Middle-income Americans paying more for health insurance

https://www.healthcaredive.com/news/middle-income-americans-paying-more-for-health-insurance/543903/

Dive Brief:

  • Middle-income families are spending more of their incomes on health insurance as average premiums skyrocketed in 2017 after modest rate increases earlier this decade, The Commonwealth Fund found in a new report.
  • Average employee contributions rose to nearly 7% of median income for single and family plans compared to 5.1% a decade ago. Premium contributions were 8% of median income or more in 11 states, including Louisiana, which had the highest percentage (10.2%).
  • The contributions and potential out-of-pocket spending for single and family policies was $7,240 in 2017. That was 11.7% of median income and an increase from 7.8% a decade ago.

Dive Insight:

Cost and price variations between areas aren’t anything new. A recent Network for Regional Healthcare Improvement found healthcare usage and pricing drive variation between states’ total healthcare costs. The report also found vast differences in costs between five states studied.

Overall, national health spending has slowed in recent years. The CMS Office of the Actuary reported this month that national health spending grew 3.9% ($10,739 per person) in 2017. It was the second consecutive year of slower healthcare spending growth. The slower cost growth is connected to fewer people receiving care.

The Commonwealth Fund found large differences between states. For instance, the average annual premium contributions for single-person plans ranged from $675 in Hawaii to $1,747 in Massachusetts. Michigan saw the cheapest premiums in family plans at $3,646 while Delaware had the highest at $6,533.

The average annual deductible for single-person policies increased to more than $1,800 in 2017. The gap was between $863 (Hawaii) and about $2,300 (Maine and New Hampshire). Three states (Florida, Mississippi and Tennessee) had average deductibles more than 6% of median income.

Premiums for employer health plans, which is how most Americans get coverage, increased 4.4% for single plans and 5.5% for family plans in 2017. All but five states saw higher single-person premiums with eight states averaging more than $7,000 (Alaska, Connecticut, Delaware, Massachusetts, New Jersey, New York, Rhode Island and Wyoming).

Meanwhile, family premiums increased in 44 states and were $20,000 or more in seven states (Alaska, Connecticut, Massachusetts, New Jersey, New York, West Virginia and Wyoming) and the District of Columbia.

The cost of health insurance is increasing faster than wage growth — and the Commonwealth Fund found that the added cost isn’t leading to higher-quality health insurance. The issue is especially a problem in southern states with lower median incomes, such as Mississippi.

The group suggested policymakers could tackle the problem of rising healthcare costs in a couple of ways.

Congress could provide more tax credits to people with employer-sponsored insurance, require businesses to improve plan benefit design to cover more services before employees reach their deductibles and offer refundable tax credits to offset out-of-pocket costs.

Other potential efforts include connecting provider payments to value and outcomes, addressing the concentration of payer and provider markets and slowing prescription drug cost growth. “Policymakers will need to recognize that the increasing economic strain of healthcare costs facing middle-income and poor Americans is driven by multiple interrelated factors and will require a comprehensive solution,” according to the report.

 

The Cost of Employer Insurance Is a Growing Burden for Middle-Income Families

https://www.commonwealthfund.org/publications/issue-briefs/2018/dec/cost-employer-insurance-growing-burden-middle-income-families

middle-income family shops for groceries

Recent national surveys show health care costs are a top concern in U.S. households.1 While the Affordable Care Act’s marketplaces receive a lot of media and political attention, the truth is that far more Americans get their coverage through employers. In 2017, more than half (56%) of people under age 65 — about 152 million people — had insurance through an employer, either their own or a family member’s.2 In contrast, only 9 percent had a plan purchased on the individual market, including the marketplaces.

In this brief, we use the latest data from the federal Medical Expenditure Panel Survey–Insurance Component (MEPS–IC) to examine trends in employer premiums at the state level to see how much workers and their families are paying for their employer coverage in terms of premium contributions and deductibles. We examine the size of these costs relative to income for those at the midrange of income distribution. The MEPS–IC is the most comprehensive national survey of U.S. employer health plans. It surveyed more than 40,000 business establishments in 2017, with an overall response rate of 65.8 percent.

