Posts Tagged ‘National Retail Federation’

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.