Insurance Market Reform

Through reforms to cost containment and expanded access to health insurance plans, the Affordable Care Act (ACA) has begun to shape the delivery and cost of health care services to Americans. Many of these reforms are still taking hold, and it is too soon to completely know how they are affecting the health care system. But looking beyond these considerations, it appears that many enduring economic challenges persist in the markets that provide health care and health insurance to consumers. This paper offers six economic facts that highlight continuing challenges and complexities in health care and health insurance markets on which the policy debate should focus.
 

Large data sets that can be analyzed to determine patterns of behavior – popularly called “big data” – are being used in ever-expanding ways. State insurance regulators have adopted the use of big data to conduct oversight of certain kinds of insurance, such as workers’ compensation and life insurance. However, those agencies providing oversight of health insurers have undertaken only modest efforts to collect, analyze, and use large sets of claims, enrollment or sales data to understand market trends and how consumers are using their health insurance to access and pay for care. This issue brief discusses how insurance regulators and third parties are currently using data collection, and how it could change under yet-to-be-implemented provisions within the Affordable Care Act as means for improving health plan oversight and compliance.

The Center for Consumer Information and Insurance Oversight has released a list of proposed 2017 Essential Health Benefits (EHB) benchmark plans for all 50 states and the District of Columbia. The Affordable Care Act (ACA) requires non-grandfathered health plans in the individual and small group markets to cover EHBs, which includes items and services in ten benefit categories. For plan year 2017, the EHB benchmark plan is a plan that was sold in 2014. CCIIO is accepting public comments on the proposed benchmark plans until September 30, 2015.

The new health insurance exchanges are the core of the ACA’s reforms, but how the law improves the nonsubsidized portion of the individual market is also important. This issue brief compares products sold on and off the exchanges to gain insight into how the ACA’s market reforms are functioning. Initial concerns that insurers might seek to enroll lower-risk customers outside the exchanges have not materialized. Instead, more generous benefit plans, which appeal to people with health problems, constitute a greater portion of plans sold off-exchange than those sold on-exchange.

Large bills from an out-of-network health care provider can be an unexpected surprise to consumers who did not knowingly obtain health care outside the plan’s provider network. As health plans embrace tighter networks as a tool for improving quality or reducing premiums, the potential for such bills may grow. Although insurers may protect their plan members in some cases, there is no broad protection from these types of bills in federal law or in most states. Several states have acted to protect consumers from the need to pay balance bills, at least in emergency situations. But even these states have struggled with how to implement protections while balancing legitimate interests of health plans and health care providers. This issue brief summarizes and compares seven state approaches to protecting consumers from balance billing.