Recently I was asked to intervene on behalf of a patient who, trapped by circumstance, was paying off an enormous bill for a lithotripsy procedure. What I uncovered wasn’t news, but it drove home how egregious the current system can be, why it so badly needs to be fixed, and how the Affordable Care Act (ACA) helps move us in the right direction.
The patient had health insurance through her husband’s job. But it was cancelled just after the hospital validated it, because the employer failed to pay the premium. The procedure was performed, and the patient was charged as “self-pay.”
If Medicare had been the payor in this case, the hospital’s total reimbursement would have been a little less than $2,000. But the lithotripsy and associated costs were billed at $33,160, or just under 17 times the Medicare rate. After the patient applied for financial assistance, a 30% contractual adjustment was applied, reducing her bill to just under 12 times the Medicare rate.
If the health system had asked her to pay 190 percent of Medicare – typically the upper end of commercial insurance rates – her bill would have been about $3,800. By the time I was contacted, the patient and her husband – responsible people trying to make good on their debt – had already paid the health system $5,700 or 285 percent of Medicare. The hospital insisted they owed an additional $16,000.
I laid this out in a letter to the CEO and, probably because he wanted to avoid a detailed description of this unpleasantness in the local paper, he relented, zeroing out the patient’s balance. No hospital executive wants to be publicly profiled as a financial predator.
But while that resolved that patient’s problem, it did nothing to change the broader practice. Most US health systems, both for-profit and not-for-profit, exploit self-pay patients in this way. Worse, not-for-profit health systems legally pillage their communities’ most financially vulnerable patients while getting millions of dollars in tax breaks each year for providing charity care.
Aggressive collections procedures, including home liens, are widespread.
Some states have strictly limited what hospitals can charge low income patients. In California, uninsured patients with incomes below 350 percent of the federal poverty level (FPL) – $82,425 in 2013 for a family of 4 – can be charged no more than Medicare rates. In New Jersey, patients within 500 percent of the FPL cannot be charged more than 115 percent of Medicare.
Section 9007 of the ACA took effect last year and prohibits excessive pricing for self-pay patients, and would revoke a charitable hospital’s tax-exempt status if it charges them more than it charges for insured patients. The language is ambiguous, conceivably allowing health systems to circumvent the law’s intent. But the spirit is clear. To keep their not-for-profit tax status and perks, health systems must stop taking advantage of self-pay patients.
Continue reading “And Yes, The Affordable Care Act Really Does Make Care More Affordable. Here’s One Example ….”
Filed Under: THCB, The Business of Health Care
Tagged: Brian Klepper, Costs, Hospitals, Medicare, Patients, Premiums, self-pay patients, The ACA
Nov 18, 2013
I’m hearing a lot of the lazy “but what are the political implication” perpetual horse race questions from the media about recent developments surrounding the Affordable Care Act. That’s fun Inside-the-Beltway stuff, but in the mean time there are real people who are likely to be helped and hurt with matters as essential as their health. So, what I am not hearing enough of yet, however, are tough, substantive questions that get to the heart of whether the Affordable Care Act is going to be stillborn.
Here are some questions that I think intelligent journalists and blogger ought to be asking in light of recent developments with the Affordable Care Act. Getting answers in many cases may take persistent questioning and closer scrutiny of existing documents. In others, FOIA requests may be needed.
1. Actual v. Anticipated Age Distributions in the Exchanges
What is the age distribution by state and in the aggregate of persons who it is claimed have enrolled in Exchange-based plans under the Affordable Care Act? Once we have this data, we can compare it to (a) census data on the age distributions in the various states and (b) any prior estimates on what the age distribution of Exchange enrollees would be such as those described in this government document.
If there is a significant difference between the age distribution encountered thus far and the anticipated age distribution, that increases the probability of the ACA succumbing to an adverse selection death spiral.
Continue reading “Five Questions Journalists Should Be Asking About the Affordable Care Act”
Filed Under: OP-ED, THCB
Tagged: CBO, consumer driven health, Grandfather Fix, Health Plans, Premiums, Risk adjustment, risk corridors, Seth Chandler, Seth J. Chandler, The ACA
Nov 16, 2013
A THCB Reader in Michigan writes:
“The rates listed on the Healthcare.gov/Michigan site are inaccurate “estimates.” Being unable to apply on the website due to glitches, I simply go on the site to view plans for my husband and me. Based on our locality, “estimates” shown are about $250 – $600 for bronze and silver plans. We even see some gold plans for about $460.
