More than 2.5 million Americans have been newly enrolled in commercial health plans sold on the market exchanges. And yet, most media coverage has somehow failed to capture the full magnitude of this significant development or appropriately link it to the American Rescue Plan (ARP) Act. In this first of a two-part series, we’ll discuss the ARP, what’s been overlooked about the bill, and how those important elements directly impact healthcare payers.
The bill, with its nearly $2 trillion price tag, has largely been publicized for its focus on two of its central tenets—the first being resource allocation to stand up a coordinated fight against the ongoing public health crisis, and the second being relief to individuals adversely impacted by the economic crisis.
Health systems and consumers are the primary targets of the ARP, receiving a large portion of the dispersed federal funds in support of the two central tenets mentioned above. Another element of the bill was the wide-reaching activation across all tiers of government (local, state, and federal) to execute on a multipronged approach to COVID-19 containment, vaccine distribution, and therapeutic developments.
While these objectives of the legislation have rightfully garnered a great deal of attention, what’s missing is a similar recognition of the transformative impact the ARP will have on health coverage and health plan organizations by reshaping beneficiary access to commercial and state Medicaid plans.
As a result of this reshaping, health plans are facing a new beneficiary population comprised largely of younger, technologically savvy members as well as those previously priced out of commercial plans with undermanaged chronic conditions.
This represents an enormous opportunity for health plans to not only deepen current investment in consumer research and identification, digital technology enablement, and procurement capabilities, but also to think differently about how these domains will support their long-term growth ambitions.
With opportunities come risks. Here are ways health plans can take full advantage of the opportunity while mitigating those risks.
The ARP is reshaping the health insurance landscape at a time when stabilizing forces are desperately needed. For decades, the healthcare industry withstood the gradual erosion of commercial coverage and the ascent of public coverage. The COVID-19 public health crisis has accelerated this underlying dynamic and forced change to the status quo with major reforms to the Medicaid and commercial insurance landscapes embedded in the ARP.
For Medicaid, the ARP establishes generous financial incentives for the 12 remaining states that have not expanded Medicaid eligibility to expand in the coming years. This incentivization is particularly timely as multiple states have Medicaid expansion ballot initiatives in progress. Turning to some of the more notable provisions that target the commercial segment, the ARP dramatically increases subsidies for Americans seeking coverage on the ACA market exchange and places a cap on premiums based on income.
It is imperative for health plans to understand that the ARP’s goal of expanding coverage will inherently create a new demographic of beneficiaries that is markedly different from those historically on Medicaid and commercial plans.
Since the first half of 2020, states have experienced an influx in Medicaid lives as millions of Americans have grappled with unemployment. Since it’s very possible that many of these individuals could have previously been uninsured or underinsured, their presence now as newly covered lives is likely to put pressure on commercial plans (beginning with the bronze plans and possibly extending to silver plans as well). Getting to know and engaging with these new members is extremely important as health plans adapt their service offerings to better align clinical and social support needs.
Proactive organizations can take some immediate steps to invest in near- and long-term success. Understanding that not every action is appropriate for every market and beneficiary segment, there are still certain evergreen measures that can be taken by MCOs and commercial plans to effectively accommodate this influx of new membership and take advantage of the opportunities it presents.
For instance, MCOs can direct resources toward shoring up a healthier Medicaid population by strengthening chronic disease management. Efforts directed to advance analytic capabilities to predict, monitor and assist beneficiaries with social determinants of health should be at the top of the list of priorities. Harnessing this data allows health plans to mitigate adverse outcomes such as ER visits, inpatient stays, appointment no-shows, and missed prescription refills.
For plans offered on the exchange, efforts to right-size primary care utilization and care coordination can begin immediately. Commercial health plans can incentivize and reshape pathways to encourage patient navigators, care coordinators, and non-physician clinicians to support primary care utilization and follow-up care management. This will enable the organization to right-size care to match patient acuity to site of care so that costs can be controlled.
In the near term, efforts like these will help stabilize the health insurance market and stem the erosion of commercial coverage. Ultimately, though, long-term success for commercial and state-managed care plans is going to depend on investments aimed at managing and containing the costs of these newly acquired members, many of whom are likely to have higher expectations of digital products and experiences than the traditional Medicaid population.
Considerations like the following will take center stage as the Medicaid coverage pool expands to include these new beneficiaries:
In the end, the organizations that enjoy the most success (and avoid the pitfalls of maintaining the status quo) will not only offer better experiences to their members, they’ll operate in different ways from traditional businesses. They will be consumer-aware, able to preempt and respond to market demands, capable of quickly shedding limiting ideas, methods, and processes, and ready to consistently make small bets on big ideas, acting more like venture capitalists and less like bureaucracies.
In part two of this series, we’ll look even deeper into how the changes put in place by the ARP pose unique challenges for health plans. Our recommendation is to divide attention across three primary domains: 1) consumerism, 2) technology enablement, and 3) procurement capabilities. Focusing on these domains will allow health plans to position themselves for both near term wins and sustainable growth in the future. Read part two to learn more.