About High Deductible Health Plans — Say It Ain’t Always So Joe!

Great friend, colleague, and highly respected industry consultant Joe Paduda writes today in his widely read Manage Care Matters column about the possible cost and claim shifting implications of uninsured and underinsured workers. In it he makes specific reference to HDHP’s.  Among the points Joe makes about ‘High’ deductible health plans are the following:

“44% of working-age adults were covered by high-deductible plans – but more than half of them don’t have health savings accounts needed to fund those high deductibles.”

“ ‘High’ deductible health plans aren’t much different than no insurance at all if the patient can’t afford the deductible – and over half can’t. So, more incentive to cost- and claim-shift.”

I have great respect for Joe and his point of view. He’s as smart as they come, his points are always thoughtful, well-supported by research, and totally authentic (well maybe except for April 1 every year).

However, when it comes to high deductible plans I’d like to remind Joe and others — let’s not throw the baby out with the bath water. There are some innovative and practical uses of HDHP’s to lower costs and deliver better coverage that are most times overlooked by the national stats, commentators and think tanks.

As famed radio commentator the late Paul Harvey used to always say “And now for the rest of the story”.

The “rest of the story” is this: HDHP plans can be and are often used, at least in our little slice of the healthcare world, by savvy and practical employers to lower costs while still providing strong benefits. There’s a core of strong employers out there — many that we are very grateful to count as clients — that are utilizing high deductible plans in combination with reimbursement plans like our own SharedFunding  to reduce costs AND provide better coverage to their employees.

Comments like these from a recent conversation among a group of CEO’s speaking to a fellow CEO about SharedFunding are not unusual:

“Helped us tremendously with health costs.”

“We have had zero increases in premiums in the last 4 years.”

“We hired them last year (our year 1) to replicate the comprehensive plan most of our employees had……….. They did it – even using same insurer.”

“Here’s the key – they contract a very high deductible plan (like $11,000 for a family), and then manage all claims & reimbursements. All the paperwork flows through them. Our employees have much lower deductibles and copays they have to meet….”

Just sayin’.

Have a great Memorial Day Weekend.

Deja Vu: CMS extends Transitional Relief Plans (pre-ACA) Through 2019

The Centers for Medicare and Medicaid (CMS) recently announced that employers in the small group market that are currently still enrolled in Transitional Relief Plans (also known alternatively as Keep Your Plan, Grandmothered Plan, Pre-ACA Plan, etc.,) may keep their existing policies and plans for another year.  

CMS stipulates that ultimately granting the extension is left to the discretion of state regulators and to the respective participating insurance carriers. Most — if not all – states and carriers are expected to grant the extensions and allow employers to keep the Transitional Relief Plans in place for another year.

The CMS announcement also noted that the Transitional Relief Plans will not be considered out of compliance.

This extension, first granted in 2014 and granted every year since, runs through December 31, 2019.

We’ll be following this closely with the insurance carriers and will keep all of our clients who currently have Transitional Relief Plans informed.

For more info click on the link below:

CMS_Extension-Transitional-Policy-Through-CY2019

As Expected, States Will Have More Control and Greater Flexibility in Regulating Obamacare Starting in 2019

In a CMS press release the Trump Administration announced yesterday, as expected, that beginning in 2019 individual states will have more control and greater flexibility in regulating the individual health insurance market and the Obamacare Marketplace (aka the Exchange). In a summary of the “final 2019 Payment Notice Rule” CMS highlighted provisions that were intended to increase flexibility, improve affordability, and decrease administrative burdens.

It’s likely that changes made at the individual state level will ultimately have some impact either directly or indirectly on employer sponsored health coverage, particularly the small group market. We will be monitoring this very closely for our clients and will report back, especially as we get closer to 2019 and more information becomes available.

In the meantime, here’s a sampling of the headlines and links to the respective articles following yesterday’s announcement by CMS:

• The Wall Street Journal: Trump Administration Allows States To Narrow ACA Coverage
• Reuters: Trump Administration Issues Rule Further Watering Down Obamacare
• Modern Healthcare: CMS Issues Final Rule Allowing States To Pick Essential Health Benefits   
• The Washington Post: Trump Administration Rewrites ACA Insurance Rules To Give More Power To States
• The Hill: Trump Officials Create New Exemptions To ObamaCare Mandate 

Here’s a link to the CMS press release:

• https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2018-Press-releases-items/2018-04-09.html

IRS Changes 2018 HSA Family Contribution Limit

On March 5, 2018 the IRS announced in it’s IRS HSA Bulletin that the 2018 contribution limit for Health Savings Accounts (HSA) linked to family coverage is now $6,850 from the previously announced $6,900.  For more information regarding these changes please see the attached IRS HSA Bulletin or linked SHRM article. 

