• Essential Benefits Set the Standard for Health Coverage in California
• Stand-Alone Vision Plans Get Excluded from the Exchange
• Bill Nudges Insurers to Favor Minority Contractors
• CAHU Summit
LIFE INSURANCE & ANNUITIES
• Indexed And Income Annuity Sales Soar in the Second Quarter
• Life Insurers Post Modest Increase In Premiums
• Many Adults Don’t Have Life Insurance
• Many Say Life Insurance Is More Important than Ever
• HHS Touts Health Reform Savings
• How Repealing the ACA Would Affect Medicare
• Doctor Advocates for Single-Payer Healthcare
• Webinar On Specialty Benefits & ACOs
• Health Care Reform Compliance Workshop
• Grandparents Come to the Rescue in Financial the Downturn
• How to Improve Employee Benefit Communications
Essential Benefits Set the Standard for Health Coverage in California
California lawmakers have sent two identical bills (SB 951 and AB 1453) to the governor to sign. The bills identify essential health benefits for individuals and small businesses starting in 2014. The benefits will apply to insurance plans sold through the state’s new health insurance exchange, which will offer federally subsidized plans for individuals and families who earn between 138% and 400% of the federal poverty level. Plans sold outside of the exchange must also meet these requirements.
The federal government has required essential health benefits to include services within 10 broad categories. States have the flexibility to refine those broad categories by choosing an existing health care plan that will serve as a benchmark come 2014. California has chosen the Kaiser HMO $30 deductible plan as its benchmark, according to a blog post by Emily Bazar of the California Health Foundation Center for Health Reporting.
According to a legislative analysis of SB 951, after January 1, 2014, any individual and small group health insurance plan that is sold or renewed in the state must include coverage for essential health benefits. Plans would have to include the same benefits and services that are covered by the Kaiser HMO $30 deductible plan. Essential benefits include the following:
• Mental health and substance abuse services will be covered in compliance with the Mental Health Parity and Addiction Equity Act of 2008.
• Pediatric vision care will be offered with the same benefits covered under the Federal Employees Dental and Vision Insurance Program.
• Pediatric oral care will be covered with the same benefits covered under Healthy Families including medically necessary orthodontic care.
• Habilitative services will be covered under the same terms and conditions that apply to rehabilitative services. The word “habilitative” has been at the heart of health insurance coverage denials for children with autism, according to Michele Winchester, JD of Institute for Health Law and Ethics. Insurers describe habilitative services as educational or long-term care services, which are are not covered. Covered rehabilitative services treat conditions that result of an injury or illness.“Health insurers typically …deny coverage for behavioral therapies since the care is not rehabilitative,” she said. Examples of habilitative programs include supported employment and day services for adults. Federal Medicaid law says that habilitative services help people acquire, retain, and improve the skills to live successfully in home- and community-based settings. In contrast, “rehabilitative” services reduce a disability and restore a person to their best possible functional level. .
Stand-Alone Vision Plans Get Excluded from the Exchange
The California Health Benefit Exchange Board voted to exclude stand-alone vision plans from coverage through the California Health Benefit Exchange, at least for the first year. However, stand-alone dental plans will be allowed to compete in the exchange. Daniel L. Mannen, OD, FAAO writes in a VSP Global blog, “Since all vision care will have to be delivered by or in partnership with a health plan in the new California Exchange, the decision greatly advantages programs that are owned by health plans (Spectera, Davis Vision, and Kaiser) and means that stand-alone vision plans, like VSP, will have a harder time competing for patients. This is significant because independent optometrists may see fewer patients as people transition into the exchanges and into plans that lock them out (like Kaiser) or that pay less (like Spectera and Davis)…Access to patients is the key to optometric independence, and organizations like VSP Vision Care should be allowed to compete in the California Exchange and Exchanges across the country.”
Bill Nudges Insurer’s to Favor Contracts From Minority-Owned Businesses
The legislature has passed AB 53, authored by Assembly Member Jose Solorio (D-Santa Ana). It requires admitted insurers with California premiums of $100 million or more to submit a report to CDI on their efforts to buy goods and services from minority, women, and disabled veteran-owned businesses. The report would be accessible to the public through the CDI website.
The measure is strongly supported by Commissioner Dave Jones and the Department of Insurance. Jones said, “California’s minority women and disabled veteran-owned businesses will grow and prosper if they can get a foot in the door of California’s largest insurance companies. Insurance companies will benefit from the services and goods provided by these businesses.”
