Corp Strat

The New York Times by Robert Pear

–

December 9, 2013:

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.”

NPR by Pauline Bartolone – December 9, 2013: When Diane Shore got a letter that her health policy would be canceled, the small premium increase for the new plan didn't bother her that much. But the changes in her choices for care really bugged her. “My physicians will no longer be in this network of physicians, or the hospitals,” she says. Shore, 62, owned an information technology consulting business in the San Francisco Bay Area and retired when she sold it in 2000. She wants to stick with the health care providers that she's had for years, she says, including the surgeon who cared for her when she had breast cancer in 1998. “I have full confidence in her,” she says. “And my primary care doctor has been my primary care doctor for 20 years.” In Shore's case, the problem is that the Blue Shield of California plan being offered limits her choice of doctors and hospitals to Marin County, where she lives. “All my doctors are in San Francisco,” she says. “I live 20 minutes from San Francisco. In fact, it's more convenient for me to go to San Francisco than to the hospital here

in Marin County.” Shore's experience doesn't surprise San Francisco-based insurance broker Susan Shargel, who's trying to sort out all the new ways insurers are contracting with doctors. Some health plans will have fewer doctors and hospitals. Blue Shield, for example, says it will have half the doctors and three-quarters of the hospitals next year as it has this year in the individual market. Shargel thinks the changes aren't clear in the cancellation letters. “There isn't something that says: 'Alert. Be aware. Take action now to be sure this works for you or to be sure you know what's happening.' There needs to be a red alert,” she says. The health plan offered to Shore was a Blue Shield of California EPO — exclusive provider organization — plan. The company says it's offering these lower-cost plans for the first time next year to buyers on the individual market. Other insurers are offering similar plans. Patrick Johnston, president of the California Association of Health Plans, notes that the federal Affordable Care Act requires more benefits than most insurance plans have provided up until now. That includes free preventive care, a limit on annual out-of-pocket spending and a ban on lifetime caps for medical expenses. So, to keep health plans affordable for buyers on the individual market, one of the few cost variables to work with is doctor contracts. “In areas where there are a lot of hospitals, some more expensive than others, and a lot of doctors, it's only natural that a health plan will sign up some, but maybe

not all,” he says. So Johnston says if you're buying your own insurance next year and want to keep your doctors, you may have to shop around. “Transitioning might mean looking or having difficulty signing up exactly the same doctors,” he says. Insurers are negotiating hard, according to Gerry Kominski, director of the Center for Health Policy Research at UCLA, saying to providers, for example: “We're willing to pay you $50 a visit. If you're not willing to do that, we know a doctors group across the street that will accept that.” Kominski acknowledges that

the trend of narrowing provider networks predates the Affordable Care Act but has been speeding up under the law. And not just for individual policyholders; it's been happening for people who get insurance through work as well. But he's quick to add that it's necessary. “If we want to keep health care from becoming completely unaffordable for everyone, at some point something has to give,” he says. “And in this case what's giving is the ability to choose any doctor and any hospital.”

And, he says, some of the plans may have a wider variety of doctor and hospital choices, but they are likely to cost more.

← Narrow Provider Networks Within Exchanges Not Revealed 11/14/2013

To Curb Costs, New California Health Plans Trim Care, Choices

The San Diego Union-Tribune by Paul Sisson –

November 13, 2013:

Health coverage is only as good as the doctors who accept it, an important truth for anyone buying a policy from Covered California, the state’s new medical marketplace.

The doctor networks supporting plans in the new health exchange, which is the main place for uninsured Californians to purchase subsidized policies, are getting more attention as residents compare and contrast offerings from different insurance companies.

While the policies listed on the new exchange each have a price clearly displayed, finding out which doctors are included can take a bit more digging.

In some cases, the doctor decision is straightforward. Big providers like Sharp HealthCare and Kaiser Permanente each offer their own plans backed by their own doctor networks.

In other cases, the connection between insurance companies and providers is not as obvious.

For example, Anthem Blue Cross and Blue Shield of California have worked their own deals with local providers to back the plans they offer in the exchange.

Blue Cross has partnered with UC San Diego as its top-tier provider, while Blue Shield has selected Scripps Health.

Executives with both health systems said they agreed to take less reimbursement from insurers in hopes that the exchange would deliver a robust volume of new patients.

Paul Viviano, chief executive of UC San Diego Health System, said he believes the university can work with Blue Cross to keep patient costs low.

“Lower cost was the focus of our conversation. We felt that we could develop a product that was useful and attractive,” Viviano said.

Likewise, Scripps CEO Chris Van Gorder said his organization decided that it was important to participate in the exchange even if it meant taking lower reimbursement than previously offered.

“I’d be surprised if anybody didn’t discount

their rates,” he said. “We assume we are going to get volume in return, but we didn’t negotiate any guarantees. We just believed we had a community obligation to participate.”

Neither executive said how much his organization agreed to discount services in order to cement a deal with their exchange insurance provider.

Fewer doctors

These partnerships have created narrower lists of doctors participating in some plans than currently exist for individual policies that have been available from the same insurer in the past.

