California Insurers Are on the Brink of Change

changeCalifornia’s insurance market is set to undergo enormous changes as health reform takes full effect and millions become eligible for public insurance or private subsidies, according to a report by the California HealthCare Foundation. The report provides a snapshot of the insurance market in California at the end of 2013, just before the major provisions of the Affordable Care Act (ACA) took effect. It also includes some initial figures from 2014 that point to large shifts in Medi-Cal and individual coverage levels. Researchers looked at data from the Department of Managed Health Care (DMHC), the California Department of Insurance (CDI), and other sources to examine market share, enrollment, financial performance, premiums, public coverage, and consumer satisfaction. The following are Key findings:

  • Health insurance was a $123-billion business in California in 2013, with six carriers accounting for more than three-fourths of all revenues and most insurers operating in the black.
  • In 2013, enrollment shifts were small, except in the pre-ACA individual market.
  • State and federal policy actions brought significant growth to Medi-Cal managed care — about 2.8 million enrollees, a 58% increase in the 18 months ending in June 2014.
  • Covered California enrolled 1.4 million individuals in health insurance plans through 11 carriers in the first enrollment period ending March 31, 2014.
  • Product choice differed by market, with only 20% of individuals enrolled in HMOs and 79% of large group enrollees in HMOs in 2013. This could change in 2014 as the ACA implements sliding-scale premium subsidies and mandates freedom for individual enrollees to choose their product and insurer.

To get the complete report, visit

Lessons From Massachusetts

The University of California Center in Sacramento is hosting a briefing on Friday California about the experiences of Massachusetts, which led the country in health care reform. It will be held Friday March 6, 2015 from 9:00 AM to 11:30 AM PST. The free event will be held at 1130 K Street in Sacramento. For more information, call 510-287-3878 or email


The ACA Could Raise Premiums for Small Groups

The Affordable Care Act (ACA) expands the definition of small employer to include those with up to 100 employees for plan years beginning in 2016. Many employees in groups 51 to 100 could be facing changes to their benefits. The expansion could also mean increased premiums for those in groups of one to 50, according to a report by the American Academy of Actuaries.

The scheduled expansion of how small employers are defined could result in changes to health care premiums and coverage for significant numbers of employees of small businesses.

Many employers and employees will be affected by the change in the small group definition. Such a change could affect over 150,000 establishments with more than 3 million workers.  Groups sized 51 to 100 will face more restrictive rating rules, which will increase relative premiums for some groups, such as those with younger and healthier populations, and reduce them for other groups, such as those with older and sicker populations.

Groups sized 51 to 100 will face additional benefit and cost-sharing requirements, which could reduce benefit flexibility and increase premiums. The more restrictive rating and benefit requirements could cause more groups sized 51 to 100 to self-insure, especially among those whose premiums would increase under the new rules. To get the issue brief, click on Health under the Public Policy tab at

Why Doctors Don’t Like the ACA

The Affordable Care Act (ACA) still isn’t popular among doctors, according to a survey by The January 2015 survey found that 44% of physicians were opposed to it before implementation, and 58% are opposed to it now after a year of working within the confines of the law. Doctors said that positives of the law include increased access to care, coverage for children under 26, no insurance denials for pre-existing conditions, decreased costs of end-of-life care, and a focus on preventive care. Doctors also cited negatives, such as lower reimbursement to physicians and hospitals, higher patient debt due to high-deductible plans, and increased administrative and compliance burdens for their practices. Seventy-eight percent of doctors said that patients are not educated about how the ACA works. Many physicians said that insurance companies should have done more to inform newly insured patients about deductibles, premiums, coverage limits, etc.

