Author Archive | John Barrett

MEDICARE ENROLLMENTS COME EARLIER THIS YEAR

NPR –

Oct. 24; If you’re a senior on Medicare or an adult child responsible for a senior on Medicare here’s something you should know: The annual “open enrollment” period for joining or changing prescription drug or private health plans is already under way.

“It’s much earlier this year. It started on Oct. 15, and it’s going to stop on Dec. 7,” says Nancy Metcalf, a senior editor and health expert at Consumer Reports. “So you have your window right now.”

Metcalf says the dates were moved up in part so plans could get all their paperwork done and put new membership cards in patients’ hands by Jan. 1, when plan changes take effect.

But the new dates are only one of several changes Metcalf says Medicare enrollees need to be aware of for next year. Consumer Reports has a free guide to some of them.

A key change she says consumers should be aware of during the open season is a new “star-based” quality rating, particularly for health plans. “You want 4 to 5 stars,” Metcalf says. And the reason that matters is that “those plans are getting more money from Medicare. They’re basically getting bonuses for being good.”

And more money, in this case, means more benefits, she says, because “one of the deals is the extra money has to go toward benefits to the members, not into the pockets of the plans.”

But no matter how many stars a plan has, last year’s health law is guaranteeing certain new benefits to everyone enrolled in the private Medicare plans known as Medicare Advantage.

In 2011, everyone in traditional Medicare was guaranteed a series of free preventive benefits, including an annual wellness exam and screenings for things like cancer and heart disease. Starting in 2012, those benefits will have to be offered by Medicare Advantage plans, as well.

Next year will also see a further constriction of the notorious “doughnut hole” gap in Medicare prescription drug coverage, where people continue to pay premiums but essentially get no benefits. In 2012, people who reach the gap will automatically get a 50 percent discount on their brand-name prescription drugs, and a 14 percent discount on generic medications.

Metcalf says even if you spend a lot on drugs and will hit that gap, the Medicare plan finder website can help you budget. If you enter both the drugs you take and the drugstores you plan to use, she says, “you get this amazing spreadsheet that will tell you month by month how much out of pocket you’re going to pay, and then exactly when you’re going to hit the doughnut hole.”

By 2020 the gap is scheduled to phase out altogether.

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Why Obamacare Might Cost You a Job

The Heritage Foundation 10/14/11

Back in February 2010, when Congress was still debating the Obamacare legislation, then-Speaker of the House Nancy Pelosi (D-CA) proclaimed to America that the law “will create 400,000 jobs almost immediately.” But according to a new report by Heritage’s James Sherk, Obamacare will have the opposite effect, pricing many unskilled workers out of full-time employment due to the law’s requirement that employers offer health benefits to full-time employees.

According to Sherk, the minimum cost of employing full-time workers under Obamacare amounts to an average of $27,500, more than what many unskilled employees produce. He explains in his paper, “Obamacare Will Price Less Skilled Workers Out of Full-Time Jobs” why increased costs will lead employers to shift to employing part-time workers:
After paying the new health premiums, the minimum wage, payroll taxes, and unemployment insurance taxes, hiring a full-time worker will cost employers at least $10.03 per hour. Full-time workers with family health plans will cost $13.75 per hour.

Employers who hire workers with productivity below these rates will lose money. Businesses employing less skilled workers will probably respond by dumping their employees onto the federally subsidized health care exchanges and replacing full-time positions with part-time jobs.

Fewer full-time jobs in favor of more part-time positions is not what America needs, particularly as it struggles with a stagnant economy, 9.1 percent unemployment, and 14 million people out of work. But just when the United States needs businesses to expand, grow, and invest, Obamacare is piling on the costs and regulations–making it more difficult for businesses to create new jobs.

Under the law, businesses with more than 50 workers must purchase more expensive government-approved insurance or pay a penalty, thereby reducing the amount of capital they have to invest in expanding and hiring new workers. That requirement also has the effect of incentivizing businesses with fewer than 50 employees to maintain their size to avoid the costs. And then there’s the uncertainty that Obamacare has brought about–businesses don’t know what their future costs will be under the legislation, making it difficult for them to plan for the future.

