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Tag: ACA

Healthcare Reform Even the Tea Party Could Support

flying cadeuciiThe Affordable Care Act (ACA) is the law of the land, and nothing the Tea Party does is likely to lead to its repeal.  But the ACA can be amended to make it less objectionable, and it wouldn’t be that hard.  We just need to modify it to allow Tea Partiers (and others) to form their own healthcare groups.

All insurance, including healthcare insurance, works by forming risk pools.  The members of the pool contribute to a pool of money which is then used to pay the claims by the members.  Most participants pay in more than they use.  In healthcare most people pay more money into the pool than the cost of the care they receive.  A few people receive far more care than they pay for.

For risk pools to work, boundaries have to be drawn around what is paid for by the risk pool.  As an example car insurance policies place a limit on how much they will pay for any one accident.  It’s nice to think that as a rich country we don’t have to draw boundaries around healthcare, that we should be able to pay for any possible medical treatment, but we can’t.  We already spend almost twice as much on healthcare as other nations and if costs keep increasing eventually it will bankrupt our country.

Many people blame private insurance companies for our expensive healthcare system, but insurers actually have very little to do with rising costs.  Instead advancing medical technology is the primary cause.  Our for-profit medical technology industry has made amazing advances in treatment and care that have allowed us to save people that used to die.  But its primary goal is still profit.  Every year the industry comes up with new procedures or refinements.  Most provide only incremental improvements in care but they all come with a higher price tag.  Every year the industry spends billions of dollars – yes, billions – successfully encouraging doctors to recommend the new procedures.  And it’s about to get much, much worse.  There is a flood of new treatments and targeted drugs getting ready to hit the market.  Some will undoubtedly be true advances, but all are likely to cost tens and even hundreds of thousands of dollars per treatment.

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What the Supreme Court Decisions Mean For the Future of Employer-Based Insurance

By PAUL KECKLEY

Paul KeckleyMonday, in its 5:4 ruling in Burwell v. Hobby Lobby, the Supreme Court affirmed that for-profit employers may opt out of certain methods of contraception it finds objectionable on religious grounds. In effect, the ruling gave standing to a company’s ability to use the 1993 Religious Freedom and Restoration Act, previously applied to individuals. Thursday, the Justices voted 6:3 that Wheaton College, is not required to transfer contraception coverage to a private insurer via submission of ESBA Form 770 deeming it an impermissible burden on its religious exercise. Instead, Wheaton will simply be required to notify HHS of its objection.

Pundits have framed these two decisions as a pivot point for the future of the Affordable Care Act. I think that’s overstated, though it assures the ACA will stay in the news and be prominent in Campaign 2014. I read the rulings and dissenting opinions: the points of view frame complicated questions, like ‘is a company entitled to the same religious freedoms granted individuals’ and ‘what are the limits of a company’s decision-making about matters of health’ and so on.

In practical terms, the immediate implications of the decisions are two:

The White House will have to develop an alternative path to contraceptive coverage.Prominent news organizations have speculated about two possibilities that would secure contraception coverage for women  who work for employers who refuse coverage on religious grounds: 1-the federal government could  create a new federal program or  2-it could require private  insurers provide coverage directly. Each would be challenged by opposition: If the former, the White House would face pushback from critics who would call it “a new entitlement”. If the latter, insurers would need to raise premiums or secure federal funding if expected to add the costs of contraception coverage for this specific circumstance.  Either way, it’s a sticky situation.

The rulings mean scores of companies and not-for-profits will file challenges to the ACA invoking religious freedom through the court system: an employer might take the position that vaccinations are a religious objection, or transfusion of non-autologous blood, or others. Already, more than 50 cases are working their way through circuit courts: more are expected.