Highlights

  • After climbing modestly between 2011 and 2016, average premiums for employer health plans rose sharply in 2017. Annual single-person premiums climbed above $7,000 in eight states; family premiums were $20,000 or higher in seven states and D.C.
  • Rising overall employer premiums increased the amount that workers and their families contribute. Average annual premium contributions for single-person plans ranged from $675 in Hawaii to $1,747 in Massachusetts; family plans ranged from $3,646 in Michigan to $6,533 in Delaware.
  • Average employee premium contributions across single and family plans amounted to 6.9 percent of U.S. median income in 2017, up from 5.1 percent in 2008. In 11 states, premium contributions were 8 percent of median income or more, with a high of 10.2 percent in Louisiana.
  • The average annual deductible for single-person policies rose to $1,808 in 2017, ranging from a low of $863 in Hawaii to a high of about $2,300 in Maine and New Hampshire. Average deductibles across single and family plans amounted to 4.8 percent of median income in 2017, up from 2.7 percent in 2008. In three states (Florida, Mississippi, and Tennessee), average deductibles comprised more than 6 percent of median income.
  • Combined, average employee premium contributions and potential out-of-pocket spending to meet deductibles across single and family policies rose to $7,240 in 2017 and was $8,000 or more in eight states. Nationally, this potential spending amounted to 11.7 percent of median income in 2017, up from 7.8 percent a decade earlier. In Louisiana and Mississippi, these combined costs rose to 15 percent or more of median income.

 

 

 

 

Public blames everyone for high health costs

https://www.kff.org/health-reform/poll-finding/kaiser-health-tracking-poll-late-summer-2018-the-election-pre-existing-conditions-and-surprises-on-medical-bills/

Health care costs remain a leading issue ahead of this year’s midterms, and voters have plenty of blame to go around, according to the Kaiser Family Foundation’s latest tracking poll.

  • Kaiser asked its respondents whether certain factors are a “major reason” health care costs are rising. (There could be multiple “major reasons.”)
  • Blame for the potential political culprits — the ACA and the Trump administration — was split about evenly.
  • But there’s a broader bipartisan agreement that industry is to blame: At least 70% faulted drug companies, hospitals and insurers. Doctors caught a break, at 49%.

Partisanship reigns, though, on the question of whether President Trump will help.

  • A mere 13% of Democrats are at least somewhat confident that Americans will pay less for prescription drugs under the Trump administration, compared with a whopping 83% of Republicans. Independents generally share Democrats’ skepticism.
  • Roughly a quarter of Democrats and two-thirds of Republicans, think Trump’s public criticism of drug companies will help bring down prices.

Surprise hospital bills haven’t attracted the same political uproar as prescription drug costs, but the Kaiser poll provides more reason to believe they could be the next big controversy.

  • 67% said they’re “very worried” or “somewhat worried” about being unable to pay a surprise medical bill, while 53% fear they won’t be able to pay their deductible and 45% are afraid of the tab for their prescription drugs.
  • 39% experienced a surprise bill in the past year.

 

 

 

New Accumulator Adjustment Programs Threaten Chronically Ill Patients

https://www.healthaffairs.org/do/10.1377/hblog20180824.55133/full/?utm_term=Read%20More%20%2526gt%3B%2526gt%3B&utm_campaign=Health%20Affairs%20Sunday%20Update&utm_content=email&utm_source=Act-On_2018-08-05&utm_medium=Email&cm_mmc=Act-On%20Software-_-email-_-Individual%20Mandate%20Litigation%3B%20Housing%20And%20Equitable%20Health%20Outcomes%3B%20Simplifying%20The%20Medicare%20Plan%20Finder%20Tool-_-Read%20More%20%2526gt%3B%2526gt%3B

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For too many Americans with chronic illnesses, such as HIV, arthritis, and hemophilia, insurance companies and their pharmacy benefit managers (PBMs) are erecting access barriers to innovative and life-saving prescription medicines. A new and growing trend—called accumulator adjustment programs—threatens to exacerbate the problem by significantly increasing out-of-pocket spending for patients. On top of it, patients are not even aware of this sudden and very costly change.

Patients with chronic illnesses already jump through hoops to receive their drugs. First, they have to ensure that their medicines are covered by their plan. Then they often have to work through a series of utilization management steps, such as prior authorization and step-therapy.

On top of those hurdles, more and more patients are facing high deductibles for prescription drugs or are being asked to pay a percentage of the cost of a drug, which is called coinsurance, instead of a nominal copayment. Coinsurance and deductibles often require patients to pay cost sharing based on the list price, which does not reflect the rebates that the PBMs receive from the drug companies.

