As executive vice president of government markets, I oversee the Highmark Inc. business areas that involve Medicare and Medicaid, Affordable Care Act (ACA) health insurance plans, and other offerings for individuals and families who get health coverage on their own rather than through an employer.
Throughout my career, I’ve emphasized that health plans must put individuals and families at the center of decision-making. That includes maintaining the financial strength needed to serve them now and into the future.
Although Highmark’s overall business remains strong, when it comes to our ACA plans, we lost $318 million in the first six months of 2015 alone, amplifying discouraging numbers we saw in 2014. As you can imagine, that has led to tough conversations throughout our organization.
In order to continue honoring our legacy of providing affordable, quality health insurance, we must find ways to stabilize our financial performance in the ACA market. So, in this post, I want to discuss the challenges in the ACA market, and the steps we’re taking for 2016 to serve our ultimate goal of making sure individuals get the right coverage for their needs.
You’ve probably seen news stories about ACA premium rates going up around the country for 2016. A few insurers are pulling out of the ACA market altogether, while others, including Highmark, have had to rethink the types of plans they offer.
What’s driving this? Although our health care system can be complex, in this case the answer is pretty straightforward: The people who have bought ACA health plans have had more costly claims, over a longer period, than anticipated. As a result, insurers like Highmark are paying out far more in claims than they collected in premiums.
ACA has helped millions of Americans get health insurance and afford care — but in many cases, precisely because they hadn’t had coverage and care for so long, their health conditions have reached more serious stages and are very expensive to treat.
You can see this by comparing our ACA members with members who get Highmark health insurance through an employer. In our central and western Pennsylvania regions, for example, ACA members were 19 percent more likely to have diabetes, had 58 percent more days in hospitals and inpatient settings, and had much higher rates of hypertension (high blood pressure), coronary artery disease, cancer and other conditions.
Steady care should eventually help level off the higher usage costs for ACA members. But no one knows how long that will take, and in the meantime, insurers have to find a better alternative than simply raising ACA plan premiums to keep up.
The strength and stability provided by our diverse businesses puts us in a good position to weather the challenges of the ACA’s early years. Still, no business can afford to lose hundreds of millions of dollars year after year.
To better serve our members while stabilizing our financial situation in the ACA market, we’ve taken action in several areas. I’ll talk about the changes in Pennsylvania specifically, but we believe that similar changes will make the ACA work better for everyone in general.
Simpler Plan Selection: I am a big believer that simpler is better. During the first two years of the ACA, many consumers had to sort through a lot of ACA plans whose differences were confusing more than meaningful. I’m all for competition that offers real choices to consumers — but the focus shouldn’t be on “more plans” so much as on more clearly distinctive plan options.
For our part, Highmark will continue to offer multiple plans in every county we serve — 62 counties in Pennsylvania and every county in Delaware and West Virginia. But we’ve also streamlined what we offer to hone in on plans that we believe serve our members best.
As a result, many of our existing ACA members will be choosing new plans for 2016. Knowing that, we’re taking extra steps to be sure they’ll have the clear information and support they need to make good choices. (See “Shop Carefully to Get the Best Plan” below, and the sidebar.)
High-Value Networks: One proven way for health plans to manage costs is to negotiate favorable rates for their members with a select network of providers. By using providers in the network, members get better value (higher quality, lower cost) for themselves while also helping to reduce the total cost of care that impacts premiums. According to an analysis by McKinsey & Company of individual exchange market products, 70 percent of plans in 2014 involved select (also referred to as “narrow”) networks.
A “good network” has always been something consumers care about, but in the past “good” often meant only “big.” Now, “good” is becoming more about quality, cost and efficiency, and that’s where we’ll excel with our health plans. Across all of our markets, we are very actively seeking and building new partnerships like those with Penn State Hershey and PinnacleHealth to create high-value provider networks for our members. In some cases, this also allows us to reverse an unpopular industry trend of higher cost-sharing for members; some Highmark plans will offer reduced cost-sharing to members because of our high-value networks.
Added Health Support for ACA Members: It is clear that the ACA population has unique, and costly, health challenges, and there needs to be better support to help them. As one example of that support, Highmark is developing a care management program specifically for our Medicare and ACA members that will focus in particular on helping individuals with chronic diseases, including diabetes, coronary artery disease, chronic obstructive pulmonary disease (COPD) and cancer.
With this program and other efforts, we’re taking a more personal, holistic approach, and looking at how we can proactively improve healthy lifestyle choices and social determinants of health like access to fresh food, transportation and health literacy.
Everyone wins if more of us stay healthy and out of the hospital. So we’re going to do everything we can to improve health outcomes and reduce costs for our ACA members.
Given the changes we are making around ACA coverage, and recognizing that there are many other options in the marketplace, my honest advice is that everyone should shop around when buying health insurance.
From a business perspective, the old goal of simply “acquiring more members” is not the only, or best, measure of success. At Highmark, our focus is to create health plans that will serve the members who choose them exceptionally well — but we also know that such plans may not be the best fit for everyone.
As Open Enrollment begins for 2016 on Nov. 1, we’ll have dedicated Highmark representatives available seven days a week, from 8 a.m. to 10 p.m.; extended hours in Highmark Direct stores; and plenty of written and online communications to explain the available options. And, as in the past, we will never “sell” anyone on a plan if it isn’t right for their needs.
Serving the ACA market isn’t just a business issue — the future of the health care system in this country impacts all of us. I believe strongly that our health insurance company, and all of the Highmark Health care companies, are playing an important role in shaping that future.
In all 62 counties in Pennsylvania, as well as in Delaware and West Virginia, our ACA health plans and services in 2016 will contribute to that future, serve our members exceptionally well, and keep our business healthy so we can continue serving our customers and communities for years to come.
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