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Tag: Health Insurance Exchanges

Did Massachusetts Health Care Reform Hurt Access To Care For the Previously Insured?

In 2006, Governor Mitt Romney signed Chapter 58 of the Acts of 2006 entitled “An Act Providing Access to Affordable, Quality, Accountable Health Care.” It has been described by many names, including Massachusetts Healthcare Reform (MHR), Romneycare, or simply, as the template for the Affordable Care Act. The goal of the act was straightforward: to ensure near-universal access to health insurance for citizens of the Commonwealth of Massachusetts. The bill quickly led to insurance expansion: by 2010, 94.2% of adults under 65 had health insurance, an 8 percent increase over the 86.6% in 2006. By all accounts, the goals of insurance expansion were met.

But the bill has not been without controversy. There have been two main concerns: first, that the bill did too little to control rising healthcare costs. The cost crisis led to the 2012 bill that many refer to as “Mass Health Reform 2.0” – formally called Chapter 224 of the Acts of 2012. Its focus is to curtail healthcare spending, and while reasonable people have reasons for skepticism about the likelihood of success, that’s a topic for another day.

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Investors Are from Mars. Entrepreneurs Are from Venus


Last year was a banner year for digital health, as the market saw significant growth in funding, bigger deals and new investors entering the space. So what’s in store for 2013? According to a survey of nearly 140 digital health entrepreneurs and over 50 health care information technology venture investors, conducted by my venture capital firm InterWest Partners, we are in for another exciting ride this year. In the survey, we asked which sectors will see the most love from investors in 2013; which companies (if any) will see a $1 billion valuation; where they are having trouble recruiting; and which digital health entrepreneur would win “Survivor: HCIT Island” The answers? Well, it all depends who you ask.

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Why HHS Created Partnership Exchanges and Why More States Are Choosing Them

New Hampshire: We’re in.

North Carolina: We’re not.

The two states on Tuesday were the latest to announce their intentions on the Affordable Care Act’s health insurance exchanges. States have until Feb. 15 to tell HHS whether they’ll retain even some control over the exchanges, or let the Obama administration run the exchanges for them.

And while New Hampshire made clear that it wants to partner with the federal government to launch an insurance exchange, North Carolina backed out of a previous plan to do exactly that.

By Friday, we’ll know where half a dozen other states stand, too.

Background on Partnership Model
The Affordable Care Act didn’t originally spell out the partnership model; under the law, states faced a binary choice of running their own insurance exchanges or punting the responsibility to the government.

But HHS officials realized they needed to tweak the ACA’s approach, as more than 30 states — increasingly led by Republicans, who took over 11 statehouses in the 2010 election — announced they planned to opt out of the exchanges altogether. This would leave HHS officials with “an awesome task in establishing and operating exchanges in [so many] different states and coordinating those operations with state Medicaid programs and insurance departments,” before open enrollment begins in October 2013, Paul Starr writes in The American Prospect.

As a result, the agency in 2011 introduced the partnership model in hopes of shifting some of the responsibility for running exchanges back to the states.

Under the hybrid approach, the federal government takes on setting up the exchange’s website and other back-end responsibilities, while states keep functions such as approving health plans and setting up consumer assistance programs. HHS also hopes that the partnership model will be a path for states that weren’t ready to run their own exchanges to take them over eventually.

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How to Win Friends and Influence Millennials: Health Exchanges Edition

America is only a few months away from Exchange Day—October 1, 2013—when the state and federal health exchanges open up for business. And when they do… well, I’d surprised if a whole lot happens at first; most people assume they open on January 1, 2014. But eventually there will be a flood of people streaming into the exchanges (virtually) to search for health insurance plans, including the Millennials.

Why? A variety of reasons. One is that people like being insured and prefer it to the uncertainty of being uninsured; those previously unable to purchase a policy they could afford now have subsidies to help them do so. Another is that people largely don’t have a choice—forego purchasing health insurance and get fined.

But the bottom line is this: whether compelled to do so by the safe feeling of being insured or the specter of a fine, Millennials are expected to be an enormous group of entrants into the exchanges: while we make up only 22% of the population, we account for 38% of the uninsured in America.

To compound our already-stratospheric opinion of ourselves, we know that the Millennials are a coveted market for health exchange insurers. Face it: you want us. Bad. That’s because we’re relatively healthy, loyal to brands we like that we see as having a positive impact (70% identify as being brand loyal), and we could actually be the first generation to recommend our health insurance plan to others.

So, culling from Millennial research, surveys, and conversations with fellow Millennials, here are a few morsels of unsolicited advice on how to win us over.

