WSJ: More Health-Care Insurers Seek Big Premium Increases

On Monday the Obama administration published more information about hefty premium increases for 2016 sought by large insurers selling plans under the health law.

An article in the Wall Street Journal by Louise Radnofsky and Stephanie Armour reported major carriers from around the country are proposing big increases in the premium rates paid by consumers who buy insurance policies on their own.

Noted in the article which can be found here: 

Blue Cross and Blue Shield of Illinois is looking to raise rates by averages of 29% or more. In Pennsylvania, Highmark Health Insurance Co. is asking for 30%, according to proposals submitted by insurers for the year ahead. Around the country, some of the main market leaders are looking for double digit increases.

The new requests for premiums come at a time when the political and legal future of the law hangs in the balance. The Supreme Court is set to issue a decision later this month on the validity of the law’s tax credits to offset the cost of premiums for lower-income consumers in most states in the country. 

The Commonwealth Fund: The Problem of Underinsured, Rising Deductibles Make It Worse

A new report from The Commonwealth Fund was issued last week finding that 31 million people with health coverage in the United States were underinsured in 2014.

The share of working-age adults who had health insurance all year but were underinsured was statistically unchanged since 2010, after nearly doubling, from 12 percent to 22 percent, between 2003 and 2010. People are considered underinsured if they have had health insurance for a full year, but have high deductibles or out-of-pocket expenses relative to their income.

The study, The Problem of Underinsurance and How Rising Deductibles Will Make It Worse, is based on The Commonwealth Fund’s Biennial Health Insurance survey, which interviewed people 19-64 years old between July and December 2014. It could not separately assess the effects of the Affordable Care Act on underinsurance because people insured all year in the survey had coverage that began prior to the law’s major insurance expansions going into effect.

The rate of growth in medical costs and insurance premiums has slowed in recent years. However, millions of consumers continue to be saddled with high out-of-pocket health care costs. While the number of underinsured people in the United States held constant in 2014, the steady growth in the proliferation and size of deductibles threatens to increase underinsurance in the years ahead.

The Affordable Care Act’s coverage expansions and protections have greatly improved the quality of insurance coverage available to people who lack job-based health benefits. In addition, cost-sharing subsidies significantly reduce deductibles for people with low incomes who buy plans in the marketplaces. But those subsidies phase out quickly, leaving families with deductibles that may be high relative to their incomes. In addition, the law has only limited ability to improve the cost protection of employer plans, which is the source of most American’s health insurance. 

Reforms and new approaches are needed to improve the cost protection of health plans. These could include innovations in benefit design that slow growth in deductibles and emphasize incentives that encourage people to utilize, rather than delay, timely health care. In addition, policymakers should identify and address holes in health plans—like out-of-network physicians in in-network hospitals—which are surprising many families with unexpected costs. Finally, systemwide efforts to lower the underlying rate of medical cost growth and share those savings with consumers will be critical.y had coverage that began prior to the law’s major insurance expansions going into effect.

USA TODAY: Feds to require big companies to cover hospitalization

Jayne O'Donnell, reporter for USA Today, wrote an article about efforts to close a loophole in the Affordable Care Act that allows large companies to refuse to cover in-patient hospital stays in any of their health insurance plans.

Comments from NBCH CEO Brian Klepper are included...

Plans that don't cover hospitalization are "preying on vulnerable people who don't have resources," says Brian Klepper, CEO of the National Business Coalition on Health. "The purpose of insurance is to cover the services that most of us cannot afford when we desperately need it."

The full article can be accessed here.

Kaiser Family Foundation/HRET Annual Employer Health Benefits Survey

Annual premiums for employer-sponsored family health coverage reached $16,351 this year, up 4 percent from last year, with workers on average paying $4,565 toward the cost of their coverage, according to the Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2013 Employer Health Benefits Survey released today. During the same period, workers' wages and general inflation were up 1.8 percent and 1.1 percent respectively.

This year's rise in premiums remains moderate by historical standards. Since 2003, premiums have increased 80 percent, nearly three times as fast as wages (31 percent) and inflation (27 percent). The survey of over 2,000 large and small employers shows that firms with many lower-wage workers (at least 35 percent earning $23,000 or less annually) require workers to pay $1,363 more on average toward family premiums than workers at firms with fewer lower-wage workers ($5,818 vs. $4,455 annually). The lower-wage firms on average offer less costly coverage too, creating a large disparity in the share of the premium that their workers pay (39 percent vs. 29 percent).

