The open enrollment period for 2015 health care coverage under the Affordable Care Act is coming up on Nov. 15 and extends to Feb. 15.
The federal health reform law has changed the way many consumers buy and use insurance. For insurance companies, it has transformed their entire way of doing business.
For this month’s KC Checkup, Heartland Health Monitor talks with Ron Rowe, vice president of sales for Blue Cross and Blue Shield of Kansas City, which provides insurance to more than a million customers.
What’s the biggest way the Affordable Care Act has changed things for insurers in Kansas City?
The biggest way it has changed things is the amount of communication that we have to do with prospective members and current members. The ACA is a very complex law. It required us to develop benefit plans that were very different than we’ve sold in the past. And so trying to take something that’s very complex and make it understandable for someone that’s not an insurance person – that’s been a very big challenge for us.
The ACA has measures to encourage hospitals and providers to lower their costs. Are insurers also under pressure to lower costs?
Big-time pressure. You know, one of the first things that a person looks at when they’re buying coverage on the exchange – or through the ACA product on the individual segment at least – is, what’s the monthly premium? And so we’re under a lot of pressure to get a low monthly premium available to folks, but not only the low monthly premium, it’s the amount of cost-sharing that someone is going to have to pay once they go and get treatment. So we’ve worked very closely with the hospitals in the last three years actually putting together the benefits that we’re offering. We’re working closely with Walmart to offer a new low-cost product in the Kansas City market, starting in 2015. But absolutely, we’ve been under a lot of pressure.
Do you have any evidence that people are using lower or no-cost preventive care (that the ACA requires insurers to offer) or are people still using the emergency room for their primary care?
Well, the low-cost preventive care is probably a misconception. It’s low-cost for the consumer, meaning that they don’t have a co-pay or deductible when they go to get that care, but the insurance company is still having to pay the providers. So it’s not necessarily low-cost. It’s no out-of-pocket for the individual consumer.
We have seen preventive services, the utilization, increase since the Affordable Care Act and those benefits were put in place. Our actuaries tell us it’s not a huge driver of our claims costs today, but there is some increase in that utilization.
Stepping away from the ACA for just a minute, there have been some recent headlines about new prescription drugs that seen to be just incredibly expensive. I’m thinking of a new hepatitis C drug that costs a thousand dollars a day. And I wonder: How does the introduction of these new super-high cost drugs affect insurers?
In a general sense – and I can’t speak about that particular drug with any detail at all – but in general, when new technologies and new drugs come to market, they have to be paid for. You know, consumers demand them. This is a drug that’s effective. It works. People want to have access to that. And so, as an insurance company, we have to pay the claims when those drugs are provided or new technologies are provided, and the way that you are able to cover those claims is to charge for it in your premiums. So what happens is when those new technologies and those new drugs come to market, you’ll tend to see premiums increase if you’re going to provide coverage for that. Just at the most basic level, that’s the biggest effect.
What kind of enrollment numbers do you expect to see in this upcoming period?
That’s a good one. Last year, here in the Kansas City, enrollment was probably somewhere around 45,000 or 50,000, I think it was. We’re expecting those numbers are going to be higher this year. And I think the reason that they’re going to be higher is, No. 1, when healthcare.gov didn’t work right from the beginning, some people just tuned out, and we don’t anticipate that happening this year. No. 2, penalties this year are higher than the penalties were last year. So I think there’s going to be more people paying attention. A $95 penalty didn’t mean that much last year, but a $395 penalty or two percent of your income is a little bit higher. People are going to pay attention to that. And I think, in general, there’s much more awareness about how the Affordable Care Act works, that there are subsidies available. You’ve got people who were enrolled talking to family members about, you know, I’m paying this much, the government’s paying that much, so in general, we think there’s going to be a bigger uptake this year during the open enrollment period.
