Tag Archive: Kaiser Permanente

Microeconomic mismatch undermines concept of interstate health insurance market for non-integrated plan issuers

Creating an interstate market for individual health insurance is a component of President-elect Donald J. Trump’s healthcare policy. “To maximize choice and create a dynamic market for health insurance, the Administration will work with Congress to enable people to purchase insurance across state lines,” according to the Trump administration’s transition website.

The concept’s not new. It’s been around for decades as a reform element favored by conservative health policy wonks. It’s even baked into the Patient Protection and Affordable Care Act. Section 1333 of the law provides a mechanism for health insurers and plans to pool risk and sell across state lines via “health care choice compacts” starting this year. The provision allows two or more states to enter into an agreement under which health plans could be offered in state individual markets but subject to regulation by the state in which the plan was written or issued. The Affordable Care Act even provides for interstate health benefit exchanges. Section 1311(f) provides for “Regional or Other Interstate Exchanges” operating in more than one state with federal government approval.

On its face, enabling the marketing of health insurance across state lines appears appealing. After all, insurance is all about large numbers — and the bigger the better. More people in multiple states covered in health plans translates to enhanced spread of risk and potentially operating economies of scale. It’s a particularly appealing reform as individual health plan issuers worry about adverse selection, particularly in less populous states and those with poorer population health status. With health plan issuers able to offer plans in multiple states, the buy side of the market also benefits with more competition and consumer choice, proponents contend.

But undermining the concept is a microeconomic mismatch. Health coverage is far more portable than provider networks, which are geographically fixed by metropolitan areas and the brick and mortar physician offices, clinics and hospitals within them. Provider charges are not uniform, varying considerably from one metro area to another, even within a given state. Health plan issuers negotiate locally with providers because nearly all health care is provided locally and not across state lines except for those living near state borders.

An interstate model currently only favors integrated health plans such as California-based Kaiser Permanente and Molina Healthcare, which each operate health care facilities in a half dozen states and have fared better in the state health benefit marketplace environment than traditional non-integrated health 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. 

Healthcare Reform Update: More providers, insurers showing appetite for narrow networks | Modern Healthcare

The ACA is driving much of the shift toward these narrow-network products, said Gerald Kominski, director of the UCLA Center for Health Policy Research in Los Angeles. The healthcare reform law standardizes health plan benefits and sets caps on out-of-pocket costs. So providers and insurers are using unique networks as a differentiator. “If you’re competing on price and you can’t vary copayment structure or deductibles, the only thing you can do is try and keep your networks as affordable as possible,” Kominski said.It’s not surprising to see providers and insurers try to copy Kaiser Permanente, said Peter Lee, executive director of Covered California, the state’s insurance exchange, at a virtual conference Wednesday organized by Modern Healthcare. “People understand when you pick Kaiser, you get a designated set of care delivery. I think it’s a very healthy thing for the entire health system to compete on delivery.”But experts caution that Kaiser has half a century of experience in operating a staff-model HMO, and other providers and insurers won’t be able to replicate that model quickly.

via Healthcare Reform Update: More providers, insurers showing appetite for narrow networks | Modern Healthcare.

Narrow networks help bridge the tradeoff between richer benefits mandated by the ACA and keeping premiums affordable –which in turn promotes the spread of risk fundamental to the viability of all insurance products. However, for narrow networks to properly function in the marketplace, they have to be true provider networks and not simply a list of suggested providers offered along with a major caveat emptor that there’s no guarantee a particular provider is in the network and accepting plan members.

Why? Because individuals and families purchase health insurance for the peace of mind it provides and the certainty that care is available when needed and covered per the coverage terms. That’s the key value. Otherwise, it functions more like those garbage “health plans” the ACA was designed to do away with that offered discounted services provider lists that could not be relied upon as accurate and current. As a vertically integrated risk bearing and provider entity, Kaiser Permanente holds a major advantage over other commercial health plan issuers in that its providers are in house, sparing Kaiser members the risk associated with provider network volatility and uncertainty that can hamper other commercial health plan issuers.

Because by definition there are fewer available providers in narrow network plans, there’s also less room for error when a member is seeking an in-network provider. That’s why it’s essential narrow network plans have networks with provider rosters that are accurate and up to date.

 


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. 

