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Archive for September, 2013

Large Kaiser Permanente market share predisposes California to ACOs

September 28th, 2013 Comments off

The large market share of Kaiser Permanente – an integrated managed health care service plan that bears medical risk like an insurer but also directly provides care though its clinics and hospitals – makes California a unique environment favorable to the formation of Accountable Care Organizations (ACOs). Kaiser Permanente accounted for 40 percent of individual and group plan enrollment in 2011, according to the California HealthCare Foundation (CHCF).

The dominance of the Kaiser model is a major influence on California’s health plans and providers to emulate that model to hold down costs and compete against it. The Golden State is also home to large physician organizations experienced in managing financial risk for patient care, easing the way for ACO growth.

A paper explaining California’s unique ACO market dynamics prepared by the Center for Studying Health System Change was posted this week at the CHCF’s California Health Care Almanac.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Data illustrate growth in insurance coverage of primary care over 50-year period

September 28th, 2013 Comments off

The California HealthCare Foundation (CHCF) has produced an interactive graphic showing the sources of health care payments in the United States from 1960 to 2011. Particularly striking is the shift in physician and clinical services that comprise much of primary care. In the 1960s, most of these costs were paid directly out of pocket by patients. Beginning in the late 1970s, commercial insurance plans began picking up a larger proportion, reaching a peak of 49 percent in 2005 before declining slightly to 46 percent for 2011, according the CHCF compilation.

Proponents of pre-paid direct primary care contend that covering primary care in the same health plan as high cost catastrophic care such as hospitalization – covered under “major medical” policies in the 1960s — is as nonsensical as using car insurance to cover routine maintenance and oil changes.

The CHCF issued an issue brief on Direct Primary Care Medical Home Plans authored by Dave Chase noting these plans offer significant potential health care cost savings over all inclusive plans such as HMOs while providing economic incentive for primary care physicians – many of whom will be needed to care for new patients obtaining health coverage under the Patient Protection and Affordable Care Act.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Basic Health Program rules issued

September 20th, 2013 Comments off

The Center for Medicare & Medicaid Services (CMS) has unveiled proposed regulations implementing a provision of the Patient Protection and Affordable Care Act authorizing states to establish a Basic Health Program (BHP) for low-income individuals not eligible for Medicaid. BHP eligibles must earn more than 133 percent but less than 200 percent of the federal poverty level and not be eligible for an employer plan providing minimum required coverage.

In some states and especially those with smaller and poorer populations, the BHP could significantly reduce exchange enrollments. Even large states such as California could see exchange enrollments reduced. A 2012 study by the UC Berkeley Center for Labor Research and Education and the UCLA Center for Health Policy Research concluded a BHP would cut that state’s exchange enrollment by between 720,000 and 950,000 individuals and could limit the exchange’s bargaining power with health plan issuers in the individual market.

The proposed rule does not specifically mention guidance CMS issued in December 2012 allowing state-based exchanges to offer Medicaid “bridge plans” to people transitioning from Medicaid or CHIP coverage to a commercial plan sold on the state exchange. The guidance authorizes state-based exchanges to contract with an issuer of a Medicaid managed care plan to offer bridge plans as qualified health plans in order to allow enrollees to remain with their existing medical providers.

Since BHPs are targeted at the same income demographic, it’s unclear how the bridge plans will be affected. California enacted legislation (SBX1-3) this July authorizing a 5-year program for the sale of Medicaid bridge plans on that state’s exchange for those earning up to 250 percent of federal poverty, subject to CMS approval.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Interest in private exchange marketplace heats up

September 20th, 2013 Comments off

The Patient Protection and Affordable Care Act’s creation of the state health benefit exchange marketplace is aimed at restoring functionality to the individual and small group markets. By the time the Affordable Care Act was enacted in early 2010, these segments were inescapably mired in an adverse selection death spiral. Premiums grew unaffordable and carriers lost the ability to spread risk as state risk pools shrank. The exchange marketplace seeks to remedy this by scaling up the size of the pool and providing a demand aggregation mechanism that with sufficient enrollment can achieve better spread of risk and, in turn, lower premium rates.

