Tag Archives: Health Insurance Coverage Adequacy

Ryan eyes push for ‘entitlement reform’ in 2018

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http://thehill.com/homenews/house/363642-ryan-pledges-entitlement-reform-in-2018?utm_source=&utm_medium=email&utm_campaign=12524

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House Speaker Paul Ryan (R-Wis.) on Wednesday said House Republicans will aim to cut spending on Medicare, Medicaid and welfare programs next year as a way to trim the federal deficit.

“We’re going to have to get back next year at entitlement reform, which is how you tackle the debt and the deficit,” Ryan said during an interview on Ross Kaminsky’s talk radio show.

Health-care entitlements such as Medicare and Medicaid “are the big drivers of debt,” Ryan said, “so we spend more time on the health-care entitlements, because that’s really where the problem lies, fiscally speaking.”

Ryan said he’s been speaking privately with President Trump, who is beginning to warm to the idea of slowing the spending growth in entitlements.

During his campaign, Trump repeatedly promised not to cut Medicare, Medicaid or Social Security.

“I think the president is understanding choice and competition works everywhere, especially in Medicare,” Ryan said.

House and Senate Republicans are currently working on their plans for tax reform, which are estimated to add more than $1 trillion to the deficit. Democrats have voiced concerns that the legislation could lead to cuts to the social safety net.

Ryan is one of a growing number of GOP leaders who have mentioned the need for Congress to cut entitlement spending next year.

Last week, House Ways and Means Committee Chairman Kevin Brady (R-Texas) said that once the tax bill was done, “welfare reform” was up next.

Sen. Marco Rubio (R-Fla.), last week, said “instituting structural changes to Social Security and Medicare for the future” will be the best way to reduce spending and generate economic growth.

Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, told Bloomberg TV that “the most important thing we can do with respect to the national debt, what we need to do, is obviously reform current entitlement programs for future generations.”

Ryan also mentioned that he wants to work on changing the welfare system, and Republicans have in the past expressed a desire to add work requirements to programs such as food stamps.

Speaking on the Senate floor while debating the tax bill last week, Senate Finance Committee Chairman Orrin Hatch (R-Utah) said he had a “rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves, won’t lift a finger and expect the federal government to do everything.”

His comments were echoed by Ryan.

“We have a welfare system that’s trapping people in poverty and effectively paying people not to work,” Ryan said Wednesday. “We’ve got to work on that.”

 

AARP to Congress: Don’t Cut Medicare

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https://www.aarp.org/politics-society/advocacy/info-2017/medicaid-medicare-tax-reform-fd.html?cmp=EMC-DSO-NLC-WBLTR—MCTRL-120817-F1-2613065&ET_CID=2613065&ET_RID=33152417&mi_u=33152417&mi_ecmp=20171208_WEBLETTER_Member_Control_Winner_251100_391403&encparam=rGtTYC48LtlDepUYFPD2E6KmzkAw6WgcgwvDlv37DZs%3D

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The tax bill would trigger an automatic funding cut in the vital program.

AARP Chief Executive Officer Jo Ann Jenkins called on congressional leaders Thursday to keep their promise to America’s seniors and prevent a large cut to Medicare that the tax bill now being debated on Capitol Hill would trigger.

The tax measure would result in a $1.5 trillion increase in the federal deficit over the next decade, according to the nonpartisan Congressional Budget Office (CBO). Such a deficit would prompt an automatic $25 billion cut to Medicare as soon as January because of the “pay-as-you-go” law, commonly referred to as PAYGO.

The law was designed to keep the deficit in check by requiring the administration to reduce spending in many mandatory federal programs if Congress enacts a law that increases the deficit but doesn’t provide offsetting revenue.

In a letter to Senate Majority Leader Mitch McConnell, Minority Leader Charles Schumer, House Speaker Paul Ryan and Minority Leader Nancy Pelosi, Jenkins reminded McConnell and Ryan that they had recently issued a statement promising that “we will work to ensure these spending cuts are prevented.”

In their statement, the Republican leaders pointed out that the PAYGO law has never been enforced since it was passed in 2010 and “we have no reason to believe that Congress would not act again” to forestall the cuts PAYGO would require.