When patients are still satisfying their deductible or are paying high coinsurance, they can face out-of-pocket spending of thousands of dollars to fill one prescription. If they cannot afford these costs, they will leave the pharmacy counter empty-handed and risk becoming sick or getting sicker. Drug manufacturers offer coupons to prevent this and make cost sharing for these drugs affordable. Historically, commercial insurance plans have applied the value of these coupons to a patient’s annual deductible and out-of-pocket maximum; reaching these limits translates into lower out-of-pocket spending for the rest of the year.

Now, however, accumulator adjustment programs are currently being pushed by PBMs, such as Express Scripts and CVS Caremark, to insurers including United HealthcareMolina, and BlueCross BlueShield of Texas and Illinois, and to large employers such as WalmartHome Depot, and Allstate. These programs change the calculus for patients by no longer applying the copay coupons to patient deductibles and out-of-pocket maximums. Patients must spend more out of pocket to reach their deductible; sometimes thousands of dollars more. For too many patients, this makes the drugs they depend on unaffordable.

While there has been an ongoing debate between the insurance industry and the drug companies regarding who is responsible for the high cost of some medications, this new practice has nothing to do with the actual cost of the drug. The only thing that has changed is how much the insurance company, employer, or PBM is requiring patients to pay for their drug. And these entities are beginning to implement accumulator adjustment programs without adequately informing beneficiaries, who will be shocked to learn that the cost-sharing assistance they have been relying on no longer applies toward their deductible or out-of-pocket costs.

People living with HIV and hepatitis have long relied on these copay coupons to afford the cost of their medications. The impact on a countless number of peoples’ lives has been profound. But this new practice will increase patient out-of-pocket spending, leaving patients at risk of hitting a “cost cliff” mid-year. This cliff could cause disruptions to patients’ care as medication becomes prohibitively expensive. For people living with HIV, hepatitis, and so many other health conditions, the resulting decision can literally mean life or death.

While some may claim that coupons are being used to incentivize brand-name drugs over generics, the fact is 87 percent of the coupons are for drugs that have no generic equivalent. The 13 percent of branded drugs programs in which generic equivalent products are available accounted for only 0.05 percent of all prescriptions filled.

There is a relatively new drug regimen, known as pre-exposure prophylaxis (or PrEP), that when taken regularly, prevents HIV. Because there is no generic alternative, most patients can’t afford the high coinsurance and rely on manufacturer copay assistance to reach their deductible and lighten the burden. This new practice of no longer applying the copay coupons to patient deductibles and out-of-pocket maximums by the insurance companies and PBMs are making access to this remarkable treatment more difficult and will have a significant impact on our efforts to prevent HIV in the United States.

But it does not have to be like this. The growing practice of not counting copay coupons toward a beneficiary’s deductible most likely stems from PBMs, insurers, and human resources professionals, who sign off on these plans, failing to fully comprehend the impact these programs will have on vulnerable patient populations and the overall health care system.

Patient groups and employees across the country should reach out to their health insurance providers and workplace plan managers to check whether their plan is implementing this new troubling practice. And if they are, people need to speak up and push back. These new insurance practices are not acceptable and bad for the health of our country.

 

 

 

Six Things Health Execs Should Know about Association Health Plans

http://www.managedhealthcareexecutive.com/policy/six-things-health-execs-should-know-about-association-health-plans?rememberme=1&elq_mid=2696&elq_cid=876742

Image result for skinny health plans

Association Health Plans (AHPs) permit small businesses to band together and buy health insurance. “By allowing them to join together in associations, small companies can have the same buying power as a large employer,” says Diane Wolfenden, director, Sales and Client Services, East Region, Priority Health, Michigan’s second largest health plan.

In June, when the final rule governing AHPs was released, the Trump Administration emphasized that AHPs will provide small businesses with more choices, access, and coverage options.

Here are six things MCOs should know about AHPs.

1. Critics say AHPs may undermine ACA plans. The most commonly cited concern with new AHP regulations is that they may undermine the ACA marketplace because association plans aren’t required to comply with all ACA regulations. “The fear is that AHPs will siphon off younger, healthier individuals, and leave those with greater health risks and pre-existing conditions in ACA risk pools,” Wolfenden says. “Critics have stated that allowing AHPs will weaken some of the ACA’s protections for consumers and make coverage on the exchanges and through ACA markets more expensive.”