After a year in the trenches trying to help patients understand this legislation, physicians say the law hasn’t done a lot to help improve healthcare, said R. Shane Jackson, president of and Jackson Healthcare. Physicians say the ACA has made serving patients and running their businesses much harder.  Seventy-four percent say that Congress should overturn the ACA, with 66% saying that it should be repealed. Still, many physicians were able to find some positives to the ACA. For more information, visit

More Doctors Rejected Medicaid Patients in 2015

In 2015 only 34% of the healthcare providers accept Medicaid, according to an analysis by HealthPocket. That’s down 21% from 2013. The data calls into question whether the temporary two-year increase in Medicaid payments to primary care physicians had any lasting improvements on Medicaid acceptance. Medicaid typically pays 61% of what Medicare pays for the same outpatient physician services. Medicare typically pays 80% of what commercial health insurers pay. For more information, visit

Integrated Health Systems May Deliver Better Care

For about four decades, integrated-delivery networks have operated under a halo of presumed societal benefits (quality, efficiency, care integration, etc.) with remarkably little evidence that these benefits exist. A study by the National Academy of Social Insurance (NASI) finds growing evidence that hospital-physician integration has raised physician costs and hospital prices. NASI looked at quality and financial information from 15 of the largest non-profit integrated delivery networks across the country, including Sutter Health in Northern California.

Integrating hospitals into health plan operations and risked-based contracting has not resulted in shorter hospital stays or lower charges per admission. Diversification into more businesses is associated with negative operating performance. Provider-sponsored insurance plans face similar problems regardless of whether they are formed by hospitals or physician groups: poor capitalization, lack of actuarial and underwriting expertise, limited marketing capability, adverse selection risk (attracting sicker than average enrollees), and the inability to reach sufficient enrollment scale.

The study authors recommend the following:

  • Integrated-delivery networks should provide more detailed and routine disclosures about how their subsidiary businesses are performing — hospitals, physicians and health plans. They should also provide overhead and revenue allocation strategies. With the present disclosures, it is not possible to tell definitively whether integrated-delivery networks offer measurable societal or institutional benefits.
  • Integrated-delivery networks should disclose the hospital’s operating profit as a percentage of total earnings. They should also disclose physician and hospital compensation policies, including whether capitated risk is passed on to hospitals and physicians as well as allocation of overhead and ancillary services income among the three main lines of business.
  • There should be a national all-payer claims database that would enable people to see what integrated-delivery networks are being paid for hospital and physician services. For more information, visit

Exchanges Offer More Choices in Kids’ Dental Benefits

Consumers who want medical plans with embedded dental benefits have more options than ever on the health insurance exchanges, according to a study by the ADA Health Policy Institute. Across 40 states examined for the study, 36% of medical plans have embedded pediatric or family dental benefits. This is a dramatic increase over 2014, when 27% of plans offered such benefits.

While pediatric dental benefits are an essential health benefit under the Affordable Care Act, many plans do not offer first-dollar coverage for preventive dental services. Medical plans with embedded dental benefits are more likely to offer first-dollar coverage than are stand-alone plans. Pediatric dental benefits purchased through medical plans are usually less costly than stand-alone plans., the government’s website for federally facilitated exchanges, is more transparent about dental benefits coverage and cost sharing than it was in 2014. For more information, visit



Insurance Industry Adds 13,900 Jobs in January 

The insurance industry saw an increase in employment with the addition of 13,900 jobs in January, according to the latest employment numbers from the U.S Bureau of Labor Statistics released on February 6, 2015.  The insurance industry grew by 0.55% last month and now sits at roughly 2.52 million employed insurance workers. Over the past 12 months, the total number of employed insurance workers has increased by 3.86% from 2.42 million in January 2014.

The finance and insurance sector saw an increase in employment with the addition of 22,400 jobs for the month of January, with the majority of job increases with insurance carriers and related activities sub-sector.  Across all industries, total non-farm payroll employment rose by 257,000 in January, with job gains in retail trade, construction, health care, financial activities, and manufacturing. The unemployment rate, at 5.7%, changed little in January and has shown no net change since October. The number of unemployed persons remains little changed at 9 million for the month of January.

