Hospitals smallest part of out-of-pocket costs

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We spend more on hospital care than any other type of health care service, but hospitals make up the smallest amount of out-of-pocket spending.

  • That means insurers are passing on a smaller percentage of hospital costs to enrollees, although they indirectly pay for hospital care through premiums.

Between the lines:

  • “A big role of patient cost-sharing is to discourage use of inappropriate or unnecessary services. So much of hospital care is non-discretionary from the perspective of patients,” Kaiser Family Foundation’s Larry Levitt says.
  • Levitt adds that insurance tends to pay a bigger part of hospital bills versus other services because hospital bills tend to be large, causing patients to blow through their deductible or hit their out-of-pocket maximum.

 

 

High-Deductible Health Plans Fall From Grace In Employer-Based Coverage

https://www.thefiscaltimes.com/2018/10/03/High-Deductible-Health-Plans-Fall-Grace-Employer-Based-Coverage

With workers harder to find and Obamacare’s tax on generous coverage postponed, employers are hitting pause on a feature of job-based medical insurance much hated by employees: the high-deductible health plan.

Companies have slowed enrollment in such coverage and, in some cases, reinstated more traditional plans as a strong job market gives workers bargaining power over pay and benefits, according to research from three organizations.

This year, 39 percent of large, corporate employers surveyed by the National Business Group on Health (NBGH) offer high-deductible plans, also called “consumer-directed” coverage, as workers’ only choice. For next year, that figure is set to drop to 30 percent.

“That was a surprise, that we saw that big of a retraction,” said Brian Marcotte, the group’s CEO. “We had a lot of companies add choice back in.”

Few if any employers will return to the much more generous coverage of a decade or more ago, benefits experts said. But they’re reassessing how much pain workers can take and whether high-deductible plans control costs as advertised.

“It got to the point where employers were worried about the affordability of health care for their employees, especially their lower-paid people,” said Beth Umland, director of research for health and benefits at Mercer, a benefits consultancy that also conducted a survey.

The portion of workers in high-deductible, job-based plans peaked at 29 percent two years ago and was unchanged this year, according to new data from the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

Deductibleswhat consumers pay for health care before insurance kicks in — have increased far faster than wages, even as paycheck deductions for premiums have also soared.

One in 4 covered employees now have a single-person deductible of $2,000 or more, KFF found.

Employers and consultants once claimed patients would become smarter medical consumers if they bore greater expense at the point of care. Those arguments aren’t heard much anymore.

Because lots of medical treatment is unplanned, hospitals and doctors proved to be much less “shoppable” than experts predicted. Workers found price-comparison tools hard to use.

High-deductible plans “didn’t really do what employers hoped they would do, which is create more sophisticated consumers of health care,” Marcotte said. “The health care system is just way too complex.”

At the same time, companies have less incentive to pare coverage as Congress has repeatedly postponed the Affordable Care Act’s “Cadillac tax” on higher-value plans.

Although deductibles are treading water, total spending on job-based health plans continues to rise much faster than the overall cost of living. That eats into workers’ pay in other ways by boosting what they contribute in premiums.

Employer-sponsored group health plans, which insure 150 million Americans — nearly half the country — tend to get less attention than politically charged coverage created by the ACA.

For these employer plans, the cost of family coverage went up 5 percent this year and is expected to rise by a similar amount next year, the research shows.

Insuring one family in a job-based plan now costs on average $19,616 in total premiums, the KFF data show. The American worker pays $5,547 of that in a country where the median household income is more than $61,000.

The KFF survey was published Tuesday; the NBGH data, in August. Mercer has released preliminary results showing similar trends.

The recent cost upticks, driven by specialty drug costs and expensive treatment for diseases such as cancer and kidney failure, are an improvement over the early 2000s, when family-coverage costs were rising by an average 7 percent a year. But they’re still nearly double recent rates of inflation and increases in worker pay.

Such growth “is unsustainable for the companies I have been working with,” said Brian Ford, a benefits consultant with Lockton Companies, echoing comments made over the decades by experts as health spending has vacuumed up more and more economic resources.

For now at least, many large employers can well afford rising health costs. Earnings for corporations in the S&P 500 have increased by double-digit percentages, driven by federal tax cuts and economic growth. Profit margins are near all-time highs.