Medicaid, Social Security, food stamps and some other social safety net programs are exempt from the PAYGO law. But Medicare and programs like federal student loans, agricultural subsidies and the operations of U.S. Customs and Border Protection are not exempt.

The law caps how much the government can trim from Medicare at 4 percent. That’s $25 billion the first year, according to CBO. The amount could be higher in subsequent years, depending on the size of the deficit and Medicare’s budget.

The reduction would affect the payments that doctors, hospitals and other health care providers receive for treating Medicare patients. Individual benefits would not be directly cut, but the reduction could have implications for the care beneficiaries receive.

“The sudden cut to Medicare provider funding in 2018 would have an immediate and lasting impact, including fewer providers participating in Medicare and reduced access to care for Medicare beneficiaries,” Jenkins wrote. Health care providers might stop taking Medicare patients, she added, even as 10,000 older adults are enrolling in the health program each day.

In addition, Medicare Advantage plans and Part D prescription drug plans may compensate for the cuts by charging higher premiums or shifting more costs to beneficiaries in future years.

“Our members and other older Americans are counting on you to preserve their access to Medicare services, including their doctors and hospitals,” Jenkins wrote.

Challenges Abound For 26-Year-Olds Falling Off Parental Insurance Cliff

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https://khn.org/news/challenges-abound-for-26-year-olds-falling-off-parental-insurance-cliff/

Marguerite Moniot felt frustrated and flummoxed, despite the many hours she spent in front of the computer this year reading consumer reviews of health insurance plans offered on the individual market in Virginia. Moniot was preparing to buy a policy of her own, knowing she would age out of her parent’s plan when she turned 26 in October.

Marguerite Moniot recently purchased health insurance on the open market with the help of a health navigator. She and her parents began searching for a policy several months ago, but the details of each plan became too complicated for the family. (Courtesy of Marguerite Moniot)

She asked her parents for help and advice. But they, too, ran into trouble trying to decipher which policy would work best for their daughter. The family had relied on her father’s employer-sponsored plan through his work as an architect for years, so no one had spent much time sifting through policies.

“Honestly, my parents were just as confused as I was,” said Moniot, a restaurant server in Roanoke.

In defeat, just before Thanksgiving, she went with her mother to meet a certified health insurance navigator, buying a policy that allowed her to keep her current doctors.

A new crop of young people like Moniot are falling off their parents’ insurance plans when they turn 26 — the age when the Affordable Care Act stipulates that children must leave family policies.

They were then expected to be able to shop relatively easily for their own insurance on Obamacare marketplaces. But with Trump administration revisions to the law and congressional bills injecting uncertainty into state insurance markets, that task of buying insurance for the first time this year is anything but simple.

The shortened sign-up period, which started Nov. 1, runs through Dec. 15. That window is half as long as last year’s, hampering those who wait until the last minute to obtain insurance.

Reminders and help are scarcer than before: The federal government cut marketing and outreach funds by $90 million, and federal funding to groups providing in-person assistance was whacked by 40 percent.

“I think it’s definitely going to be difficult. There’s just additional barriers with [less] in-person help, just fewer resources going around,” said Erin Hemlin, director of training and consumer education for Young Invincibles, an advocacy group for young adults.

Emily Curran, a research fellow at Georgetown University’s Health Policy Institute, said those actions combined with the Trump administration’s vigorous criticism of the health law could further handicap the uphill battle to entice young people to enroll. As of Dec. 2, more than 3.6 million people had enrolled through the federal marketplace, according to the Centers for Medicare & Medicaid Services. The data were not sorted by age.

“There’s already a barrier where young adults are having difficulty understanding what the value of insurance is,” she said. “Coming out … and saying prices are going up, choice is going down and this law is a mess doesn’t really get at the young adult population.”

Trouble Attracting Young Adults 

Before the Affordable Care Act, young adults had the highest uninsured rate of any age group.

The ACA made coverage more affordable and accessible. It allowed states to expand Medicaid to cover single, childless adults. Tax credits to help pay for premiums made plans on the individual market more affordable for people whose incomes fell between 100 and 400 percent of the federal poverty level (between $12,060 and $48,240 for an individual). And young adults were allowed to stay on their parents’ plan until their 26th birthday.

