Posts Tagged ‘Department of Health and Human Services’

Hedging Their Bets, Insurers Setting Up Health Insurance Exchanges

Wednesday, February 22nd, 2012

Health insurance companies are trying to play an important role in healthcare reform as the Patient Protection and Affordable Care Act (ACA) threatens to upend their marketplace in 2014 by creating their own exchanges. Health plans are trying to lock in business before government-sponsored health insurance exchanges go online in 2014.  According to Kaiser Health News and reported by Minnesota Public Radio, the largest insurers are creating their own private insurance exchanges to protect themselves against competition from the public exchanges.

The implementation of the ACA is the most significant change to healthcare since Medicare and Medicaid came on line in the 1960s – and the impact for health insurers is virtually unfathomable.  Less than two years from today, the federal healthcare law will bring more restrictions on premium increases, millions of new customers, and the ability for consumers to comparison shop online for the best deal on their health insurance.

According to Sabrina Corlette, research professor at Georgetown’s Health Policy Institute, these are just some of the changes coming in 2014. Just how insurance markets will shake out is anyone’s guess, she said.  “Insurance companies are grappling with the uncertainty like everybody else and trying to look two years down the road and how to position themselves,” Corlette said.  “(What) also needs to be watched closely (is) that it’s working for the consumer.”

According to the Obama administration, 28 states are in the process of establishing insurance exchanges under the ACA, despite multiple lawsuits and a spring date with the Supreme Court.  Fourteen states, including some with Republican governors, have passed legislation or have the authority in place to set up the regulated insurance markets, according to a report by the Department of Health and Human Services (HHS).  Other states have passed executive orders or authorized studies to demonstrate the value of exchanges.  The goal is to bring coverage to 16 million uninsured Americans in 50 states and the District of Columbia.

In their most recent demonstration of progress in health reform, administration officials promised to provide assistance to states that miss the 2013 deadline to ensure their participation.  “We’re going to meet states where they are, and…we’re going to work with them to get them as far down the path as we can,” said an anonymous administration official.

According to the report, some states such as Nevada, Alabama, Mississippi, all with Republican governors, and others are making significant progress.  The irony is that many of these “red” states are also suing the administration over the ACA’s constitutionality.

How does a red state that has taken a lead in lawsuits against the ACA reconcile these differences?  Writing in the Richmond Times Dispatch, Michael Martz says that “Six bills have been filed in the legislature proposing varying ways to set up a benefits exchange, which is required under the federal healthcare reform law that (Governor Bob) McDonnell opposes and the state hopes to overturn in the U.S. Supreme Court.  But the governor is discouraging legislators from approving any of the bills during this session, despite looming federal deadlines that some lawmakers and insurers fear will leave Virginia with a less-competitive federal exchange for individuals and small businesses to buy health benefits.  The state would have to submit a plan for the exchange this year to the U.S. Department of Health and Human Services (HHS) no later than January 1, 2013, to ensure that the entity can begin operating a year later.”

“There is plenty of time to act,” the McDonnell administration said in a series of “talking points” on why legislation is not currently needed.  “There is no need for members of the General Assembly to make untimely and unnecessary decisions surrounding creation of an exchange during the 2012 session.”

States Want Feds to Move Faster on ACA Rules

Tuesday, February 21st, 2012

Although the Patient Protection and Affordable Care Act’s (ACA) major provisions don’t go into effect until 2014, states and insurers must be prepared to enroll some 32 million Americans who currently lack insurance coverage into Medicaid or private insurance programs.  According to Kaiser Health News, the fly in the ointment is that to successfully unveil their individual programs in just two years, the states must make important crucial decisions and take actions this year.

It will be difficult for many states to meet fast-approaching deadlines, and some may not make it, said Brett Graham, managing director at Leavitt Partners, a consulting firm.  Two years is surprisingly brief and many states need information from the federal government detailing the various insurance exchange options and precisely which benefits must be included in health plans.  Complicating the situation is the fact that states are competing for a limited pool of information technology vendors to give them the help they need.  “It’s a pressure cooker,” said Graham. States are “in a position where they have to act with imperfect information.”

Next New Year’s Day, the Department of Health and Human Services (HHS) will certify which states are ready to run their own exchanges.  To earn certification, a state must put in place laws to fund the exchanges’ continuing operations.  While the federal government is providing financial help up front for the creation of exchanges, states will assume the cost once they are underway.  HHS can issue a conditional certification for those states that are making progress but need more time.

