Archive | Insurance Company News – California

Health Insurers Raise Some Rates by Double Digits

Health insurance companies across the country are seeking and winning double-digit increases in premiums for some customers, even though one of the biggest objectives of the Obama administration’s health care law was to stem the rapid rise in insurance costs for consumers.

Dave Jones, the California insurance commissioner, said some insurance companies could raise rates as much as they did before the law was enacted. Particularly vulnerable to the high rates are small businesses and people who do not have employer-provided insurance and must buy it on their own.

In California, Aetna is proposing rate increases of as much as 22 percent, Anthem Blue Cross 26 percent and Blue Shield of California 20 percent for some of those policy holders, according to the insurers’ filings with the state for 2013. These rate requests are all the more striking after a 39 percent rise sought by Anthem Blue Cross in 2010 helped give impetus to the law, known as the Affordable Care Act, which was passed the same year and will not be fully in effect until 2014.

In other states, like Florida and Ohio, insurers have been able to raise rates by at least 20 percent for some policy holders. The rate increases can amount to several hundred dollars a month. The proposed increases compare with about 4 percent for families with employer-based policies.

Under the health care law, regulators are now required to review any request for a rate increase of 10 percent or more; the requests are posted on a federal Web site, healthcare.gov, along with regulators’ evaluations.

The review process not only reveals the sharp disparity in the rates themselves, it also demonstrates the striking difference between places like New York, one of the 37 states where legislatures have given regulators some authority to deny or roll back rates deemed excessive, and California, which is among the states that do not have that ability. New York, for example, recently used its sweeping powers to hold rate increases for 2013 in the individual and small group markets to under 10 percent. California can review rate requests for technical errors but cannot deny rate increases.

The double-digit requests in some states are being made despite evidence that overall health care costs appear to have slowed in recent years, increasing in the single digits annually as many people put off treatment because of the weak economy. PricewaterhouseCoopers estimates that costs may increase just 7.5 percent next year, well below the rate increases being sought by some insurers. But the companies counter that medical costs for some policy holders are rising much faster than the average, suggesting they are in a sicker population. Federal regulators contend that premiums would be higher still without the law, which also sets limits on profits and administrative costs and provides for rebates if insurers exceed those limits.

Critics, like Dave Jones, the California insurance commissioner and one of two health plan regulators in that state, said that without a federal provision giving all regulators the ability to deny excessive rate increases, some insurance companies can raise rates as much as they did before the law was enacted.

“This is business as usual,” Mr. Jones said. “It’s a huge loophole in the Affordable Care Act,” he said. While Mr. Jones has not yet weighed in on the insurers’ most recent requests, he is pushing for a state law that will give him that authority. Without legislative action, the state can only question the basis for the high rates, sometimes resulting in the insurer withdrawing or modifying the proposed rate increase.

The California insurers say they have no choice but to raise premiums if their underlying medical costs have increased. “We need these rates to even come reasonably close to covering the expenses of this population,” said Tom Epstein, a spokesman for Blue Shield of California. The insurer is requesting a range of increases, which average about 12 percent for 2013.

Although rates paid by employers are more closely tracked than rates for individuals and small businesses, policy experts say the law has probably kept at least some rates lower than they otherwise would have been.

“There’s no question that review of rates makes a difference, that it results in lower rates paid by consumers and small businesses,” said Larry Levitt, an executive at the Kaiser Family Foundation, which estimated in an October report that rate review was responsible for lowering premiums for one out of every five filings.

Federal officials say the law has resulted in significant savings. “The health care law includes new tools to hold insurers accountable for premium hikes and give rebates to consumers,” said Brian Cook, a spokesman for Medicare, which is helping to oversee the insurance reforms.

“Insurers have already paid $1.1 billion in rebates, and rate review programs have helped save consumers an additional $1 billion in lower premiums,” he said. If insurers collect premiums and do not spend at least 80 cents out of every dollar on care for their customers, the law requires them to refund the excess.

As a result of the review process, federal officials say, rates were reduced, on average, by nearly three percentage points, according to a report issued last September. In New York, for example, state regulators recently approved increases that were much lower than insurers initially requested for 2013, taking into account the insurers’ medical costs, how much money went to administrative expenses and profit and how exactly the companies were allocating costs among offerings. “This is critical to holding down health care costs and holding insurance companies accountable,” Gov. Andrew M. Cuomo said.

While insurers in New York, on average, requested a 9.5 percent increase for individual policies, they were granted an increase of just 4.5 percent, according to the latest state averages, which have not yet been made public. In the small group market, insurers asked for an increase of 15.8 percent but received approvals averaging only 9.6 percent.

But many people elsewhere have experienced significant jumps in the premiums they pay. According to the federal analysis, 36 percent of the requests to raise rates by 10 percent or more were found to be reasonable. Insurers withdrew 12 percent of those requests, 26 percent were modified and another 26 percent were found to be unreasonable.

And, in some cases, consumer advocates say insurers have gone ahead and charged what regulators described as unreasonable rates because the state had no ability to deny the increases.