If the Trump administration’s moves dampen enrollment, insurers could face additional challenges in attracting healthy adults to balance those with illnesses, who drive up costs.In all, the uninsured rate dropped to roughly 15 percent among 19- to 34-year-olds in 2016. Still, young adults have not joined the individual market in the numbers as expected. About a quarter of marketplace customers in 2016 were ages 18-34, according to the Department of Health and Human Services. But that age group makes up about 40 percent of the exchanges’ potential market, according to researchers and federal officials.

“When you’re relatively healthy, it’s not something that you’re thinking about,” said Sandy Ahn, associate research professor at Georgetown University’s Health Policy Institute.

But illness does not recognize age. Dominique Ridley, who turned 26 on Dec. 6, knows this all too well.

Ridley has asthma. She always carries an inhaler and sees a doctor when she feels her chest tighten. The student at Radford University in Virginia relies on her mother’s employer-sponsored plan for coverage.

Ridley started peppering her parents with questions about health insurance as soon as she started seeing ads for this year’s open enrollment.

“I don’t want to just go out there and apply for health insurance, and it be all kinds of wrong and I can’t afford it,” she said.

Her parents didn’t have the answers, but her mother linked up Ridley with a friend that runs a marketing company tailored to promoting the Affordable Care Act. Ridley then connected with a broker who signed her up for a silver plan that will cost her less than $4 per month, after receiving a premium subsidy of more than $500 a month.

“If you don’t have health insurance, you don’t have anything,” Ridley said.

A Digital Campaign 

The Obama administration relied in part on partnerships to attract young enrollees to sign up. Last year, it collaborated with national organizations like Planned Parenthood Federation of America and Young Invincibles on a social media campaign called #HealthyAdulting. Emails, according to Joshua Peck, former chief marketing officer for healthcare.gov, were particularly effective for recruitment.

The Centers for Medicare & Medicaid Services, which oversees the marketplaces, said it will focus this year’s resources on “digital media, email and text messages.”

“But obviously we can’t make up for $90 million in advertising” that’s been cut, said Hemlin.Hemlin said the government has not asked Young Invincibles to assist in marketing. Her group will use its own resources to pay for targeted ads on social media to reach the target demographic, she said.

One factor that might compensate is that 20-somethings are facile at shopping online, said Jill Hanken, director of Enroll! Virginia, a statewide navigator program.

“Our job is to make sure they understand to look at provider networks and drug formularies if they have health concerns. But they’re able to do the mechanics of enrollment on their own very often.”

James Rowley, a 26-year-old entrepreneur from Fairfax, Va., is among those who signed up without help. He started his own company two years ago while covered under his father’s health plan. When he turned 26, he signed up for health insurance on his own through a special enrollment period this year. After general enrollment opened this fall, he once again picked a plan.

“I might not 100 percent need it now, but there will come a time where health insurance is important,” said Rowley.

 

 

With House conservatives’ resistance, ACA stabilization bills’ prospects get dimmer

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https://www.fiercehealthcare.com/aca/house-gop-alexander-murray-collins-nelson-bills?mkt_tok=eyJpIjoiT0RnMFkySXdPV0psWldSaCIsInQiOiJQSllQNlpcL2RhTzBDZFwvZXh5M1ZUSDJyUU5JTGw3dnh1QTVac01rZUFcL2pNUUhhMXBaQjBxK29ScHRrOHhsT3d6aE5pcFRJUWd4Sm0rYXA4S0RYVGE2N0czN2hhc2hsXC9EZk9mSGVLR0V1UFlwVDZpQmdkcll0eTBMNDUzTHlIZDIifQ%3D%3D&mrkid=959610&utm_medium=nl&utm_source=internal

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Senate GOP leaders won a key swing vote for their tax bill by pledging to pass bipartisan legislation to shore up the Affordable Care Act. But now it looks like those measures’ chances of becoming law are getting dimmer.

