Pittsburgh health insurer develops own provider network to stem “unsustainable” treatment costs
January 29, 2012
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The Pittsburgh Tribune Review reports insurer Highmark Inc. will spend up to $500 million to develop a new network of doctors, community hospitals and outpatient locations in Western Pennsylvania in addition to the $475 million it has promised to prop up West Penn Allegheny Health System. According to the newspaper, the network will include medical malls, ambulatory care centers, a health information exchange, partnerships with community hospitals and primary and specialty care centers. The deal is pending approval from Pennsylvania regulators.
“We believe this investment on behalf of our customers is crucial to address the unsustainable increases in health-care costs that are making health insurance less affordable for our customers and the community,” explained Highmark spokesman Michael Weinstein.
While not mentioned in the story, another likely driver of this payer-provider consolidation is to ease the establishment of an accountable care organization (ACO) among the involved entities.
Where the state health benefit exchanges stand at beginning of 2012
January 22, 2012
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As to be expected from the Kaiser Family Foundation, the organization has prepared a thorough and excellent report on the status of state health benefit exchanges two years before the deadline established in the Patient Protection and Affordable Care Act (PPACA) for the exchanges to open for business.
Political uncertainty related to the pending U.S Supreme Court decision this year on the constitutionality of a keystone component of the PPACA — the requirement that all Americans be covered by or purchase some form of health insurance including from state benefit exchanges — has some states sitting on the sidelines. Other states are operating on the assumption the PPACA is good law until the Supreme Court rules otherwise and are attending to the complexities of getting their exchanges ready for business come January 2014.
Click here for the Kaiser Family Foundation report.
Obama administration cites health insurance crisis in Supreme Court brief supporting PPACA coverage mandate
January 8, 2012
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The Obama administration last week filed its brief supporting the Patient Protection and Affordable Care Act’s (PPACA) requirement that every American be covered by public or private health insurance effective Jan. 1, 2014. Opponents of the requirement, referred to in the administration’s brief as the “minimum coverage provision,” contend it’s an unconstitutional exercise of Congressional authority over commerce and taxation.
The minimum coverage provision is the keystone of the PPACA and the product of a political tradeoff leading up to the 2010 enactment of the legislation to address what the brief terms “a crisis in the national health care market.” The provision was aimed at quelling opposition from health insurers who opposed the PPACA’s requirement to shift from their existing medical underwriting risk selection model to a community-rating model that requires all applicants be accepted and charged standardized premiums regardless of their medical histories. Unless everyone is required to be in the insurance market in some form or another, payers argued, they would be exposed to adverse selection because only those who needed coverage would purchase it, driving up claims costs. That would lead to adverse selection since the insurance pool would have a disproportionate number of sick people needing costly medical treatment while healthier people who go without coverage don’t contribute premiums to cover those costs.
The administration argues in its brief that this results in cost shifting in which those who have coverage end up paying additional premium dollars to pay for the uncompensated care of the uninsured, many of whom cannot obtain affordable coverage due to pre-existing conditions. “The Act breaks this cycle through a comprehensive framework of economic regulation and incentives that will improve the functioning of the national market for health care by regulating the terms on which insurance is offered, controlling costs, and rationalizing the timing and method of payment for health care services,” the brief states.
In sum, the administration asserts, the market needs community rating to sustainably provide coverage to all Americans. But it cannot work without what effectively functions as a community insurance requirement. Everyone gets in the pool regardless of medical history — and everyone pays to enter.
California hospital price control measure proposed
December 7, 2011
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A proposed California ballot measure would limit hospital charges to 125 percent of total patient care expenses beginning August 1, 2014. The measure, the Fair Healthcare Pricing Act of 2012, has been submitted to the state Attorney General for a title and summary, the first step before proponents can begin gathering voter signatures to place it on the ballot.
Here’s a fact sheet from the measure’s proponents, the Service Employees International Union/United Healthcare Workers West.
California officials worried for solvency of interim high risk pool
November 21, 2011
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The California HealthCare Foundation’s CaliforniaHealthline reports today on an about face by California’s Pre-Existing Condition Insurance Plan (PCIP) that could be a warning of things to come for other state high risk pools.
California’s PCIP was among the first state pools to open for business under a provision of the Patient Protection and Affordable Care Act (PPACA) that created interim high risk pools to provide temporary coverage at standard market rates until insurers and managed care plans must accept all applicants starting Jan. 1, 2014. The PPACA allocated $5 billion to subsidize the pools since by definition they are an adverse risk selection mechanism and aren’t likely to cover claims costs solely with insureds’ premium dollars.
After getting off to a slow start in 2010, federal and state officials grew concerned that too few people were signing up for coverage. So this summer, the Obama administration opened the tap wider on the $5 billion interim high risk pool subsidies, reducing premiums effective July 1 in two dozen states where the federal government runs the pools. California’s PCIP soon followed, reducing premiums by as much as 20 percent to attract more enrollments. The tactic worked, but perhaps too well. Previously believing there were too few enrollees, California’s Managed Risk Medical Insurance Board (MRMIB), which oversees the PCIP, is now apprehensive too many will come aboard and sink the ship.
CaliforniaHealthline’s David Gorn explains:
The threshold for the number of Californians who might participate in PCIP was estimated at about 23,000 people. Since a few more than 5,000 people signed up in that first year – and new enrollees came on board at a rate of roughly 500 a month – it seemed that the program was financially stable and able to take on more participants.
But after the first year, state officials got their first real claims data to test that estimate, and the amount required by recipients was much higher than expected. That 23,000-person threshold estimate was reduced to 6,800 Californians.