Only 14 states and the District of Columbia have made significant legislative progress toward creating exchanges, according to a Robert Wood Johnson Foundation report prepared by the Urban Institute. The study’s authors reach the conclusion that because of the ACA, the percentage of the population that is uninsured will decline in all 50 states and Washington, D.C.

While some states are aggressively moving forward, “at the other end are states that say, ‘no way, no how, we’re not doing it.’  Montana, Texas, Louisiana, Florida, they are not going to build it and they’re playing a game of chicken,” said Graham.  “They’re waiting for the Supreme Court,” hoping it will declare the ACA unconstitutional in June.

The majority of states cannot make up their minds about whether to build their own exchanges and or participate in the proposed federal model. It’s ironic that some states that are participating in the Supreme Court challenge have taken action: Colorado, Washington and Nevada have set up exchanges.

According to the Robert Wood Johnson/Urban Institute report, “Without action by these states, their populations will still benefit from health reform through the expansion of Medicaid/CHIP, but will have to rely on the federal government to create exchanges, as called for under the ACA.  This creation will be dependent on adequate federal resources and political support.”

According to the Robert Wood Johnson Foundation and the Urban Institute, 15 states have made “little or no progress” implementing insurance exchanges where individuals and small businesses can buy private insurance.  The states that haven’t started working on creating exchanges are among the states with the most residents eligible for federal subsidies to help buy insurance.  According to the analysis, the federal government has the ability to establish and run a substitute in any state that does not establish its own exchange.

Creating a full or partial federal exchange also could be a problem, although some healthcare analysts are unsure whether it will be any easier for the federal government.  It faces the same brief timeline as the states.  While Obama administration officials say they have the money to fund exchanges, many healthcare analysts aren’t so certain.  Most state legislatures will adjourn for the year by March or April — before the Supreme Court hands down its ruling — according to the National Conference of State Legislatures.  Special sessions after the ruling would be virtually impossible in an election year.

New HHS Program Seeks to Cure Alzheimer’s in 13 Years

Monday, February 13th, 2012

A national Alzheimer’s disease advisory council has set  preliminary goals and  recommendations for a national strategic plan to slow — or even bring to an end to — the expected rise in new cases as the baby boomer generation ages. The plan’s goal is to prevent and successfully treat the disease as soon as 2025. The objectives include enhancing care quality and efficiency, expanding patient and family support, enhancing public awareness and engagement, and improving data to track disease progress.

The plan is part of the National Alzheimer’s Project Act that was signed into law on recently by President Barack Obama. The law created the Advisory Council on Alzheimer’s Research, Care, and Services. The new law requires the secretary of the Department of Health and Human Services (HHS) and the advisory council to create and maintain a national plan to defeat Alzheimer’s.  Members of the council’s subgroups on long-term services and supports (LTSS), clinical care, and research are meeting to comment on and provide recommendations to formulate the plan’s draft framework.

The council’s members support alternatives to Medicare coverage and physician reimbursement to encourage the diagnosis of Alzheimer’s and provide care planning to individuals diagnosed with the disease and their caregivers. Additionally, quality indicators for the care and treatment of individuals with Alzheimer’s need to be formulated. The group proposed medical home pilot projects specifically designed to improve medical management for Alzheimer’s patients using grants from the Center for Medicare and Medicaid Innovation (CMMI).

More than five million Americans have been diagnosed with Alzheimer’s, a brain disease that causes dementia and affects primarily elderly people.  Some experts estimate that treating the disease costs the United States more than $170 billion annually.  Australia, France and South Korea already have comprehensive Alzheimer’s plans, and worldwide experts have been urging the United States to assume a leadership role.

“We want to demonstrate that as a country we are committed to addressing this issue,” Dr. Howard Koh, assistant secretary for health at HHS, said.  “We know the projected number of patients is expected to rise in the future.  We know there are far too many patients who are suffering from this devastating condition and it is affecting them and their caregivers,” Koh said.

Other experts believe that the 2025 deadline is too close and unrealistic.  “No one set a deadline for the ‘War on cancer’ or in the fight against HIV/AIDS.  We make progress and we keep fighting.  The same should be true for Alzheimer’s,” said Dr. Sam Gandy, an Alzheimer’s researcher at Mount Sinai School of Medicine.  “In my mind, that provides the unfortunate sense that we will have ‘failed’ if we don’t have a cure by 2025.”  The National Alzheimer’s Project Act provides no new funding for research.  Although some drug companies have compounds in clinical trials, researchers say they are just beginning to understand the complex disease, which develops without any symptoms for 15 to 20 years before any memory problems begin to show.  “This means that if we had, today, already in hand, the funding, recruitment and the perfect drug, the trial would still take 15 to 20 years,” Gandy said.

