In which a group of people tried to do something realtime. For a complete American History tv schedule go to csp cspan. O cspan. Org. On the health care laws, successes and failures as they prepare to replace it. It includes how the law and what should be a part of any replacement plan. We are going to talk about the results of a five state study on how competition is working in the Affordable Care act marketplaces and what we might learn from this study and how we think about competition in the marketplaces Going Forward. This is one of my Favorite Places to work with colleagues. The bookings in rock feller institute fuelled Network Study of the competitiveness you mentioned of marketplaces and Health Insurance individual nol group Health Insurance marketplaces in five states. California, florida, michigan, North Carolina and texas and we have a summary report and five reports almost big enough from the five authors or author groups of the individual states that i just mentioned. Each the author of the summary report is michael morris. Mike is at texas a m, did the research and is the author of a widely used, and i would add current and informative textbook on Health Insurance. He is my teacher. I know a lot about the subject which isnt the subject i grew up on. He is the lead author of our summary report. Wa head of Rockfeller Institute is here. It is Field Network research and is the second author of the summary report that mike is going to present. The writing Group Includes other people, me and mark hall and mark hall is the author of the North Carolina report. Mark is the turnage professor of law. It is on argue noiorganizing th conference and producing in a report in a form that i think is very accessible. I hope youll download all of the reports and read the summary report. It will be helpful it is our california colleague often reminds me in local markets. Chip said all politics is local and indeed Health Insurance markets are local even within markets. There are differences that we learned about and we have written about. We are out in the field in depth, interviewing experts, using every piece of economic demographic and program data you need to know they are snurnumbe and put them together with implementation. It is a big subject that ill touch on. But this is typical of american federalism it is to present your summary findings. What they see, what they wrote about, how their story fits into the overall story. It is along with two of our associates, michael luke from colorado who is head of the Colorado Health institute. Many have Health Institutes and they are very valuable resources for the kind of work they do. Youre doing Something Different now. You have got a moment in which you which they banned from doing medical underwriting. So everybody can come in, preexisting conditions and guaranteed issue. It is fundamental to the Health Insurance and it is big if not bigger than any other industry and sector in our economy. We have issued 27 baseline and followup reports on what states decided to do. We expected most of them would say we are not letting the feds in here. We are going to do it. Indeed the feds are operating most of the marketplaces. This gets to the heart of how American Health care has changed institutionally and relying heavily on many sources of data and many peoples expertise. We have examined 25 local markets, five in each of the states. You can read the reports. We will describe what we learned collaboratively. What do we know about the changes that effect the cost and character of health care which most of all effects millions of people who are in these systems which isnt the whole of it. There is a lot more to what we are looking at. Its where the big changes are. Platform is yours. As dick indicated this is a team effort. I have to say, it really sort of relied heavily on the ability to put all of this together and keep us focused and keep our feet to the fire in answering the questions we were charged with. I cant say enough about dick and his ability to put together a network of Field Researchers across 40 states, calling people up to say we are doing this interesting project. It is a really strong set of field investigators throughout these states and as dick indicated across all of the states. What we want to do is begin to experience the experiences in the state and how it effected the exchanges. Indeed it was our presumption going in that the states were going to be very different. Thirdly, we want to develop hypotheses about how it might evolve and to offer those as sort of testable opportunities to other researchers but also to perhaps sort of serve as a road map for all of us as we look at repeal, replace and repair. There isnt much background that i think i have to provide for this audience. It is important to appreciate that there are rating areas in each of the states. Rating areas are geographic areas in which they offer coverage in that area must quote the same premium to people of the same age and smoking status. The thing to appreciate is states are very different in how they con figured rating areas. Others metro areas are unique rating areas and the Rural Counties make up sort of the last of rating areas in the state and others use geographic sections of the state. It is important to realize they approach some what differently. It is important they dont have to participate in all of the rating areas or in all of the counties within a given rating area. It is important to appreciate just from that that states are potentially very different and very different kinds of insurance responses within the states because of the flexibility thats granted