Drug Prices Got You Down? Pharma Couldn’t Care Less.

Source: Philadelphia Inquirer, April 12, 2016Source link

One way of defining a “rogue” industry is to see which ones have declared war on their customers. By that measure, pharma stands at or near the top of combining the elements that go into making a rogue: contempt for the public and the unmitigated pursuit of greed.

In the midst of the 2016 presidential campaign, unaffordable drug prices are again among the handful of top issues that all candidates must address. By quick reckoning, this marks the seventh presidential campaign cycle where that situation applies. At the same time Congress is also holding hearings on rising drug prices and several members petitioned the Secretary of Health & Human Services to assert “march in” rights (i.e., suspend patents) on the most egregiously priced brands. The leading Democratic candidate, Hillary Clinton, wears the albatross around her neck of receiving more contributions from pharma than any other candidate.

As the recipient of all this political and media heat, one might think pharma would lie low and suppress its price gouging until after the November election, thereby allowing the amnesiac American public to refocus its attention onto some celebrity transgression or cute animal video.

But pharma doesn’t see the need for even a temporary respite. This week a Reuters analysis revealed that in the five years since 2011, prices on the nation’s 10 top-selling drug products increased between 50 and 126 percent.

Reuters’ Caroline Humer wrote that compared to the outrageous 5,000 percent drug price hikes engineered by outlier executives such as Martin Shkreli, “Routine price increases by bigger players may draw less attention, but they add up.” Using figures from the pharma data supplier IMS, she found that sales revenues for the 10 best-selling drugs went up 44 percent between 2011 and 2014, even while prescriptions for those medications declined 22 percent during that time.

The drug industry’s spokesmen respond that these increases reflect published prices and do not take into account rebates and other discounts. Yet pharmacy benefit managers told Reuters that even after rebates, they have been forced to pay 10 percent annual price increases on these top-selling medications during a period when the U.S. consumer price index rose by a yearly average of 2 percent.

Pharma not only brazenly increases its prices during a period of intense media and political scrutiny, but it also refuses to recognize the objective reality that drugs are increasingly unaffordable. The industry instead prefers to define the situation as one of public misperception that pharma must address with a proactive PR campaign.

Last month The Hill reported that Steve Ubl, the new president of PhRMA, pharma’s trade group, plans to add “top scientists and researchers” to its stable of professional lobbyists and to hire “patients who have benefited from some of the newest, and most costly drugs” to meet with lawmakers.

Ubl acknowledged that the trade group would abandon its largely defensive approach in favor of developing a proactive policy agenda and driving its adoption. Ubl told The Hill, “going on offense” refers to defeating federal policy changes that would “limit price increases.”

Medication costs now account for 16.7% of all health care spending and nearly 20 percent of every dollar that employers spend on health insurance benefits. The recent pace of drug cost growth makes it the fastest growing component of health care spending. The reality of growing drug unaffordability was seen two years ago in a Commonwealth Fund report that showed one in five U.S. adults could not fill their prescriptions or skipped doses because of the costs, twice the proportion of patients in Germany, Canada and Australia that are impeded from their medications by cost.

Yet pharma ignores this stark reality and the plight of its American customers by continuing to raise its prices at an intolerable rate. At the same time its response to complaints by the public and their elected officials consists of an aggressive PR campaign to hoodwink the public and seduce politicians. Not only does the industry rebuff all efforts to moderate its prices, but it also opposes calls for more transparency on the product development spending with which it justifies those prices.

If pharma isn’t an out of control, rogue industry, then the term lacks all meaning.

Sacramento Business Journal, March 22, 2016. Kent Hoover

It’s as if the Affordable Care Act’s tax credits for small businesses were designed to fail: Six years after Obamacare was enacted, few companies are taking advantage of tax breaks that were supposed to make health insurance more affordable.

Only 181,000 small businesses claimed the Small Employer Health Insurance Tax Credit in 2014, according to the Government Accountability Office. That’s only a fraction of the 1.4 million to 4 million small businesses that were estimated to be eligible for the tax break, which covers a portion of an employer’s contributions to their workers’ health insurance premiums.

Businesses with fewer than 25 employees with average wages of less than $50,000 (adjusted for inflation — $51,800 in 2016) are eligible for the tax credit if they cover at least 50 percent of the cost of individual coverage for their workers.

So why aren’t more small businesses taking advantage of the tax credit?

The reasons vary from the credit being too small compared with the overall cost of health insurance, to it being too complicated to figure out. (Only companies with fewer than 10 employees and average wages of $25,900 or less are eligible for the full tax credit, which is worth up to 50 percent of premiums paid by the employer. The value of the credit phases down as a company’s size and wages go up.)

Also, beginning in 2014, you had to buy insurance through a Small Business Health Options Program exchange in order to qualify for the tax credit. These SHOP exchanges were supposed to give small businesses a better deal on insurance by increasing competition in the small group market, but they’ve proved to be a flop.