Large Kaiser Permanente market share predisposes California to ACOs

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. 

Covered California announces participating health plan issuers, premium rates

California’s health benefit exchange marketplace, Covered California, today unveiled the health plan issuers that will participate in the marketplace for plan year 2014:

  • Alameda Alliance for Health
  • L.A. Care Health Plan
  • Anthem Blue Cross of California
  • Molina Healthcare
  • Blue Shield of California
  • Sharp HealthCare
  • Chinese Community Health Plan
  • Valley Health Plan
  • Contra Costa Health Services
  • Ventura County Health Care Plan
  • Health Net
  • Western Health Advantage
  • Kaiser Permanente

For the Covered California news release, click here.

The 13 plan issuers — less than the 32 plans that had initially expressed interest in participating — represent a broad mix of statewide for profit and nonprofit entities as well as plans serving distinct metro areas of the state or solely public sector employees in a given region such as Valley Health Plan operating in Santa Clara County.  Three — Kaiser Permanente, Anthem Blue Cross of California and Blue Shield of California — together account for 87 percent of the 1.6 million Golden State residents covered by individual plans in 2011, according to the California HealthCare Foundation. None of the plan issuers are Consumer Operated and Oriented Plan (CO-OP) plans under Section 1332 of the Patient Protection and Affordable Care Act.  The plans will contract with Covered California only through December 31, 2014 and not for a three-year term as originally planned.

Rates for selected 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. 

California leaning toward Kaiser Permanente’s small group HMO as individual and small group plan benchmark

California continues moving forward to implement the Patient Protection and Affordable Care Act (PPACA), advancing legislation this week setting minimum coverage standards for health plans offered by small employers and sold through the California Health Benefit Exchange.

Section 1302 of the PPACA delineates 10 “essential health benefits” small group and individual market plans must offer including ambulatory and emergency services, hospitalization, maternity and newborn care, treatment for mental health and substance use disorders, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management and pediatric services, including oral and vision care.

Since health insurance markets vary among the states and to speed state efforts to establish health benefit exchanges, the U.S. Department of Health and Human Services late last year issued guidance allowing states to choose one of the following plans sold in their jurisdictions as a benchmark:

  • One of the three largest small group plans in the state;
  • One of the three largest state employee health plans;
  • One of the three largest federal employee health plan options;
  • The largest HMO plan offered in the state’s commercial market.

California advanced legislation this week, AB 1453, defining HMO Kaiser Permanente’s small group plan as of December 31, 2011 as the Golden State’s benchmark.

 


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. 

Aetna CEO: Health insurance business model no longer viable

In 2011, some health insurers were conceding the individual market was failing, entering the dreaded death spiral of adverse selection.  But none went as far as Aetna CEO, Chairman and President Mark Bertolini at a Las Vegas conference this week in proclaiming the business model of health insurance broken and facing extinction.

“The system doesn’t work, it’s broke today” Bertolini was quoted as saying by HealthData Management in remarks to attendees of the HIMSS12 conference. “The end of insurance companies, the way we’ve run the business in the past, is here.”

A fundamental function of any form of insurance is underwriting the selection and rating of risks. With medical underwriting ending January 1, 2014 under the Patient Protection and Affordable Care Act (PPACA), it’s no wonder Bertolini sees the end of health insurance as we have known it.

The PPACA as well as other factors are forcing health insurers to reinvent themselves.  But as what?  Since Accountable Care Organizations (ACOs) being created by the reform law are risk sharing mechanisms that reward better patient outcomes and reduced treatment costs though more coordinated, more holistic patient care, Bertolini sees a role for insurers to help manage that risk.  “We need to move the system from underwriting risk to managing populations,” Bertolini was quoted as saying. “We want to have a different relationship with the providers, physicians and the hospitals we do business with.”

What about state health benefit exchanges created by the PPACA that open for business in 2014?  The exchanges are to serve as purchasing pools to help individuals and small businesses aggregate purchasing power to get better deals on health insurance than they would otherwise get negotiating on their own behalf.  If health insurance is becoming a thing of the past as Bertolini predicts, what will they be buying?  Bertolini foresees all-inclusive, branded “health systems” (perhaps similar to California-based Kaiser Permanente) that leverage health information technologies to put patients in charge of their health.

 


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. 

%d bloggers like this: