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Mercer

One possible fix for the public exchanges? Repeal the ACA provision expanding dependent coverage.  Allowing young adults up to age 26 to be covered under their parents’ plans has been one of the law’s most popular provisions, especially since it went into effect at a time when many young people were struggling to find full-time work in the wake of the recession. But it also took these same people out of the potential pool of enrollees when the exchanges opened in 2013. While many factors have contributed to premium spikes in exchange coverage in some states, one quoted across the board has been that fewer young people than expected signed up for coverage. Had young adults not been able get coverage through their parents’ plans, it’s possible a portion of them would have signed up for exchange coverage. And having these younger, and generally healthier (i.e., lower risk) individuals in the pool might have helped to keep the premiums down. 

 

Leading up to Thursday’s vote in the House on the AHCA, the GOP’s repeal and replace bill, lowering the dependent eligibility age to 23 was on the list of possible amendments but then withdrawn. As acknowledged in thisPolitico article, repealing the provision would be political suicide for anyone that proposes it; people don’t react well to losing a benefit they’ve gotten used to having. Yet the upsides for removing this provision are, in principle, aligned with GOP repeal and replace goals, namely, removing additional costs imposed through the ACA and helping to stabilize the individual market.

 

One approach might be to phase out this provision, or grandfather individuals born before a certain date, so that families have time to prepare and plan for alternative coverage for their older children. Of course, this only works if there’s an affordable health care option for these young adults on the exchanges. If the current subsidies are reduced to the levels proposed under the AHCA (an individual under 30 would only receive $2,000 towards health coverage per year regardless of income or location beginning in 2020), then leaving these individuals to the mercy of the individual market may not be wise; it could create a “black hole” of coverage from age 26 perhaps until the age when people are starting their families and see an absolute need for care.  So while employers as well as the individual market could benefit from a rollback of this provision, adequate subsidies on the exchanges would need to be in place to help these individuals purchase and maintain continuous coverage.

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We got a question in response to our post Checklist: Want to Increase Your CDHP Enrollment? Try This.

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Every year when we tabulate our survey results, we eagerly dive into the results for jumbo employers (those with 20,000 or more employees) to identify and measure movement in the latest health benefit management trends. The jumbo employers have long been the pioneers driving health care innovation. They cover more people, so more at stake. They also tend to have more resources - people and financial - to devote to the cause. Their focus is not just cost, but also includes the other two components of the triple aim - quality and engagement. How do we know it works? Historically they have demonstrated lower rates of increase in health care cost than the overall averages and at the same time maintained richer benefits (lower deductibles, etc). But the real proof is in an analysis we do of 25 best practices across large employers in three areas – plan design, workforce health, and care delivery – where those in the top quartile for most best practices outperform those in the bottom quartile with about one percent lower trend.

 

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A few weeks ago, we provided a list of five considerations for open enrollment regarding Affordable Care Act (ACA) compliance, focused on avoiding shared responsibility payments, imbedding deductibles in out-of-pocket limits, and complying with the new ACA reporting requirements. Today’s list addresses some requirements that expand beyond the ACA — including a few items you’ve probably checked off your list but might need to look at again because of recent guidance.

 

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As you finalize medical plan designs for 2016, make sure you consider these five compliance elements of the Affordable Care Act (ACA).

 

1. Embed individual out-of-pocket (OOP) limits. The ACA’s annual in-network OOP statutory limit for self-only coverage ($6,850) applies to all individuals, whether enrolled in self-only coverage or another tier (e.g., family). Be sure to confirm your medical carrier’s capabilities to adjudicate this benefit design feature. The penalty for non-compliance is $100 per day per individual.

 

 

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Last year saw the biggest one-year enrollment increase ever in account-based consumer-directed health plans – from 18% to 23% of all covered employees – as employers added plans at a rapid pace. All the growth is in plans with Health Savings Accounts – HSAs – and yet the other type of account, the Health Reimbursement Account, hasn’t gone away. About one in ten employers still offer an HRA, as they have for the past three years. In this informative article "HSAs Surge, Leaving HRAs in a Niche" in Managed Care Magazine (p.27), Mercer’s own Jay Savan explains the pros and cons of HRAs and why some employers prefer the doughnut to the bagel. 

