Posts Tagged ‘Co-pays’

Sick Americans Worry About the Cost of Their Healthcare

Tuesday, June 5th, 2012

Many Americans who have been sick or injured over the last year worry about the high cost of healthcare, and struggle to ensure that their care is appropriate, according to a new poll by the Robert Wood Johnson Foundation (RWJF), National Public Radio (NPR) and Harvard School of Public Health.  RWJF commissioned the poll to enhance understanding of Americans’ experiences and attitudes towards the cost and quality of medical care.

Fully 87 percent think the cost of care is a serious problem.  Approximately two-thirds – 65 percent — believe the cost of care has soared over the last five years.  In addition to the general public, the poll studied sick Americans’ experiences with and perceptions of the costs and quality of medical care.  “Sick Americans” (27 percent of adults surveyed) are defined as those who said they had a serious illness, medical condition, injury, or disability requiring significant medical care or who had been hospitalized overnight in the past year.

Many sick Americans had problems with the cost of their own medical care.  More than 40 percent reported that the cost of their medical care has caused a “very serious” (20 percent) or “somewhat serious” (23 percent) problem for their finances.  They also reported that expensive healthcare costs affected their ability to access care.  One in six sick Americans could not get the medical care they needed (17 percent).  Among the sick Americans who could not receive care, 52 percent report that it was because they could not afford the needed care, and 24 percent say it was because their insurers refused to pay for it.  Finally, 11 percent of sick Americans said they had been turned away by a doctor or hospital for financial or insurance reasons when they tried to receive care.

One of those people is Fresno, CA resident Amber Cooper, who has health insurance from her job in the accounting department of a small manufacturing company.  Then the company changed their insurance plan.  According to Cooper, “We were in a conference room…and I had heard rumors but didn’t know if it was true, and I started crying in front of everyone and actually had to excuse myself to gather myself together and go back in.  Unfortunately, the rumors had come true with potentially devastating consequences for Cooper, who had a liver transplant at the age of 10 and takes a medication twice a day so her body won’t reject her liver.

Every year my company changes the insurance.  And instead of giving us three different choices for insurance plans, they were changing to one, which was a high-deductible plan with no prescription coverage,” she said.  Cooper was devastated.  Her anti-rejection medicine costs more than $1,000 a month, a price that she could not afford to pay on her own.

Cooper found help at the HealthWell Foundation, which pays for her medication.  Still, she can’t afford the $300 monthly blood test to make sure she’s not rejecting her liver.  “It is scary because the only way to tell if you’re going to go into rejection is by the blood work.  Your numbers will be a little bit crazy, and then the doctors will be like, ‘OK, you need to get in and we need to check you out and make sure you’re OK.’  So I really took a risk not getting that blood work done.  But I couldn’t afford to get it done. I really couldn’t,” she said.

Cooper isn’t alone.  Health insurance has been changing noticeably “beneath the surface,” said Drew Altman, president and CEO of the Kaiser Family Foundation, a private, nonprofit, nonpartisan research group. “In plain language, it’s becoming skimpier and skimpier and less and less comprehensive.  This affects not only how people seek healthcare — they’re more reluctant to get it if they can put it off.  But it also affects family budgets in a very real way, especially as we’re still coming out of recession and families are still crunched by a weak economy,” Altman said.

Paul Fronstin of the Employee Benefit Research Institute says this is a national trend.  “Deductibles have gone up. Co-pays have gone up.  You see cost-sharing for out-of-network services have gone up,” Fronstin said.  “It seems to have accelerated in the last few years.  Healthcare is just continuing to take a bigger bite out of take-home pay.”  According to Fronstin, the economy is causing more companies to cut back on coverage because of the math: It’s the only way they can keep up with rising healthcare costs.  “Employers are trying to manage those costs.  They’re trying to keep those cost increases as close to inflation as possible.  And they’re doing everything they can to get their workers to think twice about the healthcare that they are using,” Fronstin said.