America might already be seeing the job-killing effects of the President’s signature law. Sherk writes that following Obamacare’s passage, economic growth in America changed course:
Initially, the economy appeared on track for a steady recovery. The economy went from losing 841,000 jobs in January 2009–the recession’s low point–to gaining 229,000 jobs in April 2010…

Within two months of Obamacare’s passing, the recovery stalled… In May 2010, the job situation stopped improving. Job creation dropped to just 48,000 net private sector jobs, and private-sector hiring took a new course. From May 2010 onward, private job growth improved by only 6,500 jobs per month–less than one-tenth the previous rate.

Though correlation doesn’t prove causation, the economy’s slowdown following the passage of Obamacare, when considered alongside complaints from business owners about the law’s effects on new hiring, should cause alarm for anyone who cares about unemployment in America. Heritage’s Nina Owcharenko explains why the law is the wrong prescription for turning the economy around:
Obamacare is perhaps the most damaging of the Administration’s policies that are impeding the country’s recovery. At a time when there should be a focus on cutting spending, reducing regulation, and lowering taxes, Obamacare does the complete opposite. It spends more, imposes costly new mandates and regulations, and raises taxes on individuals and businesses. This is no way to get the economy up and running again.

Unfortunately, Obamacare will make an already bad economic picture worse. Unskilled workers are struggling to find employment, and the President’s health care law will make finding full-time jobs even more difficult. If President Obama truly wants to reduce unemployment and help businesses grow, he should admit that Obamacare was a mistake and work with Congress to repeal it.

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MATERNITY CARE A MUST IN HEALTH PLANS WITH NEW LAW

By John Barrett (Based on a story appearing in the San Francisco Chronicle)

In an effort to help improve the health of mothers and infants in California, Gov. Jerry Brown has signed into law a measure that will prevent health insurers from excluding maternity care as a covered benefit.

The new law will require individual insurance policies, beginning July 1, 2012, to cover maternity just as any other condition that requires medical services.

Insurance companies began eliminating maternity coverage from individual policies to mitigate rising health care costs and insurance premiums. The move to less-expensive policies left Californians either unable to find or afford policies that did cover maternity services, or struggling to pay for pre- and post-natal care.

Current law requires health maintenance organizations, HMOs, and health insurers to include maternity coverage in their group plans. But that’s not the case for individual policies, which are typically bought by people who do not have access to group coverage through their work.

In 2010, just 12 percent of individual policies offered maternity coverage, a steep drop from 82 percent seven years ago. With so few options available, the policies that include maternity tend to be pricey because insurers figure the people willing to buy the plan are likely to use it.

The new law is expected to increase premiums for individual policyholders by an average of $6.92 per month, according to the bill’s analysis (I consider this a very low estimate). Insurers will be required to cover the full scope of maternity services, but with the same cost-sharing or co-payments required for other medical services under the policy.

In the past, several insurers opposed the bill, but the federal health care law may make maternity coverage inevitable. Maternity and newborn care are among the benefits expected to be required in plans as of 2014, when most Americans will have to buy insurance.

“There’s really no point in opposing this,” said Richard Wiebe, spokesman for the Association of California Life & Health Insurance Companies, which dropped its opposition to the bill.

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Temp Agencies: PPACA Employer Mandate a Bad Fit

October 6, 2011 By Allison Bell

 

Staffing industry representatives are asking Congress to exempt temporary workers from employer health insurance requirements set to take effect in 2014 or at least lighten the load.

The witnesses appeared today at a hearing on the effects of the employer penalty provision in the Patient Protection and Affordable Care Act of 2010 (PPACA) on temporary workers and their employers.

The hearing was organized by the U.S. House Government Affairs and Oversight Committee health subcommittee.

The PPACA employer mandate provision will require employers classified by the government as “large” to offer comprehensive health coverage to permanent, full-time employees starting in 2014 or else pay a penalty.