Employment numbers were revised for November (from 353,000 to 423,000 jobs) and December (from 252,000 to 329,000 jobs). With these revisions, employment gains were 147,000 higher than previously reported.

Brokers to See Increased Profit Margins

Fitch Ratings anticipates stable to modestly improved insurance broker profit margins in 2015. Revenue and organic growth rates will face renewed pressure from flat to declining premium rate changes in property/casualty re-insurance markets. Changes with the evolving healthcare environment could still provide opportunities for brokers’ employee benefits and consulting businesses. For more information, visit


Employee Leave Is More Complex Than Ever

The landscape of employer leave continues to undergo significant change. On the federal level, employers face continually looming initiatives and considerations under the Affordable Care Act, the FMLA, the Americans with Disabilities Act (ADA), and the Americans with Disabilities Amendments Act (ADAAA). In addition, states and even localities are increasingly adopting their own leave laws, according to the Disability Management Employer Coalition (DMEC).

Employers and employees are more confident in their understanding of the FMLA and are incorporating it into their business processes more smoothly. But it is still very challenging, particularly with respect to intermittent leave, ADA/ADAAA, and coordination with municipal and county leaves. The legal complexity has heightened. There is  a greater need to collaborate across business units and train managers and supervisors.

Employers of all sizes are overcoming challenges by outsourcing, developing solutions internally, or leveraging technology. Employers of all sizes are integrating mandated leave into their business processes more effectively, said Terri L. Rhodes, executive director of DMEC. Helen Applewhaite, the Dept. of Labor’s Wage and Hour Division FMLA Branch Chief will address the changing FMLA landscape and the department’s enforcement 2.0 strategic plan at DMEC’s FMLA/ADAAA Employer Compliance Conference April 20 to 22 in Alexandria, VA.  For more information, including a conference agenda, visit:

Employees Are Not Prepared for Financial Emergencies

Most American workers are not in a position to cover the financial needs they may face if they are unable to work or face other unexpected financial hardships, according to a research report by Prudential Financial. Employees are not prepared for three key risks they face in their working years — premature death, illness or injury and out-of-pocket medical and living expenses. More than half of U.S. households have less than $10,000 on hand to use in an emergency.

According to the white paper, the common driver for financial wellness in all three cases is the level of insurance coverage an employee carries. Employers are challenged to help workers determine what they need and how they can take advantage of company-paid and voluntary benefit offerings to improve financial wellness. The survey finds the following:

  • In the event of a premature death, the average employee could cover only 71% of the financial needs for a spouse’s or partner’s lifetime and for children until adulthood.
  • In the case of an illness or injury where they could no longer work, the average employee’s household would be able to pay 71% of their monthly expenses using other income sources, such as spousal or partner income and disability insurance benefits.
  • If they had a critical illness or accident, the average employee’s household is equipped to cover just 48% of out-of-pocket expenses through liquid savings and insurance coverage.

Employers can help by providing targeted, needs-based financial wellness programs and analytical tools. A broad array of insurance programs, such as life, disability, accident insurance, and critical illness coverage, can help protect employees. For more information, visit


Spanish Benefits Learning Center

Colonial Life has launched a Spanish-language version of its popular Benefits Learning Center website to better serve the country’s fastest-growing demographic group. The free site is open to the public and isn’t limited to Colonial Life customers. For more information, visit

ACA Compliance 

Minnesota-based Health E(fx) released its “Compliance Connect,” an Affordable Care Act (ACA) management solution. It’s designed for third-party providers, including benefits administration, payroll, private exchange, and outsourced HR-managed services. For more information, visit

LTC Educational Video

Genworth Financial has unveiled an educational video, “Let’s Talk Now,” featuring actors and media personalities Angela Bassett, Jim Nantz, Maggie Gyllenhaal, and Zachary Quinto in addition to Maria Shriver and Rob Lowe. To view the video, visit

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