Tag: Health insurance

Genetic Testing and Insurance: One Datum

Feb 3, 2012• 4

By DAVID FRIEDMAN

Reductions in the cost of genetic testing and improvements in what we know about what it tells us produce obvious benefits; if you know you are likely to have some particular medical problem, you may be able to take precautions against it. But they also have at least one potential downside.

The more is known about the chance of bad things happening to us, the less able we will be to insure against them.

A solution to this problem that is sometimes proposed is to permit individuals to have their genes tested but forbid insurance companies to require testing as a condition of insurance or to use the information it produces. The problem with that is adverse selection. If the customer knows his risk and the insurance company doesn’t, high risk and low risk customers are charged the same price, making insurance a good deal for the former and a bad deal for the latter. Insurance companies, realizing that most of those who choose to buy their insurance are bad risks, will charge accordingly, driving more of the low or average risk customers out of the market. In the limiting case, insurance is bought only by high risk customers, at a high risk price. A famous description of the problem is Akerlof’s article “The Market for Lemons.”

If we allow both insurance companies and their customers to make use of genetic information, then both high risk and low risk customers can buy insurance, but at different prices. The risk of having genetic variants that make you more likely to suffer some expensive medical problem is uninsurable, although you can still insure against the risk that, given those genes, the problem will actually appear.

It Takes a CEO to Save the U.S. Health-Care System

Feb 2, 2012• 22

By Darrell Moon

Forget Washington and the political debate over Obamacare. The real battle for the future of health care is being fought in the world of business, where tens of thousands of companies have seen their financial well-being undermined by skyrocketing employee health costs.

Although few people realize it, employee health costs have now become the third-largest expenditure for U.S. businesses today, constituting a whopping 8 percent of total compensation. And they are rising fast, more than doubling in just the last decade to more than $15,000 a year for family coverage. Of that cost, 73 percent is paid by the employer.

Yet most chief executive officers are curiously passive, failing to employ even the most basic management tools and market incentives to deal with the problem. Employees and employers alike — but first and foremost the boss — need to be held accountable for reducing the cost burden that is damaging so many companies’ bottom lines.

Here are seven things that CEOs can do:

No. 1: Give incentives to insurance brokers.

Most employers buy their health insurance through brokers who make more money when the plan costs more. Not exactly a smart way to get market forces working in your favor. Better to pay brokers on a fee-for-service basis. Better still to offer them a bonus tied to the amount by which they can reduce a plan’s costs, not a plan’s benefits.

No. 2: Give incentives to your managers.

Every CEO learned in business school that if you want to achieve a key business objective — be it launching a new product or reducing company health costs — you need to provide incentives to managers to help you succeed. Yet rare is the boss who offers bonuses to human-resources and benefits managers who reduce claims costs for the company. It’s long past the time for CEOs to get the incentives working in the right direction inside their companies, as well.

Will the Feds Be Ready?

Jan 19, 2012

By ROBERT LASZEWSKI

Insurance exchanges have to be up and running in all of the states by October 2013 in order to be able to cover people by January 1, 2014.

If the states don’t do it, the feds have to be ready with a fallback exchange. States have to tell HHS if they intend to be ready by January 1, 2013.

The White House just released a report saying that good progress is being made in 28 states. That begs the question, what about the other 22?

Writing in Kaiser Health News, Julie Appleby recently reported that HHS has let just two contracts toward building the federal fallback exchanges. One is for $69 million to build the data hub so that federal agencies can share data with the exchanges–the IRS for example. The other contract is more directly related to building federal fallback exchanges, a $94 million contract.

But in their progress report today, the administration said that they have already advanced $729 million to the states for exchange construction––17 of those states receiving $1 million, or less. So, more than $700 million has gone to 33 states–and that is just federal money to date.

If the feds are going to be ready to launch 10 or 20 federal fallback exchanges these numbers just don’t compute. It is going to take a lot more than the $94 million HHS has contracted for to launch that many federal exchanges in the states that refuse to do so.Continue reading…

Can You Really Fire Your Insurance, Mitt?

Jan 15, 2012

By TRUDY LIEBERMAN

Romney’s remark last week about firing your insurance company apparently harmed him little in the New Hampshire primary. But as the quote has rocketed around, it might be misleading some into thinking that the Massachusetts health care reforms that Romney signed into law made it so people can willy-nilly get rid of an insurer that doesn’t pay their claims on time.

The comment deserves a second look. Can you really fire your insurance company? The answer is that it’s darn difficult even in Massachusetts—the land of Romneycare.Continue reading…

Sizing Up the Obama Administration’s Defense of the Health Reform Law

Jan 15, 2012• 13

By Henry J. Aaron

Back in 2009, when the Affordable Care Act was being written, few doubted that Congress can constitutionally impose a tax penalty on people who refuse to carry adequate insurance. Congress’s power to regulate insurance markets under the Constitution’s commerce clause is settled law. While it seemed clear that Congress has the constitutional power to mandate coverage, some doubted the political wisdom of using that power. Simply forcing people to buy insurance seemed too much like a mean parent saying “eat-your-broccoli, or no dessert.” The mandate, it was feared, would arouse needless opposition. The opposition was needless because most people could be encouraged to buy coverage with positive incentives to enroll, such as direct subsidies, and penalties for refusal to enroll, such as extended denial of access to subsidies and exclusion from insurance market protections.