Two insurers cited by federal officials last year for raising rates excessively in nine states appear to have proceeded with their plans, said Carmen Balber, the Washington director for Consumer Watchdog, an advocacy group. While the publicity surrounding the rate requests may have drawn more attention to what the insurers were doing, regulators “weren’t getting any results by doing that,” she said.

Some consumer advocates and policy experts say the insurers may be increasing rates for fear of charging too little, and they may be less afraid of having to refund some of the money than risk losing money.

Many insurance regulators say the high rates are caused by rising health care costs. In Iowa, for example, Wellmark Blue Cross Blue Shield, a nonprofit insurer, has requested a 12 to 13 percent increase for some customers. Susan E. Voss, the state’s insurance commissioner, said there might not be any reason for regulators to deny the increase as unjustified. Last year, after looking at actuarial reviews, Ms. Voss approved a 9 percent increase requested by the same insurer.

“There’s a four-letter word called math,” Ms. Voss said, referring to the underlying medical costs that help determine what an insurer should charge in premiums. Health costs are rising, especially in Iowa, she said, where hospital mergers allow the larger systems to use their size to negotiate higher prices. “It’s justified.”

Some consumer advocates say the continued double-digit increases are a sign that the insurance industry needs to operate under new rules. Often, rates soar because insurers are operating plans that are closed to new customers, creating a pool of people with expensive medical conditions that become increasingly costly to insure.

While employers may be able to raise deductibles or co-payments as a way of reducing the cost of premiums, the insurer typically does not have that flexibility. And because insurers now take into account someone’s health, age and sex in deciding how much to charge, and whether to offer coverage at all, people with existing medical conditions are frequently unable to shop for better policies.

In many of these cases, the costs are increasing significantly, and the rates therefore cannot be determined to be unreasonable. “When you’re allowed medical underwriting and to close blocks of business, rate review will not affect this,” said Lynn Quincy, senior health policy analyst for Consumers Union.

The practice of medical underwriting — being able to consider the health of a prospective policy holder before deciding whether to offer coverage and what rate to charge — will no longer be permitted after 2014 under the health care law.

*Modified from a New York Times article dated January 5, 2013

 

 

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Five Things To Watch in Health Care in 2013

California Healthline Contributing Editor by Dan Diamond –

December 12, 2012:

“Prediction is indispensable to our lives,” forecaster extraordinaire Nate Silver writes in his new book, “The Signal and the Noise.” Every day, whether wearing a raincoat to work or setting aside funds for future spending, “we are making a forecast about how the future will proceed — and how our plans will affect the odds for a favorable outcome.”

In health care, the mix of ever-shifting technologies, laws and competitive landscape means that many patients’ lives (and industry dollars) rest on whether providers and regulators can make the right bets. And some years, the industry’s direction is relatively easy to predict.

For example, when “Road to Reform” did a similar forecasting exercise last year, the 2012 signposts were clear. March’s Supreme Court case. The November election.

What will be significant in 2013 is a bit murkier, though several major developments await in the months ahead. A slew of ACA-related provisions are slated to take effect, with new taxes and programs like the Bundled Payments for Care Improvement Initiative slated to come online. Both parties continue to discuss entitlement reforms, which could include raising the Medicare eligibility age. The Independent Payment Advisory Board may submit its first draft spending control proposal.

Here are five broader trends that industry observers are watching.

Premium Growth

The Affordable Care Act was supposed to help tamp down health care costs, and some supporters have suggested (possibly prematurely) that the law has been responsible for a slowdown in health spending growth.

But average Americans haven’t seen much of a difference yet. A new analysis released on Wednesday found that workers’ spending on premiums swelled by 74% between 2003 and 2011.

And while the ACA contains measures to control premiums — like new rules on insurer oversight and administrative spending — observers don’t expect any immediate relief.

“Hold onto your hat,” consultant Robert Laszewski warns. Having spoken with a number of insurers in the individual and small group markets, Laszewski says to “expect a 30% to 40% increase in the baseline cost of individual health insurance to account for the new premium taxes, reinsurance costs, benefit mandate increases, and underwriting reforms.”

Those premium hikes may disproportionately hit people in their 20s and 30s, given new regulations that will narrow the difference in health insurance rates between younger and older consumers.

They also allow opponents of the ACA to score political points. The ongoing rise in premium costs “breaks a promise made by the president to lower premiums for families by $2,500,” according to Rep. Phil Roe (R-Tenn.).

Employer Decisions

One of the most significant industry questions post-ACA: Will employers continue to provide traditional health benefits for their workers, drop coverage or adopt new models in hopes of controlling spending?

It’s been hard to get a clear answer, partly because firms have been slow to announce their changes, fearing public backlash. “Road to Reform” recently reviewed a slew of employer efforts to control benefit costs, such as possibly shifting more full-time workers into part-time arrangements, and the accompanying critical news reports.

One of those companies was Darden Restaurants, which has since clarified that it would not be modifying workers’ hours.

“The program was only a test,” Darden spokesperson Matt Kobussen tells California Healthline, and “none of [the company’s] current full-time employees, hourly or salaried, will have their full-time status changed as a result of health care reform.”

