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Healthcare Costs Starting to Slow Down

Wednesday, October 26th, 2011

The increase annually in healthcare costs appears to be slowing.  According to Sandra Block of Gannett News Service, “If there’s any good news to be found, it’s that the increase in overall costs of providing healthcare to employees has slowed.  Tower projects an increase of 5.9 percent in 2012, which represents a significant change from 7.6 percent in 2011.  Mercer, another human resources consulting firm, predicts that employee healthcare costs will rise 5.4 percent in 2012.  That’s small consolation, though, to employees whose income hasn’t kept pace with the rise in healthcare costs.  In August, personal income fell 0.1 percent from July, driven by a decline in wages and salaries, according to the Bureau of Economic Analysis.”

There’s bad news for Americans whose healthcare insurance is provided by their employer.  According to Towers Watson, a human resources consultant, employers will pass on cost increases primarily through higher employee premium contributions.  Towers Watson says that 66 percent of firms will increase employees’ share of premiums for single-only coverage in 2012; 73 percent will increase the share of premiums for dependent coverage.  A survey by the National Business Group on Health (NBGH) found that 53 percent of employers intend to increase employees’ share of premiums, while 39 percent plan to increase in-network deductibles.

The yearly survey by NBGH, a not-for-profit alliance of 83 of nation’s largest companies — employing more than million workers — expect healthcare costs to continue rising significantly faster than inflation because of medical inflation and the Patient Protection and Affordable Care Act.  “This is an unsustainable model for our country,” said Helen, Darling, the NBHG’s president and CEO, referring to the financial strains caused by the ongoing increases.  Some believe that the rising healthcare costs stemmed from components of the 2010 federal healthcare law, including its mandate to cover the offspring of workers up to age 26 and its coming bans on caps for annual benefit limits.  Employers said a variety of cost-saving moves to counter the rising cost of their health coverage, including encouraging employees to use centers of excellence for transplants and other procedures.  “Even if they spend more on the initial admission, they spend less overall due to less need for readmission or re-treatments,” Darling said, in reference to incentivizing employees to seek treatment at highly rated hospitals.

At the time of year when open enrollment begins, employers want their employees to be healthier as a means of controlling costs.

Employers also will encourage their employees to choose high-deductible plans — with lower premiums – and persuade workers to be savvy healthcare shoppers.  Some employers will require significantly higher premiums for employees who do not agree to monitor their own health and address problems.  At a time when both employers and workers are weary of paying more for health coverage, experts say it’s important this year to closely study new wellness programs — as well as all the other options on the table — to take advantage of any savings.  “Healthcare costs are going to continue to grow significantly and for your own health and your own wealth and financial good, you need to get fully engaged in understanding what your choices are,” said Tony Holmes, a partner with Mercer.

Holmes said employers expect to pay 5.4 percent more for health plans in 2012 — about a half percentage point below the typical increase over the past 10 years.  Nearly one-third of employers plan to increase premiums for employees, according to Holmes.  Charges to cover a spouse or children are even more likely to climb; more than 40 percent of large employers plan to increase the costs for dependents.

Some businesses are moving away from co-pays, where employees pay a fixed dollar amount for healthcare services and the plan picks up the rest. Instead, they’re charging workers a percentage of the total costs.  That has the goal of making consumers more aware of the total cost of the healthcare they use.  “We are clearly seeing a march toward a more aggressive consumerist system,” the NBHG’s Darling.

Mercer also found that utilization of healthcare services has slowed in 2011. The difficult economy, higher deductibles and other forms of increased employee cost-sharing, may impact utilization, Mercer said.  “Because employees have less disposable income and are working longer hours, they are less likely to seek non-urgent care.”  Additionally, utilization may be slowing because of employer programs aimed at earlier detection of health problems, Mercer said.  “Earlier risk identification and health education, along with improvements in drug therapies and medical technology, are keeping people with health risks and chronic conditions away from the emergency room,” Susan Connolly, a partner in Mercer’s Boston office, said.  The findings are based on responses from almost 1,600 employers.  In the end, approximately 2,800 employers are expected to respond, with the results — including the actual average healthcare plan cost increase for 2011 — to be released this year.

