Tag Archives: Out of Pocket Expenses

Health care fixes miss the mark

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http://www.detroitnews.com/story/opinion/2017/04/23/valenti-health-care/100822732/

 

 

The phrase “repeal and replace Obamacare” might be in the news, but any new legislation regarding it means little for Michiganians.

Obamacare and the Republicans’ fix, the American Health Care Act, are almost entirely focused on the individual insurance market, yet the majority of Americans receive employer-sponsored health insurance coverage. More importantly, more than one million Metro Detroiters are covered by employers who “self-fund” or self-insure their employee health care benefits.

What does self-insure mean? It means your employer pays, right out of its annual budget, 100 percent of employee medical claims. Your card might read Blue Cross Blue Shield or Aetna, but the insurance company is simply the administrator who collects the claims and sends them off to your employer for payment.

Regardless of who is paying, rising health care costs are the No. 1 threat to American prosperity. Health care costs forced General Motors, Chrysler and the city of Detroit into bankruptcy; health care costs are the main reason wages have not grown in 20 years; and, Michigan spends 40 percent (and growing) of its annual budget on health care — crowding out spending on everything else.

But fixing our health care cost problem today doesn’t require a single action from Congress. Instead of marching on Washington and yelling at elected officials, we should be talking to our CEOs and heads of human resources.

Self-insured employers have tremendous power to change health care. Most employers simply outsource health care benefit construction to consultants and brokers — the same people who are compensated to perpetuate our high-cost health care status quo.

When the lame, status quo attempts at cost-control fail, the usual employer response is to cut, cut, cut. They resort to using an axe to prune rose bushes; high deductible health plans are blunt force instruments that do not sustainably control health care costs and will eventually exacerbate our cost problem.

Indeed, a few, truly innovative employers are providing better employee benefits and reducing health care costs 20-50 percent. If everyone followed their lead, it could result in $2,500 to $5,000 annual raises for each of us and immediately pump $2 billion to 4 billion into the Metro Detroit economy every year.

The solution isn’t a secret. In fact, a non-profit/501(c)(3) called the Health Rosetta was formed to publicize the simple fixes. The organization was spurred by a concerned citizen and the former global head of Microsoft’s health care business named Dave Chase.

The Health Rosetta identifies a few, easy to implement, specific improvements, the most important of which focuses on the intake or front-end of the system: primary care. Hence, the Health Rosetta’s foundation is called Value-Based Primary Care or Direct Primary Care. Other improvements are then built on top, such as “Transparent Medical Markets,” where patients receive up-front pricing and even quality guarantees on a range of surgeries and procedures.

These are the kinds of solutions employers should be considering as everyone wrestles with skyrocketing health care costs.

Tom Valenti is the founding partner of Forthright Health.

California Employer Health Benefits: Prices Up, Coverage Down

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http://www.chcf.org/publications/2017/03/employer-health-benefits?utm_source=CHL&utm_content=From%20The%20Foundation&utm_campaign=Footer

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Since 2000, the percentage of employers offering health benefits has declined in California and nationwide, although coverage rates among offering firms have remained stable. Only 55% of California firms reported providing health insurance to employees in 2016, down from 69% in 2000. Implementation of the Affordable Care Act (ACA) in 2014 does not appear to have impacted the overall trend in employer offer rates.

Nineteen percent of California firms reported that they increased cost sharing in the past year, and 27% of firms reported that they were very or somewhat likely to increase employees’ premium contribution in the next year. The prevalence of plans with large deductibles also continues to increase.

California Employer Health Benefits: Prices Up, Coverage Down presents data compiled from the 2016 California Employer Health Benefits Survey.

 

GOP Conservatives’ Goal To Relax Mandatory Health Benefits Unlikely To Tame Premiums

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GOP Conservatives’ Goal To Relax Mandatory Health Benefits Unlikely To Tame Premiums

Image result for health insurance industry lobby

As House Republicans try to find common cause on a bill to repeal and replace the Affordable Care Act, they may be ready to let states make the ultimate decision about whether to keep a key consumer provision in the federal health law that conservatives say is raising insurance costs.

