Tag Archive: Medicare

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. 

Final 2017 bid to temporarily stabilize non-group market includes reinsurance revival — and public option

In what is likely to be a final, last minute effort this year to temporarily bolster the challenging market that is non-group or individual medical coverage, two elements involved in the crafting of the Patient Protection and Affordable Care Act are being revived. One – reinsurance — was enacted as part of the law’s insurance market reforms but expired in 2017. Another – the so-called “public option” – wasn’t.

On August 30, a group of eight state governors called on Congress among other measures to restore reinsurance to protect health plan issuers wary of high cost claims and worse than expected statewide risk pools as part of a federal stability fund that would help states fund reinsurance programs in 2018 and 2019. Additionally, seven states have applied to the Trump administration for state innovation waivers under Section 1332 of the Affordable Care Act to establish reinsurance programs in 2018 to help stabilize their non-group markets. Two other states enacted authorizing legislation for such a waiver, according to a chart prepared by the law firm Faegre Baker Daniels LLP.

The proposal by the eight state governors – notably both Republicans and Democrats – would fortify the non-group coverage by allowing individuals to buy coverage via the Federal Employee Health Benefit Program in counties where only one commercial non-group plan is offered. This in effect would provide a “public option” in the form of a government-run plan that was considered but rejected in the development of the Affordable Care Act. It also is in line with a suggestion by former President Barack Obama during his final year in office to create a public plan to address constrained choice among plans in some parts of the nation. Using the FEHBP for the public option could raise objections that as a large employer group plan, it’s not actuarially and administratively suitable for covering non-employees.

Those objections as well as declining affordability for plans sold off the state exchanges jeopardizing the non-group risk pool could help fuel a proposal expected this month by Vermont Senator Bernie Sanders to extend Medicare to those under age 65. Look for this proposed Medicare expansion to serve as a starting point for debate on a possible successor to the Affordable Care Act’s individual and possibly small group market reforms going into 2018-20. In the meantime, both Congress and the Trump administration will likely go along with some of the proposals to help stabilize non-group including extending — at least for 2018 — out of pocket cost sharing subsidies for low income households purchasing silver level plans on state health benefit exchanges. Uncertainty surrounding that funding has drawn widespread concern from states, the exchanges and plan issuers, and consumer interests with no one standing to gain politically if they are not continued.

A key element of the Medicare expansion proposal will likely be some form of presumptive eligibility and/or automatic continuous enrollment, accompanied by payroll and self-employment taxes to help fund the expansion for those under 65 and ineligible for other private or public coverage – along with a possible opt in for those eligible for employer sponsored plans. Policymakers on both sides of the aisle with the support of states, plan issuers and consumer groups will likely conclude the Affordable Care Act’s annual enrollment period used for employer group plans does not translate well to the non-group market. Annual enrollment is a very well established and administratively supported process for employer group plans. But it has proven challenging to implement in non-group due to the market segment’s characteristic high churn and part year enrollment by consumers that makes it difficult to risk rate.

Conventional political wisdom would hold expanded Medicare might be a non-starter among majority Republicans in Congress. But it stands a chance of advancing since it would with automatic enrollment potentially reduce the need for the Affordable Care Act’s individual and employer shared responsibility mandates that have proven among the most unpopular provisions of the statute. A Medicare expansion might well include statutory authority allowing the federal government to negotiate prescription drug prices for the program, addressing concerns shared across the political spectrum over high medication costs.

 


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. 

Study: Single-payer plan would save California $37 billion per year

The new study estimates it would cost California $331 billion to provide health care to everyone living in the state — less than the $368.5 billion spent today in a system that leaves millions without coverage. To pay for it, they say, the state needs to find $106 billion in annual tax revenue — far less than the Senate committee’s estimate of $200 billion. The figures are probably on the optimistic side, said Laurence Baker, a professor of health research and policy at Stanford, because they hinge upon California’s ability to negotiate lower costs with the powerful pharmaceutical industry and other key players, such as hospitals and doctors. “It may be that they could do that,” Baker said, “but getting from where we are now to there would be a tricky, difficult proposition.”

