Millions of Americans have lost their jobs in mere months because of the pandemic, causing significant changes in the health plan market. HRI spoke to PwC director Ruchita Kewalramani and principal Igor Belokrinitsky about how the pandemic has affected health plan enrollment and why health insurers should focus on retaining members and recruiting new ones through diversified product portfolios.
According to a recent analysis by HRI, nearly 20 million people could lose their employer-sponsored health insurance as a result of the pandemic and related recession. How should payers respond?
Payers should aim to retain employer large group coverage where possible. For 2021, this could mean offering low-cost options that allow employers to continue coverage during a downturn—whether through a narrow network or by moving from fully insured to self-insured coverage, including partially self-funding where the employer takes on more risk than a fully insured plan but with more predictability and less risk than a typical self-funded plan. Even though the number of employers actively shopping for new coverage is low, some health plans are offering low to no rate increases and proactive, suggested benefit changes in order to retain groups.
Currently most employers furloughing workers are continuing health coverage. If this coverage eventually drops, payers should work with employers to manage the transition from employer-sponsored coverage to retail health coverage such as Medicare Advantage, managed Medicaid, Affordable Care Act-compliant individual plans, individual plans not compliant with the ACA, and coverage via the Consolidated Omnibus Budget Reconciliation Act (COBRA), which allows temporary extension of employer-sponsored coverage paid for by the employee.
HRI: How should payers be thinking about their portfolio of plans in light of likely declines in employer-sponsored coverage?
Ruchita Kewalramani: Payers should focus on building awareness of their existing retail plan options in order to enroll individuals losing employer-sponsored coverage or otherwise becoming eligible for these plans. It is too late to enter managed Medicaid, Medicare Advantage or the ACA markets for 2021, other than by the acquisition of a payer already in these markets. For payers already in these markets, the focus should be on regaining membership lost from employer-sponsored plans and capturing additional, newly eligible members. For those not in these markets, there may be opportunities to capture members in non-ACA-compliant plans such as short-term limited duration plans or direct primary care plans.
Payers should focus on building awareness of their existing retail plan options in order to enroll individuals losing employer-sponsored coverage or otherwise becoming eligible for these plans. It is too late to enter managed Medicaid, Medicare Advantage or the ACA markets for 2021, other than by the acquisition of a payer already in these markets.
HRI: Short-term limited duration plans have been criticized for not covering preexisting conditions and excluding certain essential health benefits covered by ACA-compliant plans. How should payers take this into account when deciding which plans to offer?
Ruchita Kewalramani: Like most non-ACA-compliant plans, short-term plans are designed for a narrow set of circumstances: for example, coverage of routine primary and specialty care but not necessarily catastrophic coverage for non-routine care such as treating a broken arm. Segmenting the market to understand which plans are best suited for individuals based on their care needs and income level is key (see figure below).
Short-term plans will not be well-suited for everyone. Health plans should be transparent and educate the purchasers of short-term plans to avoid surprises later. Consumers are already dealing with a lot of uncertainty this year. Not understanding their health insurance coverage and being surprised at a later date is the last thing they need. Payers should help individuals find the right coverage that meets their needs and minimizes surprises.
Individuals with household incomes under 400% of the federal poverty level (FPL) will qualify for ACA-compliant plans subsidized by the federal government or Medicaid in most states. The options become more limited above 400% FPL. As such, a diversified product portfolio of ACA individual plans, COBRA and non-ACA-compliant plans such as direct primary care plans and short-term plans will be important for serving those above 400% FPL. Each of these plans caters to a different segment of the market, based on income and care needs.
HRI: What are some of the key actions payers can take after segmenting the market to gain more members?
Ruchita Kewalramani: Capturing new members as they enter the retail segment is key. Take managed Medicaid. There is no set open enrollment period. Individuals get 30 to 60 days after losing employer coverage to enroll in the Medicaid plan of their choice before the state auto-enrolls them in a plan. Building partnerships with employers making the hard choice to lay people off and advertising at unemployment offices while following CMS guidelines could help grow this business.
Medicare Advantage, on the other hand, sees most of its enrollment during the annual enrollment period each fall. Over the past few years, some plans have established retail footprints as part of their sales strategy. In the midst of the pandemic, people will be buying almost entirely by phone or online. Payers will need to think about how and where to market their plans online while also considering investment on TV, radio and mailers—all ways of promoting the plans to people at home.
Igor Belokrinitsky: Plans should not see enrollment as the end goal though. After enrollment, the medical management function needs to step in to ensure that members are receiving the care they need right away. No one has followed a normal care path over the last few months because of the pandemic. Many people have delayed care and need to get back on their care plan to avoid complications or poor health outcomes.
To learn more about the potential drop in employer-sponsored coverage resulting from the pandemic and how it could affect the healthcare industry, see HRI’s recent report “Medical Cost Trend: Behind the Numbers 2021.”
Principal, PwC US