This year’s CAHU Health Care Summit will be held October 24 to 25 in Universal City, Calif. Sessions include the following:
* Is Fee-based Planning in Your Future?
* Labor Law, Risk Management and Best Practices for your Group Insurance Clients * Medicare in 60 Minutes
* Self-Funding: It’s Origin, It’s History, & It’s Future Within Healthcare Reform * Health Care Reform – The Agent’s Role.
LIFE INSURANCE & ANNUITIES
Indexed And Income Annuity Sales Soar in the Second Quarter
Second quarter indexed annuity sales grew 8.3% from the prior quarter and income annuities sales grew 6.1%, according to an annuity study by Beacon Research. Total fixed annuity sales increased 1%.
Jeremy Alexander, CEO of Beacon Research notes that some annuities provide much needed guaranteed retirement income income, such as indexed annuities with GLWBs and lifetime immediate/deferred income annuities. Also, carriers may emphasizing these products over fixed rate annuities because their profitability has been less affected by record-low interest rates in the second quarter. “Indexed and income annuities should continue to do well, but much will depend on the interest rate environment and the collective decisions by carriers to expand or pull back on sales,” he added.
Total fixed annuity sales declined 17.2% from the year-ago quarter and 13.2% year-to-date. Allianz remained the leading company. New York Life and Aviva USA switched places to come in second and third. American Equity continued in fourth place and Great American again came in fifth.
Lincoln National took the lead in direct/third party sales. An indexed annuity from Security Benefit Life was in the top five for the first time, with Secure Income Annuity taking second place. New York Life’s Lifetime Income Annuity remained the bestselling product. Indexed annuities issued by Allianz, Aviva USA and American Equity continued in the top five as well.
Life Insurers Post Modest Increase In Premiums
Seven of the top 10 life insurance companies saw a year-over-year increase in life premiums for the six months ending June 30. The top 10 companies posted an average increase of 1.27%, according to a report by SNL Financial. Mass Mutual outpaced other insurers with a 17.9% increase in life insurance direct premiums. Life insurance premiums, consisting of both ordinary and group life, are concentrated among a small number of companies, with 49.9% of premiums written by the 10 largest top-tier insurance entities. MetLife Inc., Northwestern Mutual Life, Prudential, and New York Life Insurance Co. account for 31.2% of all life premiums.
Many Adults Don’t Have Life Insurance
Thirty-nine percent of U.S. adults do not have life insurance, according to survey results by InsuranceQuotes.com. And many of the 61% who do have life insurance appear to be underinsured and not as knowledgeable as they should be about their policies. Among those who lack life insurance, the most common explanation (45%) is that it costs too much. However, life insurance may be more affordable than many people fear since InsuranceQuotes.com found that 68% of adults who have bought life insurance policies on their own are paying under $100 per month and 46% are paying under $50 per month.
Even those who already have life insurance may benefit from shopping around. Sixty-eight percent of those with life insurance have never changed life insurance providers and 64% have held their policy for more than five years. People who haven’t compared prices in a while may be able to save money and get a better policy with just a little bit of effort, since many different insurers are aggressively competing for customers, said John Egan of InsuranceQuotes.com.
The most common level of coverage reported by those who have life insurance is $25,001 to $100,000 (34%). Seventy-three percent of those with life insurance reported $250,000 or less in coverage. Thirty percent of those with life insurance have a term life policy, 30% have a whole life policy and another 30% are not at all sure.
The full survey results are available at www.insurancequotes.com/americans-life-insurance.
Many Say Life Insurance Is More Important than Ever
Seventy-eight percent of consumers, surveyed by ING, say that life insurance is a valuable tool for estate or financial planning and 53% say that the economy has made life insurance even more important. However, 51% say that priorities, such as paying off debt or a mortgage, are major obstacles to purchasing life insurance. Meanwhile, 61% have never calculated their life insurance needs and only one-quarter of the insured are confident that they had enough coverage. While 62% identify family as the number one reason to buy life insurance, many couples avoid discussing the issue.
Forty-five percent of spouses rarely or never talk to each other about what would happen to the family finances if one of them died. Respondents are most familiar with the protection benefits of life insurance; they see the greatest value in more obvious uses, such as replacing lost income (26%) and paying off debt (23%). Very few cite its value to protect retirement savings (4%) or build wealth (1%).
Forty-four percent of Americans have little or no confidence that they have enough life insurance coverage. Twenty-three percent of 25- to 34-year olds say they are too young to buy life insurance.
