Since the passage of the Affordable Care Act (ACA) in March of 2010, much has been discussed, debated, written, and deployed relative to healthcare FINANCING reforms (see insurance, Medicare, Medicaid, self-insured employers, fees/taxes, pre-existing conditions, essential health benefits, community rating, minimum loss ratio, etc.). But very little has been written, or even revealed for that matter, about the ACA’s healthcare DELIVERY reforms and incentives. This is too bad, since we know that $.80 to $.85 of every dollar of billed health insurance premium is directly related to healthcare delivery. So it stands to reason that if we could reduce health CARE costs, health insurance PREMIUMS would follow suit. Enter Accountable Care Organizations (ACO) into the equation. Let’s examine what ACO’s are…who they are…and why many are looking to them to save America’s healthcare system from imploding.
The United States Department of Justice (DOJ) has given the necessary approval of Cigna’s acquisition of pharmacy benefit manager (PBM) – Express Scripts. The $52 billion deal will result in a consolidated healthcare behemoth that some say, is in reaction to recent healthcare sector entrant – Amazon. Another large scale healthcare acquisition/merger – CVS/Caremark and Aetna – is currently under DOJ review, but is expected to be approved soon, in a $69 billion transaction. The Cigna/Express Scripts transaction is scheduled to be completed by the end of 2018.
Insurance holding company – Assurant Inc. – announced their intent to exit the health insurance marketplace by 2016; and have retained investment banking firm – Barclays Capital – to locate a potential buyer for their health insurance and employee benefits subsidiaries. Like the legions of health insurers that have exited the market before and after passage of the Affordable Care Act (ACA), the reason is simple – quarterly losses in the millions with seemingly no end in sight. In the case of Assurant Health (and its more recognizable subsidiary insurers in the health insurance market including Time, John Alden Life, and Union Security Life) it appears the ACA was the proverbial “straw that broker the camel’s back”
Although the following chain of events directly affects some 120,000 health insurance policyholders residing in the states of Nebraska and Iowa, it could be a bell weather for individuals residing in one of the other 23 states that have/offer health insurance through a federal government approved/funded, non-profit, member owned health insurer. (see http://sstevenshealthcare.blogspot.com/2014/12/coop-health-insurancealert.html forLEARN MORE
Section 1322 of the Affordable Care Act (ACA) allowed for the establishment of “consumer operated and oriented plans” or COOPs. Bolstering the ACA’s goal of expanded health insurance coverage, and borrowing from the agricultural industry’s adoption of COOPs in the 1920s, twenty-four COOPs were approved and funded by the federal government. Specifically, the fed awarded nearly $2 billion to the 24 approved COOPs operating in 24 different states. In theory, the COOPs would bring more competition and choice into the market, which is a welcome change from the hundreds of insurers who have abandoned the health insurance market over the last several years (see Metropolitan Life, Travelers, NY Life, Prudential, Principal, American Chambers Life, and Mutual of Omaha to name just a few).