January Research Roundup: What We’re Reading
The days may be shorter, but there was no shortage of new health policy research this January. As the CHIR team hunkered down at home amidst DC’s omicron wave, we reviewed studies on the potential of personalized phone outreach to boost Affordable Care Act (ACA) marketplace enrollment, trends in the small-group health insurance market, and the Congressional Budget Office’s (CBO) latest report comparing what commercial insurers and Medicare pay for hospital and physician services.
Rebecca Myerson, Nicholas Tilipman, Andrew Feher, Honglin Li, Wesley Yin, and Isaac Menashe, Personalized Telephone Outreach Increased Health Insurance Take-Up For Hard-To-Reach Populations, But Challenges Remain, Health Affairs, January 2022. Researchers conducted a randomized controlled trial to see if personalized outreach calls to consumers from Covered California (California’s ACA marketplace) impacted enrollment rates for the 2019 open enrollment period. Covered California identified 79,522 people who previously applied for marketplace coverage but had not yet enrolled in a plan themselves or enlisted a navigator or insurance agent to do so on their behalf. Members of the study sample were randomly assigned to a treatment group (receiving a phone call from the marketplace) or a control group (not receiving the call).
What it Finds
Overall, receiving a call from the marketplace increased take-up of marketplace plans by 2.7 percentage points (a 22.5 percent increase over the control group).
Personalized phone outreach significantly increased enrollment rates for particular subgroups.
Calls had the largest impact on enrollment rates for consumers above the age of 50, increasing their uptake of a Covered California plan by 5.1 percentage points.
Consumers with incomes below 150 percent of the federal poverty level (FPL) saw a 4 percentage point increase in enrollment rates. The calls had a statistically significant enrollment impact for households under 200 percent FPL, but not for higher-income households.
Applicants who listed Spanish as their preferred language saw an enrollment rate increase of 3.2 percentage points.
Enrollment rates for applicants who were referred to the marketplace from Medicaid rose by 2.9 percentage points.
Despite encouraging results for the impact of receiving a phone call, total enrollment numbers for the population studied were low; less than 15 percent of the study sample ultimately enrolled in a marketplace plan (a previous administrative survey of the population the sample drew from suggests that 45 percent obtained coverage through either Medicaid or employer-sponsored insurance).
Researchers acknowledged limitations of the study design; for instance, since the majority of households receiving an outbound call did not answer the phone and instead received a voicemail, the data doesn’t reflect the full impact of a live conversation with a marketplace representative on enrollment.
The intervention provided a 102 percent return on investment rate for Covered California, with the cost per new member similar to the average lifetime commission per member for consumers assisted by brokers.
Why it Matters
Consumers can face a series of obstacles when trying to enroll in marketplace coverage, such as lack of access to necessary technology, insufficient language options, a “choice overload” of different plans, and varying levels of health literacy. Stakeholders are considering interventions to make enrollment more accessible, especially for uninsured and underinsured populations. This large randomized control trial affirms the potential of personalized phone outreach to increase the likelihood those eligible for marketplace plans ultimately enroll in coverage. The study also highlights the importance of tailored outreach to people who are at high risk of being uninsured if they do not enroll in marketplace coverage, such as Spanish-speaking consumers and consumers disenrolled from Medicaid. This should be of particular concern to states as the eventual expiration of the Medicaid continuous coverage requirement could lead to significant coverage losses for these groups.
Jessica Banthin and Elizabeth Grazevich, Urban Institute, Trends in Small-Group Market Insurance Coverage, Urban Institute, January 13, 2022. Researchers at the Urban Institute reviewed trends in coverage rates, premiums, and other key metrics for private sector small-group and large-group insurance markets from 2013-2020 to evaluate the impact of ACA implementation on coverage offered by small and large employers.
What it Finds
Overall, the proportion of small firms offering health coverage to employees has decreased since 2000, but remained relatively steady between 2013 and 2019, exhibiting a lower rate of decline compared to the decade prior.
Employees of small firms (companies with 50 or fewer employees) are significantly less likely to have an offer of health coverage than employees of large firms (1,000 or more employees). In 2020, 50.5 percent of small-firm employees worked for an employer that offered health insurance, compared to 99 percent of large-firm employees. This gap is even larger when wage levels are taken into account; roughly 25 percent of employees in small, low-wage firms had an offer of health insurance in 2020.