Forty-nine percent look to their employer as their only source for insurance coverage. Employees without access to life insurance benefits at the workplace are seven times more likely to have no coverage at all. People who bought life insurance face-to-face with a financial professional felt the most confident and knowledgeable about their coverage. Among that group, 70% are very or extremely confident about their coverage compared to just 56% for all insured respondents.
The study also reveals the following:
• 54% of parents have not calculated how much life insurance they need.
• 51% of uninsured Americans say they can’t afford life insurance despite historically low rates.
• 56% of those with life insurance only have coverage that meets up to three times or less of their annual salary.
• 27% say they should have five to 10 times their annual salary in coverage. However, only 17% of insured respondents actually have this amount.
• 50% of insured respondents know somebody who has been helped by life insurance compared to only 34% of uninsured respondents.
For more information, visit http://ing.us.
HHS Touts Health Reform Savings
The Affordable Care Act has saved consumers $2.1 billion on health insurance premiums, according to a report by the Dept. of Health and Human Services. Beginning Sept. 1, 2011, the health care law implemented federal rate review standards. These rules require insurance companies to submit proposed rate increases for public review and justify their actions if they want to raise rates by 10% or more. HHS says that new rate review rules prevent insurance companies from raising rates without accountability or transparency. To date, rate review has helped save $1 billion for Americans. Additionally, the law’s Medical Loss Ratio rule is helping deliver rebates worth $1.1 billion to nearly 13 million consumers. HHS secretary Kathleen Sebelius said, “Thanks to the law, our health care system is more transparent and more competitive and that’s saving Americans real money.”
The Affordable Care Act provides states grants to enhance their rate review programs. Forty-two states have used the funds to beef up their rate review process. The HHS says that consumers have saved approximately $1 billion in premiums in the individual and small group markets because of rate review.
The HHS says that this initiative is one of many in the health care law aimed at saving money for consumers. It works with the 80/20 rule, which requires insurance companies to generally spend 80% of premiums on health care or provide rebates to their customers. Insurance companies that have not met the 80/20 rule will provide more than $1.1 billion in rebates this year to nearly 13 million Americans. Americans receiving the rebate will benefit from an average rebate of $151 per household.
How Repealing the ACA Would Affect Medicare
If the ACA were repealed, the law’s savings and revenue provisions would be reversed, as would benefit improvements for Medicare, according to a study by the Kaiser Family Foundation. Repeal would increase Part A and B spending by restoring payment rates to private insurers (Medicare Advantage plans) and health care providers to their pre-ACA levels, among other changes.
Repeal would offset savings by eliminating coverage in the Part D doughnut hole and reinstating cost-sharing for preventive services. Because the ACA is expected to reduce net spending over 10 years, repealing the ACA would increase net Medicare spending by $716 billion over 10 years compared to the current baseline. Repealing the ACA would also accelerate the projected year of insolvency for the Part A Hospital Insurance Trust Fund by eight years, from 2024 (current projection) to 2016 (if the ACA is repealed). This is because spending for services under Part A would increase while revenues dedicated to Part A would decrease. As a result, within four years, Medicare would not be able to fulfill its obligation to pay for all Part A covered services.
Some provisions of the ACA reduce the growth in Medicare spending by phasing down payments to Medicare Advantage plans, reducing updates in payment levels to hospitals and other providers, and increasing premiums to be paid by higher-income beneficiaries.
The ACA also contains provisions that improve benefits, providing free coverage for some preventive benefits and closing the coverage gap in the Part D prescription drug doughnut hole by 2020. The law also includes higher payments for primary care physicians.
Some provisions are designed to reduce costs and improve the quality of patient care for elderly and disabled beneficiaries including incentives to reduce preventable hospital readmissions and establish accountable care organizations (ACOs).
The ACA establishes new sources of revenue dedicated to the Medicare program including an additional payroll tax on earnings of higher-income workers and a fee on the manufacturers and importers of branded drugs.
Originally, the Medicare provisions of the ACA were estimated to reduce net Medicare spending by $428 billion between 2010 and 2019. More recently, the Congressional Budget Office (CBO) estimated that the Medicare provisions would reduce Medicare spending by $716 billion from 2013 to 2022. The increase reflects a new 10-year budget window and changes in the CBO baseline. For more information, visit www.KFF.org.
