Insurance Market Reform

While there may be reasons to believe that premiums will increase substantially in 2015, particularly in less competitive markets, there are even stronger reasons to believe that premium increases will be moderate, and in line with underlying cost growth. The dominant force behind the surprisingly low premiums in 2014 remains intact—the strong incentives for markets to be highly competitive, which forces insurers to set premiums aggressively to attain or retain market share. These incentives should be even stronger in 2015 with increased enrollment and a more stable risk pool
 

Consolidation between and among hospitals and physicians can lead to improvements in efficiency and quality of care, but it also tends to raise prices for health care services. Health care purchasers and payers can counteract providers’ pricing power through various strategies, including limiting provider networks, providing tiered benefits and other point-of-service incentives to patients, and supporting the formation of physician organizations. In some cases, government regulation—like antitrust enforcement—may be necessary.
 

Employers of 50 or more workers are required to provide health insurance or pay a penalty. This requirement has been delayed until 2015 for employers with 100 and more workers and until 2016 for those with 50-99 workers. However, there are reports of changes in employer labor practices, such as reducing the hours of part-time workers and concerns about increasing workforce above 50 workers. This brief argues that the employer mandate should simply be eliminated. It would not reduce insurance coverage significantly, but it would eliminate the labor market distortions that have troubled employer groups and that could have negative effects on some workers. The penalties on employers do bring in some new revenues that would have to be replaced.

Recent cancellations of nongroup health insurance plans generated much policy debate and raised concerns that the Affordable Care Act (ACA) may increase the number of uninsured Americans in the short term. This article provides evidence on the stability of nongroup coverage using US census data for the period 2008–11, before ACA provisions took effect. The findings suggest that the nongroup market was characterized by frequent disruptions in coverage before the ACA and that the effects of the recent cancellations are not necessarily out of the norm.
 

Traditionally, insurers and employers have covered treatment for mental health conditions differently than treatment for physical conditions. Coverage for mental health care had its own (usually higher) cost-sharing structure, more restrictive limits on the number of inpatient days and outpatient visits allowed, separate annual and lifetime caps on coverage, and different prior authorization requirements than coverage for other medical care. Altogether, these coverage rules made mental health benefits substantially less generous than benefits for physical health conditions. This brief explores the various laws that have begun bringing them into balance.