Premium tax credits in the American Rescue Plan and off-marketplace enrollees.

OBJECTIVES: The 2021 American Rescue Plan Act (ARPA) increased the availability and magnitude of premium tax credits (PTCs) for consumers purchasing individual marketplace plans in 2021-2022. Millions currently purchase PTC-ineligible plans off of the marketplace. We estimate the proportion of off-marketplace enrollees who would be eligible for the expanded PTCs under ARPA, calculate PTC amounts for eligible enrollees, and examine factors influencing plan choice that could inform outreach efforts. STUDY DESIGN: We analyzed data from a survey of a random sample of off-marketplace enrollees in California in 2017 (n = 829). METHODS: Using survey data including self-reported income, household size, and employment status combined with 2021 benchmark premium data from Covered California, we estimate eligibility for PTCs and potential PTC amounts under ARPA among off-marketplace enrollees. We adjust for both survey design weights and poststratification weights. RESULTS: Among off-marketplace enrollees, we estimate that approximately 12% are potentially ineligible for PTCs because they reported incomes less than 100% of the poverty level or because they had access to employer-sponsored coverage for their family through themselves or their partner. The median annual PTC in 2021 for eligible off-marketplace enrollees was $311 but varied greatly by age, family or individual plan, and household income (5%-95% range, $0-$14,836). In 2017, 69% of off-marketplace enrollees were unaware that they had to enroll in marketplace plans to receive PTCs, and 51% received enrollment assistance from insurance brokers. CONCLUSIONS: These findings suggest the need for targeted outreach to encourage off-marketplace enrollees to switch to marketplace plans.

Growth In ACA-Compliant Marketplace Enrollment And Spending Risk Changes During The COVID-19 Pandemic.

In 2020 the COVID-19 pandemic caused millions to lose their jobs and, consequently, their employer-sponsored health insurance. Enacted in 2010, the Affordable Care Act (ACA) created safeguards for such events by expanding Medicaid coverage and establishing Marketplaces through which people could purchase health insurance. Using a novel national data set with information on ACA-compliant individual insurance plans, we found large increases in Marketplace enrollment in 2020 compared with 2019 but with varying percentage increases and spending risk implications across states. States that did not expand Medicaid had enrollment and spending risk increases. States that expanded Medicaid but did not relax 2020 Marketplace enrollment criteria also had spending risk increases. In contrast, states that expanded Medicaid and relaxed 2020 enrollment criteria experienced enrollment increases without spending risk changes. The findings are reassuring with respect to the ability of Marketplaces to buffer employment shocks, but they also provide cautionary signals that risks and premiums could begin to rise either in the absence of Medicaid expansion or when Marketplace enrollment is constrained.

Sorting Out the Health Risk in California's State-Based Marketplace.

OBJECTIVE: To characterize the health risk of enrollees in California's state-based insurance marketplace (Covered California) by metal tier, region, month of enrollment, and plan. DATA SOURCE/STUDY SETTING: 2014 Open-enrollment data from Covered California linked with 2012 hospitalization and emergency department (ED) visit records from statewide all-payer administrative databases. DATA COLLECTION/EXTRACTION METHODS: Chronic Illness and Disability Payment System (CDPS) health risk scores derived from an individual's age and sex from the enrollment file and the diagnoses captured in the hospitalization and ED records. CDPS scores were standardized by setting the average to 1.00. PRINCIPAL FINDINGS: Among the 1,286,089 enrollees, 120,573 (9.4 percent) had at least one ED visit and/or a hospitalization in 2012. Higher risk enrollees chose plans with greater actuarial value. The standardized CDPS health risk score was 11 percent higher in the first month of enrollment (1.08; 99 percent CI: 1.07-1.09) than the last month (0.97; 99 percent CI: 0.97-0.97). Four of the 12 plans enrolled 91 percent of individuals; their average health risk scores were each within 3 percent of the marketplace's statewide average. CONCLUSIONS: Providing health plans with a means to assess the health risk of their year 1 enrollees allowed them to anticipate whether they would receive or contribute payments to a risk-adjustment pool. After receiving these findings as a part of their negotiations with Covered California, health plans covering the majority of enrollees decreased their initially proposed 2015 rates, saving consumers tens of millions of dollars in potential premiums.

Building regulatory and operational flexibility into accountable care organizations and 'shared savings'.

The Affordable Care Act created accountable care organizations (ACOs), which will be a new part of Medicare as of January 2012, together with a "shared savings program" that will modify how these organizations will be paid to care for patients. Accountable care organizations have the potential to lower costs, improve the quality of care, facilitate delivery system reform, and promote innovation in health care. The federal government is set to create rules to regulate these organizations and has broad discretion to allow them to pursue a variety of approaches. Drawing on experience from some ACO pilot programs and the Medicare Part D prescription drug coverage program, we argue that regulations governing accountable care organizations should be flexible, encouraging of diversity and innovation and allowing for changes over time based on lessons learned. We recommend using regulations as a general framework, while relying on notices and other guidance below the regulatory level to spell out specific requirements.