Sen. Susan Collins, R-Maine, wants two bills to pass that she hopes will mitigate the effects of a provision in the tax bill that repeals the individual mandate: the Alexander-Murray bill, which would fund cost-sharing reduction payments for two years, and a bill she co-authored with Democrat Bill Nelson, which provides funding for states to establish invisible high-risk pool or reinsurance programs.

Collins voted for the Senate’s version of the tax bill—a critical win for GOP leaders, as they could only lose two votes and it failed to gain her support for previous ACA repeal bills. But she only did so after Senate Majority Leader Mitch McConnell assured her the two ACA stabilization measures would pass.

Yet while some lawmakers previously said those measures could be tacked on to the short-term spending bill Congress aims to pass this week, congressional aides now say it isn’t likely to be included, according to The Wall Street Journal. Further, while House conservatives have indicated strong support for repealing the individual mandate in the final version of the GOP tax bill, they are far from on board with the two ACA stabilization bills.

For example, Ohio Rep. Warren Davidson said he’s a “hard, hard, very hard no,” on the Alexander-Murray bill, per the WSJ article.

House Speaker Paul Ryan could also be a barrier to passing the two bills. His office told a meeting of congressional leadership offices on Monday that he wasn’t part of any deal between Collins and McConnell, The Hill reported. But his office didn’t say outright that it opposed the bills.

For her part, Collins said it will be “very problematic” if the ACA stabilization bills don’t pass, according to the WSJ. She also won’t commit to voting for the final version of the tax bill until she sees what comes out of a conference committee between the House and Senate.

Even if those measures do pass, there have been questions about whether they would do enough to soften the blow of repealing the individual mandate. The Congressional Budget Office has advised that the Alexander-Murray bill would do little to change its prediction that repealing the mandate would increase the uninsured rate and raise premiums.

A new analysis from Avalere found that Collins’ bill could help stabilize the individual market by increasing enrollment and reducing premiums in 2019, but the consulting firm’s experts cautioned that those effects could be overshadowed by repealing the individual mandate.

 

Professor Speaks episode, “ACA Individual Mandate”

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http://www.propharmaconsultants.com/speak.html

Professor Speaks

The November 15th, 2017 Professor Speaks episode, “ACA Individual Mandate”, is now available on YouTube and the Pro Pharma Website.

This episode addresses questions like:

  • What is the Individual Mandate?
  • Why do some want to repeal it?
  • What would be the effect of repealing it?

Marketplace Confusion Opens Door To Questions About Skinny Plans

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Marketplace Confusion Opens Door To Questions About Skinny Plans

Consumers coping with the high cost of health insurance are the target market for new plans claiming to be lower-cost alternatives to the Affordable Care Act that fulfill the law’s requirement for health coverage.

But experts and regulators warn consumers to be cautious and are raising red flags about one set of limited benefit plans marketed to individuals for as little as $93 a month. Offered through brokers and online ads, the plans promise to be an “ACA compliant, affordable, integrated solution that help … individuals avoid the penalties under [the health law].”

Legal and policy experts have raised concerns that the new plans could leave buyers incorrectly thinking they are exempt from paying a penalty for not having coverage. Additionally, they say, plans sold to individuals must be state-licensed.

Apex Management Group of Oak Brook, Ill., and Pennsylvania-based Xpress Healthcare have teamed up to offer the plans, and executives from both companies say they don’t need state approval to sell them.

In California, Insurance Commissioner Dave Jones has already asked for an investigation.

“Generally speaking, any entity selling health insurance in the state of California has to have a license,” Jones said earlier this month. “I have asked the Department of Insurance staff to open an investigation with regard to this company to ascertain whether it is in violation of California law if they are selling it in California.”

Asked about a possible investigation, Apex owner Jeffrey Bemoras recently emailed a statement saying the firm is not offering the plans to individuals in California.

Bruce Benton, spokesman for the California Association of Health Underwriters, which represents the state’s health insurance agents, said his organization has not heard of Apex or Xpress and does not know of anybody who is selling their skinny plans in California.

These skinny plans — sold for the first time to individuals in other states across the country — come amid uncertainty over the fate of the ACA and whether President Donald Trump’s administration will ease rules on plans in the individual market. Dozens of brokers are offering the plans.