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What a New Benefit From Starbucks Teaches Us About the Future of Employer Provided Health Insurance

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Starbucks, which taught America to love lattes, made news this week with the announcement of a new tuition benefit for its partners (Starbucks-speak for employees). At first glance this move seems like simply another benefit in Starbucks relatively (for its industry) generous compensation package. In particular, Starbucks has long been heralded for providing health insurance for all partners working more than 20 hours per week. It is this connection to health insurance that we wish to explore. While Howard Schulz the founder and current CEO of Starbucks has long said the firm offers health insurance because it is the “right thing to do” for their employees, we have always suspected a more profit maximizing goal for this compensation decision. If we put on our strategy hats (we are both members of Kellogg’s Strategy Department), we can deduce that as a profit-maximizing firm, what Starbucks giveth with tuition benefits it may soon taketh away from health insurance benefits. In the process, Starbucks may be heralding the demise of employer sponsored health insurance, something we have predicted in previous blogs.

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Make Sense? Competition, Not Higher Premiums, May Turn Out to Be the Biggest Threat to Obamacare Buyers

flying cadeuciiThere have been lots of news reports, including some from me, about insurers raising premiums 10 percent or more on the Obamacare exchanges next year.

But for most people who bought health coverage in the Obamacare exchanges, that’s not really a concern.

That’s because the vast majority of Obamacare buyers so far have received tax credits to reduce the cost of that coverage.

Those subsidies, rather than being flat dollar amounts, fluctuate so customers never pay more than a certain percentage of their incomes on insurance.

In other words, if premiums rise next year like WellPoint Inc. has predicted, subsidies also will rise to keep the net cost to consumers at the same percentage of their income.

So rising premiums aren’t a problem for consumers, unless their income rises so much that it reduces the size of their subsidy.

“If all insurers increase their rates by 10 percent, that might not have a dramatic shift in the market,” said Paul Houchens, a consulting actuary at the Indianapolis health practice of Milliman Inc. “Most of that premium increase is going to be absorbed by the federal government.”

(Rising federal spending could also be a problem for Obamacare–not to mention taxpayers–but that’s not my focus today. Also, Houchens noted, Obamacare’s premiums are not scheduled to rise in line with premiums forever, but will be indexed to income growth and inflation.)

But for 2015, what could cause the biggest problem for Obamacare consumers, Houchens pointed out to me last week, is if an insurer reduces its premiums. Or if a new compeitor enters the market in 2015 with lower premiums than insurers were offering in 2014.

If that idea makes your head spin, welcome to Obamacare, where up is down and down is up—at least compared to how health insurance used to work. It’s what I’ve taken to calling the weightlessness of Obamacare.

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Can I Record My Conversation with My Insurance Company?

A THCB reader in San Diego writes:

I am SERIOUSLY annoyed.  I just got off the phone with my insurer. I’d called a day ago and spoken to a representative (who was very helpful) about a claim. I called back today to follow up and check on a detail.

It quickly became obvious that something was very wrong. I realized immediately what had happened. She’d made a mistake.  And left out a minor but important detail on my claim.

But instead of owning up to it, the woman pretended as though nothing had happened.  It was like we’d never met before. After a five minute conversation she accused me of lying.  I  could not believe what I was hearing. I was outraged.  I asked to be transferred to a supervisor.

The super listened to me for a minute and then took the side of her employee.  “Why should I believe you? Can you prove it?”

Can I prove it? I’ve been a good customer for years.  I shouldn’t have to prove it!!! “  How can I stop this from happening?  Can I record my conversation with my insurer? After all, they’re recording me for “quality purposes”!!!

Lost in the health care maze? Having trouble with your health Insurance? Confused about your treatment options? Email your questions to THCB’s editors. We’ll run the good ones as posts.

Can Hospitals Survive? Part II

In 1980, while working at the University of Chicago Pritzker School of Medicine, I wrote an article for the Harvard Business Review entitled “The Health Care Market: Can Hospitals Survive?”. This article, and the book which followed, argued that hospitals faced a tripartite existential threat:

1)  ambulatory technologies that would enable physicians to compete successfully with hospitals at lower cost in their offices or freestanding settings, 2)  post-acute technologies that would enable presently hospitalized patients to be managed at home and 3) rapidly growing managed care plans that would “ration” inpatient care and bargain aggressively to pay less for the care actually provided.