Employee wellness programs are a popular strategy for employers trying to control costs. Nearly all large employers (at least 200 workers) offer at least one wellness program, which can take many forms and target a wide range of conditions. More than a third (36 percent) of large employers who offer wellness programs offer some kind of financial incentive for workers to participate, such as lower premiums or a lower deductible, receiving a larger contribution to a tax-preferred savings account, or gift cards, cash or other direct financial incentives.

Insurer Sees Small Employers Dropping Health Coverage, Shifting to Self-Insured

As the nation prepares to roll out the next phase of the ACA, the second biggest medical insurer - Wellpoint - said that it expects to lose members in health insurance plans sponsored by smaller employers. At the same time, the company expects membership gains in self-insured employer plans and in the kind of individual plans that will be sold in the public exchanges starting Oct. 1.

The lost customers aren’t just signing up with WellPoint rivals; some of it is going into the uninsured ranks. The Obama administration recently postponed enforcement of a requirement that employers with 50 employees or more offer health coverage next year or face fines. But the delay in the “employer mandate” wasn’t the reason WellPoint gave for losing small-group members. Nor did executives respond directly to analyst’s questions about whether small employers are “dumping” workers into the subsidized individual market. Rather, small employers have hesitated to buy coverage for next year because of uncertainties surrounding the online exchanges offering individual and small-group plans, the company said.

UnitedHealth to Double Payments Tied to Quality and Cost Measurements

UnitedHealthcare plans to more than double the amount of its reimbursements that are tied to quality and cost-effectiveness, bringing the value of its contracts that are linked to quality measurements to $50 billion by 2017, the company recently announced.

Already more than $20 billion of UnitedHealthcare's payments to providers, such as hospitals and physicians, are paid through contracts that tie part of the payment to measurements of quality and cost-efficiency.

UnitedHealthcare—which provides coverage for more than 40 million people through private insurance, Medicaid, and Medicare—said that it has seen strong success from using quality and cost-control metrics. The company said that using patient-centered medical homes, in which a physician coordinates the care of patients, reduced the growth of medical costs by up to 4.5 percent.

The company is including in its projections three main types of programs:

• Performance-based payments, such as bonuses for primary care practices, or performance-based contracts with hospitals, physicians and other providers that reward them for improving patient medical outcomes and lowering costs.
• Centers of Excellence programs, in which payments are bundled for specific treatments or procedures, such as organ transplants, rather than charging for each visit or drug.
• Accountable care organizations and medical homes, in which the medical provider would get to share in any savings that result from better overseeing patients' care.

Read UnitedHealthcare's press release here.

Oregon Insurers Rethink 2014 Exchange Premiums as State Posts First-Ever Rate Comparison

The new health insurance marketplace envisioned by federal health reforms doesn't formally kick in until fall. But it already is taking shape – and consumers for the first time can compare, premium by premium, identical plans by different insurers. According to The Oregonian, a comparison of proposed 2014 health premiums became public online this week, causing two insurers to request do-overs to lower their rates even before the state determines whether they're justified. The unusual development was sparked by a comparison that used to be impossible because plan benefits varied so widely. But under the federal reforms in the Affordable Care Act that take effect Jan. 1, health insurance is mandated and every insurer must offer certain standard plans, known as Essential Health Benefits. Oregon's state-based health insurance exchange - Cover Oregon - allows for much easier apples-to-apples comparisons among health insurance plans than exists currently in the individual insurance market.

Survey: Employees Do Not Want More Control over Health Insurance Decisions

Fifty-four percent of U.S. workers prefer not to have more control over health insurance options because making such decisions is daunting, a survey says.  The third annual Aflac WorkForces Report -- an online survey of nearly 1,900 benefits decision-makers and more than 5,200 U.S. workers -- was conducted in January by Research Now and released by Aflac, a provider of supplemental and guaranteed-renewable insurance in the United States.

The survey found 62 percent of workers said medical costs they would be responsible for would increase, but only 23 percent were saving money for potential increases.  Seventy-five percent of workers said they think their employer would educate them about changes to their healthcare coverage as a result of the Affordable Care Act, but only 13 percent of employers said educating employees about healthcare reform was important to their organization.

Fifty-three percent said they feared their employers might not adequately manage their coverage, leaving their families less protected. Eighty-nine percent admitted they chose the same benefits year over year -- and many don't understand the options provided.