“The Trump administration is injecting a significant amount of confusion into the implementation of the ACA,” said Kevin Lucia, project director at Georgetown University’s Health Policy Institute. “So it doesn’t surprise me that we would have arrangements popping up that might be trying to take advantage of that confusion.”

David Shull, Apex’s director of business development, said “this is not insurance” and the plans are designed to meet the “bulk of someone’s day-to-day needs.”

In his email, Bemoras wrote that “Apex Management group adheres closely to all state and federal rules and regulations surrounding offering a self-insured MEC [minimal essential coverage] program.” He added: “We are test marketing our product in the individual environment, [and] if at some point it doesn’t make sense to continue that investment we will not invest or focus in on that market.”

Price-Tag Appeal, But What About Coverage?

The new plans promise to be a solution for individuals who say that conventional health insurance is too expensive. Those looking for alternatives to the ACA often earn too much to qualify for tax subsidies under the federal law.

Donna Harper, an insurance agent who runs a two-person brokerage in Crystal Lake, Ill., found herself in that situation. She sells the Xpress plans — and decided to buy one herself.

Harper says she canceled her BlueCross BlueShield plan, which did meet the ACA’s requirements, after it rose to nearly $11,000 in premiums this year, with a $6,000 annual deductible.

“Self-employed people are being priced out of the market,” she said, noting the new Xpress plan will save her more than $500 a month.

The Xpress Minimum Essential Coverage plans come in three levels, costing as little as $93 a month for individuals to as much as $516 for a family. They cover preventive care — including certain cancer screenings and vaccinations — while providing limited benefits for doctor visits, lab tests and lower-cost prescription drugs.

There is little or no coverage for hospital, emergency room care and expensive prescription drugs, such as chemotherapy.

Harper said she generally recommends that her clients who sign up for an Xpress plan also buy a hospital-only policy offered by other insurers. That extra policy would pay a set amount toward in-patient care — often ranging from $1,500 to $5,000 or so a day.

Still, experts caution that hospital bills are generally much higher than those amounts. A three-day stay averages $30,000, according to the federal government’s insurance website. And hospital plans can have tougher requirements. Unlike the Xpress programs, which don’t reject applicants who have preexisting medical conditions, most hospital-only plans often do. Harper says she personally was rejected for one.

“I haven’t been in the hospital for 40 years, so I’m going to roll the dice,” she said.  And if she winds up in the hospital? “I’ll just pay the bill.”

About 100 brokers nationwide are selling the plans, and interest “is picking up quick,” said Edward Pettola, co-owner and founder of Xpress, which for years has sold programs that offer discounts on dental, vision and prescription services.

Caveat Emptor

Experts question whether the plans exempt policyholders from the ACA’s tax penalty for not having “qualified” coverage, defined as a policy from an employer, a government program or a licensed product purchased on the individual market.

The penalty for tax year 2017 is the greater of a flat fee or a percentage of income. The annual total could range from as little as $695 for an individual to as much as $3,264 for a family.

Trump issued an executive order in October designed to loosen insurance restrictions on lower-cost, alternative forms of coverage, but the administration has not signaled its view on what would be deemed qualified coverage.

Responding to questions from KHN, officials from Apex and Xpress said their plans are designed to be affordable, not to mimic ACA health plans.

“If that is what we are expected to do, just deliver what every Marketplace plan or carriers do, provide a Bronze, Silver Plan, etc. it would not solve the problem in addressing a benefit plan that is affordable,” the companies said in a joint email on Nov. 14. “Individuals are not required to have an insurance plan, but a plan that meets minimum essential coverage, the required preventive care services.”

Bemoras, in a separate interview, said his company has been selling a version of the plan to employers since 2015.

“As we see the political environment moving and wavering and not understanding what needs to be done, the individual market became extremely attractive to us,” Bemoras said.

Still, experts who reviewed the plans for KHN said policies sold to individuals must cover 10 broad categories of health care to qualify as ACA-compliant, including hospitalization and emergency room care, and cannot set annual or lifetime limits.

