IN CALIFORNIA
• Gov. Brown Signs, Vetoes Health Care Reform Bills
• Coordinated Care ACO
HEALTHCARE
• How the Obama and Romney Health Plans Stack Up
• The Insured Rate Has Grown Slightly
• Spending on Quality Improvement
• Most Employers Consider Moving Retirees to the Individual Exchange Market
NEW PRODUCTS
• Variable Annuity
• Simplified Enrollment
• Consumer Reports Offers Guide to Healthcare Reform
• 401(k) Rollover Guide
• Education for Retirement Plan Participants
• Fully Insured Multi-Carrier Corporate Health Exchange
• Managing Benefits Online
EVENTS
• Fixed Annuity Summit
Gov. Brown Signs, Vetoes Health Care Reform Bills
Governor Jerry Brown signed the several health reform-related bills into law:
California Health Benefit Exchange
• AB 792 establishes notification requirements about reduced-cost coverage in the California Health Benefit Exchange and no-cost coverage in Medi-Cal for individuals in the following situations: filing a dissolution or nullity of marriage, divorce, or separation; petitioning for adoption; or no longer being enrolled in health coverage through a health plan or health insurer.
AB 1761 gives enforcement authority to the Department of Managed Health Care (DMHC) and the Commissioner of the California Department of Insurance (CDI) over licensees (and solicitors) who claim to provide services on behalf of the California Health Benefit Exchange without having a valid agreement.
Pre-existing Conditions
• AB 1083 eliminates pre-existing condition requirements and establishes premium-rating factors based only on age, family size, and geographic regions (except for grandfathered plans). If guaranteed issue and rating factors are repealed in the ACA, California’s existing guaranteed issue and rating law pre-ACA would become operative.
• AB 1083 establishes that small business owners cannot be subject to additional premium hikes based on their employees’ health.
Essential health benefits
• AB 1453 establishes the Kaiser Small Group HMO 330 plan contract as California’s Essential Health Benefits benchmark plan for individual and small group health plan products licensed by the Department of Managed Health Care. SB 951 provides that this provision applies regardless of whether a contract or policy is offered inside or outside the state exchange.
Major Risk Medical Program
• AB 1526 allows the Managed Risk Medical Insurance Board to further subsidize the premium contributions paid by individuals who receive coverage in the Major Risk Medical Insurance Program from January 1, 2013 to December 31, 2013.
Enrollment in State Programs
• AB 1580 streamlines eligibility and enrollment processes for various programs to provide health care coverage to those with limited financial resources, including the Medi-Cal program and the Healthy Families Program.
CO-OPS
• AB 1846 establishes a licensing framework at CDI and DMHC for consumer operated and oriented plans (CO-OPs).
• AB 970 authorizes, upon consent of the applicant, information provided for the single state application for health subsidy programs to be used to meet requirements for new or continued eligibility in the California Work Opportunity and Responsibility to Kids (CalWORKs) and CalFresh programs.
Lifetime Caps
• AB 1526 eliminates annual and lifetime caps from the Managed Risk Medical Insurance Program.
Appeals
• SB 1410 clarifies the process under which consumers appeal denial-of-care decisions.
The Governor gave the following explanations for vetoing the following bills:
• AB 1000 would have prohibited a higher copayment, deductible, or coinsurance amount for a prescribed, orally administered anticancer medication than what is required for an intravenously administered or injected cancer medication): This bill doesn’t distinguish between health plans and insurers who make these drugs available at a reasonable cost and those who do not.
• AB 1461 would have required health plans to guarantee health plan contracts without pre-existing condition requirements during initial, annual, and special enrollment periods: Without the strong foundation that federal law provides, a state-level mandate on insurers, alone, could encourage healthy people to wait until they got sick or injured before purchasing coverage. This would lead to skyrocketing premiums, making coverage more unaffordable.
• AB 2152 would have established notification requirements on PPOs licensed by the DMHC and the CDI when a terminated provider contract affects 800 or more covered lives. It specified patient disclosure for terminations affecting 2,000 or more covered lives: It provides for stronger notification procedures at the Department of Insurance, but weakens the notification procedures under existing law at the Department of Managed Health Care.
• AB 2162 would have adjusted the dollar increments for investments and income that public officials use in filing a Statement of Economic Interest: The law already requires public officials to disclose their income and investments with enough particularity so that conflicts of interest can be identified.
• SB 359: I share the goals of this legislation to reign in excessive hospital charges for out-of-network emergency care. I am not convinced, however, that the rate-setting formula in this bill has it right.
• SB 393 would have would have defined a patient-centered medical home: More work is needed before we codify the definition contained in this bill.
• SB 411 and SB 878 would have established a new regulatory scheme for the private home care industry: I understand the argument for stronger oversight. But given the economic stresses and uncertainty, I am not prepared to embark upon the institutional changes and costs that this bill entails.