But less-public changes to benefit design and provision are well in the works, at Darden and elsewhere. For example, the restaurant company is among several major firms exploring whether using defined contribution — where employers pay a fixed amount into employees’ health plans and allow workers to choose their coverage from an online marketplace — would be a more cost-effective way to provide health coverage.

Exchange Implementation

While HHS moved the deadline for states to decide whether they’re operating their own health insurance exchange, it’s kept the Oct. 1, 2013 deadline for all exchanges to begin enrolling consumers. And most observers agree: It will be a sprint to hit that deadline, especially with more states opting to let the government set up the model.

“Will the [federal government] be ready to provide an insurance exchange in all of the states that don’t have one on Oct. 1, 2013?” Laszewski asks.

“I have no idea. And neither does anyone else I talk to … We only hear vague reports that parts of the new federal exchange information systems are in testing.”

Merger and Integration Activity

The case doesn’t carry the weight of Florida v. Sebelius, but FTC v. Phoebe Putney Health System — and FTC v. ProMedica, for that matter — reflects the broad tension between regulators and providers.

In both lawsuits, FTC is attempting to prevent provider consolidation that the agency says would lead to anti-competitive behavior and higher prices for patients. And victories in those cases would further embolden FTC to intervene in merger activity, lawyers tell “Road to Reform.”

But hospitals, physicians and other providers say that they must move into new arrangements in hopes of navigating the changes wrought by the ACA, which is intended to reward more integration and care networks.

Comparative Effectiveness Research

While many experts polled by “Road to Reform” highlighted some of the ongoing policy issues that will spill into next year — from states’ decisions on expanding Medicaid to “fiscal cliff” negotiations — one pointed to potential changes in care quality as a top 2013 priority.

“I’m thinking a lot about” the Patient-Centered Outcomes Research Institute, economist Austin Frakt tells California Healthline.

“Comparative effectiveness research is far more important than most of the tinkering that gets proposed (like raising the Medicare age),” Frakt adds.

But is PCORI properly designed to help transform health care, or is it just another pool of research funding? As Michael Millenson writes, the institute is slated to spend $300 million on patient-centered outcomes research next year, which could make it a major player in funding new quality initiatives. But PCORI’s designers intentionally tamped down, worried that too much focus on “comparative effectiveness” would be seen as prioritizing “cost-effectiveness,” and even rationing.

“PCORI is the offspring of a shotgun marriage” between regulators who favor government-led reforms and those who are skeptical of them, Millenson concludes. “[And] no one is quite sure yet what this child will be once it grows up.”

Looking Forward

As forecasts go, all observers that “Road to Reform” talked to agreed: It will be another fast-paced year for the industry.

Of course, there’s always this maxim from expert prognosticator Silver: “It is amusing to poke fun at the experts when their predictions fail.”

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Aetna CEO Sees Obama Health Law Doubling Some Premiums

Health insurance premiums may as much as double for some small businesses and individual buyers in the U.S. when the Affordable Care Act’s major provisions start in 2014, Aetna’s chief executive officer said.

While subsidies in the law will shield some people, other consumers who make too much for assistance are in for “premium rate shock,” Mark Bertolini, who runs the third-biggest U.S. health-insurance company, told analysts yesterday at a conference in New York. The prospect has spurred discussion of having Congress delay or phase in parts of the law, he said.

“We’ve shared it all with the people in Washington and I think it’s a big concern,” the CEO said. “We’re going to see some markets go up as much as as 100 percent.”

Bertolini’s prediction is at odds with Congressional Budget Office estimates that the law will have little effect on small and large-employer plans and the Obama administration’s projections that middle-class families will actually save money. The 2010 law is expected to extend health care to about 30 million people who otherwise couldn’t get insurance, paid for by new taxes and fees on companies and wealthier individuals.

Those taxes will make coverage more expensive for insurers, as will other provisions such as a ban on discriminating against people with pre-existing medical conditions, Bertolini said. Premiums are likely to increase 25 percent to 50 percent on average in the small-group and individual markets, he said, citing projections by his Hartford, Connecticut-based company.

High Estimate

The one-time jump in rates also includes increases in costs that would come even without the law, Bertolini said.

“That just seems silly,” said Gary Claxton, a vice president at Kaiser Family Foundation, aMenlo Park, California- based nonprofit that studies health issues. “I can’t imagine anything going on in the small-group market that would change the average premium that much. On the individual market, there’s arguments for things changing, but those magnitudes seem high.”

The Obama administration said last year that “middle-class families” buying insurance through the law’s new online exchanges may save as much as $2,300 a year starting in 2014. Nick Papas, a White House spokesman, declined to comment on Bertolini’s predictions.

The CBO estimated in 2009 that the law will increase premiums 10 percent to 13 percent for individuals and have little effect on small and large-employer plans. After the subsidies are factored in, individual bills will go down by about 60 percent, the agency predicted.

About 43 percent of people who buy on the exchanges, or individual markets outside of them, won’t be eligible for subsidies, according to the report. They would see premium increases “somewhat less” than 10 percent to 13 percent, CBO predicted.