Healthcare Costs Starting to Slow Down

Wednesday, October 26th, 2011

The increase annually in healthcare costs appears to be slowing.  According to Sandra Block of Gannett News Service, “If there’s any good news to be found, it’s that the increase in overall costs of providing healthcare to employees has slowed.  Tower projects an increase of 5.9 percent in 2012, which represents a significant change from 7.6 percent in 2011.  Mercer, another human resources consulting firm, predicts that employee healthcare costs will rise 5.4 percent in 2012.  That’s small consolation, though, to employees whose income hasn’t kept pace with the rise in healthcare costs.  In August, personal income fell 0.1 percent from July, driven by a decline in wages and salaries, according to the Bureau of Economic Analysis.”

There’s bad news for Americans whose healthcare insurance is provided by their employer.  According to Towers Watson, a human resources consultant, employers will pass on cost increases primarily through higher employee premium contributions.  Towers Watson says that 66 percent of firms will increase employees’ share of premiums for single-only coverage in 2012; 73 percent will increase the share of premiums for dependent coverage.  A survey by the National Business Group on Health (NBGH) found that 53 percent of employers intend to increase employees’ share of premiums, while 39 percent plan to increase in-network deductibles.

The yearly survey by NBGH, a not-for-profit alliance of 83 of nation’s largest companies — employing more than million workers — expect healthcare costs to continue rising significantly faster than inflation because of medical inflation and the Patient Protection and Affordable Care Act.  “This is an unsustainable model for our country,” said Helen, Darling, the NBHG’s president and CEO, referring to the financial strains caused by the ongoing increases.  Some believe that the rising healthcare costs stemmed from components of the 2010 federal healthcare law, including its mandate to cover the offspring of workers up to age 26 and its coming bans on caps for annual benefit limits.  Employers said a variety of cost-saving moves to counter the rising cost of their health coverage, including encouraging employees to use centers of excellence for transplants and other procedures.  “Even if they spend more on the initial admission, they spend less overall due to less need for readmission or re-treatments,” Darling said, in reference to incentivizing employees to seek treatment at highly rated hospitals.

At the time of year when open enrollment begins, employers want their employees to be healthier as a means of controlling costs.

Employers also will encourage their employees to choose high-deductible plans — with lower premiums – and persuade workers to be savvy healthcare shoppers.  Some employers will require significantly higher premiums for employees who do not agree to monitor their own health and address problems.  At a time when both employers and workers are weary of paying more for health coverage, experts say it’s important this year to closely study new wellness programs — as well as all the other options on the table — to take advantage of any savings.  “Healthcare costs are going to continue to grow significantly and for your own health and your own wealth and financial good, you need to get fully engaged in understanding what your choices are,” said Tony Holmes, a partner with Mercer.

Holmes said employers expect to pay 5.4 percent more for health plans in 2012 — about a half percentage point below the typical increase over the past 10 years.  Nearly one-third of employers plan to increase premiums for employees, according to Holmes.  Charges to cover a spouse or children are even more likely to climb; more than 40 percent of large employers plan to increase the costs for dependents.

Some businesses are moving away from co-pays, where employees pay a fixed dollar amount for healthcare services and the plan picks up the rest. Instead, they’re charging workers a percentage of the total costs.  That has the goal of making consumers more aware of the total cost of the healthcare they use.  “We are clearly seeing a march toward a more aggressive consumerist system,” the NBHG’s Darling.

Mercer also found that utilization of healthcare services has slowed in 2011. The difficult economy, higher deductibles and other forms of increased employee cost-sharing, may impact utilization, Mercer said.  “Because employees have less disposable income and are working longer hours, they are less likely to seek non-urgent care.”  Additionally, utilization may be slowing because of employer programs aimed at earlier detection of health problems, Mercer said.  “Earlier risk identification and health education, along with improvements in drug therapies and medical technology, are keeping people with health risks and chronic conditions away from the emergency room,” Susan Connolly, a partner in Mercer’s Boston office, said.  The findings are based on responses from almost 1,600 employers.  In the end, approximately 2,800 employers are expected to respond, with the results — including the actual average healthcare plan cost increase for 2011 — to be released this year.

