Posts Tagged ‘Healthcare insurance exchanges’

Will California Opt for the Public Option?

Wednesday, March 7th, 2012

Although Vermont became the first state in the union to adopt a public option in healthcare, it may soon have company.  As Vermont Governor Peter Shumlin said when signing the legislation, “We gather here today to launch the first single-payer healthcare system in America, to do in Vermont what has taken too long – have a healthcare system that is the best in the world, that treats health care as a right and not a privilege, where health care follows the individual, isn’t required by an employer –  that’s a huge jobs creator,” Shumlin said.

The enormity of creating a public option hasn’t stopped tiny Vermont, which might seem like an unlikely place for a major revamp of the health insurance system: “By most standards, Vermont’s health care system already is one of the nation’s best. The United Health Foundation has ranked Vermont the healthiest state in the country four years in a row. Fewer than 10 percent of Vermonters lack health insurance, one of the lowest rates in the country.”

And then there’s California.  In a giant warehouse in Alameda, an army of  phone operators are employed by a large health insurance plan, and they’re willing to go the extra mile for their customers. They’ll schedule a doctor who will make home visits, a pharmacist who will drop off a prescription, and even help fill out an application for food stamps.  “We do things for them that a traditional, commercial health plan doesn’t do,” says Ingrid Lamirault, chief executive officer of the Alameda Alliance for Health, a county-run, not-for-profit insurer.

Although the much celebrated, and much maligned, public option may have died in Congress, it’s alive and well in California, which is unique in the nation for having public health insurance plans that are run by its counties.  California’s plans stretch from San Francisco to the Mexican border and cover 2.5 million residents.

The Alameda Alliance for Health — like a private insurance company — has a network of doctors and hospitals and covers 200,000 people in Oakland and neighboring communities.  Much like private health insurance companies, the alliance also runs a managed care plan for Medicaid beneficiaries and additional plans for county workers.   The alliance’s Lamirault thinks this is just the beginning.  In 2014, when the Patient Protection and Affordable Care (ACA) becomes law, millions of Americans will be able to buy coverage through state-based insurance exchanges. In California, government-run public plans, like the Alameda Alliance for Health, will compete with private insurance companies for all those new customers, those who run the county plans believe they can offer a robust network of doctors and hospitals to bargain shoppers looking for affordable coverage. “I think when some people get to make a choice,” according to Lamirault, “having local offices they can walk into and get help with things and get their questions answered, and when they call customer service they get their calls answered in under two minutes. Those kinds of things are important to them.”

California is unique in that many public county systems also contract with private physicians and top-notch research hospitals. They even share the same lobbying group as the big-named insurance companies, the California Association of Health Plans.  Some of those companies don’t have a lot of love for their public brethren. “Certainly, there are some health plans that didn’t like the idea of having to compete with these public plans,” said Anthony Wright, a public plan booster and executive director of Health Access, a Sacramento-based health care consumer advocacy group. “Especially ones that, having come out of the Medicaid program, are used to providing care at cheaper rate.”

Some California insurance companies say they will happily compete on price so long as the public plans do not get preferential treatment.  Doctors and hospitals already accept low reimbursement rates from public plans, often as part of their charity care. That lets the public plans keep their premiums low, although private plans say they are charged higher prices.

The preferential treatment is not likely to last beyond the 2014 opening of the exchanges in California to people with higher incomes, the government-run plans will have to pay providers more than they do now, according to Sumi Sousa, officer of policy development at the San Francisco Health Plan. Sousa says the belief that public plans always cost less just isn’t true. “Some commercial providers, because they’re so large, they’re able to spread their cost over a much broader network,” Sousa said. That’s not the case for many county-run health plans in California, which are quite small.  Still, says Sousa, the public plans do have low overhead: Executives earn a fraction of the salary paid to the big CEOs, and they have no stockholders.