Employers that offer group health coverage could still end up paying a penalty if the employee’s share of the premiums for the lowest-priced individual plan available exceeds 9.5% of the employee’s income. The Internal Revenue Service has proposed that an employer could assume that the compensation it will be reporting on a worker’s Form W-2 is that employee’s income for health coverage affordability calculation purposes.

Christopher Spiro, managing director for health policy at the Center for American Progress Action Fund, Washington, an organization that supports PPACA, says PPACA and the federal agencies implementing it are trying to be as practical and flexible as possible when implementing provisions that would affect temporary workers and the temps’ employers.

The provision applies only to employers with 50 or more full-time employees, and that means 96% of employers will be exempt, Spiro said in written testimony posted on the committee website.

The provision also exempts seasonal workers and workers who work less than 30 hours per week, and an employer can calculate a worker’s hours either month by month or, in a procedure proposed by the U.S. Treasury Department, by using an average calculated using a look-back period of up to 12 months, Spiro said.

But, any method created to ease employers’ burden “must not undermine the purpose of employer responsibility,” Spiro said. “The method must not create an incentive to convert permanent full-time employees into temporary workers.”

Edward Lenz, a senior vice president at the American Staffing Association, Alexandria, Va., praised the Treasury Department’s look-back proposal but would prefer to see temporary workers exempted from “offer of coverage requirements” altogether.

Otherwise, a staffing firm could end up having to make “double payments” and have a strong incentive to stop offering coverage to any employees, Lenz said.

Many temporary workers have coverage from other sources, and they likely would end up with more stable arrangements, such as consistently owned “mini med” plans, or individual coverage purchased through the new health insurance exchanges that are supposed to be created by PPACA, if they do not move in and out of the staffing company’s plan, Lenz said.

John Uprichard, president of Find Great People International Inc., Greenville, S.C., testified that his firm – which has 50 internal employees, a pool of about 375 to 400 temporary workers, an internal annual payroll of $2.9 million, and an annual temporary worker payroll of about $7.4 million – believes complying with the current employer coverage mandate provision without any changes would increase its monthly health benefits costs by more than $62,000, or by more than $744,000 per year.

The administrative costs associated with compliance would be about $40,000 per year, Uprichard said.

“Offering coverage to temporary employees will be virtually impossible because their long hours fluctuate and they would be moving in and out of coverage constantly,” Uprichard said.

The employer and the employee control the hours, Uprichard noted.

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U.S. Health Insurance Cost Rises Sharply, Study Finds

By REED ABELSON New York Times
Published: September 27, 2011

The cost of health insurance for many Americans this year climbed more sharply than in previous years, outstripping any growth in workers’ wages and adding more uncertainty about the pace of rising medical costs.

A new study by the Kaiser Family Foundation, a nonprofit research group that tracks employer-sponsored health insurance on a yearly basis, shows that the average annual premium for family coverage through an employer reached $15,073 in 2011, an increase of 9 percent over the previous year.

“The open question is whether that’s a one-time spike or the start of a period of higher increases,” said Drew Altman, the chief executive of the Kaiser foundation.

The steep increase in rates is particularly unwelcome at a time when the economy is still sputtering and unemployment continues to hover at about 9 percent. Many businesses cite the high cost of coverage as a factor in their decision not to hire, and health insurance has become increasingly unaffordable for more Americans. Over all, the cost of family coverage has about doubled since 2001, when premiums averaged $7,061, compared with a 34 percent gain in wages over the same period.

How much the new federal health care law pushed by President Obama is affecting insurance rates remains a point of debate, with some analysts suggesting that insurers have raised prices in anticipation of new rules that would, in 2012, require them to justify any increase of more than 10 percent.

In addition to increases caused by insurers getting ahead of potential costs, some of the law’s provisions that are already in effect — like coverage for adult children up to 26 years of age and prevention services like mammogram screening — have contributed to higher expenses for some employers.

The Kaiser survey includes both big and small companies using employer-sponsored coverage representing about 60 percent of all insured Americans of working age. The annual growth in premiums, according to the survey, had slowed in recent years to 5 percent, rising just 3 percent in 2010, in part due to the lingering effects of the recession. After years of double-digit increases, the moderation was a welcome relief.