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Medicare Advantage Premiums to Fall Four Percent in 2012

Tuesday, October 4th, 2011

The Obama administration’s announcement that Medicare Advantage insurance plans premiums will decline in 2012, at a time when enrollment is expected to rise, is good news for the leading health insurers in that segment.  Wall Street analyst Ana Gupte said that the announcement suggests strengthening support in the administration for the privately-run versions of the government’s Medicare program, which covers the elderly and disabled.  Medicare Advantage plans offer basic Medicare coverage with extras like vision or dental coverage oratremiums lower than standard Medicare rates.  Health and Human Services Secretary Kathleen Sebelius said that Medicare Advantage premiums will average four percent less in 2012, and insurers running the plans believe that enrollment will rise by 10 percent.  “Overall, we were very encouraged by the announcement and see this as reinforcing our bullish thesis on the Medicare Advantage and (prescription drug coverage) segments,” according to Gupte.

It’s highly unusual to see healthcare insurance premiums falling. Reduced premiums and growing enrollment are the opposite of what insurers and Republicans predicted would happen to Medicare Advantage after the passage of the Patient Protection and Affordable Care Act (ACA).  The ACA cut payments to fee-for-service Medicare Advantage plans by about $136 billion over the next 10 tears.  Right before the law passed, American’s Health Insurance Plans predicted that “millions of seniors in Medicare Advantage will lose their coverage, and millions more will face higher premiums and reduced benefits.”  So what accounts for the drop?  The decrease in premiums doesn’t have a lot to do with policy decisions made in the ACA.  It’s three outside factors that are putting downward pressure on Medicare.  One is that Medicare costs are growing more slowly.  Both in Medicare and in private insurance, the recession has seen patients using fewer medical services.  This looks to be especially true in Medicare, where seniors might have more limited resources because they tend to live on a fixed income.  The latest S&P Healthcare Economic Indices data indicates that Medicare spending appears to be rising at a slower rate than just a few years ago.

Jonathan Blum, director of the Centers for Medicare and Medicaid Services (CMS) Center for Medicare, said the more affordable costs and growth forecasts demonstrate that companies are still interested in offering such plans despite new consumer protections under the healthcare law and payment caps to insurers.  According to Blum, “We can say with complete accuracy that despite projections in 2010 that the program will decline, the program has grown and will continue to grow.  The plans have made a very strong statement that they intend to commit to the program.  Plans that do a better job serving the needs of their Medicare members should be rewarded and all plans should be encouraged to improve their performance.” 

Healthcare insurers warned that seniors can expect more costs and receive fewer benefits from their Medicare Advantage plans after payment cuts take effect.  They point to projections from the Congressional Budget Office, which predicted Medicare Advantage enrollment would fall to just 7.8 million participants in 2019.  “Medicare Advantage plans remain committed to the program and are doing everything they can to preserve benefits and keep coverage as affordable and possible for beneficiaries,” said Robert Zirkelbach of America’s Health Insurance Plans (AHIP).  “However, as these cuts take effect in the coming years, Medicare Advantage beneficiaries will face higher out-of-pocket costs, reduced benefits, and fewer health care choices.”  The group and its insurer members, who opposed many of the healthcare reforms before they passed, are now committed to implementing the law.

“Many people raised fears that under the Affordable Care Act, beneficiaries would see their Medicare Advantage options shrink and their premiums rise,” Sebelius said.  “Instead, we have seen just the opposite.”