Additionally, the public option is likely to be on California’s 2012 ballot.   Jamie Court, executive director of Consumer Watchdog, a Santa Monica-based consumer advocacy group, plans to put an initiative to add a state-run healthcare public option on the ballot. Opponents say the initiative doesn’t improve the way healthcare is delivered and paid for.  Despite critics, Court says he’ll push forward on his plans to circulate a petition to the public.  “We believe the premium regulation is definitely something that Californians overwhelmingly favor, and we think the public option is something that they still favor,” Court said.  Court has written that health insurance requirements are a motivating force for the initiative: “By 2014, all of us will be required to buy health insurance or face tax penalties. The problem is that health insurance companies can charge whatever they like and raise premiums at will in California.”

In opposition, Micah Weinberg of the Bay Area Council, say rising rates reflect rising health care costs and extended life spans, and the government should let competition keep rates down. Weinberg calls himself an “enthusiastic supporter of healthcare reform,” and argued on KPCC’s Patt Morrison Tuesday that the system is already making reforms — reforms he feels the public option doesn’t address.  “We’re expanding insurance coverage by giving people insurance subsidies to purchase insurance through the exchanges, so that’s exactly what we’re doing.  A public option doesn’t get us any closer to that goal and it’s not a helpful addition to what we’re trying to accomplish,” says Weinberg.

States to Determine Their Own ACA Coverage Levels

Wednesday, December 28th, 2011

The Obama administration averted a potentially vicious lobbying battle over the medical benefits insurers must cover under the Patient Protection and Affordable Care Act (ACA) when it handed the decision to the states.  The ruling gives states the power to set coverage levels for the policies uninsured people will purchase through exchanges, starting in 2014.  Business groups will make a case for a narrow set of benefits to save costs while consumer advocates want expanded coverage.  The decision shifts the issue to the states and away from the White House, and lets President Barack Obama say he’s giving governors and legislatures greater flexibility to confront rising medical costs and control changes the 2010 healthcare law is bringing to insurance markets.

“Obama has taken all the grief he can stand over healthcare,” said Erik Gordon, a business professor at the University of Michigan in Ann Arbor.  “He doesn’t want it to give the Republicans any more political ammunition.  He is passing the hot potato to the states.”

“This is significantly more state-flexible and friendly than many would have expected,” said Alan Weil, head of the National Academy for State Heath Policy. What’s to guarantee that the state’s choice of a benchmark plan will be affordable?” asked National Retail Federation Vice President Neil Trautwein.  If coverage is unaffordable today, this doesn’t change the equation.”

Ron Pollack, executive director of Families USA, said Department of Health and Human Services (HHS) would have to provide “strong oversight and enforcement” of the benefit standards as the states implement them.  “It will be important to ensure that adequate coverage across all 10 required benefit categories is provided — marking an improvement over many plans offered today,” he said.  Giving states greater flexibility to determine necessary benefits was perceived as an attempt to defuse criticism that the health reform law gives the federal government too much control over the healthcare system.  A longtime advocate for federal health reform, Pollack also expressed reservations.  “We understand the inclination to balance flexibility, comprehensiveness of coverage, and cost,” he said. “However, flexibility must yield to reliable, comprehensive coverage of benefits for consumers.  It is essential that HHS provide strong oversight and enforcement.”

Under the revised guidelines, state legislature must either set coverage levels in line with widely subscribed small- business plans in their communities, or tie them to benefits included in their state employees’ health plan, federal plans or the largest commercial managed-care plan in the state.  Generally, health plans for small businesses, state employees and federal workers “cover similar services,” including doctors’ visits, hospitalization and outpatient mental health, according to a study conducted by HHS.  Discrepancies arise in areas such as prescription drugs.  While they’re covered as a basic benefit by all government employee plans, only 84 percent of small business plans cover them.  Others require additional premiums.  Small business plans also rarely cover dental care, acupuncture, bariatric surgery and hearing aids, unless states require it.

According to Forbes magazine’s sba.com column, “At a first glance, this seems like it might be a step in the right direction for individuals and small business owners.  However, that is not necessarily the case.  It seems as though the new idea comes with a wide array of new problems.  First, while the new policy will give states flexibility, it imposes more benefit mandates.  The new policy lists 10 ‘essential health benefits’ that the state MUST provide.  Some of these essential benefits are prescription drugs, preventative care, doctor and hospital services, and maternity care.  The new policy allows the states to designate a state-wide ‘benchmark’ health insurance plan, setting the minimum standard of care.  All insurers would then have the ability to change their insurance plans as long as the coverage provided benefits of the same or greater value.  The new ‘more flexible’ plan still seems very rigid and regimented.  Additionally, the new plan would lead to higher-cost insurance premiums, not lower.