 

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Final rules released last week on the mandate for nongrandfathered health plans to cover preventive services without cost sharing largely consolidate and clarify existing guidance. For closely held for-profit entities with religious objections to covering all or certain contraceptive services, the regulations give new details on how to obtain the same accommodation available to nonprofit religious organizations and their affiliates. The regulations will apply for plan years starting on or after 60 days from the date of publication in the Federal Register (Jan. 1, 2016, for calendar-year plans).

 

President Obama has officially nominated Andrew Slavitt to become CMS Administrator. Slavitt has been serving as Acting Administrator since Marilyn Tavenner stepped down earlier this year. He previously was an executive with Optum, a division of United Health, and was involved in ACA implementation in that capacity. Slavitt needs Senate confirmation and will face tough questioning from Republicans who want to grill the administration over the ACA in addition to drilling down on Medicare and Medicaid issues.

 

This week in Congress, the Medicare prescription drug program will be the focus of a House hearing, while the Senate Finance Committee examines the security of the federal insurance exchange website.

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The recent US Supreme Court decision legalizing same-sex marriage seems likely to affect employer offerings of domestic partner (DP) coverage. Many employers that now offer DP benefits chose to do so because their employees did not have a legal right to marry their same-sex partners and thus could not qualify for dependent coverage. But more often than not, DP benefits are also extended to unmarried opposite-sex domestic partners, so a change in policy could affect those couples as well.

 

Offerings of DP coverage have been growing steadily. According to Mercer’s National Survey of Employer-Sponsored Health Plans, over the past five years offerings of domestic partner coverage have risen from 39% to 55% among large employers (500 or more employees). Among jumbo employers – those with 20,000 or more employees – 76% offer DP coverage. There is still a wide variation by geographic region, however. Fewer than half of all large employers in the South and Midwest provide DP benefits (46% and 45%, respectively), compared to solid majorities of large employers in the Northeast and West (60% and 78%, respectively).

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In light of last week’s US Supreme Court decision legalizing same-sex marriage, some of the large employers offering domestic partner benefits may decide to reevaluate their benefits offerings. The original intent of domestic partner benefits was to provide coverage to same-sex spouses who did not have a legal right to marry. With that issue removed by the Court, employers may decide to stop offering domestic partner benefits and eliminate the administrative burdens associated with the offering. However, employers should consider carefully their organizational culture, attraction/retention strategies, and the end date for offering domestic partner benefits -- after which couples will essentially be required to marry or lose coverage. Keep in mind that it’s the couples who prefer not to marry -- same-sex or opposite-sex --  who stand to lose the most.

 

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A recent article in The New Yorker entitled “OverKill” by Atul Gawande describes the harmful effects of unnecessary medical care, with a focus on the resulting adverse medical consequences. It framed the issue of medical waste using a different lens than I typically apply, and I find myself thinking about the implications frequently.

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Right now, consumer-directed health plans (CDHPs) are at the top of the list of key cost management strategies. For employers looking to build a health program that’s sustainable over the long term, a plan that’s designed to change employee behavior — to make them better health care consumers — has a lot of appeal. So much appeal that we’ve seen the percentage of covered employees enrolled in CDHPs more than double over the past four years. In 2014, nearly half of all large employers offered a CDHP, and 23% of their employees were enrolled. By 2017, 66% of large employers expect to offer a CDHP.

 

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The US Preventive Services Task Force (USPSTF) issued draft advice on Monday recommending that women ages 50–74 get a mammogram every two years. Citing concerns about the risks associated with false positives, the USPSTF recommends women in their 40s make individual decisions after consulting with their physicians. This draft is mostly a restatement of the USPSTF 2009 recommendation but it remains at odds with the 2002 recommendation regulators used to define a “recommended preventive service” that non-grandfathered health plans must cover with no cost sharing. For purposes of the ACA, the current breast cancer screening recommendation allows mammography for women age 40 years and older, with or without clinical breast examination, every one to two years. It’s unclear if this new recommendation will result in a change to the ACA rule. Keep an eye out for any developments, and be prepared to consider the pros and cons of a plan design change should the ACA rule change.

 

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