AHIP: Enormity of HIX Challenges Sinks In

Rollout and triage have been the dominant concerns for the new public health insurance exchanges in 2014. But a whole new set of challenges looms as payers look ahead to building out and sustaining the centerpiece of the healthcare reform effort.

A pair of top government officials set the tone early for the Exchanges Forum in Washington, D.C. March 6 – 7 organized by America's Health Insurance Plans.

The first speaker at the exchange forum was Gary Cohen, who has been leading the federal effort to establish the new public exchanges as director of the Center for Consumer Information and Insurance Oversight. CCIIO is a branch of the federal Centers for Medicare and Medicaid Services.

"The Number One thing we learned from 2014 is this is hard work," said Cohen, who is leaving the federal government at the end of the month, when enrollment in the public exchanges for 2014 comes to a close. "As long as we all keep our focus, then I think we will be more successful as time goes by… We have to continue to be willing to learn lessons."

Diana Dooley, secretary of California Health and Human Services as well as chairwoman of the California Health Benefit Exchange, was even more frank in her remarks to the several hundred health plan executives who had gathered for the exchange forum.

"It isn't smooth and it isn't going to be smooth for some time," Dooley said. "We were able to open on October 1 but it was not perfect… We would all like to take a breath, but there's no time."

"I think the hardest work is just beginning," the California official said.

No rest for the weary
For the past two years, the challenges of rolling out and stabilizing the new public exchanges have preoccupied all of the players involved, from regulators to insurers, to healthcare providers. But the main theme at the AHIP exchange forum was the challenges ahead in 2015 and beyond:

• The rise of the consumer
• Deterioration of the risk pool resulting from last week's federal government decision to allow consumers to keep non-PPACA-compliant health plans until fall 2016
• Maintaining education and outreach efforts in 2015
• Product design in the evolving public exchange marketplace
• Focusing on sustainability of the exchanges and consumer retention

Mark Waterstraat, chief strategy officer at Benaissance in Omaha, NE, said it will be essential for health plans to establish direct relationships with consumers if they are going to be successful in the public exchanges. "We are going to go through a significant transition in this industry," he said, noting that brokers played the direct customer service role in the pre-PPACA health insurance market.

Insurers offering policies on the public exchanges need to look to major retailers as role models and offer one-stop shopping experiences such as a suite of insurance products including medical, dental, vision, life and disability coverage, Waterstraat said. "If we don't get out in front in this move to the consumer, others will," he said.

Cohen defended the decision to allow consumers to keep their non-PPACA-compliant policies. "The last thing we want is for someone who had health insurance to lose it," the CMS official said. "We want to give people as many options as we can."

But one of the actuaries who addressed the forum said allowing people to keep their existing policies through 2016 will likely lead to premium increases over the next two years. James T. O'Connor, principal and consulting actuary at Milliman, said the two-year extension will likely lead to the healthiest people sticking with their existing plans and the least healthy people switching to exchange plans for more affordable comprehensive coverage. "We will see rates set somewhat higher… due to the transition policies," he said.

An Uninformed Consumer
Several forum speakers said maintaining outreach and education efforts in 2015 will be a major challenge because of the costs associated with the kind of face-to-face contact that is most effective in educating consumers about the new public exchanges.

"If you look at the uninsured, they are very uninformed," said Rosemarie Day, president of Day Health Strategies in Somerville, MA. "That's a problem and a gap that has to be closed."

Cammie Blais, CFO of the public exchange in Colorado, said face-to-face educational efforts are the most effective way to reach consumers, but the cost of maintaining those kinds of outreach programs will be impossible for most states to maintain. "It's very time consuming and we need to make those programs more targeted," the Connect for Health Colorado CFO said. "We can't sustain that effort long-term."

Blais said Colorado exchange officials are looking for partners in the private sector and public assistance agencies to help carry the educational burden in 2015 and beyond. She said one strategy is to work with health plans, agents, and brokers to provide education about the exchanges to consumers. "We've included them from the beginning," she said, adding it will be a challenge to keep some brokers and agents engaged in the exchanges. "Many, many of them are frustrated with the process. It's unclear how many of them will participate in 2015."

Retention Strategies
Blais said retaining consumers in the public exchanges is going to be one of the prime challenges in 2015. "We can grow, but we have to retain," she said. "We have to start looking at retention strategies as soon as the next open enrollment period."

To achieve high retention rates, officials at the Colorado public exchange are focused on simplifying the renewal process and "messaging to existing customers" about the value of having health insurance at all times, not just when a health crisis strikes. "We really want people to understand how this benefits them every day," she said.

Expect Prolonged Market Instability
While there was widespread agreement at the AHIP forum that the public exchanges are stabilizing, many speakers predicted it will take several years to achieve a stable marketplace.

"It's really every year for the next few years that there's [going to be] a new major challenge," Blais said. "I think it would be unrealistic to say it's going to be totally stable in five years."

When pressed, Blais said the earliest a stable market could be achieved would be 2018, with a "hard period of figuring it out" followed by an adjustment period. "How do we correct and tweak what's already there?" she said. "We will have to have a couple years of data to make those kinds of decisions."

Chris Carlson, principal and consulting actuary at Oliver Wyman, said last week's decision to let consumers keep their non-PPACA-compliant policies through the fall of 2016 will extend uncertainty in the public exchanges. He predicted that many of the "transition folks" will not join the public exchanges until 2017 and the marketplace will not achieve stability until 2019.

"It's going to take a few years … before we are anything close to having everybody insured," Dooley said. "The marketplace is responding at the same time we're trying to get this up and running."

Paul Wann, senior director at Boston-based ikaSystems, said it will take three to five years for the public exchange market to "settle down," but he was optimistic about the long-term. "We have to get consistency – the soon the better. That's the way we do business in the private sector. That's how we survive," he said.

Regardless of how the public exchanges evolve in the coming years, they are almost certainly going to be a major factor in the broader health insurance marketplace far into the future, Wann said. "There's a lot of money invested in this. It's going to be hard to kill it," he said. "It's moving in the right direction, we just need to keep the momentum going."