• State Senate Passes Bill that Threatens Self Insured Plans
• Assembly Passes Fraud Bill
• Assembly Passes Bill to Regulate Heath Care CO-OPs
• Small Business Owners Want Private Sector Pension Plans
• Blue Shield Collaborates On Coordinated Care Model
LONG-TERM CARE INSURANCE
• LTC Market Shows Encouraging Signs
• Large Employers Flock to CDHPs
• Many Individual Plans Don’t Meet Exchange Standards
• Will the Supreme Court Decision Matter to Obamacare?
• The Plastic Safety Net
• The VA Plans to Waive Co-pays for Remote Doctor Visits
• Mobile Benefit App
• 408(b)(2) Fee Disclosure Guide
• Wellness Program
• Healthcare Cost Estimator
State Senate Passes Bill that Threatens Self Insured Plans
The California Senate passed a bill (SB 1431) that would set guidelines for stop-loss carriers when selling policies to small employers with two to 50 employees. The bill would prohibit companies from excluding employees on the basis of health status and ensure that policies purchased by small employers are renewed.
Commissioner Dave Jones said, “As federal health care reform goes into effect, there will be more incentives for small employers to self-insure and buy stop-loss coverage. Without SB 1431, small group insurance premiums could rise to unsustainable levels for small businesses inside and outside of the California Health Benefits Exchange. Stop-loss carriers could also cherry-pick younger and healthier employees, and determine which small businesses to sell to and even which individuals to exclude from within those small groups.” Jones notes that 15 states regulate minimum attachment points in stop-loss policies in some fashion. Three other states prohibit the sale of such policies to small groups altogether, Jones added. The bill is authored by Senate Democratic Caucus Chair Kevin de León (D-Los Angeles) and sponsored by Commissioner Dave Jones and the California Department of Insurance.
Mark Reynolds, RHU of BEN-E-LECT says, “If you work for an employer with 49 employees then you will no longer have access to the same health plans as employers with 51 employees.”
The bill would do the following:
• Exempt multiple employer welfare arrangements.
• Require a stop-loss insurance carrier to offer coverage to all employees and dependents of a small employer to which it issues a policy.
• Prohibit the carrier from excluding any employee or dependent on the basis of actual or expected health status-related factors.
• Require the carrier to renew all policies at the option of the employer, .
• Prohibit a policy from containing certain individual or aggregate attachment points for a policy year.
According to http://www.defeatsb1431.com, the bill would do the following:
• Restrict the specific deductible to no less than $95,000 per member.
• Restrict the aggregate coverage to a formula of $19,000 times the number of covered members.
Although the bill passed, the group “sees positive results from the grassroots efforts in the Senate, and we are hopeful that continued grassroots efforts during the next stage of the legislative process will have an even greater effect and hopefully defeat the bill outright.”For more information, visit www.insurance.ca.gov. To get a sample letter opposing the bill, visit http://www.defeatsb1431.com.
Assembly Passes Fraud Bill
The California Assembly passed AB 2138, which would increase funding to allow local district attorneys to step up investigation and prosecution of health and disability insurance fraud. The bill would increase the annual assessment paid by health and disability insurers from 10 cents to 20 cents per insured.
In May 2008, CDI’s Advisory Task Force on Insurance Fraud found that the health and disability insurance lines had insufficient policy assessments to support a statewide anti-fraud effort. From 2007 to 2010, CDI got more than 6,000 health and disability suspected fraudulent claims statewide, with a fraction of those claims referred to the local district attorneys. The local district attorneys were only able to conduct 656 investigations from these suspected fraudulent claims, resulting in 221 arrests and 184 convictions with an annual average of $223 million in chargeable fraud. AB
The bill is authored by Assembly Member Bob Blumenfield (D-San Fernando Valley) and sponsored by Commissioner Dave Jones and the California Department of Insurance (CDI). The bill now moves to the Senate For more information, visit www.insurance.ca.gov.
