Posts Tagged ‘Health Affairs’

Current Individual Healthcare Coverage Doesn’t Meet ACA Standards

Monday, June 4th, 2012

The majority of individual policies currently on the market could not be sold on state exchanges in 2014, according to a new report.  The report, published in Health Affairs and funded by the Commonwealth Fund, examined individual plans from several states and found that 51 percent of the plans fail to meet the minimum requirements established by the Patient Protection and Affordable Care Act (ACA).

The law says that plans sold on public exchanges must cover at least 60 percent of the costs of treating a typical patient, a figure known as “actuarial value.”  Most of the policies the researchers analyzed covered less than that, meaning the possibility of high out-of-pocket costs for patients.  To meet the actuarial value targets for “bronze plans, “the lowest category, current plans would have to pay for more care. That likely means they would be more expensive to consumers.

“The individual market of the future will sharply contrast with the market of the past decades,” said John Gabel of the University of Chicago.  They do not say whether changes to the market will be good or bad for consumers, but they are likely to be a mixed bag.  Supporters of the ACA say that new regulation of insurance products provide key consumer protections.  Opponents believe that they will drive up the cost of insurance. “Deductibles will have to be lowered,” Gabel said. “The out-of-pocket limits may have to be lower.  They will have to offer maternity benefits” as well as coverage for mental-health and substance-abuse.

People who buy individual health insurance policies typically pay higher premiums and higher out-of-pocket costs than people who have employer-provided.  Individual policies usually offer less coverage and, until the ACA fully becomes effective in 2014, can exclude coverage for pre-existing conditions.  The ACA sets minimum standards for plans sold through the state-run exchanges.  Slightly more than 50 percent of people on the individual market have policies that cover less than 60 percent of plan costs.  One-third of individual policies pay 60 to 69 percent, enough to meet the lowest thresholds under the healthcare law.

Many consumers will get more generous coverage if they purchase insurance through an exchange.  But, according to the Congressional Budget Office (CBO), the boost in benefits could also increase premiums.  “Premiums for health insurance in the individual market will be somewhat higher on average under (the healthcare law) than under prior law, mostly because the average insurance policy in that market will cover a larger share of enrollees’ costs for healthcare and provide a slightly wider range of benefits,” the CBO said.  The increases would be partially offset by other policies that would cut premiums, but still come out slightly higher.  Consumers won’t have to pay the extra costs, though, because the federal government will provide subsidies to help cover the cost of insurance.

Approximately 62 percent of people who now try to buy insurance for themselves in the so-called individual market report that they can’t find an affordable policy, said Sara Collins, vice president for affordable health insurance at the Commonwealth Fund.  People who do “often end up with coverage that’s really not adequate.”  Enhancing current plans to meet the ACA’s requirements will probably raise consumer’s up-front premiums, Gabel said.  “Other things held constant, the cost of the plan will go up,” he said.  The ACA does not allow insurers to cherry- pick only healthy customers; adding sick people to insurance pools will also raise costs, he said.

People whose policies currently don’t meet the health law’s requirements will have to “buy up” in 2014, said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.  “Any time new benefits are added to a policy that adds to the cost of coverage.”  Premium increases can be alleviated by other changes, according to Gabel.  The exchanges should reduce administrative costs for insurers and “make for more price competition” among plans.  The ACA also limits, to 20 percent of premium revenue, the amount insurers can keep for administrative costs and profit, and creates subsidies to cut the cost of insurance for low- and middle-income people.  “Presumably a lot of people on these really crummy plans in the study could potentially be eligible for premium subsidies,” Collins said.  “It’s really going to be important that other provisions of the law address the premium growth issue.”

Americans See Access to Trauma Centers Decline

Wednesday, October 12th, 2011

Approximately 25 percent of Americans had to travel farther in 2007 than in 2001 to access their nearest trauma center, published in Health Affairs.

In the 15 years between 1990 and 2005, nearly 339 or 30 percent of trauma centers closed, compared with just 66 closures between 1981 and 1991.  The majority of the centers closed because of financial problems resulting from treating too many uninsured patients and the cost of making life-saving resources available 24/7.  The study determined that the average increase in travel time to a trauma center was about 10 minutes, but that about 16 million people saw travel times increase by more than one-half hour.  Researchers found that residents of rural areas and communities with large minority populations, low-income and uninsured residents were most likely to be impacted.

“We’re not saying that we should build a trauma center on every street corner. But we do have evidence that access for certain populations is already pretty bad, and it’s getting worse,” Renee Hsia, lead researcher and emergency department doctor at San Francisco General Hospital.

When looked at in a different way, the study determined that 69 million Americans now have a longer trip to their closes trauma center than they did just 10 years ago.