Some in the industry are looking at other ways to bring Medicare costs down.  According to the Fierce Pharma website, “Healthcare industry leaders are poised to make their own deficit-reduction suggestions — including some that might not win them points in a popularity contest.  Uncertain what budget cuts the deficit-reduction committee might propose, the Healthcare Leadership Council has come up with its own proposal that would ask Medicare beneficiaries to endure more belt-tightening themselves.  The group is aiming to put forward an alternative more palatable than across-the-board Medicare cuts mandated by the deficit-reduction bill if the “supercommittee” doesn’t agree on its own plan.  And it’s betting that its proposal will be easier to bear than budget-cutting ideas floated in the past, such as drug re-importation.  The council, which includes Big Pharma executives, hospital companies and insurers, crafted a plan that would raise the Medicare-eligibility age little by little to 67 from 65, beginning in 2014. It would hike co-pays and deductibles.  It would require well-off seniors to pay higher premiums.  And it would add private-sector competition to traditional Medicare coverage, pitting government-subsidized private insurance plans against regular Medicare.  Requiring seniors to pay more might be considered a non-starter; after all, consumer groups, particularly AARP, have vociferously fought against such moves in the past.  But the council figures that provider-based Medicare cuts will end up costing beneficiaries when all is said and done.  ‘This thinking that we’re protecting beneficiaries because we’re only cutting providers — that’s mythical,’ said Mary Grealy, the council’s president.”

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No More Surcharges on Pre-existing Conditions

Tuesday, September 20th, 2011

There’s good news for Americans who lack healthcare insurance and have pre-existing medical conditions.  As of July 1, 2011, the Obama administration reduced the premiums  these people pay to purchase high-risk insurance plans that the federal government operates in 17 states and the District of Columbia.  Called pre-existing condition insurance plans (PCIPs), this coverage for people with medical conditions that often make then unable to buy insurance on the individual market was created by the Patient Protection and Affordable Care Act (ACA). 

Virginia and six other states will slash their premiums by 40 percent; other states and the District of Columbia will see cuts of between 15 and 25 percent; Mississippi will cut its rates by just two percent.  The revised rates give greater consideration to state-specific data and closely track the standard rates for individual policies in each state.  “Now, the program has been up and running for six to nine months, we’ve had an opportunity to redefine the methodology,” said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the Department of Health and Human Services. 

Advocates for consumers and federal officials hope that the reduced premiums will encourage additional people to opt into the plans.  Although approximately 375,000 people were expected to sign up for the PCIPs, just 21,454 had enrolled as of April 30, 2011.  The biggest roadblocks are seen as high premiums and a legal requirement that enrollees lack healthcare insurance for six months prior to joining the program.

Another provision of the law could have the potential to make the plans even more affordable.  Some insurers are already cutting premiums to meet the new “medical loss ratio” requirements.  (Medical claims paid are considered losses in insurance jargon.)  If difficult economic times continue and people cut back on medical care, other insurers may follow suit.  “Plans are getting nervous about how big the rebates they’re going to have to pay are,” said Timothy Jost, a law professor at Washington and Lee University who’s a consumer representative to the National Association of Insurance Commissioners.

Compared to the legal requirement that people be uninsured for six months before signing up for the new plans, high premiums are probably a bigger stumbling block to enrollment, experts say. They can’t really do anything about the six months, because that’s in the law,” says Kansas Insurance Commissioner Sandy Praeger, who heads the health insurance and managed care committee for the National Association of Insurance Commissioners.  “But they can bring down the cost, which will help.”

The trend to ever-increasing healthcare premiums has led some organizations to ask for an extreme solution. Recently, the Greater Boston Interfaith Organization (GBIO) and Health Care for All issued a plea to freeze healthcare premiums for one year to sort out a better solution for healthcare companies and individuals alike.  The freeze’s supporters argue that the price hikes of health insurance have not evened out, despite the fact that more people are facing economic difficulties.  During the year-long freeze, the hope is that consumers will be better educated to find the best deals for their insurance and that companies could find ways to better meet their customers’ needs.

The cost reduction has made a major difference to Kathleen Watson of Lake City, FL, who had been uninsured since 2004 when COBRA coverage under her husband’s previous policy expired.  Because she has leukocytosis — a constantly elevated white blood cell count — locating affordable coverage was impossible.  Watson found herself in an even more difficult position in 2009 when she was diagnosed with non-Hodgkin lymphoma and developed an antibiotic-resistant bacterial infection while hospitalized with pneumonia.

