Tag Archive: employer-sponsored coverage

Rising medical costs undermine America’s largest coverage silo: Employer-sponsored medical benefit plans.

But the longer-term risk for job-based coverage is the inability of most employers — despite their power as the largest purchasers of health care services — to stem rising health care costs. Though some very large employers that run their own health insurance plans, like Comcast and Boeing, show considerable sophistication in managing their workers’ health care bills, they are the exceptions.

Faced with these structural handicaps, employers trying to limit their exposure to health care costs fall back on a simple strategy: shifting more of those costs to their employees. That winds up increasing the number of Americans with employer-sponsored health plans who are underinsured. The Commonwealth Fund survey found that underinsured adults reported health care access and medical bill problems at nearly the same rates as adults who lacked coverage for part of the year.

Increasing underinsurance among working families should raise alarm bells for policymakers and advocates both for and against increased government involvement in health care. If employer-sponsored health insurance continues to become less and less adequate over time — and we have every reason to believe it will — the discontent of middle-class working Americans with the cost of their health care will inevitably increase.

Source: The Decline of Employer-Sponsored Health Insurance – The Commonwealth Fund

Employer-sponsored medical coverage covers as many Americans as Medicare, Medicaid and the non-group individual market combined. As such, it’s the biggest coverage silo of the nation’s multifaceted scheme to cover the costs of medical care.

According to this Commonwealth Fund analysis, the structural integrity and long term viability of that largest and traditionally quite generous of coverage silos is under enormous stress from the ever growing cost of medical care. Another appearing today in Health Affairs warns that rising medical care costs could reduce commercial medical insurance, including employer plans.

Those cost pressures could cause it to tip over. If it topples, the analysis accurately observes, it would create an environment where a wider expansion of government plans beyond Medicare and Medicaid becomes more politically possible, even probable. It could spark a consolidation of the four big coverage silos into one or two. History appears poised to turn a page over the next decade.

 


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. 

Greater than expected staying power of employer-sponsored health coverage could jeopardize viability of post-ACA individual market

There are three basic explanations being offered up by individual health plan issuers on the eve of plan year 2017 open enrollment to justify sharply increased premiums in many states:

  1. Most of the Patient Protection and Affordable Care Act premium stabilization programs are expiring in 2017 and money is still owned plans under one of the expiring mechanisms designed to even out a given health plan issuer’s loss experience with that of other issuers;
  1. Plan issuers have more extensive loss experience data than in the initial years of the individual market segment as the Affordable Care Act reforms kicked in and it was harder to estimate what to charge;
  1. Closely related is the previous point, loss data indicates statewide individual risk pools are posting higher than expected medical utilization, with even higher utilization among plans sold on state health benefit exchanges. Premiums are thus being aligned to reflect the true quality and loss experience of the statewide risk pools.

The third point describes a dynamic situation that could change over time. For example, if medical utilization decreases and the health risk profiles of those in the individual market improve, premiums could readjust downward to reflect that more favorable environment.

However, a more long term concern that should be troubling for health policymakers voiced within some quarters of the health insurance industry is the state risk pools are unbalanced. Or to use an insurance industry term, adversely selected and skewed toward those more prone to using a lot of medical care with too few folks in the pool who use less. Those are actuarially assumed to be the so-called “young invincibles” in their twenties and thirties.

This is a larger concern because it could reflect a more long term, structural problem in the individual market as a whole. If the pool remains unbalanced, premium rates are likely to remain elevated since there are fewer premium dollars flowing into the pool from those who use less medical care to offset the expenses of higher utilizers. The longer premiums remain elevated, the greater the risk to the viability of the individual market as a whole since adverse selection tends to perpetuate an unvirtuous cycle of more people abandoning the market as premiums increase, reinforcing the need for additional premium hikes. This was the situation that existed prior to the Affordable Care Act’s 2010 enactment. Even in populous states like California, where accounts of premium increases of nearly 40 percent and an individual market poised to enter the terminal “death spiral” phase of adverse selection tipped the political scales to assure the needed votes in Congress for the law’s approval.

One of the assumptions of the Affordable Care Act’s individual market reforms is that by making individual coverage more like employer-sponsored coverage with minimum benefit requirements, annual enrollment periods and no medical underwriting, employer-sponsored coverage among smaller organizations would decline. It hasn’t turned out that way. The greater than expected staying power of employer-sponsored health coverage could reinforce an ongoing structural imbalance in the individual market, particularly in smaller states where by definition the risk pool is naturally limited.

The reason is the twenty and thirty somethings health plan issuers say they need to help achieve a good spread of risk for a balanced pool are more likely to be covered in employer sponsored plans than people age 50 and older  — and therefore not participating in the individual market. They are beginning their careers and more likely to be employed full time and whereas the latter age cohort is more likely to be retired, semi-retired, self-employed, and otherwise not employed full time by an employer offering health 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. 