For example, there are about 2,233 doctors supporting Blue Shield of California’s health exchange offerings in San Diego County. That number represents only about 53 percent of Blue Shield’s total affiliated doctor network in the region, the insurer said in an email. And those who buy Blue Shield exchange policies will be able to use 12 of San Diego County’s 20 hospitals.

Anthem Blue Cross did not respond to a request for the number of local doctors included in the plans it sells in San Diego County, but a spokeswoman for UC San Diego Health System said all of its 820 local doctors are included.

The pattern, trading discounts for relationships that could deliver high volumes of patients, does not appear to be unique to San Diego County.

Eyeing more volume

Patrick Johnston, president

and chief executive of the California Association of Health Plans, said insurance companies like Blue Cross and Blue Shield offered lower rates to providers as a way of helping deliver prices that are, on average, lower than those offered today in the individual health insurance market.

“Covered California insisted on health plans

paring down costs so that consumers could afford the cost of health insurance,” Johnston said.

The executive said that, in many markets, insurers used volume to persuade well-known provider networks to take less in reimbursement than they were getting before.

“It is a common negotiating arrangement where hospitals can expect more patients and, in exchange, they have a rate that’s discounted,” Johnston said.

But the discount-for-volume strategy has not worked so well for smaller organizations, at least in San Diego County.

Wayne Knight, executive director of health care reform at Tri-City Medical Center in Oceanside, said many independent doctor groups balked when insurance companies started asking for discounts.

“A lot of the physician groups that are full, or close to full, they’re like, ‘We don’t need to do this,’ ” Knight said. “A lot of physicians are saying, ‘I’m not going to do it; it’s just not worth it.’ ”

Dr. Ted Mazer, an ear, nose and throat doctor and spokesman for the San Diego County Medical Society, said he did not participate in some Blue Cross plans due to reimbursement rates offered. He said many doctors who work in partnership with the larger health systems in the area do not realize that they have been signed up for exchange plans through their affiliation with that larger partner. Mazer predicted chaos in the provider world when patients start showing up, insurance card in hand.

“Most of the doctors don’t know what they’ve got, and they don’t know, really, if they’re in or out,” Mazer said.

He added that inaccuracies in Covered California’s online doctor directory also have persisted in some cases, despite attempts to make corrections.

Bulging patient demand

The big question, then, is whether the doctor networks assembled by insurance companies will be adequate to support demand. So far, local providers seem confident that their new patients will be able to get a doctor appointment with their newly purchased policy.

Johnston, the health plan association CEO, said he believes the networks will hold up.

“We expect that people are going to be very happy with the tailored networks set up in each region of California to provide care. Does that mean every doctor and hospital is included? No. The test should not be whether every provider is included but whether consumers have good care, reasonably available,” Johnston said.

November 14, 2013
Certain Individual and Small Group Health Plans Granted Extra Year to Comply with Reform Law

President Obama announced today that insurers may renew certain individual and small group health plans for 2014 without having to comply with new Affordable Care Act (ACA) requirements scheduled to take effect on January 1, 2014. Eligible policies include those with an effective date between January 1 and October 1, 2014 that would have otherwise been terminated.

According to the President, this change is “targeted” to those individuals who are in these policies today; it does not allow the sale of non-compliant plans to people not currently in plans.

With this decision, state governors and insurance commissioners may allow insurers to continue to offer plans that may

have otherwise been cancelled until the end of 2014.
Insurers that elect to take advantage of the transitional policy are required to:
1. Notify enrollees about ACA requirements that are not met by the coverage they are renewing
2. Notify enrollees about the new health plan options and tax credits available on the public Marketplaces to those who qualify

HHS wil provide more clarity and details in the days ahead.

The vote hits at President Obama, who, during the debate over the Affordable Care Act, said people could keep their healthcare plans if they like them. Millions of people, however, have gotten cancelation notices because of ObamaCare’s new standards.

Late Wednesday afternoon, House Majority Leader Eric Cantor (R-Va.) announced via Twitter that the bill would get a vote.

The Keep Your Health Plan Act, H.R. 3350, was introduced last week by House Energy & Commerce Committee Chairman Fred Upton (R-Mich.) and more than two dozen Republicans. As of

Wednesday, co-sponsorship had grown to 88 members.

Upton’s bill authorizes insurance companies to keep offering plans that they have said need to be canceled because of ObamaCare’s new insurance standards. Since early October, companies have sent out millions of notices to enrollees saying their plans will be scrapped and, in many cases, replaced by more expensive plans.

“Despite the president’s repeated promise of ‘if you like your plan, you can keep it,’ many Americans are now learning the sad reality that their current plan will no longer exist beginning on Jan. 1,” Upton said last week. “Instead they are forced to purchase healthcare that they cannot afford through a system that does not even work, and that’s just not fair.”

The concept behind Upton’s bill is being supported by some Democrats, including two in the Senate — Sens. Mary Landrieu (D-La.) and Joe Manchin (D-W.Va.) — who have proposed a

similar bill.