Print BCTV: Ctrl-Alt-Debacle -- Obamacare early enrollment, coverage gaps, increased cost sharing


Transcript of BioCentury This Week TV Episode 165



Dr. Jack F. Hoadley, Research Professor, Health Policy Institute, Georgetown University
Matt Eyles, Executive Vice President, Avalere Health LLC



Health and Human Services

Kathleen Sebelius, HHS Secretary

Medicare Payment Advisory Commission

Coventry Healthcare/Aetna

Jay Carney, White House Press Secretary





Steve Usdin, Senior Editor




STEVE USDIN: Rebooting, will the complaints stop when the website starts working? And what can be done for millions of Americans as policies have been cancelled? We'll get beyond the headlines with two government policy veterans. I'm Steve Usdin. Welcome to BioCentury This Week.


NARRATOR: Your trusted source for biotechnology information and analysis, BioCentury This Week.


STEVE USDIN: HHS Secretary Kathleen Sebelius admitted to Congress that the rollout has been a debacle.


KATHLEEN SEBELIUS: Hold me accountable for the debacle. I'm responsible.


STEVE USDIN: And so many Americans have had their insurance policies canceled that President Obama felt obliged to apologize. Even after the President's apology, the White House website continues to promise if you like your plan you can keep it, and you don't have to change a thing due to the healthcare law. Secretary Sebelius says the exchanges will be fixed soon, and Americans will be able to purchase insurance in time to have coverage on January 1.


But if the government can pull that off, what other surprises could be in store? Will Americans with chronic diseases or the Young Invincibles be happy with their coverage? Will drug companies be allowed to help with co-pays for expensive drugs?


We'll ask Doctor Jack Hoadley of Georgetown University. He worked on Medicare Part D as an HHS staffer, and is currently a member of the Medicare Payment Advisory Commission, a congressional agency. And Matt Eyles of Avalere Health, the widely quoted healthcare consultancy. Prior to joining Avalere, Eyles managed public policy for Coventry Healthcare, which is now part of Aetna.


Former President Bill Clinton called on President Obama this week to honor his commitment to allow Americans who are happy with their insurance policies to keep them. Here's what President Obama's spokesperson Jay Carney said about it.


JAY CARNEY: The president has tasked his team with looking at a range of options, as he said, to make sure that nobody is put in a position where their plans have been canceled and they can't afford a better plan, even though they'd like to have a better plan.


STEVE USDIN: Jack, Matt, that's easy to say. Is it easy to do? Can the White House pull that off?


MATT EYLES: It's very complicated at this late date. Given the notification that's already been sent out by the plans, most states have a requirement to notify consumers 60 days or more before a plan gets terminated. And there's no coincidence that the timing of the notices went out in early November. So that train has probably left the station. There's not a whole lot that they can do at this point to put that back and start over again. It's really complicated right now.


STEVE USDIN: So Jack, one of the things, there's legislation that's been introduced in Congress. Democrats have introduced legislation to require insurance companies to honor policies. Republicans have introduced legislation, or have said they're going to introduce legislation, that would give them the option to do it. Would either of those things work? And what would be the consequences?


JACK HOADLEY: It's not clear that they would work for a lot of the reasons Matt just talked about. It is complicated to do this, to reverse a policy that's put in place. Insurance companies have already taken steps to move on from that situation.


What they may find ways to do is to look at some way to ease the process for people to get new coverage, make sure, a, they understand their options to buy another policy from the same company or, b, go to the exchanges. There's even, I know, been some discussion of possibly having some kind of emergency subsidy availability for some of these people that may be at lower income levels. So there might be some things to do to make it easier for people to get new policies.


STEVE USDIN: So do you think that we're seriously at risk that there will be large numbers of Americans who are going to have their policies canceled and aren't going to be able to get new insurance in time? They're going to be uncovered starting in January?


MATT EYLES: I think it's important to put the number in context. So the individual insurance market really is overall a relatively small segment of the people that get covered through the United States. The most people still have coverage through their employers. Those policies aren't being canceled. So it's really a relatively small segment. It's obviously very disturbing any time someone gets a cancellation notice that they weren't expecting. And there's not a really good way for people to go and shop at this point in time. So that is a challenge that we need to address.


JACK HOADLEY: But the reality is that in any other year prior to this year there were people losing their policies at the end of the policy year. So the idea of people getting notices of canceled policies is not unique to this cycle. And at least this time there may be more options for them to go to an exchange, something that didn't have an option to do before. So that's the bright side. But Matt's absolutely right, that the numbers out of the entire set of people that have insurance in this country will really be fairly small.