But when I telephone the insurance companies (Aetna, Humana, BCBSM, HAP) for details and quotes, suddenly the costs of the same plans are $950 – $1750! Obviously, the “estimates” are disingenuous, probably reflecting prices that are available only to very young adults with no medical history.
An estimate is not an estimate unless it is close to what the final price is expected to be, not one-half or one-third the final price. Insurance companies need to list the estimates on the .gov website by range, rather than a single rate. For example, if a policy can be sold for as little as $250 or as much as $950 depending on the particulars of each insured, that policy estimate needs to read $250 – $950. Until insurance companies do this, they are, effectively using a bait-and-switch sales technique, which is illegal.”
If you’ve had a bad or good experience attempting to buy health insurance on the state or federal exchanges, we’d like to know about it. E-mail us at email@example.com.
Filed Under: ACA Database, THCB
Tagged: ACA Database, consumer driven health, Premiums, THCBist
Oct 24, 2013
Will all the White House messages, the stream of breathless Twitter updates on the number of hits and enrollments, and the press hype surrounding opening day send the uninsured public into panic mode? Will they prompt buyers to consider only the premium and click to enroll ASAP? And why not? For weeks the administration, state exchange officials and supporters of the Affordable Care Act have been telling the public how cheap premiums will be — much cheaper than expected.
A Pennsylvania woman told me she was chomping at the bit to enroll because she was eager to dump her policy from Aetna for a cheaper model from Blue Cross. Never mind that she had no idea whether the coverage was better, the same, or worse.
A Nebraska woman heard there was a worksheet to fill out and it had to be completed by October 1. It was first-come-first-served, an agent had told her.
If cheap premiums were the only thing shoppers had to consider, this sense of urgency might be fine. But it’s not. Here’s the problem.
Selecting a health insurance policy is fraught with potential missteps and misunderstandings. As the Nebraska woman told me, “You’re walking into a chasm of uncertainty. It’s like shopping for a used car. You don’t know if you’re getting a lemon,” a lemon you’re stuck with until the next open enrollment.
For consumers, the key advice right now is: don’t rush into anything. Tuesday, October 1st marked the first day of a six-month open enrollment period, not the last. Coverage doesn’t even begin until January 1, 2014, so there’s no need to buy the first policy you see. If you do want coverage on January 1, the deadline for enrolling is Dec 15.
Continue reading “Of Course, Then There’s The Fact That You May Be Better Off Waiting To Buy Coverage, Anyway …”
Filed Under: Uncategorized
Tagged: Health Insurance Exchanges, Health Plans, Pharma, Premiums, The ACA, Trudy Lieberman
Oct 13, 2013
October 1st marks the first ever public exchange open enrollment season. This means some of the speculation around consumer awareness and understanding, enrollment/uptake, premiums, and payer participation (not to mention the technical readiness of the exchanges) will finally subside and give way to a clearer picture of the PPACA’s initial success in mandating individual health coverage.
Despite this approaching level of clarity, however, several very significant “blind-spots” will continue to persist, principally for the health insurance carriers that choose to participate by offering PPACA compliant plans in the exchange.
This is due to the law’s guaranteed issue mandate prohibiting health carriers from denying coverage based on preexisting conditions. As a result, the traditional enrollment process which consists of a comprehensive assessment of each applicant’s health status and risk cast against the backdrop of time-tested underwriting guidelines is completely thrown out.
What takes its place is an extremely limited data set (i.e., the member’s age, tobacco/smoking status, geographic region, and family size) from which carriers can determine pre-approved premiums and variability therein. To use an analogy, health insurance companies no longer have a “bouncer at the door” turning people away, or a sign reading No shirt, No shoes, No service at the entrance.
In other words, everyone, regardless of their risk profile, must now be welcomed in with open arms and with very limited risk-adjusted rates.