Those conservatives, known as the House Freedom Caucus, and members of a more moderate group of House Republicans, the Tuesday Group, are hammering out changes to the GOP bill that was pulled unceremoniously by party leaders last month when they couldn’t get enough votes to pass it. At the heart of those changes is the law’s requirement for most insurance plans to offer 10 specific categories of “essential health benefits.” Those include hospital care, doctor and outpatient visits and prescription drug coverage, along with things like maternity care, mental health and preventive care services.

The Freedom Caucus had been pushing for those benefits to be removed, arguing that coverage guarantees were driving up premium prices.

“We ultimately will be judged by only one factor: if insurance premiums come down,” Freedom Caucus Chairman Rep. Mark Meadows (R-N.C.) told The Heritage Foundation’s Daily Signal.

But moderates, bolstered by complaints from patients groups and consumer activists, fought back. And a brief synopsis of results from the intraparty negotiations suggests that the compromise could be letting states decide whether to seek a federal waiver to change the essential health benefits.

“The insurance mandates are a primary driver of [premium] spikes,” wrote Meadows and Sen. Ted Cruz (R-Texas) in an op-ed in March.

But do those benefits drive increases in premiums? And would eliminating the requirement really bring premiums down? Health analysts and economists say probably not — at least not in the way conservatives are hoping.

“I don’t know what they’re thinking they’re going to pull out of this pie,” said Rebekah Bayram, a principal consulting actuary at the benefits consulting firm Milliman. She is the lead author of a recent study on the cost of various health benefits.

Opponents of the required benefits point to coverage for maternity care and mental health and substance abuse treatment as driving up premiums for people who will never use such services.

But Bayram said eliminating those wouldn’t have much of an impact. Hospital care, doctor visits and prescription drugs “are the three big ones,” she said. “Unless they were talking about ditching those, the other ones only have a marginal impact.”

John Bertko, an actuary who worked in the Obama administration and served on the board of Massachusetts’ health exchange, agreed: “You would either have very crappy benefits without drugs or physicians or hospitalization, or you would have roughly the same costs.”

Maternity care and mental health and substance abuse, he said, “are probably less than 5 percent” of premium costs.

Of course, requiring specific coverage does push up premiums to some extent. James Bailey, who teaches at Creighton University in Omaha, Neb., has studied the issue at the state level. He estimates that the average state health insurance mandate “raises premiums by about one-half of 1 percent.”

Those who want to get rid of the required benefits point to the fact that premiums in the individual market jumped dramatically from 2013 to 2014, the first year the benefits were required.

“The ACA requires more benefits that every consumer is required to purchase regardless of whether they want them, need them or can afford them,” Ohio Insurance Commissioner Mary Taylor said in 2013, when the state’s rates were announced.

But Bayram noted most of that jump was not due to the broader benefits, but to the fact that, for the first time, sicker patients were allowed to buy coverage. “The premiums would go down a lot if only very healthy people were covered and people who were higher risk were pulled out of the risk pool,” she said. (Some conservatives want to change that requirement, too, and let insurers charge sick people higher premiums.)

Meanwhile, most of the research that has been done on required benefits has looked at plans offered to workers by their employers, not policies available to individuals who buy their own coverage because they don’t get it through work or the government. That individual market is the focus of the current debate.

Analysts warn that individual-market dynamics differ greatly from those of the employer insurance market.

Bailey said he “saw this debate coming and wanted to write a paper” about the ACA’s essential health benefits. But “I very quickly realized there are all these complicated details that are going to make it very hard to figure out,” he said, particularly the way the required benefits work in tandem with other requirements in the law.

For example, said Bertko, prescription drugs can represent 20 percent of costs in the individual market. That’s far more than in the employer market.

Bayram said another big complication is that the required benefits do double duty. They not only ensure that consumers have a comprehensive package of benefits but enable other parts of the health law to work by ensuring that everyone’s benefits are comparable.

For example, the law adjusts payments to insurers to help compensate plans that enroll sicker-than-average patients. But in order to do that “risk adjustment,” she said, “all of the plans have to agree on some kind of package. So if you think of essential health benefits as an agreed-upon benchmark, I don’t know how they can get rid of that and still have risk adjustment.”

Drugmakers Dramatically Boosted Lobbying Spending In Trump’s First Quarter

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Drugmakers Dramatically Boosted Lobbying Spending In Trump’s First Quarter

Eight pharmaceutical companies more than doubled their lobbying spending in the first three months of 2017, when the Affordable Care Act was on the chopping block and high drug prices were clearly in the crosshairs of Congress and President Donald Trump.

