Insurance-Report.com

Good News for Consumer Directed Health Plans

Jim Van Wyck — Tue, 18 Nov 2008 21:21:51 +0000

WellPoint has a new report on consumer directed health plans (CDHPs):

Employers who adopted a CDHP in 2006 saw their cost decline, while the cost for non-CDHPs rose between 7% and 10%.
People in a CDHP were more likely to have a choice of plan.
The CDHP was more likely to be chosen by families with children.
People enrolled in CDHPs were more likely to use preventative care
than people in non-CDHPs (3.1% higher for women and 8.8% higher for
men).

Will Premium Increases Slam High Deductible Plans?

Jim Van Wyck — Mon, 17 Nov 2008 17:27:28 +0000

Many small businesses could face “markedly higher” health insurance premium increases in 2009 compared with 2008, the Wall Street Journal reports. According to the Journal,
although increases in premiums paid by businesses have increased at a
slower rate in recent years, small businesses in the South, Midwest and
California that are receiving their annual renewal notices have begun
reporting “noticeably steeper rises.” The Journal reports that some businesses are receiving quotes that are “double those quoted just a few months ago.”

A survey by Citigroup
of 30 U.S. insurance brokers found that more insurers are raising
premiums at a faster rate than those who said they are slowing
increases. In addition, third-quarter earnings reports from WellPoint, UnitedHealth and Humana
all indicated that there is less aggressive pricing competition by
other insurers in a number of markets, which makes it easier to “charge
premiums that would assure a solid profit,” according to the Journal.

A
few years ago, health insurers lowered premiums in an attempt to gain
business with new health savings accounts. However, because many of the
more popular plans pay all costs after a $1,500 to $3,000 deductible,
insurers’ costs have been higher than expected. “Now the insurers are
catching up,” John Sinibaldi, an employee benefits consultant, said. In
addition, many not-for-profit Blue Cross and Blue Shield plans in
recent years provided premium breaks as a way of reducing “big
surpluses from flush years” to avoid political pressure from states,
according to the Journal.

However, with the recent
economic downturn, analysts say such not-for-profits might have more
reason not to provide those price breaks. “Now that investment income
is significantly less, we could see less concern about an embarrassment
of riches and more about battening down the hatches,” Matthew Borsch,
an analyst at Goldman Sachs, said. Smaller employers often are affected most by increases in premiums, according to the Journal.

According to Edward Kaplan, national practice leader at employee benefits consultant Segal,
companies with more than 500 employees might have leverage to negotiate
with health insurers. Kaplan said insurers are “being much more rigid”
with smaller firms (Fuhrmans, Wall Street Journal, 11/17).

High-Deductible Plans

More than 100 large companies and hundreds of smaller businesses have
begun offering high-deductible plans as their only health care option
this year during open enrollment season, the New York Times reports. According to the Times,
the annual deductible for these plans is at least $1,100 for an
individual and is even higher for families. Such plans often have a low
monthly premium and sometimes an HSA to which both employees and
employers can make contributions.

The number of employees and
family members covered by high-deductible plans has increased by 20% to
30% annually. About 7.5% of the 158 million people with
employer-sponsored coverage are enrolled in high-deductible plans,
according to Steve Davis, managing editor of trade newsletter Inside Consumer-Directed Care.
Fewer than 25% of people with high-deductible plans have HSAs with
funds in them to offset the deductible costs, Davis said. In addition,
a 2008 survey by
the Kaiser Family Foundation and the Health Research and Educational
Trust found that among companies that offer an HSA-qualified
high-deductible plan, about one-quarter of workers do not receive an
employer contribution to their savings accounts.

Jeffrey Munn, a benefits design expert at Hewitt Associates,
said there is a “longer-term concern” associated with these plans
because no one is sure “whether the savings are coming from wiser
consumers, or they are just not going to the doctor because they would
have to spend more out of pocket.”

The Times
reports that experts predict high-deductible plans could become more
popular with employers during next year’s open enrollment season
because of the economic downturn (Freudenheim, New York Times, 11/15).

Is HealthNet For Sale?