*Modified from a Bloomberg article

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Insurers’ Proposed Rate Hikes in California Draw Criticisms

Consumer advocates are criticizing insurers’ planned premium rate hikes in California as an attempt to boost profits while the U.S. prepares to implement the Affordable Care Act, the San Francisco Chronicle reports (Colliver, San Francisco Chronicle, 11/29).

Details of Anthem’s Planned Rate Hikes

Recently, Anthem Blue Cross proposed premium rates hikes for next year that average 18% for more than 630,000 individual policyholders. Some of Anthem’s policyholders could experience premium increases of as much as 25% in February 2013.

Anthem also is seeking a separate rate hike averaging 15% for an additional 100,000 policyholders whose plans are regulated by the state Department of Managed Health Care (California Healthline, 11/28).

Details of Additional Planned Rate Hikes

According to filings with state officials, other insurers that have proposed premium increases include:

Aetna, which has proposed a nearly 19% rate hike for about 69,000 individual policyholders in April 2013;

Kaiser Permanente, which has proposed an 8% rate hike for more than 220,000 policyholders in January 2013; and

UnitedHealth Group, which has proposed a 10% rate hike for about 11,000 policyholders in January 2013.

Criticisms of Planned Rate Hikes

Consumer advocates say that insurers are trying to raise premiums in advance of Jan. 1, 2014, when the ACA will be fully implemented and insurers will not be able to deny coverage to individuals with pre-existing conditions. Jamie Court — president of Consumer Watchdog — said insurers want to boost their premiums going into 2014 to account for uncertainties in the law and to make sure they can make as much money as possible. He said, “This is a pre-emptive strike against the implementation” of the ACA.

Insurers’ Response

Darrel Ng — an Anthem spokesperson — said that the insurers’ rate increases “represent an economic reality faced throughout the entire industry, indicating health care costs continue to escalate faster than the growth of premiums.” Anthem also argued that the lagging economy has caused people to drop their health insurance to save money. As a result, many of those who keep their policies tend to be sicker and use their insurance more, according to Anthem (San Francisco Chronicle, 11/29).

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Insurers Question Physicians’ Acceptance of Medi-Cal Kids

Some California health plans are expressing concerns that there will not be enough physicians who are willing to accept children moved from the Healthy Families program to Medi-Cal, California Watch reports.

Healthy Families is California’s Children’s Health Insurance Program and Medi-Cal is California’s Medicaid program (Jewett, California Watch, 11/29).

Background

In October, California Health and Human Services Secretary Diana Dooley announced that the state is moving forward with plans to shift about 863,000 children from Healthy Families to Medi-Cal next year. Dooley said that the transition will help streamline and simplify government health care programs for California children.
Eliminating Healthy Families is estimated to reduce state spending by $13 million this fiscal year and $73 million annually after the transition is finished, according the state. The Department of Health Care Services said it plans to move all children enrolled in Healthy Families into Medi-Cal by Sept. 1, 2013. The beneficiaries are expected to be moved in four phases, depending on whether their physicians and health plans already accept Medi-Cal (California Healthline, 10/17).

Details of Concerns

Health Net has notified the state that it is unsure of how many of its physicians will continue to care for children after they are moved to Medi-Cal, which pays physicians less for health care services than Healthy Families.

Health Net covers about 86,000 children in four counties:

Fresno;
Los Angeles;
Sacramento; and
San Diego.

Health Net said it could not determine physicians’ willingness to take on children enrolled in Medi-Cal without seeing reimbursement estimates. CalViva — a plan that contracts with Health Net and has nearly 15,000 members in Fresno, Kings and Madera counties — reported similar concerns to state officials.

State Actions

In response to the concerns, state officials moved the transition date for Healthy Families beneficiaries covered by Health Net and CalViva from Jan. 1, 2013, to March 1, 2013. Norman Williams — a DHCS spokesperson — said that the agency provided physician payment information to Health Net on Nov. 5 and is continuing to collect data about whether physicians will accept Medi-Cal beneficiaries (California Watch, 11/29).

 

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Sears Switches to Defined Contribution & Private Exchange Model

Sears Holdings Corp. has joined the ranks of thousands of businesses small and large, by announcing it will move to a Defined Contribution model for employee health benefits in 2013. Through the plan, Sears will allocate a fixed dollar amount for employees and their dependents to purchase health insurance through a private health exchange.

The goal of the shift is to combat the rising cost of providing health benefits to Sears’ 90,000 eligible employees.

The cost per participant under traditional group health plans is on the rise. Employers are also feeling the pinch from minimum requirements such as the minimum percentage of the premium that must be paid by the employer, and the requirement that a minimum percentage of employees join the group plan. If either of those minimums is not met, the entire plan is canceled.

Sears’ Defined Contribution Model

Under the new plan, Sears will be able to cap their monthly health benefits cost per employee by giving a fixed dollar amount (the “defined contribution”) to each employee. Each employee will choose a health insurance plan on the private exchange that works for them, their spouses, and their dependents.

For decades, U.S. employers have been offering a one-size-fits-all plan with benefits that some employees may not need. Defined Contribution gives employees more choice and mitigates an employer’s financial risk from unexpected claims.