Warren Buffett on the Amazon/Berkshire/Chase health venture — “Don’t Expect Any Miracles Out Of Us”

A month and change has now passed since the great splash of January’s big Amazon/Berkshire/Chase health venture announcement. It certainly was successful in disrupting the news cycle. The initially sky-high healthcare “Richter Scale” readings are returning to normal. And, it’s pretty safe to say that any substantive changes, major disruption, and any new normal that may be triggered by this venture on big healthcare (20% of the economy), other employers – big, small and in between, and everybody else are not on the immediate horizon.

Like the CVS/Aetna venture announced last December, real change is likely to be More Tortoise Than Hare.

A sampling of Warren Buffett’s comments in some of his recent interviews with Bloomberg, CNBC, and KHN may provide you with a little more insight and a glimpse of some of his expectations.

Here are a few sound bytes from recent Buffett interviews:

He said that the goal of the business is “better care, lower costs,”and, that it will “take time.”

“This is not easy. If it was easy, it would have been done.”

“It would be very easy I think to go in and shave off 3 or 4 percent just by negotiating power. We’re looking for something much bigger than that.”

He spoke of health-care spending taking up an increasing proportion of the U.S. economy, and a indicated that the goal of the venture is to “at least” halt that ascendant trend.

Buffett also stated that he hopes “we could find a way where perhaps better care could be delivered even at somewhat lesser cost.”

To read more go to Bloomberg: Buffett-Dimon Health Venture To Go Beyond Just Squeezing The Middlemen 

Could 2018 End Up Being a Year of Improved Health Insurance Market Stability? Here are Five Reasons It Could Be the Case.

With healthcare seemingly out of the political crosshairs for the moment and any tectonic shifts emanating from a new Amazon/Berkshire Hathaway/J.P. Morgan Chase superpower health entity a ways down the road, employers may get to experience some at least temporary market stability in the way of more choices, more consistent rates, less volatile renewals, and more opportunities to innovate (e.g. SharedFunding).

Employers have grounds for hope, at least for the next year or so.

Here are five (5) reasons that may lead to at least some temporary stability and have positive impact on cost and selection in the group market:

1. The total number of people insured is holding steady or possibly even increasing despite the repeal of the individual mandate.
2. Interest and energy in employer sponsored plans is up. More employers are offering health coverage. Many are also trying to improve their health coverage in order to compete for and retain talent in a more robust job market and a stronger economy.
3. Much of the market activity for both insurance carriers and healthcare providers is geared toward gaining scale while building a better mousetrap (eg. Aetna/CVS, Unitedhealthcare and other carriers acquiring providers, etc). Strategic M&A activity is expected to continue.
4. More states are experimenting by exercising the state waiver option (more info here and here). While tinkering with the individual market and Medicaid will get most of the headlines, more control on the state level should spawn more innovation and new options in the group market especially for small and mid-size employers.
5. Health systems are now focused on vertical integration and improving their overall value proposition. They’re jockeying for market position and attempting to win over patients and payors alike.

Health Coverage By the Numbers (vol 2): The Cost of Coverage and Employer Contributions

Job-based health insurance is still far and away the largest single source of health care coverage in the U.S. As we continue to work on behalf of clients to drive new and better ways to stem the tide of health care costs, here are some key stats from 2017 to ponder:

1.)  Average annual premium nationally for single coverage — .$6,690 (or $557 per month)

2.)  Average annual premium nationally for family coverage — .$18,764 (or $1,564 per month)

3.)  Generally speaking, most employers cover at least 50% of the employee’s cost of premium. Nationally, employers cover on average 81% of the cost of single (employee only) premium.

4.)  Not all employers contribute to family coverage. Employers that do contribute to family coverage, cover on average 69% of the cost to cover dependents.

^{Source: Kaiser Family Foundation}

Health Coverage By the Numbers

Job-based health insurance is the largest single source of health care coverage in the U.S.

1.) Employer-sponsored insurance covers more than 157  million workers and their dependents.

2.) The next largest source of coverage, Medicaid, insures less than half as many, 63 million.

3.) Medicare enrolls 45 million;

4.) Individual market (on/off Marketplace) provides coverage for about 21 million.

Source: Kaiser Family Foundation (KFF.org)