STEVE USDIN: But that's not going to much comfort to --


JACK HOADLEY: -- to any individual person.


STEVE USDIN: -- to those individuals. So what have we learned -- switching to another topic, Matt -- looking at the early enrollment numbers? Leaving aside the federal numbers because there are all the problems with the website. But the states and have had their websites working moderately well, anyway. What have we learned about? What you learned about the early enrollment numbers?


MATT EYLES: Right. So Avalere's been able to do an analysis that looks at those state-based exchanges that have been able to put out enrollment numbers. And as of November 8 we were able to discern that about 49,000 people had been enrolled through state-based exchanges. Now, that's still a very small percentage, only about 3% of what we expect to be the total. But at least, people are able to go through the process and get enrolled. And we are starting to see some numbers come out.


STEVE USDIN: So Jack, you were involved with Part D, and you've been following the program very closely since then. Are these early numbers for the first few weeks indicative of what's likely to happen for the whole enrollment period?


JACK HOADLEY: They're not really indicative of what's going to happen in the future. Even Medicare Part D, which was a simpler program relative to this, and even though it had a lot of rocky problems at the beginning, there were not as many problems as there are today. Only 10% of the people who eventually enrolled voluntarily in that program had rolled after one month in that situation. And only a third had enrolled by the end of the year. Many of them waited for that extended open enrollment period in the new year to get signed up.


And the Massachusetts exchange experience was very similar. There was only 120 or some number of people that enrolled in the first month in that program, which ended up with good enrollment. It's actually smart for people to take their time to enroll, even if there weren't some of these problems.


STEVE USDIN: So the Obama administration's going out now and sending hundreds of thousands of letters out to people who tried to enroll earlier and saying come back in. The water's good now. Try to do it. Even if they get the website finished, is it going to be possible to process those millions of applications between now and the end of the year so people don't have a coverage gap starting in January?


MATT EYLES: Again, there's precedent for this. So this happens in Medicare today when lots of beneficiaries make decisions and go and get enrolled. Many, many beneficiaries, millions of them, will make changes throughout the course of the year, especially at the open enrollment period. And insurers are able to process all those changes. So they should be able to do that.


STEVE USDIN: The Obama Administration says that once Americans have enrolled and started receiving coverage they'll be happy. But data from Avalere shows there may be sticker shock. We'll talk about that in a moment.


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STEVE USDIN: We're talking with Jack Hoadley and Matt Eyles about life on the ACA health insurance exchanges. Matt, we've seen a slide that shows underinsured at different poverty levels, at 100% of the poverty level or 200% of the poverty level. Can you explain to us what that slide's showing us?


MATT EYLES: Sure. So we know that the deductibles that people are going to have to pay are going to be quite high, no matter what their income is. And even for those people that get some cost-sharing reductions to reduce their out-of-pocket costs, the plans that they have might be unaffordable, especially if they have a chronic condition.


STEVE USDIN: So basically, people, especially people who've never had insurance before, I think their expectation's going to be, well, this premium may be a little bit hard to afford, but it's going to be covered. That's going to be into my medical costs. And what you're saying is that's not at all the case, right?


DR. JACK HOADLEY: And part of what that tells people is something that they need to take into account when they're shopping for their policies. So there are these different metal tiers. There are bronze plans and silver plans and gold plans and platinum plans. And part of the difference in those plans is how much out-of-pocket cost they're going to face during the year.


There's a tendency too much to look at the premium and say, oh, this plan's cheaper, so that's better for me. But a lot of people who might look at a cheap bronze plan that might not even have a premium at all for somebody who has a subsidy or very small premium may actually be better to pay a little more every month in premium to reduce their out-of-pocket cost so they're a little less in this kind of situation.


STEVE USDIN: But Matt, you're still saying that if you've got somebody who is at the poverty level and they're eligible for the subsidies and for some of the other help that the government's giving them, and they're looking at a silver plan, for example, they still may be looking at out-of-pocket expenses that are really unsustainable and they're not going to be able to afford.


MATT EYLES: Well, for people who are on the lower end of the economic spectrum, it could be a particular challenge for them. We know that the plans offer cost-sharing reductions to reduce deductibles and out-of-pocket costs. But again, if you're on multiple medicines, need to see multiple physicians, you still might have some high out-of-pocket costs.