“Another long-standing issue with Obama’s idea is that individuals are not clear on what services and benefits are expected to be provided as a minimum.  Instead of clearing up this confusion and spelling out what exactly would be required, Obama has simply put that responsibility on the states – giving them the ‘flexibility’ to design their plans.

“While it may look like Obama is responding to his opponents’ remarks about his previous plan forcing health insurance standards on states, it seems as though this policy change still accomplishes his goals – just through a different means.  Obama can continue to shape and reshape his ideals; however it will be up to the Supreme Court to decide whether the government can require Americans to buy health insurance at all.”

HHS Website Monitors Health Insurance Premium Increases

Monday, October 17th, 2011

Consumers can now select their state on a federal web page to see if any health insurers have raised rates, as well as the company’s reasoning behind the action. This information was previously unavailable, according to Steve Larsen, the Department of Health and Human Services (HHS) deputy director for oversight (only a few states include rate increases on their own websites).  Now, all insurance companies must file this information with HHS as one directive of the Patient Protection and Affordable Care Act (ACA).  “We are taking a good, hard look at why insurance companies are seeking to raise your rates, why your premiums might be going up, and making sure these decisions are public and justified,” HHS Secretary Kathleen Sebelius said.  “This is just a start, and over time we will be reporting more of these requests.”

The announcement follows a recent survey by the Kaiser Family Foundation that showed premiums for an employer-sponsored plan for a family of four climbing nine percent in 2011.  A report by Barclays Capital Equity Research showed that in the first three months of 2011, 13 of the leading 14 health insurers exceeded their earnings per share estimates; average earnings were 46 percent over estimates.  Insurers who wanted to raise rates 10 percent or more for individual or small group plans are required to provide justification.

At the same time, an advisory group urged officials to create a list of essential health benefits under President Barack Obama’s healthcare overhaul that aligns with the cost of typical small-employer plans.  The Institute of Medicine (IOM) report recommended that HHS be specific in deciding what health benefits should be required in individual and small group plans as the ACA goes into full effect in 2014.  The IOM, one of the National Academies of Science that advises U.S. policymakers, did not address any specific benefits types, in keeping with its assigned task.  “We’re in a marathon.  What we’ve just gotten today is the first leg,” said Paul Keckley, executive director of the Deloitte Center for Health Solutions.

The IOM recommendation favors business groups and insurers who have sought a narrow package of required benefits because of concerns that the plans will cost too much, said Neil Trautwein, vice president for the National Retail Federation.  Government should limit premiums to levels no higher than what small businesses pay on average and choose benefits “within the context of financial constraints,” according to the report.  The recommendation “is the appropriate tack to take since the objective is to cover everyone with at least basic benefits,” Trautwein said.

The issue has seen businesses and patient advocacy groups — such as the American Cancer Society, which argues for robust coverage — at odds with each other.  The ACA requires insurance plans to cover 10 broad categories of care, including hospitalization, mental health and pediatrics starting in 2014 and left details to Obama’s HHS secretary, who has  asked the IOM to recommend the optimal way to select the benefits that should be included in the plans.  Employer lobby groups argue that a generous package of benefits would cause workers to desert company plans, which could have the effect of compelling employers to pay fines and raise premiums as the number of people covered by their health plans decreases.

According to the IOM, Sebelius should start with a package of benefits that mirrors what small businesses offer their employees.  She should set a “premium target” for the benefits that is approximately the same as what small businesses will pay, on average, in 2014.  Next, she should select benefits that meet the target, a process the IOM compared to shopping for groceries under a budget.  “If the package of essential health benefits gets too comprehensive, it quickly becomes unaffordable,” said John Ball, chairman of the institute committee that wrote the report.