Even though educating employees is a low priority, helping workers learn how to manage their health care choices effectively presents an opportunity for employers to demonstrate they care about their employees, and to curb potential absenteeism, low morale, and low productivity.

Commonwealth Fund's Biennial Health Insurance Survey

Eighty-four million people―nearly half of all working-age U.S. adults―went without health insurance for a time last year or were underinsured because of high out-of-pocket costs relative to income, according to a new study based on findings from the Commonwealth Fund's 2012 Biennial Health Insurance Survey.

At the same time, the report finds that the proportion of young adults who were uninsured during the year fell from 48 percent to 41 between 2010 and 2012, reversing a decade-long trend for the 19-to-25 age group. The health reform law’s provision allowing young people to remain on their parents’ health insurance until age 26 is likely the reason for the improvement, the authors say.

The survey also finds that medical debt continues to burden U.S. households, leading in many cases to lower credit ratings and even bankruptcy. In 2012, 41 percent of working-age adults, or 75 million people, had problems paying their medical bills or were paying off medical bills over time.

Startup Helps Health Insurance Cards Go Digital

In an era of e-tickets, bitcoins and app-based banking, it seems pretty antiquated that we still have to fumble through our wallets for an insurance card each time we go to the doctor's office. But USA Today reports on a Philadelphia-based start-up that has a plan for making those flimsy pieces of cardboard digital — and the upside isn't just the potential for going paper-free.

With the rise of high-deductible plans, patients are increasingly on the hook for more of their medical expenses than they've ever been before. For patients, that means a bigger need for tools that provide more transparency about health care costs. And for doctors, particularly independent physicians, said Medlio co-founder and CEO David Brooks, that means a growing problem with collecting payment.

According to a 2007 report from McKinsey, hospitals and providers usually only collect about 50 percent of the postinsurance balance (or the amount owed by the patient beyond what insurance covers or what they pay at the time of treatment). That's not because patients are inherently delinquent, Brooks emphasized, it's often because they're either too confused about what they need to pay or they don't believe that they were billed correctly.

The company, which is part of the new Dreamit Health start-up accelerator, said the first version of its app is still a few months away. But the initial plan is a free mobile app that enables patients to check in from their smartphones. Instead of handing over a physical card, patients would use the app to provide doctors with their insurance information and the app would automatically verify insurance eligibility for the provider. Medlio also intends to give patients an estimate of their treatment's cost before they receive it, and it enables patients to initiate (and doctors to collect) payments directly through the app.

Insurers May Include Wellness Programs in Individual Products on Exchanges

Health insurers are gearing up to compete for millions of potential customers who could begin shopping for an individual health plan later this year. And one strategy to win new business from individual health-insurance buyers could be by offering new and unique products.

The Pittsburgh Tribune-Review reports that the University of Pittsburgh Medical Center (UPMC) Health Plan, the health insurance arm of hospital system UPMC, has announced that it will introduce a wellness-program option next month for its Individual Advantage plans. It will include financial rewards for participating.

While fairly common in employer-sponsored health plans, wellness programs are still rare among individual plans. But those programs and other new options could become more widespread. Health insurers will need to differentiate themselves in what's expected to be a highly competitive market for customers who are required under the Affordable Care Act to buy their own coverage because they don't get it from an employer, and wellness programs with incentives could be a relatively easy way to do that.

Commonwealth Fund Tracking State Insurance Market Reforms

Last month, federal regulators at the Center for Consumer Information and Insurance Oversight released guidance on how the Affordable Care Act’s new private insurance market reforms—including guaranteed access to health care coverage and the ban on denying or limiting benefits for people with preexisting health conditions—will be enforced. While states are the primary regulators of insurance, the guidance recognizes that the Centers for Medicare and Medicaid Services is responsible for enforcing the reforms in states that lack the authority or ability to do so.

In a new blog post, Katie Keith, J.D., and Kevin W. Lucia, J.D., of the Georgetown University Center on Health Insurance Reforms describe what the new guidance means for enforcement of some of the law’s most significant reforms. An interactive map, meanwhile, highlights the legislative steps states have taken―or not taken―to enforce the insurance protections.

Advisory Board Develops Private Sector Bundled Payment Tracker

The Advisory Board has developed a database of hospitals, health systems, and private sector payers that have adopted commercial bundled payment strategies. Currently, there are more than 30 different agreements in place. The database is interactive and provides details on the payment arrangements, including whether they are employer-driven or plan-driven.