According to P.J. Skerrett, Editor of Harvard Health, “Like a powerful wave, the Alzheimer’s epidemic is expected to crest in 2050. At that time an estimated 16 million Americans will be living with this mind-robbing disease. (About 5.4 million Americans have Alzheimer’s Disease today.)  In an effort to head off the explosion, President Obama has signed into law the National Alzheimer’s Project Act.

This ambitious project aims to attack Alzheimer’s on several fronts:

  • Improving early diagnosis.  The brain changes that lead to Alzheimer’s disease probably begin years before memory loss and other problems appear. Earlier diagnosis could help families better plan for the future, and could be especially important if better treatments become available.
  • Finding effective prevention and treatment strategies.  Today’s treatments relieve symptoms for only a short time; none prevent or stop Alzheimer’s-related mental decline. New treatments that are more durable would be a huge boon to current and future Alzheimer’s sufferers.
  • Providing more family support.  Spouses and adult children are the primary caregivers for many people with Alzheimer’s disease. The day-to-day challenges of caring for someone with Alzheimer’s can be daunting. Many caregivers have no training and don’t know what resources are available to them. The project would provide better education and support for caregivers.” Skerrett said.

Healthcare Providers Must Innovate to Trim Costs

Wednesday, February 8th, 2012

A top official from the Centers for Medicare and Medicaid Services (CMS) recommended that providers — including hospital executives — should research technology-driven changes in their systems with the goal of improving care and reducing costs.  “We need to decide now whether to make the commitment to adopt innovation that will fundamentally change the way we operate, change the way we deliver care, change the way we think about these organizations that we run,” Dr. Richard Gilfillan, acting director of the CMS’ Center for Medicare and Medicaid Innovation, said.  “This is not an abstract notion; this is a very concrete question that each of us will have to answer.”

Healthcare leaders who join in such an overhaul in their care delivery will likely find that the main obstacle is in changing how they are paid, Gilfillan said.  “We can ask people to keep folks from going back to the hospital, but if we pay health systems for putting more people in the hospital, we’ll get what we have today: a lot of hospital care,” he said.  Medicare will encourage private payers to change payment approaches by undertaking its own changes.  Specifically, Gilfillan said, once his office identifies payment practices that result in improved clinical outcomes and reduced spending, the HHS secretary will implement those throughout Medicare administratively.  “As you can see, this is a powerful tool for changing the way we deliver care,” Gilfillan said.

The large number of senior citizens covered by Medicare and low-income Americans covered by Medicaid suggests that any changes that serve those patients could soon be adopted throughout the system.  “The reality is that over the years, the private sector has by and large followed Medicare’s lead in payment systems,” Gilfillan said.  “Medicare has been the most innovative payer if you look back over the last 30 years.”  With $10 billion in funding through the end of 2019, Gilfillan anticipates rolling out additional initiatives before too long.  These could encompass ideas that emerge at an “innovation summit”.

Created by the Patient Protection and Affordable Care Act (ACA), the Innovation Center works to test and support innovative new healthcare models that reduce costs and strengthen the quality of care.  “The Affordable Care Act gives us tremendous new tools to innovate and improve our health care system,” said Health and Human Services Secretary Kathleen Sebelius.  “We discussed how we can work together to make innovative ideas a reality in communities across the country.”

“The level of real excitement surrounding this conference shows not only that people who know healthcare recognize the urgent need for better health and better care at lower cost, they also are ready to move forward with solutions,” said CMS Acting Administrator Marilyn Tavenner.  “The fact that all of these disparate interests share the aim of better healthcare and are willing to work for it not only means that we’re going to have the best ideas on the table, but also that we’re going to have the expertise and the resources that will ultimately ensure better health at a lower cost will be within the reach of every American,” Gilfillan said.

In the meantime, the Obama Administration also released a new report highlighting the success of the Center for Medicare and Medicaid Innovation.  The Center for Medicare and Medicaid Innovation’s role is limited to testing payment incentives and healthcare delivery methods within Medicare and Medicaid, as well as the Children’s Health Insurance Program.

Public Perceives Supreme Court Justices As Biased Over ACA’s Legality

Monday, February 6th, 2012

Approximately 60 percent of Americans believe that the Supreme Court justices who will hear the Patient Protection and Affordable Care Act (ACA) will base their judgments more on personal ideology than a legal analysis of the individual mandate, according to a recent Kaiser Family Foundation poll.