This wouldn’t necessarily be a problem if the enrolling population comprised a well understood risk pool representing a true cross-section of the population. The reality, however, is that a predominantly unknown and potentially unhealthy population will flood the individual health insurance marketplace in a two weeks just as most states quickly phase out their high-risk pre-existing condition pools and shift them into the exchanges.
Continue reading “State Insurance Exchange Blind Spots: Unknown Risks and Unintended Consequences”
Filed Under: The Business of Health Care
Tagged: Aetna, Cigna, Health Insurance Exchanges, Premiums, risk, risk pools, Seth Kellner, The ACA, The States, TripleTree, United Health
Sep 23, 2013
While sitting in the crowded waiting room of a medical specialist’s office I was forced to listen to the television set directly over my head. Cranked up so that everyone could listen above the din of conversation, Wolf Blitzer introduced a video clip of the President hailing the latest news from New York about health insurance exchanges.
Speaking as if he was still on the campaign trail, the President’s words came through loud and clear over the television: thanks to his health reform, premiums in the New York exchange would be half that of premiums in the individual market. This was a model the entire nation should embrace.
No one heard me mutter under my breath that this was a model for New York and a small handful of other states that previously regulated their individual insurance markets effectively out of existence.
What the President undoubtedly knows, but dared not say, is that New York’s individual insurance market is unlike any other state. In New York, insurers cannot charge higher premiums to high risk enrollees.
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As a result of this aggressive community rating, high risk individuals are disproportionately represented in New York’s individual policy risk pools. This drives up premiums, which drives away low risks, driving premiums even higher. Insurers in New York are counting on the purchase mandate, combined with purchase subsidies, to lure low risks into the pool.
This is why they have lowered premiums.
Continue reading “What Happens In New York Stays In New York”
Filed Under: The Business of Health Care
Tagged: Costs, David Dranove, Health Insurance Exchanges, New York, Obamacare, Premiums, The ACA
Jul 19, 2013
There has never been a time in my life when I’ve owed a lot of money. That certainly has changed these past two years as my husband and myself find ourselves with medical debt that we may never pay off . As you can guess, we have no health insurance – we can’t afford it and even if we did have an extra $650 a month we couldn’t obtain it due to our pre-existing conditions.
Briefly, I had emergency surgery to remove a cyst on my ovary in 2010, a diagnosis of an auto-immune disease in 2011 and two bladder cancer surgeries in 2012. My husband has had high blood pressure for over 25 years due to a heart defect discovered in his 30’s.
My husband and I live very simple lives and have little debt. For the past 18 years we’ve been self-employed, owning a retail music store, and for many of those years I worked for other companies. Some offered medical coverage, some did not. And for some of those years I was able to offer medical coverage for our few employees which also covered my husband and myself. The group coverage was minimal and started out being affordable but with increases it was impossible to afford for long. I tried catastrophic coverage but that was almost as expensive as regular coverage but with a higher deductible. Of course, neither my husband nor I needed the coverage when we had it! They say youth is wasted on the young. I say health insurance is wasted on the young!
Continue reading “Health Insurance is Wasted on the Young”
Filed Under: OP-ED, THCB
Tagged: Costs of Care, Insurance, Kelly Wooten, Millenials, Premiums
Jul 8, 2013
The insurance industry had a rocky start a century ago. It was clear that there were untoward events that could befall any of us with catastrophic results, from the incineration of a home to the loss of the ability to maintain gainful employment from injury or death.
Insurance offers a mechanism to share this risk. The stumbling block was the possibility that the insured might burn down their home to collect. Once it was realized that “moral hazard” could be held at bay by investigating for fraud, there was little to hinder the growth of an industry designed to serve our risk adverse proclivities. Almost every adult has some experience valuing the expense of sharing risk for a variety of hazards. After all, automobile insurance is generally compulsory and most of us are familiar with notions of deductibles and riders when it comes to homeowners’ policies. The possibilities are not an abstraction; we can envision the house or its contents damaged, destroyed, or stolen leaving us bereft. What would reducing that prospect be worth to us? As is true for many value-based decisions, the answer brings a mix of reason and intuition (1)that can produce surprising outcomes (2).