About the Private Health Exchange

The states and feds may still be hashing out the details of the state health exchanges, but businesses like Sears are pushing private exchanges forward. Sears employees will now have 15 choices for health insurance instead of the existing 4. Coverage options are available from five different medical insurers.

The objective of providing more choice through an exchange is to create competition and drive prices down for the policyholders.

“The more insurance providers compete, the better,” said Chris Brathwaite, spokesman for Hoffman Estates-based Sears. “I will have an opportunity to shop for a health care provider who meets my medical and my pocketbook needs.”*

Sears has not revealed how much it will allot for employees, but the amount will generally cover the insurance premium of one of the plans under the exchange. Depending on the amount and class of employee, employees could be responsible for paying a portion of the remainder of expenses they incur. All of the available plans provide catastrophic protection and cannot reject people for medical history or pre-existing conditions.

Health Reform and Companies’ Defined Contribution Shift

It is anticipated that more companies will adopt the Defined Contribution healthcare model as they are faced with rising expenses as 2014 nears.

“The best decision for most employers and their employees will be to eliminate their company-sponsored health insurance in favor of a defined contribution HRA solution,” says renowned economist and Zane Benefits founder, Professor Paul Zane Pilzer.

“That’s because employees no longer need employers to purchase quality health insurance, and, starting in 2014, employees earning less than 400% of the FPL (~$92,000 for a family of four) per year who purchase a personal policy will receive a large federal subsidy on their premium if their company doesn’t offer a group plan.”

As a result, all of the following Defined Contribution plans are expected to become mainstream:

  • Health Reimbursement Arrangement (HRA)
  • Medical Expense Reimbursement Plan (MERP)
  • Fixed Contribution Plan
  • Section 105 Plan

Modified from a Zane Benefits Blog 11/20/2012

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Health-Care Law Spurs a Shift to Part-Time Workers

Some low-wage employers are moving toward hiring part-time workers instead of full-time ones to mitigate the health-care overhaul’s requirement that large companies provide health insurance for full-time workers or pay a fee.

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Several restaurants, hotels and retailers have started or are preparing to limit schedules of hourly workers to below 30 hours a week. That is the threshold at which large employers in 2014 would have to offer workers a minimum level of insurance or pay a penalty starting at $2,000 for each worker.

The shift is one of the first significant steps by employers to avoid requirements under the health-care law, and whether the trend continues hinges on Tuesday’s election results. Republican presidential nominee Mitt Romney has pledged to overturn the Affordable Care Act, although he would face obstacles doing so.

President Barack Obama is set to push ahead with implementing the 2010 law if he is re-elected.

Pillar Hotels & Resorts this summer began to focus more on hiring part-time workers among its 5,500 employees, after the Supreme Court upheld the health-care overhaul, said Chief Executive Chris Russell. The company has 210 franchise hotels, under the Sheraton, Fairfield Inns, Hampton Inns and Holiday Inns brands.

“The tendency is to say, ‘Let me fill this position with a 40-hour-a-week employee.’ “Mr. Russell said. “I think we have to think differently.”

Pillar offers health insurance to employees who work 32 hours a week or more, but only half take it, and Mr. Russell wants to limit his exposure to rising health-care costs. He said he planned to pursue new segments of the population, such as senior citizens, to find workers willing to accept part-time employment.

He described the shift as a “cultural change” toward hiring more part-timers and not a prohibition against hiring full-timers.

CKE Restaurants Inc., parent of the Carl’s Jr. and Hardee’s burger chains, began two months ago to hire part-time workers to replace full-time employees who left, said Andy Puzder, CEO of the Carpinteria, Calif., company. CKE, which is owned by private-equity firm Apollo Management LP, APO -0.74% offers limited-benefit plans to all restaurant employees, but the federal government won’t allow those policies to be sold starting in 2014 because of low caps on payouts. Mr. Puzder said he has advised Mr. Romney’s campaign on economic issues in an unpaid capacity.

Home retailer Anna’s Linens Inc. is considering cutting hours for some full-time employees to avoid the insurance mandate if the health-care law isn’t repealed, said CEO Alan Gladstone.

Mr. Gladstone said the costs of providing coverage to all 1,100 sales associates who work at least 30 hours a week would be prohibitive, although he was weighing alternative options, such as raising prices.

The Costa Mesa, Calif., company currently offers benefits to workers who put in at least 32 hours a week.

Supporters of the health-care overhaul said most large employers already covered workers voluntarily, and requiring others to do so or pay a penalty was important to level the playing field between businesses.

A spokeswoman for the Department of Health and Human Services said the administration didn’t believe the law would substantially affect employment, citing the Massachusetts health-care overhaul signed by then-Gov. Romney in 2006.

“Consistent with the experience in Massachusetts and projections of the Congressional Budget Office, the health-care law will improve the affordability of health care while not significantly impacting the labor market,” spokeswoman Erin Shields Britt said in a written statement. “This law will decrease costs, strengthen our businesses and make it easier for employers to provide coverage to their workers.” Administration officials declined to answer further questions.