The Xpress/Apex programs do set limits, paying zero to $2,500 annually toward hospital care. Doctor visits are covered for a $20 copayment, but coverage is limited to three per year. Lab tests are limited to five services annually. To get those prices, patients have to use a physician or facility in the PHCS network, which says it has 900,000 providers nationwide. Low-cost generics are covered for as little as a $1 copay, but the amount patients pay rises sharply for more expensive drugs.

“I’m very skeptical,” said attorney Alden J. Bianchi of Mintz Levin, who advises firms on employee benefits. “That would be hard [to do] because in the individual market, you have to cover all the essential health benefits.”

The details can be confusing, partly because federal law allows group health plans — generally those offered by large employers — to provide workers with self-funded, minimal coverage plans like those offered by Apex, Bianchi said.

Apex’s Shull said in a recent email that the firm simply wants to offer coverage to people who otherwise could not afford an ACA plan.

“There will be states that want to halt this. Why, I do not understand,” he wrote. “Would an individual be better off going without anything? If they need prescriptions, lab or imaging services subject to a small copay, would you want to be the one to deny them?”

Some consumers might find the price attractive, but also find themselves vulnerable to unexpected costs, including the tax liability of not having ACA-compliant coverage.

Harper, the broker who signed up for one of the plans, remains confident: “As long as Xpress satisfies the [mandate], which I’m told it does, my clients are in good hands. Even if it doesn’t, I don’t think it’s a big deal. You are saving that [the tax penalty amount] a month.”

 

Healthcare bankruptcies more than triple in 2017

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https://www.beckershospitalreview.com/finance/healthcare-bankruptcies-more-than-triple-in-2017.html

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Regulatory changes, the rise of high-deductible health plans and advances in technology are a few of the factors that have taken a toll on healthcare companies’ finances, and these challenges may lead many hospitals and other medical companies to restructure their debt or file for bankruptcy in the coming year, according to Bloomberg.

Although hospitals are expected to face financial challenges in the year ahead, many healthcare companies are already struggling. According to data compiled by Bloomberg, healthcare bankruptcy filings have more than tripled in 2017. Healthcare bankruptcies are on the rise as filings across the broader economy have fallen since 2010, according to the report.

The challenges in the healthcare sector may hit rural hospitals the hardest due to the reduction in Disproportionate Share Hospital payments.

The ACA calls for annual ggregate reductions to DSH payments from fiscal year 2014 through fiscal year 2020. Subsequent legislation delayed the start of the reductions until fiscal year 2018, which began Oct. 1, and pushed the end date back to fiscal year 2025.

David Neier, a partner at Winston & Strawn, told Bloomberg the cuts to DSH payments may “single-handedly throw hospitals into immediate financial distress.”

 

Skyrocketing out-of-pocket spending outpaces wage growth

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https://www.healthcaredive.com/news/skyrocketing-out-of-pocket-spending-outpaces-wage-growth/506734/

Dive Brief:

  • In the latest study to show how out-of-pockets costs could create barriers to care, the Kaiser Family Foundation (KFF) found that out-of-pocket spending is outpacing wage growth.
  • The average deductible for people with employer-based health insurance increased from $303 in 2006 to $1,505 in 2017.
  • Researchers also found that average payments for deductibles and coinsurance skyrocketed faster than overall cost for covered benefits. That’s happened while average copayments have decreased.

Dive Insight:

KFF researchers reviewed health benefit claims from the Truven MarketScan Commercial Claims and Encounters Database to calculate the average that members pay for deductibles, copayments and coinsurance. What they found should not surprise anyone in healthcare or with employer-based health insurance — deductibles and overall out-of-pocket health costs are rising.

The organization found patient cost-sharing “rose substantially faster than payments for care by health plans as insurance coverage became a little less generous” between 2005 and 2015.

Deductibles went from accounting for less than 25% of cost-sharing payments in 2005 to almost half in 2015. The average payments toward deductibles rose 229% from $117 to $386 and the average payments toward coinsurance increased 89% from $134 to $253 in that period.

On the plus side, copayments fell by 36% from $218 to $139 as payers and employers have moved more costs to healthcare utilization.