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The Gold Plated Health Care System: What the New Numbers Tell Us about the State of the Economy

For the third year in a row, national health spending in 2011 grew less than 4 percent, according to the CMS Office of the Actuary.  However, the report said modest rebounds in pharmaceutical spending and physician visits pointed toward an acceleration of costs in 2012 and beyond.  CMS’s analysts make much of the cyclical character of health spending’s relationship to economic growth and also forecast a doubling of cost growth in 2014 to coincide with the implementation of health reform.

This non-economist respectfully disagrees and believes the pause could be more durable, even after 2014.   Something deeper and more troublesome than the recession is at work here.  As observed last year, the health spending curve actually bent downward a decade ago, four years before the economic crisis. Health cost growth has now spent three years at a pre-Medicare (indeed, a pre-Kennedy Administration) low.

More Than The Recession Is At Work

Hospital inpatient admissions have been flat for nine years, and down for the past two, despite compelling incentives for hospitals to admit more patients. Even hospital outpatient volumes flat-lined in 2010 and 2011, after, seemingly, decades of near double-digit growth.  Physician office visits peaked eight years ago, in 2005, and fell 10 percent from 2009 to 2011 before a modest rebound late in 2011 — all this despite the irresistible power of fee-for-service incentives to induce demand.

The modest rebound in pharmaceutical spending (2.9 percent growth) in 2011 appears to have been a blip.  IMS Health reports that US pharmaceutical sales actually shrank in 2012, for the first time in recorded history, and that generic drugs vaulted to the high 70s as a percent of prescriptions!

There is no question that the recession’s 7-million increase in the uninsured depressed cost growth.  But the main reason health cost growth has been slowing for ten years is the steadily growing number of Americans — insured or otherwise — that cannot afford to use the health system.  The cost of health care may have played an unscripted role in the 2008 economic collapse.  A 2011 analysis published in Health Affairs found that after accounting for increased health premium contributions, out-of-pocket spending growth and general inflation, families had a princely $95 more a month to spend on non-health items in 2009 than a decade earlier.  To maintain their living standards, families doubled their household debt in just five years (2003-2008), a debt load that proved unsustainable.  When consumers began defaulting on their mortgages, credit cards and car loans, the resultant chain reaction brought down our financial markets, and nearly resulted in a depression.

By sucking up consumers’ income since 2008, the rising cost of health benefits has weighed heavily upon the recovery.  According to the 2012 Milliman Cost Index, the cost of health coverage rose by 32.8 percent from 2008 to 2012, while family income did not grow at all in real terms.  The total cost (employer and employee contributions plus OOP spending) of a standard PPO policy for a US family of four was $20,700, almost 42 percent of the US household median income in 2012.

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And With the Stroke of a Pen, Health Insurance Exchanges Become Health Insurance Marketplaces ….

Thanks to David Kerrigan of the Massachusetts Health Connector for pointing out that the Obama Administration has suddenly switched terminology: health insurance exchanges are now health insurance marketplaces. I think it’s a great idea, which is why I wrote a blog post on this very topic on Friday. The Hill (Obama officials ditch ‘exchanges’ in rebranding of healthcare reform law) covers the story.

However, the Hill has a weird angle on this. The article heavily features an anti-ObamaCare activist, Dean Clancy who says:

“They could call them motherhood or apple pie, but it wouldn’t change our feelings about them… We’re encouraged that they’re showing signs of desperation. I think that it’s too late in the game to try to start calling this something different. And [we’re] not going to spend a lot of effort fighting over a word.”

Clancy’s website is called blockexchanges.com, so he may actually have more commitment to the word exchange than the Obama folks. Somehow blockmarketplaces.com just doesn’t have the same ring to it. (That domain is still available at this writing in case you want to grab it.) Blockexchanges also has some misleading information on its home page:

“Remember, without the state exchanges, ObamaCare cannot function.”

Actually, the federal government will step in if the states don’t.

Personally, I don’t sense desperation but rather a gradual wising up about what implementation will require. The term “marketplace” makes a good deal of sense for someone who is comparison shopping for health insurance. Here’s to more commonsense improvements as ObamaCare is rolled out.

David E. Williams is co-founder of MedPharma Partners LLC, strategy consultant in technology enabled health care services, pharma, biotech, and medical devices. Formerly with BCG and LEK. He writes regularly at Health Business Blog, where this post first appeared.

In Defense of Narrow Networks

It wasn’t long ago that the newly established health exchanges were being celebrated. Before the ongoing website catastrophe, politicians and policymakers were lauding the low premiums in these new health insurance market places. On September 24, President Obama said, “And the premiums are significantly lower than what they were able to previously get … California — it’s about 33 percent lower. In my home state of Illinois, they just announced it’s about 25 percent lower.”