Assembly Passes Bill to Regulate Heath Care CO-OPs
The California State Assembly passed AB 1846, which would establish framework at the California Department of Insurance (CDI) to license consumer operated and oriented plans (CO-OPs). A CO-OP, which may be established under the Patient Protection and Affordable Care Act (ACA), is a new type of non-profit health insurer or HMO that is designed to offer affordable health insurance options to individuals and small businesses. CO-OPs must be licensed as issuers in each state in which they operate. They are subject to state laws and regulations that apply to all similarly situated issuers.
The bill is authored by Assembly Member Richard Gordon (D-Menlo Park) and sponsored by Insurance Commissioner Dave Jones and the CDI. Jones said passage of the bill would allow California to participate in the program and get federal funding. “These CO-OPs provide value to consumers by returning surplus revenue to members in the form of lower premiums, lower-cost-sharing, and expanded benefits,” he said. Under the ACA, those seeking to form a CO-OP may apply for the $3.8 billion in federal funds in the form of low interest loans. The bill now heads to the State Senate. For more information, visit www.insurance.ca.gov.
Small Business Owners Want Private Sector Pension Plans
California’s small business owners overwhelmingly support a retirement plan proposal that would be immune to stock market fluctuations and sudden economic downturns while offering employees a guaranteed monthly pension benefit for life. The proposal is the model for a bill making its way through the California Senate. It is envisioned as a partnership between the public and private sectors.
A survey of 505 small business owners in California finds large margins of support for the plan across gender, age, political, and geographical lines. The survey was conducted by Lake Research Partners for the National Conference on Public Employee Retirement Systems (NCPERS).
NCPERS unveiled its Secure Choice Pension proposal late last year as a solution to the retirement security crisis in the private sector, which is particularly acute in the small business community. The Secure Choice Pension would involve each state establishing its own plan. Private-sector employers that join a Secure Choice Pension would have lower administrative costs and dramatically lower administrative obligations.
Participating employees would make regular contributions to the Secure Choice Pension while employers could make contributions on behalf of employees.
Participants would have lower investment costs due to the economies of scale that are available to large pension plans. Participants would benefit from higher returns because Secure Choice Pension assets would be pooled and managed by professionals. The Secure Choice Pension would be funded by employers and would not impose a cost or risk to taxpayers.
Hank Kim, Esq., NCPERS executive director and counsel said, “After watching the Great Recession wipe out significant value from their 401(k) balances, most private-sector employees want the security of lifetime pension benefits. And to effectively address America’s retirement security crisis, workers need all three legs of the retirement security stool – pension benefits, Social Security and personal savings like 401(k)s. Our Secure Choice Pension proposal is a viable response to workers’ desires, employers’ business needs and America’s retirement crisis.”
California Senator Kevin de Leon (D-Los Angeles) has used NCPERS’ Secure Choice Pension proposal as the model for his Retirement Savings Act (Senate Bill 1234), which was recently approved by the Senate Committee on Public Employment and Retirement and the Senate Labor Committee.
The following are key findings of the survey:
• 71% of small-business owners favor the Secure Choice Pension proposal.
• The Secure Choice Pension is popular among small business owners who offer a retirement plan (70%) as well as those who do not (73%).
• Support for the Secure Choice Pension crosses party lines with 78% of Democrats and 70% of Republicans in favor.
• At 77%, support is particularly strong among Republican small business owners who don’t offer retirement benefits
• 73% of small business employers say that offering retirement benefits helps them recruit good employees.
• 60% say that offering a retirement plan is too expensive.
• 53% are interested in the Secure Choice Pension for their employees.
For more information, visit www.ncpers.org.
Blue Shield Collaborates on Coordinated Care Model
Blue Shield of California and John Muir Health launched an accountable-care initiative to provide integrated, cost-efficient health care to about 16,000 Blue Shield HMO members in Contra Costa County. The goal is to improve the quality care and reduce costs through better coordination of care. Mitchell Zack of John Muir Health said, “We are…working…with Blue Shield to pass along savings to local employers in the form of lower premiums.”