Medicare Advantage Premiums to Fall Four Percent in 2012

Tuesday, October 4th, 2011

The Obama administration’s announcement that Medicare Advantage insurance plans premiums will decline in 2012, at a time when enrollment is expected to rise, is good news for the leading health insurers in that segment.  Wall Street analyst Ana Gupte said that the announcement suggests strengthening support in the administration for the privately-run versions of the government’s Medicare program, which covers the elderly and disabled.  Medicare Advantage plans offer basic Medicare coverage with extras like vision or dental coverage oratremiums lower than standard Medicare rates.  Health and Human Services Secretary Kathleen Sebelius said that Medicare Advantage premiums will average four percent less in 2012, and insurers running the plans believe that enrollment will rise by 10 percent.  “Overall, we were very encouraged by the announcement and see this as reinforcing our bullish thesis on the Medicare Advantage and (prescription drug coverage) segments,” according to Gupte.

It’s highly unusual to see healthcare insurance premiums falling. Reduced premiums and growing enrollment are the opposite of what insurers and Republicans predicted would happen to Medicare Advantage after the passage of the Patient Protection and Affordable Care Act (ACA).  The ACA cut payments to fee-for-service Medicare Advantage plans by about $136 billion over the next 10 tears.  Right before the law passed, American’s Health Insurance Plans predicted that “millions of seniors in Medicare Advantage will lose their coverage, and millions more will face higher premiums and reduced benefits.”  So what accounts for the drop?  The decrease in premiums doesn’t have a lot to do with policy decisions made in the ACA.  It’s three outside factors that are putting downward pressure on Medicare.  One is that Medicare costs are growing more slowly.  Both in Medicare and in private insurance, the recession has seen patients using fewer medical services.  This looks to be especially true in Medicare, where seniors might have more limited resources because they tend to live on a fixed income.  The latest S&P Healthcare Economic Indices data indicates that Medicare spending appears to be rising at a slower rate than just a few years ago.

Jonathan Blum, director of the Centers for Medicare and Medicaid Services (CMS) Center for Medicare, said the more affordable costs and growth forecasts demonstrate that companies are still interested in offering such plans despite new consumer protections under the healthcare law and payment caps to insurers.  According to Blum, “We can say with complete accuracy that despite projections in 2010 that the program will decline, the program has grown and will continue to grow.  The plans have made a very strong statement that they intend to commit to the program.  Plans that do a better job serving the needs of their Medicare members should be rewarded and all plans should be encouraged to improve their performance.” 

Healthcare insurers warned that seniors can expect more costs and receive fewer benefits from their Medicare Advantage plans after payment cuts take effect.  They point to projections from the Congressional Budget Office, which predicted Medicare Advantage enrollment would fall to just 7.8 million participants in 2019.  “Medicare Advantage plans remain committed to the program and are doing everything they can to preserve benefits and keep coverage as affordable and possible for beneficiaries,” said Robert Zirkelbach of America’s Health Insurance Plans (AHIP).  “However, as these cuts take effect in the coming years, Medicare Advantage beneficiaries will face higher out-of-pocket costs, reduced benefits, and fewer health care choices.”  The group and its insurer members, who opposed many of the healthcare reforms before they passed, are now committed to implementing the law.

“Many people raised fears that under the Affordable Care Act, beneficiaries would see their Medicare Advantage options shrink and their premiums rise,” Sebelius said.  “Instead, we have seen just the opposite.”

