A 224-page document full of regulatory jargon might not be a fun summer read. Nevertheless, the U.S. Department of Health and Human Service’s (HHS) mid-July release of proposed rules for state-run health insurance exchanges (HIE) represents a major step toward expanding an insurance pool that could grow by an estimated 24 million Americans over the next eight years.
When the exchanges arrive in 2014, the single biggest impact is likely to be a major expansion of access, with 8.9 million individuals expected to sign up in the first year alone, according to projections by the Congressional Budget Office. A new report by PwC US Health Research Institute forecasts that a stunning 97% of those expected participants will be individuals who currently lack health insurance. A major driver of the new enrollments will be sliding-scale federal subsidies for individuals who earn from 138% to 400% of the federal poverty level, helping them buy insurance through the exchanges.
Experts say the exchanges also could directly impact hospitalists by bringing big changes to hospitals’ reimbursement revenue streams, spurring efforts to improve patient satisfaction metrics and increasing the momentum toward clinical comanagement agreements.
First, though, the public will get a chance to weigh in over rules that have been alternately lauded and derided, largely following the fault lines over the broader package of healthcare reforms. At a news conference set in front of a hardware store, HHS Secretary Kathleen Sebelius said competition on a level playing field would increase the purchasing power and drive down costs for individuals and small businesses. Websites for each of the exchanges would allow consumers to comparison-shop, with HHS ensuring that plans provide minimum standards for coverage. Patient groups, consumer organizations, and some small-business associations have welcomed the HHS rules, despite some concern that the exchanges could be tilted too far in favor of insurers. Overall, many analysts say, the rules have provided a fair amount of latitude over how the HIEs will be established and governed. Some business lobbyists, however, contend that the complex requirements will increase healthcare costs instead of lowering them. A July 16 editorial in the Wall Street Journal blasted the exchange rules as poorly designed and offering too little flexibility for states.
Two state-run ex-changes already exist, in Massachusetts and Utah. As of mid-July, however, states that had enacted laws to establish their own HIEs were outnumbered by those whose legislatures or governors had specifically blocked efforts to do likewise, according to the National Conference of State Legislatures. If states cannot or will not set up an exchange, HHS will step in and do it for them.
Reversal of Fortune?
Regardless of who ultimately oversees the exchanges, studies have begun suggesting who the most likely participants might be. An analysis by the Kaiser Family Foundation suggests that the newly insured are likely to be relatively older, less educated, more racially diverse, and in poorer health than those who currently carry private insurance but have fewer diagnosed conditions (www.kff.org/health reform/8147.cfm). Just as analysts, such as PwC, say that insurers will need to change their business strategy to lure and retain consumers, hospitals might need to redouble efforts to ensure high quality and patient satisfaction among a patient demographic that might be harder to please.
Mark Williams, MD, FACP, FHM, professor and chief of the division of hospital medicine at Northwestern University’s Feinberg School of Medicine in Chicago, says the shift could represent a boon for hospitals that have been forced to maximize efficiency. “In general, those hospitals that have a poorer payor mix have tended to become very efficient, and so they make money off of Medicare patients,” Dr. Williams, a former SHM president, says. “This is fascinating because, on the one hand, there may be a lot of patients for whom hospitalists can now get paid because they’re insured. But I personally think that, simultaneously, we’re going to be seeing cutbacks in payments for other patients who have private insurance.”