September 30, 2011
Premiums for federal employee health benefits will rise just 3.8% in 2012, according the U.S. Office of Personnel Management, which notes that negotiations with insurers “kept premium increases as low as possible without increasing the out of pocket costs, such as for deductibles, co-pays, and coinsurance.” In 2011, premiums rose 7.3%.
Some 8 million federal employees are covered by OPM under the Federal Employees Health Benefits Program at a cost of $43 billion, and the good news here is that rate hikes in the federal program tend to be an indicator of price increases in the commercial market. As previously reported, a recent Mercer employer survey suggests premiums for 2012 will rise about 5.4%. However, Mercer notes, without benefit buydowns and cost shifting, the increase would be more like 7% in 2012.
September 29, 2011
Health insurance premiums rose about 8% for single and 9% for family coverage in 2011, according to the Kaiser Family Foundation’s annual survey of employers. The data encompass both self-insured and fully funded plans. The rate of increase is considerably higher than last year, when single premiums rose nearly 5% and family premiums just 3%.
The question is why the big spike? KFF gave no clear answer. However, KFF chief executive Drew Altman was clear healthcare reform wasn’t the culprit: “Regardless of how you feel about the Affordable Care Act, its effect on premiums this year is modest. Most of the law’s provisions don’t go into effect until 2014.” The two biggest mandates taking effect in 2011 — allowing children up to age 26 to stay on their parents’ policies and coverage of certain preventive procedures — account for about 100 to 200 basis points of the 2011 increase, Alman says.
Others aren’t so sure. Deutsche Bank’s January employer survey found the exact same 9% increase for 2011; however, employers said that healthcare reform accounted for up to 700 basis points of the increase. “Insurer and employer concerns around the incremental costs of new mandates and taxes….was by far the primary driver of the spike in premium increases for 2011,” says Deutsche Bank analysts Scott Fidel.
Still other analysts put the cost of reform at around 300 to 400 bps — which I’m guessing is probably closer to the truth given that underlying cost trends seem to be hovering the in 5% to 6% range.
September 28, 2011
Drew Altman, chief executive of the Kaiser Family Foundation, referring to the continued shift to consumer-directed heatlhcare plans.
Conservatives rail about Obamacare, but they may be winning more than they are losing; it is their vision of insurance with more “skin in the game” that is gradually taking over the marketplace because employers have no other way to control costs.
Kaiser’s latest research shows that approximately 17% of covered employees were in high-deductible health plans with a savings option in 2011, compared to 13% in 2010 and just 8% in 2009.
September 27, 2011
Six years before the federal government came out with its regulations for ACOs, Blue Cross Blue Shield of Michigan (Detroit) had already launched its own effort to promote coordinated care among physicians.
Since 2005, BCBS-MI has offered physicians financial incentives not only to meet quality and cost savings goals but to invest in the development of patient-centered medical homes and coordinated care capabilities.
In the 12 months ended July 1, 2011, for example, BCBS-MI paid out more than $75 million to 11,274 physicians as part of the company’s Value Partnership program. That figure is expected to rise to $110 million for the 12 month ending July 1, 2012. According to David Share, M.D., program vice president, half the payments will reward results and half will reward the development of coordinated care capabilities.
BCBS-MI announced earlier this year it is expanding the effort to reduce fragmentation in the healthcare system by rewarding physicians and other providers for better integrating care across the healthcare spectrum. This Organized System of Care initiative has similar long-term goals to ACOs. But Share argues there is an important difference.
The government’s approach to ACOs, he argues, is top-down, i.e., follow these rules, makes investments, and if you save money you’ll get some rewards. The problem is organizations don’t yet know what works and what doesn’t when integrating care as part of an ACO, he says. “It doesn’t make sense to predetermine everything,” he says. “It’s stultifying. It squelches creativity. It’s stacked against organizations willing to take risks and try new things,” he adds.
Complete coverage appears in the September issue of ACO Market News.
September 26, 2011
Stating its intention to continue to expand in California, Humana Inc. (Louisville,KY) announced an agreement to acquire MD Care Healthplan (Signal Hill,CA), which serves about 15,000 Medicare Advantage lives inCalifornia. Terms of the deal weren’t disclosed. It is the second acquisition of a Medicare plan for Humana in two months. In August, Humana announced an agreement to acquire Arcadian Management Services (Oakland,CA), with 64,000 members in 15 states. Arcadian Arcadian had 2010 revenues of $622 million.
Scott Fidel of Deutsche Bank notes that while small, the deal is notable because it highlights Humana’s push to expand its Medicare business in the westernU.S.– an area dominated by UnitedHealth/Pacificare, Kaiser and WellPoint. Humana has historically had a strong Medicare presence in the south andMidwest. Humana has a total of 4.4 Medicare members, including 1.9 million Medicare Advantage lives and 2.5 million Medicare drug lives. The MD Care deal accounts for less than 1% of Humana’s Medicare Advantage members. Total Medicare lives in California are about 200,000.
September 21, 2011
The cost of health benefits to employers is expected to rise about 5.4% in 2012, the slowest rate of increase since 1997, according to preliminary annual survey data from benefit consultant Mercer. There are two reasons why:
1. Employers continue to shift costs to employees or reduce benefits. Excluding these types of plan changes, costs would rise about 7.1% in 2012. In other words, employers expect to shift about two percentage points of underlying cost increases to employees next year. In the past few years, the cost shift had been more like three percentage points — largely because underlying costs had been rising at a faster pace (9% annually over the past five years). “If the underlying trend is lower to begin with, employers will be likely to shift less cost,” Mercer says.
2. Use of healthcare services is slowing, which may be a result of a bad economy combined with higher deductibles and other forms of cost sharing, Mercer says. In other words, people can’t afford to spend as much on care so they go without. Another possibility, Mercer says, is health improvement programs are keeping people out of the emergency room and consumers “are more aware that overuse and misuse of health care services will directly impact their wallets as well as their employer’s budget.”
September 20, 2011
From the website of Bloom Health (Minneapolis, MN), a benefits administratrator specializing in defined contribution health plans, which has just been acquired by insurance companies WellPoint, Health Care Service Corp. and Blue Cross Blue Shield of Michigan:
Bloom is NOT an insurance company. We are a completely unbiased and an independent entity.