The Affordable Care Act?s mission to significantly reduce the number of Americans without health insurance isn?t having much impact on expanding access to dental benefits. In fact, various provisions of the law that fuse together these offerings appear to be complicating matters in both public and private marketplaces. The growing pains of health care reform could very well turn smiles into frowns across the employer-provided dental benefits landscape.
With most group dental plans historically offered on a stand-alone basis, a move to embed dental into medical policies may be ?disruptive to how people currently have coverage? and force them to switch dentists, suggests Fred Horowitz, D.M.D., a former practitioner and founder of OpenView Consulting, LLC.
Coupling dental with medical also is causing confusion, reports Jolynne Williamson, assistant vice president of group dental product at The Guardian Life Insurance Company of America. ?The intent was obviously to increase access to oral health care,? she says, ?but I think one thing that we?re all realizing is that the ACA has not really matured yet.?
Also see:
A key issue is allowing medical carriers the option of subjecting dental benefits to their annual deductible. Financially strapped participants in a plan whose medical deductible is $2,000 or higher may think twice about sending their child to the dentist to fill a cavity or for other procedures involving a substantial out-of-pocket cost, Williamson cautions. As the law matures, she says regulators will need to keep a close watch on how various provisions create unintended consequences that actually restrict access to care.
Employers and their broker-partners are equally puzzled about dental benefits in the public exchanges, which she believes was exacerbated by numerous delays and transition policy extensions. What?s more, all the head scratching coincided with the busiest time of year. Many plan sponsors weren?t sure whether they should pursue early renewals, which was further complicated in states that prevent that from happening.
Modest gains in enrollees
Although a chief objective of the ACA was to widen access to pediatric dental benefits, enrollment in stand-alone plans was only about 16% on average, ranging from about 3% to 36% across the nation. Interestingly enough, the average uptake for stand-alone plans for adults was 19%. The numbers suggest that consumers don?t understand what they?re buying, according to Charles Norman, D.D.S., president of the American Dental Association.
In a review of medical and dental plans on public exchanges in 41 states, the ADA found that there?s little benefits transparency in the new online marketplace. The problem is especially prevalent with 80% of the medical plans with embedded dental benefits ? which make it unclear whether a deductible, co-pay or annual maximum will apply to all services, including dental.
As a provider, Norman is concerned about there being no practical way his patients would ever get to use their dental benefits. ?If you had a pediatric dental benefit with a $6,000 deductible, would you ever use it or ever meet the deductible?? he asks.
He says the lesson for employers is that they need to understand what they?re purchasing for their employees and make those dental benefits easy to understand, which ultimately will help improve oral health.
Also see:
Horowitz says the marketplace must adjust to pediatric dental being one of 10 essential health benefits. ?You?re going to see a separation perhaps between people electing a pediatric dental plan for their children and maybe a voluntary plan for the adults,? he says. ?The problem with having pediatric-only dental benefits is it can have a tendency to break up family coverage,? particularly for those who are on tighter budgets. He notes that Nevada, where there are no embedded dental benefits, is getting a different result than Connecticut and other states where there are embedded benefits.
Williamson adds that, curiously enough, none of the other nine EHBs are tied to age. She says pediatric dental and vision benefits were added at the last minute. Unlike plans sold in the traditional market, pediatric benefits in public exchanges eliminated the cap on annual outlays. The prospect of unlimited usage in a given year certainly poses a herculean challenge for insurance carriers in terms of pricing those products. Experts say the result will be a bifurcated system for children who receive dental coverage either through a public or private marketplace.
In states whose public exchanges are part of the federally facilitated marketplace, there were just 1.1 million enrollees in stand-alone dental plans ? of whom just 63,000 were children. The figure falls far short of predictions ranging from 4 million to 8 million Americans.
?Generally, in a commercial population, we see 30% of the enrollees as children, and we don?t really think that the population that entered exchanges is any different in terms of the number of children they have,? says Evelyn Ireland, executive director of the National Association of Dental Plans.
Any modest dental coverage gains for children were the result of enrollment in Medicaid and the Children?s Health Insurance Program, whose respective eligibility requirements include households with income that?s closer to the federal poverty level, she adds.
Ireland says roughly half of the nearly 44 million dental plan enrollees in the small-employer market involving firms with 100 or fewer employees are children. ?We don?t see as many changes in the large employer market and that there?s any reason to shift to this coverage or move to exchanges,? she adds.
Also see:
One major challenge for the dental industry is compliance with the ACA?s minimum loss-ratio requirement. While most dental plans involve nearly all of the same administrative processes as medical plans, their premiums are significantly lower on average, and ?yet almost all of the same services have to be provided,? explains Horowitz. If the MLR must be 85%, he says ?you?re looking at a factor of almost 10 times how much money is available to do that? ? a problem he describes as most pronounced in California.
The upshot will be fewer services offered or plans withdrawing from the public exchange because not enough money will be available to fulfill their appropriate obligations to plan members, Horowitz predicts.
Private exchanges to the rescue?
With all the consternation about how public exchanges could have a negative impact on dental care, Williamson believes private exchanges are helping elevate consumerism in the dental benefits market, allowing employees to customize a solution that best fits their unique needs. ?Even if it may cost a little more,? she says, ?their satisfaction rate actually increases because they are in control.? On the employer side, she says this new benefits delivery model allows them to offer a more robust set of benefits and better control their costs.
?I look at the private exchanges today as sort of an extension of the existing distribution model, both for small groups and individuals taking advantage of technology as the next step or iteration in how dental benefits are marketed,? Horowitz notes.
The challenge for private exchanges will be pricing dental products at a time when there are so many formulas and benefit exclusions that are used. ?From an actuarial standpoint, we?re in a new era,? Norman explains.
By the middle of last year, Ireland says dental insurance carriers were flooded with solicitations from multiple private exchanges that sought RFPs to participate on their platform. While the consultant-based model has garnered the lion?s share of attention, she also points out that numerous other players include agents, chambers of commerce and business groups.
?At first it was kind of overwhelming,? Ireland says. ?I think at this point, even the dental carriers are being fairly careful about which private exchanges they invest in connecting to because they have to know that they?re going to get some return on the investment.?
Ireland says it?s not surprising that dental benefits are a perfect fit for private exchanges, considering how they are the most requested benefit after medical coverage, and are popular with young people ?who want to take good care of their smile for either social reasons or business competitive reasons.?
Product innovation
Williamson expects that as the ACA matures, many different combinations of plans and services will emerge ? from noninsurance vehicles to those that are coupled with an insurance mechanism. The law will bring more consumerism, she says, and with it will come product innovation that may take the industry and regulators time to catch up.
One example is a minimal coverage dental product coupled with a discount plan and/or perhaps some type of stop-loss coverage to pay for large, unexpected costs. She says consumers can budget for known routine costs, even the small unknown costs, but want protection for the unknown larger expenses.
?They want to be able to have an idea of what they would pay for something specific or at least the maximum amount they could pay,? according to Williamson. ?If I know that I can get a root canal for x number of dollars or that the max I will have to pay is x, then I can plan and budget for that. It?s not this percentage of an unknown number.?
She also predicts a higher utilization of health savings accounts, health reimbursement accounts and flexible spending accounts to help pay for out-of-pocket costs when the threshold for ACA compliance is raised to businesses with 100 employees.
Bruce Shutan is a Los Angeles freelance writer.
