Tag Archive: Baby Boom generation

Health care cost tsunami crests with burgeoning boomer waistlines

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. 

We are the 401%: Middle class households ineligible for exchange subsidies could reignite health reform

A little more than three years ago, steep premium increases in California’s individual market sparked outrage from Sacramento to Washington, providing a political tipping point for the enactment of the then-moribund Patient Protection and Affordable Care Act (PPACA). This fall and into 2014, those without government or employer-sponsored health coverage who earn more than 400 percent of the federal poverty level (FPL) ($45,960 for singles; $92,200 for a family of four) may find themselves outraged yet again by sharp double digit premium increases.  Under the PPACA, those earning in excess of 400 percent of FPL are ineligible for income tax subsidies available for qualified health plans purchased through state health benefit exchanges.  They will bear the full amount of higher premiums on their own.

Projections of the impact of the PPACA individual market reforms issued this week by the Society of Actuaries (on the medical cost impact of those newly insured under the law) and the actuarial consulting firm Milliman (on premiums in California) suggest premiums for plan year 2014 will rise significantly for these relatively higher income middle class households.  The Society of Actuaries estimates the PPACA individual market reforms will drive up claims costs by an average of 32 percent nationally by 2017 and by double digits in as many as 43 states.  The Milliman study commissioned by the California exchange, Covered California, estimates those currently insured with incomes exceeding 400 percent of FPL purchasing the lowest cost “bronze” rated plan covering 60 percent of expected costs can expect a 30.1 percent premium hike for 2014.   “Currently insured individuals with incomes greater than 400% of FPL will experience the largest increases,” the Milliman study notes.

Those in this income range likely to be hit with the biggest increases are middle class people in their 50s and 60s – the large Baby Boomer demographic not yet Medicare eligible and not covered by employer-sponsored plans.  A major potential implication of higher premiums on top of the already relatively high rates paid by this age group (new age rating rules under the PPACA will provide some relief) is many of them may find even bronze-rated coverage unaffordable and go uninsured, contrary to the policy goal of the PPACA to increase affordability and access to coverage.

If 2014 rate increases for 401+ percent FPL households boost the price of the cheapest plans too high, tax penalties built into the law for those without public or private coverage won’t provide incentive for these individuals to purchase coverage.  The PPACA’s individual mandate expressly exempts those who have to spend more than eight percent of their incomes to purchase the cheapest bronze plan offered in their geographic rating region. The law also provides for a financial hardship exemption.

Because of the sheer size of the Boomer demographic and Boomers’ willingness to seek political redress of their grievances, if the premium increases for the 401 percenters predicted indirectly by the Society of Actuaries and directly by Milliman materialize, it could create impetus for further reforms in 2014.


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. 

California prior rate approval scheme dead for this year

As Business Law Daily reports, California legislation that would have subjected health insurers and managed care plans to a prior approval rate regulation scheme has been shelved for this year.  AB 52 could however be revived in 2012, the second year of the two-year legislative session.

A logical argument can be made that health insurers and managed care plans should be subject to prior approval rate regulation.  California’s market for health coverage is an oligopoly in which a handful of big payers control about 90 percent of the market.  Given the lack of robust competition, market forces alone aren’t likely to check premiums.  But it’s also not clear that placing payers under prior rate approval like the state’s far more competitive property/casualty insurance marketplace would do so either.

Payers would still pass along the relentless rise of medical care costs to policyholders and members.  Perhaps not as quickly since regulators would first have to green light premium hikes.  But ultimately higher medical costs would be reflected in increased premiums.

Just as the Baby Boom generation drove up auto insurance premiums in the years after its members got their drivers licenses until middle age and they became safer, more experienced drivers, the Boomer generation’s now aging cohorts are placing enormous cost pressures on health insurers and managed care plans.  Those demographic forces as well as rising chronic conditions and obesity among later generations cannot be corralled by insurance rate regulation.  They can be mitigated by healthier, more balanced lifestyle choices — choices made by individuals and not regulators.


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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