The initiative launches July 1, 2012 and will continue for at least 36 months. The partners expect the collaboration to result in little to no increase in healthcare costs for members in the first year and low single digit increases in the two subsequent years.
This is Blue Shield’s seventh commercial accountable care organization. Blue Shield works with hospitals, physician groups and employers on ACOs to deliver integrated care to 100,000 Californians in Sacramento, San Francisco, the Central Valley and Orange County. For more information, visit www.blueshieldca.com.
For more information, visit www.johnmuirhealth.com.
LTC Market Shows Encouraging Signs
Some carriers have withdrawn from the group long-term care (LTC) insurance market, fueling fears that the benefit might be losing favor. But the industry is merely adjusting and regrouping, according to a report by LTC Financial Partners LLC and EraNova Institute. Cameron Truesdell, CEO of LTCFP said, “There’s a struggle going on between two types of the benefit, group LTC insurance and voluntary multi-life LTC insurance. Both have a future but multi-life is set to come on strong.”
With multi-life LTC insurance, there is no master policy as with the traditional group benefit. Individual policies are issued to each insured member and there is usually greater flexibility in policy design. “Multi-life fits today’s dynamic, fast-evolving organizations. It can work with as few as three employees or as many as tens of thousands,” said Truesdell.
The 12-page report reveals a large market potential for multi-life based on its value to three constituencies: It protects earning capacity and retirement assets; bolsters productivity of an aging workforce; helps retain talent; and reduces reliance on Medicaid.
Benefit brokers, human resource managers, executives, and association directors can request complementary copies from the following LTCFP representatives:
Michael Scoles – 408-264-1759
Jim Valentine – 408-792-0540
Todd Stein – 415-861-5088
Sarah Fisher – 510-230-4301
Paula Taylor – 510-763-5002
Laura Weber – 714-674-0190
Jeffrey Flanzer – 805-701-0085
Sandra Stanley – 888-316-8919
Phyllis Solgere – 909-627-5587
Petra Petry – 949-351-0347
Large Employers Flock to CDHPs
Enrollment in consumer-directed health plans (CDHPs) grew 18% in 2011, according to the Mercer National Survey of Employer Sponsored Health Plans commissioned by the American Association of Preferred Provider Organizations (AAPPO).
Thirteen percent of all employees with employer-sponsored plans chose CDHPs in 2011. No other type of insurance plan saw that kind of enrollment growth in 2011. This trend corresponds with a slight, but steady decline in HMOs over the same period.
Last year’s increase continues a steady growth trend that started in 2008 (7%) and continued through 2010 (11%). The trend is likely to continue with 48% of employers of all sizes expecting to offer a CDHP in the next five years.
Karen Greenrose, AAPPO president and CEO said, “Given the cost savings inherent in the consumer-directed model, it’s clear that employers – especially our largest ones – are increasingly looking to CDHPs.”
Offerings of CDHPs among large employers (500 of more employees) jumped from 23% in 2010 to 32% in 2011, which is the biggest one-year increase so far. Small employers (under 499 employees) are the least likely to offer a CDHP, but even that sector grew from 16% in 2010 to 20% in 2011. Forty-eight percent of the largest employers (20,000 + employees) offered CDHPs in 2011, with 54% expecting to offer them in 2012.
Rep. Phil Roe, Chairman of the House Education and Workforce Health Subcommittee, said, “It’s obvious that the CDHP/HSA model is filling a significant void in the marketplace. As a physician, I know that patients are demanding greater personal control over their healthcare decisions and their employers want more affordable and manageable costs. CDHPs and the PPO networks they are built on are clearly meeting that demand “
Of the 256 million Americans with private or government health insurance, 204 million were enrolled in PPO-based plans in 2011, including point-of-service and consumer-driven plans, according to the Census Bureau. HMO enrollees represented the remaining 52 million (or roughly 19%). To view the entire study, visit www.aappo.org.
Many Individual Plans Don’t Meet Exchange Standards
Coverage in more than half of individual health plans falls short of what can be sold through exchanges in 2014, according to a study in Health Affairs. Individual insurers will need to alter benefit designs to qualify for exchanges.
