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Essential health benefits

California has frequently been cited as an early Affordable Care Act success story with enrollment coming at least closer to projected numbers than in other states. This week’s release of information from Covered California, the state entity organizing enrollment there, shows a mixed picture about the likelihood that the ACA will become a stable source of non-discriminatory relatively inexpensive health insurance in the nation’s most populous state.

A highlight from the report is that 79,891 have at least gotten as far as selecting a plan since enrollment opened on October 1, 2013.  That’s better than any other state and better — at least as of the last report — of all the other states combined using the healthcare.gov portal.

And, because, contrary to the wishes of California Insurance Commissioner Dave Jones, Covered California has decided not to permit those with recently enrolled in underwritten individual health insurance to “uncancel” policies that do not provide Essential Health Benefits, there is the potential to add more people to the Exchange pools than would otherwise be possible.

Additional good news: the pace of enrollment has picked up over the past two weeks.

Still, to date, the 79,891 who have at least selected a plan are only 6% of the 1.3 million that the federal government projected California would enroll through 2014. And the web site in California appears to be working acceptably.

Continue reading “New California Numbers Show Disproportionate Enrollment by Those Over 55″

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Last week President Obama announced that he will try to keep his oft repeated promise to Americans in the individual market that they can keep their plans if they like them … for a year. The media have done an excellent job explaining why President Obama’s temporary patch to the ACA may endanger its existence; in the process the American public has learned more than it ever wanted to about adverse selection, cream skimming, and most importantly crass politics.

Though the full costs of adverse selection will be muted in the first year by risk corridors and reinsurance, it is clear that the failing website, the bad press, and the recently announced delay are placing maximal stress on even those backup provisions of the bill.

Even if the ACA survives this additional insult against the economics that support its very existence, we have witnessed yet another missed opportunity for positive reform to President Obama’s signature legislative achievement. And this time we can’t just blame intransigent tea-party Republicans and their quixotic efforts at repeal; here the buck stops at 1600 Pennsylvania Ave, NW.

While many of the plans that are affected by the President’s temporary patch might actually be plans that don’t qualify as “insurance” (i.e. they have low lifetime caps on expenditures or don’t cover hospital services), numerous others actually offer quite good coverage that just don’t meet the exceptionally high standards of the newly developed minimum essential health benefit (EHB).

In many ways, the first dollar coverage for preventive care and the wide ranging number of services covered by the ACA aren’t truly insurance either. Instead, these features amount to a very generous pre-payment plan for medical services supported by the United States treasury.

These elements of the EHB are too costly and unnecessary. Perhaps even more concerning, they are just the ante. As time goes on, vested interests for everything not included in the EHB will work tirelessly to insure that their favorite benefits are included. If you want evidence of this eventuality, you need look no further than the remarkably long and growing list of benefits mandated by most states.

Keep in mind that as the EHB grows more generous the premiums and subsidies on the exchanges will also grow. And we know who will pay their “fair share” of those increases.

Continue reading “The Real Fix? The Exchanges Aren’t Working. Here’s Why …”

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This post highlights the findings of a paper released today by the Clayton Christensen Institute, “Seize the ACA: The Innovator’s Guide to the Affordable Care Act.

Since its passage in 2010, the Patient Protection and Affordable Care Act (ACA) has been analyzed by experts from nearly every political, economic, and health policy angle possible. Yet in the noisy debate about whether the legislation is good or bad and whether to implement or repeal it, we think there’s something missing: a rigorous but practical discussion of the innovation opportunities created by the legislation and the barriers to innovation it imposes.

To facilitate that goal, we analyzed the ACA through the lens of the theory of disruptive innovation. First articulated by Harvard professor Clayton M. Christensen, disruptive innovation theory explains how innovations that decrease cost and increase accessibility transform entire industries.

As existing products increase in performance and begin to exceed customer needs (think of next year’s biggest Cadillac model), low-cost, lower-performance alternatives created by new entrants take root in the low end of the market (think of next year’s smallest Kia model).

These new products are initially inferior in comparison to established products, but they become better and better until they “disrupt” and eventually topple larger incumbent competitors.

So how does the ACA affect the pace of disruptive innovation in health care? What opportunities does it create for innovators? What barriers does it inadvertently erect? Here are a few thoughts from our recent paper.

Continue reading “Disruptive Innovation and the Affordable Care Act”

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Ezra Klein is right. In a recent Washington Post column, the left-leaning policy wonk laid plain that the future of ObamaCare is at stake in next week’s elections. If President Obama wins and Democrats hold the Senate, the Affordable Care Act will survive. If Mitt Romney wins and Republicans take the Senate, the law is dead. It is the starkest of differences.

How likely is each scenario? At this moment Democrats have the advantage. According to Real Clear Politics, the president is running slightly ahead in six out of ten battleground states. He could actually lose seven of these, but still be reelected if he hangs onto Ohio, Wisconsin, and Iowa.

While key Senate races have tightened, such as Tommy Thompson in Wisconsin, Democrats have a slight advantage there too. If the elections were held today, Republicans would fall two seats short.

What would this future look like?  Implementing ObamaCare would be accelerated. HHS and states will have less than fourteen months to finalize major provisions of the law before they take effect on January 1, 2014.

Thousands of pages of regulation will be released shortly after the election, on everything from IRS rules for employers to essential health benefits to covering pre-existing conditions. It remains to be seen how prescriptive these regulations would be.

State officials will have to submit a blueprint for their insurance exchanges by November 16th. They will need to decide if they will create and exchange and how it will be designed.

They will also have to decide whether to expand their Medicaid programs, and they’ll need to determine essential health benefits and benchmark plans for the insurance options to be sold through their exchanges.

Continue reading “Healthcare Law on the Ballot”

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Beginning in 2014, the Patient Protection and Affordable Care Act (PPACA) hands the Secretary of the U.S. Department of Health and Human Services a joystick – the Essential Health Benefits (EHB) package – with the potential to rocket small-business health insurance premiums skyward. EHB is the menu of goods and services that must be covered under all exchange-purchased insurance plans and non-grandfathered small-group and individual insurance plans. By vesting one set of hands with control over EHB, small business faces permanent administrative uncertainty. At the same time, the brunt of EHB appears largely to bypass big business, unions, and governments.

The EHB requirements apply to policies purchased both in exchanges and in non-exchange small-group or individual markets. In the small-group and individual markets, annual or lifetime coverage limits on all EHB items are forbidden. And plans must have an actuarial value (AV) of at least 60 percent, meaning the plan’s total reimbursements must be at least 60 percent of the total qualifying health care costs incurred.

Section 1302 empowers the Secretary of HHS to define EHB, but gives little specificity beyond requiring that EHB include 10 general categories (e.g., ambulatory patient services) and “the items and services covered within the categories;” the Secretary is to also assure that EHB includes “benefits typically covered” by a “typical employer plan.” The meaning of these words in quotation marks is left to the Secretary (and future Secretaries) to define and redefine. The fluid definitions and concentrated discretion mean uncertainty, which carries a financial cost for small business.
Continue reading “Essential Health Benefits: The Secretary’s Joystick”

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MASTHEAD


Matthew Holt
Founder & Publisher

John Irvine
Executive Editor

Jonathan Halvorson
Editor

Alex Epstein
Director of Digital Media

Munia Mitra, MD
Chief Medical Officer

Vikram Khanna
Editor-At-Large, Wellness

Maithri Vangala
Associate Editor

Michael Millenson
Contributing Editor










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