2. The regulation seeks to prevent the forming of associations solely to provide health benefits. Under the new regulations finalized by the Department of Labor, an association must have a substantial purpose for existing in addition to offering health benefits. “Offering health benefits may be the primary reason for forming an association, but the secondary reason must be substantive enough that even without offering health benefits the association could continue to exist,” Wolfenden says.

Businesses can form AHPs in a specific city, county, state, or multi-state metropolitan area. “Therefore, chambers of commerce, trade groups, or businesses in the same geographic area can form or join an AHP,” says Sally C. Pipes, president, CEO, and Thomas W. Smith Fellow in Healthcare Policy, Pacific Research Institute, a free-market think tank. “Alternatively, cross-border AHPs can form for businesses or sole proprietors that occupy the same industry.”

The association needs to have an organized structure with a governing body and policies and procedures in place indicating governance, as well as legalization behind it, says Bryan Komornik, director of West Monroe’s healthcare practice, a business technology consulting firm. Like the ACA, individuals can’t be discriminated against if they have pre-existing conditions.

In addition, association members must be able to demonstrate the income they derive from their business is sufficient to cover the cost of their premium or that they work at least 80 hours per month at the business, Wolfenden says.

3. They could expand the number of insured patients. AHPs will not only give small employers more options for their employees, but they could also encourage some individuals to buy insurance when they may have gone without it otherwise. The Congressional Budget Office (CBO) estimates that 4 million current ACA enrollees in the individual and small group markets could shift their coverage to these new policies, Wolfenden says. Further, the CBO stated that about 10% of those 4 million people buying plans in 2023 and beyond would have been uninsured otherwise.

Individuals who join a coalition can obtain health insurance coverage for themselves, their spouse, and their children, or they can opt to only get coverage for themselves, Komornik says. If an individual’s spouse has an employer-sponsored health plan, the individual can still get coverage through the association if they qualify otherwise.

4. They might offer fewer benefits. AHPs are likely to offer lower premiums through skinnier plan design, sacrificing benefits for lower costs. “This means that consumers will need to have a better understanding of what will, and will not, be covered by their AHP policy,” Wolfenden says. Because AHP policies aren’t required to comply with ACA regulations, they may not cover prescription drugs or certain types of surgeries.

5. They could lead to more uncompensated care. Because AHP plans may offer leaner benefits, some patient advocacy groups are concerned that patients will end up with healthcare expenses that their insurance company won’t cover and the patient can’t pay. “These bills may end up going unpaid, leading to an increase in uncompensated care,” Wolfenden says. Uncompensated care has fallen in nearly every state since the ACA’s implementation based on the expanded coverage. “Increases in uncompensated care make it harder for providers to invest in new technologies and equipment and maintain enough capacity to care for patients. Transparency will become even more critical as providers will need to work closely with patients to ensure they understand what their insurance policy covers and what their share of the costs will be upfront.”

6. The new rule will have a staggered implementation schedule. The new rule will be phased in in three stages. It will first take effect for associations with fully-insured AHPs on September 1, 2018. It will become applicable for associations with existing self-insured AHPs on January 1, 2019. Finally, the rule will take effect for new self-insured AHPs on April 1, 2019, Pipes says.

 

Deductibles: They’re not going down

http://files.kff.org/attachment/Report-Employer-Health-Benefits-Annual-Survey-2017?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosvitals&stream=top-stories

 

Data: Kaiser Family Foundation; Chart: Chris Canipe/Axios

The average insurance deductible keeps going up, as does the number of people covered by high-deductible plans. And only about half of those people get help from their employers to save up for potential medical bills, according to a new study in Health Affairs.

The details:

  • In 2006, just 11.4% of private-sector workers had a high-deductible plan. In 2016, that number was up to 46.5%.
  • Roughly half of those workers also get an employer contribution to a health savings account or health reimbursement arrangement.
  • High-deductible plans are most popular with smaller companies, where employer contributions to an HSA are least popular.
  • At the smallest companies, about two-thirds of workers didn’t have the option of a plan without a high deductible, and don’t get an employer contribution to an HSA or HRA.

Why it matters: Higher deductibles don’t just require people to pay more out of pocket each year. They also expose those consumers to the complexities of the health care system, including the way prices are set.

  • People with high deductibles are more likely to have to pay the full sticker price of a prescription drug, or for a hospital procedure.

 

High Deductibles Aren’t Working

https://theincidentaleconomist.com/wordpress/shopping-for-health-care-simply-doesnt-work/

Image result for high deductibles

Each year, for well over a decade, more people have faced higher health insurance deductibles. The theory goes like this: The more of your own money that you have to spend on health care, the more careful you will be — buying only necessary care, purging waste from the system.

