1. Health

CBO Sees Slow Growth For Exchanges; Administration Promotes Agents And Brokers In Marketplaces

On September 14, 2017, the Congressional Budget Office issued its annual report on Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2017 to 2027. The CBO and Joint Committee on Taxation (JCT) estimate that in 2017, the federal subsidies, taxes, and penalties associated with health insurance coverage for people under age 65 will result in a net federal subsidy of $705 billion, about 3.7 percent of the gross domestic product (GDP). This amount is projected to rise to $1.2 trillion, or 4.1 percent of GDP by 2027. 

About 244 million noninstitutionalized civilians under age 65 have health insurance. Of these, about 156 million have employer coverage, 63 million Medicaid or CHIP, 17 million nongroup market coverage (with 8 million subsidized and 2 million unsubsidized through the exchanges), and 8 million Medicare. A total of 28 million are uninsured.  

Federal subsidies for people under age 65 in 2017 amounted to $287 billion for employment-related coverage, $296 billion for Medicaid, $89 billion for Medicare, and $45 billion for Affordable Care Act premium tax credits, cost-sharing reduction payments, and Basic Health Plan subsidies. The CBO projects that the individual mandate penalty will only yield $3 billion in revenue for 2017 because a “substantial majority” of the uninsured are not subject to it. 

The CBO expects the nongroup market to be stable for 2018. It expects premiums to rise by about 15 percent for 2018 because of short-term uncertainty about the cost-sharing reduction payments but thereafter to rise at about 5 percent a year, and perhaps even to decrease for 2019.

The CBO expects the number of people covered by employers to decrease by about 5 million by 2017, reflecting a long-term decline in employer coverage and some employers moving their employees to Medicaid or the nongroup market. The CBO expects Medicaid coverage to grow to 70 million over the next decade. About 17 million of these would have ACA Medicaid expansion coverage, up from 13 million today. The CBO expects that some states will still expand Medicaid in the future, although the current uncertainty about the program makes expansions in the near term unlikely. 

The CBO expects exchange enrollment to continue to grow, but slowly. About 10 million will be covered this year, about 11 million in 2018, and 12 million for succeeding years. The CBO acknowledges that its estimates of exchange coverage have been excessive, in part because employers have not dropped coverage to the extent expected and in part because the exchanges have proven less attractive to consumers than expected. The CBO predicts, however, that exchange coverage will grow as people eligible for subsidies move to the exchanges; this will occur because premiums for the market outside the exchange are rising as transitional plans disappear and children in CHIP move to the exchanges because CHIP subsidies decline. The CBO does not expect exchange enrollment to grow in the short run because of premium increases as the Trump administration cuts advertising and outreach, and uncertainty continues about cost-sharing reduction payments and individual mandate enforcement. 

Administration Promotion Of Marketplace Agents and Brokers Runs Up Against Lack Of Insurer Payments 

As has been widely reported, the Department of Health and Human Services (HHS) has cut payments to ACA navigators dramatically for 2018. Although overall cuts in the program are about 40 percent, specific programs have been hit by far larger cuts. As the administration has been defunding the ACA navigator program, however, it appears to be enthusiastically pursuing agents and brokers to participate in the exchanges.  

A September 13 set of slides posted at the REGTAP.info website outlines measures the administration is taking to do this. These include the enhanced direct enrollment pathway announced earlier, but also improved technical assistance to agents and brokers. CMS is also updating and making more user friendly the marketplace learning management system.  

The new measures further include a “Help on Demand” tool on HealthCare.gov “that will connect consumers directly with a registered agent/broker.” The slides identify this program as providing “sales leads” to agents and brokers. The slides also note that federally facilitated marketplace agents and brokers will show immediately when consumers search for assistance without the consumer having to click away from the current default navigator/assister search results. 

Agents and brokers have in fact accounted for a large percentage of exchange enrollees and should be encouraged to continue their efforts. Unfortunately, however, many insurers have stopped paying or substantially reduced commissions for exchange enrollments, and agents and brokers cannot be expected to work for free, no matter how much encouragement they receive. 

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