Only 28 percent believe the justices will base their decision on the mandate without regard to politics and ideology.  The poll also asked about general views of the Supreme Court and found that 75 percent of the public believe that justices sometimes let their personal politics sway their decisions.  Seventeen percent said justices more often than not decide cases based on legal analysis.  The court is expected to hear oral arguments in March in a case brought against the Patient Protection and Affordable Care Act (ACA) by 26 states.

The Kaiser poll found that the individual mandate, a requirement that most Americans purchase health insurance by 2014 or pay a fine, remains unpopular — 67 percent of Americans opposed the provision and just 30 percent supported it.  Overall, approximately 37 percent of Americans view the health law favorably, while 44 percent have an unfavorable view.

In terms of the “repeal and replace” agenda that House Republicans are pursuing, it’s not really winning over the public.  According to the Kaiser poll, 50 percent of respondents would prefer to expand the law or keep it in place; just 40 percent want to repeal it outright or replace it with an alternative.  That could be a problem, since House Energy and Commerce Health Subcommittee Chairman Joe Pitts said that a “replace” plan is on the subcommittee’s to-do list, at approximately the same time that the Supreme Court is expected to rule.  Pitts hopes that his caucus will be able to seize the opportunity to sway public opinion: “We’ll have a window of opportunity to — with everyone looking — to explain that the Affordable Care Act is not fully implemented yet.  A lot of people think it is.  So we’ll use that opportunity in that window to discuss the full ramifications of the Affordable Care Act and what we’ll replace it with.”

For example, Justice Elena Kagan (who was Solicitor General at the time the ACA was passed and has recused herself from the Supreme Court case) and noted Supreme Court litigator and Harvard Law Professor Laurence Tribe, who worked for the Justice Department at the time, had an email exchange in which they discussed the pending healthcare vote.  “I hear they have the votes, Larry!!  Simply amazing,” Kagan wrote to Tribe in an email.

“So healthcare is basically done!” Tribe responded to Kagan.  “Remarkable.  And with the Stupak group accepting the magic of what amounts to a signing statement on steroids!”  The “Stupak group” refers to then-Representative Bart Stupak (D-MI), who masterminded a group of House Democrats who had indicated they would not vote for the ACA if it permitted federal funds to pay for abortions.  Ultimately, Stupak and his allies voted for the bill, even though no additional language was added that would prevent federal funding for abortions.

Writing for KSL.com, contributor Curt Mainwaring muses on what will happen if the Supreme Court upholds the ACA. “If the Supreme Court rules that ACA is constitutional, healthcare costs will likely continue to rise — although at a slower rate than if the law were determined to be unconstitutional.  Healthcare costs currently make up approximately 18 percent of gross domestic product.  If expenditures continue on their current trajectory, ‘the share of GDP devoted to healthcare in the United States is projected to reach 34 percent by 2040.’  In more intimate terms, the Department of Health and Human Services demonstrates individuals paid approximately $1,000 per year in healthcare costs in 1960, more than $7,000 per year in 2007, and are projected to pay more than $13,000 per year by 2018.

“Simply put, this kind of a rise in healthcare costs is unsustainable — and these kinds of projections are part of the reason ACA was created in the first place.  Nevertheless, claims of ACA’s positive impact on the economy have likely been overestimated.  ACA focuses heavily on reducing the cost of health insurance — a factor that will likely result in reduced insurance costs.”

Will the ACA Survive the Supreme Court, 2012 Election?

Wednesday, February 1st, 2012

The 26 states that have challenged President Barack Obamas healthcare law face several dilemmas as they try to convince the Supreme Court to declare the law’s Medicaid expansion unconstitutional   The two lower courts that heard the Medicaid challenge ruled in favor of the Obama administration, even as those judges struck down the healthcare law’s individual mandate. Legal experts on both sides of the mandate debate were surprised that the Supreme Court agreed to also hear the Medicaid piece of the state’  lawsuit.  The healthcare law’s supporters claim that the states erred in their initial brief on the Medicaid expansion, which was filed with the Supreme Court.

According to the states involved in the lawsuit. the ACA’s Medicaid expansion is “coercive.” Although state participation in the program is strictly voluntarily, the brief argues, the healthcare law makes it impossible for states to opt out of Medicaid.  The brief tries hard to link the Medicaid expansion to the individual mandate, arguing that states won’t be able to exercise their legal right to leave Medicaid because it’s the only way for Medicaid-eligible residents to fulfill the mandate.

