Obamacare Rule Triggers Huge Rebates

BloombergBusinessweek: “One of the less discussed pieces of the Affordable Care Act is a measure to control insurance premiums by limiting how much companies can spend on stuff other than medical claims. Expenses for marketing, fees to brokers, administrative costs, profits, and the like can’t take up more than 20¢ of each premium dollar (or 15¢ for large-group plans). Any amount collected above that threshold must be returned to customers.”

The medical-loss ratio rule “has resulted in rebates of $1.6 billion to individuals and businesses over the last two years, according to a new tally of federal data from the Commonwealth Fund, a health research foundation.”

Medicaid Enrollment Grows in States That Rejected Obamacare Expansion

Jason Millman: Even states that refused Obamacare’s Medicaid expansion are seeing enrollment growth in the health-care program, according to a new analysis.

“These states, just like the ones that did expand Medicaid, are experiencing what’s known as the ‘woodwork effect’ among people who were previously eligible for coverage under existing Medicaid rules but didn’t sign up. Those previously eligible are now seeking coverage as there’s a massive effort to get people enrolled. The federal Centers for Medicare and Medicaid Services has reported Medicaid enrollment numbers so far, but the agency hasn’t yet said how many come from the ACA expansion or were eligible under existing rules.”

(Avalere Health)

Early Signs That Obamacare Premiums Aren’t Soaring

 Vox: Early data shows health insurance premiums will generally go up in 2015, but most of the hikes won’t be the double-digit increases some Obamacare opponents previously predicted.

“Average premium changes for Washington, meanwhile, ranged from a 6.8 percent decrease to a 14.2 percent hike. Most listed insurers posted single-digit increases or decreases.”

“These are, however, only proposed rate changes. So the final rate changes could be even lower, since proposed premium hikes tend to come down during negotiations between regulators and insurers.”

“The Congressional Budget Office projected the average premium hike will be about 6 percent each year between 2016 and 2024. How that translates at the state level remains to be seen, but Virginia and Washington might offer an early look.”


Are Restrictions on Choice an Outcome of Obamacare?

New York Times: “No matter what kind of health plan consumers choose, they will find fewer doctors and hospitals in their network — or pay much more for the privilege of going to any provider they want.”

“While the sizes of the networks vary considerably, many plans now exclude at least some large hospitals or doctors’ groups.”

“Insurers, ranging from national behemoths like WellPoint, UnitedHealth and Aetna to much smaller local carriers, are fully embracing the idea, saying narrower networks are essential to controlling costs and managing care.”

” … state and federal regulators say they are more closely monitoring the plans being offered in the coming year to be sure they are clear and that consumers have sufficient access to hospitals and doctors. In some cases, they are already insisting on changes.”

And “more employers are considering smaller networks.”

“In 2010, 24 percent of the largest employers offered smaller networks, chosen for their low costs or quality. Last year, 27 percent offered them and 44 percent said they were considering them, according to Mercer, a benefits consulting firm. Some companies are experimenting with different tiers of networks, charging workers more if they go to the broadest network.”

Obamacare Premium Outlook: Some Good News, Some Bad News

Wall Street Journal: “In the first look at how insurers plan to adjust prices in the second year under the federal health-care law, filings from Virginia carriers show they are opting for premium increases in 2015 that will pinch consumers’ pocketbooks but fall short of some bigger rate predictions.”

“The filings show insurers’ planned increases easily outpacing broader U.S. inflation, but shy of the much larger boosts some critics predicted.”

“Anthem HealthKeepers Inc. plan offered by a unit of WellPoint Inc. said it would raise premiums by an average of 8.5% across its individual plans in Virginia … other health plans proposing rate increases ranging from 3.3% for Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc., with around 10,000 members in the state, to 14.9% for CareFirst BlueChoice Inc., which said it had about 32,000 members.”


What Problems with the Obamacare Surge?