When the ACA created the new plans for people with pre-existing medical conditions, Watson looked into coverage.  Unfortunately, the $605 monthly premium was more than she could afford on what she earns running a medical transport business.  When she learned that rates in the three plans were being reduced by 40 percent, Watson checked out the plans again.  This time, she signed up for an affordable $363 a month that started July 1.  “I’m just happy to have insurance now,” Watson said, noting that she immediately needs a CT scan and a lung biopsy to check out enlarged lymph nodes in her right lung, bladder and colon.  “Hopefully it does what it says.”

Discussions about further reductions could be in the works.  “It’s possible,” that the medical loss ratio requirements might further depress PCIP premiums, Larsen said.  “I wouldn’t care to speculate about that.”

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Polls: Most Americans Oppose Changes to Medicare

Tuesday, June 28th, 2011

Americans have mixed feelings about what changes should be made to the popular Medicare program. Although 53 percent say the program needs fundamental changes, 58 percent say it is working fine the way it is.  Americans were asked to decide which of three statements is closest to their viewpoints: “Medicare works pretty well and only minor changes are necessary to make it work better”; “There are some good things about Medicare, but fundamental changes are needed”; or “Medicare has so much wrong with it that we need to completely rebuild it.”

Twenty-seven percent – including 36 percent of Democrats – believe that only minor changes are needed.  Another 13 percent said the program needs to be completely rebuilt.  Fully 53 percent said Medicare needs fundamental changes — even though the program has many good points.  People who want basic changes include a majority of Republicans and independents, though just 43 percent of Democrats support the plan.  A majority of Americans between ages 18 and 64 want significant changes.  Just 37 percent of those 65 and older agree.

Additionally, respondents were asked if they wanted to see Medicare “continue the way it is set up now, as a program that pays the doctors and hospitals that treat senior citizens” or “if they think it should be transformed into “a program that gives senior citizens payments towards the purchase of private insurance.”  Democrats want to retain Medicare in its present form; Republicans want to transform it into a voucher system in which seniors choose their coverage and are given money to cover their insurance premiums.

So strongly does the Senate Democratic leadership feel,  they have reaffirmed that Medicare cuts should not be on the table during the debt ceiling discussions.  “Seniors can’t afford it,” Senate Majority Leader Harry Reid (D-NV) said.  “The vast majority of the American people, including most Republicans, do not support changing Medicare as we know it, as articulated in that piece of legislation that came from the House.  That” piece of legislation is the Paul Ryan (R-WI) plan, “The Path to Prosperity”, which slashes the budget deficit by about $5 trillion over the next decade.

Ryan’s plan would overturn the Patient Protection and Affordable Care Act (ACA) and proposes major reforms to Medicaid and Medicare.  Medicaid would become a block grant system; the federal government would allocate money to states, giving them greater flexibility to shape their healthcare programs that serve the poor.  Currently, the government matches every dollar that states spend on Medicaid; the formula varies from state to state.

Senator Charles Schumer (D-NY) said Democrats will not accept a “mini” Ryan plan.  “The Ryan plan to end Medicare as we know it must be taken off the table, but Republicans should know that we will not support any mini version plan of ‘Ryan’ either,” Schumer said.  “We want to make our position on Medicare perfectly clear.  No matter what we do in these debt-limit talks, we must preserve the program in its current form, and we will not allow cuts to seniors’ benefits.“

Slashing Medicare will be a major issue in the 2012 election. According to Harvard political scientist and pollster Robert Blendon, “Older Americans tend to vote at much higher rates than other voters,” he said.  “They are the group that most care about healthcare as a voting issue.”

