With each issue, Trib+Health brings you an interview with experts on issues related to health care. Here is this week's subject:
Dr. Michael Morrisey is a professor and head of the Department of Health Policy and Management at Texas A&M University's School of Public Health. Morrisey recently co-published a study about competitiveness with the Affordable Care Act in Texas. The full report can be read here.
Editor's note: This interview has been edited for length and clarity.
Trib+Health: Can you briefly explain your recent study in Texas that concluded the healthcare marketplace in the state unraveled dramatically under the Affordable Care Act?
Morrisey: There’s a three-year story here, I think. In the first year, Blue Cross Blue Shield jumped into all Texas counties, and I think most of the other carriers put their toes in the water, too. But they were pretty careful in the sense of being concerned about what premiums to charge — they set relatively high premiums and expected some low enrollment.
These are folks who typically have not had insurance before. As a consequence, it wasn’t clear how rapidly they would sign up; if only the sick ones would, or what effects would be with subsidies and penalties. There was a lot of uncertainty in that first year.
In the second year, we saw consumers were pretty price-sensitive — almost to the exclusion of everyone else. And enrollment was relatively low. The other carriers, the non-Blue Cross Blue Shield ones, started entering the market regressively by lowering their premiums relative to Blue Cross Blue Shield. We saw some entry of new firms. Once that happened, it frankly looked like the beginnings of some pretty rigorous competition, at least in some of the urban, larger-sized metropolitan areas.
In the third year, coming up to the current enrollment period that just closed, the insurers finally got good actuarial data on their enrollment. They found that utilization was much worse than expected, that adverse selection had hit them pretty hard, and a bunch of them withdrew.
Trib+Health: What primarily motivated you to conduct this study in Texas with your colleague at Texas A&M, Tiffany Radcliff?
Morrisey: The study came as a result of some Brookings Institution funding from Washington, D.C. I was one of the organizers of a bigger study, and what we wanted to do was look at the nature of exchange competitions in five states. We looked from California to Florida to North Carolina to Michigan to Texas. The idea was to get a broad range of how things might be working.
There was a sense in California that it was working really well; they were very pro-Obamacare there. In Michigan, while it has Republican leadership, it is kind of a purple state, and it, too, extended its Medicaid program. The other three states were more or less oppositional. We wanted to see how the various markets were responding in the exchange.
One of the things that was so pronounced across Texas and all five states was that health insurance markets really are local. It’s not Texas or even Houston-wide — it comes down to health insurers establishing a network of prices they can work with.
Trib+Health: Your study included five locations: Austin, Houston, Temple, McAllen and Midland. Why those five cities, and out of those results, which ones were the most surprising?
Morrisey: We chose Houston because it’s a large market with a very diverse population, and there are lots of healthcare providers. We chose Austin for much of the same reasons, but there were also reports from Florida that Tallahassee, the state’s capitol, had a different insurance climate, perhaps for political reasons.
Temple was chosen because of Scott & White and the influence we thought would be there in a competitive setting. We chose Midland because it’s out in the west and subject to oil ups and downs, and McAllen because it’s on the border and has potentially all kinds of opportunities and complications with healthcare because of border crossings.
The big surprise was how rapidly Houston and Austin unraveled. In both markets, it looked like competition was going to be a force to reckon with in the exchange insurance market. It just petered out.
Trib+Health: Are health field experts anticipating changes under a Trump administration, or are challenges expected to remain?
Morrisey: I think experts are pretty split on what they think is likely to happen. There are some that think not much will change. My view is that we are going to see a somewhat slower rollout than what was originally anticipated of some repairs.
This next year and the open enrollment period in 2018 are going to be critical for whether insurers are willing to hang on and see what happens. We already heard Humana is pulling out entirely, so we’ll see what happens. I am reasonably optimistic we are going to see some changes in the ACA but sort of the larger elements, such as subsidized access to health insurance, will continue.