“While the (Affordable Care Act) purports to leave states’ participation in Medicaid nominally voluntary, multiple aspects of the Act evince Congress’ keen awareness that, in fact, no state will be able to reject its new terms and withdraw from the program,” the brief says. “Most obviously, the ACA’s individual mandate requires Medicaid-eligible individuals to obtain and maintain insurance.”  But most Medicaid-eligible people would be exempt from the mandate, said Timothy Jost, a law professor at Washington and Lee University and a supporter of the health law.

Then there’s the Supreme Court case, which will be heard in the spring and a verdict announced prior to the November presidential election. According to Kurt Mainwaring, a ksl.com contributor, “Far-reaching consequences of the court’s ruling will likely impact both the cost of healthcare and the outcome of the 2012 elections.  If the Supreme Court rules that ACA is constitutional, healthcare costs will likely continue to rise — although at a slower rate than if the law were determined to be unconstitutional.  At present, healthcare costs make up approximately 18 percent of GDP. If expenditures continue on their current trajectory, “the share of GDP devoted to healthcare in the United States is projected to reach 34 percent by 2040.”  Translated to real numbers, the Department of Health and Human Services (HHS) notes that Americans paid approximately $1,000 annually in healthcare costs in 1960; more than $7,000 per year in 2007; and are projected to pay more than $13,000 per year by 2018.  This kind of increase in healthcare costs is not sustainable — and these kinds of projections are part of the reason ACA was enacted in the first place.

Beach Conger, a Vermont internist writing in the Burlington Free Press believes that “Medicare for All” — a possibility that was raised during the lengthy debate over the ACA — should be reconsidered.  According to Conger, “Medicare and I were born in the same year. Professionally speaking, that is. We were raised together, and we have been married to each other for what seems an eternity. As with any long-term relationship, we have had our ups and downs, but we have both matured over the years, and I believe we are both the better for it. Without being too vain, I have to say I have done a better job at providing health care, and I have to admit that Medicare has helped me do it.  At first, it just made sure that those retired people who wished to pay me the fees to which those in my line of work have become so accustomed, could actually do so. But eventually it realized that there was more to the business than just money, and it began to keep an eye over my shoulder, making sure I was not leaving undone those things which ought to be done and not doing those things which I ought not.  So I can’t help but think, why not Medicare for everyone? It would be so simple. And that’s when I realized.  It was too simple.”

Dr. Conge, it should be pointed out, lives in Vermont, to date the only of 50 states to enact a single-payer public option — Green Mountain Care.

MLK & Healthcare Reform

Monday, January 30th, 2012

A recent byline article in Forbes magazine by Carolyn McClanahan, M.D., CFP, raises many issues about healthcare in the year 2012.  According to McClanahan “The New England Journal of Medicine’s (NEJM) article on the fate of healthcare reform in 2012 greatly saddens the optimist in me. It discusses four important events, and I’ll share my “simplistic view” of these events:

“State legislatures getting in gear to fill their role assigned by the ACA.  As I’ve discussed previously, we have a complicated healthcare system which is expensive and inefficient.  Instead of simplifying, each state will implement or delay implementing the law based solely on their political interest.  This is not productive.”

“The second event is the Supreme Court’s ruling on the legality of the ACA in May. It is possible that the entire law could be struck down, (albeit unlikely).  If this scenario plays out, we will have wasted billions implementing parts of the law to date.  Another more likely scenario is the law will be upheld but the mandate that everyone purchase health insurance be thrown out.  This would severely weaken the law because people will only buy insurance when they are sick.  There will still be a requirement that insurance companies have to sell insurance to everyone regardless of health status.  This is not financially feasible.  Most likely, the law will stand, but who really knows?”

“The third key event is the deadline for states to apply for federal grants to operate their health insurance exchange.  State who don’t apply will either have to cede control of the exchanges to the federal government or pay for the cost of implementation themselves.  State governors and legislatures against the ACA, like my home state of Florida, risk turning away resources and having more of the federal government running the show.  Talk about the law of unintended consequences.”

“The fourth key date is the election in November.  If President Obama wins re-election, implementation will continue.  If he loses, the winner will have a difficult time repealing the law unless the Republicans can win 60 seats in the Senate.  So what is their plan?  Have everyone drag their feet on implementation or do a half-baked job.  Wouldn’t it be nice if instead they came up with a good plan to fix the parts that are not working?  Simplify and clean up the mess of the insurance part of the law and implement with speed and clarity the good parts like preventive care initiatives, rebuilding our primary care workforce, and improving our ability to handle large disasters.”