But for workers and many smaller businesses, health costs are a heavier burden.

Premiums for family plans have gone up 55 percent in the past decade, twice as fast as worker pay, according to KFF.

Employers’ latest cost-control efforts include managing expenses for the most expensive diseases; getting workers to use nurse video-chat services and other types of “telemedicine”; and paying for primary care clinics at work or nearby.

At the “top of the list” for many companies are attempts to manage the most expensive medical claims — cases of hemophilia, terrible accidents, prematurely born infants and other diseases — that increasingly cost as much as $1 million each, Umland said.

Employers point such patients to the highest-quality doctors and hospitals and furnish guides to steer them through the system. Such steps promise to improve results, reduce complications and save money, she said.

On-site clinics cut absenteeism by eliminating the need for employees to drive across town and sit in a waiting room for two hours to get a rash or a sniffle checked or get a vaccine, consultants say.

Almost all large employers offer telemedicine, but hardly any workers use it. Thirty-nine percent of the larger companies covering telemedicine now make it comparatively less expensive for workers to consult doctors and nurses virtually, the KFF survey shows.

 

 

 

Cost of Family Health Insurance Now Nearly $20,000 a Year

https://www.thefiscaltimes.com/2018/10/03/Cost-Family-Health-Insurance-Now-Nearly-20000-Year

 

Annual premiums for employer-provided health insurance hit an average of $19,616 for a family this year, a rise of 5 percent over 2017, according to a new survey by the Kaiser Family Foundation. Employees paid an average of $5,547 for their coverage, with employers covering the rest.

The average premium for family coverage has risen 55 percent since 2008 — about twice as fast as wages, which are up 26 percent, and three times as fast as inflation, up 17 percent over a decade.

Faced with relentlessly rising health care costs, many companies have required employees to pay for more of their care before insurance kicks in, and the Kaiser survey found that deductibles are rising even faster than premiums. Among workers who have a deductible — about 85 percent of insured workers — the average deductible amount has risen to $1,573, a 212 percent increase since 2008. Deductibles have risen eight times faster than wages over the last 10 years, the survey said (see the chart below).

Kaiser President and CEO Drew Altman said that he expects health care costs to be an important political issue for the foreseeable future. “As long as out-of-pocket costs for deductibles, drugs, surprise bills and more continue to outpace wage growth, people will be frustrated by their medical bills and see health costs as huge pocketbook and political issues,” Altman said.

Read a summary of the Kaiser Family Foundation’s 2018 Employer Health Benefits Survey here, and the .

 

Insurance start-up launches on-demand health coverage

https://www.cnbc.com/2018/06/27/insurance-start-up-launches-on-demand-health-coverage.html

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  • Start-up Bind uses proprietary algorithms, powered by machine learning, to lower health-care costs.
  • Bind discovered that it could break out certain procedures and reduce health benefit costs more effectively than with a high-deductible plan.
  • It is backed by Ascension Ventures, Lemhi Ventures and UnitedHealthcare.

Technology has made on-demand services a reality for everything from food deliveries to gym classes and car-sharing. What if you could have on-demand health coverage for big-ticket procedures like knee surgery?

On-demand health insurance seems like an oxymoron, but digital health insurance firm Bind is betting that by structuring health plans so that people can add coverage and pay for it when they need it, companies and employees can save money in the long run.

“It’s not intuitive for people, but I think when we started this we thought, ‘how do people really use the health-care system?’ And we used it in an on-demand way,” explained Tony Miller, co-founder and CEO of Bind.

The two-year old start-up is not a full-fledged insurer, it administers benefits for self-insured employers using UnitedHealth Group’sprovider networks and data analytics. Using its own proprietary algorithms, powered by machine learning, Bind discovered that it could break out certain procedures and reduce health benefit costs more effectively than with a high-deductible plan. It is backed by Ascension Ventures, Lemhi Ventures and UnitedHealthcare.

Plans are designed with basic co-pays and no deductibles for core medical coverage. In addition to free preventive care required under the Affordable Care Act, Bind’s plans cut out deductibles for primary care and specialist visits, maternity coverage, hospital care, medications and even cancer treatment. Co-pays are priced on a sliding scale — from $15 for a visit to retail clinic to $100 at an urgent care facility.