USA Today: Despite “dire predictions, the nation’s primary care system is handling the increased number of insured patients without major problems so far, according to interviews with community health centers, large physician practices and insurers nationwide.”

” … there are few reports of patients facing major delays getting care, say officials from more than two-dozen health centers and multigroup practices, as well as insurers and physician groups in nine big states.”

“Some exceptions have surfaced, particularly in parts of Colorado, Kentucky and Washington state, which had some of the biggest gains in coverage.”

“But most of the health centers and large physician groups contacted said they were prepared for new patients because they had added space and providers.”

A major reason for the “muted demand” is that “more than 5 million people projected to gain coverage remain uninsured because only half the states expanded Medicaid.”

Also: “about 4% of the U.S. population gained insurance this year but many of them are young and ‘relatively low users of health care.'”

HealthCare.Gov: A Deal When Compared With State Exchanges

NPR: An analysis of federal data from former Obama administration official Jay Angoff finds that “the federal exchange was relatively efficient in signing up enrollees. Each one cost an average of $647 in federal tax dollars.” By contrast, it cost an average of $1,503 to sign up each person in the 15 state exchanges.

Surprising fact: “The five states whose governors and/or legislatures were among the most adamant about resisting the Affordable Care Act — Florida, Texas, Georgia, Virginia and Michigan — ended up with the lowest per-person enrollee costs. Florida’s cost per enrollee was just $76; Texas’ was $102, and Michigan’s $427.”

“All of the states with very high costs for each enrollee have one thing in common — relatively small populations. Yet it took millions of dollars to set up each exchange, so the smaller states couldn’t spread the costs.”

Angoff said “the federal government might want to reconsider letting other states establish their own exchanges, and encourage those whose exchanges aren’t doing so well to become part of”



Map source: Vox

Health Care Spending Won’t Grow as Fast as Projected

Charles Roehrig of the Altarum Institute disputes the Bureau of Economic Analysis projections of a 10% increase in health spending for 2014.

“This is NOT a correct interpretation, and it is important to explain why. Moreover, this 10% figure conflicts with the 7% growth that we are reporting in our latest Health Sector Economic Indicators.”

“In short, because the surge in numbers of insured individuals will not be repeated in subsequent quarters, the 10% annualized rate of growth in spending is NOT a good indicator of how the full year is likely to play out.”

” … our annualized increase is based on comparing spending in the current month to spending in that same month from the prior year. Thus, the 7% increase shown for March 2014 indicates that spending is 7% higher than March 2013.”

Spending Chart

Will health care costs rise? The Wall Street Journal reports that “recent studies show that health spending is rising more rapidly after five years of record low increases … The main factor was lingering effects of the slow economy; people put off visits to doctors and hospitals and bought fewer drugs.”

“Now utilization is picking back up as the economy improves.”

Is Obamacare Helping Hospitals Keep Patients Healthier?

National Journal: “Hospitals are doing a better job at keeping patients healthy, and it’s partly due to reforms put in place by the Affordable Care Act.”

“Hospitals prevented nearly 15,000 deaths and 560,000 injuries by reducing additional illnesses and infections acquired in the hospital, preliminary data from the Health and Human Services Department show. That would mean upward of $4 billion in overall health-spending savings between 2010 and 2012, according to Wednesday’s report.”

Jason Millman: HHS “partially attributed the decrease to Affordable Care Act programs, one of which penalizes hospitals for high readmission rates and another which rewards hospitals for quality care. The readmission penalties alone hit 2,225 hospitals last year. These programs, which took effect in October 2012, are still new, and the industry is still working through how the incentive structures could be better targeted.”

National Journal: “While some of these practices were in place in hospitals prior to the Affordable Care Act, according to the AHA, only now are the changes accelerating across the nation.”


McKinsey Survey Finds Vast Majority Paying Premiums

Modern Healthcare: “Roughly a quarter of individuals who purchased health plans through the state and federal exchanges were previously uninsured, according to the latest survey results from the McKinsey Center for U.S. Health System Reform.”

