Tag Archive: premium rates

Sacramento region hit hard by CalPERS health plan rate hikes – Sacramento Business Journal

This set up a dynamic where next year, single public agency workers in Los Angeles will pay a monthly premium of $611 for traditional Anthem HMO coverage, while their counterparts in Sacramento will pay $1,113. Family coverage for the same plan is $1,588 in Los Angeles, $2,893 in Sacramento. Employers pay part of the tab, but workers pick up the rest. The breakdown varies by employer.“Ouch,” said Phil Wright, administrative services manager for the city of West Sacramento, said of the public agency rate hikes next year. “When your monthly health insurance premium is more than your mortgage payment, there’s a problem.”

Source: Sacramento region hit hard by CalPERS health plan rate hikes – Sacramento Business Journal

Wright’s comment reflects the unsustainable structural costs that are at the heart of the health insurance crisis. Wright is essentially putting the cost of health coverage on a par with housing costs. What’s noteworthy here is these are premiums negotiated with the purchasing power of many combined local government agencies in the nation’s largest state: California. Because of the state’s size and the purchasing power of the California Public Employees Retirement System (CalPERS), health plan cost trends in the Golden State are seen as an indicator of where rates are headed nationally.

“Frankly, these costs are unacceptable,” Doug McKeever, chief of the CalPERS health policy research division, told the Sacramento Business Journal. “It’s a really tricky dynamic for us as the cost is born by employers and members,” he added. “We need to look at alternative strategies to bring down 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. 

Health insurance returning to traditional role of covering unexpected, high cost care

A basic insurance principle is returning to health coverage: mitigating the financial risk of a major, unexpected or accidental need for medical care. That’s how it worked in the period immediately following World War II, when health insurance was termed “major medical” and designed to cover high cost care such as injuries resulting from accidents or a medical crisis such as a heart attack or stroke.

The big driver of the change: sharply rising premium rates over the past decade. Costly premiums are driving people to choose plans with more cost sharing and the lower premiums that come with greater cost sharing such as deductibles, co-pays and co-insurance. Even when premium rates are subsidized, 85 percent of those purchasing individual plans sold on state health benefit exchanges in 2014 chose bronze and silver rated plans over higher priced gold and platinum rated plans that have less cost sharing. Bronze and silver rated plans cover 60 and 70 percent, respectively, of expected annual health care costs while gold and platinum, 80 and 90 percent.

The upshot of these less generous plans is people will become less inclined to view health plans as pre-paid medical care and more as insurance for medical financial emergencies. It’s back to the future of major medical plans of the 1950s and 1960s – a reversal of the all-inclusive managed care plan trend that began in the 1970s and 1980s.

A consequence is likely to be less wasteful utilization of primary care for issues that typically clear up on their own such seeking an antibiotic prescription for a minor cough. That’s a highly beneficial development amid widespread concern of a looming shortfall of primary care physicians at the same time more people gain medical coverage under the Affordable Care Act.

Related trends are the rise of cash paid primary care options including prepaid direct primary care physicians and clinics, retail and drugstore clinics and companies offering quickly accessible online telehealth consultations. These services provide consumers convenient care within and outside of normal business hours without the need for an appointment plus reduce the uncertainly of whether a particular primary care visit will be covered by their health plan. Also, tax advantaged health savings accounts that allow money to be set aside to pay for minor care.

All of this fits nicely into the growing ethos that wellness is a personal responsibility that for the vast majority of people is secured with healthful lifestyles rather than frequent engagement with medical 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. 

ACA provides options for smaller states to create larger risk pools

Individual and small group health insurance markets will be the ultimate deciders of whether the Affordable Care Act’s market reforms and exchange marketplaces make coverage more affordable and valuable. Their experience over 2014 and 2015 will serve as a litmus test.

A major determinant of premium affordability will be a state’s ability to create large and diverse pools of individuals and small employers that enable payers to spread risk. Beginning in January, 2014, the ACA establishes two pools: one comprised of individuals and families and another made up of small employers. The size of those pools is naturally a function of a given state’s population and the heft of those pools has an impact on premiums. Large states like California have a natural advantage in creating sizable risk pools better able to spread out the cost of medical care. Accordingly, California has opted to leverage the market power of its population to actively negotiate with health plans over terms of coverage and rates for plans sold on its health exchange marketplace, Covered California. Smaller, less populated states, however, don’t have the law of large numbers on their side.

The Affordable Care Act appears to recognize this circumstance and has built in mechanisms that would enable smaller states to create larger, more robust risk pools:

  • Section 1312(c)(3) allows states to combine their individual and small employer markets into a single risk pool;
  • Section 1331(b)(3)(B) authorizes states to negotiate regional compacts with other states to cover low income individuals not eligible for Medicaid in “standardized health plans.”  (The federal Department of Health and Human Services (HHS) has held off issuing regulations for these plans until at least 2015);
  • Section 1333(a) provides a mechanism for health insurers and plans to pool risk and sell across state lines via “health care choice compacts” starting in January, 2016. Two or more states could enter into an agreement under which health plans could be offered in state individual markets, subject to regulation by the state in which the plan was written or issued, provided plans comply with the other states’ rules regarding market conduct, unfair trade practices, network adequacy, and consumer protection standards including standards relating to rating and handling of disputed claims.  (The statute requires HHS issue regulations governing health care choice compacts by July 1, 2013);
  • In addition to authorizing interstate plans, the ACA also appears to contemplate such plans being marketed in multiple state exchange marketplaces. Section 1311(f) allows state exchanges to combine into “regional or other interstate exchanges,” subject to approval by the participating states and HHS.

Given the large number of states where HHS will fully or partially operate exchanges, it’s possible the federal government will press the affected states to exercise some of these options to create larger purchasing pools in order to gain greater bargaining power with payers.

 


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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