The big-ticket out-of-pocket costs kick in for elective procedures, such as knee replacement or back surgery. The extra co-pay for those procedures is based on the total cost, with consumers being given the full price of the procedure up front and no surprise bills on the back end. The co-pay can be structured so the worker can pay it off through payroll deductions, like a premium.

By outlining the total costs, Bind said it helps employees generate 10 to 15 percent in savings for themselves and for their employer compared to traditional out-of-pocket deductible plans.

“A market might be $6,000 to $24,000 for knee arthroscopy,” explained Miller. “What Bind does is says (for) the $6,000 performer — you only have to pay $1,000 to have access to them. If you want to go to the $24,000 knee arthroscopy with no difference in quality, no difference in performance, you have to pay $6,000 as a consumer.”

“What happens is the consumers actually go and buy the more cost-effective provider and they save money. But more importantly, the entire pool saves money … we save $18,000 for the group,” he said.

That was the way high-deductible plans were supposed to work, with consumers making the most cost-effective choice. Miller should know. He co-founded Definity Health in the late 1990s, which helped pioneer so-called consumer directed health plans; UnitedHealth bought that firm in 2004.

Does he worry that employers could use Bind’s on-demand plans to skimp on core benefits, and shift more costs to their workers? He does.

“What I would worry about is, taking this very novel plan design and if someone wanted to create a skinny plan out of it,” which he admitted would defeat the goal of Bind plan designs.

“Let’s make sure we fund the things we all need in health insurance and make sure that’s a part of everyone’s core benefit,” he said.

Bind has so far signed up small regional employers for its plan, but hopes to launch with a large Fortune 500 company for 2019 coverage.

 

Drug prices are still skyrocketing

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The Trump administration — primarily the president himself — has talked a lot about cracking down on prescription drug prices. But the pharmaceutical industry hasn’t changed its ways since Trump took office: 20 drugs have seen price hikes of 200% or more since January 2017, my colleague Bob Herman reports this morning.

  • The drugs to watch: High-cost, high-use prescriptions like Humira, Enbrel and Revlimid. AbbVie hiked the price of Humira, the highest-selling drug in the world, by 19% over the 14-month period, and Amgen did the same for Enbrel. Celgene raised the list price of Revlimid by 20%.
  • The big one: SynerDerm, a prescription skin cream, had the largest price hike. Phlight Pharma, the maker of SynerDerm, raised the list price by 1,468% over the past 14 months.
  • The runners-up: A total of 39 drugs saw price hikes of at least 100%, although many of them — like anti-venom extracts — are rarely used and don’t cost the health care system much overall.

The impact: These increases, which can be found in an analysis by Pharmacy Benefits Consultants, are in the drugs’ list prices, before rebates and discounts are applied. People with insurance don’t pay these full amounts, but price hikes still affect everyone.

  • Copays and deductibles are often based on drugs’ list prices, and uninsured patients can find themselves on the hook for a drug’s entire list price.

 

Idaho Blue Cross Jumps Into Controversial Market For Plans That Bypass ACA Rules

Idaho Blue Cross Jumps Into Controversial Market For Plans That Bypass ACA Rules

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That didn’t take long.

It’s barely been two weeks since Idaho regulators said they would allow the sale of health insurance that does not meet all of the Affordable Care Act’s requirements — a controversial step some experts said would likely draw legal scrutiny and, potentially, federal fines for any insurer that jumped in.

On Wednesday, Blue Cross of Idaho unveiled a menu of new health plans that break with federal health law rules in several ways, including setting premiums based on applicants’ health.

“We’re trying to offer a choice that allows the middle class to get back into insurance coverage,” said Dave Jeppesen, the insurer’s executive vice president for consumer health care.

The firm filed five plans to the state for approval and hopes to start selling them as soon as next month.

The Blue Cross decision ups the ante for Alex Azar, the Trump administration’s new Health and Human Services secretary. Will he use his authority under federal law to compel Idaho to follow the ACA and reject the Blues plans? Or will he allow state regulators to move forward, perhaps prompting other states to take more sweeping actions?

At a congressional hearing Wednesday, even as Blue Cross rolled out its plans, Azar faced such questions.