“87% of respondents who had enrolled in coverage indicated that they had made their first premium payments. That was up from 77% in the February poll and aligns with figures that some large insurance companies have released.”

“Roughly 60% of respondents who shopped for coverage but didn’t enroll in a plan cited affordability as the reason for not completing the transaction …. Ignorance about the availability of subsidies remained high for uninsured individuals. Two-thirds of those individuals who cited affordability as the primary reason why they did not enroll in a plan were unaware of the availability of premium subsidies.”

Republican Frustration as Insurers Don’t Deliver Desired Results

New York Times: “House Republicans summoned a half-dozen health insurance executives to a hearing Wednesday envisioned as another forum for criticism of the Affordable Care Act. But insurers refused to go along with the plan, and surprised Republican critics of the law by undercutting some of their arguments against it.”

“Insurers, appearing before a panel of the Energy and Commerce Committee, testified that the law had not led to a government takeover of their industry, as some Republicans had predicted. Indeed, several insurers said their stock prices had increased in the last few years.”

Four of the five insurance companies said more than 80% of their new customers have paid their initial premiums.

In response, Rep. Michael Burgess (R-Tex) “complained that no one at the witness table ‘wanted to be forthcoming.’”

The Hill: “Later in the hearing, Republicans resorted to classic jabs against the healthcare law, noting that President Obama’s promise to save families $2,500 on their premiums has not come true.”

But: “The discussion was not always favorable to the healthcare law, as it touched on health plan cancellations, the potential for premium increases in 2015 and problems that still plague the back end of”

Federal Health Spending Revised Downward

Sarah Kliff: “The federal government thinks it will spend $900 billion less on health care programs over the next decade than it projected just three years ago, according to a new analysis from the Committee for a Responsible Fiscal Budget.”

The reason is largely “due to the fact that health care costs have grown a lot slower in the past four years than they did in the past.”

Medicare, Medicaid and Obamacare “cover more than a third of all Americans. And that means any change to health care spending, however tiny, can have a huge impact on the federal budget.”

” … most of the spending reduction comes from the fact that health care costs have grown slower than expected — a huge boon for a country that also happens to be a massive health insurer.”


Another Obamacare Attack Debunked

Sam Baker: “Health insurance companies say the number of people who paid their Obamacare premiums will be higher than House Republicans implied.”

“The House Energy and Commerce Committee said last week that, based on information it received from insurers, only 67 percent of people who signed up for private coverage through Obamacare’s exchanges had gone on to pay their first month’s premium.”

“Energy and Commerce’s figure included people who signed up for coverage but whose first premium hadn’t come due at the time of the committee’s inquiry. And that’s a lot of people.”

“Wellpoint, the largest insurer in the Obamacare exchanges, said the payment rate is closer to 90 percent among people who reached their first payment deadline.”

“The committee’s 67 percent figure will remain true only if none of those people make their first payment. And that seems unlikely: Insurers said their 80 percent to 90 percent payment rate was consistent across all six months of the open-enrollment period.”

Obamacare Model Shows Significant Drop in Mortality Rate

Screen Shot 2014-05-06 at 8.03.49 AM
New York Times: The Massachusetts death rate fell by almost 3% between 2007 and 2010 after the state “adopted mandatory health care coverage in 2006, a study released Monday found, offering evidence that the country’s first experiment with universal coverage — and the model for crucial parts of President Obama’s health care law — has saved lives, health economists say.”

“‘It’s big,’ said Samuel Preston, a demographer at the University of Pennsylvania and an authority on life expectancy. “Professor Preston … said it added to a growing body of evidence that people with health insurance could reap the ultimate benefit — longer life.”

“The authors identified 513 counties in 46 other states that were most similar to Massachusetts before reform in demographics and levels of poverty and insurance, then compared their mortality rates with that of Massachusetts. They found that the rate declined 2.9 percent in Massachusetts, but remained flat in counties outside the state.”