Insurance Insider News
The Future of Employer Based Coverage

by Leila Morris – 8/14/14

employer-based health coverage Employers are likely to continue providing health coverage as long as they get a federal tax incentive. They will also provide coverage as long as it remains a competitive advantage to do so, since workers want group health coverage, said Chris Jennings, president of Jennings Policy Strategies. He addressed a recent a May forum in Washington, D.C., sponsored by the Employee Benefits Research Institute.

Noam Levey, who covers national healthcare policy for The Los Angeles Times said, “It is interesting to hear what people in Washington think is going to happen with employer-provided coverage, and then you talk to people in the benefits world, and you get a very different picture. The simple fact of the matter is that employer-provided health coverage clearly has a value for employers.” Levey said that employers are working to tier their benefits, at different levels for different workers. He said that he real wild card with health benefits is the federal tax treatment of health coverage and how Congress may change it. “The Cadillac tax obviously is going to be something that’s going to get a lot of debate here, and when it actually goes into effect, I’ll guarantee you we’re going to have some fireworks in Washington,” he said.

A recent EBRI survey reveals how much employees value health benefits. Seventy percent of workers rate health coverage as the most important benefit and another 10% rate it as second most important. Of the 60% of workers who report rising health care costs, one-third reduced their retirement plan contributions, which means trading off retirement benefits to maintain health benefits.

When considering a specific job, 77% of workers say health benefits are the most important benefit while only 11% say retirement savings plans are most important.

Ninety percent of workers are confident that their benefits are less expensive than what they could purchase on their own, and 80% are confident that their employer had picked the best plan for them. Ninety percent are satisfied with their health coverage, and 75% are satisfied with the mix of health coverage and wages. Ninety percent want in more choice in their health plans, which may explain the interest in health care exchanges. EBRI found that 45% of employees prefer something along the lines of a defined contribution health offering. Fronstin added, “It’s going to be interesting to see what happens down the road as workers understand more about the benefits of public exchanges and as employers introduce private exchanges. We’ll see what kind of shift there is and whether it’s employer-driven or worker-driven.”

Jennings predicts that many employers will go into private exchanges. The most likely candidates are small businesses, retailers, and employers with part-time, low-income work forces. While many employers are considering private health exchanges, Americans who work for larger employers will probably not see that change immediately, he said.

Jennings said, “It’s going to take a few years for all that to shake out. Employers are slow to react…They want to see how the exchanges are operating. They want to see satisfaction rates.” However, Jennings said that employers will have more incentive to look at alternatives if there is a major resurgence in healthcare-cost inflation. Jennings doesn’t anticipate an abrupt reduction in benefits among employers since larger employers are already preparing for the Cadillac tax and high-cost plan assessment.

George Washington University professor Joe Antos cited an Aon Hewitt study of workers in its own private exchange, which found that 58% selected a different level of coverage from one year to the next. “What that says is that having somebody else decide what your coverage should be probably isn’t going to suit a lot of people. A private exchange gives people more choices. It’s an opportunity to find out what people really want and not pour more money into something that may not be of such great value.”

Antos said that the Affordable Care Act’s (ACA) coverage mandate primarily affects lower-wage workers. Higher-income workers generally work for companies that already offer coverage. Antos said, “If you’re a part-time worker and you’re working 32 hours a week, you might drop to 29 hours because your employer doesn’t want to get caught in all of this. Are you going to be able to make up those hours? Are you going to be able to get another job?” He cited a recent study by the Urban Institute that calls for eliminating the employer mandate since relatively few people will not have insurance. Antos said that it’s highly unlikely that the federal government will enforce the unpopular employer mandate. He also said that a shift to defined contribution health plans is inevitable. For more information, visit http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5435

The Growing Interest in Private Exchanges

Interest in private exchanges has sharply increased as the Affordable Care Act is officially underway, according to a report by the Decision Resources Group. The number of patients in consumer-driven health plans is likely to increase as private exchanges become more prevalent, which could have a negative effect on pharmaceutical sales, especially for branded drugs.

Decision Resources Group Analyst, AnnJeanette Colwell said, “Although there has not been mass movement towards these private exchanges, employers are interested in exploring these options. The increased interest in private exchanges provides an opportunity for managed care organizations to gain commercial enrollment, especially if employers begin moving their groups into single carrier exchanges.”

She said that when employer groups shift their workers into exchanges and use a defined contribution benefit model, employers will be more cost-conscious. Consumers are less likely to choose plans that significantly exceed their employers’ contributions. They are likely to choose a high-deductible option that has lower monthly premiums. For more information, visit www.DecisionResourcesGroup.com.