Overall, patient-cost sharing increased by 66% from an average of $469 in 2005 to $778 in 2015. Average payments by health plans also increased 56% from $2,932 to $4,563.

While out-of-pocket health costs have skyrocketed, wages in the same period increased by 31%.

The KFF study comes on the heels of a JPMorgan Chase Institute report that found Americans are struggling with out-of-pocket costs. In many cases, JPMorgan Chase Institute found that people are delaying healthcare payments until they get “liquid assets.” In fact, healthcare payments spike in March and April when Americans get tax refunds.

In another recent study on the topic, HealthFirst Financial Patient Survey said more than 40% of respondents are “very concerned” or “concerned” about whether they could pay out-of-medical bills over the next two years. More than half said they are worried that they might not be able to afford a $1,000 bill, 35% were concerned about a $500 bill and 16% said they’re worried about paying a bill less than $250.

Those amounts are usually well below health plan deductibles. The Kaiser Family Foundation/Health Research & Educational Trust 2017 Employer Health Benefits Survey recently found that health plan deductibles often exceed $3,000.

That could be a problem not just for those individuals. Providers and hospitals are already struggling with sagging reimbursements and payer cost-saving measures and policies. More bad debt would only make matters worse.

 

Increases in cost-sharing payments have far outpaced wage growth

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Increases in cost-sharing payments continue to outpace wage growth

Image result for Deductibles account for less than a quarter of cost-sharing payments in 2005, but almost half in 2015

 

Rising cost-sharing for people with health insurance has drawn a good deal of public attention in recent years.  For example, the average deductible for people with employer-provided health coverage rose from $303 to $1,505 between 2006 and 2017.

While we can get a sense of employees’ potential exposure to out-of-pocket costs by looking at trends in deductibles, many employees will never reach their deductibles and other employees may have costs that far exceed their deductibles.  In addition to deductible payments, some employees also have copayments (set dollar amounts for a given service) or coinsurance payments (a percentage of the allowed amount for the service).  To look at what workers and their families actually spend out-of-pocket for services covered by their employer-sponsored plan, we analyzed a sample of health benefit claims from the Truven MarketScan Commercial Claims and Encounters Database to calculate the average amounts paid toward deductibles, copayments and coinsurance.

We find that, between 2005 and 2015, average payments for deductibles and coinsurance rose considerably faster than the overall cost for covered benefits, while the average payments for copayments fell.  As can be seen in the chart below, over this time period, patient cost-sharing rose substantially faster than payments for care by health plans as insurance coverage became a little less generous.

Deductible spending has risen while copayment spending has fallen

The MarketScan claims database contains information about health benefit claims and encounters for several million individuals each year provided by large employers.  The advantage of using claims information to look at out-of-pocket spending is that we can look beyond the plan provisions and focus on actual payment liabilities incurred by enrollees. A limitation of these data is that they reflect cost sharing incurred under the benefit plan and do not include balance-billing payments that beneficiaries may make to health care providers for out-of-network services or out-of-pocket payments for non-covered services.  We use a sample of between 933,000 and 14.8 million enrollees per year to analyze the change from 2005 to 2015 in average health costs for covered benefits overall, the average amount paid by health benefit plans, and the average amounts attributable to deductibles, copayments, and coinsurance.  The analysis of costs for each year was limited to enrollees with more than six months of coverage during that year.

From 2005 to 2015, the average payments by enrollees towards deductibles rose 229% from $117 to $386, and the average payments towards coinsurance rose 89%, from $134 to $253, while average payments for copays fell by 36%, from $218 to $139.  Overall, patient cost-sharing rose by 66%, from an average of $469 in 2005 to $778 in 2015. During that period, average payments by health plans rose 56%, from $2,932 to $4,563. This reflects a modest decline in the average generosity of insurance – large employer plans covered 86.2% of covered medical expenses on average in 2005, decreasing to 85.4% in 2015.  Wages, meanwhile, rose by 31% from 2005 to 2015.