Source: Study: Single-payer plan would save California $37 billion per year

California’s proposed single payer legislation would create a state monopsony that could flex considerable market power with providers of medical services as Baker suggests. But in order to obtain the potential savings it could bargain, the Golden State would have to blow up the current payment pie (illustrated in this post) that carves out slices for different populations and bake a whole new one covering everyone. That’s nothing short of reshaping the entire payer side of the state’s medical care system — a heavy lift considering most people are happy with their slice of the pie with the possible exception of those in the non-group market ineligible for meaningful premium subsidies under the Affordable Care Act.

Then as others have pointed out, there’s the obstacle of getting the Trump administration to approve federal waivers allowing California to redirect those subsidies and Medicare and Medicaid funding to the proposed Healthy California program. The administration is quite favorable to states devising their own schemes for covering those not eligible for group plans and Medicare. But it’s not clear if would go so far as to approve combining all federal medical dollars into a single pot in one state.

 


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. 

ACA architect Ezekiel Emanuel’s post-ACA alternative to individual market reforms: auto enrollment in catastrophic coverage

The Patient Protection and Affordable Care Act retains the current system in which those not covered by employer-sponsored and government plans purchase their own medical coverage from insurance companies. The individual or non-group market as it’s termed is like buying life insurance. A policy is issued and the covered party pays a monthly premium to keep the coverage in force.

To ensure the market functions well with large numbers of people in the risk pool and a good spread of risk among those who use little medical care and those who use a lot, the Affordable Care Act compels health plan issuers to make coverage widely available to anyone wanting to buy it. Similarly, it stimulates buyer demand by requiring everyone to have some form of medical coverage or pay an income tax penalty.

The problem is while Americans like the idea of being able to purchase coverage and not be turned down for underwriting reasons as they can when applying for life insurance, they don’t support being forced to purchase individual coverage and want the option to go without. That gives health plan issuers concern because with too many people “going bare,” they will be nakedly exposed to too many high utilizers who aren’t inclined to forgo coverage because they suffer from costly-to-treat medical conditions. Summed up, what the buy and sell sides of the market feels the other side must do to make it work, the other side dislikes. Sellers and buyers are forced into an uneasy relationship, one that needs many years to determine if can sustainably work after a somewhat rocky start. Four years isn’t likely to be long enough, but political exigencies are now requiring policymakers to reexamine the relationship.

One alternative is coming from none other than one of the Affordable Care Act’s primary architects, Ezekiel Emanuel. In remarks delivered at the Commonwealth Club of San Francisco this week, Emanuel suggested moving away from the market-based model of the law and toward making the individual market more like a government insurance program and specifically Medicare. Those eligible – presumably those not covered by an employer-sponsored or government plan – would be automatically enrolled in basic, catastrophic coverage. There would be an option to pay a premium for more generous coverage. Emanuel predicted that approach could garner bipartisan support. While he didn’t specifically raise the point, such as scheme could conceivably be funded at least in part by payroll and self employment taxes. It also wouldn’t be incompatible with conservative ideas such as providing a tax credit to help households offset the cost of medical insurance. Emanuel’s comments on this topic start at 13 minutes into this audio recording of his remarks.

 


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 health insurance segment will continue to face existential crisis post-election

Source: Health Affairs Blog. http://healthaffairs.org/blog/2017/02/08/the-marketplace-premiums-increase-underwriting-cycle-or-death-spiral/

 

Regardless of what the incoming Trump administration and Congress opt to do with the Patient Protection and Affordable Care Act’s reforms of the individual health insurance market, the segment will continue to face an existential crisis. The individual market remains the problem stepchild of health coverage, playing an important but relatively minor role in a siloed scheme dominated by employer sponsored coverage for a solid majority of those under age 65 and the big government entitlement programs of Medicare and Medicaid for most of the rest. Not to mention the other integrated government run care systems for active duty military members and their dependents and military veterans.