A Preliminary Look At 2015 Individual Rates

A picture of the 2015 insurance landscape is beginning to emerge months after the close of the 2014 exchange open enrollment period, according to a report by PWC. Publicly released premium increases across about 29 states and the District of Columbia vary widely, ranging from a low of -23% in Arizona to a high of 50% in Arkansas. The average rate increase across states reporting data is 8.2% while the average monthly premium (without subsidies) is around $385.Year two of the exchanges is expected to see an upswing in participation from several major commercial insurers. The bellwether Blue Cross Blue Shield plans have submitted increase requests across the country typically above 9%.

New healthcare CO-OPs, nonprofit insurers created under the ACA, are priced comparably to or lower than competitors in Arizona, Colorado, Connecticut, Kentucky, Maine, Maryland, Nevada, and Tennessee. Arizona’s CO-OP is the lowest-priced plan in the state, with a 23% proposed rate decrease from 2014. Competitive premiums may not always result in higher enrollment as some CO-OPs have found. For more information, visit http://www.pwc.com/us/en/health-industries/health-research-institute/aca-state-exchanges.jhtml

Federal Drug Discount Program Faces Challenges

A federal program that provides billions in drug discounts to safety net hospitals and other health care providers is expanding under health care reform. The 340B program faces a number of critical issues, such as whether to better define eligibility, strengthen compliance efforts, and provide greater transparency about the discounts provided, according to new analysis by the RAND Corporation. The federal Health Resources and Services Administration is developing new regulations to address these and other issues. “Policymakers need a clear, objective description of the 340B program and the challenges it faces on the road ahead. There are increasingly divergent views on the program’s purpose and the role it should play in supporting safety net providers,” said Andrew Mulcahy of RAND.

The federal 340B program began in 1992 to help health care providers extend services to the indigent and uninsured. The program allows some hospitals, clinics, and health centers to buy outpatient prescription drugs at discounted prices. The program covers more than 7,800 entities as a result of expanding eligibility rules. Hospitals that participate in the program account for more than one-third of all U.S. outpatient hospital visits.

Federal officials estimate that the 340B program accounts for $6 billion in outpatient drug spending, about 2% of all U.S. prescription drug spending in 2011. This translates into savings of $1.6 billion for eligible safety net providers. RAND researchers say that these savings are small compared to the disproportionate share hospital payments and primary health care grants that play a large role in financing care in the safety net. However, some estimates suggest that the size of the program could double under provisions in the federal Affordable Care Act. Formulas used to calculate drug prices are based partly on proprietary information, which can make it difficult for health care providers to know whether they can negotiate a lower price for drugs through another source. For more information, visit www.rand.org.

Some Medicare Advantage Companies Fail At Customer Service

Using government data, HealthPocket analyzed customer service in the call centers of Medicare Advantage companies. Hold times, dropped calls, accuracy of information provided, and customer satisfaction metrics were all included in the analysis of every Medicare Advantage plan that operates in multiple states. HealthPocket found low customer service scores among several large Medicare Advantage companies. While the top five companies are regional brands with lower brand recognition nationally, several of the bottom five companies are popular insurance brands. UnitedHealth Group includes the familiar AARP-branded Medicare Advantage products, and Health Net and WellCare are also Medicare Advantage brands with considerable enrollee populations. More than15% of the Medicare Advantage companies failed to meet the government standards for customer service through a call center. The following companies had the highest customer service scores:

1. HealthPartners
2. Gundersen Lutheran Health System Inc.
3. Cambia Health Solutions
4. Health Plan of the Upper Ohio Valley
5. University of Pittsburgh Medical Center The bottom five companies were:
1. Universal Health Care Group
2. Health Net
3. UnitedHealth Group
4. WellCare Health Plans
5. Munich American Holding Corporation The complete findings and methodology can be reviewed here http://www.healthpocket.com/healthcare-research/infostat/medicare-advantage-customer-service-ranking#.U-un9IURKMI.

State Spending on Employees’ Health Insurance Varies Significantly

Spending on health insurance for state employees was up slightly in 2013 over the previous two years, with the cost varying widely from state to state, according to a report from the State Health Care Spending Project. Paying for employee health insurance is second only to Medicaid as a portion of states’ health care spending. Monthly premiums averaged $963 per employee, with the state covering 84% of the premium. In California, the average is $1,092 with the state covering 77% of the premium.

State plans, using premium contributions from states and employees, paid for 92% of the average enrollee’s health care costs in 2013. To provide some context, these plans would be designated as platinum in the health insurance exchanges.Nineteen states offered employees at least one health plan with an annual deductible of at least $1,500 in 2013, up from 16 states in 2011. Among the 19 states, 7% of state employees enrolled in the high-deductible plans in 2013. Nationwide, 4% of state employees enrolled in such a plan, and 45% enrolled in plans with no deductible.

