Posts Tagged ‘healthcare insurance premiums’

Employer Healthcare Coverage Costs Americans More and Offers Less

Wednesday, December 15th, 2010

American families with employer-sponsored health insurance are paying more for inferior coverage, according to a new study from the Commonwealth Fund

According to the study, premiums for family coverage rose 41 percent between 2003 and 2009, more than three times faster than median incomes.  Deductibles on a yearly basis rose 77 percent.

According to the study’s authors, “Fortunately, the Affordable Care Act (ACA) contains a significant number of coverage and delivery system reform provisions designed to reduce cost growth and provide financial protection, while improving the quality of healthcare.  The creation of state-based health insurance exchanges, the introduction of new market rules and consumer protections, and the expansion of state and federal oversight of industry practices will begin to increase value in U.S. health insurance markets.  Further analysis suggests that the incentives for administrative efficiency and modernization included in the ACA have the potential to save businesses and families $2,000 or more in premium costs by 2019.”

Whether you live in Montana, Texas, or New York, private insurance costs have been increasing faster than working family incomes,” said Commonwealth Fund Senior Vice President Cathy Schoen, the study’s lead author.   “For more than a decade, families with job-based insurance have been sacrificing wages to hold on to health insurance. The good news is that the Affordable Care Act reforms provide a foundation to improve coverage and slow healthcare cost growth in the future.”

“Health insurance is increasingly unaffordable for families, and benefits are being scaled back as employers and workers struggle to keep up in a difficult economy,” said Commonwealth Fund President Karen Davis.  “If implemented well, provisions in the Affordable Care Act — including some starting this year, such as tax credits for small businesses to provide coverage, dependent coverage for young adults up to age 26, and elimination of co-payments for preventive care — have the opportunity to reverse these unsustainable increases and ensure that families in every state have access to affordable, comprehensive health insurance.”

Lower-Income Families Often Defer Healthcare Because of Cost

Tuesday, December 7th, 2010

Lower-income families covered by health plans with high deductibles are more likely to defer care than their counterparts who earn more money and have similar coverage.  A survey of 141 families whose income levels were less than 300 percent of the U.S. poverty rate and 273 families with high incomes found that 51 percent of the poorer families deferred healthcare because of the cost, compared with 35 percent of the better off families.  The study, which was led by Jeffrey Kullgren, a clinical scholar at the Robert Wood Johnson Foundation, which is affiliated with the Philadelphia VA Medical Center and the University of Pennsylvania, was published in a recent edition of the Archives of Internal Medicine.  A 22-item questionnaire collected data about health plan characteristics, attitudes towards use, cost and sought information about behavior and demographics.

One way in which a growing number of families are facing higher levels of cost-shariing for healthcare is enrollment in high-deductible health plans.   These plans, which feature annual deductibles of at least $1,000 per individual and at least $2,000 per family before more services are covered, seek to encourage patients to become more cost-effective consumers of healthcare and frequently offer lower premiums than other types of health insurance.”

Those surveyed were asked how they might respond to three hypothetical scenarios involving services that their plans did not cover – a $100 blood test; a $1,000 colonoscopy; or a $2,000 MRI.  The majority of participants – no matter their income level – would talk with their physician about deferring or making other plans in all three scenarios.  Rather surprisingly, though, the lower-income families were more likely to discuss the $100 blood test of $1,000 colonoscopy than were the higher-income families.

“These findings suggest that physicians have a central role to play in helping their patients navigate the challenges of decision making in high-deductible health plans,” according to the authors.  “Beyond the implications for clinicians, our findings have important implications for federal health reform.  Reform legislation that establishes an individual health insurance mandate could lead more families to enroll in plans with high levels of cost-sharing, as has been seen following the implementation of coverage mandates in Massachusetts.  If more families do enroll in high-deductible health plans, policymakers should consider strategies to support patients facing high levels of cost sharing.”

Healthcare Reform Stipulates That 80 Percent of Premiums Be Dedicated to Medical Services

Thursday, September 16th, 2010

Under healthcare reform law, insurers must spend 80 percent or more of premiums on medical services.  The nation’s insurance commissioners are mandating that healthcare plans spend a minimum of 80 percent of premium dollars on medical costs.  The requirement is a central principle of the new Patient Protection and Affordable Care Act.  The National Association of Insurance Commissioners, which writes laws governing the insurance industry, approved a proposed financial disclosure form that insurers must file starting in 2011.  Department of Health and Human Services Secretary Kathleen Sebelius will use the association’s recommendations for medical-loss ratio, which is the percentage of premiums that pay for medical services vs. administrative costs.

According to the new law, individual and group policies purchased by companies with 50 or fewer employees will be required to spend 80 percent of premiums on medical costs.  That rises to 85 percent for companies with more than 50 employees.  If the healthcare plan does not provide the required medical service, they must pay a rebate to their plan participants.

“Medical-loss ratios are important because they demonstrate to the employer or family that premium dollars are being used on healthcare,” said Michael McRaith, Illinois Department of Insurance Director.  The regulations affect healthcare plans that are monitored by the state and which will be the primary choice for uninsured once the insurance exchanges are operational in 2014.

The insurance industry wants the cost of exposing fraud and abuse to be covered by the 80 percent and not from administrative costs.  According to Robert Zirkelbach, a spokesman for the lobbying group America’s Health Insurance Plans, “Fraud and abuse have a direct impact on the quality and safety of patient care.”

Study Finds Some Healthcare Plans Are Unaffordable

Wednesday, June 16th, 2010

Pro-business consultant Mercer L.L.C. predicts some employers will find healthcare reform too costly.  Approximately 38 percent of companies have employees for whom healthcare insurance coverage would be deemed “unaffordable”, according to a study by the New York-based pro-business benefit consultant Mercer L.L.C.  According to the healthcare reform bill that phases in between now and 2014, employers are subject to penalties if premiums paid by their full-time employees are more than 9.5 percent of household income.  The yearly penalty for too-expensive coverage is $3,000 for each full-time employee who takes government assistance to buy coverage in a state insurance exchange.

“Lawmakers did not take into account that employers don’t have access to information on employee household income,” said Tracy Watts, a Mercer partner.  “Employers question how they are going to get that information and what other administrative challenges might come along with this new requirement.  For example, what happens if an employee’s total family income changes during the course of a plan year?”

Another Mercer finding is that 51 percent of employers with more than 500 workers offer coverage to part-time employees who work 30 hours a week or more.  The rest either do not offer coverage to part-timers, or require that they work 30 hours to be eligible.  “This rule will require employers with a lot of part-time employees to make some hard choices,” according to Watts.  “If they don’t offer coverage to part-timers, can they afford to start, or to raise the minimum hours required for coverage?”