A similar viewpoint was expressed by Department of Health and Human Services (HHS) Secretary Kathleen Sebelius, who said that access to healthcare is the next civil rights frontier.  According to Sebelius, “On Martin Luther King Day, it is easy to congratulate ourselves on our progress in moving beyond segregated schools, lunch counters and drinking fountains. The hard question is this: what injustices do we still accept that should, in fact, be intolerable?  Surely Dr. King would find the next civil rights frontier in healthcare, with nearly 50 million uninsured, almost 45,000 deaths annually due to lack of insurance, and more than half of all personal bankruptcies linked to illness and medical bills.”

“While the Affordable Care Act will bring improvements, such as decreasing the ranks of the uninsured, supporting community health centers, and investing in prevention, it leaves many gaps. At least 23 million people will still be uninsured in 2019. Tens of millions will be underinsured, one serious illness away from financial ruin. Most people who suffer medical bankruptcy had private insurance before getting sick. And medical bankruptcy is a cruel double whammy. Already beset with pain, anxiety and fear – due to serious illness – families find themselves financially devastated.  This doesn’t happen in other industrialized countries, which have high-quality health systems that cover everyone.”

As a department, we are committed to ensuring that all Americans achieve health equity by eliminating disparities and doing what we can to improve the health of all groups, including the poor and underserved,” Sebelius said. “One of the most important ways we are doing this is through our new health care law, the Affordable Care Act.”

Medicare, Medicaid Costs Rising More Slowly

Tuesday, January 24th, 2012

Healthcare spending nationally grew slowly for the second successive year in 2010, bringing it in line with growth in the U.S. economy as a whole, according to the Department of Health and Human Services (HHS).  Spending rose by 3.9 percent in 2010, to $2.6 trillion, while the GDP rose 4.2 percent, according to HHS, which published its findings in the journal Health Affairs.  In 2009, spending increased nearly the same by 3.8 percent, but in contrast it’s growth rate was twice that by 7.6 percent in 2007.  Spending increases frequently hit double digits in the 1980s and 1990s.  While spending growth in general remained slow, premiums for people in private insurance plans grew faster for the first time in seven years than what was spent on their care, according to the Centers for Medicare and Medicaid Services (CMS).  Premiums in 2010 rose 2.4 percent, slightly less than the 2.6 percent increase in 2009, although private health insurers’ spending on actual benefits rose only 1.6 percent in 2010, down from 3.7 percent in 2009.

Healthcare represents 17.9 percent of the U.S. economy, the same proportion as in 2009, according to a government report. “Persistently high unemployment, continued loss of private health insurance coverage and increased cost sharing led some people to forgo care or seek less costly alternatives than they would have otherwise used,” the report said.

The report showed that the federal government paid 29 percent of the nation’s healthcare bill in 2010, up from 23 percent in 2007. Some of that increase reflects a transitory increase in federal aid to states to enroll more uninsured people in Medicaid. The percentage of spending by private businesses and state and local governments fell.

The recession played a large role in impacting spending, CMS officials said.  Because fewer people were insured, and private insurers generally picked up less of the cost, patients went to the doctor and hospital less frequently.  The answer may go beyond the recession.  “The utilization slowdown is at least in part structural, and not just cyclically driven by the economy, and the adoption of higher cost sharing plan designs will result in some level of permanent slowdown in trend,” said Ana Gupte, a senior analyst at Sanford Bernstein, which conducts research for investors.

“Premiums grew faster than benefits for the first time in seven years, and benefits grew at their slowest rate in the history of the accounts, according to Anne Martin, a CMS economist.  Martin said this was because private health insurance companies lost enrollees as people were laid off, moved to cheaper health insurance plans as a result, cost-sharing increased.

Karen Ignagni, president of America’s Health Insurance Plans, said that the portion of premiums “allocated to health plans administrative costs was among the lowest in recent years, despite the fact that health plans have been in compliance with the healthcare reform law.”

Additionally, spending on prescription drugs declined in 2010.  Not only did individuals buy fewer drugs, but there were also more switches from brand to lower-cost generic medications. According to CMS, fewer new drugs came onto the market.