by this rating area approach. So why these states . We chose california because its a Democratic State that expanded medicare. It adopted a state based exchange of the active purchaser we chose michigan that expended. Florida is an oppositional state that uses the federally facilitated exchange. There was early evidence there that insurers were working with local providers to Program Products that would allow them to compete with the dominant insurer. We wanted to see how we were working out. Texas is an oppositional state. It uses the federally facilitated exchange. It suggested there was potential for substantial and we wanted to see how it all played out. Overall we looked for some geographical diversity. There is also racial diversity in all of this. We looked for Strong Research teams. We have got what i think is a very good set of places to observe. A little bit on methods. It looked at structuring the networks within the insurer plans and it looked at changes in the environment that potentially took place as we watched the four years unfold. Having said that, its not just sort of a set of questions that we follow. It is a more fluid discussion that follows from the discussion that proceeds it into where the issues are from the point of view from the people on the ground. We come away with a very knrich sense of what the states looked like. The field teams conducted 15 to 90 minutes of provider and Provider Networks, with Insurance Agents and brokers and with navigators and with policy exper experts, some times the media. You cant generalize from five states when one is they are all very different. First the key finding is that Health Insurance markets are local. Now, i have been looking at Health Insurance markets for 20 years or more. It is only in the last three or four years and certainly through the field work that we have been doing here that i appreciated how local these markets are. It is a mistake to sort of think of idaho as a market. It is a mistake to think of texas as a market. The Insurance Markets are much more local than that. There is a lot of divergence within the state. Thats just the beginning of it. There are big differences of it between urban areas. Insurers are managed care entities. They form networks. To be able to get successful in a local market you have to have a network of hospitals and physicians and other providers who agreed to prices you believe can make it competitive. If its the case you cant establish you cant establish a network, its well ney impossible to be able to offer an insurance product in that setting. Clearly, thats the case in lots of rural america. Its also the case in modestsize urban areas. Theres a single network. Sometimes a single hospital. You decide you want to come in and compete against the dominant carrier in the state, youve got to be able to negotiate meaningful prices with that provider. And that turns out to be difficult to do, to give you a competitive advantage in the insurance side. It also turns out to be a problem sometimes in large metro areas. In texas, for example, we talked to one insurer whod said we were pretty successful in putting together what we think was a very good network in houston. But we could never get something to work in dallas. So its not just a matter of we are here, were in the state, and because we can provide it on the eastern side of the state we can provide it on the western too. It depends on the local market. So big implications there. First, its unrealistic to expect youre going to find similar results or indeed that there are Similar Solutions everywhere. Second, premiums as we have found are lower in areas where there are greater numbers of hospital and other providers. Without that competition at the provider level its difficult to see lower prices at the insurer level. And indeed weve been told from our interviews that the decades of consolidation that weve seen in the provider markets have made it difficult for insurers to compete. Having said that, if indeed these markets are local, that suggests that theres opportunities for regional insurers and other insurers who cobrand with local providers to establish a successful niche in their local market where they can compete pretty successfully, or at least we think they can. And weve seen some evidence of that. The other point, though, is if indeed these markets are local and they depend on the nature of those local networks of providers, that says at least to us that meaningful interstate Competition AmongHealth Insurers may be very difficult to achieve. Its not enough that regulatory barriers are reduced. Its putting together the networks and thats the difficult thing. Second major finding. Claims costs substantially exceeded the insurers expectations. In the first year or two of the exchanges the insurers actually had very little information. They have been insuring this pool of individuals at all. They had some information perhaps from their existing individual market. They had some information from the small group market. Maybe they went to National Data like maps. But in any event, they had remarkably little data on these individuals. And as a consequence a lot of them were very timid about entering the market. But after that first year where they saw that premiums sort of drove enroll sxmt that enrollment was relatively low, we saw lots of new entry in 2015. Again on the expectation that they could experiment in the market and we saw entry and we saw potential for real competition there. But then 2016 rolled around and insurers had data that their actuaries believed. And those data were scary. They were high utilization, largely across the