and ease-of-use of the websites, both federal and state run
• Navigators and assisters helping consumers understand plans, including cost sharing reductions and tax subsidies that may be available to them
• Individuals finding acceptable plans at a reasonable price point based upon their household income

Coverage will begin on January 1, 2014, and individuals in need of care will be particularly eager to schedule doctor’s appointments to see immediate benefits of the monthly premiums they pay. The Department of Health and Human Services will collect high-level data regarding demographics, spending, and services provided throughout the year to quantify the needs of both new and continuing members. The quality and comprehensiveness of this information will directly affect insurers’ financial bottom lines through three compulsory programs (risk adjustment, reinsurance, and risk corridors) designed to ensure the premiums of Qualified Health Plans (QHP) sold on the marketplaces are comparable to similar plans sold through other channels.

The market is now entering a waiting period: waiting for enrollment statistics to be compiled and released, waiting for coverage to begin and quantify the real needs of the previously uninsured members, and waiting to quantify a variety of financial metrics. Collectively, this information will characterize the next phase of ACA success while the long-term implications won’t be realized for years to come.