STEVE USDIN: So one of the other things I'm wondering about as a general principle is the structure of the policies on the exchanges. Is that driving the system to offering less generous coverage overall, because people outside of the exchanges are seeing from their employers that they're having higher costs, higher co-pays, higher deductibles? Or is that just a trend that's happening, and we're just seeing it in the exchanges?


MATT EYLES: Yeah, I think it's a trend that much broader than the Affordable Care Act. I mean, we've been seeing this for the past decade, where there's been increasing cost-sharing requirements for employees who have employer-sponsored insurance. This might be accelerating the trend a little bit, but it's part of a bigger trend that we're seeing in our healthcare system.




DR. JACK HOADLEY: I think that's right. It really is a trend that's been going on independent of what's going on in the exchanges, whether we're talking about the amount of costs you're subject to out of pocket, whether we're talking about the narrowness of a provider network, how likely you are to find your own doctor in a particular plan. Those are both changes that we're seeing in a lot of private insurance, as well as the insurance that's being sold on these exchanges.


STEVE USDIN: So I'm wondering if there's something else, if there's another kind of feedback that we might look at or that you might predict. Which is, do you think that the structure of the exchanges and also of the other requirements from the Affordable Care Act for minimum levels of coverage and so on, are they going to have a feedback into the whole system that are going to increase costs of insurance as one of the ways of actually lowering overall cost of healthcare, by putting more of the costs onto patients?


DR. JACK HOADLEY: I mean, this is a complicated question to try to think about. I mean, there are those who think that by putting more of the cost on the patients that patients will be smarter consumers and will seek out treatments that are more efficient and more effective instead of some more expensive treatments that might not work as well. There are, of course, other things that have been done in the Affordable Care Act to try to address the cost of care and really create incentives for physicians and hospitals to work together more in things called Accountable Care Organizations and other kinds of activities to try to actually deliver care more efficiently, which would bring everybody's cost down, to the system as well as to the individual consumer.


MATT EYLES: Yeah. I think what employers want to see is some more certainty around their costs. So we could see a move more towards the level of coverage that we see in exchanges as employers consider whether or not to move towards maybe a more defined contribution model where they know with certainty how much their costs are going to be each year, rather than maybe a self-insured model where they're not really sure how much they're going to be spending on healthcare from one year to another.


STEVE USDIN: So then you'd be moving basically to a system where employers would say, this is how much money we're going to give each employee. You can go and shop for it. If you can get something great, that's great. If you can't get anything great, it's your problem.


MATT EYLES: Well, I don't know that will be that draconian, because I think the employers really are interested in their employee well-being and making sure that they have good options. But for those that have higher cost conditions, they might have to be spending quite a bit more than someone who's healthier that could buy down and maybe buy a skinnier plan and save some money in that way.


STEVE USDIN: Jack, one thing we haven't talked about is Medicaid. Medicaid expansion was actually supposed to be a huge part of the increase in coverage under the Affordable Care Act. How is that going?


DR. JACK HOADLEY: Well, I think it's still a huge part in the states that have chosen to expand Medicaid. And obviously, there are a lot of states that made a decision not to expand. But the states that did so are actually getting numbers that are larger than the numbers we were talking about earlier for new enrollment through the exchanges. So I think that's going to, in the end, be one of the success stories of this.


STEVE USDIN: And Matt, some of the states, at least, are relying on the same websites that aren't working very well to get new Medicaid patients. Is that a problem?


MATT EYLES: Well, fortunately, Medicaid has a broader infrastructure than exchanges. And so the website is a challenge, but we know that states are able to leverage their existing infrastructure to reach out to people that could qualify. We did an analysis that looked at enrollment in state-based Medicaid expansion, and we estimate that 444,000 people have already been covered through the Medicare expansion. So that seems to be working a bit better.


STEVE USDIN: What is the coverage that people have on Medicaid? How does that compare to the coverage that they might get on a bronze or silver plan in the exchanges?


DR. JACK HOADLEY: There really is better coverage in the sense of a lot less cost sharing. In most cases in Medicaid, there's relatively minimal cost sharing that people are subject to, and really with the same breadth or even more breadth of benefits. So it's really very rich coverage. Medicaid is a good program for the people that qualify for it.


STEVE USDIN: One of the things that's always surprised me is that there are large numbers of people that qualified for Medicaid before the expansion who didn't sign up for it. Do you think that this might change and people, because of the individual mandate or because states are taking a more aggressive effort to get people enrolled, that we might see the ranks of Medicaid increase in addition to the expanded capability?