Companies in industries that already offer full benefits have indicated that they weren’t planning major changes around the law. Several employers with hourly workforces, including Marriott International Inc. MAR -0.14% hotels, the Costco Wholesale Corp. COST +1.67% warehouse chain and the Panera Bread Co. PNRA +0.56% restaurant chain also said they had no plans to change employee hours in response to the law.

But benefits consultants said most retail and hotel clients have explored shifting toward part-time workers.

Those industries are less likely to offer health coverage now, and if they do, the plans typically are too skimpy to meet the minimum-coverage requirements.

“They’ve all considered it,” Matthew Stevenson, a workforce-strategy principal at Mercer. In a July survey, 32% of retail and hospitality company respondents told the consulting firm that they were likely to reduce the number of employees working 30 hours a week or more.

Consultants have warned that companies that use more part-time labor risk productivity losses from high staff turnover and lower morale. Laurence Geller, who until last week was CEO of Strategic Hotels & Resorts Inc., BEE +13.29% said he weighed moving toward part-time workers but decided against risking that highly trained staff at his high-end hotels would go elsewhere. The company owns hotels bearing the Four Seasons, Fairmont and Ritz-Carlton names.

The insurance mandate applies to companies with the equivalent of 50 or more full-time workers, a calculation based on the number of people employed by the company and an average of hours they work in a week. Companies are adjusting schedules now because they will have to review employment rolls for up to a year in advance to determine which workers will be deemed full-time under the law.

A company will have to pay a penalty of $2,000 for every such worker, after the first 30, if it doesn’t offer qualifying health coverage. If a company offers health insurance but the coverage is deemed sparse or unaffordable, the company must pay $3,000 for every worker who gets a federal tax subsidy to purchase coverage as an individual.

Darden Restaurants Inc. DRI +0.72% was among the first companies to say it was changing hiring in response to the health-care law. The Orlando, Fla., parent of Red Lobster and Olive Garden in February began testing hiring part-time workers in four markets to replace some full-time employees who had left, a spokesman said.

Ken Adams said his 10 Subway restaurant franchises in Michigan have about 60 employees who work 30 hours or more in a given week. Before year-end he plans to cut their hours to below 30 and, in some cases, to reduce positions altogether, he said. A Subway corporate spokesman said it was up to individual franchisees to make such decisions.

*Modified from a WSJ article by Julie Jargon, Louise Radnofsky, and Alexandra Berzon

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Health insurance options for low-income families

Tamara E. Holmes – October 18,2012

Many Americans get health insurance as a benefit through their jobs. But for those without health benefits – especially those on a very tight budget – maneuvering through the health care system can be challenging.

With the average health insurance premium at $5,615 a year for an individual, according to the Henry J. Kaiser Family Foundation, low-income people are especially hard-pressed to find coverage for themselves and their families. Fortunately, some low-income Americans can take advantage of government-backed and private insurance plans.

Medicaid is an option that some people may not realize they’d qualify for, says Stephanie Cohen, CEO of Cohen & Golden, which sells health insurance and financial products. Under Medicaid, certain people whose income is too low to be able to afford to buy health insurance may receive free or low-cost medical services.

Medicaid is federally and state funded; eligibility requirements differ from state to state, although all states must adhere to certain federal standards. For example, in New York, a family of four must have $15,208 or less in annual income to qualify for Medicaid. In Oklahoma, a family of four may qualify for Medicaid if they make $6,996 or less per year. People who are pregnant or who have disabilities typically can qualify for Medicaid at higher income levels.

Not all Medicaid programs are the same

The services covered under Medicaid also vary by state. Some benefits must be offered by all state Medicaid programs, including inpatient hospital stays, laboratory tests and X-rays. Other services are optional. For example, while all states must provide dental coverage to children, states can determine whether they’ll offer it to adults.

According to a study by the Kaiser Family Foundation, three states – Alabama, Delaware and Tennessee – do not offer dental coverage to adults, while half of the states provide only emergency dental care and do not cover routine dental visits. Most states offer expanded eligibility to pregnant women, meaning they can qualify for Medicaid even if their income is higher than the state’s requirements.

In 2014, more people will be eligible to receive Medicaid as a result of the federal health care reform law. Starting then, people who make 133 percent of the federal poverty level, which now is $29,700 for a family of four, will qualify for the service.

  • Although low-income families may qualify for Medicaid, it might be challenging to find a doctor. Some physicians refuse to accept patients covered by Medicaid because the reimbursement for services is so low, says John Barrett, founder of California-based Health Insurance Brokers, which provides health insurance solutions to individuals, small businesses and seniors. In fact, a recent study by medical staffing company Jackson Healthcare found that 66 percent of dermatologists, 64 percent of endocrinologists and 58 percent of internists said they can’t afford to take on new Medicaid patients.

Your state’s health department can connect you to a local Medicaid office, which can help you find a physician who accepts Medicaid.

For those who have children under age 19, the Children’s Health Insurance Program (CHIP) is another government-backed insurance option. It provides coverage to children in families with incomes that are too high to qualify for Medicaid. As with Medicaid, each state oversees its own CHIP.