Individuals in the top 15 percent of health spenders (who together account for 75.1% of total health benefit costs for the sample), had substantially higher out-of-pocket costs, averaging $2,766 in 2015, including $1,302 in coinsurance payments, $1,006 in deductible spending, and $458 in copays. The growth in cost-sharing for this group was similar to the sample overall.  As of 2015, 6.5% of all enrollees had deductible payments that exceeded $1,500 and 8.4% had overall cost-sharing payments that exceeded $2,500.

Deductibles account for less than a quarter of cost-sharing payments in 2005, but almost half in 2015

The relatively high growth in payments toward deductibles is evident in the changes over time in the distribution of cost sharing payments: deductibles accounted for 25% of cost sharing payments in 2005, rising to 50% in 2015.  Conversely, copayments accounted for nearly half (46%) of cost sharing payments in 2005, falling to 18% in 2015.  The increase in coinsurance over the period from 29% of total employee cost-sharing in 2005 to 33% in 2015 may reflect the strong growth over the period in plans that qualify a person to establish a health savings account; these plans are more likely to have coinsurance than copayments for physician services.  Patients are more sensitive to the actual price of health care with deductibles and coinsurance than they are with copays, which are flat dollar amounts.  The other difference between a copay and a deductible is that copays may add up over time, while a deductible may need to be met at once, causing affordability challenges.

While average payments towards deductibles are still relatively low in the context of total household budgets, they have increased quite rapidly. Deductibles are the most visible element of an insurance plan to patients, which may help explain why consumers continue to show concern about their out-of-pocket costs for care. Although health insurance coverage continues to pay a large share of the cost of covered benefits, patients in large employer plans are paying a greater share of their medical expenses out-of-pocket. And, while health care spending has been growing at fairly modest rates in recent years, the growth in out-of-pocket costs comes at a time when wages have been largely stagnant.

Is a Medicare option for all the only practical means to solve the healthcare insurance crisis?

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https://www.beckershospitalreview.com/payer-issues/is-a-medicare-option-for-all-the-only-practical-means-to-solve-the-healthcare-insurance-crisis.html

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From a healthcare consumer perspective, it increasingly strikes one that the healthcare insurance market is a story of haves and have-nots.

The haves include those that work for companies of a certain size, at which the companies can access insurance at very expensive but somewhat rationalized costs (think $16,000 to $20,000 per family per year, with employees contributing roughly $5,500), people on Medicare, and — crazily enough — people on Medicaid. (Again, the concept of a “have” here solely relates to the availability of healthcare coverage. It is by no means meant to understate the challenge of being in such poverty to be eligible for Medicaid.)

The have-nots include a vast number of people trying to buy insurance directly from insurance companies. Here, one increasingly hears that whether one is rich or poor, the costs are horrendous. Family costs for PPO plans seem to fall in the $20,000 to $25,000 range for many families, and even higher for those with preexisting conditions.

From a provider perspective, Medicare is a mixed bag depending on the type of provider. From a hospital’s perspective, it seems to be fine overall. From a physician’s perspective,  many seem to find it woefully inadequate.

One of the great challenges of the ACA is it set up an additional healthcare system of subsidies around insurance markets, mandates and so forth. It added complexity and costs, but also helped provide an additional basket of coverage for a good deal of uninsured Americans.

Regardless of political perspectives, rather than building another healthcare finance system, it seems that a simple approach would be to build on an existing system that, while imperfect, seems to work fairly well.

As an ardent capitalist at heart, the idea over the years of expanding a government program of any sort, including Medicare, has always led me to a negative conclusion. I.e., would it cause the kind of regression in our healthcare system that exists in systems in England or Canada, where care is famously inadequate or requires waiting months for certain types of care?

In contrast, at some point, does the cost of healthcare for those who don’t work for a large company and aren’t eligible for Medicare or Medicaid make the system so expensive that there is good reason to offer a Medicare option for such people? This demographic makes up a large part of the population, and it seems that the private insurance market is offering them only very expensive choices for health plans.

Much of my sense of the cost of private healthcare insurance comes anecdotally — from listening to diverse family and extended family around the Thanksgiving table, for instance. That stated, I do sense the cost of insurance for a family has moved from quite expensive to extremely and back-breakingly expensive. Sadly, I’m losing confidence that the core free market can fix it.