Two Minute Drill

Repair, Not Repeal.

That is the conundrum now over Obamacare, or the Affordable Care Act (ACA). It appears Americans are coalescing around the idea of fixing or repairing the unpopular parts of ACA rather than repealing it. So far, the law has been rolled out with the following popular and unpopular components:

Popular

  • children stay on parents plans to age 26
  • elimination of pre-existing condition clauses
  • guarantee issue for individual policies
  • free “wellness” programs
  • subsidies based on income

Unpopular

  • individual mandate
  • emerging “narrow networks” trend
  • employer taxes (still largely unknown to the population at large)

So does repair mean…

  • richer subsidies?
  • elimination of the individual AND employer mandate?
  • regulation of carriers to offer more robust choices?
  • elimination of employer taxes?
  • repeal of the “cadillac” tax?

Reading the law and seeing how the financing of it is projected, it seems more unpopular items need to be implemented. The law’s taxes, mandates and medicare cost reductions will not be popular, but are essential. If you see another way of stabilizing this law over the long run, please let me know. Perhaps a single payer system? Maybe Google will come to the rescue.

To read more on this topic, Americans want to Fix, Not Repeal Obamacare, or Politifact’s Truth-o-Meter on Which is more unpopular: Obamacare or repealing Obamacare?

Big Pharma Companies Prescribe Higher Prices

An article about big pharma companies and their pricing policies show a trend toward sharply rising drug prices. It doesn’t seem likely that it will slow down any time soon. I warn you – there’s tons of details to consider when it comes to pharmaceutical drug costs. Here are some key takeaways:

  • Big Pharma is in a period of intense consolidation
  • The cost of brand-named drugs is soaring
  • Starting prices of new drugs are escalating
  • More concentration in a therapeutic area = higher prices
  • Generic drugs now make up 86% of all medicines used in the U.S. but that hasn’t reduced total spending on prescription drugs
  • The economics of prescription drugs are unique compared to other major markets
  • Turf wars between drug makers are driving costs higher
  • Rising prices of brand-named drugs is roughly equal to losses due to patent expirations

If you or your employees are concerned about the rising cost of drugs, stay tuned…you’ll see more about this hot topic from us.

To read the entire article, read Big Pharma’s Favorite Prescription: Higher Prices as seen on BusinessWeek.com

Employers are on the hunt! Says a new survey…

Seems like everyone wants to know what’s on the minds of employers and what they are thinking about insurance. A new survey conducted by Wells Fargo Insurance interviewed 70 employers across the U.S. Results show that as employers and their employees face higher costs, deductibles and copays the employers are searching for ways to control costs and help employees improve their health.

The survey findings also show the top three employer product innovations this year include:

  • Accountable Care Organizations (ACO’s)
  • increased wellness programs
  • narrow provider network offerings

47% of survey respondents say they will develop their own private proprietary exchange by 2015.

Read the full article at Wall Street Journal online, Survey: Cost of Healthcare Claims Continue to Rise; Interest in Private Exchanges Increases

Are you an employer? What are you thinking about insurance?

Inside Baseball: Observations on Obamacare, Enrollments and the Exchange

National healthcare consultant and columnist Bob Laszewski makes some interesting observations in his most recent column at Health Care Policy and Marketplace Review.  After making the rounds with insurance carrier executives, actuaries and others involved with the Obamacare rollout, here are some of the things Laszewski reports:

On Enrollment Numbers. About half the enrollments in the exchange are made up of folks that already had insurance and about half were previously uninsured. Other conventional polls indicate that the ratio is closer to two-thirds previously insured and one-third previously without insurance.

On Demographics and Risk. The average age of those enrolling is still high (not enough from the 18 -34 demographic). Actuaries indicate that the overall numbers  may present an even bigger issue: Is enrollment via the exchanges large enough to get the right mix of healthy and sick people to balance the risk?

On Enrollment Attrition. About 15% – 20% of those counted as enrolled have not paid even first month premium. Something to watch over the course of the rest of the year is how many new enrollees will simply allow their policies to lapse. If that happens, with open enrollment closed until next year those numbers are not likely to be replaced.

On Consumer Satisfaction. Carriers report hearing a lot of dissatisfaction from consumers about their new health plans especially when compared to what they had before.

On 2015 Rate Increases. While there will be some variation within and across states, generally, rate increases for 2015 are expected to be just under 10% on exchange plans. A number of factors contribute to this projection: Lack of claims data to analyze.  Rate increases greater that 10% are subject to regulatory review. And, Obamacare reinsurance protects carriers from underwriting losses until 2016.

Our bottom line. Waaaayyyyy more questions than answers. The answers aren’t likely to come for quite some time (years). Carriers don’t think Obamacare will be repealed but rather will evolve and are going forward in that fashion. No one has a handle on Obamacare costs at this point and won’t until enrollments stabilize, more claims data is available for analysis and the $20 billion federal reinsurance backstop for insurance carriers expires in 2016 or when as Laszewski states “the training wheels come off.”

Hobby Lobby Politics – will the “brand” win or lose?

Have you been keeping up with the controversial Hobby Lobby case in the Supreme Court of Sebelius v. Hobby Lobby? The company has taken a very public position against certain provisions of The Affordable Care Act, specifically as it relates to covering contraception for women. They cover male contraception in the form of vasectomy, but take issue with providing contraception for women. David Green, founder of the very successful family-owned retail chain, wants the court to expand the Religious Freedom Restoration Act of 1993 so that businesses like his can opt out of certain provisions of Obamacare on religious grounds.