Some states run their CHIPs as part of Medicaid while others run the two programs separately. The income requirements, again, differ from state to state. For example, in West Virginia, the income of a family of three must be no more than $55,590, while in Maine the income level for a family of three must be no more than $37,060.

Private options available

Private insurance options are available for low-income Americans, particularly those who are relatively healthy. High-deductible health insurance plans typically have low premiums because the policyholder agrees to pay more of the costs when services are delivered.

For example, if you bought a plan with a $2,500 deductible, you would pay the first $2,500 in medical expenses and the insurance plan would pick up the rest. As long as you’re healthy, you’ll save money on premiums with such a plan. If you suffer a catastrophic illness, you’ll be covered above that initial $2,500.

“Mini-med” health plans are another option people with low incomes can explore. These plans provide limited health insurance coverage for treating illnesses and certain inpatient hospital procedures. These plans also are best suited for those who are relatively healthy; the plans tend to have low annual coverage limits, meaning you’ll likely run out of benefits quickly if you’re diagnosed with a major illness.

  • Low-income people who have limited insurance plans can also visit free clinics, Barrett says. For example, Planned Parenthood offers free mammograms and breast cancer screenings, as well as colon cancer screenings, routine physical exams and men’s health services in some locations.
*Modified from an InsureMe.com article
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Cheesecake Factory Medicine

The liberal assault on Paul Ryan’s Medicare reform has often been ugly, but that’s not to say it hasn’t been instructive. While ripping Mr. Ryan, ObamaCare’s intellectual architects have been laying out in more detail their own vision for the future of American health care. It’s a vision that all Americans should know about before they go to the polls in November.

No one did more to sell the Affordable Care Act than Peter Orszag, the former White House budget director who claimed during 2009-2010 that as much as a third of health spending is “waste” that doesn’t improve outcomes. But now that he’s repaired to Wall Street and writes an online column, he’s deriding the idea that better incentives can reduce costs and sneering at the “health-care competition tooth fairy.”

So get a load of Mr. Orszag’s Tinker Bell alternative, which he called the “most important institutional change” after ObamaCare passed in 2010: the Independent Payment Advisory Board composed of 15 philosopher kings who will rule over U.S. health care.

Who are these Orszag 15? Well, nobody knows. The board was supposed to be up and running by the end of September, but the White House is avoiding naming names for Senate confirmation until after the election. No one knows, either, what this group of geniuses will propose, but that too is part of the grand Orszag plan.

ObamaCare included dozens of speculative pilot programs that are supposed to make health-care delivery and business models less wasteful. Mr. Orszag’s payment board is then supposed to apply the programs that “work” to all of U.S. medicine through regulation, without Congressional consent or legal appeal. Seriously.

It doesn’t take a mythical childhood metaphor to mock this theory. Mr. Orszag’s style of central planning—in what was already the heaviest regulated U.S. industry before ObamaCare—has failed over and over again in Medicare since the creation of the fiat pricing fee schedule in the 1980s.

Meanwhile, another ObamaCare godfather, the surgeon and influential New Yorker magazine writer Atul Gawande, has further instructions for the medical masses, this time from—believe it or not—the Cheesecake Factory, the chain restaurant.

Dr. Gawande’s point is that medicine would function better if care were delivered by huge health systems that can achieve economies of scale, like commercial kitchens. Care ought to be standardized like preparing a side of beef, with a “single default way” to perform each treatment supposedly based on evidence, with little room for personalization.

No doubt health care could learn a lot about efficiency from a lot of industries, but to understand the core problem with assembly-line medicine, recall that ObamaCare actively promotes medical corporatism. The reason isn’t to encourage business efficiency but for political control. Liberals believe in health-care consolidation because fewer giant corporations are easier for Mr. Orszag’s central committee to control, and more amenable to its orders.

Thanks to ObamaCare, Cheesecake Factory medicine is already becoming a reality. Irving Levin Associates, a research firm that tracks health-care mergers and acquisitions, reports that M&A hit $61.2 billion in the second quarter and the highest annual levels since the 1990s. Three of five hospitals now belong to a parent company’s network, while more than half of physicians are employed by hospitals or systems, not independent practitioners.

On the insurer side, too, incumbents are demolishing their smaller rivals. Aetna is buying Coventry Health Care, a company that administers Medicare and Medicaid benefits, for $5.6 billion. WellPoint made the same play in acquiring Amerigroup for $5 billion in July, while last October Cigna laid out $3.8 billion for HealthSpring.

This bureaucratization will amplify everything patients and businesses despise about the current system: the unintelligible $103,234.61 bill for a turned ankle, the doctor who can’t take a phone call because of how the hospital schedules shift.

Why aren’t mom’s eight specialists aware of each other’s existence? Why is health care mostly conducted via a pad and pen, and beepers and fax machines, in the iPhone era? Why are there so few geriatricians when the first wave of Baby Boomers is already turning 65? Why is it still so hard to find usable information about quality and prices?

The reason isn’t a lack of hospital administrators or technocratic experts. More often than not it’s that patients aren’t the true consumers. The government is, and medical providers inevitably serve the paymaster.