The unexpected increase in premiums raises questions about whether health care costs are, in fact, stabilizing at all, as people have postponed going to the doctor for a check-up or dentist for Pediatric Dentistry and Orthodontics and have put off expensive procedures. “No one quite knows,” said Mr. Altman.

Throughout this year, major health insurers have defended higher premiums — and higher profits — saying that their expenses would rise once the economy recovered and people believed they could again afford medical care. The struggling economy will probably keep suppressing demand for medical care, particularly as people pay a larger share of their own medical bills through higher deductibles and co-payments, according to benefits consultants and others. About three-quarters of workers now pay part of the bill when they go see a doctor, and nearly a third have a deductible of at least $1,000 if they have single coverage, up from just one in 10 in 2006, according Kaiser.

Although demand for care appears to be growing relatively slowly, insurers and benefit consultants also say prices for medical care continue to climb as prescription drug makers and hospitals charge more. “If they’re a popular brand or anchor hospital, they’re going to negotiate a significant increase if they can,” said Edward A. Kaplan, a benefits expert with the Segal Company, which recently surveyed insurers about medical costs.

The question for employers and insurers is whether the lackluster economy, as well as recent efforts by employer and insurers to better manage the medical care of workers, will keep premiums increasing at a more moderate level. Early responses to a survey by Mercer, a consulting firm, suggest employers are expecting the cost of providing health benefits to go up about 5 percent next year, according to Beth Umland, Mercer’s director of research for health and benefits. These companies may be factoring in the more pessimistic view of the economy, she said, where any recovery seems further off than it did a few months ago.

Employers are reporting that their workers are using less medical care, said Ms. Umland, but they and insurers have been slow to estimate costs that reflect the lower demand. “It always takes a while for underwriting to catch up with reality,” she said.

Some small business say they expect their premiums to moderate, but only because of changes in their work force — partly caused by younger, healthier employees — that make it less likely that the companies will incur high medical claims. “Up until last year, we saw very hefty increases — double digits,” said Heather Gombos, an executive for R. M. Jones & Company and affiliated businesses in New Britain, Conn., a group that insures about 50 of its 80 employees.

Family coverage is now running $12,000 a year, Ms. Gombos said, and she is waiting to see what rate increases her insurer proposes for the coming year. She thinks premiums will not rise as sharply in 2012. “What it comes down to is we’ve had some good luck,” she said.

Some businesses say they anticipate relief from higher costs in the coming year for a variety of reasons. At Ogilvy & Mather, the New York advertising firm, the company believes its efforts to encourage wellness and better oversee its employees’ health through an on-site medical clinic are paying off. “We are not anticipating any cost increase for employer and employee,” said Gerri Stone, the senior partner who oversees the firm’s benefits strategy.

Ms. Stone acknowledged that the firm’s 3,600 employees were relatively young and healthy, helping it avoid some of the sharp increases experienced by other businesses. “We’ve never gone into the double digits,” she said. Family coverage runs about $16,000 a year, she said.

Insurers and benefits consultants say, however, it is difficult to predict whether health care demand will again take off when the economy rebounds or whether some other factor is at play. “We’ve seen a moderation in the increase in health services, particularly in discretionary services,” said Tom Richards, an executive with Cigna. While he attributes some of the moderation to the poor economy, he says the increase in cost-sharing by employees and programs that more closely monitor their health could be having a more permanent impact.

The question, he said, is “what is the economy going to be and what is the new normal.”

Obama administration officials argue that new regulations are forcing insurers to be more circumspect about raising rates. Insurers seeking to raise premiums next year by more than the 10 percent maximum will have to publicly justify their rate increases, and the new law requires the companies to spend at least 80 cents of every dollar they collect in premiums on medical care. If they end up taking too much in premiums, they will have to refund the money to consumers.

But employers and others say much more still needs to be done to control overall costs, especially when workers’ wages are essentially flat. Of the $15,073 in average premiums paid for family coverage, Kaiser found that employees paid $4,129 towards the cost, in addition to whatever out-of-pocket costs they shouldered.