Beginning in 2014, every health plan in the new marketplaces known as “exchanges” will have to provide a minimum package of “essential health benefits.”  The IOM report provides federal officials with a framework for devising that package, but doesn’t provide specifics.  “I’m sure a lot of people were expecting to get a list,” said Elizabeth McGlynn, a member of the IOM committee and head of the Kaiser Permanente Center for Effectiveness and Safety Research.  “That was outside of our charge.”

“With this thoughtful report, the IOM is urging policymakers to strike a balance between the affordability of coverage and the comprehensiveness of coverage,” said Karen Ignagni, president and CEO of the health insurance trade group America’s Health Insurance Plans.  “We agree that this balance is critical to ensuring that individuals, working families and small employers can afford health insurance.”  Amanda Austin of the National Federation of Independent Business termed the report “encouraging,” and “pretty thoughtful,” although she believes that HHS still has to do the heavy lifting to write the plans.

Sebelius issued her own statement on the report, saying she will hold “listening sessions” to help people choose what benefits they want included in the mandatory package.  “These conversations will help us ensure that every American can access quality, affordable health coverage they can rely on,” she said.  This seems to suggests to some that a proposal from the department won’t be coming anytime soon.

Medicare Changes Would Hit Lower-Income Seniors Hard

Tuesday, August 2nd, 2011

At a time when concern about federal deficits and the national debt are growing,  few quarrel with the need to reform Medicare.  The health insurance program for seniors and people with certain disabilities accounts for 15 percent of the federal budget – in third place behind Social Security and defense spending.  That share is rising as healthcare costs continue to rise and more baby boomers retire, threatening the program’s long-term solvency.

Several of the most prominent solutions under discussion largely derive their savings by shifting a greater share of the cost onto beneficiaries.  The plan sponsored by Representative Paul Ryan (R-WI) and passed by the House of Representatives would significantly cut Medicare spending by capping the government’s contribution to the program and transforming it into a system of “premium supports” given to seniors to help subsidize their purchase of private insurance plans, with seniors paying additional costs.  This would double out-of-pocket spending by the average senior to $12,500 each year, according to Congressional Budget Office estimates.

The ability of a majority of seniors to shoulder that burden appears dubious.  Just five percent of Medicare beneficiaries make $80,000 or more, a figure that includes any income from a spouse. For the 47 percent of seniors who are at or close to poverty, on average they are already spending nearly 25 percent of their budgets on healthcare, according to an analysis by the Kaiser Family Foundation.

“There’s this impression that there’s a great deal of wealth among the Medicare population, this image of wealthy seniors playing golf and enjoying their retirement years,” said Tricia Neuman, director of the Kaiser Family Foundation’s Medicare Policy Project.“But while some are lucky to do so, many are living on a fixed income, struggling to make ends meet…with really limited capacity to absorb rising costs.”

According to the Kaiser Family Foundation’s report, raising Medicare’s eligibility to 67 in 2014 would generate an estimated $5.7 billion in net savings to the federal government, but also result in an estimated net increase of $3.7 billion in out-of-pocket costs for 65- and 66-year-olds, and $4.5 billion in employer retiree healthcare costs.  In addition, the study projects that the change would raise premiums by about three percent both for those who remain on Medicare and for those who obtain coverage through health reform’s new insurance exchanges.  The study assumes both full implementation of the health reform law and the higher eligibility age in 2014 in order to estimate the full effect of both the law and the policy proposal.  In the absence of the health reform law, raising Medicare’s age of eligibility would result in an increase in the uninsured, according to other studies, as many older Americans would have difficulty finding affordable coverage in the individual market in the absence of Medicare.  With health reform, virtually all 65- and 66-year-olds would be expected to obtain alternative sources of coverage.”

Healthcare remains a major focus of budget talks on Capitol Hill,Senator Mark Kirk (R-IL) recently told the American College of Surgeons (ACS).  Every group that relies on federal funding should expect a 10 to 20 percent drop in that funding.  When Dr. L.D. Britt, president of the ACS, warned that such cuts could send some healthcare providers into a “tailspin,” Kirk responded that “the tailspin is the U.S. economy.  There is a new audience at play,” Kirk said, referring to U.S. creditors.  “The judgments they render, they are swift and severe.”  Kirk is optimistic that a solution to the country’s debt-ceiling dilemma “will have a way of concluding itself one day before the August 2 deadline.”