board. And that led to concerns about high utilization and led to withdrawal from local markets and from states. And its important to point out here, it isnt just that some National Carriers withdrew from full states. Its also the case that carriers who remained withdrew from some markets, from some counties and rating areas and withdrew some of the products they were offering while still remaining in the exchanges. And it was also the case as you all know that weve seen substantial premium increases as a consequence to that. The implications of this is theres certainly an open question as to whether those rather large premiums that weve seen in 2017 are able to sort of get ahead of the losses that the insurers have anticipated. Theres concern about the extent of adverse selection relative to the general sickness of the risk pool and what carriers are able to do about it. And theres an open question about those special late open enrollment provisions. As im sure youve all heard, there are opportunities where people can enroll in an Exchange Plan after the open Enrollment Period closes. And some insurers have argued that was an enormous drain on them, that late enrollees were extraordinarily expensive. And the administration past and present are sort of working at alternatives to tightening those. And its an open question to how meaningful those claims are both in terms of the original assertions and whether or not changes would make a difference. It turns out that there were from our review mounting losses that stem from high utilization, and those losses can overwhelm competition. In all of our states we saw the withdrawal of insurers. In North Carolina and texas some metro areas went from five and nine insureser to suddenly having only three. Florida had three insurers withdraw. Michigan and california also saw withdrawal of carriers although this view was its not as big a problem as elsewhere. We saw the plateauing of alternative forms of insurance innovati innovation. And certainly insurers have viewed they themselves as having enrolled sicker folks. And that suggests that theres an issue of Risk Mitigation. And certainly theres a view across many of our states that the risk adjustment mechanism and the shortterm other transitional mechanisms were inadequate selection that they saw. Particularly true in florida and texas. As one insurer told me in texas. So in the first year we set our premiums relatively high and we got in my words a sick draw of the population. We lowered our premiums to try to attract more people and a healthier draw and we did but six months and we made money and six months later we got the risk adjustment fee and lost money. We set our premiums high and lose money. We set our premiums low and lose money. They withdrew from the market. The Risk Mitigation issues matt matter. And the point is if we wanted to prohibit insurers from using preexisting conditions to set premiums as the aca does and as many have said must continue to be the case in the future, that means we have to somehow deal adequately with the risk adjustment, Risk Mitigation problem. Maybe thats the better funding of some of the existing mechanisms. Maybe that means looking at other mechanisms like high risk pools. Another finding is clearly what weve seen in all of this is a shift to Narrower Networks. And all of this is well under way. Theres very good evidence over the last 20 years that Narrower Networks allow insurers to negotiate lower prices with providers by essentially Trading Volume for price. Clearly that is in the mind of insurers as they have moved largely from ppos to hmos. Theres an underlying thread in all of this as well, though. And that has to do with whether or not moving to a narrower network can affect adverse selection or your fear of attracting highrisk folks. So if one excludes premium providers, potentially that leads people with related diseases to seek insurance elsewhere. Theres some evidence of that. But theres also evidence that premier providers are some of those that have been working with insurers to cobrand. And its certainly the case that Medicaid Managed Care planned have while they have their own relatively unique nature of their networks, they have also sort of provided access to coverage in some of the premier networks. Some of the premier providers, excuse me. So Narrower Networks continue. Theres concern amongst brokers and agents and policy experts that consumers are only beginning to be aware of what the Narrower Networks mean to them. There is pretty good well, actually, theres very good evidence that Narrower Networks are cost reducing. But in some sense this can be misleading given the nature of the local markets that weve talked about. As one provider said to us, were the only hospital in town. The insurer moved from a ppo to an hmo, really didnt have much of an impact here. Outreach to consumers may be critical to enhancing enrollment. Insurance is complicated. Even for those of us who have coverage. Consumers have been largely focused on price but increasingly the navigators tell us that they are able to appreciate the nature of deductibles and copays. The new challenges have to do with Narrower Networks, with balanced billing, and with planning withdrawals and having to move from one plan to another. Some states have been very good at outreach. Florida in particular. California and North Carolina as well. Its important also to appreciate that it isnt just the navigators that provide information. Safety net providers often play a Critical Role in opportunities like enrollment fairs to encourage enrollment. And brokers and agents certainly feel that they have