“Medicare for us is a pillar of health and economic security for our seniors,” said Representative Nancy Pelosi (D-CA), who is the House Minority Leader.  “It’s an ethic, it’s a value…and we intend to fight for it.  Pelosi is well aware that there is a problem with Medicare and acknowledges that the program is not financially sound enough to support the retirement of 78 million baby boomers who are joining the program.  Additionally, she knows that Medicare costs strongly impact the nation’s debt and deficit problem.  Additionally, she says that she prefers not to use Medicare as a weapon against Republicans.  “Would you rather have success with the issue, or would you rather have a fight in the election?  Of course you’d rather have success,” she said.  “That’s what you came here to do.  That’s what’s important to the well-being of the American people.”

Another recent poll, conducted by the Pew Research Center,  found that older Americans do not have a favorable opinion about privatizing Medicare.  Fifty-one percent of people aged 50 and over oppose the plan, while just 29 percent support it.  Even among Republicans, more respondents oppose the plan than support it.  The changes are designed to save the program’s finances by trimming government benefits for all Americans under the age of 55.  Medicare says it will run out of funds to pay full benefits by 2024.  One person polled is Michael A. Smith, a 54-year-old lifelong Republican who is currently unemployed and lives in the Philadelphia suburbs.  “A community like this, they want jobs and no changes in the funds they’ve paid into all their lives,” Smith said.

The nonpartisan Congressional Budget Office has stated that Ryan’s plan would not allow insurers to charge sick people more than healthy ones. Insurance companies would set premiums at the same level for everyone of the same age.  Although Ryan’s plan would leave Medicare intact for anyone now 55 or older, Jack Pitney, a political science professor at Claremont McKenna College in Claremont, CA, said older voters have a hard time believing that.  “Anytime you say, `But this doesn’t affect current senior citizens,’ they think it’s going to affect them,” he said.  “Seniors are very, very sophisticated when it comes to these programs.  They figure any change could have a loophole or an exception or a provision that could end up hurting them after all.  They’re very zealous about safeguarding the programs from which they benefit.”

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ObamaCare Covers Pre-Existing Conditions: So Why Are So Few People Enrolling?

Monday, June 20th, 2011

Premiums and eligibility standards for many federally run state-based pre-existing insurance pools will be cut, according to the Department of Health and Human Services (HHS).  The changes will impact some- of the state-based insurance programs, which have attracted fewer enrollees than the Obama administration originally estimated.  The plan will reduce Pre-Existing Condition Insurance Plan (PCIP) premiums between two percent and 40 percent in Washington, D.C., and in 17 of the 23 states where the federal government runs the program.  Another 27 states run their programs by using federal funding through the Patient Protection and Affordable Care Act (ACA).

According to HHS, the changes will bring the premiums closer to the individual insurance market rates in each state.  The change will not affect premiums in states where they are “well-aligned” with the individual insurance market premiums.  “That means real savings for people across the country,” HHS Secretary Kathleen Sebelius said.  “The Pre-Existing Condition Insurance Plan changes lives, and in many cases, literally saves lives.  These changes will decrease costs and help insure more Americans.”

Changes include allowing adults — beginning July 1 — to qualify for the program if a physician, physician assistant or nurse practitioner provides a letter from the last year stating that the individual has had “a medical condition, disability or illness.”  The change no longer requires that applicants provide an insurance company denial letter, although the programs will still require citizenship or legal residency and no health insurance coverage for the previous six months.  PCIP provides comprehensive health coverage, including primary and specialty care, hospital care, prescription drugs, home health and hospice care, skilled nursing care and preventive health and maternity care.  It limits yearly out-of-pocket spending and does not carve out benefits the people need.  Eligibility is not based on income and people who enroll are not charged a higher premium because of their medical condition.

