Summer is over, but health policy researchers have hardly taken a vacation. August’s research round up includes studies examining specialty drug coverage across commercial plans, the effects of the Affordable Care Act (ACA) on people of different income levels, individual market premium predictions, employer-sponsored high-deductible health plans, and surprise medical bills in employer-sponsored insurance.

Chambers, J., et al. Specialty Drug Coverage Varies Across Commercial Health Plans in the US. Health Affairs; July 31, 2018. Researchers analyzed over 3,000 coverage decisions from the largest commercial health plans in the United States to assess variations in coverage of specialty drugs, and compare decisions to indications from the Food and Drug Administration (FDA) on conditions the drug is approved to treat.

What It Finds

• There is significant variation in coverage of specialty drugs approved by the FDA: only 16 percent of the 302 drug-indication pairs (a drug paired with a particular condition it is approved to treat) were covered in the same manner across health plans.
• Fifty-two percent of health plan coverage decisions were consistent with the FDA label, while 33 percent of coverage decisions were more restrictive and nine percent of decisions were less restrictive. In five percent of cases, drugs were not covered at all.
• Health plans were more likely to have restrictive coverage of drugs that are (1) not intended for children or an orphan disease (conditions effecting a relatively low number of people), (2) self-administered drugs versus physician-administered, (3) drugs with available alternatives, (4) newer drugs, and (5) for drugs associated with higher budget impacts.
• Across health plans, there was little to no association between the restrictiveness of coverage and the health plan’s volume of cited clinical or real-world evidence.

Why It Matters

Little is known about how commercial health plans cover specialty drugs, and even less is known about how they come to their respective coverage decisions. Experts do know that without insurance coverage, people are three times as likely to postpone or forgo necessary medication due to cost, which can lead to devastating and even life-threatening health outcomes. With such wide variation in if and how insurance plans decide to cover specialty drugs that treat the most severe health conditions, consumers run the risk of unknowingly switching into a plan that won’t cover the medication they are on, or hitting multiple hurdles while trying to access treatment. Policymakers should keep these risks in mind when considering new policies to ensure evidence-based and transparent drug pricing.

McKenna, Ryan M., et al. The Affordable Care Act Attenuates Financial Strain According to Poverty Level. Inquiry: Journal of Health Care Organization, Provision, and Financing; July 25, 2018. Using the 2011-2016 National Health Interview Survey, researchers observe how the ACA has affected health disparities regarding financial strain, access to care, and utilization of services according to federal poverty level (FPL).

What It Finds

• People earning between 0 and 199 percent of the FPL had the largest reductions in experiencing financial strain and the greatest increase in insurance coverage after national implementation of the ACA’s coverage provisions in 2014.
• Across income groups, the ACA led to substantially lower likelihoods of individuals not being able to afford prescription medication and needed medical care.
• Researchers found no association between lower rates of uninsurance and increased wait times, suggesting that the health care system successfully absorbed increased demand for care.

Why It Matters

The ACA made dramatic improvements to the uninsured rate in the United States, especially for those with low and moderate incomes through income-based premium and cost-sharing subsidies. A number of factors, including federal policy changes, have stunted enrollment and rolled back key consumer protections. There is currently a lawsuit, Texas v. United States, challenging the constitutionality of the ACA due to the loss of the individual mandate penalty that could gut most, if not all, of the law. If that were to happen, those who gained the most under the ACA, which includes some of the most vulnerable populations in the country, have the most to lose. Policymakers should keep these populations a priority as they consider ways to stabilize insurance markets and protect consumers.

Fiedler, Matthew. How Would Individual Market Premiums Change in 2019 in a Stable Policy Environment? Brookings Institute; August 1, 2018. As several policy changes in the individual market go into effect for 2019, including the expansion of alternative coverage that can skirt the ACA’s rules and the elimination of the individual mandate penalty, many insurers have requested premium increases for the upcoming 2019 plan year. This study estimates what next year’s premiums would look like in a stable policy environment.

What It Finds

• The author estimates that insurers will earn larger profits for 2018, anticipating a 10.5 percent margin of premium revenue, up significantly from 1.2 percent in 2017.
• In a stable policy environment – that is, if federal policies in effect for 2018 remain in effect for 2019 – average premiums on the ACA-compliant individual market would decrease by 4.3 percent in 2019.
• In a stable policy environment, insurers would likely seek a significantly smaller profit margin for 2019. Pre-ACA profit margins averaged at -1.5 percent.