Congressional records show those eight, including Celgene and Mylan, kicked in an extra $4.42 million versus that quarter last year. Industry giant Teva Pharmaceutical Industries spent $2.67 million, up 115 percent from a year ago as several companies embroiled in controversies raised their outlays significantly.

“It’s certainly a rare event” when lobbying dollars double, noted Timothy LaPira, an associate professor of political science at James Madison University. “These spikes are usually timed when Congress in particular is going to be really hammering home on a particular issue. Right now, that’s health care and taxes.”

Trump has come down hard on drugmakers, stating in a press conference before his inauguration that the industry is “getting away with murder.” He has promised to lower drug prices and increase competition with faster approvals and fewer regulations. Sens. Bernie Sanders (I-Vt.) and John McCain (R-Ariz.), and Rep. Elijah E. Cummings (D-Md.) have introduced bills to allow lower-cost drug imports from Canada or other countries.

Lobbyists weren’t expecting much by way of big policy changes during the comparatively sleepy end of the Obama administration this time last year, but with a surprise Trump administration and a Republican-controlled House and Senate, trade groups and companies are probably “going all in,” LaPira said.

Thirty-eight major drugmakers and trade groups spent a total of $50.9 million, up $10.1 million from the first quarter of last year, according to a Kaiser Health News analysis. They deployed 600 lobbyists in all.

PhRMA, the drug industry’s largest trade group, spent $7.98 million during the quarter —more than in any single quarter in almost a decade, congressional records show, topping even its quarterly lobbying ahead of the Affordable Care Act’s passage in 2010.

In their congressional disclosures, companies listed Medicare price negotiation, the American Health Care Act, drug importation and the orphan drug program as issues they were lobbying for or against. They do not have to disclose on which side of an issue they lobbied.

When Medicare prices are on the table, it should come as no surprise that pharmaceutical companies are interested in influencing congress.

“It’s quite literally hitting their bottom line,” LaPira said.

Drugmakers under fire more than doubled their lobbying dollars. Mylan spent $1.45 million during the quarter, up from $610,000 last year. The company’s CEO faced a congressional hearing in the fall when it raised the price of EpiPen to over $600.

Marathon Pharmaceuticals spent $230,000, which was $120,000 more than last year. Marathon was criticized in February after setting the price of Emflaza, a steroid to treat Duchenne muscular dystrophy, at $89,000 a year. That angered advocates, Congress and patients who had been importing the same drug for as little as $1,000 a year. Marathon has since sold the drug to another company, and the price may come down.

Teva and Shire also more than doubled their spending. Teva was accused as part of an alleged generic price-fixing scheme in December, and the Federal Trade Commission sued Shire because one of its recently acquired companies allegedly filed “sham” petitions with the Food and Drug Administration to stave off generics.

Companies that make drugs for rare diseases also more than doubled lobbying dollars as congressional leaders and the Government Accountability Office work to determine whether the Orphan Drug Act is being abused. Those firms include BioMarin, Celgene and Vertex Pharmaceuticals. Celgene, which makes a rare cancer drug, more than tripled its first quarter lobbying to more than $1 million.

Despite efforts to make good on campaign promises to repeal the Affordable Care Act, House Republicans canceled a floor vote on the American Health Care Act in March after multiple studies estimated that millions of people would lose coverage if it passed, and neither Democrats nor ultra-conservatives lined up in opposition to the bill’s provisions. Drug prices weren’t a key part of the package.

 

Revised ACA Repeal-and-Replace Bill Likely to Increase the Uninsured Rate and Health Insurance Costs for Many

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http://www.commonwealthfund.org/publications/blog/2017/apr/amendment-aca-repeal-and-replace-bill

News outlets report that House Republicans are close to agreeing on an amended version of the American Health Care Act (AHCA), their proposed repeal and replacement of the Affordable Care Act (ACA). The all-important legislative language for the revised bill is not yet available, nor are Congressional Budget Office (CBO) projections of its effects on coverage and the budget, so any analyses are necessarily tentative.