The Affordable Care Act does not initially offer the demand aggregation mechanism of the public exchange marketplace for large employers but gives states the option of opening their exchanges to large employers in 2017. However, large employers seeking relief from rising employee health care costs aren’t about to wait. Instead, they are looking at private exchanges being formed by benefit consulting firms serving large employers. Several large employers participating in a private exchange could potentially cover many thousands of people and bring them into the pool far faster than state exchanges that have to enroll individuals and small employers one at a time.  Private exchanges also make it easier for big employers to adopt defined contribution-based health benefits in which employees would select from a larger number of plans than might otherwise be offered by a single employer. Media coverage this week of burgeoning interest in the private exchange marketplace can be viewed here and here.

While large employers of relatively highly paid full time workers find the private exchange marketplace of interest to reduce the cost of covering their workforces, those with low wage, part time staff are looking to the state exchange marketplace. It provides a means for these employers to reduce their health care outgo by sending part time workers (defined in the ACA as having an average work week of less than 30 hours) to purchase individual plans sold on the state exchanges and subsidized by advance income tax credits. Two such employers – specialty grocer Trader Joe’s and Home Depot –indicated in recent days they would take this route.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Health care cost tsunami crests with burgeoning boomer waistlines

September 15th, 2013 Comments off

The sheer size of the Baby Boomer demographic is setting up a huge tidal wave of health care costs that will only increase as the Pepsi Generation turned Fat Generation ages into their 70s. “[T]he boomers are aging into obesity-related illnesses, which will translate into a cost crisis for health care and Medicare,” said Rich Hamburg, deputy director of the Trust for America’s Health, in this article published in todays’ Sacramento Bee, calling the trend “an epidemic.”

The article cites expert opinion calling for a cultural shift away from excess food consumption similar to the decline of tobacco use over the past few decades. I would add a reprise of the 1970s and 1980s — when exercise was the in thing and many jogged, went to the gym and otherwise regularly engaged in daily activity – is also needed.

A good start would be switching off the sedentary commute-to-cubicle treadmill that has essentially turned offices into fat farms. With today’s maturation of Information and Communications Technology (ICT) that makes working most anywhere possible, there is little need for the daily trip to a commute-in office. Ditching the commute would free up time people need to engage in health promoting behaviors and daily exercise and help them avoid the unvirtuous cycle of “too busy” and “too pooped when I get home from work” that makes eating more appealing then exercise.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

R.I. health benefits exchange may provide fiscal relief to municipalities | Breaking News | providencejournal.com | The Providence Journal – The Providence Journal

September 13th, 2013 Comments off

Cash-strapped jurisdictions from Detroit to Sheboygan County, Wis., are considering moving retirees into Obamacare marketplaces as a way to reduce costs.

Detroit has proposed the option as it seeks to emerge from the largest municipal bankruptcy in U.S. history.

And Chicago plans to reduce health insurance coverage for tens of thousands of retired city workers next year. The city expects those retired workers would be able to purchase government-subsidized health care through Illinois’ Obamacare exchange.

via R.I. health benefits exchange may provide fiscal relief to municipalities | Breaking News | providencejournal.com | The Providence Journal – The Providence Journal.

State health benefit exchanges could end up getting significantly larger than predicted enrollment numbers if this cost shift takes off.  Lots of government employees retire before they become eligible for Medicare at age 65.  Health plans could also end up with more older people in their state individual market risk pools than forecast, leading to higher than expected costs. However as suggested in the article, moving government retirees into the exchange marketplace may not come without a legal fight over labor contract provisions governing retirement benefits.

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Health reform alters traditional state regulation of health insurers

September 7th, 2013 Comments off

The traditional role of state regulation of health insurance products is being transformed with the implementation of the Patient Protection and Affordable Care Act. Nearly three dozen states opting not to set up state-based health benefit exchange marketplaces are effectively ceding regulation of some or all elements of the individual and small group health insurance markets to the U.S. Department of Health and Human Services’ (HHS) Center for Consumer Information and Insurance Oversight. This Los Angeles Times article provides more detail.

The feds already have a large degree of premium rate oversight authority. 45 Code of Federal Regulations (CFR) Part 154 authorizes HHS to establish an annual rate review process to identify “unreasonable” health insurance rate increases. The regulation is enforced jointly by the feds and state regulators or solely by the federal government if states opt not to participate.

This raises questions regarding the future of state-based regulation of individual and small group health coverage. Will health care reform ultimately produce a hybrid of state and federal regulation? And since a majority of states is opting out of the state-based exchange marketplace, will it create momentum for a future shift to full federal regulation?

 


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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