So many old rules in health care and insurance no longer seem to apply.
I keep stumbling upon situations, where, what used to be up is now down and what used to be down is now up.
No one seems to know for sure how things will settle out under the new reality created by Obamacare and the even more unpredictable reactions to the law by health care companies, employers and, most especially, you and me.
I’ve started using the term “weightlessness” to describe this state we’re in. Picture the astronauts on the international space station, floating through a room, flipping at will, as likely to settle on a wall or on the ceiling as on the floor.
That’s what life is like under Obamacare now—for physicians, hospital administrators, insurance executives, benefits brokers and employers.
Here are a few examples:
1. I wrote last week about how a chunk of workers, even at large employers with generous benefits, would actually get a better deal on health insurance from the Obamacare exchanges than from their employers. So their employers are starting to consider whether they should deliberately make health benefits unaffordable for those low-wage workers, so they can qualify for Obamacare’s tax-subsidized insurance.
That could be good for both employers and employees. The effect on taxpayers, which would switch from granting a tax credit to employers to instead granting it to the employees, is unclear.
2. Even though insurers were certain that price would be king on the Obamacare exchanges, that hasn’t led most customers to buy the plans with the cheapest premiums. As I wrote Friday, 76 percent of those shopping on the exchanges in my home state of Indiana have picked the higher-premium silver and gold plans, with only 24 percent picking bronze plans.
“There are a few geographies where we believe we are gaining share despite lower price competition which points to the value of our local market depth, knowledge, brand, reputation and networks,” WellPoint Inc. CEO Joe Swedish said during an January conference call with investors.
It’s possible that’s a result of older and sicker patients being the earliest buyers on the exchange, and that as healthier people buy coverage, they’ll gravitate to the low-cost bronze plans. But that hasn’t happened—which, as I wrote on Friday, has proved wrong hospitals’ concerns about the super-high deductible bronze plans.
Continue reading “The Weightlessness of Obamacare”
Filed Under: Uncategorized
Tagged: Benefits, Employers, Insurers, J.K. Wall, Milliman, Obamacare, Risk adjustment, Subsidies, the business of healthcare
Feb 18, 2014
Risk adjustment is a key mechanism to ensuring appropriate payments for Medicare Advantage plans, Medicare Part D drug plans, and Medicaid health plans. Since health plans vary in their mix of healthy and sick enrollees, risk adjustment modifies premium payments to better reflect the projected costs of members served and compensate plans that enroll high-cost patients.
Historically, risk adjustment was only used in Medicaid and Medicare – in effect, redistributing some revenue from health or drug plans with a relatively healthier mix of members to those plans with a more costly enrollment profile. However, the Affordable Care Act (ACA) extends risk adjustment to the individual and small group health insurance markets starting in 2014.
A new brief from The Synthesis Project tackles the issue and makes several interesting recommendations for how to improve risk adjustment methods for the post-ACA market. Without accurate risk adjustment, health plans have a strong financial incentive to seek out only the healthiest enrollees, especially under ACA-mandated adjusted community rating. Under adjusted community rating, health plans may not vary premiums based on health status or sex and are limited in how much they may vary premiums based on age. Under ACA, the healthy, the young, and men subsidize the health costs of the unhealthy, the older, and women.
Risk adjustment is therefore a necessary factor in stabilizing the dramatically new post-ACA health insurance marketplace, particularly the new Health Insurance Exchanges. Even then, the ACA is a giant game of musical chairs. The market under ACA will be chaotic and challenging, with a mix of winners and losers once the music stops and the dust settles, which will take at least three to five years.
Continue reading “How Health Plan Risk Adjustment Models May Change Under the ACA”
Filed Under: Economics, THCB
Tagged: Economics, Health Insurance Exchanges, Kip Piper, Risk adjustment, Synthesis Project, The ACA, Upcoding
Jan 3, 2014
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
If Americans judged the quality of hospital care the way Newsweek judges high schools, we would soon be inundated with “charter hospitals” that only treat healthy patients.
As reported in The New York Times, thirty-seven of Newsweek’s top 50 high schools have selective admission standards, thereby enrolling the cream of the eighth grade crop. That means that when these high scoring eighth graders reach eleventh grade, they’ll be high scoring eleventh graders, helping the school move up the Newsweek rankings. These selective admission schools simply have to avoid screwing up their talented students.