According to the MyHealthCafe.com blog, the move is a good one.  “Based on PCIP enrollment so far, it may not be an issue.  California may have a budget to provide health insurance coverage for 20,000 in its PCIP, but so far only 513 Californians have enrolled in its PCIP.  That is still more than the paltry 101 residents of Missouri who have enrolled for health insurance coverage in that state’s PCIP.  In contrast, Pennsylvania, which is running its own PCIP and is limiting health insurance premiums to a comparably affordable $283 a month, has enrolled 1,657 in its PCIP, 1,000 more than any other PCIP in the nation.  Overall, only 8,000 Americans have enrolled in a PCIP so far.  Although Americans with pre-existing conditions were expected to stampede into the newly-formed PCIPs, applications for most of the PCIPs have only trickled in so far.  It is astonishing to many who predicted that the PCIPs would be flooded with applications from Americans with pre-existing conditions who have been long-denied health insurance.  Experts questioned whether the $5 billion dollars would be enough to cover the 375,000 expected to enroll until 2014,when all health insurers will be required to offer insurance regardless of pre-existing conditions.”

As an example, HHS said that a 50-year-old Floridian can now get comprehensive health coverage for as low as $270 per month. “This option became available to children under age 19 in February, and we are extending this pathway to all applicants regardless of age,” Sebelius said.  “Applicants will no longer have to wait on an insurance company to send them a denial letter.”

“These changes will get more people covered,” said Steven Larsen, the director of the Center for Consumer Information and Insurance Oversight.  “We’re encouraged by recent increases in enrollment and we’re excited to build on these efforts and reach even more people.”

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600,000 Young Adults Already Taking Advantage of Healthcare Reform Law Provision

Tuesday, June 14th, 2011

More than 600,000 young American adults are taking advantage of the healthcare law provision that allows people under 26 to remain on their parents’ health plans, a pace that appears to be faster than the government expected.

WellPoint, which insures 34 million Americans, said the dependent provision was the reason why 280,000 new members were enrolled.  That was approximately one-third of its total enrollment growth in the first three months of the year.  Other large insurers have added thousands of young adults.  Aetna added approximately 100,000; Kaiser Permanente, about 90,000; Highmark Inc., about 72,000; and Health Care Service Corporation, about 82,000.  The Department of Health and Human Services (HHS) believes that about 1.2 million young adults will sign up for coverage in 2011.

“The (college) coverage will probably end in August, but students should check the date,” said Aaron Smith, co-founder and executive director of the Young Invincibles,  a Washington-based non-profit healthcare advocacy group for young adults.  “It’s an important piece of information.  They could have a gap in coverage.”  The group has created guidelines to help new grads understand their health insurance options.  Thanks to the ACA, young adults can remain on their parents’ health insurance until their 26th birthday, even if they’re in school, financially independent and even if they’re married.  The sole exception is if they have health coverage through their own employer.  In those situations — even if the policy is bad — they can’t remain on their parents’ plan.  Young adults have one of the lowest coverage rates, estimated at as much as 30 percent.  The healthcare reform overhaul has helped make a dent in that figure.

Adding young adult coverage increases the average family premium by approximately one percent, according to federal estimates.  Unfortunately, graduating students who are currently uninsured don’t get a special enrollment opportunity under the law, says Smith, and must wait until the next annual enrollment period to sign on with their parents’ plan.

Not surprisingly, some employers are concerned about having to pay for additional coverage for their employees’ offspring.  Helen Darling, CEO of the National Business Group on Health, which represents more than 300 large employers, said employers generally don’t like adding anything to their health costs.  “I don’t think anyone is eager to spend more money,” Darling said.  “This is not something employers would have done on their own.”

According to insurers, the growth in young-adult enrollment comes as the industry began reporting 1st quarter earnings shows better than expected profits.  Carl McDonald, a Citigroup analyst, said that the higher profits aren’t related to the new enrollees but rather because most of the increase in young people’s enrollment has occurred among self-insured employers; in those firms, insurers act as administrators and assume no financial risk.  McDonald said the majority of insurers’ profit increases is due to their customers using fewer health services, particularly hospital care.

“We are pleased to see the embrace of this key provision of the Affordable Care Act,” said Jessica Santillo, a spokeswoman for HHS.  “Young adults are more than twice as likely to be uninsured than older adults, making it harder to get the health care they need, and putting them at risk of going into debt from high medical bills.”

