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Posts Tagged ‘employer group coverage’

Why medical care payment reform is a wicked problem

May 29th, 2017 Comments off

“You can have a picture of what the final system would look like,” says Katharine London of the University of Massachusetts, coauthor of a series of studies of a Vermont single-payer plan that eventually was abandoned. “But the biggest hurdle for single-payer is how you get from here to there.” That journey involves persuading voters that the system they’re so enthusiastic about in the abstract will function to their advantage in reality. That’s a hard task. “People by and large like the health insurance they have,” in part because most people have limited or infrequent interactions with the healthcare system, Gruber says. “They’re not willing to give up something they like enough for something unknown.”

Source: The challenges in setting up a California single-payer system are daunting — but not insurmountable – LA Times

Jonathan Gruber –who consulted on the drafting of the Patient Protection and Affordable Care Act — is right on the money in his analysis. The pie chart below showing all forms of medical coverage in the nation’s largest state illustrates why medical care payment reform is such a wicked problem. Yes, it’s byzantine with all those slices of the pie covering different groups of people. But the people covered within each slice are generally satisfied with their coverage and thus not inclined to give up their slice in order to put everyone into one big pie of single payer where a governmental entity would pay all medical bills. That especially applies to employer group medical benefit plans that provide the bulk of private sector coverage to those under age 65.

 

Public sources account for 71% of healthcare revenues in California, including 60% from federal progSource: UCLA Center for Health Policy Research. Public Funds Account for Over 70 Percent of Health Care Spending In California. August 31, 2016.
 


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. 

Return to high risk pools implies failure of ACA’s single statewide risk pool

May 16th, 2017 Comments off

The return to state high risk pools encouraged by Trump administration executive action and as proposed in the American Health Reform Act pending in the Senate — mechanisms phased out with the Patient Protection and Affordable Care Act reforms of the non-group segment effective in 2014 — carries with it a critical implication. Specifically, the individual market even with single statewide risk pools mandated by Section 1312(c) the Affordable Care Act are too small —  in some less populous states at least — to achieve a sufficient spread of risk. Therefore, the logic implies, individuals with conditions who use largely disproportionate amounts of medical care must be excluded from the statewide pool and cordoned off in high risk pools in order to maintain the pool’s actuarial viability and ward off adverse selection in the individual market.

That cuts against a core assumption of the Affordable Care Act — that by having all individuals and family members in a given state treated as one large risk pool, a sufficient spread of risk would be achieved. In addition, the law’s premium stabilization programs and an ongoing risk adjustment mechanism to compensate health plan issuers who take on members with costly, complex chronic conditions would act as buffers to ensure the actuarial integrity of the pool and reduce the likelihood of adverse selection. The proposed revival of high risk pools would suggest that’s not the case and the amount of medical care utilized by some pool members is so costly that it skews an entire state’s risk pool.

This in turn leads to a far larger implication. If 5 percent of the pool population account for 50 percent of the costs — or 1 percent accounting for 20 percent to use another expression of the ratio cited in this National Institute for Health Care Management data brief — then medical care may not be an insurable risk due to insufficient spread of risk. If that’s the case, it could result in plan issuers ceding most or all of the loss risk to the government as is currently the case in Medicare and Medicaid managed care. Notably, Aetna CEO Mark Bertolini reportedly suggested just that, according to this account at Reason.com, with nominal insurers taking on the role of plan administrators handling “back room” transactions:

The government doesn’t administer anything. The first thing they’ve ever tried to administer in social programs was the ACA, and that didn’t go so well. So the industry has always been the back room for government. If the government wants to pay all the bills, and employers want to stop offering coverage, and we can be there in a public private partnership to do the work we do today with Medicare, and with Medicaid at every state level, we run the Medicaid programs for them, then let’s have that conversation.

Note the second condition in Bertolini’s statement: If employers want to stop offering coverage. Complain as they may about rising premiums in group coverage, there’s no indication that the highly entrenched employee benefit model of covering medical care for the non-elderly is going to be abandoned by employers anytime soon. Even if the Affordable Care Act’s mandate on employers of 50 or more to offer coverage is repealed given favorable tax treatment of employer-sponsored medical care plans.

 


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. 

Proposal: taxpayer funded primary care

May 11th, 2017 Comments off

In the United States, community health centers could be funded directly by the government based on population, not fee for service. They would provide a broad, well-defined range of services, including primary care, with weekend and evening hours, telemedicine, basic pharmaceuticals and education for management of chronic illness. Mental health care would be provided, including management of drug addiction. And they could serve as a base for managing crises such as epidemics and bioterrorism events. Anyone could use a community health center without income verification, free. People could still use private primary care providers, but they would have to pay for them, directly. Insurance would be reserved for emergencies, through inexpensive catastrophic coverage. Even Medicaid and Medicare could eventually be moved into a catastrophic-only model.

Source: What Spain Gets Right on Health Care – The New York Times

A couple of likely criticisms come to mind. First, would

Second, proposal is likely to face the major obstacle confronting proponents of single payer coverage, wherein the government covers both primary and catastrophic care: the entrenched employer-sponsored medical insurance benefit model that has been in place since the 1940s. Given

 


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. 