I predicted a significant decline in inpatient care in the future, and urged hospitals to diversify aggressively into ambulatory and post acute services.   Many did so.  A smaller number, led by organizations like Henry Ford Health System of Detroit and Utah’s Intermountain Health Care, also sponsored health insurance plans and became what are called today “Integrated Delivery Networks” (IDN’s).

In the ensuing thirty years, US hospital inpatient census fell more than 30%, despite ninety million more Americans.   However, hospitals’ ambulatory services volume more than tripled, more than offsetting the inpatient losses; the hospital industry’s total revenues grew almost ten fold.

Ironically, this ambulatory care explosion is now the main reason why healthcare in the US costs so much more than in other countries.  We use far fewer days of inpatient care than any other country in the world.  But as the McKinsey Global Institute showed in 2008 ambulatory spending accounts for two thirds of the difference between what the US spends on healthcare and what other countries spend, far outstripping the contribution of higher drug prices or our multi-payer health financing system.

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Could Med Students Help Win the Enrollment War?

State health exchanges are facing many challenges in the recent scramble to enroll their residents in the healthcare marketplace. Among the numerous obstacles, including online systemic glitches (Washington state botched the tax-credit calculation while Maryland’s appears to be having just general technical incompetence) and complete lack of knowledge (according to a recent Gallup poll, 71% of uninsured Americans have no clue what the exchanges are), a critical challenge is the quick generation of a new healthcare workforce, namely enrollment counselors and navigators.

According to the Center for Medicare and Medicaid Services, enrollment navigators are supposed to help people enroll, whether through online or paper applications, determine individual eligibility for various subsidies and assistance programs, and generally educate the public regarding the new health exchanges. Certified application counselors differ slightly from navigators, taking a less involved role in the process, but still serving as assistants to people who need help completing their application.

However, in many states, including Florida (1 navigator per 100,000 uninsured citizens as of October 1st), Georgia (only 4 people were certified to be counselors when the exchanges went live) and California (official numbers will be released on November 14th, but current estimates suggest less than 20% of future counselors are fully certified yet), there is a huge workforce shortage which is both reducing the rate of enrollment and contributing to people’s doubts about the Affordable Care Act in general.

Part of the problem is that many states, for several months now, have purposely made it more difficult for people to become certified enrollment employees; Ohio and Missouri are  widely cited as two of those. They have also instituted regulations on what information counselors can and cannot give patients and have tried to implement large fines, such as in Tennessee, which luckily ruled to temporarily restrain these penalties, for those who may unknowingly breach part of the contract.

As a medical student hoping to be more involved in influencing patient care, but unable to do so at a clinical level just yet, the opportunity to serve as an enrollment counselor or navigator is more than timely.

In my home state of California, training and certification to become a Certified Enrollment Counselor is not easy, but it’s doable. The process involves 20 hours of in-person courses, a number of online modules, and a background check. However, the cost of training is compensated—$58 per completed application, to be exact.

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A Plan B For Healthcare.gov?



It is now becoming clear that the Obama administration will not have Health.care.gov fixed by December 1 so hundreds of thousands, or perhaps millions, of people will be able to smoothly enroll by January 1.

Why do I say that? Look at this from the administration spokesperson’s daily Healthcare.gov progress report on Friday:

Essentially what is happening is people [those working on the fixes] are going through the entire process. As we have fixed certain pieces of functionality, like the account creation process, we’re seeing volume go further down the application. We’re identifying new issues that we need to be in a position to troubleshoot.

Does that sound like the kind of report you would expect if they were on track to fix this in less than three weeks? Their biggest problem is that they admittedly don’t know what they don’t know.

The spokesperson also reiterated the administration intends to have Obamacare’s computer system “functioning smoothly for the vast majority of users” by the end of the month.

It’s time for the Obama administration to get real.

It takes months to properly test a complex data system like this. Two things are obvious:

  1. When they launched on October 1, very little of the testing had been completed.
  2. They are now in the midst of that many months long testing and fixing period. It is clear they don’t have a few weeks of work left; they have months of work left.Continue reading…

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