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Nine Million Americans Lost Healthcare Coverage During the Recession

Monday, April 4th, 2011

The financial crisis not only robbed nine million Americans of their jobs – but also their healthcare insurance. According to a new study by The Commonwealth Fund, only 25 percent of Americans who lost employer-sponsored healthcare coverage succeeded at finding another source.  As a result, an estimated 52 million Americans did not have healthcare coverage in 2010.  Even though the federal government provides a subsidy, just 14 percent of people who lost their jobs continued their coverage through COBRA.

According to The Commonwealth Fund Biennial Health Insurance Survey of 2010, “Using data from The Commonwealth Biennial Health Insurance Survey of 2010 and prior years, this report examines the effect of the recession on the health insurance coverage of adults between the ages of 19 and 64 and the implications for both their finances and their access to healthcare.  The survey of 3,033 adults, conducted by Princeton Survey Research Associates International from July 2010 to November 2010, finds that in the last two years a majority of men and women who lost a job that had health benefits became uninsured.  Adults who sought coverage on the individual insurance market over the past three years struggled to find plans they could afford and many were charged higher premiums, had a health condition excluded from their coverage, or were denied coverage altogether because of a pre-existing condition.  Meanwhile, Americans with health insurance had higher deductibles and consequently greater exposure to medical costs.  And millions were struggling to pay medical bills, facing cost-related barriers to getting the care they need, or skipping or delaying needed care, including prescription medications, because of the cost.”

Just 50 percent of adults aged 64 or less are current with preventive care.  Fully 49 million employed Americans spent 10 percent or more of their yearly income on out-of-pocket costs and insurance premiums, a sharp increase from the 31 million reported in 2001.  Once the Patient Protection and Affordable Care Act (ACA) goes into full effect in 2014, the situation is likely to improve dramatically.  “These reforms have enormous potential to begin solving the problems identified in this report,” said Sara Collins, vice president of The Commonwealth Fund, a private foundation that promotes a high performing healthcare system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, minority Americans, children, and the elderly.

“The report tells the story of the continuing deterioration of healthcare accessibility, efficiency, safety and affordability over the past decade,” said The Commonwealth Fund president Karen Davis. “All this despite the fact that the United States spends more than any other country on healthcare.  Most recently it has failed the millions of Americans who lost their jobs during the recession and lost health benefits as well, leaving them with no place to turn for affordable healthcare coverage.  The silver lining is that the Patient Protection and Affordable Care Act has already begun to bring relief to families,” Davis said.  “Once the new law is fully implemented, we can be confident that no future recession will have the power to strip so many Americans of their health security.”

Of those people who attempted to buy an individual plan during the study’s timeframe — 19 million individuals – or 71 percent found it difficult or impossible to locate a plan they could afford and met their needs, were denied coverage or charged extra because of a pre-existing medical condition.  Adults with family incomes of less than $22,050 for a family of four were hardest hit with 54 percent having no healthcare insurance.  An additional 41 percent of families with incomes of between $22,050 and $44,100 had no coverage.  Of higher-income families, just 13 percent lacked healthcare coverage in 2010.

Conservative groups such as the Heritage Foundation are critical of the healthcare reform law.  The Washington, D.C.-based think tank wants changes made to the healthcare system to make it less reliant on government and to have individuals “own and control their own healthcare policies.”  Additionally, Heritage believes that the healthcare law will increase government spending.  “Of course there’s some people who will benefit from the law, but just focusing on individuals with benefits is misleading,” said Brian Blase, a policy analyst in health studies.  “You have to look at the law in its totality.”

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Healthcare Fight Could Be Settled by Stealing an Idea From Medicare

Tuesday, January 18th, 2011

The Obama administration may have a card up its sleeve in its battle against states’ attempts to have the new healthcare reform law declared unconstitutional.  Even if the Supreme Court ultimately rules that the federal government cannot require that individuals purchase healthcare insurance, the administration could borrow a strategy that Medicare has used for decades that encourages consumers to participate in new insurance groups.  Medicare coverage for physician visits is voluntary and is paid for by a separate premium.  Even so, 90 percent of Medicare recipients sign up for the plan because opting out when they become eligible carries a lifelong penalty that only increases the longer they resist.