The researchers studied longitude and latitude coordinates for every trauma center in the United States.  Next, they measured driving distances and times between trauma centers and area ZIP codes, factoring in population data.  They compared the results for 2001 and 2007, the most recent year for which data was available.  Hsia said the results surprised the researchers.

Designed to handle complex injuries, trauma centers are different from emergency rooms.  Someone with a broken leg should go to the emergency room; a person with multiple fractures should go to a trauma center.  A patient with a concussion can be treated in the emergency room, while someone with a brain injury should be taken to a trauma center.  Time is all important.  Medical experts agree that a severely injured victim’s chances of survival and returning to a normal life are optimal if they can get the right treatment within an hour.  It’s called the “golden hour,” derived from military medicine during the Vietnam War and still guiding medical units in Afghanistan and Iraq.  “A 30-minute increase means half that time is wasted on driving,” Hsia said.  “A quarter of the population is significant.”

“We’re not saying that we should build a trauma center on every street corner. That would not be cost-effective,” Hsia said.  “But we do have evidence that access for certain populations is already pretty bad, and it’s getting worse.”

Healthcare Costs Wiping Out Your Income Gains

Monday, September 26th, 2011

If Americans’ incomes are not growing, part of the blame can be placed on the high cost of healthcare.  According to the Washington Post’s Sarah Klitt, “All evidence points to American voters not really caring about rising healthcare costs.  But here’s one pretty compelling reason they should:  The escalating cost of healthcare has wiped out nearly all income gains made by the average American family in the past decade.”

Research in the September issue of Health Affairs notes that American physicians are paid more per service than in other countries — in some instances, double the amount.  There is also a larger gap between fees paid for primary care and specialty care, when compared with other industrialized countries.  These higher fees translate to higher incomes for American physicians than those earned by their foreign counterparts, and are the primary driver of higher overall spending on physicians’ services.

The study — by Miriam Laugesen of the Mailman School of Public Health at Columbia University and Sherry A. Glied, also of the Mailman School and presently Assistant Secretary for Planning and Evaluation at the Department of Health and Human Services (HHS) — compared fees paid by public and private payers for primary-care office visits and hip replacement surgery in Australia, Canada, France, Germany, the United Kingdom, and the United States.

The researchers determined that American primary-care physicians on average are paid 27 percent more by public payers for an office visit, and 70 percent more by private payers for an office visit, compared to the typical amount paid in other nations.  The largest difference in fees paid to American physicians versus fees paid to doctors in other countries was for hip replacements.  American physicians earned 70 percent more for these procedures by public payers, and 120 percent more by private payers, than the average fees paid to physicians in other countries.

“The gap between the fees paid for primary care and those for orthopedic services such as hip replacements is significantly bigger in the United States than it is in other countries,” Laugesen said.  “For decades, policymakers and medical leaders in this country have debated financial incentives to spur more doctors to become primary-care physicians.  Our work shows that continuing attention needs to be paid to the difference in payments across specialties, and how we can get better value for those expenditures.”

Additionally, American physicians reported higher salaries when compared with the other countries, despite the fact that there was minimal difference in the volume of services provided.  Laugesen and Glied suggest that the differences may reflect the fact that American physicians are paid more for their skill and time than doctors in other countries.  Whether or not those higher payments have merit is a question that the study did not address.  American primary-care physicians earned the highest average annual incomes ($186,582) while French ($95,585) and Australian ($92,844) primary-care physicians earned the lowest.  American orthopedic surgeons earned the highest average annual incomes at $442,450, followed by $324,138 for surgeons in the UK.  Although UK surgeons earned 50 percent more than surgeons in the other comparison countries, they earned 30 percent less than American orthopedic surgeons.

A study by the RAND Corporation determined that rapidly rising healthcare costs have eaten nearly all the income gains made by middle-income American families over the past 10 years, leaving them with just $95 per month in extra income, after accounting for taxes and price increases.  Had healthcare costs risen only as fast as the cost of other goods and services from 1999 to 2009, the same family would have had an additional $545 per month to spend in 2009.

“Accelerating healthcare costs are a primary reason that the so many American families feel like they are just treading water financially,” said David Auerbach, the study’s lead author and an economist at the RAND Corporation, a non-profit research organization.  “Unless we reverse the trend, Americans increasingly will notice that health costs compromise their other spending options.”

Between 1999 and 2009, healthcare spending in the United States nearly doubled, from $1.3 trillion to $2.5 trillion.  During the same timeframe, the percentage of the nation’s GDP devoted to health care rose from 13.8 percent to 17.6 percent.  Per-capita healthcare spending rose from $4,600 to just over $8,000 a year.

Although the numbers are arresting, they don’t necessarily translate to the daily routine of American families because many healthcare costs are hidden, according to the researchers.  Auerbach and co-author Dr. Arthur L. Kellermann, director of RAND Health, combined information from multiple sources to describe the obligation that rising healthcare costs placed on middle-income families with employer-sponsored health insurance from1999 to 2009.

