The health insurance space is becoming more complex as new avenues for affordable coverage emerge. State and federal agencies need to adapt shopping, eligibility, and billing functions when implementing a new marketplace to be successful.
Agencies looking to support emerging marketplaces are studying and considering preexisting solutions in adjacent distribution channels, like healthcare exchanges.
The U.S. Postal Service (USPS) is about to embark on a large, new initiative where a strong, adaptable technology backbone is paramount. The ability to facilitate an integrated-cloud strategy using an Azure hybrid approach grants agencies additional flexibility to meet shifting requirements.
The Postal Reform Act of 2022 aims to streamline coverage management while reducing costs for the USPS and enrollees.
The new law states:
- The Office of Personnel Management (OPM) to create the new Postal Service Health Benefits (PSHB) Program within the Federal Employee Health Benefits Program (FEHB) and calls for eligible employees to enroll in Medicare,
- Postal employees and beneficiaries who enroll in employee health insurance to enroll in a PSHB plan,
- Future retirees to enroll in Medicare, a change expected to save $22.6 billion over 10 years, and
- The USPS to create a health benefits education program to assist employees and beneficiaries with the enrollment process.
Both Medicare-Eligible Enrollees and the USPS Will See Cost Savings
The Congressional Budget Office estimates the initiative “could save the postal retirement and health programs about $5.6 billion through 2031” and a total of $50 billion in the next 10 years.
Against the backdrop of the Postal Service’s net loss of $4.9 billion in 2021 – its 15th consecutive annual net revenue loss – achieving these cost savings is important to policymakers and Congress. Experts expect postal workers and retirees will also save money. Equally important, the financial viability of the Postal Service is important to the 4 million consumers who receive prescriptions each day, the recipients of 320 million COVID-19 tests, the millions of voters who mail their ballots, and just about every American.
Combining Medicare and PSHB may also result in a reduction in premium costs for enrollees. Much like dual-eligible beneficiaries, Medicare will pay for Medicare-covered services and the remaining balance will be reviewed by PSHB.
To say that many eyes will be watching as the USPS embarks on this new program is quite likely an understatement.
History Repeats Itself: Technology Struggles with New Distribution Channels
For PSHB to achieve projected savings while improving access to coverage, complex infrastructure and data integrations are required. Both state and federal governments have struggled in the past with ambitious projects such as a new approach to selling, managing, and reporting government-sponsored coverage.
Case in point – the initial rollout of the ACA health insurance exchange on October 1, 2013. According to the case study, CMS Management of the Federal Marketplace,
“Website outages began within 2 hours of launch, preventing many consumers from logging in and signing up for health insurance…. In the end, only six consumers were able to submit an application and select a plan on the first day of the first open enrollment.”
The challenges of setting up a new insurance marketplace also proved disastrous for state marketplaces. Even with generous federal financial support, 2014 early adopters were plagued with shopping and enrollment websites that did not work, inaccessible data, and overwhelmed call centers. In the months and years to follow, many states spent millions to combat issues that were present during marketplace launch.
Declining implementation and operation costs changed the future of emerging marketplaces. Technology partners that experienced the ups and downs of the early rollouts have spent the last decade developing and improving marketplace solutions. Experienced, modified off-the-shelf (MOTS) solutions reduce risk and save both time and money.
Avoiding the Appeal of Custom Solutions for Old Problems
As new agencies get involved with selling and managing health insurance, the upfront cost of implementing the needed technology can be daunting. Additionally, piecing together a custom solution can dramatically increase an agency’s tech debt due to the unexpected issues that arise with new technology.
30 percent of CIOs estimate that “more than 20 percent of their technical budget ostensibly dedicated to new products is diverted to resolving issues related to tech debt.” Tech debt continues to climb across all industries. The surveyed CIOs calculated that tech debt amounts to 20 to 40 percent of the total value of the technology stack.
One large insurance company reported that tech debt amounted to 15 to 60 percent of every dollar spent on IT. This additional spend had not been accounted for in the initial business cases.
To avoid the astronomical cost of continuously resolving issues that arise from untested, custom technology stacks, emerging marketplaces can implement MOTS solutions utilized by federal and state exchanges.
Partnering with Experienced Technology Vendors for a Better Member Experience at Lower Costs
For a seamless implementation, emerging marketplaces can consider combining Medicare and FEHB through a centralized enrollment platform that leverages existing technology and cloud infrastructure.
An adaptable architectural design and a ready-to-deploy Azure workloads mitigate risks that are prevalent when using antiquated solutions – ensuring on-time, effective delivery and deployment.
Softheon’s MOTS solution can be fully configured to meet the needs and requirements of any marketplace initiative. Softheon’s core offerings are built on a flexible, adaptable, and scalable microservices architecture enabling configurations without any hard coding.
Payers that utilize Softheon’s marketplace offering saw:
- Member Retention: 11.8 percent increase in member retention compared to the industry average.
- Member Effectuation: 2 percent increase in member effectuation rates compared to the industry average.
- Build vs Buy: Reduced estimated deployment time by 73 percent compared to an internally-built solution.
- Operational Cost Savings: 9.75 ROI in cost savings from outsourcing Marketplace solutions to Softheon.
Softheon’s History as a Marketplace Technology Partner
Softheon is a leader in the enrollment and payment processing space, with 22 years of direct experience serving federal and state government agencies with enrollment, premium administration, reconciliation, and ongoing data analytics and reporting support. Softheon works with 90+ carriers and government agencies, including the Centers for Medicare and Medicaid Services (CMS) and nine state agencies, enrolling more than 20 million consumers and processing $25+ billion in payments since the inception of the ACA. Established integration points mean near-real-time access to third-party agencies like CMS and a proven ability to execute Medicare integration.
About the Author
Josh Schultz
Josh Schultz is a Senior Policy Analyst at Softheon, where he advises the company on health policy issues affecting businesses and government health agencies. Prior to Softheon, Josh worked for a non-profit agency assisting Medicare beneficiaries, a technology company, and consulting firms.