Nevertheless, the summaries leaked to the media offer insight on the amended bill. If accurate, those summaries suggest that the revised AHCA will significantly increase the numbers of uninsured Americans, raise the cost of insurance for many of the nation’s most vulnerable citizens, and, as originally proposed in the AHCA, cut and reconfigure the Medicaid program. The new amendment specifically allows states to weaken consumer protections by, for example, permitting insurers to charge people with preexisting conditions higher premiums.

What the Amendment Leaves in Place

The amended proposed bill does little to change many provisions of the original AHCA including:

The CBO estimated in March that the combined effects of these provisions would increase the number of people without health insurance by 24 million by 2026. Older Americans would be particularly hard hit by the bill, experiencing much higher premiums relative to the ACA and the greatest coverage losses.

What the Amendment Changes

The amendment offers states the option to apply for waivers to reduce ACA consumer protections that have enabled people with health problems to buy private health insurance. States could waive the ban on charging people with preexisting conditions higher premiums, as long as states set up high-risk pools for people with conditions like cancer or heart disease who could no longer afford coverage. States could also change the ACA’s required minimum package of health benefits for health plans sold in the individual and small-group markets.

Despite the fact the federal ban on preexisting condition exclusions would remain under the AHCA, as Tim Jost points out, insurers could reach the same end by not covering services like chemotherapy that sick people need, or by charging very high premiums for individuals with expensive, preexisting problems. In addition, waiving the ACA’s essential benefit requirement could weaken other consumer protections like bans on lifetime and annual benefit limits and caps on out-of-pocket costs.

While states that allowed higher premiums for people with health problems would be required to use a high-risk pool under the amendment, prior research has found that such pools operated by states before the ACA were expensive both for states and for people enrolled in them, and covered only a small fraction of the individuals who would have benefited. An amendment proposed earlier in the month would provide federal funds for a so-called “invisible risk-sharing” program, a hybrid between a high-risk pool and reinsurance for high claims costs, but the allocated funding would likely need to be much higher to have an impact on costs.

The number of states that would apply for these waivers is unknown, but it seems reasonable to expect that many states with governors and legislatures that have opposed the ACA would do so. For a substantial part of the country, therefore, the amendment could seriously undermine the ACA’s protections for people with preexisting health conditions.

 

Medicare Advantage risk selection

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http://www.academyhealth.org/blog/2017-04/medicare-advantage-risk-selection

Mortality graph

One of the concerns about Medicare Advantage (MA) is that it doesn’t serve sick beneficiaries well, motivating some of them to switch to traditional Medicare (TM). If true, it’s an argument for maintaining affordable access to TM.

There’s considerable evidence that it is true. The most recent (if you can call last summer recent) is found in a paper by Elizabeth Goldberg and colleagues. They examined Medicare beneficiaries 65 years or older between 2000 and 2012, a period during which enrollment in MA grew from 19% of beneficiaries to 28%. For each year, they classified a beneficiary as “MA” if enrolled in an MA plan in January of that year, and “TM” otherwise. Note, however, that it wasn’t until 2006 that beneficiaries had to stick with their plan choice for most of the year (lock-in). Nowadays, they can adjust their plan choice only until mid-February. Prior to 2006, they could switch plans every month.

TM has no Part A (hospital insurance) premium and it’s standard Part B (physician services insurance) premium is 25 percent of program costs, or $134 per month in 2017. The premium is higher for individuals and couples with higher income. Both parts include considerable cost sharing and both have an open network and impose no managed care-type restrictions on utilization. Though MA plans tend to fill in much of Medicare’s cost sharing, as well as offer supplemental benefits at little to no additional premium, they usually have limited networks and attempt to manage care. It’s these latter features that can make TM more attractive than MA to sicker beneficiaries.

Older studies also found that sicker people tended to prefer traditional Medicare and were more likely to leave Medicare H.M.O.s. And other, more recent studies found that lower-income, less educated and sicker people reported worse experiences in Medicare Advantage than in traditional Medicare.

My takeaway from all this is that MA may promote efficiency and higher quality care, but it doesn’t serve some types of sicker beneficiaries as well as TM. They vote with their feet and leave MA when TM appears relatively more attractive. Though not without cost, this degree of choice — that spans both private and public options — is a strength of Medicare and a large benefit to its beneficiaries, while remaining the focus of intense political attention.