Paul Ginsburg, president of the Center for Studying Health System Change, a Washington research group, said the report didn’t address the biggest question: “When the economy gets strong again, do we just return to the old business as usual?  Probably,” he said. “But there’s a chance that the experience of people economizing may have longer-lasting effects.”

The Obama administration was pleased with the report and called it good news for the healthcare law, although some researchers found the law had a less than 0.1 percent impact on national health spending in 2010.  “These numbers do not take into account all of the cost-saving provisions in the Affordable Care Act that are still being implemented.  But they do show why the Affordable Care Act is so important,” senior White House adviser Nancy-Ann DeParle said. According to DeParle, the insurance regulations in the law will keep insurance companies “in check.”

The phasing in of the patient Protection and Affordable Care Act (ACT) which will expand insurance coverage to as many as 32 million people, will incur larger cost increases later in this decade. National health spending is expected to increase by 8.3 percent in 2014, when the most ambitious coverage expansions take effect, according to CMS projections.  “The law will control the growth of healthcare spending through fraud prevention, better coordination of care, disease prevention and overhauling insurance markets,” DeParle said.

According to DeParle, “Starting in 2011, insurance companies were required to publicly disclose and justify any premium increases larger than 10 percent. Many states have the authority to reject unreasonable premium increases and the Affordable Care Act gives states $250 million to strengthen their rate review programs. Additionally, insurers are required to spend at least 80 percent of your premium dollars on healthcare expenses instead of overhead and profits.”

States Rewarded for Adding Kids to Public Insurance Rolls

Monday, January 9th, 2012

Twenty-three states will share $296.5 million in federal funds for encouraging low-income families to enroll children in state-run public healthcare programs.  The bonuses reward states that streamlined eligibility for Medicaid, the federal-state health program and the Children’s Health Insurance Program (CHIP).  The goal is to assure coverage for children younger than 19 from households with annual incomes of less than $45,000 for a family of four, though some states are more generous.  Despite 2011’s shaky economy, the number of uninsured children fell to 5.9 million in 2010 from 6.9 million the previous year, according to a study by the Georgetown University Health Policy Institute.  Children still leave the program rolls because parents neglect to renew eligibility, increasing the likelihood of missed vaccinations and dental checkups, said Tricia Brooks, a senior fellow at the Georgetown institute.

“Families may avoid routine preventive care with the hope they’ll have more money next month or delay seeking care until they know they really have to bring the children in,” Brooks said.  “At that point, the emergency room is a likely choice.”

Besides the 1.2 million newly insured children, three million who previously had private insurance transferred to CHIP or Medicaid during that time frame, said Sherry Glied, assistant secretary for planning and evaluation at the Department of Health and Human Services (HHS).  Because of that, children have been protected from 10 years of erosion of health insurance among Americans that resulted as employers dropped coverage, workers with insurance were laid off because of the recession, and people whose only alternative was to buy insurance on their own could not afford to do so.  Since CHIP was first established in 1997, the share of adults ages 26 to 64 with a health plan dipped from 83 percent to 80 percent. By contrast, in the same period, the share of children with insurance grew from 86 percent to 93 percent.  “It’s very encouraging, because it shows that even in an economic downturn, CHIP really made a difference,” Glied said.

The 23 states that are eligible to receive performance bonuses are: Alabama, Alaska, Colorado, Connecticut, Georgia, Idaho, Illinois, Iowa, Kansas, Louisiana, Maryland, Michigan, Montana, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oregon, South Carolina, Virginia, Washington, and Wisconsin.

To earn their bonuses, states used electronic databases rather than paperwork submissions from families to verify incomes or preemptively enrolling kids who appear to be eligible.  Additionally, states may guarantee one year of eligibility rather than requiring periodic renewals.  Georgia and South Carolina use information from their nutrition assistance programs to hasten eligibility determinations, said Marilyn Tavenner, acting administrator of the U.S. Centers for Medicare and Medicaid Services.  In 2010, 15 states claimed bonuses totaling approximately $206 million.  Alabama, which received $55 million after adding 133,000 children to its public insurance programs, led the pack.

In Connecticut, for example, an estimated 49,000 Connecticut children under 18 have no health insurance, said Mary Alice Lee, senior policy fellow with Connecticut Voices for Children.  The state provides affordable insurance for children under the Husky Health program. According to Lee, considering that the state’s economic downturn and the 2010 nine percent unemployment rate, the fact that the percentage of uninsured children held steady means that the Husky program is working.  “The number of uninsured children in Connecticut is really relatively low compared to other states,” Lee said.  On a national basis, 9.8 percent of children under 18 were uninsured in 2010.  “The Husky program is doing exactly what it’s supposed to do, that is, provide affordable coverage for children during times of economic stress.”