Jim Van Wyck — Mon, 17 Nov 2008 17:21:51 +0000

Health plan profits are falling, and given the trends in the U.S.
economy and healthcare costs generally, this trend is likely to linger
for a while. And if falling profits remain a fact of life for the
plans, it’s likely to spawn a series of plan selloffs which will bring
further consolidation to an industry that has already seen lots of
large mergers in recent years, observers note. For the short term,
some–like WellPoint–have kept their bottom lines healthy by raising
premiums, but they can only do that for so long before employers drop
them, experts say.

With returns on their investments dropping,
medical costs climbing and membership falling, publicly-traded health
plans have taken it on the chin. Though WellPoint did see an increase
in earnings per share, every publicly-traded health plan saw profits
fall in the third quarter. Many are telling investors to continue to
expect bad times. For example, after third-quarter profits fell 39
percent, partly due to investment losses, Aetna has told its investors
that it can’t commit any longer to its long-term operating earnings per
share growth goal of 15 percent.

So which plans will likely sell
out to survive? Stock analysts say Los Angeles-based Health Net and
Bethesda, MD-based Coventry Health Care are strong candidates, as
they’re struggling more than some of their competitors.

Big Price Hikes For Small Firms

Jim Van Wyck — Mon, 17 Nov 2008 17:18:42 +0000

Small Firms Face Health Insurance Price Increases

by Sarah Rubenstein, Wall Street Journal

Just
as the tough economy is starting to really put the squeeze on small
businesses, they are facing another financial pinch: Jumps in their
health insurance premiums.

Though the cost of health insurance has been a long-running problem
for small businesses, their rates had been rising at a slower pace in
recent years. No more, the WSJ reports.
Employers and insurance brokers in the South, Midwest and California
are reporting noticeably steep hikes. Some premium increases being
quoted to employers are double those of just a few months ago.

One factor is the beating that investment portfolios of
not-for-profit Blue Cross and Blue Shield plans are seeing lately. In
recent years, these plans have been under political pressure to provide
price breaks. “Now that investment income is significantly less, we
could see less concern about an embarrassment of riches and more about
battening down the hatches,” says Goldman Sachs analyst Matthew Borsch.
Meantime, for-profit insurers have had higher-than-expected medical
costs and pricing missteps this year, leading them now to be less
flexible with smaller clients.

California’s MRMIP is Failing

Jim Van Wyck — Fri, 31 Oct 2008 02:48:00 +0000

A Shrinking Program to Insure the Uninsurable in California

Working people who have health problems and don’t get insurance from their employer fall into a gaping hole in our system: They don’t qualify for government-backed insurance for the poor, but their health problems make them uninsurable on the open market.

Lots of states have special programs to help these people. But the programs often leave many patients hung out to dry.

California’s Major Risk Medical Insurance Program, for example, covers about 13,000 people — only 2% of the state’s medically uninsurable, the Los Angeles Times reports this morning. The number of people in the program has fallen by about a third since Arnold Schwarzenegger took office, and by half since 1999, the LAT says.

The state subsidizes a third of the cost. But the other two-thirds is more than many people can afford. A 55-year-old Los Angeles County resident with one dependent would be on the hook for $11,240 in premiums and a $450 deductible this year for the cheapest plan, the LAT says.

What’s more, annual benefits are capped at $75,000 a year, which may not be enough for the very ill, especially those with particularly expensive conditions.

Dave Dunlap, a 54-year-old uninsured trucker, would need far more than that to pay for the new liver he needs. “I’m trying to fight to get a transplant,” the Dunlap told the LAT. “Everyone’s waiting for me to have a way to pay for it. I can’t even get on the donor list until I have a way to pay for it.”

Cost Issues #1 Reason Small Business Does Not Offer Health Insurance

Jim Van Wyck — Wed, 22 Oct 2008 19:49:31 +0000

Fifty-nine percent of employers that do not offer health insurance to
employees would not pay more than $50 monthly per worker for coverage,
and only 10% would pay at least $200 monthly, according to a survey
released recently by benefits consulting firm Mercer, the Milwaukee Journal Sentinel
reports. The survey included responses from more than 3,400 employers,
545 of which did not offer health insurance to employees.