• SB 961 would have required a health insurer to offer all of the insurer’s health benefit plans that are sold in the individual market to all individuals and dependents in each service area. Insurers would have been required to limit enrollment in individual health benefit plans to specified open enrollment and special enrollment periods: This billed failed to link our state reforms to federal law.
For the full text of the bills, visit: http://leginfo.ca.gov/bilinfo.html.
Coordinated Care ACO
NantHealth and Blue Shield of California will develop solutions to allow doctors, hospitals, and health plans to deliver evidence-based care in a more coordinated and personalized way. The companies will work with Saint John’s Health Center in Santa Monica and Access Medical Group to establish the first clinically based continuous learning center. It will be part of a new accountable care organization (ACO) Blue Shield intends to form with Access and Saint John’s. The learning center will be test innovations in reimbursement, business and clinical processes, new technologies and change management. For more information, visit www.nantworks.com.
How the Obama and Romney Health Plans Stack Up
The following is a summary of a report by the Commonwealth Fund
With the U.S. presidential election just weeks away, health care is in the spotlight. President Obama and Governor Romney have proposed distinctly different approaches to health care problems. If reelected, the president has pledged to continue implementing the Affordable Care Act with major provisions are to be rolled out in the next 15 months. President Obama supports the goal of near-universal health insurance coverage by maintaining existing private insurance markets while instituting tighter and more standardized regulations. In addition, federal tax credits would make individually purchased health plans more affordable. The Medicaid program would cover more families with low or moderate incomes.
To contain growth in health care costs and improve the quality of care, Obama supports the health law’s reforms that target how insurance markets operate, how providers are paid, and how care is delivered.
Governor Romney says that more limited regulation would ensure that consumers have a broad choice of health plans. To encourage more people to buy health plans in the individual market, he would make the tax treatment of individually purchased coverage similar to what is accorded to employer-based plans.
Romney would reduce federal funding to Medicaid by establishing state block grants and loosening federal requirements. He would scale back the federal/state public insurance program substantially for people with low incomes.
Romney wants to drive down health care costs by providing fixed budgets and looser standards to state Medicaid programs, on the theory that doing so will allow states to innovate and save money.
Romney would introduce competition between private plans and traditional Medicare by giving premium support to beneficiaries to buy the plan they choose. If such competition fails to bring down costs, he would also place limits on annual spending, starting in 2023. To get the full report, visit www.commonwealthfund.com.
The Insured Rate Has Grown Slightly
Eighty-two percent of people 65 and under had health insurance in 2011 compared to 81.5% in 2010. That half a percent increase is notable because there have only been increases in the rate of the insured during five years since 1994, according to an Employee Benefit Research Institute Issue Brief. The issue brief is based on EBRI estimates from the Census Bureau.
However, employment based health benefits for the nonelderly population declined from a peak of 69.3% in 2000 to 58.4% in 2011. At the same time, public program health coverage expanded in 2011, accounting for 22.5% of the nonelderly population.
Six percent to 7% had individual coverage in 2011 — a rate that has remained relatively steady since 1994. Due to high unemployment rates, the nation is likely to see an erosion of employment-based health benefits when the data for 2012 are released next year.
According to the EBRI brief, some employers that believe in the business case for providing health benefits, may rethink its value, especially if unemployment remains high or if employers determine that the health reform legislation provides viable alternatives. For more information, visit ebri.org.
Spending on Quality Improvement
A recent SNL Insurance analysis finds that health insurers spent an average of 0.78% of their adjusted premiums on quality improvement expenses in 2011. Under health reform, carriers must report spending that is directly related to improving the quality of care. So far, that share of insurance premiums barely registers for many insurers. UnitedHealth Group Inc. and Humana Inc. spent the most on quality improvement
The top private health insurance companies in the United States all spent in the· neighborhood of 1% of their adjusted premiums earned on quality improvement expenses. Determinations of what an insurer spends on improving health care quality are linked to its medical loss ratio. Insurers must pay rebates to policyholders if they do not meet federal benchmarks for the share of premium dollars that must be spent on medical care (85% for large group plans and 80% for individual and small group plans). Costs attributed to improving quality are considered medical expenses for MLR purposes. For the full report, visit http://www.snl.com/InteractiveX/Article.aspx?cdid=A-15871226-13100·
Most Employers Consider Moving Retirees to the Individual Exchange Market
Sixty-three percent of employers that are planning changes to retiree health coverage are considering or are in the process of moving retirees to individual coverage through a health exchange partnership. About two-thirds of Medicare-eligible retirees in the U.S. are already enrolled in a Medicare plan through the individual market.
John Grosso of Aon Hewitt said, “Changes to the Medicare Part D and Medicare Advantage programs, along with choice, competition, and generally favorable rating rules, have made the individual market very cost-effective compared to the group insurance program. We expect that there will be a similar opportunity for pre-Medicare retirees beginning in 2014.”