After controlling for plan richness and household size, there is a substantial range in premiums across the states. This suggests that other factors have an important effect on premiums, such as variation in physician treatment approaches, service utilization, and age and health status of employees. For more information, visit www.pewtrusts.org.

Obesity, Language, And Affordability Pose Barriers To Latino Health

Latinos face barriers to maintaining their health including affordability, immigration status, and language, according to a study by National Council of La Raza (NCLR). Twenty-five percent of those surveyed had visited an emergency room in the past year — a costly option that cannot replace regular medical visits for people with chronic conditions. Latinos are among the fastest-growing segments of the American population and will represent nearly one-third of U.S. workers by 2050. “Our nation’s ability to meet economic demands is tied to the health of this community. Affordable health insurance and access to high-quality medical care and information is vital,” said Delia Pompa, senior vice president, Programs, NCLR. The following are key findings:

• 60% of survey respondents have been diagnosed with a chronic disease. Comorbidities are highly prevalent.
• About 75% are overweight/obese.
• About one-third had difficulty in getting health information in Spanish, the preferred language among 74% of those surveyed. Focus group participants perceived that the fear of unintended immigration consequences is a deterrent for health care access in their communities.

“To take on these critical challenges, we need a major public health initiative that includes using promotores de salud, community health workers, who are trusted sources of information and who provide culturally and linguistically appropriate education,” said Manuela McDonough, Associate Director, Institute for Hispanic Health, NCLR. For more information, visit http://www.nclr.org.

 

IN CALIFORNIA

Kaiser Is the Only Exchange Plan to Lower its Rates

The Los Angeles times reports that Kaiser is lowering its rates for Obamacare coverage in California by 1.4% next year.California’s health insurance exchange recently announced that premiums were rising 4.2%, on average, statewide for 2015 policies. A new analysis by Citigroup healthcare analyst Carl McDonald offers new details on what consumers can expect by company. Kaiser was among the most expensive health plans in 2014 and staggered to a fourth-place finish in exchange enrollment. Anthem Blue Cross was the leader statewide, followed by Blue Shield of California and Health Net Inc. Kaiser doesn’t seem particularly happy with its exchange market share, as it is the only company reducing exchange premiums in 2015, McDonald told the LA Times.

Rates for Anthem Blue Cross, a unit of industry giant WellPoint Inc., are going up 4.6%, on average, according to Citigroup.Blue Shield’s increases are 6% statewide and Health Net is raising premiums by 4.9%. Despite those 2015 rates going in different directions, McDonald and other industry analysts are skeptical that Kaiser will gain much ground on its rivals. Even with the slight decrease, Kaiser’s HMO remains one of the more expensive options.

Next year, Health Net’s HMO remains the cheapest coverage on the silver tier in L.A. at $231 a month for a 40-year-old, up $7 from this year’s premium. Those low rates made Health Net the market leader in L.A. with 33% market share, beating out Blue Shield and Anthem.

Those three insurers and Kaiser together accounted for 94% of Covered California’s initial enrollment of 1.4 million people under the Affordable Care Act. About 1.2 million actually completed the sign-up process and started paying their premiums, according to state estimates.

These rates are still subject to review by regulators before open enrollment for 2015 starts Nov. 15. The changes in premiums for each company also vary by region and the type of health plan. Among the smaller, regional health plans, L.A. Care is boosting its HMO premiums by 11.3%, according to Citigroup research. That’s the biggest percentage change for any insurer in the state.

Medi-Cal Is Bracing for an Enrollment Boom

By the end of 2015, the Affordable Care Act will add more than two million enrollees to Medi-Cal, according to a report by the California Health Care Foundation. However, Californians are likely to have a hard time getting health care through Medi-Cal unless the number of participating physicians grows or California finds other ways to deliver services. Medi-Cal enrollees face significant challenges due to statewide variations in physician availability. The survey also finds the following:

• Their are 35 to 49 Medi-Cal primary care doctors to 100,000 enrollees, which is well short of the 60 to 80 that the federal government says are needed. There are 68 to 102  non-primary physicians Medi-Cal to 100,000 enrollees, which is within the federal estimate of need (85 to 105 per 100,000).
• 69% of all physicians have Medi-Cal patients; 77% have Medicare patients; and 92% have privately insured patients.
• Physicians in community health centers and public clinics have the highest rate of Medi-Cal participation at 92%, and those in solo practice have the lowest at 54%.

To get the report, visit http://www.chcf.org/publications/2014/08/physician-participation-medical

 

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LIFE SETTLEMENTS

“Worthless” Life Policy Brings a Windfall

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