Today's Datapoint

2.1% … was the average total health benefit cost per employee in 2013, down from 4.1% in 2012, according to Mercer’s new National Survey of Employer-Sponsored Health Plans.

Quote of the Day

“Some people have suggested that COBRA is dead … and it might be for some employers, but they are still on the hook for sending [COBRA] notices [to outgoing employees]. Even though it might make sense to repeal COBRA [because of ACA provisions], it’s doubtful it will be repealed by this Congress … even if both sides agree.” — Chantel Sheaks, major medical consultant at American Fidelity Administrative Services, LLC, told AIS’s Inside Health Insurance Exchanges.

Today's Datapoint

Nearly $1 million in shared savings were earned by White Plains, N.Y.-based WESTMED Medical Group through its accountable care contract with UnitedHealthcare.

Quote of the Day

“The challenge that [new]anti-obesity medications have is one of legacy. The products that have been available in the past haven’t been all that dramatic or effective in weight loss and that sort of stuck in the mind, I believe, of prescribers. So the new products [Belviq and Qsymia] are going to have to demonstrate efficacy before they’re going to get widespread use.” — Craig Oberg, R.Ph., a managing consultant with The Burchfield Group, told AIS’s Drug Benefit News.

On Health Exchanges, Premiums May Be Low, but Other Costs Can Be High

By ROBERT PEAR Published: December 9, 2013 WASHINGTON — For months, the Obama administration has heralded the low premiums of medical insurance policies on sale in the insurance exchanges created by the new health law. But as consumers dig into the details, they are finding that the deductibles and other out-of-pocket costs are often much higher than what is typical in employer-sponsored health plans. Until now, it was almost impossible for people using the federal health care website to see the deductible amounts, which consumers pay before coverage kicks in. But federal officials finally relented last week and added a “window shopping” feature that displays data on deductibles. For policies offered in the federal exchange, as in many states, the annual deductible often tops $5,000 for an individual and $10,000 for a couple. Insurers devised the new policies on the assumption that consumers would pick a plan based mainly on price, as reflected in the premium. But insurance plans with lower premiums generally have higher deductibles. In El Paso, Tex., for example, for a husband and wife both age 35, one of the cheapest plans on the federal exchange, offered by Blue Cross and Blue Shield, has a premium less than $300 a month, but the annual deductible is more than $12,000. For a 45-year-old couple seeking insurance on the federal exchange in Saginaw, Mich., a policy with a premium of $515 a month has a deductible of $10,000. In Santa Cruz, Calif., where the exchange is run by the state, Robert Aaron, a self-employed 56-year-old engineer, said he was looking for a low-cost plan. The best one he could find had a premium of $488 a month. But the annual deductible was $5,000, and that, he said, “sounds really high.” By contrast, according to the Kaiser Family Foundation, the average deductible in employer-sponsored health plans is $1,135. “Deductibles for many plans in the insurance exchanges are pretty high,” said Stan Dorn, a health policy expert at the Urban Institute. “These plans are more generous than what’s prevalent in the current individual insurance market, but significantly less generous than most employer-sponsored insurance.” Caroline F. Pearson, a vice president of Avalere Health, a consulting company that has analyzed hundreds of plans, said: “The premiums are lower than expected, but consumers on the exchange will often face high deductibles and high co-payments for medical services and prescription drugs before they reach the cap on out-of-pocket costs,” $6,350 for an individual and $12,700 for a family. Those limits provide significant protection, even though those sums are substantial for most consumers. In addition, the federal website, HealthCare.gov, informs people that they may qualify for subsidies to reduce their out-of-pocket costs if their household income is below 250 percent of the federal poverty level, meaning that it is less than $28,725 for an individual or $48,825 for a family of three. These “cost-sharing reductions” are available for a specific kind of midlevel plan known as a silver plan. People with lower incomes can get more help with out-of-pocket costs, but only if they choose silver plans. Mr. Dorn said the government had not done much to inform people of these potential savings. “Consumers are giving up cost-sharing reductions of enormous value if they enroll in a bronze plan because it has the lowest premium,” he said. Plans in the marketplace are separated into four categories — bronze, silver, gold and platinum — indicating the generosity of coverage, or the share of costs paid by insurance for an average enrollee. Many people buying insurance on the federal and state exchanges are expected to qualify for subsidies. But in the first month, for reasons that are not clear, only 30 percent qualified. The others must pay the full premium and will be subject to the full deductible. Most people shopping in the exchanges are expected to choose bronze or silver plans, which provide less generous coverage than most employer-sponsored plans. A study by Jon R. Gabel and colleagues at NORC, a research organization affiliated with the University of Chicago, found that 65 percent of employees in group health plans had higher-value coverage that would be classified as gold or platinum under the Affordable Care Act. At the same time, most policies in the exchanges are more generous than what people have been buying for themselves in the individual insurance market. Mr. Gabel found that 84 percent of policyholders in the individual market had coverage that was less than or equivalent to the bronze level. James T. O’Connor, an actuary at Milliman, an employee benefit consulting firm, said: “Larger employers generally have more generous coverage than small employers, and small group plans, on average, are richer than what people can typically buy with their own money in the new health insurance exchanges.” Mark A. York, a 60-year-old freelance writer in Hailey, Idaho, said he began shopping after he received a letter saying that his current insurance policy would be canceled because it did not meet the requirements of the health care law. In the exchange, he said, he found policies with premiums similar to what he is now paying, $440 a month, but “the deductibles were so high — $4,000 to $6,000 a year — that it defeats the purpose of having insurance.” Brian H. Snoddy, 35, of Palmyra, Va., said his wife and two children had a policy with a $330 premium and a $2,500 deductible, but it is being canceled. For new plans with comparable coverage on the federal exchange, he said, “the deductibles are way higher, $5,000 or $6,000.” For visits to a medical specialist, many plans on the federal exchange require co-payments of $50 to $75 or more. Federal officials often point to premiums as evidence that the health care law has made insurance affordable. “Nearly six in 10 uninsured Americans can pay less than $100 a month for coverage in the health insurance marketplace,” Kathleen Sebelius, the secretary of health and human services, has said. Higher deductibles are one tool that insurers can use to hold down premiums. Many have also held down premiums on the exchanges by limiting the choices of doctors and hospitals available to consumers in their provider networks. Kellye Norris, 53, of Dallas said that after trying for more than a month, she completed an application on the federal exchange and enrolled in a Cigna plan with a premium of about $500 a month and no subsidies. “My deductible is nearly $3,000, which is ridiculously high, in my opinion,” Ms. Norris said. “But as someone with pre-existing conditions, I’m grateful to be able to buy insurance at all.” http://www.nytimes.com/2013/12/09/us/on-health-exchanges-premiums-may-be-low-but-other-costs-can-be-high.html?pagewanted=all&_r=0