That means (given current enrollment of 5,290 including last month’s bump of 726 new subscribers), there’s now only room for a little more than 1,500 new enrollees (which is about two months’ worth of enrollees, given October’s bump of 726 new subscribers).
Unless the federal government pumps more money into the program.
In other words, more people are enrolling, but bringing with them high medical utilization costs that challenge the ability of the MRMIB to keep the PCIP solvent until 2014 when it will no longer be needed. Other states may soon experience a similar conundrum: fulfilling the PPACA’s mandate to have the interim high risk pools serve markets of last resort that must accept applicants without medical underwriting while having enough money to pay for their care. And manage to do so for nearly four years.
A little more than one year ago, this blog discussed how the interim risk pools could become a catastrophic coverage pool for those requiring very high cost care and threaten to rapidly draw down the $5 billion appropriated for them in the PPACA. This may well be happening now.
Group health insurance premiums up 50 percent from 2003 to 2010
November 19, 2011
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Premiums for employer-provided health insurance rose by 50 percent from 2003 to 2010 as employers passed on high costs to workers, boosting their annual share of premiums by 63 percent over the seven-year period, according to a report issued this week by The Commonwealth Fund. That’s much faster than overall inflation and wage growth during the period. The numbers reflect an affordability crisis confronting health insurers given the rate of growth of premiums is taxing the ability of employers and individuals to pay them at the same time the nation struggles to regain economic growth.
The report looks to a combination of insurance market reforms, payment incentives and delivery system changes to potentially reduce insurance costs by an average of 1 to 1.5 percentage points per year over the next decade. But even with the higher savings figure, coverage would remain costly, putting the average national family premium at $16,912 in 2015 and $20,620 by 2020, the report estimates.
While not specifically called out in The Commonwealth Fund report, the premium increase data underscore the enormous social cost of the poor health habits of many Americans — unhealthy diet and lack of adequate exercise and sleep — that underlie chronic conditions such as heart disease and diabetes that in turn drive up medical costs. Insurance market reforms alone can’t address those factors that according to the Preventative Medicine Research Institute account for 75 percent of health care costs that can be prevented by lifestyle changes.
New social ethos needed for health care
October 22, 2011
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California as the United States is facing an affordability crisis when it comes to purchasing health coverage and care. Many argue that the best response to bend the cost curve that’s increasingly placing them out of reach for employers and consumers is revamping the current health care system away from the “auto mechanic” model. In that paradigm, patients are charged incrementally for each visit to the shop and “repair” they need. Reformers promote an alternative system that provides incentives for health care providers to keep people healthy and relatively free of the effects of chronic disease that account for a large majority of health care spending, particularly as people age into their senior years. If they are in less than optimal health in early adulthood and middle age, they’ll end up as very costly medical cases in future years.
“It is not possible to develop a medical system that is adequately efficient to resolve California’s affordability crisis if a large percentage of people are developing diabetes—and conditions that often come along with obesity such as depression—in their 30s and 40s,” argues Micah Weinberg of the Bay Area Council in the organization’s report released this month, Roadmap to a High-Value Health System Addressing California’s Healthcare Affordability Crisis.
“Our current food environments and the individual choices we make are creating a tidal wave of disease that our medical system cannot handle effectively and equitably,” Weinberg asserts. “Californians, therefore, must become much more engaged in improving their own health and taking personal responsibility for bringing down their own lifetime healthcare costs so that resources are preserved for those truly in need.”
Weinberg is essentially promoting a new social ethos relative to health care. One that regards health care as an expensive, finite resource and not a limitless commodity that can be easily modified to respond to consumer demand and market forces. If we as individuals over utilize health care as the result of poor lifestyle choices, that collectively incurs a major societal cost and worsens the plight of those who need care for illnesses and injuries they could not have avoided.
Rising costs prompt Wal-Mart to scale back health coverage
October 22, 2011
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Cost pressures in group health coverage segment have prompted the nation’s largest employer to scale back coverage for its work force and increase employee cost sharing.
Greg Rossiter, a Wal-Mart spokesman, said the decision to deny coverage to new part-time employees resulted from the company’s revamping of its health care offerings in light of rising costs.
“Over the last few years, we’ve all seen our health care rates increase and it’s probably not a surprise that this year will be no different,” Mr. Rossiter said. “We made the difficult decision to raise rates that will affect our associates’ medical costs. The decisions made were not easy, but they strike a balance between managing costs and providing quality care and coverage.”
The full New York Times story is here.
Wal-Mart isn’t representative of the large group market given its large number of part time and low wage workers. However this development shows that rising medical costs are rapidly chipping away at the availability of employer-based coverage in the large group market just as has occurred in the small group market.
Physician-nurse turf battle heats up as nurses earn doctoral degrees
October 2, 2011
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The New York Times today reports on the trend of nurses continuing their educations to obtain doctoral degrees in nursing. Physicians view the trend as another salvo in a longstanding scope of practice turf battle with nurses and some experts don’t see it doing anything to improve health care in the United States:
“Everyone’s talking about improving patients’ access to care, bending the cost curve and creating team-based care,” said Erin Fraher, an assistant professor of surgery and family medicine at the University of North Carolina School of Medicine. “Where’s the evidence that moving to doctorates in pharmacy, physical therapy and nursing achieves any of these?”
Perhaps not immediately. It will be interesting, however, to watch the role of nurses as primary caregivers evolve as more Americans gain access to medical coverage as the Patient Protection and Affordable Care Act (PPACA) continues to be phased in over the next several years. A major concern that there will be too few primary care and family physicians available to serve those who gain access to care under the PPACA. In response, there could be a major shift in medical care in which nurses become primary care providers with medical doctors serving as surgeons and specialists (as many doctors already do) treating patients with multiple complex and rare medical conditions that exceed the training and expertise of nurses.
