Health plans must consider new risk pools

November 19, 2013

Operational and economic consequences of extending non-grandfathered plans must be considered.

Extending non-grandfathered plans, as President Obama is now encouraging, might be a political move that soothes some Americans today but it has immediate and long-term economic fallout. William Kerr, MD, CEO of Avalon Healthcare Solutions, a pediatrician and former managed-care leader, believes the operational and economic consequences must be considered.

"One thing that would concern me would be the integrity of the risk pool," he says. "What happens as we fairly rapidly consider taking one risk pool and allowing it to break apart into multiple risk pools?"

The biggest question for insurers is how to manage the exchange products now that the risk pool will likely be different than expected when the exchange plans were designed earlier this year. Also, the population that remains in the extended plans will face higher premiums and leaner coverage.

"I don't know how, near the Thanksgiving holiday, one is expected to go through a process that normally takes nine months, to go through actuarial assessment, through filing with the insurance commissioner, to marketing and enrollment," Dr. Kerr says.

He's uncertain of how the industry should best move forward when the Affordable Care Act is the law of the land, but the president is asking states and insurance carriers to roll out a new strategy not addressed in ACA.

"You wonder what executives are supposed to react to: the dialog or the existing law of the land," he says.

But Jan Berger, MD, president of Health Intelligence Partners, a consulting firm, believes health plans can take a long-term view and turn the market disruption into an opportunity if they act quickly.

"It's an opportunity for health plans to engage the consumer in a better understanding of what health insurance is, what coverage is and how to best purchase the plan that really meets not only their needs for today but their ongoing needs," Dr. Berger says.

Today consumers are purchasing plans, but many don't understand what their policies would cover if they do have significant healthcare needs.

"The skinny plans were maybe the only thing people could afford in the past, and they didn't understand what they were purchasing," she says. "Now it allows us to have a very different conversation with them. It's actually an opportune time because health plans have the capability and the access to members to start the conversation."

The administration is pushing back the start of the 2015 enrollment period to November 15.

Updated 11-24 to reflect new enrollment period