The majority of Americans with individual insurance coverage are enrolled in a plan with an actuarial value that is too low to qualify for a state-based exchange. Insurance reforms that went into effect September 23, 2010 raised the financial protection offered by exchange plans. For example, lifetime maximum benefits have been eliminated; effective preventive services must now be offered without cost sharing; and annual limits on insurance coverage have been removed. But to qualify for exchanges, insurers will need to lower the average deductible for individual tin-level plans, which average nearly $3,900 for a single person.
Second, about two-thirds of employees are enrolled in a gold or platinum plan. Families with coverage through the exchanges are likely to have less financial protection than those with employer-based coverage. Employers that buy insurance coverage through the small-employer exchange in the silver tier will probably get less extensive coverage for their employees than if they bought a plan in the employer-based market.
Another issue concerns very sick patients who incur sizable out-of-pocket expenses regardless of coverage. These top spenders face out-of-pocket expenses of nearly $3,800 in a group platinum plan. But there are substantial differences in out-of-pocket spending among plans with high actuarial value and plans with low value. A family in the top 1% of medical spenders with tin-level coverage in the individual market would have annual out-of-pocket expenses of more than $27,000.
When it comes to actuarial value, individual insurance coverage does not meet exchange standards for the majority of covered lives. However, group insurance coverage is likely to have higher actuarial value than plans offered by exchanges.In 2010, the average actuarial value was 83% for group plans and 60% for individual plans. Annual out-of-pocket expenses were $1,765 for an average family with group coverage compared to $4,127 for those with individual coverage. The differences between the group and individual markets were even more dramatic for people in poor health who incurred high medical expenses. Along with a ban on medical underwriting, the individual market is expected to change dramatically due to health reform.For more information, visit http://content.healthaffairs.org.
Will the Supreme Court Decision Matter to Obamacare?
by G. Keith Smith, M.D., founder of Surgery Center of Oklahoma
(The full article appeared in the summer 2012 issue of the Journal of American Physicians and Surgeons.)
The late libertarian economist Murray Rothbard wrote that laws are generally passed to grant some privilege to those who advocate them. So we must always ask, “Who benefits?” The main supporters of the Affordable Care Act (ACA) have already achieved their main objectives and so may be indifferent to whether the U.S. Supreme Court overturns it.
One huge beneficiary is the health information technology industry. Physicians and hospitals were presented with a carrot (subsidies to purchase government-approved systems) and a stick (progressive fee cuts if they fail to implement electronic medical records. Billions of dollars have already been made. Since the subsidies were in the HITECH Act, which preceded the ACA, overturning the ACA might have little effect.
Overturning just the individual mandate would not affect the death panel or rationing feature since the enforcement tool — the electronic-medical record would remain. The medical loss ratio provision of the law, which requires insurers to pay out all but 10% to 15% of premiums in claims, will do the same thing to small insurers that the electronic-medical record requirement does to small hospitals – drive them out of business. For relief from competition, big businesses are more than willing to pay big money. The political theater at the U.S. Supreme Court may serve mainly to divert attention from the real objectives of the biggest proponents of the ACA. For more information, visit www.aapsonline.org.
The Plastic Safety Net
Nearly half of low-and middle-Income households carried credit card debt from out-of-pocket medical expenses. The average amount of medical credit card debt was $1,678, according to a survey by Demos – a research and advocacy organization. In February and March 2012 Demos surveyed a low- and middle-income American households that carried credit card debt for three months or more. Medical debt is a major contributor to poor credit for all indebted households. In fact, 55% of those who say they have poor credit say unpaid medical bills or medical debts contributed.
The study also found the following:
• Average credit card debt has declined, but many households still rely on credit cards to pay basic living expenses.
• In 2012, the average credit card debt is $7,145, down from $9,887 in 2008.
• In the past year, 40% of households used credit cards to pay for basic living expenses, such as rent or mortgage bills, groceries, utilities, or insurance — a rate that is comparable to 2008.
