Q&A with Ken Janda, President & CEO of Community Health Choice
State of Reform recently talked with Ken Janda about the upcoming legislative session in Austin, including hot issues like Medicaid, where Community Health Choice has traditionally had a strong business in the Houston area, as well as the health of the individual market, where the company may be the fastest growing insurer in Texas’ individual market . The following Q&A has been edited for clarity and length.
State of Reform: There has been a lot in the news in recent months about the health of insurers in the individual market. What’s the state of your business?
Ken Janda: Our business is very stable. We’re a not-for-profit and more than half of our business comes via MCO [Medicaid managed care]. We’re very proud of what we do on the Medicaid side, improving health outcomes for individuals, including the rate of vaccinations and pediatric well-being visits. We’ve also been able to achieve virtually no medical trend increases year over year.
We entered in the individual market when the Exchange opened in 2014. It was a good opportunity with changes in the marketplace. We started with about 300 members in that market in 2014 and expect to have about 125,000 members in 2017.
State of Reform: Have you been able to hold the line on cost trends in the individual market as you have with Medicaid?
Janda: Claims have been good with the exception of pharmacy. We, like everyone else, are seeing increasing prices for generic drugs and very high prices for some of the new drugs coming on to the the market.
State of Reform: Many plans in the individual market who started in Medicaid have a lot of their membership from people that are no longer Medicaid eligible, but not yet affluent or middle class. Is that the same for you or are you seeing a different demographic as you grow?
Janda: In 2015 & 2016 our individual market members were almost all previously uninsured, with two-thirds of our of enrollees under 250% of the federal poverty level. For 2017, because the big national carriers all left the market and Blue Cross raised their rates so much, we’re experiencing for the first time tens of thousands of new customers who were traditional individual market customers before the ACA.
State of Reform: How are you managing that? Many Medicaid managed care plans do business with smaller networks of providers than traditional, commercial insurers. What’s your approach?
Janda: Our network is as big as any commercial network in the Houston metropolitan. We have worked very hard to say to the provider community that many of these are folks were previously uninsured. Most of our network providers understand that dynamic and have been willing to give us fairly attractive prices.
State of Reform: What’s your view of how well the ACA is working given where your company is at?
Janda: 22 million people that were previously uninsured are now insured. That’s a great leap forward. Meanwhile, all those states that have expanded Medicaid have had wonderful results no matter how you measure them.
Now, for us as a health plan in Texas, the fact we have over a million people across the state buying coverage in the marketplace is a very strong thing, not just over 100,000 we have at Community Health Choice. I think the APTC [Advanced Premium Tax Credit] was a very smart move in the ACA to increase access to coverage.
I love that we got rid of pre-existing conditions, but the individual mandate needed to be stronger. It will be interesting to see what Republicans come up with in replacement strategies that can do better.
The other thing that has really helped us take a leap forward in the ACA is some of the pilot programs for payment reform, like ACOs. That might be one of the biggest success of the ACA because it has been a catalyst to jump-start to an era of controlling medical cost trend.
State of Reform: Ok, if those are the successes, what are the challenges?
Janda: I agree with Republicans that the bureaucracy that was created by the ACA and that were embedded in the rule-making process really is administratively cumbersome. For example, just creating a health plan that meets federal requirements is a real challenge, because things like their [the federal] actuarial value calculator don’t conform to how the industry actually does business.
Looking at the individual market, we have gotten an older and sicker population than we would have guessed we would have, so going to more of a 5 to 1 ratio for age-band rating of premiums rather than a 3 to 1 ratio could help us attract more younger people by offering more affordable coverage.
Rather than repeal and replace, I’d like to see ACA 2.0, to make the law work better, but it’s really hard to have practical, common sense discussions right now.
State of Reform: What’s your concern with repeal & replace?
Janda: I’m much more worried about accidental, short-term catastrophes rather than long term. Over time, I think Republicans want insurance companies to be successful, with more competition.
In the short term, I worry about the deteriorating risk pool for us or any insurance company. It’s destabilizing. For example, eliminating the individual mandate mandate while retaining access to coverage with no pre-existing conditions won’t work.
My biggest long-term concern is that we at Community Health Choice really like being a safety net health plan that serves low-income populations in a not-for-profit model. I worry that what’s going to move forward is less subsidies for low-income people, less Medicaid expansion, and more benefits for high income people.
State of Reform: Besides the individual market, there are obviously changes coming to Medicaid too. What do you think of a possible block grant for Medicaid?
Janda: I’m not averse to talking about capitated amount per Medicaid enrollee, including one that takes into account changes for demographics. I can live with that. That’s different than a strict block grant, which is too much risk to the state.
State of Reform: Do you think Medicaid expansion or reform is possible in Texas given the likelihood of the Trump Administration providing more flexibility to the states?
Janda: Yes, I think it’s very feasible in Texas. What some of us are actively thinking about is is there a way to use 1115 waiver to utilize regional health partnerships, convert DSRIP [Delivery System Reform Incentive Payment] and uncompensated care funding under Medicaid into a coverage model at the local level.
I think we can come up with something to improve health costs in Houston where a number of safety net providers, health plans like us, the mental health system, and probably even prison system could work together. Texas likes local control and local ideas, and this could be a great opportunity to come up with something on a regional basis.
I also think we can work with new Administration to come up with ways to give incentives to get people off of Medicaid. For example, tying Medicaid coverage for able-bodied adults to jobs and working is potentially a good thing. That said, I worry about some approaches like that to Medicaid reform or expansion that include HSAs, which are more of an administrative burden than they’re worth, despite value of getting “skin in the game” for the consumer.
State of Reform: What we’ve talked about with the individual market and Medicaid is a lot. Do you have any other priorities for this legislative session?
Janda: Yes, I’d like to see control of the Medicaid formulary move from the state to health plans. Health plans are in a better position to manage the formulary and make sure we can control costs while getting the patients the right prescription drugs. Insurers manage the formulary for every other part of their business so it makes sense to do that in Medicaid too.
Also, I’d say the 1115 waiver must be extended. It would destroy the health care safety net in Texas if it’s not.
Lastly, we need to come up with a fair way to deal with patients getting balanced billed by providers who won’t sign contracts with us. These are often hospital-based providers such as radiologists or emergency room doctors who won’t contract with us, even though the hospital they work at is in the network. I hope we can find a fair legislative solution.
My view is, if you won’t accept from us in commercial insurance a rate that is twice of what you receive from Medicare, then why are you in business? Go be a plumber or an electrician. You need to think differently about the world, because commercial rates are going to continue to drive down toward Medicare, not the other way around.
State of Reform: Any other closing thoughts given the very interesting times we’re in for health policy?
Janda: It’s really difficult for me to sleep at night, because we have in a political environment created more angst from insurance companies and people that have insurance and safety net providers than we need to. I hope we can stop running around with our hair on fire and instead all say what we want and figure out how to improve the health care system from here.