CMS Issues Rules for Health Insurance Co-ops

Monday, August 1st, 2011

The Center for Medicare and Medicaid Services (CMS) has issued rules impacting the creation of co-ops, or private not-for-profit insurers created by Patient Protection and Affordable Care Act.  The co-ops will receive funding via $3.8 billion in government loans.  They will be run by consumers and will qualify for start-up loans if they have a high probability of becoming financially viable.  CMS will determine viability based on evaluations of their legal, operational and business plans, according to Richard Popper, director of the Office of Insurance Programs at the CMS.  Additionally, CMS will offer “solvency” loans to provide insurers with the legally and financially required reserves.  The co-ops are intended as non-commercial alternatives for insurance consumers joining the health insurance exchanges that will begin in 2014.  The rules will require that any co-ops’ profits to go to reducing their customers’ costs or improving their care.  “That’s what really makes these plans different and why Congress chose to include these in the Affordable Care Act,” Popper said.

Anyone who is confused about the status of their state’s insurance exchange can take advantage of two excellent resources for clarification.  One is a primer put out by the non-profit Kaiser Family Foundation which answers many basic questions about the online exchanges, where millions of individuals and small businesses will price and compare insurance plans starting in 2014, in clear-cut terms.  Additionally, the Commonwealth Fund provides its own explanation of how the insurance exchanges will work.

Co-ops will provide consumers with a wider range of choices, greater plan accountability and help ensure a more competitive insurance market,” said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight.  This “announcement shows how the Affordable Care Act is bringing new choices and giving consumers a voice in insurance markets throughout the nation.”

The co-ops are structured to increase competition in the insurance market and provide additional options for people and small businesses looking for affordable health insurance.  Their organization is similar to that of credit unions: profits are used to benefit members of the co-op, which can include reducing premiums, improving health benefits, improving the quality of care, expanding enrollment or taking other actions to contribute to stabilizing coverage.

“The co-op program also seeks to promote improved models of care. Existing health insurance cooperatives and other business cooperatives provide possible models for the successful development of Co-ops around the country,” noted the proposed rule.  “One major barrier to continued development of this model has been the difficulty of obtaining adequate capitalization for start- up costs and state reserve requirements.  The Co-op program is designed to help overcome this major barrier to new issuer formation by providing funding for these critical activities.”

Writing on Kaiser Health News, Christopher Weaver says that “The rules would steer a total of $3.8 billion in low-interest loans to groups such as The Evergreen Project in Baltimore, seeking to launch the so-called Consumer Oriented and Operated Plans. The health department hopes at least one ‘co-op’ will launch in each state and anticipates funding a total of 57 around the country.  The strategy is that new health plans run by consumers – most board members would also have to be plan members — would find ways to improve care, rather than boost profits. The new plans, made possible by the seed money, would also compete with established insurers to drive prices down.  The Evergreen Project, named after the coffee shop where its founders held initial meetings, is among a small cadre of groups that are laying the groundwork to launch these nonprofit insurers to care for families and individuals who will be required to buy coverage under the health law — but may be hard pressed to afford it.”

Dr. Peter Beilenson, one of the founders, said The Evergreen Project has already raised $315,000 in foundation grants and completed a 16-month feasibility study.  The members are expecting a report from hired actuaries before applying for the loans to move forward.  The key factor: Could the co-op actually cost less than other insurers?  “We actually think we can bring it in” — meaning the plan’s premium prices — “under Aetna and Coventry,” Beilenson said.

Mike Leavitt,  a former Secretary of Health and Human Services and governor of Utah said that governors need to take the lead in creating health insurance exchanges or the federal government will dictate how the exchanges should be run.  “This is a profoundly important moment for states,” Leavitt said.  “States need to lead.  Too often, we have just deferred this to the federal government, and the federal government needs guidance (from the states) to do it.”  Iowa Governor Terry Branstad said Iowans are “confused and, I think, very upset with what’s going on” with healthcare reform implementation.  According to Branstad, consumers must take “ownership” of their health decisions and the costs.