Insurers' responses to health reform law emerging

How will health insurers respond to the passage of health reform, last year’s Patient Protection and Affordable Care Act (PPACA)? Earlier, we received some insights into how employers will respond to this legislation. A survey from benefits consultant Milliman has now clarified how insurers are expected to respond.

Health insurers will be changing some "fundamental aspects of providing health insurance" as a result of provisions of the PPACA, according to Milliman's 2010 Group Health Insurance Survey.

Insurer tools. Milliman's survey responses from more than 60 insurers indicate that the following insurer tools will become more common:

• Quality incentives and bonus programs for medical providers (often referred to as pay for performance) encouraging providers to use evidence-based medicine (69% of insurer respondents agreed that they would apply this strategy);
• Risk-sharing arrangements with providers (63% of insurers);
• More price transparency for members (62%) and more "aggressively" tiered provider networks based on quality, effectiveness, and price;
• Reduced insurance broker commissions (53%), as brokers' roles are redefined according to the PPACA.

Long-term strategies. In response to the ACA, health insurers are adjusting their long-term strategies as follows:

• Preparing to participate in the Health Insurance Exchanges beginning in 2014 (83% of respondent insurers);
• Strengthening self-insurance options for employers (66%); and
• Expanding into the markets for individual insurance (44%), and for small group and large group insurance (43% each). Few insurers were planning to exit those markets (12% from individual, 6% from small group, and 2% from large group markets).

Of course, only time will tell how these insurer responses play out.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.