Health Insurers Spent Less Than 1% of Premium Dollars on Care Improvement in 2011

Health insurance companies reported spending an average of less than 1 percent of the premiums they collected from policyholders in 2011 on activities directly supporting improvement of health care quality, according to a Commonwealth Fund study released today.

The new report, by Mark A. Hall and Michael J. McCue, looks at differences in medical loss ratios, consumer rebates, and quality improvement expenses, based on insurers' corporate structure and ownership. The authors find that insurance companies spent a combined $2.3 billion on direct quality improvement activities―an average of $29 per subscriber. The study examines all segments of an insurer's book of business, from individual market policies to large group self-insured.

The Affordable Care Act's medical loss ratio rule requires insurers to spend at least 80 or 85 percent of premiums on medical claims and quality improvement activities―those likely to improve health outcomes, prevent hospital readmissions, improve patient safety, and increase wellness and health promotion―or else pay rebates to consumers.

Employer Considerations In Trends Toward Self-Insurance

A story in USA Today examines the newly emerging trend toward smaller businesses becoming self-insured. Businesses that have made - or are thinking about making - this move say that the decision is about free choice, cost savings, and doing what is right for their employees; others see it as a threat to the Affordable Care Act. As more small employers avoid the act's requirements through self-coverage, small-business marketplaces intended to cover millions of Americans could break down and become unaffordable.

ACA advocates especially worry that firms with fewer than 50 employees will self-insure. Those companies are not required to offer policies under the health law, but many are expected to buy in online marketplaces, SHOPs, scheduled to open in October.  However, self-insurance might be the only way some struggling employers can afford medical coverage.  The article describes these issues and offers considerations for employers when making this decision.

Health Affairs Study: CDHP Enrollees Unaware of Free Preventive Services

The authors of this Health Affairs study surveyed people in California who had a consumer-directed health plan and found that fewer than one in five understood that their plan exempted preventive office visits, medical tests, and screenings from their deductible, meaning that this care was free or had a modest copayment. Roughly one in five said that they had delayed or avoided a preventive office visit, test, or screening because of cost. Those who were confused about the exemption were significantly more likely to report avoiding preventive visits because of cost concerns. Special efforts to educate consumers about preventive care cost-sharing exemptions may be necessary as more employers and health plans, including Medicare and some Medicaid programs, adopt this model.

EBRI Study: Increase in Self-Insured Private Sector Employers

Self-insured health plans are on the rise among private-sector employers, the Employee Benefit Research Institute (EBRI) said in its recent study. The trend may be seen as a sign that employers are increasingly sensitive to cost concerns, and those sensitivities might continue as the Affordable Care Act is implemented, noting that Massachusetts has seen an increase in the share of workers covered by self-insured plans since implementing its own healthcare reform bill in 2006.

The percentage of workers in self-insured plans has been increasing nationwide. In 2011, 58.5 percent of workers with health coverage were in self-insured plans, up from 40.9 percent in 1998. For the most part, the percentage of workers in self-insured plans increased consistently between 1998 and 2011. Larger employers are more likely to offer self-insured health plans. In 2011, 68.5 percent of workers in firms with 50 or more employees were in self-insured plans, whereas only 10.8 percent of workers in firms with fewer than 50 employees were in self-insured plans. Large employers drove the upward trend in overall self-insurance, with the percentage of workers in self-insured plans in firms with 50 or more employees increased from 48.4 percent in 1998 to 68.5 percent in 2011. In contrast, the percentage of workers in self-insured plans in firms with fewer than 50 employees was close to 12 percent in most years of the survey, though it peaked at 18.1 percent in 1997 and reached a low of 10.8 percent most recently in 2011.

Understanding the trend in self-insurance for employers with 50 or more workers and those with fewer is important because the employer mandate in the ACA only affects employers with at least 50 workers. However, other aspects of the law that are expected to drive up health insurance costs will affect employers of all sizes.