 

The CHCF Blog Californians in Individual Market Spent $2,500 Less on Care in 2015 Than Before the ACA

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http://www.chcf.org/articles/2017/04/californians-individual-market-spent-less

Average Annual Spending on Health Care by Consumers in Individual Market

Two years into the Affordable Care Act (ACA), Californians who bought health insurance on the individual market spent $2,500 less on health care compared to 2013, the year before the ACA was fully implemented, according to data from the US Census Bureau’s Current Population Survey (CPS) available on ACA 411. This decline was likely driven primarily by the premium tax credits and cost-sharing reductions provided through the ACA’s health insurance marketplaces. This progress toward making health care more affordable is at risk as federal lawmakers debate repealing or radically changing the ACA.

Californians’ Spending Decline Beats National Trends

In 2013, Californians with individual coverage spent, on average, $7,300 out of pocket on health care (defined as spending on health insurance premiums, copays, deductibles, coinsurance for services and prescription drugs). That amount fell to $4,900 in 2014, the first year the ACA health insurance marketplaces (called Covered California in California) were open for business. In 2015 average spending for those covered through the individual market continued declining to $4,800 for a total drop of $2,500 over the two-year period.

Nationally, the amount spent on health care by consumers with individual coverage dropped from $6,800 in 2013 to $5,500 in 2015, a $1,300 decline.

Average Annual Spending on Health Care by Consumers in Individual Market

Similarly, the percentage of consumers with individual coverage reporting “high-burden spending” (defined as spending more than 10% of total income on health care) fell nationally, with California seeing a steeper decline, from 42.9% in 2013 to 33.8% in 2015. Nationally, it dropped from 44.7% to 38.8% during the same period.

Percentage of Consumers in Individual Market Spending More Than 10% of Income on Health Care

For more information on national trends in high-burden spending, read this new analysis of the CPS data by the State Health Access Data Assistance Center (SHADAC). There was a small but statistically significant decline in the overall US rate of high-burden spending, with improvements also among those on Medicare and those earning less than 400% of the federal poverty level (about $47,000 a year for a single person). The brief also highlights which states saw statistically significant changes in high-burden spending among various coverage types and income levels.

 

Obamacare’s Insurers Struggle for Stability Amid Trump Threats

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https://www.bloomberg.com/politics/articles/2017-04-17/obamacare-s-insurers-struggle-for-stability-amid-trump-threats

Image result for Obamacare's Insurers Struggle for Stability Amid Trump Threats

Obamacare is stuck in limbo, and insurers and state regulators are struggling to set their plans for what’s increasingly shaping up as a chaotic year for the health-care program.

After the failure of Republicans’ first attempt to repeal and replace the Affordable Care Act and President Donald Trump’s subsequent threats to let the program “explode,” more health insurers are threatening to pull out next year, while others may sharply raise the premiums they charge. They’ll start to declare in the next few weeks whether they’re in or out.

Marguerite Salazar, Colorado’s insurance regulator, said that her state’s carriers, which include Anthem Inc. and Cigna Corp., haven’t said they’re leaving, though they don’t want to commit either.

“That’s my biggest fear, is that we would lose carriers in the individual market,” Salazar said. “We don’t want to set up an environment that would tell them, well, maybe we don’t need to be here.”

In Washington, Insurance Commissioner Mike Kreidler pushed back by a month the date when insurers have to say what they’ll offer. He’s urging them to stay and thinks most will, but “they’re not making commitments right now.”

“They’ve got those cards and they’re holding them close,” said Kreidler, a Democrat. “Right now, there’s so much uncertainty.” The fear is that they’ll follow the lead of Aetna Inc. and Wellmark Inc., which pulled out of Iowa’s Obamacare markets this month.

Trump’s Uncertainty

Much of the uncertainty is thanks to the Trump administration, which will play a key role in deciding whether the health law’s markets collapse or survive. Industry representatives — including company executives and insurance lobby CEO Marilyn Tavenner — are scheduled to meet Tuesday with Seema Verma, the head of the Centers for Medicare and Medicaid Services, the U.S. agency that oversees the law.

Trump’s latest threat has been to stop payments that subsidize co-pays and other upfront costs for lower-income people. Without them, insurers would likely boost their premiums or drop out entirely. The administration has refused to commit to keeping the payments going.

Health insurers see April 30 as a key deadline for a decision on the cost-sharing payments. They’ll start filing with some state regulators in May to say whether or not they’ll stay in the markets.

