Exchange Implementation Nears, but Questions Still Exist

Last week, The American Journal of Managed Care (AJMC) reported how private employers are increasingly trending towards utilizing private health insurance exchanges in place of more traditional employer-provided insurance plans. While the Affordable Care Act (ACA) has incited critically-needed interest and discussion of a more competitive insurance marketplace in order to control costs, there are still many emerging concerns about both the public and private healthcare exchanges.

Earlier this week, the US Department of Health and Human Services (HHS) revealed a highly anticipated report that listed the expected costs for insurance premiums in the federally-based state exchanges. The findings were considerably less specific than hoped for.

“The report gives a lot of examples of the kinds of people who will get good prices—but everyone else will remain in the dark until at least next Tuesday, when Obamacare is supposed to open its doors,” said Brett Norman and Jason Millman in a recent article.

The premiums reflected in the report are mainly for very specific groups including the healthy 27-year-old group, which is expected to feel the most impact from reform, and working families who qualify for subsidies. Gary Cohen, director of the Center for Consumer Information and Insurance Oversight, said that this is due to the pending finalization of rates—even as the deadline looms less than a week away. The average price for an individual purchasing exchange insurance is expected to be $328 per month. This has weakened arguments about “rate shock,” but without specific rates for individuals, it is hard to tell just how "affordable" premiums will be for people outside the example groups HHS supplied.

In addition, there may be up to 500,000 children who will not receive coverage due to what has been labeled a “family glitch.”

“Congress defined "affordable" as 9.5% or less of an employee's household income, mostly to make sure people did not leave their workplace plans for subsidized coverage through the exchanges. But the "error" was that it only applies to the employee—and not his or her family,” reported Kelley Kennedy of USA Today in a recent article. “So, if an employer offers a woman affordable insurance, but doesn't provide it for her family, they cannot get subsidized help through the state health exchanges.”

This glitch will most likely affect employees who work for private employers like UPS. The company recently announced that it would no longer supply spousal insurance for employees, leaving many individuals with significant health costs as they do not qualify for a federal subsidy. UPS, meanwhile, saves $60 million.

"The family glitch is definitely a drafting error that Congress made that needs to be fixed," said Joan Alker, executive director of the Georgetown University Center for Children and Families. "But that seems unlikely."

Exchanges are brimming with promise to increase access and control the out-of-pocket spending for consumers nationwide, but as the eve of exchange implementation nears, there are still many barriers in the way of exchanges meeting their full potential.

Around the Web

HHS Reveals Obamacare Coverage Prices for Federal Exchanges [Politico]

'Family Glitch' in Health Law Could Be Painful [USA Today]

UPS Takes Spouses Off Insurance; Blames Obamacare [NBC News]