Before we head out for a long-anticipated beach vacation, we at CHIR had to check out some great new health policy research. This month, we reviewed studies on health equity and health plan benefit design, 2022 insurer rate filings, and employer market power in hospital price negotiations.

Health Equity from an Actuarial Perspective: Health Plan Benefit Design, American Academy of Actuaries. July 2021

This discussion brief reflects recent work from the American Academy of Actuaries Health Practice Council’s Health Equity Work Group, whose goal is to contribute to efforts to reduce health disparities and improve health equity. This brief considers the impact health plan benefit design has on health disparities and health outcomes.

What it Finds

• In this discussion brief, the Work Group explores whether particular aspects of health plan benefit design contribute to disparities in access and affordability of care. They find that:
  • Plan features such as cost sharing, dollar maximums for specific services, utilization management protocols, and reference pricing,which are intended to create financial incentives for consumers to use lower-cost, higher-quality services, may be reducing costs due to underutilization or deferral of necessary services, particularly for consumers who have limited access to resources needed to effectively choose a plan without assistance. 
    • In order to effectively use these features, consumers need access to adequate, culturally appropriate information to distinguish between high-value and low-value care. Consumers with lower health care literacy, or those experiencing language or cultural barriers, may have difficulties here.
    • Underutilization or deferral of necessary services in under-resourced communities further exacerbates existing health disparities.
  • Broker incentives, such as premium-based compensation, may lead to suboptimal plan choice and overspending on coverage by consumers from disadvantaged groups.
  • With regard to standardized benefits, the inclusion or exclusion of particular benefits in standard plans may not fully address or even consider the needs of communities experiencing health disparities. 
    • Some under-resourced communities may be priced out of the market due to the inclusion of some benefits in standard plans, or may be subsidizing the premiums of more well-resourced communities.
    • Non-traditional benefits, such as food assistance for populations experiencing food insecurity, may be passed over in favor of benefits that do not fully meet the needs of underserved communities.
  • The use of network design features that control or limit access to providers may restrict access to care that is biased against underserved populations.

Why it Matters

This brief provides some valuable perspective for considering how health plan benefit design could perpetuate health disparities. The concerns raised here can help actuaries, policymakers, and other stakeholders better understand whether and how current methods used to create plan benefit designs may be adjusted to achieve more equitable access to health care services. 

Ramirez, G. et al. Insurer Filings Suggest COVID-19 Pandemic Will Not Drive Health Spending in 2022, KFF, July 19, 2021

In this brief, researchers analyze 2022 premium rate filings for ACA Marketplace individual market insurers in 13 states and the District of Columbia to determine the ways insurers anticipate the COVID-19 pandemic to affect health care spending and utilization.

What it Finds

• Researchers reviewed premium rate filings from 75 Marketplace-participating insurers across 50 states and the District of Columbia. In their analysis they found:
  • About half of the 75 insurers (37 insurers) expect health care use to return to pre-pandemic levels, and have not factored additional costs or savings into their 2022 premiums.
    • Thirteen insurers anticipate that the pandemic will raise their costs; most insurers in this group reported that the impact would be less than one percent.
    • Three insurers anticipate that the pandemic will lower their costs.
  • Among the plans that anticipate cost increases due to the pandemic, reasons included costs related to ongoing COVID-19 testing, treatment, first-time vaccinations, and vaccination boosters.
  • Insurers have also considered the potential impact of telehealth use and other policy changes in their filings.
    • Some insurers expect continued use of telehealth services, but none anticipate them to impact costs in 2022.
    • Some insurers projected a decrease in average morbidity of individual market enrollees in 2022 due to increased federal premium subsidies under the American Rescue Plan Act (ARPA). These insurers anticipate that the ARPA will have a downward effect on their premiums by less than five percent.
    • Few insurers mentioned the No Surprises Act in their rate filings, although Blue Cross Blue Shield of Vermont noted that costs for out-of-network service may decrease while the cost of covered care for services not covered under the Act may increase.

Why it Matters

This report provides helpful insight into how insurers are responding to drivers of health care costs and utilization, and to recent policy changes. Although insurers seem to be confident that the COVID-19 pandemic will have a negligible impact on future costs, uncertainties remain on how new COVID-19 variants, vaccination uptake, and how potential demand from delayed care from 2020 might affect costs in the future. For more on this topic, check out our post on 2022 early rate filings here.

Eisenberg, M. et al. Large Self-insured Employers Lack Power to Effectively Negotiate Hospital Prices, American Journal of Managed Care, July 13, 2021

This study assesses the ability of self-insured employers to negotiate hospital prices and examines the relationship between hospital prices and employer market power in the United States.

What it Finds

• Using US Census Bureau County Business Patterns data, researchers examined inpatient hospital prices and employer market power across the United States between 2010 and 2016 in the nation’s 10 most concentrated labor markets. In their analysis they found:
  • In most areas of the United States, self-insured employers lacked sufficient market power to negotiate hospital prices. In 2016, the mean value of employer market power was 62, while the mean value for hospital market power was 5,410.
  • There is no evidence that increased employer market power– brought about by hospital wage controls, for example– is associated with lower hospital prices in employer-sponsored insurance markets.
  • There is no evidence that, operating alone, employers are able to effectively use bargaining power to negotiate lower hospital prices.
• Given these findings, researchers recommend that self-insured employers consider forming purchase alliances with state and local government employee groups in order to enhance their market power and lower negotiated prices for hospital services.

Why it Matters

In recent years, some large employers have opted to contract directly with hospitals in an effort to lower health care costs, with varied success. However, this study’s findings suggest that self-insured employers may have better luck forming purchase alliances with other groups. When they do so, employers and their affiliate coalitions may have a greater bargaining leverage over consolidated hospital systems.