Posts Tagged ‘Healthcare insurers’

Healthcare’s Early Hope?

Tuesday, June 25th, 2013

We have a couple of promising trends emerging from the recent reports. Consumers saved $3.9 billion in premiums last year, according to an analysis released today from the CMS. Why? Because Obamacare stipulates that insurers must spend at least 80% of their premium dollars on medical expenses.

Called the MLR provision or the “80/20” rule, it forces insurers to lower their rates or improve coverage to meet the standard.  And, if they don’t comply, a rebate is issued to the patients. This year, 8.5 million Americans will receive $500 million in rebates. On top of this, they saved more than $3.4 billion from lower premiums in 2012.

All of this comes a t a time when spending in general is trending down. PricewaterhouseCoopers’ Healthcare Research Institute (HRI) now predicts that U.S. medical costs in 2014 will spike by 6.5 percent, a full percentage point lower than the organization’s estimate of 7.5 percent for 2013. The net growth rate in healthcare costs, after accounting for benefit design changes such as higher deductibles, will be about 4.5 percent. The truth is that this is part of a longer-term trend. Between 2009 and 2011, total health spending grew at the lowest annual pace in the last five decades, at just 3.9 percent a year. In contrast, between 2000 and 2007, those annual growth figures ranged between 6.2 and 9.7 percent.

The reasons are familiar: the move to less costly outpatient settings to deliver care; the sluggish recovery which has tempered healthcare spending (the Kaiser Family Foundation thinks this is three-quarters of the reason for lower spending); new models for delivering care; and aspects of Obamacare (like the 80/20 rule for example). Then there’s all the waste that reform has gone after.  According to government data, hospital readmissions dropped by nearly 70,000 in 2012, and this trend is expected to accelerate through 2014.

Still, we have a long way to go and a few years of bending the cost curve don’t make up for decades of exorbitant increases. According to the Kaiser Family Foundation, the average American’s cost of care has gone up 140 percent over the past 10 years, while wages only went up 40 percent.  Still, the numbers offers hope that we are starting to gain some ground.

No More Surcharges on Pre-existing Conditions

Tuesday, September 20th, 2011

There’s good news for Americans who lack healthcare insurance and have pre-existing medical conditions.  As of July 1, 2011, the Obama administration reduced the premiums  these people pay to purchase high-risk insurance plans that the federal government operates in 17 states and the District of Columbia.  Called pre-existing condition insurance plans (PCIPs), this coverage for people with medical conditions that often make then unable to buy insurance on the individual market was created by the Patient Protection and Affordable Care Act (ACA). 

Virginia and six other states will slash their premiums by 40 percent; other states and the District of Columbia will see cuts of between 15 and 25 percent; Mississippi will cut its rates by just two percent.  The revised rates give greater consideration to state-specific data and closely track the standard rates for individual policies in each state.  “Now, the program has been up and running for six to nine months, we’ve had an opportunity to redefine the methodology,” said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services. 

Advocates for consumers and federal officials hope that the reduced premiums will encourage additional people to opt into the plans.  Although approximately 375,000 people were expected to sign up for the PCIPs, just 21,454 had enrolled as of April 30, 2011.  The biggest roadblocks are seen as high premiums and a legal requirement that enrollees lack healthcare insurance for six months prior to joining the program.

Another provision of the law could have the potential to make the plans even more affordable.  Some insurers are already cutting premiums to meet the new “medical loss ratio” requirements.  (Medical claims paid are considered losses in insurance jargon.)  If difficult economic times continue and people cut back on medical care, other insurers may follow suit.  “Plans are getting nervous about how big the rebates they’re going to have to pay are,” said Timothy Jost, a law professor at Washington and Lee University who’s a consumer representative to the National Association of Insurance Commissioners.

Compared to the legal requirement that people be uninsured for six months before signing up for the new plans, high premiums are probably a bigger stumbling block to enrollment, experts say. They can’t really do anything about the six months, because that’s in the law,” says Kansas Insurance Commissioner Sandy Praeger, who heads the health insurance and managed care committee for the National Association of Insurance Commissioners.  “But they can bring down the cost, which will help.”

The trend to ever-increasing healthcare premiums has led some organizations to ask for an extreme solution. Recently, the Greater Boston Interfaith Organization (GBIO) and Health Care for All issued a plea to freeze healthcare premiums for one year to sort out a better solution for healthcare companies and individuals alike.  The freeze’s supporters argue that the price hikes of health insurance have not evened out, despite the fact that more people are facing economic difficulties.  During the year-long freeze, the hope is that consumers will be better educated to find the best deals for their insurance and that companies could find ways to better meet their customers’ needs.

The cost reduction has made a major difference to Kathleen Watson of Lake City, FL, who had been uninsured since 2004 when COBRA coverage under her husband’s previous policy expired.  Because she has leukocytosis — a constantly elevated white blood cell count — locating affordable coverage was impossible.  Watson found herself in an even more difficult position in 2009 when she was diagnosed with non-Hodgkin lymphoma and developed an antibiotic-resistant bacterial infection while hospitalized with pneumonia.

When the ACA created the new plans for people with pre-existing medical conditions, Watson looked into coverage.  Unfortunately, the $605 monthly premium was more than she could afford on what she earns running a medical transport business.  When she learned that rates in the three plans were being reduced by 40 percent, Watson checked out the plans again.  This time, she signed up for an affordable $363 a month that started July 1.  “I’m just happy to have insurance now,” Watson said, noting that she immediately needs a CT scan and a lung biopsy to check out enlarged lymph nodes in her right lung, bladder and colon.  “Hopefully it does what it says.”

Discussions about further reductions could be in the works.  “It’s possible,” that the medical loss ratio requirements might further depress PCIP premiums, Larsen said.  “I wouldn’t care to speculate about that.”