Given its place in the overall scheme of things, individual health insurance is the remainder market of last resort for those not covered by the dominant private and public systems. It functions as a high turnover, temporary segment that’s inherently unstable. People move in and out of coverage due to changing life circumstances or obtaining eligibility for coverage under one of the dominant systems. Others possess a deeply ingrained “culture of coping” as some have termed it to get medical care where it’s the most easily accessible and affordable such as hospital emergency departments, community clinics and free care events. That coping culture includes avoiding paying for individual health insurance, a pattern in place decades before the Affordable Care Act’s individual market reforms went into effect in 2014. It’s not going to be changed quickly even as health plan issuers are required to accept all applicants without regard to medical history and the law provides subsidies for premiums and out of pocket expenses to low and moderate income households.

That instability makes it very challenging for the basic insurance principle of risk spreading since the risk being insured against is highly dynamic. Actuaries base their projections on relatively stable risk pools and flows of premium dollars into the pool. As long as “covered lives” are moving in and out of the individual market, that desired actuarial predictability will remain elusive, the Affordable Care Act’s carrots and sticks aimed at stabilizing the pool notwithstanding.

As policymakers reassess the Affordable Care Act health insurance market reforms in the post-election period, they might well reexamine an assumption of the law that small group coverage would be eclipsed by the reformed individual market. It was expected that by making individual market coverage more like small group coverage by establishing small group plans as benchmark plans, that along with the individual market reforms would drive more people into individual coverage.

It hasn’t quite worked out that way. Even though the Affordable Care Act does not mandate they do so, small employers are continuing to offer group coverage, albeit less generous than the recent past and more akin to major medical, catastrophic plans with high deductibles. If they are offered coverage under them, employees have little incentive to enroll in individual coverage since they would not qualify for subsidized coverage sold on state health benefit exchanges.

That circumstance reduces the potential size of the individual segment and in so doing, degrades the individual market risk pool. While the Obama administration’s health insurance reforms are based on keeping employer-sponsored health benefits as the bedrock of coverage for most pre-retirement Americans, they also were aimed at revitalizing the struggling individual market. Given that employer-sponsored coverage cuts against a robust individual health insurance space, it may not be possible to have both.

 


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. 

One year after jettisoning single payer, Vermont now looks to control medical costs via expanded “all payer” ACO

One year after Vermont abandoned its plan to move to a single payer health finance framework amid concerns over the ability of tax revenues to cover rising medical utilization costs under that payment model, the state is rolling out an alternative aimed at reining in those costs. It would do so through a proposed “all payer model.” The model builds on the Patient Protection and Affordable Care Act’s Medicare Shared Savings Program Accountable Care Organizations (ACO) model in which providers share risk with reimbursements tied to the overall cost and quality of care provided rather than discrete medical procedures under the traditional fee for service model. Reflecting the pervasiveness of costly, chronic health conditions no longer largely confined to the Medicaid eligible population, the Vermont proposal would expand that model to all forms of reimbursement, including Medicaid and commercial plans:

The State would agree to coordinate with Medicaid and commercial insurers, and in return the federal government would allow Medicare to participate in the ACO value-based payment model. As is true today, health care providers’ participation in ACOs is voluntary; the ACO must be attractive to providers and offer an alternative health care delivery model that is appealing enough to join.

The goal of the proposed all payer model is to limit the annual growth of statewide medical spending to 3.5 percent with a maximum spending growth of 4.3 percent:

The goal of this financial target is to bring health care spending closer to economic growth. When health care costs grow faster than Vermont’s economy, Vermont families find their premiums rising faster than wages. This is also true in the state’s Medicaid budget, which grows faster than the revenue sources used to fund it.

The board’s authority to regulate reimbursement rates exists under current state law, according to a term sheet outlining the proposal. Vermont will seek any necessary waivers from the federal government to operate the all payer model, noting the state has jointly developed a policy framework and the needed waivers in consultation with the federal Health and Human Services Department’s Center for Medicare & Medicaid Services.