Increase the Use of "Bundled" Payment Approaches.

This article explores how increased use of bundled payment approaches would affect health system performance along seven dimensions. Bundled payment approaches have the potential to reduce spending, consumer financial risk, and waste. Evidence is mixed regarding how these approaches would affect health. There is no good evidence about the effects of bundled payments on reliability of care or patient experience. Bundled payment approaches are not applicable to coverage or health system capacity. Implementing bundled payment approaches would require fundamental changes in the way that health care providers bill and are paid for services.

Fixing flaws in Medicare drug coverage that prompt insurers to avoid low-income patients.

Since 2006 numerous insurers have stopped serving the low-income segment of the Medicare Part D program, forcing millions of beneficiaries to change prescription drug plans. Using data from participating plans, we found that Medicare payments do not sufficiently reimburse insurers for the relatively high medication use among this population, creating perverse incentives for plans to avoid this part of the Part D market. Plans can accomplish this by increasing their premiums for all beneficiaries to an amount above regional benchmarks. We demonstrate that improving the accuracy of Medicare's risk and subsidy adjustments could mitigate these perverse incentives.

Insurance exchanges under health reform: six design issues for the states.

The Patient Protection and Affordable Care Act depends on new, state-based exchanges to make health insurance readily available to certain segments of the population. One such segment is the lower-income uninsured, who can qualify for subsidized coverage only through an exchange. Other segments are unsubsidized individuals and small employers, who may choose to buy coverage inside or outside of an exchange. Although the law provides some guidance in structuring these new exchanges, it leaves many key decisions to the states. Successfully implementing exchanges will require public-private partnerships, expertise in insurance operations and marketing, and a series of strategic decisions. We review the half-dozen most important design issues.

Bending the curve through health reform implementation.

In September 2009, we released a set of concrete, feasible steps that could achieve the goal of significantly slowing spending growth while improving the quality of care. We stand by these recommendations, but they need to be updated in light of the new Patient Protection and Affordable Care Act (ACA). Reducing healthcare spending growth remains an urgent and unresolved issue, especially as the ACA expands insurance coverage to 32 million more Americans. Some of our reform recommendations were addressed completely or partially in ACA, and others were not. While more should be done legislatively, the current reform legislation includes important opportunities that will require decisive steps in regulation and execution to fulfill their potential for curbing spending growth. Executing these steps will not be automatic or easy. Yet doing so can achieve a healthcare system based on evidence, meaningful choice, balance between regulation and market forces, and collaboration that will benefit patients and the economy (see Appendix A for a description of these key themes). We focus on three concrete objectives to be reached within the next five years to achieve savings while improving quality across the health system: 1. Speed payment reforms away from traditional volume-based payment systems so that most health payments in this country align better with quality and efficiency. 2. Implement health insurance exchanges and other insurance reforms in ways that assure most Americans are rewarded with substantial savings when they choose plans that offer higher quality care at lower premiums. 3. Reform coverage so that most Americans can save money and obtain other meaningful benefits when they make decisions that improve their health and reduce costs. We believe these are feasible objectives with much progress possible even without further legislation (see Appendix B for a listing of recommendations). However, additional legislation is still needed to support consumers ­ including Medicare beneficiaries ­ in making choices that reduce costs while improving health.

The Accountable Care Organization (ACO) model: building blocks for success.

The Accountable Care Organization (ACO) model has received significant attention among policymakers and leaders in the healthcare community in the context of the ongoing debate over health reform, not only because of the unsustainable path on which the country now finds itself but also because it directly focuses on what must be a key goal of the healthcare system: higher value. The model offers a promising approach for achieving this goal. This article provides an overview of the ACO model and its role in the current policy context, highlights the key elements that will be common to all ACOs, and provides details of several challenges that may arise throughout the implementation process, including a host of technical, legal, and operational challenges. These challenges range from issues such as the organizational form and management of the ACO to analytic challenges such as the calculation of spending benchmarks and the selection of quality measures.

Toward a 21st-century health care system: recommendations for health care reform.