Doctor Advocates for Single-Payer Healthcare
The following summarizes a statement by Dr. Steffie Woolhandler, professor of public health at the City University of New York and visiting professor of medicine at Harvard Medical School. She is co-founder of Physicians for a National Health Program.
The slight drop in this year’s total number of uninsured to 48.6 million from a record 50 million last year was largely attributable to an increase in government health insurance coverage, particularly those covered by Medicaid and Medicare. The latest Census Bureau figure, 48.6 million uninsured, conjures up a very grim picture: a preventable death every 11 minutes.
There was also a modest gain in coverage among people 19 to 25 (539,000) approximately 40% of whom obtained coverage through their parent’s health plan as a result of the 2010 health law.
While the number of people covered by private health insurance last year was statistically unchanged from 2010, the share of Americans with private coverage, 63.9%, shows a slight drop and continues a three-decade-long trend of diminishing coverage through private insurance.
While the national count of uninsured went down slightly, the number of uninsured climbed in 21 states, most significantly in California, where 197,000 additional people became uninsured since 2010. The Census Bureau reported that California’s uninsured numbered 7.4 million in 2011, or 19.7% of the population.
The Census Bureau report underscores the urgency of implementing a single-payer, improved-Medicare-for-all program. Such a program would ensure truly universal, comprehensive, high-quality coverage for everyone while ridding us of insurance-company-related waste, bureaucracy, and profiteering. A single-payer system would save both lives and money.
Woodlander’s comments to not address waste and bureaucracy in government-run programs, such as Medicare.
Webinar On Specialty Benefits & ACOs
Dr. Mark Hiatt, chief medical officer of HealthHelp, is hosting a free Webinar on how specialty benefits management may help accountable care organizations. It will be held September 25 at 1:00 p.m.
Health Care Reform Compliance Workshop
Research and Markets is selling an audio recording of its health reform compliance workshop. Experts break down employer responsibilities in easy-to-understand steps. They explain the changes coming in each year between now and 2018 and the decisions employers need to make to stay in compliance.
Grandparents Come to the Rescue in Financial the Downturn
Grandparents have taken on the role of a financial safety net for their children and grandchildren, in some cases, to the detriment of their own finances, according a MetLife study. Sixty-two percent of grandparents have provided financial support to grandchildren in the past five years, averaging $8,289, primarily for investments and education. Forty-three percent of those surveyed say the economic downturn is the reason for monetary support. Thirty-four percent are helping their children and grandchildren even though they feel that it is having a negative effect on their own finances.
Of the 20% of grandparents living in multi-generational households, 30% have grandchildren living with them and 35% live with an adult child only.
How to Improve Employee Benefit Communications
Only 37% of employers say that their benefit communications have been very effective in helping employees make the right benefit decisions, according to a survey by guardian life. Employees agree. Only 34% say that the benefit communications they get are very effective.
When employees get benefit-related information through the channels they prefer, they see more value in their benefits and are more satisfied with them. Only providing benefit information through one channel like e-mail, for example, is not likely to have as great an impact as communicating through multiple channels.
Employees are exposed to messages more often and they are more likely to understand their options when they get benefit information by e-mail, online, during group sessions in the office, and by mail. It also allows employees to make their benefit decisions at a time and in a way that best suits their needs and lifestyles. Almost 20% of employees want to get benefit communications through six or more channels. In fact, 70% of employees who get benefit communications through their preferred channels are very confident about their benefit selections versus just 57% of those who do not. Not surprisingly, workers who enroll in their preferred channel are significantly more satisfied with their benefit package (70%).
As workers assume increasing responsibility for benefit decisions, they are gravitating to a self-service approach to enrollment and other benefit transactions, much like they do when booking travel, banking, or paying bills online. In fact, 80% want to sign up for benefits online. As it turns out, online enrollment is quite a satisfying experience; 90% of workers who are able to enroll online are very satisfied with the experience.
A new online service from Cigna provides accurate prices for more than 200 common medical procedures and quality information on doctors and hospitals. Pricing includes specialist, facility, and related fees, according to the real-time status of the individual’s health plan deductibles and co-insurance, as well as their available health spending account funds – all before choosing their physician. Rather than using broad cost ranges or averages, Cigna’s price estimates are based on actual claims payments. A Cigna customer can even compare a physician’s costs for performing a procedure at different hospitals. Cigna’s new transparency tools are named one of the top 10 innovations of 2012 by InformationWeek in its 24th annual ranking of the 500 leading technologies. To see a video demo, visit http://www.youtube.com/watch?v=oFSCMTaxNsE.