Here are our top blog posts for 2010, ranked by number of readers who accessed the story during the year.
Nifty New York Times worksheet allows you to calculate how to fix the federal budget deficit by deciding which cuts to make through 2015 and again through 2030. Check out the huge long-term savings from capping Medicare spending growth starting in 2013. Also noteworthy is the impact of raising the Social Security retirement age to 70 and letting the Bush tax cuts expire. (Note: My 10-year-old daughter went through this exercise and fixed the federal budget in about 10 minutes — without cutting military spending aside from nukes and by pretty fairly distributing the rest of the pain).
UnitedHealth Group (Minnetonka, MN) says it expects 2011 earnings per share to fall 7.7% to between $3.50 and $3.70 per share on revenues of about $100 billion. United is the second publicly traded health plan to project a decline in 2011 earnings. Humana said last week it expects 2011 earnings to fall 16%.
Citi analyst Carl McDonald says that minimum medical cost ratio requirements released by HHS this week (see prior post) will result in lower individual health plan premiums or at least dampen the rate of premium increase.
It won’t be universal, but yes. If you’re running an individual health plan that has a 60% loss ratio today, and after all the adjustments plans are allowed, the adjusted MLR is 70%, the plan is still going to owe a big rebate to get to the 80% minimum. I think what you’ve started to see and will be seeing more of is plans lowering premium rates to bring that adjusted loss ratio closer to 80%. The thought is that a lower priced product will be better at attracting new members than maintaining the same price and writing a rebate check in July 2011. Doesn’t always mean that absolute premium dollars go down, but it could mean that a plan that was planning on raising rates 10% because of increasing cost trends doesn’t have to do that anymore.
You’ll recall during the healthcare reform debate, there was a lot of arguing over the likely impact of reform on health plan premiums. The Congressional Budget Office projected a year ago that under reform premiums for 134 million people in large groups would be flat to down, premiums for 25 million people in small groups would be flat to down, costs for 18 million people with subsidized individual plans would be down (a lot) — and costs for 14 million unsubsidized individuals would be up 10% to 13% because they’re getting much better coverage.
If you believe McDonald, the “premiums will fall” crowd may indeed have been right.
New minimum medical cost ratio regulations could force health plans to rebate $600 million to $1.4 billion to customers annually from 2011 through 2013, or an average of about $1 billion per year, according to the U.S. Dept. of Health and Human Services. The regulations, which HHS adopted on the recommendation of state insurance regulators, require 80% of individual and small group premiums to go toward medical care and quality improvement activities; 85% in the large group market. HHS estimates 2.8 million to 9.6 million Americans could be eligible for rebates each year.
But Carl McDonald of Citi thinks the HHS estimate is too low.
The biggest issue is that the forecast is based on 2009 data, while commercial MLRs have improved dramatically in 2010 because of lower medical costs….WellPoint has quantified its exposure to minimum medical loss ratios at approximately $300 million, while we think United will talk about rebates of around $600 million at its investor day next week. So between these two plans alone, we’re nearly to $1 billion in rebates. Granted, these are the two largest plans in the industry, but we think rebates for the industry would easily exceed $1.5 billion based on this year’s margins.
Either way, MCR rebates will reduce health plan profits by 3% to 6% — assuming total industry profits in the $25 billion to $30 billion range.
A Commonwealth Fund study of 11 nations found that in the past year U.S. adults had the highest out-of-pocket costs, struggled the most to pay medical bills and were the most likely to forgo care because of cost:
Compared with the residents of 10 other industrialized countries, U.S. adults are the most likely to report health care problems related to access, cost, and insurance complexity….One-third (33%) of U.S. adults went without recommended care, did not see a doctor when sick, or failed to fill prescriptions because of costs, compared with as few as 5 percent of adults in the United Kingdom and 6 percent in the Netherlands….One-fifth (20%) of U.S. adults had major problems paying medical bills, compared with 9 percent or less in all other countries.
Michael Moore and Wendell Potter on Countdown with Keith Olbermann. (Video here)