Why It Matters

A priority of the ACA is to make health coverage more affordable, as the cost of health insurance is often the largest barrier for consumers’ ability to obtain care. In the first years of the ACA’s reforms, insurers struggled to make a profit, but as the market began to stabilize, costs became more predictable. Recently, several policy changes, including the end of a key ACA subsidy program, threats to repeal the individual mandate penalty, and uncertainty surrounding the future of the law curbed insurer predictability and increased premiums drastically. Insurers were able to recover much of the potential loss through higher premiums 2018, but not without consequences for consumers. Although insurers have generally proposed more modest rate increases for 2019, policymakers, the media and the public should understand that consumers would likely have experienced broad rate decreases, if federal policy had been more supportive and stable.

Miller, G. Edward., et al. High-Deductible Health Plan Enrollment Increased from 2006 to 2016, Employer-Funded Accounts Grew in Largest Firms. Health Affairs; August 6, 2018. This study examines the rising frequency of employers offering high-deductible health plans (HDHPs)  and evaluates plan characteristics, including whether they come with an employer-funded health savings account (HSA) or health reimbursement arrangement (HRA) and average deductibles.

What It Finds

• Private-sector enrollment in HDHPs increased from 11.4 percent of enrollees in 2006 to 46.5 percent of enrollees in 2016.
• In 2016, health plan enrollees from the firms with more than 1,000 employees were the least likely to enroll in HDHPs (42.2 percent), while health plan enrollees from firms with 25-99 employees were the most likely to enroll in HDHPs (56.4 percent).
• Firms with fewer than 1,000 employees showed little to no change in offers of non-HDHPs, and large firms increasingly offered only HDHP plans with a subsequent decrease in non-HDHP options for employees.
• In 2016, only 22 percent of HDHP enrollees in firms with fewer than 25 employees had an employer-funded HSA or HRA, compared to 64.8 percent of HDHP enrollees in firms with more than 1,000 employees.
• On average, deductibles for HDHP enrollees were $2,480 for an individual and $4,721 for a family; the IRS thresholds to qualify for an HSA are $1,300 and $2,600, respectively.

Why It Matters

One surefire way for employers to save money and still offer health benefits at an affordable premium to employees is to offer HDHPs. Many employers offer funded HSA accounts that allow the employer and employee to make tax-free contributions that the employee can use for certain medical expenses, including payment for pre-deductible services. However, HDHPs expose many consumers to higher out-of-pocket costs. Studies like this show that there is a significant portion of employees that are left with no choice aside from HDHPs, and do not have access to an employer-funded account to help defray the higher cost-sharing. This all but forces many employees to delay or forgo needed care, or face bills of thousands of dollars. Yet many Americans report they cannot afford an emergency bill of even $400. The risks HDHPs pose to employees and their families should be taken into consideration when firms of all sizes are determining employee benefit options.

Claxton, G, et. al. An Analysis of Out-of-Network Claims in Large-Employer Health Plans. Peterson-Kaiser Health System Tracker; August 13, 2018. For those enrolled in employer-sponsored health insurance (ESI), cost-sharing has been increasing due to the rise of HDHPs and narrowing provider networks that lead to surprise bills due to out-of-network care. Researchers analyze the extent to which large firm employees enrolled in ESI are seeing higher out-of-pocket costs due to out-of-network claims, and how much control they have over their decisions about where to obtain health care services.

What It Finds

• Almost 18 percent of large firm enrollees’ inpatient admissions included a claim from an out-of-network provider.
• Even when using in-network facilities for care, more than 15 percent of patients still saw a claim from out-of-network providers.
• ESI enrollees were more likely to have a claim from an out-of-network provider when getting care at an emergency room, regardless of whether it was an in-network or out-of-network facility.
• When looking at specific services, enrollees needing child birth and newborn care were less likely to have a claim for an out-of-network provider, while those seeking mental health care, such as psychological or substance use services, were most likely to incur an out-of-network claim.

Why It Matters

Surprise medical bills are catching a lot of media attention lately, and consumers, providers, and advocates are pushing back against rising out-of-pocket costs.  ESI is considered more stable and affordable than other types of insurance, but employees with this type of coverage are not immune to surprise medical bills. Most occurrences of out-of-network claims happen when consumers are at their most vulnerable, especially during emergency situations. Even when consumers are diligent about obtaining care at in-network facilities, they can still be slammed with an expensive medical bill from an out-of-network provider. Some states have policies in place regarding balance billing, or bills from out-of-network providers for costs that insurers don’t cover; however, states are preempted from regulating employer-sponsored plans that are self-insured. Studies that tease out areas where consumers are most at risk are critical to state and federal efforts to alleviate the crippling debt that can result from high and unexpected medical bills.