“We’re going to continue to have this yawning gap,” said Helen Darling, the chief executive of the National Business Group on Health, which represents employers that provide health coverage to their workers. Health care costs continue to climb much faster than overall inflation, she noted.

“The health economy acts as if it’s a boom economy,” she said.

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Obama jobs plan: Raise taxes on health care

By MATT DOBIAS | 9/15/11 Politico.com

The White House wants another shot at requiring some Americans to pay more for their employer-backed health coverage, despite a previously tepid response from the very same lawmakers needed to advance the proposal.

Nearly imperceptible to all but the most trained tax policy eyes, President Barack Obama’s blueprint to boost employment hinges partly on a provision that makes health plans taxable for individuals who make more than $200,000 and couples making more than $250,000.

“If your incomes are above those levels, and you benefit from employer-sponsored health insurance, you’re going to have to pay a modest amount of tax on the value of the health insurance,” explains Paul Van de Water, a senior fellow at the Center on Budget and Policy Priorities.

The tax provision was included as a way to defray the nearly $447 billion price tag for Obama’s template to get Americans back to work. Under the White House’s calculations, the provision means that higher earners would pay about 7 percent more on the value of their health coverage. Put another way, it caps what the wealthy can deduct for the cost of their coverage, lowering the amount to 28 cents.

“This proposal is part of a balanced deficit reduction plan that includes closing corporate tax loopholes and asking the wealthiest Americans to pay their fair share,” a senior White House official said, adding that shifting the deduction from 35 percent to 28 percent makes it “more in line with what middle class families receive today.”

The exclusion is a familiar target for the administration officials. Some variation of the proposal has been included in every budget Obama has submitted.

Indeed, a similar measure had been eyed during the early days of the health reform debate on Capitol Hill as a way to help pay for the mammoth package. Ultimately, lawmakers proved cool to the idea, and White House negotiators settled for a tax on more generous — and costly — health plans that doesn’t start until 2018.

“It was one of the options being discussed,” Van de Water said. “There was a lot of discussion of including some version of health insurance benefits as one of the pay-fors.”

Now, the tax exclusion idea is part of a jobs package — Obama’s proposal for dealing with the top priority for lawmakers from both parties. Whether that will be enough to overcome a deep reluctance to approve new tax revenues is still unclear, but members from both parties have a powerful incentive to find some common ground.

“It’s so clear to me that we want to do anything we can to create jobs,” Sen. Sherrod Brown (D-Ohio) said. “If that means compromising on some pay-fors and making it work, we’ll compromise to get this up and running.” Even so, it may not be enough to garner GOP support.

Grace-Marie Turner, president of the Galen Institute, a think-tank that promotes open market solutions for health care, said the proposal misses the mark.

“I can’t imagine any Republicans would support it,” she said. “It’s not the right way to fix the flawed tax treatment of health insurance.”

Donald Marron, director of the Tax Policy Center, a jointly-run program between the Urban Institute and the Brookings Institution, said the exclusion makes for an obvious target.

At $200 billion per year, the tax subsidy is by far the largest tax preference, he said. “It clearly increases the number of folks who have health insurance,” Marron added. “But in a bang-for-buck way, it’s not an efficient way to encourage benefits. It goes to high-income people who, frankly, would have coverage anyway.”

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California could pose problem for Obama’s healthcare reform

By Noam N. Levey, Los Angeles Times

September 15, 2011

California, a model for healthcare reform, is seeking to impose some of the toughest limits on government-subsidized coverage. If approved, the limits could herald deep Medicaid cuts nationwide.

 

Reporting from Washington — For more than a year, as conservative states have battled President Obama’s sweeping healthcare law, California was supposed to be a model that showed the law’s promise.

But the state is emerging as one of the biggest headaches for the White House in its bid to help states bring millions of Americans into the healthcare system starting in 2014.

Though still outpacing much of the nation, cash-strapped California is cutting its healthcare safety net more aggressively than almost any other state, despite billions of dollars in special aid from Washington.