How times have changed! Even supporters of the exchanges have rightly criticized the technical problems that have prevented millions of Americans from signing up. However, many critics are also complaining about the large number of health plan offerings with “narrow networks” of physicians that enrollees can visit for medical services. The Missouri Health Advocacy Alliance expressed “major concern” when Anthem excluded BJC HealthCare from its narrow network. Seattle Children’s Hospital, which was excluded from several exchange plans, has sued the Washington State Office of Insurance for “failing to ensure adequate network coverage.”

Criticism of narrow networks is misguided and counterproductive. As we explain below, narrow networks will be of little consequence to most of the individuals who sign up for the exchanges, and the elimination of narrow networks could eliminate our single best opportunity to harness market forces to reduce costs and improve quality. Indeed, narrow networks are largely responsible for the low premiums that were being celebrated just one month ago.

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So, What Exactly Is a Health Insurance Exchange Anyway???


I’m a health care expert who follows health reform closely, so when I’m confused about something I know most people are.

When Massachusetts passed the universal coverage law in 2006 I didn’t understand exactly what the Connector was supposed to do. If they had called it a health insurance store or marketplace or comparison site I would have grasped the concept better. Once it’s explained it’s obvious, but why use the word “connector” in the first place?

The federal Affordable Care Act makes matters even worse. It calls these things health insurance “exchanges.”

That word has the wrong connotations. When I hear the word “exchange” I think of a stock exchange. That’s not somewhere I go to buy or compare products or services to use. Others think of “exchange” as what they do when they made a purchase that was the wrong size or received a gift they didn’t like.

Even for health wonks that fully grasp the concept, the word “exchange” is confusing, because the term is also used in the context of health information exchanges, which are used to exchange clinical data. I often hear people asking about the impact of the “exchange” –without specifying “insurance exchange” or “information exchange,” and I have to ask them which they mean.

There’s a simple solution to this: let’s dump the word “exchange” and use a term that’s more understandable and appropriate. How about:

  • Store
  • Marketplace
  • Comparison site
  • Supermarket

David E. Williams is co-founder of MedPharma Partners LLC, strategy consultant in technology enabled health care services, pharma, biotech, and medical devices. Formerly with BCG and LEK. He writes regularly at Health Business Blog, where this post first appeared.

Obamacare’s Fiscal Cliff

Did you notice that in the standoff over the fiscal cliff, all the discussion was about the Bush tax cuts? Which ones would be made permanent? And for whom? There was no discussion about the ObamaCare tax increases. I think that was a huge tactical mistake on the part of the Republicans.

Over and over again, President Obama claimed he was trying to protect the middle class from higher taxes. It was a claim that went unchallenged ― by the Republicans and by the mainstream media.

Yet five of the tax increases Americans are facing this month are new taxes created under the Affordable Care Act (ObamaCare). Three of the five will hit people who are solidly middle class.

Next year, things will get worse. The new tax on health insurance is about as regressive as a tax can be. It will total $100 billion over the next 10 years and very little of that amount will be paid by anyone who can be called “rich.”

  • The health insurance tax will fall on private sector Medicaid plans, which have about 70% of all Medicaid enrollees.
  • The tax will fall on Medicare Advantage plans whose enrollees have below average incomes and are disproportionately minority.
  • The tax will hit every small business and every individual who buys insurance in the commercial market place.
  • The tax will not fall on self-insured plans whose enrollees include the highest paid workers and the highest paid CEOs.

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Health Reform: The Political Storms Are Far from Over

The history of president Obama’s health reform bears an uncanny and disturbing similarity to the life cycle of a hurricane. With Sandy fresh in our memory, the similarity is not comforting.

Hurricanes have three phases. The front wall of the storm brings high winds, lightening, and rain. Next, at the hurricane’s center, or eye, the wind drops and the air warms. If one is at sea, the water may turn calm and warm, bringing the illusion that the storm has ended. As the storm moves on, wind and rain return, often with increased force. Those fooled by the calm who leave safe havens may be destroyed by what follows.

The life cycle of a hurricane will bear an eerie similarity to that of health reform. Nearly four years elapsed between president Obama’s initial call for national health reform until the bill became law and the Supreme Court ruled on its constitutionality. The political and legal turmoil was intense and continuous. The process was rancorous and the outcome in doubt from start to finish. It took a bitterly fought presidential election to put an end to this phase of the struggle.

Now, we are in a period of relative calm. The 2012 election settled the immediate fate of the Affordable Care Act (ACA). The candidate who swore to repeal it lost. The ACA was the major domestic legislative achievement of the victorious incumbent president who won reelection. Now, eighteen states are in process of designing rules for health insurance exchanges — the administrative entities that will manage implementation of the new law, the most important provisions of which will take effect one year hence. The other states will either leave implementation entirely to the federal government or share administrative responsibilities with federal agencies.

A huge amount of work remains to be done by October 1, 2013 when people can begin enrolling for insurance coverage in the new exchanges.

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