To the surprise of many, opponents of the Affordable Care Act took the broccoli analogy literally. Not buying insurance is simply inactivity, they argued. If government can prohibit this form of inactivity by forcing people to buy insurance, it can force them to buy anything, even broccoli. If Congress can prohibit such ‘inaction,’ they argued, freedom is in jeopardy. More to the point, the constitution doesn’t allow limits on ‘inactivity.’

The appeal to the broad public of the argument that not buying insurance is inactivity may not have been surprising. But the acceptance of the argument by some federal judges is downright astounding, as the distinction rests on a fundamental ignorance of how insurance markets work.

The Essential Bargain

Jan 9, 2012• 8

By Jonathan Halvorson

The ACA has included a long series of bargains to achieve universal health care in the face of two forces: a multi-trillion dollar health care industry, and an implacable political opposition that refuses to bargain. Whatever the merits and blunders of the compromises taken, it should have come as no great surprise that the guidance released at the end of 2011 for the minimum benefit set (the “essential benefits”) was yet another compromise. It bowed to the existing authority of the states by allowing them leeway to decide the essential benefit package, despite the fact that the law itself seemed to intend a single national standard. There are limits, of course: ten categories of benefit must be covered (hospital, lab, maternity, dental, etc.) and the details on what is covered must be set by reference to one of four model plans:

• One of the three largest small group plans in the state by enrollment;
• One of the three largest state employee health plans by enrollment;
• One of the three largest federal employee health plan options by enrollment;
• The largest HMO plan offered in the state’s commercial market.

Predictably, immediate reactions were mostly negative. It was almost universally described as a “punt” by the administration, but a more accurate football metaphor is that the new guidance was a field goal. It’s certainly better than not scoring at all, and games can be decided by field goals. But it also means that your offense wasn’t good enough to close the deal on a touchdown. In that way, you can look at a field goal as one step closer to losing. For different reasons, that is exactly what some foes and supporters alike of the ACA will say about the new guidance.

San Francisco’s Universal Health Plan Reaches Tens of Thousands, but Rests on Unstable Funding

Dec 28, 2011• 4

By Barbara Grady

Four years ago, San Francisco launched a grand experiment, becoming the first city in the nation to offer comprehensive health care to its growing ranks of uninsured.

Stitching together two-dozen neighborhood health clinics and an array of hospitals, the city bet that two reforms — emphasis on primary care and a common electronic enrollment system — could improve outcomes and buffer the city against soaring health care costs.Continue reading…

The States: Friends With (Essential) Benefits

Dec 19, 2011

By Linda Bergthold

Since the passage of health reform (Affordable Care Act), many have wondered what would be covered in the benefits offered through the State Exchanges. We have been reassured that the benefits that are “essential” would be comprehensive yet affordable. But essential to whom? What is an essential benefit and who gets to decide? Tough questions. No easy answers.

Last week HHS released a bulletin punting part of the issue to the States. States will have more “flexibility” to determine what is in the essential benefit package. Of course, not complete flexibility. These benefit plans MUST include, at least, the ten categories of benefits that are defined in the law. Those categories include:

Section 1302(b)(1) provides that EHB include items and services within the following 10 benefit categories: (1) ambulatory patient services, (2) emergency services (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.*

Here are some questions that you might want to know about what is unfolding:

Seven Reasons to be Thankful for Health Reform this Holiday Season

Dec 12, 2011• 10

By LINDA BERGTHOLD

This holiday season you may be surprised to find some gifts from the Affordable Care Act (aka health reform) in your stocking. I say “surprised” because a recent Kaiser Family Foundation poll found that the American public still doesn’t know what is in the health reform law and what is not.

If you haven’t been sick this year or are not included in the following categories of people who are benefiting from health reform, it makes sense that you won’t have paid much attention. You may not experience concrete benefits until it is fully implemented in 2014. But just in case you know someone in these categories, here’s the list of health reform “gifts” available this year (see my blog on the Health Insurance Resource Center for more details):

1. If you are 65 or older — (and eligible for Medicare) — seniors who are enrolled in Medicare Advantage plans (that’s Part C or the managed care part of Medicare) may have seen their premiums reduced this year. Some may even have access to ZERO premium health plans. Seniors also now receive free preventive treatments and a rebate of $500 if their drug coverage hits the “donut hole” in 2011.

2. If you haven’t turned 26 yet — you may have been able to stay on your parents’ health plan this year, even if you are working or don’t live at home. 1.8 million young people had access to this benefit. And 90,000 children under the age of 19 could not be denied coverage because of a pre-existing condition due to a change that was implemented in 2011.

3. If you needed preventive care (or had the good sense to get it) — you had access to it this year without a co-payment or deductibles.

Congress Passes Socialized Medicine and Mandates Health Insurance – In 1798

Dec 10, 2011• 17

By Rick Ungar

The ink was barely dry on the PPACA when the first of many lawsuits to block the mandated health insurance provisions of the law was filed in a Florida District Court.

The pleadings, in part, read:

The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying health care coverage.

State of Florida, et al. vs. HHS

It turns out, the Founding Fathers would beg to disagree.

In July of 1798, Congress passed – and President John Adams signed – “An Act for the Relief of Sick and Disabled Seamen.” The law authorized the creation of a government operated marine hospital service and mandated that privately employed sailors be required to purchase health care insurance.

Keep in mind that the 5th Congress did not really need to struggle over the intentions of the drafters of the Constitutions in creating this Act as many of its members were the drafters of the Constitution.

And when the Bill came to the desk of President John Adams for signature, I think it’s safe to assume that the man in that chair had a pretty good grasp on what the framers had in mind.

Here’s how it happened.