Mr. Ryan’s insight is that health care would work better if patients were controlling their own dollars. His reform accepts the fact that health, disease and treatment are usually complex, individual and unpredictable, not commodities that can and should be reduced to protocols, metrics, algorithms.

The immediate danger of the Orszag-Gawande-Obama vision is that layer on layer of new regulation will lock in less-than-best practices. This makes the status quo worse, because too-big-to-fail oligopolists have less incentive to innovate to reduce costs and improve quality.

The longer-run danger is that the cost board starts to decide what types of care “work” for society at large and thus what individual patients are allowed to receive. One way or another, health costs must come down. And if Mr. Ryan’s market proposal is rejected, then government a la Orszag will do it by brute political force.

A murderer’s row of liberal health-care gurus—Zeke Emanuel, Neera Tanden, Don Berwick, David Cutler, Uwe Reinhardt, Steve Shortell, Mr. Orszag, many others—recently acknowledged as much in the New England Journal of Medicine. They conceded that “health costs remain a major challenge” despite ObamaCare. That would have been nice to know in, oh, 2009 or 2010.

Anyhow, their big idea is the very old idea of price controls that are “binding on all payers and providers,” much as post-RomneyCare Massachusetts is already doing. When that strategy fails as it always has, and the public denies further tax increases, the Orszag payment board will then start to ration or prohibit access to medical resources that it decides aren’t worth the expense.

These political choices will be unpopular and even deadly, which is why Mr. Orszag worked so hard to insulate his payment board from oversight or accountability. Congress can only reject the board’s decisions if it substitutes something else that reduces costs by as much. More amazing still, only a minority of the board can be “directly involved” in the provision of health care.

This latter provision is supposed to prevent the alleged conflicts of interest that come from knowing something about how health care is provided in the real world. What it reveals instead is that this board isn’t about medical quality at all. It is purely a balance-sheet exercise to make sure that the Orszag-Obama agenda of top-down health care can’t be undone by something as crude as democratic consent.

And they claim that Paul Ryan’s proposal is “radical”?

What the debate over Mr. Ryan’s reform is revealing is that the real health-care choice, and the real choice this November, is about the role of government. The Orszags of the world ultimately have what President Obama would call an “ideological” preference for coercion over individual choice. They want to impose the unilateral decisions of the state over those of millions of Americans.

The larger irony is that ObamaCare’s architects claim that all of this will lead to more equity in the delivery of medical services, but in practice it will have the opposite effect. Americans of even middle-class means will not tolerate being told they cannot spend their own money to improve their own health or save the lives of their loved ones, so under price-controlled ObamaCare we will quickly see the emergence of a two- or even three-tier system outside the reach of government.

The affluent will get their own special level of service. Certainly Mr. Orszag, a vice chairman of corporate and investment banking at Citigroup, won’t be getting treatment at some municipal hospital. The Cheesecake Factory is a great place to eat but you probably wouldn’t want to be operated on there—especially if it’s run by the government.

*Modfied from a WSJ Opinion article

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The Wal-Mart Effect Comes To Health Care

Health Care: Giant discounter Wal-Mart says it will soon offer vaccinations for a wide variety of ailments. Can the “Wal-Mart Effect,” which has helped slash U.S. inflation, do the same thing for soaring health care costs?

Everyone knows Wal-Mart has been a positive influence on inflation. A few years back, the highly respected National Bureau of Economic Research even estimated that the government’s consumer inflation data were overstated by about 15%, due largely to the unrecognized impact of Wal-Mart’s everyday low prices on the economy.

A separate 2007 study by the investment advisory and forecasting firm Global Insight estimated that in 2006, Wal-Mart’s low prices saved consumers roughly $287 billion — or about $2,501 per household. The impact — especially on low-income consumers — has been enormous.

John Tierney, a New York Times columnist, even suggested that Wal-Mart receive a Nobel prize for helping to pull so many people out of poverty.  Well, the retail giant may be at it again —this time in health care. As reported last week, it’s expanding customer offerings into vaccines. That’s right, vaccines.

The Benton, Ark.-based company has been moving into health care since 2006, when it started selling generic drugs at a flat $4 fee. Now, in addition to the low-cost vaccines for influenza and pneumonia it offers at 2,700 stores, it’s expanding into 10 other common vaccines, including shingles, meningitis, hepatitis and the human papillomavirus. This will give millions of Wal-Mart customers who never see a doctor the chance to get cheap preventive care.

Quietly, Wal-Mart’s changing the face of health care. Last year, it played down the leak of a 14-page internal document that outlined its plans to “build a national, integrated, low-cost primary health care platform.”

But the fact is, Wal-Mart is rapidly expanding its presence as a primary health care provider, and it’s not alone. Other retailers are getting into the act, opening clinics and providing health services at low cost.
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Is it having any impact? Retail prescription drug outlays rose just 1.2% in 2010, down from increases of 14% a year just a few years ago. And as the chart shows, health care spending increases have slowed sharply in recent years — partly due to Wal-Mart.

Once again, markets respond to problems — while government creates more. If we’re lucky, Wal-Mart and other retailers may even help sink that other failed health care model, ObamaCare.

*Modified from an Investors Business Daily Editorial.

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