No parent in America should have to think twice about taking their child to a doctor’s appointment or filling a prescription for their child because the cost is too high,” Tavenner said. “And no child should have to miss school or activities because they’re not getting the care they need to stay healthy.”  States have wide latitude regarding how they spend the funds, but the intent is that they will be used to help defray the shared Medicaid costs that the states incur by enrolling more children.

States to Determine Their Own ACA Coverage Levels

Wednesday, December 28th, 2011

The Obama administration averted a potentially vicious lobbying battle over the medical benefits insurers must cover under the Patient Protection and Affordable Care Act (ACA) when it handed the decision to the states.  The ruling gives states the power to set coverage levels for the policies uninsured people will purchase through exchanges, starting in 2014.  Business groups will make a case for a narrow set of benefits to save costs while consumer advocates want expanded coverage.  The decision shifts the issue to the states and away from the White House, and lets President Barack Obama say he’s giving governors and legislatures greater flexibility to confront rising medical costs and control changes the 2010 healthcare law is bringing to insurance markets.

“Obama has taken all the grief he can stand over healthcare,” said Erik Gordon, a business professor at the University of Michigan in Ann Arbor.  “He doesn’t want it to give the Republicans any more political ammunition.  He is passing the hot potato to the states.”

“This is significantly more state-flexible and friendly than many would have expected,” said Alan Weil, head of the National Academy for State Heath Policy. What’s to guarantee that the state’s choice of a benchmark plan will be affordable?” asked National Retail Federation Vice President Neil Trautwein.  If coverage is unaffordable today, this doesn’t change the equation.”

Ron Pollack, executive director of Families USA, said Department of Health and Human Services (HHS) would have to provide “strong oversight and enforcement” of the benefit standards as the states implement them.  “It will be important to ensure that adequate coverage across all 10 required benefit categories is provided — marking an improvement over many plans offered today,” he said.  Giving states greater flexibility to determine necessary benefits was perceived as an attempt to defuse criticism that the health reform law gives the federal government too much control over the healthcare system.  A longtime advocate for federal health reform, Pollack also expressed reservations.  “We understand the inclination to balance flexibility, comprehensiveness of coverage, and cost,” he said. “However, flexibility must yield to reliable, comprehensive coverage of benefits for consumers.  It is essential that HHS provide strong oversight and enforcement.”

Under the revised guidelines, state legislature must either set coverage levels in line with widely subscribed small- business plans in their communities, or tie them to benefits included in their state employees’ health plan, federal plans or the largest commercial managed-care plan in the state.  Generally, health plans for small businesses, state employees and federal workers “cover similar services,” including doctors’ visits, hospitalization and outpatient mental health, according to a study conducted by HHS.  Discrepancies arise in areas such as prescription drugs.  While they’re covered as a basic benefit by all government employee plans, only 84 percent of small business plans cover them.  Others require additional premiums.  Small business plans also rarely cover dental care, acupuncture, bariatric surgery and hearing aids, unless states require it.

According to Forbes magazine’s sba.com column, “At a first glance, this seems like it might be a step in the right direction for individuals and small business owners.  However, that is not necessarily the case.  It seems as though the new idea comes with a wide array of new problems.  First, while the new policy will give states flexibility, it imposes more benefit mandates.  The new policy lists 10 ‘essential health benefits’ that the state MUST provide.  Some of these essential benefits are prescription drugs, preventative care, doctor and hospital services, and maternity care.  The new policy allows the states to designate a state-wide ‘benchmark’ health insurance plan, setting the minimum standard of care.  All insurers would then have the ability to change their insurance plans as long as the coverage provided benefits of the same or greater value.  The new ‘more flexible’ plan still seems very rigid and regimented.  Additionally, the new plan would lead to higher-cost insurance premiums, not lower.

“Another long-standing issue with Obama’s idea is that individuals are not clear on what services and benefits are expected to be provided as a minimum.  Instead of clearing up this confusion and spelling out what exactly would be required, Obama has simply put that responsibility on the states – giving them the ‘flexibility’ to design their plans.

“While it may look like Obama is responding to his opponents’ remarks about his previous plan forcing health insurance standards on states, it seems as though this policy change still accomplishes his goals – just through a different means.  Obama can continue to shape and reshape his ideals; however it will be up to the Supreme Court to decide whether the government can require Americans to buy health insurance at all.”