Health insurance is even more complex, and has always been so. The industrial revolution saw the development of “Friendly Societies” in Britain and the Prussian “Krankenkassen”. These were trade-based institutions that allowed advantaged workers to purchase insurance to provide “sick pay” but there was little else. The sea change was the Prussian “welfare monarchy” (3), an extensive insurance scheme that encompassed universal health care and a complex approach to disability insurance (4). Modifications of the Prussian scheme spread across the industrial world. It made landfall in the United States in time for the presidential election of 1912. Only one component took root in America: Workers’ Compensation Insurance but not as a national insurance scheme. It fell to the each state to regulate an insurance scheme to compensate injured workers for lost income and medical expenses.
This set the stage for state-based regulation of employer-sponsored private health insurance schemes going forward. But forward momentum appears anything but swift or linear in a country that trusted physicians to charge “commensurate with the services rendered and the patient’s ability to pay” (AMA Code of Medical Ethics, 1957.) Health Insurance as both an industry and a product has become a frustrating web of inefficiency and confusion.
Continue reading “The Health Insurance Shell Game”
Filed Under: Economics, Uncategorized
Tagged: behavioral psychology, Insurance, Janet Schwartz, Nortin Hadler, Premiums, risk management
Jun 19, 2013
The Affordable Care Act contains a number of provisions intended to incent “personal responsibility,” or the notion that health care isn’t just a right — it’s an obligation. None of these measures is more prominent than the law’s individual mandate, designed to ensure that every American obtains health coverage or pays a fine for choosing to go uninsured.
But one provision that’s gotten much less attention — until recently — relates to smoking; specifically, the ACA allows payers to treat tobacco users very differently by opening the door to much higher premiums for this population.
That measure has some health policy analysts cheering, suggesting that higher premiums are necessary to raise revenue for the law and (hopefully) deter smokers’ bad habits. But other observers have warned that the ACA takes a heavy-handed stick to smokers who may be unhappily addicted to tobacco, rather than enticing them with a carrot to quit.
Under proposed rules, HHS would allow insurers to charge a smoker seeking health coverage in the individual market as much as 50% more in premiums than a non-smoker.
That difference in premiums may rapidly add up for smokers, given the expectation that Obamacare’s new medical-loss ratios already will lead to major cost hikes in the individual market. “For many people, in the years after the law, premiums aren’t just going to [go] up a little,” Peter Suderman predicts at Reason. “They’re going to rise a lot.”
Meanwhile, Ann Marie Marciarille, a law professor at the University of Missouri-Kansas City, adds that insurers have “considerable flexibility” in how to set up a potential surcharge for tobacco use. For example, insurers could apply a high surcharge for tobacco use in older smokers — perhaps several hundred dollars per month — further hitting a population that tends to be poorer.
Is this cost-shifting fair? The average American tends to think so.
Continue reading “About Time? Smokers Face Tough New Rules Under Obamacare”
Filed Under: THCB
Tagged: Cancer, Dan Diamond, Insurers, Medicaid Expansion, MLR, Obamacare, Premiums, smoking, smoking cessation, The ACA, tobacco
Jan 25, 2013
As employees participate in open enrollment for their company’s health insurance enrollment next year, it’s clear they should make a point of participating in their employer’s enrollment information meetings, not merely pick last year’s coverage. Partly because of the implementation of President Obama’s health care overhaul plan, U.S. workers are expected to pay average premiums of $2,200 in 2011 – an increase of 12.5 percent, the biggest in four years, according to human resources consulting firm Hewitt Associates.
Increases in health care premiums are certain to continue increasing in coming years at double-digit rates, with inflation further exacerbated by the entry of 32 million uninsured Americans into the healthcare system. This will speed the transformation of insurers from underwriters of medical risk to managers of medical risk, a process inevitably accompanied by higher prices.
Annual healthcare inflation — and hence baseline premiums — have been rising 8-12 percent annually for two decades, and there is no reason to expect this to change anytime soon. It could actually increase as provisions of healthcare reform – such as the mandated removal of pre-existing conditions – become law. Some of these provisions, such as the elimination of a dollar amount of health benefits in a given year and the fact that children can now stay on a parent’s health plan until age 26, help explain the likely spike in health insurance premiums next year.
Continue reading “Companies Clearly Won’t Stop Hiking Health Care Coverage Premiums”
Filed Under: Uncategorized
Tagged: Employers, Premiums
Nov 1, 2010