HHS Releases ACA Proposed Rule on Benefit and Payment for 2014

This proposed rule provides detail on a variety of ACA-related insurance market reforms, including the risk adjustment, reinsurance, and risk corridors programs; cost-sharing reductions; user fees for a Federally-facilitated Exchange; advance payments of the premium tax credit; a Federally-facilitated Small Business Health Option Program; and the medical loss ratio program. The cost-sharing reductions and advanced payments of the premium tax credit, combined with new insurance market reforms, will significantly increase the number of individuals with health insurance coverage, particularly in the individual market. The premium stabilization programs – risk adjustment, reinsurance, and risk corridors – will protect against adverse selection in the newly enrolled population. These programs, in combination with the medical loss ratio program and market reforms extending guaranteed availability (also known as guaranteed issue) protections and prohibiting the use of factors such as health status, medical history, gender, and industry of employment
to set premium rates, will help to ensure that every American has access to high-quality, affordable health insurance.

HHS Releases ACA Insurance Market Reforms Proposed Rule

This proposed rule would implement the Affordable Care Act’s policies related to fair health insurance premiums, guaranteed availability (guaranteed issue), guaranteed renewability, risk pools, and catastrophic plans. The proposed rule would clarify the approach used to enforce the applicable requirements of the Affordable Care Act with respect to health insurance issuers and group health plans that are non-federal governmental plans. This proposed rule would also amend the standards for health insurance issuers and states regarding reporting, utilization, and collection of data under section 2794 of the Public Health Service Act (premium review process).

Today, consumers with current or past medical problems can be denied health insurance coverage in the vast majority of individual (nongroup) markets (45 states). Similarly, individuals and small employers often find that they have few protections in terms of the premiums that issuers can charge them.

The ACA addresses these problems by extending guaranteed availability (also known as guaranteed issue) protections so that individuals and employers will be able to obtain coverage when it currently can be denied, by continuing current guaranteed renewability protections, by prohibiting the use of factors such as health status, medical history, gender, and industry of employment to set premium rates, by limiting age rating, and by prohibiting issuers from dividing up their insurance pools. These reforms are effective for plan years (group market) and policy years (individual market) starting on or after January 1, 2014.

The proposed rule would also revise the timing of the submission of requests for state-specific

thresholds and the effective dates of such thresholds; require that health insurance issuers submit data on proposed rate increases in a form and manner to be determined by CMS, and amend the requirements for a state to have an Effective Rate Review Program. CMS is proposing these changes to align with the timing of rate submissions of qualified health plans (QHPs) in the Exchanges, and to adjust rate review to meet its additional purpose of helping to promote fair market competition beginning in 2014. The law requires that, beginning in 2014, the Secretary of HHS, in conjunction with states, monitor premium increases of health insurance coverage offered through an Exchange and outside of an Exchange. HHS will monitor these increases to identify patterns that could signal market disruption and assist in oversight of the new market-wide rating reforms created by the Affordable Care Act, which are effective on January 1, 2014.

Medicaid Opt-Out States Could Increase Your Premiums – Even If You Have Private Insurance

Debates over the ACA’s Medicaid expansion — and whether or not states should participate — has centered on how it would impact state budgets. A new paper suggests that the privately-insured have a stake in the matter too. Their premiums, the Academy of American Actuaries say, would rise if states decide to forgo the public insurance expansion.

If a state decides not to expand its Medicaid program, residents between 100 and 133 percent of the Federal Poverty Line — individuals making between $11,170 and $14,893 — become eligible for subsidized health insurance on the public exchange. Those lower-income individuals “can be expected to have higher health care needs than the higher-income exchange enrollees.”

Using CBO data, the brief estimates that those higher health-care costs will be 2 percent higher than “projections made under the assumption that all states do expand Medicaid.” Those premium increases would be borne by both the federal government, which helps buy coverage for subsidized individuals, as well as the individual purchasers themselves.

That would be the expected, nationwide increase in premiums. States that opt out, however, would be likely to see even premiums tick up even more. That has to do with a an ACA provision about reinsurance. When the Affordable Care Act was written, there was worry that very sick people would flood the insurance exchanges when they launched the exchanges. That would cause insurance premiums to spike.

To safeguard against that, the Affordable Care Act included $25 billion in reinsurance funds: Money meant to stabilize the insurance market, and send extra subsidies to the insurers that ended up with really sick members.

That $25 billion budget is fixed; it’s not tethered, in anyway, to the number of people on the exchange. So if states don’t participate in the Medicaid expansion, that same amount of money will be expected to cover a bigger number of people.As the actuaries put it, “a lower payment would be available on a per-enrollee basis.” States without the Medicaid expansion have be expected to have greater exchange participation that would, once again, cause premiums for all to rise.