Employer group coverage stumbling block for single payer

April 7th, 2017 Comments off

The bill’s authors haven’t announced how the program would be funded. And that’s where the biggest obstacle lies, said Oberlander: It would largely uproot California’s present system, in which roughly half of coverage is sponsored by employers. If “you’re going to take health insurance largely out of the market, you’re going to disconnect it from employers,” he said. “Then you have to make up all the financing that you’re going to lose.”There’s no way to make up for those lost employer contributions other than to introduce “very visible taxes,” Oberlander said. And that’s not the only reason why a single payer plan would be controversial. “A lot of people are satisfied with what they have,” he said.

Source: While Washington Fiddles, California Leaders Forge Ideas For Universal Health Care | California Healthline

As this article points out, the largest obstacle to creating a single payer health care financing system is the seven decade history of employer group health coverage covering the majority of American adults and their families. The fundamental conflict boils down to how health care is paid for: as an employee benefit or as a government service.

Even though large states like California might have the fiscal and political economies of scale to make single payer pencil out — particularly if it is able to negotiate better value for health care dollars spent — rethinking the financing scheme requires a big conceptual, out of the box leap that makes U.S. health care reform a wicked problem.

 


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. 

Feds draw bright line between employer group, individual coverage

November 10th, 2014 Comments off

The U.S. Departments of Labor, Health and Human Services and Treasury issued guidance that draws a bright line delineating employer group health coverage from individual coverage sold to those who aren’t covered by government or employer sponsored health plans.

Under the guidance issued November 6, employers cannot reimburse employees to cover individual policy premiums. “If the employer uses an arrangement that provides cash reimbursement for the purchase of an individual market policy, the employer’s payment arrangement is part of a plan, fund, or other arrangement established or maintained for the purpose of providing medical care to employees, without regard to whether the employer treats the money as pre-tax or post-tax to the employee,” the guidance states.

Nor may employers set up health reimbursement account (HRAs) that enable employees to purchase coverage and access advance premium tax credits for individual plans sold in the state health benefit exchange marketplace. HRAs are group health plans and therefore employees participating in them are ineligible for the credits or cost-sharing reductions, the departments reason. “The mere fact that the employer does not get involved with an employee’s individual selection or purchase of an individual health insurance policy does not prevent the arrangement from being a group health plan,” the guidance notes.

In addition, the guidance states employers may not offer cash to an employee in poor health in order to steer the employee away from a large employer’s group health plan. Such arrangements violate Health Insurance Portability and Accountability Act (HIPAA) provisions barring discrimination based on one or more health factors, the departments conclude. “Offering, only to employees with a high claims risk, a choice between enrollment in the standard group health plan or cash, constitutes such discrimination.”

 


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. 

Obama administration’s messaging on ACA’s individual health market reforms lacking

October 30th, 2013 Comments off

The Obama administration is suffering a political pillorying this week on the imminent rollout of new market rules governing the individual health insurance market and the government-created health benefit exchange marketplace that began selling the plans October 1.

In large part, the criticism stems from weak messaging to communicate the reforms and why they are needed. There should be more emphasis on conveying these reforms affect the individual market where about five percent of Americans purchase their health coverage, clearly distinguishing these health plans from those purchased by employers that cover the large majority of Americans. As individual health plan issuers revamp and discontinue old plans to comply with the new market standards, the administration now finds itself having to defend its claims that most Americans could keep their current coverage when the individual market reforms take effect January 1, 2014. Viewed in the context of employer group coverage, that is generally accurate. But not necessarily so when it comes to individual coverage, an entirely different insurance product.

Perhaps more importantly, the administration and members of Congress who supported the 2010 enactment of the Patient Protection and Affordable Care Act need to more clearly explain why the law’s substantial government intervention in the individual market was needed in the first place. Administration officials have described the market as out of control from a regulatory standpoint, terming it like the “wild west.” But more fundamentally, the ACA aims to rescue this market because it was falling into oblivion. Individual plan issuers and those who buy this coverage were finding it increasingly difficult to get together in the marketplace on terms and pricing.

That market failure occurred because the market fell into a downward spiral where health plans became overly risk averse and excluded too many potential customers, restricting the flow of membership fees and premiums to pay claims. Plan issuers also violated a fundamental principle of insurance by splitting their customer base into small pools and were consequently unable to share the cost of claims across a larger group of customers. Finally, premiums for some individuals and families began to equal the cost of a mortgage payment and grew unaffordable. No market can function if potential customers cannot afford to buy the product or service being offered.

Whether the ACA can restore the individual market to healthy functioning remains to be seen, particularly given continued upward pressure on premiums from rising medical costs. The law’s market interventions could prove ineffective if too few young adults opt to buy coverage. Also if too many older people not yet eligible for Medicare who earn too much to qualify for tax credit subsidies for plans sold in the state health benefit exchange marketplace find premiums unaffordable and don’t buy coverage or request affordability exemptions from the individual mandate.

 


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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