From 2013 to 2019, small-firm enrollment numbers remained somewhere between 8.9 and 9.6 million enrollees, and then dropped to 7.9 million enrollees in 2020 (researchers noted this is likely due to the pandemic-driven decrease in small business employment).
Single and family premiums for both small- and large-firm coverage increased from 2013 to 2020. Among small-firm employees, family premiums rose by 31 percent during this period.
Between 2016 to 2018, the benchmark premium in the individual market increased by 34 percent (for a 40-year-old), then experienced a few years of average decreases showing significantly greater volatility than premiums in the group market. The authors suggest that this volatility could have played a role in small employers continuing to offer employees coverage during this period.
Small-firm employee premium contribution rates rose by 2.3 percentage points between 2013 and 2020, while contribution rates for family coverage increased 4 percentage points during the same time period, reaching 34.6 percent in 2020 (compared to the large-firm employee contribution rate of 26.4 percent for family coverage that year).
Self-funding among firms with fewer than 50 employees has grown modestly, from 13.2 percent in 2013 to 16.0 percent in 2020. Higher levels of self-funding among small employers in 2016 may have contributed to the premium spikes seen in 2017.
Why it Matters
Although some experts predicted that the ACA would lead to fewer small employers offering health insurance, the small group market has been relatively stable, particularly in comparison to the decade before ACA implementation when offer rates were declining steeply. However, compared to the large-group market, the relatively limited availability of employer-sponsored coverage at smaller businesses—particularly for low-wage workers—suggests the need for policies that help these workers obtain affordable and comprehensive health insurance. Although the data show only modest increases in self-funding among small employers, it is important to note that it may not reflect the rise of level-funded plans, which market a self-funded plan combined with a low attachment point stop-loss policy. Many small employers may not realize that level funded plans are effectively self-funded plans. Over the long term, it will be important for stakeholders to continue monitoring coverage trends in both small and large group markets.
US Congressional Budget Office, The Prices That Commercial Health Insurers and Medicare Pay for Hospitals’ and Physicians’ Services, January 2022. The Congressional Budget Office (CBO) compared how much commercial health insurers and Medicare fee-for-service (FFS) pay hospitals and physicians and looked at the wide variation in commercial insurer spending across the country.
What it Finds
Commercial insurers’ per-person spending on hospital and physician services grew an average of 3.2 percent annually from 2013 to 2018, reflecting price increases for those services averaging 2.7 percent a year. Medicare FFS per-person spending increased at a much slower average rate of 1.8 percent annually, primarily due to an average annual service price increase of 1.3 percent.
Data from studies published between 2010 and 2020 showed that prices paid by commercial insurers for both hospital and physician services were significantly higher than Medicare FFS prices.
Commercial insurers paid on average 240 percent of Medicare FFS’s outpatient hospital prices and 182 percent of its inpatient prices.
Commercial insurers paid 129 percent of Medicare FFS’s prices for physician services, with specialty care costing more than primary care.
Market power and provider consolidation are both associated with higher commercial prices. There is also a small positive correlation between quality and prices, but CBO cautioned that it is unclear whether there is a causal connection. Commercial insurers pay a wider range of prices across geographic regions compared to Medicare FFS.
In 2018, prices paid by commercial insurers (specifically employment-based plans) for inpatient hospital ranged from 54 percent higher than the national average Medicare FFS price (in Arkansas) to 294 percent higher than Medicare (in Massachusetts). Commercial insurers experienced similar levels of price variation for physician services in 2017.
Commercial insurer prices can even vary significantly across one metropolitan statistical area (MSA) where different providers often charge different rates for the same service.
The report finds little evidence for “cost-shifting,” the theory that providers negotiate higher prices from commercial insurers to offset revenue shortfalls from public payers, since researchers found a weak relationship between the share of patients with Medicaid or Medicare and increased prices paid by commercial insurers.
Why it Matters
The report’s data confirms that commercial insurers pay much higher prices than federally regulated Medicare FFS, and commercial insurer prices have risen at a faster rate. The prices that commercial insurers pay for provider services directly affect coverage costs and benefits for consumers. When insurers spend more for provider services, health plan enrollees can face lower wage growth, higher premiums, increased cost-sharing, and reduced benefits. As CBO points out in the report, commercial insurer price increases and federal spending on health care subsidies are also linked. Any future efforts to reduce rising health care spending in the U.S. should take into account the prices paid by private and public payers, variation across and within geographic areas, and dynamics such as the effects of market concentration on price variation.