Sixty-five percent of plan sponsors would at least consider leveraging an exchange strategy for their pre-Medicare retirees some time after 2013, with or without a subsidy, in order to take advantage of the opportunities created through new state-sponsored health care exchanges and additional PPACA market reforms.
Employers are pursuing two other general retiree health care strategies in response to provisions under the PPACA. Sixty-one percent of employers expect to change their Medicare Part D strategy due the elimination of the tax-favored status of the retiree drug subsidy under the PPACA. Seventeen percent of those plan sponsors made changes in 2011 or 2012, another 11% will make changes for 2013, and 72% are exploring what actions to take and when. Sixty-two percent of the employers that have decided changes their retiree drug program are moving forward with a group-based Medicare Part D prescription drug plan. Thirty-two percent are leveraging the individual Medicare-eligible health insurance market in some manner.
Changes to the tax-favored status of the retiree drug subsidy and improvements to the Medicare Part D program are driving significant change in the employer-sponsored retiree health care market. These enhancements allow for cost savings for plan sponsors and retirees while preserving retiree benefits, explained Grosso.
Twenty-nine percent of plan sponsors expect to change plan features, such as deductibles, copayments, and coinsurance; 22% favor sourcing coverage through the state exchanges, and 18% favor changing retiree premium cost-sharing in some way.
While most employers say they will need to manage exposure to excise taxes, 69% don’t expect to implement these actions in the near-term. “Even though the excise tax is not scheduled to take effect until 2018, plan sponsors must reflect any anticipated excise tax exposure on their financial statements. Some employers have already made changes to their retiree strategy to limit this impact, but others with higher cost plans should, at a minimum, evaluate how they can preserve the tax efficiency of their program on behalf of the plan sponsor and participating retirees,” said Milind Desai, retirement actuary at Aon Hewitt. For more information, www.aon.com
Variable Annuity
Lincoln Financial introduced risk portfolio management funds for its “ChoicePlus Assurance” variable annuity products. The strategies are designed to reduce exposure to market volatility and protect account values. Investors have the potential to enhance their variable annuity guarantees and maximize income during retirement. For more information, visit www.lincolnfinancial.com.
Simplified Enrollment
Transamerica has designed single-source technology that allows employees to make all of their elections in a single enrollment — from core options like medical insurance to voluntary options like critical illness insurance. With “Businessolver’s” real-time, web service connection, clients can replace manual, offline evidence of insurability and enrollment processes. For more information, visit www.transamericanemployeebenefits.com.
Consumer Reports Offers Guide to Healthcare Reform
As the calendar counts down to open enrollment season, consumers wonder how the health reform law will affect them and their families. To help answer those questions, Consumer Reports is releasing a guide, “Health Reform: Seven Things You Need to Know. For more information, visit ConsumerReportsHealth.org/freeguides in English or ConsumerReportsenEspanol.org/salud in Spanish.
401(k) Rollover Guide
The 401(k) Coach is offering 401 (k) Rollover Toolkit. It ensures that advisors are providing rollover services in a non-fiduciary capacity. For more information, e-mail awalker@the401kcoach.com
Education for Retirement Plan Participants
OneAmerica unveiled an educational program for retirement plan participants. Developed from national consumer research, the “One Day?” campaign stresses how important it is for plan participants to take their retirement off the back burner immediately. The campaign includes a variety of print and digital content that is beginning to be delivered to plan sponsors and participants. These pieces include enrollment materials, educational brochures and mailers. For more information, visit www.oneamerica.com.
Fully Insured Multi-Carrier Corporate Health Exchange
This fall, more than 100,000 U.S. employees will be enrolling in health benefits through Aon Hewitt’s, fully insured, multi-carrier corporate health care exchange. The Corporate Exchange includes consumer-based decision support tools that turn selecting health benefits into a retail shopping experience. Individuals in Aon Hewitt’s exchange will have access to a wide range of benefits experts and advisors to answer questions and provide guidance during enrollment and throughout the year. Benefits will be offered by nine national and regional carriers, including UnitedHealthcare, Cigna, and Health Care Service Corporation, which operates Blue Cross and Blue Shield plans for 14 million members, including 5 million national account members visit www.aonhewitt.com. For more information, visit www.aon.com.
Managing Benefits Online
BeneTrac has made it easier for brokers, human resource managers, and employees to manage health and other insurance plans online in the BeneTrac platform. BeneTrac updated its platform in response to information from customer surveys; feedback from employees, HR administrators, and brokers; and usage data. For more information, visit www.BeneTrac.com, call 619-788-5800 or e-mail salessupport@BeneTrac.com.
Fixed Annuity Summit
NAFA is hosting its summit October 17 to 19 at the Hyatt Regency Scottsdale Resort and Spa at Gainey Ranch in Scottsdale, Ariz. To register, visit http://www.regonline.com/Register/Checkin.aspx?EventID=1116981.