According
to the survey, 43% of employers that did not offer health insurance to
employees cited cost issues. Other employers that did not offer health
insurance to employees cited turnover among workers and the belief
employees would prefer higher wages to coverage, the survey found
(Boulton, Milwaukee Journal Sentinel, 10/21). The survey
found that about half of employers disagree with “pay or play”
requirements, under which employers must offer health insurance to
employees or pay into a public fund to provide coverage (Fuhrmans, “Health Blog,” Wall Street Journal, 10/21). Thirty-one percent of employers support such requirements, and 19% have no opinion, according to the survey.

About
29% of employers support single-payer health insurance, and 31% support
proposals to replace an income tax break for employees who receive
health insurance from employers with a tax credit to purchase coverage,
the survey found. In addition, about 46% of employers support federal
reimbursement of employer health insurance costs that exceed a certain
level, according to the survey (Spors, “Independent Street,” Wall Street Journal, 10/21).

Linda
Havlin, a partner at Mercer, said, “The facts speak for themselves here
– not only are they not providing coverage but they are more likely to
drop coverage” (Milwaukee Journal Sentinel, 10/21).

Subprime Mortgage Explained

Jim Van Wyck — Wed, 01 Oct 2008 18:55:11 +0000

This presentation has the dual virtues of being both savagely funny and accurate.

Broker fired for selling CDHP with employer funding

Jim Van Wyck — Thu, 11 Sep 2008 05:44:35 +0000

In recent times, health plans in California have started to warn their
brokers that it wasn’t kosher to sell high-deductible plans with other
forms of insurance or funding to cover the deductible. Now, Blue Shield
of California has terminated a broker for taking just such an action, a
move that is now being scrutinized by the state’s Department of
Insurance. Southern California broker Bill Goldstein was terminated by
Blue Shield last month for selling a small employer a $3,000-deductible
Blue Shield plan, presumably along with some other form of financing
designed to help employees meet their obligations.

Several
plans, including Blue Shield of California, Health Net, Kaiser
Permanente and Anthem Blue Cross, have sent letters to insurance
brokers threatening to terminate the broker’s contract and withhold
commissions if brokers sell so-called “wrap-around” packages to
employers. Brokers, some of whom have been protesting such policies,
say that all they’re doing is helping their clients provide a policy
that both employers and employees can afford. The health plans,
meanwhile, say that the high-deductible plans don’t make money unless
consumers are forced to bear the initial cost of care and make careful
decisions. None of the plans, however, have released figures indicating
how high-deductible plans perform when consumers don’t bear all of the
first-dollar coverage, according to the Sacramento Business Journal.

To learn more about the dispute:
- read this Sacramento Business Journal article

What’s worse, soaring energy prices or out of control health insurance costs?

Jim Van Wyck — Thu, 11 Sep 2008 04:50:12 +0000

What part of the economy has seen rapid price increases and put a real squeeze on U.S. households and businesses?

Energy, you say? True. But health insurance is even worse.

45 Billion dollars worse!

Since 2000, spending on health insurance premiums actually grew faster than spending on energy; by the first half of 2008 American consumers were paying $370 billion more for
insurance premiums than in 2000. Spending for energy is a relative
laggard by comparison, increasing “only” $320 billion since 2000.

Rising energy prices constitute a real drain on family budgets. Rising
prices for health care, however, are also eating away at other
consumption possibilities, and we shouldn’t lose sight of this just
because we’re not given weekly reminders when we pull up to the gas
pump.

HSA Bank reports HSA customers are more engaged, seek information, select lower cost alternatives

Jim Van Wyck — Mon, 28 Jul 2008 19:32:44 +0000

HSA Bank has released the results of a survey it conducted of 733 respondents drawn from its “employer relationships” and their employees, with and without HSA programs. The survey found that, “high deductible health plan respondents are more likely to be engaged consumers who ask about costs prior to making an appointment, seek information about generic prescription alternatives and select lower cost treatment alternatives,” according to a press release from the company.

It also found -

When rating their overall health, no statistically significant difference exists between the respondents with a high deductible health plan and those in a traditional health plan.

Respondents with a high deductible health plan were no more or less likely to decide against or delay treatment due to cost when a treatment was recommended in the past 12 months.

Nearly 73 percent of the respondents with a high deductible health plan chose that plan over a traditional health plan option.

Here’s a link to download the report.