And state leaders are pressing the Obama administration for permission to place some of the toughest limits in the nation on government-subsidized healthcare, including a cap on how often people with Medicaid — the healthcare program for the poorest Americans — can go to the doctor.

A decision on some of California’s requests is expected this month. If approved, the limits could open the door to deep cutbacks nationwide.

“There are states that are bellwethers. California is one of them,” said Jane Perkins, legal director of the National Health Law Program. If the federal government approves California’s requests, other states are almost certain to seek similar treatment, setting off a “race to the bottom,” she said.

The stakes are unusually high for the Obama administration. “Health reform is badly in need of success stories, and early success in California could add decisive momentum,” said Drew Altman, president of the nonprofit Kaiser Family Foundation, a leading health policy center. “But if California bogs down, or if there is an implementation failure, it would be a huge negative for the whole implementation effort nationally.”

Less than a year ago, California officials were setting out to lead the country toward healthcare reform.

In October, then-Gov. Arnold Schwarzenegger broke with national Republicans to support the healthcare overhaul and made California the first state to create an insurance exchange after the national law was enacted. Beginning in 2014, these exchanges will serve as Internet-based marketplaces in which people who do not get health benefits at work can buy coverage.

A month later, the Obama administration approved a $10-billion plan to help California get a jump start on expanding coverage to its poorest residents, another key part of the new law.

The state continues to move ahead. A well-respected expert is taking the helm of California’s insurance exchange, and the state is expanding the number of low-income Californians eligible for health coverage.

“Health reform is the light at the end of the tunnel,” said Anthony Wright, executive director of Health Access California, a leading advocacy group.

By contrast, GOP leaders in Texas, Florida, Kansas and other conservative states have recently put the brakes on expanding health coverage.

But as a result of a deep budget crisis, California’s 2012 spending plan slashes $2 billion from Medi-Cal, as Medicaid is called in the state, over the next two years. That could affect more than 8.5 million people.

California already spends less per beneficiary than any state. It is now seeking waivers from the federal government to impose copays of $5 for office visits and prescriptions, $50 for emergency room visits and $100 for hospital stays. Few other states come close to charging Medicaid recipients that much.

Cost sharing in Medicaid is tightly restricted under federal law because it can discourage people from seeking needed care. A family of three at the federal poverty line makes just $356 a week.

The state plans to limit Medicaid beneficiaries to seven doctor visits a year, with exceptions for essential care. No state has imposed such stringent limits.

California, which already pays Medi-Cal providers less than all but two states, also is pushing to cut payments to doctors, hospitals and others who serve Medi-Cal patients by 10%. That would drop reimbursement for a standard physician visit to less than $12.

“This isn’t the way we’d want to run a Medicaid program,” said Toby Douglas, California’s Medi-Cal director. “If it wasn’t for the state fiscal crisis, we … would not be going forward with these proposals. We would be focusing solely on healthcare reform.”

Medical providers and patient advocates are growing increasingly concerned, however, that the cuts will undermine the goals of the new law.

Many doctors have already closed their doors to Medicaid patients. Other providers are following suit. In June, Sharp Coronado Hospital in San Diego County stopped taking new patients at its facility providing long-term life support.

“I’m afraid no one is going to take these people,” said Chief Executive Marcia Hall.

In Washington, officials at the Department of Health and Human Services, who have been in intense discussions with California officials for months, desperately want to avert a healthcare crisis in the state.

In a case before the U.S. Supreme Court this fall, the administration is backing California’s bid to throw out a lawsuit by state medical providers challenging its Medi-Cal cuts.

At the same time, many administration officials are worried that granting California permission to further slash Medicaid could prompt other states to follow suit.

“We want to honor the flexibility that the states need and want,” said Dr. Donald Berwick, who heads the federal Medicaid and Medicare programs. “But beneficiaries are also having a tough time, and we want make sure their interests and access are being protected.”