Whatever your political or religious views on contraception, consider what politics and religious views can have on your company’s brand. Mary Buffett, writer for The Huffington Post does an excellent job of laying out the facts and the potential toll this case may have on the successful brand name Hobby Lobby has made for itself over the past several years. Why Hobby Lobby Loses Even if it Wins at the Supreme Court.

Open Enrollment is Over. So Now What?

Media outlets have been buzzing since Tuesday about the passing deadline of open enrollment and what the next phase of implementing the new health care system will bring. There is a lot of “noise” about whether the 7.1 million number of new enrollees reported by the White House is an inflated number, mostly because many believe there is a large percentage of enrollees who have yet to pay for their insurance. Also, there is a great deal of speculation that insurance companies will raise their rates next year along with reports that indicate the implementation of the new health care system will weigh heavy on large employers, causing their expenses to rise [additionally] by nearly 6% [over and above what they would already spend] over the next ten years.

Kaiser Health News offers a round up of commentary from several sources in
Open Enrollment is Over — What’s Ahead for the Health Law Now?

Meanwhile, Marketwatch by Wall Street Journal reports ADP just released it’s 2014 ADP Annual Health Benefits Report. This is their second annual report, based on actual, aggregated health benefits data from U.S.-based companies with 1,000 or more employees. According to a press release by ADP, “…the report provides employers with benchmarks to better gauge the effectiveness of their current strategies and to help plan for changes on the horizon.”

The data was collected by a survey of employees (anonymous) from a group of employers spanning from 2010 to 2014. Key findings of the report include:

  • Premium increases are leveling off
  • Employers are contributing slightly less
  • Overall participation is steady, but varies with age
  • Costs vary by state

You can download a free copy of the ADP report here.

Individual Mandate and the March 31 Deadline

Info for Part-time or Other Employees Currently Without Health Insurance

There’s lots of noise out there related to Obamacare’s individual mandate and the rapidly approaching March 31 open enrollment deadline. Here’s summary information for those part-time or other employees that currently do not have any health insurance:

  • The deadline to sign up for individual health insurance is March 31 – less than a week away. This marks the end of the open enrollment period.  After March 31, those without coverage will not be able to purchase an individual health plan (on or off the exchange) until the next open enrollment period beginning in November — unless they have a qualifying event such as marriage, birth of a child, loss of employer sponsored health coverage, move out of state, have a significant income change, etc.  If that’s the case, then they can enroll during a special enrollment period.
  • Extensions may be available based on information released just yesterday.  According to latest reports if someone started to apply for coverage through the HealthCare.gov website but could not finish by March 31 or they experienced other glitches in trying to sign up, they will have until about the middle of April to seek an extension.  Individuals can qualify for an extension by checking a blue box on the HealthCare.gov website indicating that they’ve tried to enroll before the deadline. The following are links to recent news stories that reported the extension that was officially announced yesterday:

http://www.reuters.com/article/2014/03/26/usa-healthcare-enrollment-idUSL1N0MN04Y20140326

http://www.thefiscaltimes.com/Articles/2014/03/25/White-House-Extends-Enrollment-Time-Obamacare

  • If someone goes without health coverage after March 31, they may be subject to health reform law’s tax penalty come tax time next April for not having coverage.  The penalty this year is $95 or up to 1% of income, whichever is greater.
  • Some financial assistance may be available.  Individuals and families with incomes between 100 percent and 400 percent of the poverty level (about $11,490 to $45,960 for individuals) may qualify of premium tax credits (also referred to as premium subsidies).  Tax credits are based on a percentage of household income and are applied on a sliding scale for those that qualify.

Individuals who want to obtain health care insurance before the March 31 deadline should visit Healthare.gov to begin their application process.

Your employees. Are they medicaid eligible?

There are many opinions about Medicaid expansion and my post is opinion free.

Employers across all sectors of the economy are likely to have Medicaid eligible employees/dependents in their population. Many do not know they are Medicaid eligible and some may be on the employer plan.

What does this mean?

Like anything, researching it may be the best first step. Simply finding out if this exists in an employer population may make sense.

Then what?

Some employees will be delighted to know they qualify, some may be upset. Some employers will take advantage of Medicaid expansion to reduce the rolls on the employer-sponsored plan while others may hate the idea and avoid it all together.

We respect all opinions but we also are developing a tool to determine eligibility and — if the employer would like — assist in the enrollment process. We will be launching it next month.

We want to help any employer that wants to know who in their population is eligible for Medicaid and then listen to find out if there is anything the employer would like to do about it.

What is Medicaid?

  • Medicaid is funded largely by the federal government but run by the states
  • Unlike Medicare, Medicaid eligibility is based on income.  The Affordable Care Act expanded medicaid to reach well beyond prior eligibility pools (it will now 133% of poverty level).
  • Medicaid operates as nearly 100% coverage for all medical expenses.
  • Medicaid networks are more restrictive than Medicare or commercial policy networks
Medicaid used to be accessible only to children and low (really low) income parents with dependent children. Single people did not qualify. Parents with eligible children did not qualify often. Eligibility now is much much wider.
In the next few weeks we will be rolling out a tool to assist any employer/employee evaluate Medicaid eligibility.
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