The fee for service reimbursement model is no longer suitable and is “antiquated” according to the Vermont proposal:

When the fee-for-service health care payment model was devised over 50 years ago, the average life expectancy of Americans was significantly shorter than it is today, and the burden of chronic disease was smaller. The Centers for Disease Control and Prevention (CDC) reports that treating people with chronic diseases accounts for 86 percent of our nation’s health care costs. Health care reimbursement was designed to pay for acute medical conditions that required a single visit to the doctor or a single hospitalization. By contrast, persons with chronic conditions require regular, ongoing care across the continuum of traditional medical services and community-based services and supports. Fee-for-service reimbursement makes it difficult for innovative health care providers to adapt to the changing needs of the population that they serve. The antiquated system provides clear financial incentives to order additional tests and procedures, yet it does not reward doctors and other health care professionals for providing individualized and coordinated care for complex chronic conditions. In the end, patients may receive care that is expensive, fragmented, and disorganized.

 


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. 

Companies Look to Transition Retirees to Health Exchanges – May 20, 2015

LINCOLNSHIRE, Ill., May 20, 2015 /PRNewswire/ — Challenges and opportunities created by the Affordable Care Act are prompting two-thirds of companies to consider altering their pre-65 retiree health strategies over the next few years, according to a new Aon Hewitt survey. Of those, 35 percent are favoring sourcing health coverage through the public exchanges under a defined contribution approach. Twenty-eight percent are considering eliminating pre-65 retiree coverage and subsidies altogether. Aon Hewitt’s 2015 Retiree Health Care survey of 349 companies covering 3.2 million retirees found that few companies have already taken action with respect to their pre-65 strategies. Just six percent of companies have already decided to move some portion of their pre-65 retirees to the public exchanges to secure health coverage, and another nine percent are offering retirees a choice between the group program and the public exchanges.

Source: Companies Look to Transition Retirees to Health Exchanges – May 20, 2015

If this survey portends a trend among large private sector employers, state health benefit exchanges could see a rise in enrollment among retirees under age 65 not yet eligible for Medicare. In addition, new federal regulations issued in March 2015 could also support such a trend. The new rules, Amendments to Excepted Benefits, allow employers offer retirees (and part time employees) and their dependents a richer level of benefits through a widened range of excepted benefits that wrap around qualified health plans sold on the exchanges. The arrangement would operate on a trial basis under a two-year pilot program beginning January 1, 2016. The new rules took effect this week.

 


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 insurance rates could shoot up – SFGate

Trummel, grappling with his second increase of the year, isn’t holding his breath. But he’s hoping that the new state-run marketplace where people will be able to buy health insurance under the federal health law in 2014 will yield an option that offers him some relief until he qualifies for Medicare.

“If I could get into that (the marketplace), I might have only one more year of this agony with Anthem Blue Cross,” Trummel said. “I’m just holding on until either the health law or Medicare will kick in.”

via Health insurance rates could shoot up – SFGate.

 


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. 

When payer becomes provider

Kaiser Health News (KHN) reports on what could become a growing trend:  Health insurers buying medical groups and forming physician management companies.  “It’s the latest sign that the barrier between companies that provide health coverage and those that actually provide care to patients is crumbling,” writes KHN’s Christopher Weaver.

The key driver is payers’ desire to clamp down on rising medical costs that are passed on to consumers as higher insurance and managed care plan premiums.  Those fast rising premiums are threatening the viability of payers’ individual and small group market segments by heightening the danger of adverse selection and insolvency.

The trend also fits nicely with a provision of the Patient Protection and Affordable Care Act allowing providers to form so-called Accountable Care Organizations (ACOs).  Authorized to begin operating in January 2012 under the PPACA, ACOs are designed to incentivize doctors and hospitals to band together to improve value and outcomes for Medicare patients and sharing any reduced Medicare reimbursements with them.  ACOs could also become a template for a new managed care model for privately insured patients as well.

Going forward, there could be tension between the degree of ownership and involvement of payers with physician practices, leading to regulatory and legal scrutiny relative to state laws that bar corporations from directly practicing medicine in order to protect the independent medical judgment of physicians from business management decisions.

 


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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