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Trends and Innovations in Health InsuranceKrista Drobac, Partner, Sirona Strategies
November 3, 2017
AAFP State Legislative Conference – Healthcare 2.0
Agenda
Healthcare costs are driving large-scale changes in the insurance market
New Directions in Insurance M&A
New Market Entrants
New Ways to Shop for Insurance
New Insurance Design
Rising Healthcare Costs Driving Industry Changes
Healthcare spending continues to grow
Rising Insurance Premiums Reflect Rising Cost
Average annual premiums for employer-sponsored family health coverage reached almost $19,000 this year, a 19 percent increase since 2012.
Premiums in the individual marketplaces have grown by over 100 percent since 2013.
Cost increases are driving consumer frustration, and propelling calls for greater choice and lower-cost insurance options.
High Costs Driving Market Change
High out of pocket costs for healthcare mean that consumers
are more price sensitive – to insurance choices, to out of pocket expenses, and to healthcare goods and services, like over-the-counter
and prescription drugs.
This price sensitivity, as well as other changes in the market, have led to a number of mergers and acquisitions among insurance
companies, as well as a number of new entrants and changing
business models.
Insurance Mergers – Health System Integration
Health systems and providers are increasingly taking advantage of new value-based payment models by offering health plans
Integration allows providers to better manage their networks and improve care coordination.
As of 2014, 106 providers are vertically integrated with a health plan.
Much of the growth is in the Medicaid and Medicare Advantage markets. As of 2016, 20 percent of all MA enrollees were enrolled in a provider-led health plan.
Aetna & CVS
If approved, the merger would combine the companies’ health
insurance, pharmacy benefit management, pharmacy, and
health clinic services, establishing a highly integrated
organization.
The news comes in the wake of news that Amazon is moving into the pharmacy business.
It remains to be seen whether the merger could produce
efficiencies and lower healthcare costs.
CVS Health is reportedly in talks to purchase Aetna for more than $66 billion
New Market Entrants
Offer health plans but main focus on utilizing patient medical data
Each focuses on a specific population –
Clover for MA patients, Nuna for Medicaid
patients, and Oscar for the individual market
Use data and technology to identify gaps in care
and evaluate health care issues
For example, when a patient fails to pick up a
prescription, a Clover representative calls the client and, if it makes sense, dispatches a
Clover nurse practitioner or other specialist for a
home visit
Private Insurance Exchanges
Private exchanges are health insurance marketplaces for larger employer groups. Employers give their workers a defined contribution to buy coverage from 1 or several participating insurers.
Walgreens is one of the largest employers to use private exchanges. Almost ¾ of its 200,000 eligible employees have chosen a bronze or silver plan.
Aon Hewitt is prominent in the private exchange space. In 2016, 55 employers with more than 1 million employees and dependents participated in Aon Hewitt’s Active Health exchange, a significant increase from 33 employers with 850,000 employees in 2015.
Changes in Insurance Design – HDHPs & HSAs
Health savings accounts give consumers more control over their healthcare choices and spending, thus driving down total costs.
They are triple-tax advantaged investment tools: consumers can save, accrue interest, & withdraw funds – all tax-free.
Consumers are only eligible for an HSA if they are enrolled in a high-deductible health plan (HDHP), or a health plan with a deductible greater than $1,300 (2,600 for a family).
20 Million - The number of Americans with a health savings account
Each of the ACA repeal and replacement bills included HSA
provisions seeking to undo some of the changes that the ACA made to HSA
policy, like increasing the allowable contribution threshold, allowing HSA savings to be used for OTC purchases,
and enabling catch-up payments.
However many in Congress seek to go further to make HSAs easier to use and
to ensure that HSA policies accommodate consumer needs, as
well as medical advances and benefit trends.
A new bipartisan and bicameral bill, to be released next month, is expected to
include several additional reforms, including coverage of services and
medications for chronic disease prevention, and wellness prevention.
Changes in Insurance Design – HDHPs and HSAs