Some in the industry are looking at other ways to bring Medicare costs down.  According to the Fierce Pharma website, “Healthcare industry leaders are poised to make their own deficit-reduction suggestions — including some that might not win them points in a popularity contest.  Uncertain what budget cuts the deficit-reduction committee might propose, the Healthcare Leadership Council has come up with its own proposal that would ask Medicare beneficiaries to endure more belt-tightening themselves.  The group is aiming to put forward an alternative more palatable than across-the-board Medicare cuts mandated by the deficit-reduction bill if the “supercommittee” doesn’t agree on its own plan.  And it’s betting that its proposal will be easier to bear than budget-cutting ideas floated in the past, such as drug re-importation.  The council, which includes Big Pharma executives, hospital companies and insurers, crafted a plan that would raise the Medicare-eligibility age little by little to 67 from 65, beginning in 2014. It would hike co-pays and deductibles.  It would require well-off seniors to pay higher premiums.  And it would add private-sector competition to traditional Medicare coverage, pitting government-subsidized private insurance plans against regular Medicare.  Requiring seniors to pay more might be considered a non-starter; after all, consumer groups, particularly AARP, have vociferously fought against such moves in the past.  But the council figures that provider-based Medicare cuts will end up costing beneficiaries when all is said and done.  ‘This thinking that we’re protecting beneficiaries because we’re only cutting providers — that’s mythical,’ said Mary Grealy, the council’s president.”

Medicare Part D Costs Expected to Fall in 2012

Monday, August 22nd, 2011

Medicare Increased competition between Medicare Part D plans, greater generic drug use and more transparency for consumers are why the Center for Medicare and Medicaid Services (CMS) expects lower Medicare prescription drug premiums next year.  Next year, the average Medicare prescription drug plan premium will cost approximately $30, compared with an average of $30.76 in 2011, according to the Department of Health and Human Services (HHS).  CMS Administrator Dr. Donald Berwick said that the average premium is about 44 percent lower than what was estimated in 2003.

The Part D drug benefit,  enacted when George W. Bush was president, lets seniors and others on Medicare sign up for a privately administered, government-subsidized health plan to purchase their prescriptions.  The program enjoys high popularity with beneficiaries and has proven to be far less costly than budget analysts originally expected, partly because of competition among private plans and the growing use of less costly generic drugs.

HHS also announced that nearly 900,000 Americans in the Medicare Part D “doughnut hole” have benefited from a 50 percent discount in brand-name drugs in 2012.  HHS estimates that out-of-pocket savings on drug costs for Medicare beneficiaries to be about $461 million from January through June of this year.  The Obama administration has worked to strengthen the Medicare drug benefit with the help of the Patient Protection and Affordable Care Act (ACA).  The law phases out the coverage gap, long seen as one of the program’s weaknesses.  Last year, approximately four million seniors received $250 rebates because they fell into the gap in coverage.  This year, the law will provide 50 percent discounts on prescriptions for those who hit the doughnut hole.

Seniors can chose from a variety of Part D plans,  and Dr. Donald Berwick, administrator of the Center for Medicare and Medicaid Services, said competition “clearly helps” keep premiums from rising.  At the same time, he warned against overextending Part D.  HHS said 17 million seniors have received at least one preventive healthcare service without a co-pay.  The ACA eliminated co-pays for many preventive services under Medicare and will ultimately do the same for private insurance.

“This decline in the average creates more risk for plans like ‘Humana’ and ‘United Health’ that have a significant portion of the Part D members,” said Peter Costa, a Wells Fargo analyst.  Costa said one reason for the lower bids could be last year’s joint venture between Humana and Wal-Mart stores to offer Medicare drug coverage with the lowest premiums in the country.

“The Affordable Care Act is delivering on its promise of better health care for people with Medicare,” said HHS Secretary Kathleen Sebelius.  “People with Medicare who hit the doughnut hole are paying less for their prescription drugs, 17 million Americans have received free preventive services and prescription drug premiums will remain low.  These are important steps that are making a difference in the lives of millions of Americans right now.”

“Medicare beneficiaries will have more affordable prescription drug coverage next year as a result of vigorous competition in the Part D program and Medicare drug plans’ efforts to encourage seniors to choose the most affordable medicines,” said Karen Ignagni, president and CEO of America’s Health Insurance Plans.  Ignagni noted that “taxpayers are also saving billions of dollars as the total cost of the program continues to be far below original projections.”