MATT EYLES: Yeah, we could see that. I mean, we've estimated that 5.8 million people are going to enroll through Medicaid in the first year, and that could expand the number of people that do get covered through Medicaid.


STEVE USDIN: I have another question not about Medicaid, but more broadly. Which is, do you have a concern that all the problems and attention that's been focused on the website problems are going to mean that Americans are just not going to have confidence in the competence of government to do anything, and especially to do anything big about healthcare in the future?


DR. JACK HOADLEY: That's certainly a risk, and I think it's a risk that isn't well-founded. I mean, I think government actually does a lot of these things quite well. But if the perception builds up through all this discussion of the failures of the website that government can't do things well, it will reinforce the instinct in a lot of people to think that. And I think we really need to try to find ways to overcome that perception.


STEVE USDIN: Well, next, the ACA was supposed to eliminate pill splitting and dose skipping. Will it?


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NARRATOR: Now back to BioCentury This Week.


STEVE USDIN: We're talking about the future of Obamacare with Matt Eyles and Jack Hoadley. Jack, you worked on Medicare Part D. That's a prescription drug benefit for senior citizens. How would you compare what people in the exchanges are going to get, what their access is going to be like, and their cost, to what seniors have in Part D?


JACK HOADLEY: You know, it's really too early to tell in a very systematic way how those are going to compare, because until we really get a better sense of the overall formularies, the list of drugs that are covered, the exact cost sharing levels for different kinds of situations, only then will we really be able to make that kind of analysis.


One way to give a little sense of it is in Part D was designed so that on average cost sharing would be about 25% of the cost. So that's 75% covered by the plan. When you think about the tiers years of coverage, platinum plan is 90%, gold plan is 80%, silver is 70%. So it's kind of between silver and gold and sort of the overall average. So that's the level at which it was set. That doesn't speak to the issue of what drugs are covered and what tiers particular drugs are put on that affects an individual person.


STEVE USDIN: And Matt, there's a lot of complexity there, right? Because it's not just what drugs are covered, but it's also, as Jack said, it's also the tiers and the co-pays. Can you talk about that a little bit?


MATT EYLES: That's right. So we're looking specifically at the tiers, to the extent that that information is available. And Jack's absolutely right. It's a little challenging to get that right now.


But it does look as if cost sharing is coming in a bit high, in terms of what people are going to have to spend, especially when they get to the pharmacy counter. If they're paying a coinsurance amount, they don't know what they're going to pay until they get to the pharmacy counter when they know what the ultimate price of the drug is, versus a co-payment where they know when they go in.


STEVE USDIN: And can you explain that a little bit, the difference between a co-payment and coinsurance?


MATT EYLES: Sure. So a fixed co-payment is knowing with certainly when you go in a generic drug might be $10, a branded might be $30, and a preferred brand might be $50. When we're talking about coinsurance we're talking about a percentage of a drug's price. And it's very hard for a consumer to know what that exact price is until they get in and are speaking with the pharmacist and they tell them what the price is, to know what that 30% represents.


STEVE USDIN: And so you might have patients who are taking very expensive drugs or multiple moderately expensive drugs, and they're going to get to the pharmacy counter and they're going to find out that they've got really big bills.


MATT EYLES: Right. And we are concerned about whether or not patients will actually potentially walk away from the pharmacy without a prescription in hand, and what happens with a so-called abandonment rate. And are patients going to go back and get an alternative? Or are they not going to get treated at all?


STEVE USDIN: And I remember some earlier work that Avalere did, which was shocking to me, which was that patients who had oral cancer drugs, life-saving drugs, that a small copay actually made people not take the drug.


So I want to switch to another thing which is related to this, which is there's been a lot of confusion. It seems like it's a wonky issue, but it's actually something that's going to hit people directly in their pocketbooks about copay coupons. So the drug companies can give patients coupons that can help them with their copay or with their coinsurance.


And it wasn't clear whether they're going to be able to do that in the Affordable Care Act. The administration sent out conflicting signals. Where do we stand on that now?


JACK HOADLEY: I think we don't know completely where we stand. And there's probably going to be more advice coming out from the Administration to clarify it before the first of the year.