“There are rules. There is a rule of law that we need to enforce,” Azar said. Observers noted, however, he did not specifically indicate whether the federal government would step in.

Robert Laszewski, a consultant and former insurance industry executive, thinks it should.

“If Idaho is able to do this, it will mean other … states will do the same thing,” he said. “If a state can ignore federal law on this, it can ignore federal law on everything.”

Idaho’s move stirs up more issues about individual insurance market stability.

Policy experts say that allowing lower-cost plans that don’t meet the ACA’s standards to become more widespread will pull younger and healthier people out of Obamacare, raising prices for those who remain. Supporters say that is already happening, so this simply provides more choices for people who earn too much to qualify for subsidies to help them purchase ACA coverage.

The state’s move to allow such plans, announced in January, drew harsh and swift criticism.

“Crazypants illegal,” tweeted Nicholas Bagley, a law professor at the University of Michigan and former attorney with the civil division of the U.S. Department of Justice, who said that states can’t pick and choose which parts of federal law to follow. Sabrina Corlette, a research professor at Georgetown University’s Center on Health Insurance Reforms, pointed out that health insurers could be liable for sharp fines if they are found to be in violation of the ACA.

But both Idaho regulators and Blue Cross officials say they are not worried.

Jeppesen said the ACA gives states regulatory authority “to make sure the market works and is stable,” and the insurer is simply “following what the state has given us guidance” to do.

Other insurers in Idaho are taking a much more cautious approach, telling The Wall Street Journal they are not stepping up immediately to offer their own plans.

Laszewski said they are likely waiting to see what legal challenges develop.

“If I were running an insurance company, there’s no way I would stick my neck out until the high court has ruled in favor of this — and they’re not going to,” he said.

Jeppesen said his company has consulted with legal experts and is moving ahead with confidence. The aim is to bring people back into the market, particularly the young, the healthy and those who don’t get a tax credit subsidy and can’t afford an ACA plan.

For some people — especially younger or healthier applicants — the new plans, which the insurer has named Freedom Blue, cost less per month than policies that meet all ACA rules.

They accomplish that by limiting coverage. If they are allowed to be sold, consumers will need to weigh the lower premiums against some of the coverage restrictions and variable premiums and deductibles, policy experts say.

The plans, for example, will include a “waiting period” of up to 12 months for any preexisting conditions if the applicant has been without coverage for more than 63 days, Jeppesen said.

Additionally, they cap total medical care coverage at $1 million annually. And premiums are based, in part, on a person’s health: The healthiest consumers get rates 50 percent below standard levels, while those deemed unhealthy would be charged 50 percent more.

All those caveats violate ACA rules, which forbid insurers from rejecting coverage of preexisting conditions or setting dollar caps on benefits or higher premiums for people with health problems.

But the rates may prove attractive to some.

Premiums for a healthy 45-year-old, for example, could be as low as $195 a month, according to a comparison issued by the insurer, while a 45-year-old with health problems could be charged $526. In that case, the 45-year old would find a lower price tag — $343 a month — for an ACA-compliant bronze plan.

While Freedom Blues plans cover many of the “essential health benefits” required under the ACA, such as hospitalization, emergency care and mental health treatment, they do not include pediatric dental or vision coverage. One of the five plans does not include maternity coverage.

When compared with one of the Blues’ ACA-compliant plans — called the Bronze 5500 — the new standard Freedom Blue plan’s annual deductibles are a mixed bag.

That’s because they have two separate deductibles — one for medical care and one for drugs. If a consumer took only generic drugs, the new plan would be less expensive, according to details provided by the plan. But with a $4,000 deductible for brand-name drugs, the Freedom Blue plan requires more upfront money before full coverage kicks in than the ACA-compliant plan it was compared with.

Jeppesen said the insurer hopes to attract many of the “110,000 uninsured state residents who cannot afford [ACA] coverage.”

That’s the total number of uninsured people who earn more than 100 percent of the federal poverty level in the state, he said.

Sarah Lueck, senior policy analyst for the Center on Budget and Policy Priorities, cautioned that some of those residents might actually be eligible for subsidies under the ACA, which are available to people earning up to four times as much.

“Many … could be getting subsidies for more comprehensive coverage through the [ACA-compliant state exchange] and would be better off,” Lueck said.