The healthcare reform law could incorporate a similar penalty instead of the current mandate.  Such a move would persuade reluctant but healthy people to enroll in a healthcare plan.  The primary benefit is that this keeps premiums affordable because the law makes it impossible for insurers to refuse to treat sick people.  “It wouldn’t be a nirvana solution,” said Chris Jennings, a health policy consultant who advised President Bill Clinton and Hillary Clinton during their 1990s push for healthcare reform.  According to Jennings, the current law covers more people at lower cost, although “it would be irresponsible not to try an alternative” if the courts overturn the legislation.

Gail Wilensky, who ran Medicare for President George H. W. Bush, described the ploy as “mandate lite”.  A modification of what is done with seniors on Medicare would be a much more powerful tool.  You don’t have to buy insurance.  But if you don’t, the first time you come in, we’re going to add a penalty that you’ll have to pay for the next four or five years.”

The case is likely to be tied up for years in more than 20 lower federal and state courts before it potentially reaches the Supreme Court.  In the meantime, provisions of the law will be phased in.  President Obama is firm in his belief that the law will be proven constitutional and that the possible fallback plan will not be necessary.

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Affordable Care Act Passes Its First Court Test

Thursday, October 28th, 2010

Healthcare reform survives its initial court case. Can the government make people buy insurance?  The Affordable Care Act (ACA) has survived its first court test, an attempt in Michigan to overturn the mandatory insurance provision that requires Americans to buy minimum coverage. The ruling by U.S. District Judge George Steeh was in response to a lawsuit filed by the Thomas More Law Center, which had requested an injunction against the ACA on the grounds that it exceeds Congress’ authority and is an unconstitutional tax.

In his 20-page decision, Steeh ruled that Congress has the power to pass the law under the Commerce Clause of the United States Constitution.  According to the decision, “The minimum coverage provision, which addresses economic decisions regarding healthcare services that everyone eventually, and inevitably, will need, is a reasonable means of effectuating Congress’ goal.”

Steeh noted that “Without the minimum coverage provision, there would be an incentive for some individuals to wait to purchase health insurance until they needed care, knowing that insurance would be available at all times.  As a result, the most costly individuals would be in the insurance system and the least costly would be outside it.  In turn, this would aggravate current problems with cost-shifting and lead to even higher premiums.”

The Thomas More Law Center plans to appeal Judge Steeh’s ruling.

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Medicare Advantage Premiums to Fall in 2011

Thursday, October 14th, 2010

CMS' tough-love negotiations with Medicare Advantage insurers means lower premiums in 2011.The average premiums paid by individuals for private Medicare Advantage plans — which approximately 25 percent of beneficiaries choose — will fall slightly in 2011.  That’s good news, considering that commercial insurance premiums for many people under 65 and some small business are expected to rise between 10 and 25 percent. Insurers blame the new healthcare reform law for the increases, a position that President Barack Obama and Congressional Democrats dispute.

“Despite the claims of some, Medicare Advantage remains a strong, robust option for millions of seniors who choose to enroll or stay in a participating plan,” said Dr. Donald M. Berwick, Centers for Medicare and Medicare Services (CMS) administrator.  Medicare officials negotiated with insurers to hold the line on premiums and co-pays.  “We negotiated more aggressively than in the past,” said Jonathan D. Blum, Medicare deputy administrator.  “As a result, some plans changed their bids to produce more value for beneficiaries.  On average, Medicare Advantage premiums will be one percent lower in 2011 than today.  Medicare Advantage projects that enrollment will increase by five percent in 2011.”

John K. Gorman, a former Medicare official who is now an insurance industry consultant, says the “announcement shows that there is a new sheriff in town.  Medicare officials were very specific and very forceful.  Insurers succumbed to the government’s demands and stayed in the Medicare market because they have become much more dependent on Medicare business.”

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