The Fate of the QI Benefit up in the Air as Congress Weighs “Doc-Fix”

Today, both the Senate Finance Committee and the House Committee on Ways & Means considered legislation to permanently repeal and replace the Sustainable Growth Rate (SGR) formula. Without Congressional action, the SGR calls for sizable cuts to Medicare reimbursements to physicians and other providers. For the last decade, Congress has acted on an annual basis to avert these drastic cuts, commonly known as the “doc-fix.” The legislation considered today would gradually transition Medicare to a system where doctors are paid on the basis of the value of care provided, as opposed to the volume of services ordered. Medicare Rights Center supports transitioning to a reformed payment system that emphasizes value—essentially better quality care at a lower price. Yet, Medicare Rights remains deeply concerned about the future of critical Medicare benefits annually extended alongside the annual SGR patch. Critical among these is the Qualified Individual (QI) program. The QI benefit covers the cost of the Part B premium for Medicare beneficiaries with limited incomes, from about $14,000-$15,500 a year, and less than $7,080 in assets. Amounting to about $105 per month in 2013, this vital assistance helps vulnerable seniors and people with disabilities afford health care costs and other basic needs that they might otherwise go without. Legislation approved by the House Committee on Ways & Means earlier today does not yet address the QI program and other extender programs, while the Senate Finance Committee framework only extends the QI program through 2018. Earlier this week, 112 organizations, including Medicare Rights, urged members of Congress to ensure QI is made permanent alongside a permanent SGR fix. In addition to leaving concerns regarding critical extender programs unresolved, the House and Senate Committees have yet to address how the SGR repeal and replacement policy will be paid for. As these negotiations move ahead, Medicare Rights urges Congress not to shift added costs to people with Medicare.

According to a recent report,

...the following percentages of adults, by age group, do not have a primary care physician: • adults aged 18-29: 34% • adults aged 30-49: 25% • adults aged 50 or older: only 16% Source: "Alternative Care Facilities Are The Preferred Medical Option For Younger Generation," Vitals.com Press Release, November 19, 2013, http://www.vitals.com/posts/press-center/press-releases/alternative-care-facilities-are-the-preferred-medical-option-for-younger-generation