“The complex way that the United States pays for healthcare often obscures the consequences of healthcare cost growth for most American families,” Kellermann said.  “This makes the challenge of controlling healthcare costs that much harder.”

Most Firms Plan to Keep Their Health Insurance Plans After 2014

Tuesday, September 6th, 2011

Approximately three-quarters (71 percent)  of mid-sized to large companies plan to retain their health insurance plans in 2012, according to a new Towers Watson survey.  Another 53 percent expect the health reform law, the Patient Protection and Affordable Care Act (ACA), to be fully implemented in January, 2014.  At that time, people will be mandated to buy coverage and employers must provide coverage.  Anyone who fails to follow the mandate face fines.  About 53 percent of employers expect to trigger the health reform excise tax by 2018, meaning they will pay the fine, rather than provide coverage.  The average rate increase for health premiums expected for 2012 is 5.9 percent, a decrease from the 7.6 percent in 2011, according to the 368 business owners surveyed. 

Another 45 percent of respondents plan to rethink their long-term healthcare strategy next year, and many are not certain how they will respond to the impact of state-based insurance exchanges in 2014.  An additional 29 percent are unsure about whether they will continue sponsorship or offset the loss of healthcare benefits if they end employee coverage with an equivalent salary increase.  For retirees, more than half of employers (54 percent) that offer health care benefits plan to discontinue them for both pre-65 and post-65 retirees.  Approximately 70 percent of employers are skeptical that health insurance exchanges, where individuals and small businesses will be able to compare prices, buy coverage and get federal subsidies, will be a viable alternative to employer-sponsored coverage for their employees in 2014 or 2015. 

 Another finding of the Towers Watson survey is that nine percent of the companies recently polled plan to drop employer-sponsored health insurance after the ACA takes effect in 2014.  Other research predicts that even more firms will discontinue coverage, letting employees buy insurance through the online marketplaces, or exchanges, that will be established. 

“There are just a lot of unanswered questions, and a lot of it’s speculation,” said Dale Thoma, managing partner for Willis of Wisconsin, Inc., a subsidiary of global insurance broker Willis Group Holdings.  Clients are asking for help exploring options, including the possibility of dropping coverage in three years.  “Absolutely, people are talking about it,” Thoma said.  “It will probably be the No. 1 topic in our business.”  Dianne Kiehl, executive director of the Business Health Care Group, a coalition of Milwaukee-area employers who work to curb rising costs, said her members are “all kind of still waiting” although some haven’t ruled out dropping coverage.  Thomas R. Sobocinski, Wauwatosa-based national director for healthcare at accounting and advisory firm Baker Tilly, said companies are looking at whether to continue offering health insurance to employees.  “There is serious cost-benefit evaluation as to what employers are going to do 2014 and beyond,” he said. 

A study by Mercer shows different results. Despite reports that employers will cut the healthcare benefits they offer to workers as the ACA goes into effect in 2014, Mercer says that quite the opposite will happen.  According to Mercer, enrollment in health insurance plans offered by employers is on the rise.  The consulting firm surveyed companies and found that the vast majority will continue to provide their workers with health care benefits.  According to Mercer’s survey, only two percent said that they were “very likely” to discontinue offering health benefits.  Rather, they will send employees to state-run health insurance exchanges.  

Current healthcare spending is expected to more than double from 2010 – 2014, according to Health Affairs  The study found that healthcare spending growth in 2010 was estimated to be 3.9 percent.  That level of healthcare spending is expected to grow to 8.3 percent in 2014 when expanded Medicaid and private insurance coverage under the ACA take effect.  Expanded healthcare coverage under the ACA is expected to drive demand for healthcare, particularly for prescription medications and physician/clinical services.  The researchers also expect that the federal government’s share of healthcare spending will grow from 27 percent in 2009 to 31 percent in 2020. 

Dr. Donald Saelinger, former CEO of Patient First Physicians Group and former Vice President with St. Elizabeth Healthcare, and a healthcare consultant, is committed to making the ACA work.|newswell|text|FRONTPAGE|s  According to Saelinger, “One major concern is the ability of the health-care infrastructure to manage the influx of nearly 50 million new patients. An added concern is the absence of any reasonable tort reform, which would eliminate seven percent of the cost of healthcare.  An important challenge to full implementation of the ACA law is the issue of the its constitutionality.  Is it constitutional for United States government to force all Americans to purchase insurance, referred to as the individual mandate?  We must understand that insurance works as a result of the rule of large numbers; it must have healthy people and sick people in the insurance pool, otherwise it does not work.  Furthermore, if we were allowed to buy health insurance only when we get sick, the cost of the insurance would be unaffordable.”