And what's hard about it is there are coupons that are used for different kinds of purposes. So sometimes drug companies are providing a coupon for an expensive drug, which is a way of saying for at least some patients, sometimes based on their incomes, we're going to make this expensive drug more affordable to you. In other cases, they're trying to perhaps using a coupon to create an incentive for somebody to take a brand name drug when there are actually some less expensive generic alternatives available for treating that same condition.


In one case, it's really just more bringing down the cost of an expensive drug. In the other case, it's kind of trying to tilt what choices people are making. And some might want a policy that would favor one but not the other.


STEVE USDIN: And is it possible to have a nuanced policy that would use copay coupons to help people afford really expensive drugs where there are no alternatives but wouldn't help them shift away from a generic?


MATT EYLES: I think it would be very difficult to craft that kind of policy. Clearly what has come out so far from HHS and then from CMS is conflicting and is probably creating quite a bit of confusion. And I think Jack's absolutely right, that we're going to need another arbiter to step in and give some very clear guidance so that we know what's acceptable and what's not.


STEVE USDIN: We're going to come back with some predictions from Jack Hoadley and Matt Eyles, and also hear about part of the solutions.


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STEVE USDIN: We're back with Matt Eyles and Jack Hoadley. Matt, Jack, what's next?


MATT EYLES: I think it's all about the website right now, and can the federal government fix the problems by December 1st in a reasonable time frame so that people don't lose confidence in the program? There's still a lot of time to enroll, but there is that risk that if it's not fixed soon enough that people begin to believe that the program won't work at all, rather than just the website being broken.


JACK HOADLEY: That's right. I think a lot of it'll be about the buzz that's then created. If there's a sense that things really are improving, it will encourage people to come back and look at the website, to consider their choices. If there's a negative feeling out there, if the litany of press coverage continues to be negative, then people will be discouraged from going after the kind of coverage that they really are entitled to.


STEVE USDIN: And what's your sense, your predictions? Do you think that things are going to get back on track by December 1st?


MATT EYLES: I don't know that by December 1st it will all be fixed. And I think we've been hearing messages that it's not going to be perfect by then. But it needs to be functional. And I think that they're working as hard as they can on it. But there's so many question marks right now. You can't really put a stake in the ground and say it's going to be fixed.


JACK HOADLEY: I like to be an optimist, and I think that's right. It's not a yes/no question. Things are probably already better. Clearly, people are better able to get on the website today than they were on October 1st. What we hope is that it improves enough that there's a generally good feeling.


As well as finding other means of signing up. People can use the telephone lines and some of the other means to get signed up. The important thing is people are entitled to getting this coverage. And we'd like to see people taking advantage of it.


STEVE USDIN: So all the attention now has been on these problems with the website. One of the things I'm wondering -- kind of harkening back to some of the conversation we've had earlier -- when people actually get through all that and they can start comparing the plans, one, is it going to be clear for people what's better for them? And do you think people are generally going to be happy with what they see or not?


JACK HOADLEY: It's hard. People may or may not be happy with what they see. Obviously, if they're expecting unrealistically low prices they're going to see other things. But I think for the most part, they are going to see attractive coverage. What they're going to have trouble doing, because it's hard, is figuring out how to pick, how to get the right mix of coverage, of access to their own doctors, of the right kind of prices upfront on premiums versus out-of-pocket cost when they get services.


STEVE USDIN: And Matt, the other thing I'm wondering is it seems like it's early days, but it's not. Insurance companies are going to have to think about whether they're going to get in for next year. They're going to be making those decisions pretty soon. Are they going to have any information to base those decisions on?


MATT EYLES: It's really one of the challenges for the timelines for the first two years is that it's really a two-year game that you're getting into, because you don't really know how the first year's going to go, given the length of the open enrollment period and when insurers need to file their products for the following year. So it is a little bit of a black box and a leap of faith to get in there and say that we're going to try and make a run of this without a lot of information.


STEVE USDIN: And Jack, one of the things people are going to compare, it's been very easy to compare, is what happens to prices on policies year once to year two? Very quickly, we've got a few seconds. What do you think's going to happen?


JACK HOADLEY: I don't think we know yet. I mean, there will be changes in prices. The experience, in Part D, said that some plans set their initial prices too high and actually came down in a year or two. Other plans set their initial prices too low and came up.


STEVE USDIN: Well, thanks. That's this week's show. I'd like to thank my guests, Matt Eyles and Dr. Jack Hoadley.


What are your thoughts about what you've heard today? Joint the ACA conversation on Twitter by using the hashtag #biocenturytv. I'm Steve Usdin. Thanks for watching.