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Workers See Steep Increases in Deductibles

Workers are paying an average of nearly $4,000 for family health coverage — an increase of 14% compared to last year, according to a survey by the Kaiser Family Foundation and the Health Research & Educational Trust. Employees are paying quite a bit more even though premiums for family coverage rose an average of only 3% to $13,770 in 2010. The amount employers contribute for family coverage did not increase.

PPOs continue to dominate the employer market, enrolling 58% of covered workers. Average PPO family premiums topped $14,000 annually in 2010. Since 2005, workers’ contributions to premiums have gone up 47%. Since 2005 premiums rose 27%, wages rose 18%, and inflation rose 12%. Many employers are also raising the employee’s annual deductibles. Twenty-seven percent of covered workers now face annual deductibles of at least $1,000 compared to 22% in 2009. Forty-six percent of workers in small firms (3 to 199 workers) have such deductibles.

Kaiser president and CEO Drew Altman, Ph.D. said, “With the economy struggling, businesses have been shifting more of the costs of health insurance to workers through premiums, deductibles, and other cost-sharing. This can be helping to stem the rapid rise in premiums that we saw in the early 2000s, but it also means employer coverage is less comprehensive. From a consumer perspective, the cost of health insurance just keeps going up faster than wages.” Thirty percent of employers say that, in response to the economic downturn, they reduced health benefits or increased cost sharing and 23% increased what employees pay for coverage.

Only consumer-driven plans saw growth in their market share in 2010. These high-deductible plans, which include a health savings account or health reimbursement arrangement, now enroll 13% of covered workers, up from 8% last year. “Consumer-driven plans have clearly established a foothold in the employer market, tripling their market share from 4% in 2006 to 13,” said study lead author Gary Claxton, a Kaiser vice president and director of the Healthcare Marketplace Project.

Surprisingly, the percentage of firms offering health benefits in 2010 increased sharply to 69%, up from 60% in 2009. That’s largely due to an increase in the offer rate among firms with three to nine workers. Because most workers work for large firms, the shift among the smallest firms did not have a major effect on the percentage of workers who are offered health benefits or who are covered at their job. A possible explanation is that non-offering firms were more likely to fail during the past year, leading to a higher offer rate among surviving firms. Other findings from the survey include the following:

• Single coverage — Premiums for worker-only health benefits increased 5% in 2010 to reach $5,049 annually. Workers are paying an average of $899 a year for single coverage, up from $779 in 2009. Forty-seven percent of covered workers are in single coverage plans.

• Physician office visits – The average co-payment for primary care increased from $20 to $22 for in-network physician office visits from 2009 to 2010. It increased from $28 to $31 for specialty care during the same period.

• Mental health benefits — 31% of firms with more than 50 workers made changes to mental health benefits in response to the 2008 Mental Health Parity and Addiction Equity Act. Most eliminated limits on coverage to comply with the law, though 5% dropped mental health coverage altogether.

• Wellness benefits — 74% of employers that offer health benefits offer at least one of the following wellness programs: weight loss program, gym membership discounts or on-site exercise facilities, smoking cessation program, personal health coaching, classes in nutrition or healthy living, web-based resources for healthy living, or a wellness newsletter.

• Health risk assessments — 11% of employers that offer coverage give employees the option of completing a health risk assessment. Two percent of employers offer financial incentives as part of the wellness plan, such as lowering the worker’s share of premiums or offering merchandise, gift cards, travel, or cash to their workers. Large firms are more likely to offer assessments and to offer financial incentives.

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Insurers’ rate quote practice is unfair to consumers

Shoppers are routinely asked to disclose their current provider’s rate, which all but guarantees that no one will provide coverage for much less.

Let’s say your barber is increasing the cost of haircuts. Is it fair for other barbers to require that you disclose how much you were being asked to pay before they say how much they’ll charge?

That hypothetical example illustrates the situation many California businesses find themselves in when they go shopping for health insurance. By routinely having to reveal the size of a rate increase to other insurers, they all but guarantee that no one will provide coverage for much less.

“It’s price fixing,” said John Antonelli, president of ARSLegal in Whittier. “If my company tried this, we’d be thrown in jail.”