But that theory doesn’t fully mesh with reality: High deductibles aren’t working as intended.

A body of research — including randomized studies — shows that people do in fact cut back on care when they have to spend more for it. The problem is that they don’t cut only wasteful care. They also forgo the necessary kind. This, too, is well documented, including with randomized studies.

People don’t know what care they need, which is why they consult doctors. There’s nothing inherently wrong with relying on doctors for medical advice. They’re trained experts, after all. But it runs counter to the growing trend to encourage people to make their own judgments about which care, at what level of quality, is worth the price — in other words, to shop for care.

Shopping for health care may sound ludicrous on its face — and sometimes is. People don’t have time, let alone the cognitive focus, to shop for treatments while having a heart attack, or during any other emergency.

But not all care we need is related to an emergency. Some care is elective, and so potentially “shoppable.” Scholars have estimated that as much as 30 or 40 percent of care falls into this category. It includes things like elective joint replacements and routine checkups.

And yet very few people shop for this type of care, even when they’re on the hook for the bill. Maybe it’s just too complex. Even when price transparency tools are offered to consumers to make it easier, almost nobody uses those them.

A National Bureau of Economic Research working paper published Monday adds a lot more to the story. The study team from Yale, Harvard and Columbia considered a health care service that should be among the easiest to shop for: nonemergency, outpatient, lower-limb M.R.I.s.

This is the kind of imaging you might get if you’re having some trouble with a knee or ankle, but not bad enough to need the image right away.

The study, which focused on more than 50,000 adults between 19 and 64, strongly suggests that people get their M.R.I.s wherever their doctors advise, with little regard to price. The authors didn’t eavesdrop on patients, so they don’t know exactly what the doctors said about where to get M.R.I.s.

But the identity of a patient’s orthopedist explains a lot more about where he or she got her M.R.I. than any other factor considered, including price and distance. Less than 1 percent of patients in the study sample availed themselves of a price comparison tool to shop for M.R.I.s before receiving one.

By this reasoning, the authors concluded that doctors sent people to more expensive locations than they had to. On the way to their M.R.I., patients drove by an average of six other places where the procedure could have been done more cheaply.

“Many patients are going to very expensive providers when lower-price options with equal quality are available,” said Zack Cooper, a health economist at Yale and a co-author of the study. Though patients seem to follow the advice of their doctors on where to go, their doctors don’t have all the information on hand to make the best decisions for the patient either.

There are over 15 M.R.I. locations within a half-hour drive for most patients. As with many health care services, there is a large variation of prices across these locations, which means a tremendous opportunity to save money by selecting lower-priced ones. In one large, urban market, prices for the procedure are as low as about $280 and as high as about $2,100.

If patients went to the lowest-cost M.R.I. that was no farther than they already drove, they’d save 36 percent. Savings rise if they’re willing to travel farther. Within an hour’s drive, for example, savings of 55 percent are available. Savings are split between patient and insurer, depending on cost sharing. On average, patients pay just over $300 toward the cost of the procedure.

There is no evidence that the quality of low- and high-priced M.R.I.s differs, at least enough to be clinically meaningful. The study found that virtually none of the M.R.I.s at any price level had to be repeated — strong evidence that the doctors relying on them are satisfied even with the lower-priced images.

At almost $1,500, the average price of a hospital M.R.I. is more than double that of one at an imaging center. The study found that doctors who work for hospitals (rather than independently) are more likely to send their patients for more expensive hospital-based imaging. Just getting all patients to use M.R.I.s that are no farther away and not in a hospital could save 16 percent.

What this latest study suggests, in the context of other studies, is that if people can’t shop for elective M.R.I.s, there’s hardly a chance they are going to do so with other health care procedures that are more complicated and variable.

Even if 40 percent of health care is shoppable, people are not shopping. What seems likelier to work is doing more to influence what doctors advise.

For example, we could provide physicians with price, quality and distance information for the services they recommend. Further, with financial bonuses, we could give physicians (instead of, or in addition to, patients) some incentive to identify and suggest lower-cost care. An alternative approach is for insurers to refuse to pay more than a reasonable price — like the market-average — for a health care service, though patients could pay the difference if they prefer a higher-priced provider.

Leaving decisions solely to patients, and just making them spend more of their own money, doesn’t work.