• Since the financial crisis, credit is tighter; half of affected households have cut spending as a result.
• Over the past three years, 39% have experienced tighter credit, such as having cards canceled, credit limits reduced, or being denied a card when applying.
• 48% of households with reduced access to credit cut the spending they would otherwise have charged to their credit cards.
• Unemployment and medical bills were among the leading contributors to credit card debt.
• 86% of households that incurred expenses due to unemployment in the past year took on credit card debt as a result.
• While 62% of overall indebted households reported that their credit was excellent or good only 44% of African Americans and 55% of Latinos described their credit in such positive terms.
• The 2009 Credit Card act is helping households pay down balances faster and avoid fees.
• One third of households are responding to new information included on credit card statements by paying their balances down faster.
• In the 2008 survey, half of households reported accruing late fees compared to just 28% in 2012.
• Those who did make late payments were significantly less likely to see their interest rate increase as a result: 24% fewer households reported interest rates increasing as a result of a late payment in 2012 than in 2008.
For more information, visit http://www.demos.org.
The VA Plans to Waive Co-pays for Remote Doctor Visits
The Dept. of Veterans Affairs is on the forefront of cost savings with plans to eliminate the payments veterans make when they see VA physicians during telemedicine appointments. The proposed rule change would encourage veterans to stay closer to home rather than utilize VA resources for transportation and lodging costs to go to VA Medical Centers.
The VA began the largest rollout of telemedicine in 2009. GlobalMed has provided nearly 2,000 mobile telemedicine systems for VA installations in all 50 states and U.S. territories. The VA has 23 Veterans Integrated Service Networks (VISNs). One of them, VISN 20, recently reported that its telemedicine program helped save $742,000 last year. “The proposed rule indicates that the savings the VA has seen in telemedicine is more than enough to cover the cost of lost co-pays,” said Joel E. Barthelemy, managing director of GlobalMed.
Since initiating its telemedicine program, the VA has increased veterans’ access to specialist consultations, improved access to primary and ambulatory care, reduced waiting times, decreased veteran travel, improved outcomes, and raised patient and family satisfaction. For more information, visit www.globalmed.com.
Healthcare Consumerism Radio Show
The Institute for HealthCare Consumerism Radio Show is offering a weekly schedule for June 2012. The live show airs Fridays from 8:00 a.m. to 9:00 a.m. PST at http://www.theihcc.com/en/media_center/radio. Podcast archives of all past episodes are also available.
Mobile Benefit App
Assurant’s updated Benefit Tools mobile ap can be viewed on a Smartphone. Members can review their benefits as well as print, fax, or e-mail their membership card to their dentist. The app also connects Smartphone users with dentists and eye doctors close in their zip code of choice. Users also can link easily to the Assurant Employee Benefits website to purchase individual dental plans. For more information, visit www.assurantemployeebenefits.com.
408(b)(2) Fee Disclosure Guide
Nationwide Financial has developed a 408(b)(2) Solutions guide to help retirement plan advisors adapt to Department of Labor fee disclosure regulations that take effect on July 1. For more information about fee disclosure, you can watch a video at http://www.nationwide.com/advisor-added-value-videos-disclosure.jsp.
Aetna enhanced its Healthy Commitments program. The company increased the guaranteed savings for employers to 2% on healthcare trend when their employees meet minimum participation levels. Customers will now have access to additional incentives to encourage employee participation. The Enhanced package includes worksite biometric screenings, member incentives, and a fitness program that uses social networking. The Premier package offers one-to-one personal support to employees in areas, such as weight management, tobacco cessation, stress management, nutrition, physical activity, and preventive health. For more information, visit www.aetna.com.
Healthcare Cost Estimator
UnitedHealthcare has launched “myHealthcare Cost Estimator.” The integrated online service helps consumers find quality care and estimate the cost of more than 100 common treatments and procedures. Estimates reflect an individual’s health plan benefits, including their real-time account balances when applicable. The new online service is more precise than calculators that may only rely on old claims data, which often comes from only a handful of employers. For more information, visit http://www.myuhc.com.