As HIX Enrollment Closes, Analysis Begins

After the enrollment deadline passes, private insurance carriers operating on the public exchanges must move quickly; they have only two months to file proposed premium rates and product designs for 2015.

Final 2014 enrollment numbers are about to start pouring out of the state and federally administered exchanges across the country like the roaring rivers washing away this harsh winter's heavy snowfall.

At insurance companies and exchange headquarters, officials will be sifting through the data looking for key factors that will help characterize the 6 million individuals who have reportedly enrolled in private insurance plans through the exchanges since October.

The stakes are high for payers, as they assess the cost of doing business with their new customers and try to glean insights from their 2014 beneficiaries that will help them set exchange premiums and product designs for 2015.

"The devil is in the details," Tammy Tomczyk, senior principal and consulting actuary at Oliver Wyman Consulting Actuaries in Milwaukee, said Friday. "Six million signed up, but how many of them paid? Or do they keep their coverage? Are we going to have four million, five million, or six million? I don't know where we're going to end up."

If enrollment on the exchanges is set at about six million beneficiaries, which is the enrollment figure predicted by the Congressional Budget Office in February, Tomczyk said the prospects for stability in the new exchanges could be good. "The bigger the pool, the higher the probability that you will have younger and healthier people coming in," she said, adding data from the exchanges over the next few weeks will make the picture clearer. "The big question, if it really is six million, is what do they really look like? How old are they, for example?"

At the Centers for Medicare & Medicaid Services, the federal agency working to launch and stabilize the exchanges, officials reacted gleefully Friday to government data showing individual enrollment in the exchanges had crossed the 6 million mark. "The Affordable Care Act is working," a CMS spokeswoman said. "More than six million Americans have signed up for private insurance through the Marketplace, and we're continuing to see a nationwide consumer surge in demand for Marketplace coverage. We only expect this demand to increase in the coming years."

Key Beneficiary Pool Factors
While noting there will be important circumstantial factors to consider from state to state, Tomczyk said "you can count on one hand" the factors that will determine 80 percent of the risks insurers face in the 2014 pool of exchange beneficiaries:

• Age
  The well-established correlation between higher age and higher healthcare costs means that in states where the exchange beneficiary population is skewed to older individuals, insurers will face higher risk of costly claims.
• Metal Mix
  There is a presumption that older individuals and people with chronic diseases will pick the most comprehensive Platinum plans to avoid annual out-of-pocket expenses of more than $4,000 in many bronze plans. "For a person in poor health, they're better off buying the Platinum," Tomczyk said. "In general, the people who enroll in Bronze will be healthier."
• Medicaid Expansion
  About half of the states have expanded Medicaid to income-eligible adults under the age of 65. Presuming low-income individuals are at higher risk of chronic disease and other costly conditions, providing medical coverage through existing state Medicaid programs will divert some of the least healthy individuals entering the health insurance market away from the exchanges. A twist will come in 2015 and beyond, when several states are set to expand Medicaid through the exchanges rather than through existing state Medicaid programs.
• Pent Up Demand
  In the first year of enrollment in the exchanges, there is an expectation that individuals with pre-existing conditions who could not get insurance before federally driven healthcare reform will be among the first to enroll. While nailing down the numbers will be difficult, Tomczyk said the previously uninsured will fall into two categories: those who were young, healthy and saw buying insurance as an opportunity; and those with costly pre-existing conditions. "This is the data, [that] as it starts emerging, becomes very helpful," she said.
• Claims Experience
  "With only three months of claims, you can get a pretty good idea of people's risk score for the year," Tomczyk said. "We're going to start looking at our clients' data."

On Friday, CMS said it finds the early data from the exchanges encouraging. The exchanges, a spokesperson said, are proving to be sustainable and appear to be paralleling the experience in Massachusetts, which established a balanced exchange risk pool after then-Gov. Mitt Romney launched a comprehensive healthcare reform effort in 2006.

Exchange Operator's View
From the vantage point of officials operating the exchanges, the 2014 enrollment data will reveal potential unbalances that could be destabilizing factors in the new markets.

"One of the key pieces of this is to have balance," Cammie Blais, CFO of Connect for Health Colorado, said Thursday. "We've been happy with the mix that has come in. But it's going to be critical to use that information to calibrate our next steps and determine how we continue to partner with stakeholders."

Getting a detailed profile of the 2014 Colorado exchange beneficiaries will "become a leading indicator of what we need to be focusing on next," Blais said. The steps Connect for Health Colorado officials need to consider include policy holder retention, policy renewals, and changing marketing campaigns to recruit enrollees from groups that have historically faced barriers to accessing healthcare, she added.

Operators of exchanges across the country are "getting a longer-term view" as the focus on launching the exchanges turns to stabilizing them. "There's going to be early adopters and those who hold out and wait to see if it's going to work… The people who are enrolling now either have a need or see it as an opportunity. … It's a longer vision that we need to have. Our reality will continue to change."