Sorry, We Don’t Take Obamacare – The New York Times

The goal of the Affordable Care Act, which took effect in 2013, was to provide insurance to tens of millions of uninsured or under-insured Americans, through online state and federal marketplaces offering an array of policies. By many measures, the law has been a success: The number of uninsured Americans has dropped by about half, with 20 million more people gaining coverage. It has also created a host of new policies for self-employed people like Ms. Moses, who previously had insurance but whose old plans were no longer offered.Yet even as many beneficiaries acknowledge that they might not have insurance today without the law, there remains a strong undercurrent of discontent. Though their insurance cards look the same as everyone else’s — with names like Liberty and Freedom from insurers like Anthem or United Health — the plans are often very different from those provided to most Americans by their employers. Many say they feel as if they have become second-class patients.

Source: Sorry, We Don’t Take Obamacare – The New York Times

A primary goal of the Affordable Care Act when enacted was to tame the “Wild West” landscape of individual health coverage and put it more on a par with employer-sponsored coverage. And to provide more peace of mind to those having individual coverage.

It did so by defining essential health benefits and minimum actuarial value of individual plans. According to this New York Times story, that hoped for relative degree of parity has yet to be achieved, with employer-sponsored plans that cover the majority of working age adults remaining preferred by providers.

 


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. 

Arkansas proposes overhauling Medicaid program to emphasize employer-sponsored coverage

Arkansas is asking the U.S. Department of Health and Human Services to sign off on an overhaul of its Medicaid expansion program to make it into more of an employment expansion program based on employer-sponsored coverage rather than a traditional state insurance program for low income earners. The state is proposing federal Medicaid funding go toward defraying the cost of premiums for employees and also subsidizing small employer plans.

Source: 20160215 ArkWorks Summary_JM – 20160215_ArkWorks_Summary_share.pdf

 


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. 

Analysis: First year enrollment churn could be nearly half of QHP enrollees, quarter of Medicaid beneficiaries

In health insurance, “churn” refers to people moving between various forms of coverage as their life and economic circumstances change. Those in employer-sponsored plans who are dismissed or leave their jobs move into the individual market, COBRA, Medicaid or go uninsured. Those on Medicaid can earn off eligibility if their household income rises above their state’s cut off point. People move back to employer-sponsored coverage when they or their partners are employed by an entity that offers health coverage either on its own or as required starting next year in the case of large employers.

As well as these forms of coverage, the Patient Protection and Affordable Care Act adds a new category this year: those eligible for advance tax credit-subsidized coverage in the state health benefit exchange marketplace. Like Medicaid, eligibility for this form of coverage is means tested and can change as household income rises above 400 percent or falls below 138 percent of federal poverty.

An analysis of the nation’s largest state health benefit exchange marketplace, Covered California, finds churn over a 12 month period could amount to nearly half of those enrolled in subsidized qualified health plans (QHPs) and a quarter of those enrolled in Med-Cal, California’s Medicaid program. Click here for the report by the UC Berkeley Center for Labor Research and Education.

The churn among QHPs has implications for the exchange marketplace insofar as exchanges are financially reliant on health plan issuer participation fees assessed on QHP premiums starting in 2015 when federal establishment grant funding will no longer be available. In that vein, the report concludes Covered California (and by implication other state-based exchanges) must devote ongoing attention to enrollment throughout the year outside of open enrollment periods including outreach, web portal, in-person and call-center assistance.

 


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. 

Individual market could turn into SHOP’s biggest competitor

In a post last December, I characterized small group as the most voluntary – and consequently the most vulnerable – health insurance market segment notwithstanding Patient Protection and Affordable Care Act reforms designed to improve it. Whether these reforms will ultimately help shore up this distressed market segment remains to be seen, I wrote at the time.

A key ACA reform to create market power on the buy side to help drive down rising premiums – small employers identify high premiums as the biggest barrier to covering their employees – is the mandate each state health benefit exchange establish a voluntary small employer purchasing pool known as the Small Business Health Options Program (SHOP). However, experts have recently suggested that in the eyes of potential small employer SHOP enrollees, SHOP’s biggest competition could come from the individual marketplace as they cease providing employer-sponsored coverage.

Ezekiel J. Emanuel, who helped draft the Affordable Care Act as a health policy adviser to the Obama administration, had this to say to The New York Times small business blog You’re the Boss:

I’ve always been a bit perplexed by the idea of setting up a SHOP exchange, since I don’t understand why it’s just not better if you’re a small business to say, all right, everyone, I’m just going to give you X amount of dollars and let you shop in the individual market. That seems to me to be a way to go – why should a small business set up a lot of machinery around it? Why should exchanges set up a lot of machinery? And it would be better for exchanges to have these workers in the individual exchange.

As small employers who early renewed plan year 2013 plans late last year migrate to ACA-compliant plan year 2015 plans, a quarter of small group plan members could end up moving to individual coverage from November 2014 through January 2015, estimates health insurance industry veteran and consultant Michael Lujan. Lujan is former SHOP director at California’s exchange, Covered California.

 


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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