“Everybody is still in a wait-and-see mode,” said Kristine Grow, a spokeswoman for the industry group America’s Health Insurance Plans. AHIP and other industry groups are pushing the administration to commit to making the cost-sharing payments that Trump has threatened to halt. “Plans really need certainty,” she said.

 

Long-term care insurance facing major pricing shift

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https://www.washingtonpost.com/news/get-there/wp/2017/04/17/long-term-care-insurance-facing-major-pricing-shift/?utm_term=.44bd32bcb04a

One of the biggest fears people have about retirement is getting sick and running out of money to cover their health issues.

So in comes long-term care insurance, which can cover the cost of nursing homes, assisted-living facilities and in-home care. Medicare — except in very limited situations — does not cover long-term care. Medicaid covers long-term care, but to qualify for the benefit, you have to be pretty poor.

If you need help with life’s basic activities — eating, dressing and bathing — it can be expensive and the cost of that care can decimate your savings.

The problem is that there have been some steep premium increases for long-term care insurance, and it has many people wondering if the insurance is worth it. Insurance companies have had trouble pricing the insurance. Initial premiums charged haven’t been enough to cover claims.

But how the insurance is priced may be changing significantly. Rather than keeping premiums steady for several years and then having to impose huge double-digit rate hikes, Genworth, one of the largest providers of long-term care insurance, wants to be have the ability to change premiums annually, reports Forbes contributor Howard Gleckman.

“In this design, unfortunately called the Annual Rate Sufficiency Model, buyers of new policies would likely see modest, single-digit rate hikes each year or two,” Gleckman writes. “If Genworth thinks it is likely to pay fewer claims than expected or if investment income is higher than projected, consumers might even see small rate reductions in some years.”

He goes on: “For years, some brokers told buyers that their premiums would never increase. But in reality, while carriers could not raise rates on individual policies, they could boost prices for an entire class of buyers. They often delayed those rate hikes — or were blocked by state insurance commissioners — for five years or more, until policyholders got hammered with increases of 40 percent and up.”

 

High-Risk Pools for People with Preexisting Conditions: A Refresher Course

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http://www.commonwealthfund.org/publications/blog/2017/mar/high-risk-pools-preexisting-conditions?omnicid=1196155&mid=henrykotula@yahoo.com

During the recent effort to repeal and replace the Affordable Care Act (ACA), some members of Congress and the Trump administration seemed to be experiencing a certain nostalgia for high-risk pools, which operated in 35 states before the ACA was enacted. At a CNN Town Hall Meeting in January, Speaker of the House Paul Ryan responded to a question about coverage for people with preexisting conditions by saying:

We believe that state high-risk pools are a smart way of guaranteeing coverage for people with preexisting conditions. We had a really good one in Wisconsin. Utah had a great one . . . . What I mean when I say this is, about 8 percent of all the people under 65 have that kind of preexisting condition . . . . So, by financing state high-risk pools to guarantee people get affordable coverage when they have a preexisting condition, what you’re doing is, you’re dramatically lowering the price of insurance for everybody else. So, if we say let’s just, as taxpayers—and I agree with this—finance the coverage for those 8 percent of Americans under 65 in a condition like yours, they don’t have to be covered or paid for by their small business or their insurer who is buying the rates for the rest of the people in their insured pool, and you’d dramatically lower the price for the other 92 percent of Americans.

As high-risk pools and other changes to the ACA continue to be debated, it is critical to deconstruct statements such as these and remind ourselves of how high-risk pools really worked and how unaffordable they were. It is important to remember that high rates of uninsurance and lack of affordability for all buyers in the individual market existed before the ACA, even in states with high-risk pools. In addition, policymakers seem to substantially underestimate the number of Americans with preexisting conditions who might be forced to purchase coverage through a high-risk pool if insurers are allowed to deny coverage in the marketplace.

Reality Check

The reality is that high-risk pool coverage was prohibitively expensive and there is little evidence to suggest that the existence of such pools made coverage less costly for others in the individual insurance market. Without substantially more federal funding than currently proposed, these facts are not likely to change. People with preexisting conditions may have “access” to coverage, but most will not be able to afford it and those who can will face limited benefits and extremely high deductibles and out-of-pocket payments.