That’s no way to determine how good a school is. The measure of a good education should be to assess how well students did in that school compared to how they would have been predicted to do if they had gone to other schools.
Imagine two liver transplant programs, one whose patients experience 90% survival in the year following their transplant and the other whose patients experience only a 75% survival rate. Based on that information, the former hospital looks like the place to go when your liver fails. But aren’t you curious about the kind of patients that receive care in these two hospitals? Wouldn’t you want to know whether that first hospital was padding its statistics by selectively transplanting relatively healthy patients?
Continue reading “Getting Quality Right: Exercise Due Caution When Grading Hospitals, Schools and Doctors”
Filed Under: OP-ED, THCB
Tagged: Education, Hospital rankings, Peter Ubel, Quality, Risk adjustment, survival rates
Dec 7, 2012
I’ve never seen a week in health care policy like last week. The media reports have to be in the thousands, all trying to make sense of the furious debate between Obama and Romney over Medicare.
As someone who has studied this issue for more than 20 years, it has also been more than exasperating for me to watch each side trade claims and for the press to try to make sense of it.
This blog post is quite long because the subject matter is complicated. If you want to cut to the chase, see my conclusion and summary at the end of this post.
Allow me to list a few of the questions people are asking and give you my take on it.
Will current seniors suffer under the Romney-Ryan Medicare plan?
No. Let me start by saying something that will likely surprise you. If I could be king for a day, I would prohibit anyone over the age of 60 from voting in this election. This election is really about the future and the big decisions on the table are about the long-term government spending and entitlement issues that should be made by younger voters who will have to pay for them and will benefit or suffer from them.
Those in their 60s and older are almost surely going to cruise to the end with the benefits they now have.
Whether its Obama’s Medicare plan, based heavily on the Medicare cost control board imbedded in his health reform bill (which doesn’t begin to impact hospital costs until 2020), or the Romney/Ryan Medicare premium support plan (that has no effect on anyone now over the age of 55), today’s seniors’ benefits are insulated from this issue.
Continue reading “All Hell Hath Broken Loose”
Filed Under: OP-ED, THCB
Tagged: 2012 Election, ACOs, entitlements, Market Freedom, Medicare, Medicare Advantage, Medicare Prescription Drug Plan, Mitt Romney, national budget, Paul Ryan, President Obama, Risk adjustment, Robert Laszweski, Senior Care, The ACA
Aug 21, 2012
I was pleased to see the Chicago Tribune carry an op-ed piece this week by my friend and colleague Michael Millenson. The gist of the piece was that information about hospital quality is readily available online and we should use that information when choosing a hospital. Michael is right — there is no shortage of places to turn to get information about hospital quality. But I think he waxes too enthusiastic.
For one thing, it is not clear whether the widespread availability of quality information is a boon or a problem. Consider Medicare’s Hospital Compare website. Look up quality information for pneumonia and you are overwhelmed with nearly 20 different measures on four different web pages. I couldn’t possibly make sense of all this information even if I used sophisticated computer software; how could the average person sort through it all? One quality measure seems to stand out – mortality. But I wonder if this should be a major concern for pneumonia patients. Are we talking about 5 percent mortality rates, or 0.05 percent? I don’t know and Medicare won’t tell me.
HealthGrades.com is much simpler – it just reports mortality. The widely respected Leapfrog Group reports mortality for pneumonia and also reports another 8 general hospital quality measures, some of which are derived from even more measures.
When reading these report cards I find that my local hospital in Highland Park scores very well on mortality in the HealthGrades and Leapfrog reports but I can’t find it anywhere at the Medicare website. And I wonder if the low mortality rate is due to the hospital or due to the demographics of the patients. Michael Millenson pointed out that these report cards are risk adjusted, but he failed to mention that the available risk are pretty lousy – mostly controls for age, sex, and a few comorbidities. (Much better risk adjustment is possible but requires data not available to Medicare, HealthGrades, or Leapfrog.) Hospitals that get poor quality scores often report that their patients are sicker than the risk adjusters give them credit for. They might be right. Hospitals that get good scores never claim that their patients are healthier. Maybe they are hiding something. Continue reading “Minor League Report Cards”
Filed Under: THCB
Tagged: Healthgrades, Hospital Compare, Inside Baseball, Leapfrog, PROMIS, Quality, Risk adjustment
Apr 2, 2011