His business, which handles document copying for law firms, has 135 employees. Antonelli said ARS had been paying about $600,000 annually to Blue Shield of California to provide health coverage to workers and their families.

But serious illnesses involving a handful of workers and their family members prompted Blue Shield to raise the company’s annual premium last year 60% to almost $960,000, he said.

So Antonelli had his insurance broker put out a request for quotes from other firms. He knew from experience that he’d have to disclose information about the general health of his workforce. What he hadn’t expected was a requirement among insurers that he also disclose how much Blue Shield wanted to raise his company’s rates.

The California Department of Insurance says this isn’t a legal requirement. But brokers and insurance-industry officials say it’s a standard practice to ask how much a company’s current insurer wants to charge for annual premiums.

“If you don’t tell them, you don’t get a quote,” said John Barrett, a Pasadena health insurance broker. “It’s that simple.”

From the insurer’s point of view, that’s understandable. Insurers will do everything possible to minimize their exposure to risk. The more they know about a company’s insurance history, the easier it is to tailor a policy that keeps losses at a minimum.

“That’s not price fixing,” Barrett insisted. “It’s full disclosure.”

But it also speaks to a distinct lack of competition in the marketplace. Knowing what a rival wants to charge can be a strong incentive for other insurers to keep their own prices high, said Laurence Taylor, a broker with Pegasus Capital & Insurance Services in downtown Los Angeles.

“It’s an unfortunate situation,” he said. “It makes things tough for employers.”

Antonelli’s position is that as long as he’s upfront about his employees’ insurance claims, why should he have to stack the deck in an insurer’s favor by declaring how much a competitor wanted to charge?

“I’m happy to tell you about the health of my employees,” he said. “But you give me a bid on your own, not based on what Blue Shield wanted to charge.”

In his case, the lowest bid received from another insurer for comparable coverage still represented a hefty 25% rate hike, which Antonelli reluctantly accepted.

California law limits how much insurers can charge businesses with fewer than 50 workers, so it’s relatively easy to obtain reasonable quotes from multiple providers.

Things are different for larger businesses. Because insurers have more latitude when it comes to prices, they’ll often seek whatever they think the market will bear.

For a medium-size company like Antonelli’s, with relatively little bargaining muscle compared with an enterprise with thousands of workers, that can be a real challenge. Such companies typically have to settle for whatever they can get from insurers.

One other thing that’s striking here: The punitive nature of filing claims. In Antonelli’s case, his company willingly paid about $600,000 a year for health insurance. But as soon as a few serious cases materialized — one worker had heart trouble, the spouse of another got cancer — Blue Shield jacked up the company’s rates.

That’s quite a product. Don’t use it, and it’ll cost you $600,000. Use it, and your cost will soar to almost $1 million. A Blue Shield spokesman declined to comment.

Patrick Johnston, president of the California Assn. of Health Plans, an industry group, said knowing how much another insurer is charging can be a crucial data point when determining a company’s medical risk.

“If the rate is high, it would suggest to other insurers that the claims experience is high and likely to remain high,” Johnston said. “Therefore, the insurer quoting the bid would be cautious about estimating on the low side.”

And that’s how you get a vicious cycle whereby insurance rates inevitably skew higher. All it takes is one large rate increase for all other insurers to fall in line, regardless of what their own due diligence might tell them.

A bill in Sacramento, AB 52, would have given state regulators the authority to block unreasonable rate increases. But it fell apart last week when backers acknowledged they didn’t have the votes to get it passed.

At the very least, lawmakers should take a closer look at insurers requiring a competitor’s renewal rate before offering a quote for health coverage. This is an unfair and unreasonable practice that tips the scales too far on insurers’ behalf.

Insurers should have access to relevant claims data in pricing their contracts. All parties should be making informed decisions when it comes to health coverage.

But lawmakers should prohibit the requesting of a rival’s rates. It serves to make insurers lazy in their price estimates and to encourage costlier policies.

Healthcare is expensive enough. We don’t need to perpetuate a system that makes things worse.

 

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