Gearing up for exchanges

The healthcare reform law conjures an appealing vision for hospitals: No longer will they have to manage the burden of uninsured Americans with a mix of federal and state subsidies, cost-shifting and contorted accounting.

In less than six months, about 7 million people are expected to enroll in new health insurance plans sold in state exchanges for coverage in 2014.

The tightly regulated health insurance marketplaces and tax credits to help people buy coverage in them are among key provisions the law's drafters counted on to reduce the number of uninsured Americans. By 2023, about 25 million may have coverage that they purchased in the exchanges, according to the Congressional Budget Office.

Modern Healthcare asked CEOs attending the recent congress of the American College of Healthcare Executives how they expect the launch of the exchanges will actually change their businesses next year. Here are some of their edited responses:

Richard Umbdenstock, president and CEO, American Hospital Association:

“First of all, I hope the premise is correct. I hope there are tens of millions of Americans who have coverage because people need to be inside of an insurance-based system and not kept on the outside. So, that is No. 1. I am a little questioning on how effective we'll be in the exchanges and in the expansion of Medicaid of getting actually to that tens of millions number. So, we've all got to work toward that.

“Secondly, I do believe that there will be upward pressure (on cost). So, if there are really all at once tens of millions of people coming in a relatively compact period of time, that could put significant pressure on. But on the other hand at the moment, I always say there isn't a dollar of care today that isn't paid for by somebody. So, if they have been accessing the system at all, ideally we will be shifting that access to a more appropriate location, which should be less expensive than the hospital emergency room. So, there will be some offset of current dollars, or redeployment of current dollars, I hope to a better spot.”

Sister Carol Keehan, president and CEO, Catholic Health Association:

“We have been working since the passage to deal with the issue of, once coverage became available, making sure people got enrolled and we didn't have the slow roll-up that we had in SCHIP or that we have in traditional Medicaid. So, we are working on that.

“We are working with groups like Enroll America; we are a very active partner. We are working with other people who touch these folks that are eligible—everybody from Catholic Charities USA to community organizations like United Way, to people that would be nontraditional partners of ours like H&R Block. They do 1 out of every 7 tax returns in this country. A lot of their tax returns are for the people that are now eligible either for expanded Medicaid or the exchanges.

“These are trusted people, and we are dealing with the fact that every focus group tells us that the people that are going to be eligible for this new coverage don't know it, don't believe it. So, we are working to understand how it is going to work in our states. How it is going to work for both the exchanges and Medicaid. Who can we work with so that we can help people as quickly as possible take advantage of this.”

Chris Van Gorder, president and CEO, Scripps Health, San Diego:

“I think we are going to probably have a spike, but I am maybe one of those few people who says I don't think it is going to be a huge issue long-term. I have read a number of studies that indicate that a lot of these patients who will be newly insured are generally healthy. Now there clearly are those who couldn't get insurance and others, and we will see a spike from those, but the large percentage are young folks who just decided to go without insurance—and while they may come in now and get a physical or something like that, I am not convinced that it is going to be huge, long-term increase in volume.

“Remember we have always had a national healthcare system—it's called the emergency room. And so patients that needed to be in the hospital probably were in the hospital. They just came in through the emergency room and we didn't get paid for it. We expect somewhere around a 3 million person increase on the Medi-Cal rolls. Unfortunately, the state of California is one of the lowest payers in the entire country and so, to some degree there was an advantage in not having that reimbursement because at least it was charity care. Now it is not even considered charity care, and yet we will probably be losing money on every single patient. So, it's one of those little nuances.”

Joseph Swedish, as of March 25 CEO of WellPoint; former president and CEO, Trinity Health, Livonia, Mich.:

“With respect to the payer sector, a value proposition is being sought today, especially related to the exchange environment. It's a huge where-to-start megaproblem for us as an insurer. I believe that the health insurance industry has still got a very robust future. It is an integral part of the healthcare delivery fabric of our nation.

“But, we have to reinvent ourselves in terms of that value proposition. So, there is no doubt WellPoint is well-positioned. I have said repeatedly, I like our chances to, in fact, reinvent ourselves to better serve the markets we are in, to grow and better serve people. I have said repeatedly that I believe healthcare is in a Renaissance period—pretty excited about the possibilities going forward, but it's certainly not for the faint of heart.”