The coverage, cost, and quality problems of the U.S. health care system are evident. Sustainable health care reform must go beyond financing expanded access to care to substantially changing the organization and delivery of care. The FRESH-Thinking Project (www.fresh-thinking.org) held a series of workshops during which physicians, health policy experts, health insurance executives, business leaders, hospital administrators, economists, and others who represent diverse perspectives came together. This group agreed that the following 8 recommendations are fundamental to successful reform: 1. Replace the current fee-for-service payment system with a payment system that encourages and rewards innovation in the efficient delivery of quality care. The new payment system should invest in the development of outcome measures to guide payment. 2. Establish a securely funded, independent agency to sponsor and evaluate research on the comparative effectiveness of drugs, devices, and other medical interventions. 3. Simplify and rationalize federal and state laws and regulations to facilitate organizational innovation, support care coordination, and streamline financial and administrative functions. 4. Develop a health information technology infrastructure with national standards of interoperability to promote data exchange. 5. Create a national health database with the participation of all payers, delivery systems, and others who own health care data. Agree on methods to make de-identified information from this database on clinical interventions, patient outcomes, and costs available to researchers. 6. Identify revenue sources, including a cap on the tax exclusion of employer-based health insurance, to subsidize health care coverage with the goal of insuring all Americans. 7. Create state or regional insurance exchanges to pool risk, so that Americans without access to employer-based or other group insurance could obtain a standard benefits package through these exchanges. Employers should also be allowed to participate in these exchanges for their employees' coverage. 8. Create a health coverage board with broad stakeholder representation to determine and periodically update the affordable standard benefit package available through state or regional insurance exchanges.

Fostering accountable health care: moving forward in medicare.

To succeed, health care reform must slow spending growth while improving quality. We propose a new approach to help achieve more integrated and efficient care by fostering local organizational accountability for quality and costs through performance measurement and "shared savings" payment reform. The approach is practical and feasible: it is voluntary for providers, builds on current referral patterns, requires no change in benefits or lock-in for beneficiaries, and offers the possibility of sustained provider incomes even as total costs are constrained. We simulate the potential expenditure impact and show that significant Medicare savings are possible.

Distributing $800 billion: an early assessment of Medicare Part D risk adjustment.

The viability and stability of the Medicare Part D prescription drug program depend on accurate risk-adjusted payments. The current approach, prescription drug hierarchical condition categories (RxHCCs), uses diagnosis and demographic information to predict future drug costs. We evaluated the performance of multiple approaches for predicting 2006 Part D drug costs and plan liability. RxHCCs explain 12 percent of the variation in actual drug costs, overpredict costs for beneficiaries with low actual costs, and underpredict costs for beneficiaries with high actual costs. Combining RxHCCs with individual-level information on prior-year drug use greatly improves performance and decreases incentives for plans to select against bad risks.

Early experience with employee choice of consumer-directed health plans and satisfaction with enrollment.

OBJECTIVE: To assess the initial impact of offering consumer-defined health plan (CDHP) options on employees. DATA SOURCES/STUDY SETTING: A mail survey of 4,680 employees in the corporate offices of Humana Inc. in June 2001. STUDY DESIGN: The study was a cross-sectional mail survey of employees aged 18 and older who were eligible for health care benefits. The survey was conducted following open enrollment. The primary outcome is the choice of consumer-directed health plan or not; the secondary outcome is satisfaction with the enrollment process. Important covariates include sociodemographic characteristics (age, gender, race, educational level, exempt or nonexempt status, type of coverage), health status, health care utilization, and plan design preferences. DATA COLLECTION METHODS: A six-page questionnaire was mailed to the home of each employee, followed by a reminder postcard and two subsequent mailings to nonrespondents. PRINCIPAL FINDINGS: The response rate was 66.2 percent. Seven percent selected one of the two new plan options. Because there were no meaningful differences between employees choosing either of the two new options, these groups were combined in multivariate analysis. A logistic regression modeled the likelihood of choosing the novel plan options. Those selecting the new plans were less likely to be black (odds ratio [OR] 0.46), less likely to have only Humana coverage (OR 0.30), and more likely to have single coverage (OR 1.77). They were less likely to have a chronic health problem (OR 0.56) and more likely to have had no recent medical visits (OR 3.21). They were more likely to believe that lowest premiums were the most important plan attribute (OR 2.89) and to think there were big differences in the premiums of available plans (OR 5.19). Employees in fair or poor health were more likely to have a difficult time during the online enrollment process. They were more likely to find the communications very helpful (OR 0.42) and the benefits information very understandable (OR 0.38). They were less likely to feel that they had enough time to make their enrollment decision (OR 0.47). CONCLUSIONS: Employees who were attracted to the new CDHP plan options valued the attributes that distinguished these plans from other choices. The shift to consumer-defined plans and to the electronic provision of information, however, requires a significant increase in the communication support for all employees, but particularly for those in fair or poor health whose information needs are the most complex and individualized.

Variation in use of medical care services: higher risk or higher consumption?

The issue of variation in use of medical care is important in Florida and in other regions of the country. It is difficult to disaggregate the effects of differences in health risk of Medicare beneficiaries from physicians' practice patterns and patients' preferences for care. New risk-adjustment methods used by the Centers for Medicare and Medicaid Services may provide some insights, but they also raise similar questions about the influence of practice patterns on variation.