The SHOP requirement proved to be the reason why Buffalo Supply Inc., a medical supplies and equipment company in Lafayette, Colorado, couldn’t take advantage of the health insurance tax credit. Executive Chairman Harold Jackson told the House Small Business Committee in a hearing entitled “Lip Service but Little Else: Failure of the Small Business Health Insurance Tax Credit” that he ran into problems when he tried to enroll in Colorado’s SHOP exchange last year. First, the online application asked for a lot of information he didn’t have — such as the Social Security numbers, dates of birth and tobacco use of his employee’s spouses and dependents. Then, after he spent two or three days gathering this information, and 10 hours entering it into the SHOP system, he couldn’t figure out how to review the insurance plans that were available.

“I called the 800 number, and they told me they don’t give quotes to small businesses. The SHOP representative said I needed to go through a broker. When I called a broker, clearly he had heard from businesses like me about the SHOP. Even though the SHOP referred me to him, he told me, ‘I can get you a quote, but I don’t want to go through the exchange, it’s too much hassle.’ ”

Jackson ended up with a policy with a $16,380 annual premium for family coverage — more than 25 percent higher than what it paid in 2010, when the ACA was enacted. Plus, deductibles and out-of-pocket maximums are higher.

“So we are paying more in premiums and sadly our employees are also paying more when they need medical care and services,” Jackson said.

Then there are small businesses that employ too many workers or pay too well in order to qualify for the tax credit. Michael Ricco, quality manager of AEEC, a Reston, Virginia-based professional services firm, told the committee that these types of small businesses could use help with insurance costs as well.

“The size standard for companies to use this health care tax credit is on the woefully low side and should be increased so that many more legitimate small businesses can take advantage of this credit,” Ricco said.

In AEEC’s case, however, it still wouldn’t qualify for the tax credit because its workers make more than the $50,000 annual wage cap.

“We question the fairness of this cap because, it essence, it punishes our company for paying our employes a higher wage,” he said.

Even businesses that pay well need help covering health insurance costs, he said, especially since workers’ expectations for benefits increase with their salaries.

“For example, a cashier at McDonald’s is going to be thrilled with any health care coverage while a senior data architect expects a platinum health plan. So small businesses like ours are among the most in need of a tax credit,” Ricco said.

But Holly Wade, director of research and policy analysis for the NFIB Research Foundation, said the tax credit was designed in such a way that the biggest beneificiaries are small businesses that are the least likely to even offer health insurance. The tax credit isn’t likely to sway even them because it’s temporary and complicated to use.

“The small business tax credit is a much better talking point than it is a financial incentive for small businesses,” Wade said.

Source Link

LABJ Largest Insurance Agencies in LA 2016

SFVBJ Largest Insurance Brokers 2016

March 20, 2016

The Los Angeles Business Journal and the San Fernando Valley Business Journals released their lists of Largest Insurance Brokerage Agencies for 2016 and Corporate Strategies was ranked in both lists for 2016.

For the San Fernando Valley edition, the agency ranked as the 12th largest agency, while the Los Angeles edition ranked the agency as #32 amongst 50 agencies.

Corporate Strategies provides employee benefits, insurance, payroll, HR, and technology planning to business owners and professionals. The agency is a leading producer for Anthem and Blue Shield of California, as well as a distributor for Crump, American General Life, and MetLife.

Who’s the Boss of Workplace Culture?

HR professionals, managers, and employees have very different opinions about workplace culture: who drives it, what’s important to creating a great culture, and what can destroy it, according to a study by Kronos Inc. and WorkplaceTrends.com. The survey reveals the following:

Who Defines Workplace Culture?

• About one-third of HR professionals say that the head of HR defines the culture while only 10% of managers and 3% of employees agree.
• 26% of managers say their executive team defines the culture while only 11% of HR professionals and 9% of employees agree.
• 29% of employees say the employees define workplace culture while only 9% of HR professionals and 13% of managers agree.
• 40% of Millennial employees say that employees define the culture – an indication of an evolving view of workplace culture where employees feel they have more power.
• 28% of employees say that no one defines the workplace culture while only 5% of HR professionals and 7% agree.

What Improves Workplace Culture

Employees say that the three things that matter most to having a good workplace culture are pay (50%), coworkers who respect and support each another (42%), and work-life balance (40%). HR and managers are off base on their assumptions. HR professionals say the top three things that matter to employes are managers and executives who lead by example, employee benefits, and a shared mission and values. Managers say say that what matters most to employees are managers and executives who lead by example, a shared mission and values, an emphasis on taking care of customers. Twenty-five percent of HR professionals and 29% of managers say that pay is a top factor in how employees view workplace culture.

What Kills Workplace Culture

HR professionals and managers say that a high-stress environment and company growth are the most damaging to workplace culture. Employees say that not having enough staff to support goals, dealing with unhappy/disengaged workers who poison the well, and having poor employee/manager relationships are most damaging.

Other Factors

The survey also reveals that technology, job hopping, and Glassdoor-like pressure have changed the culture. Forty-three percent of HR professionals and 39% of managers say that using technology to improve culture is the biggest difference compared to a decade ago. Forty percent of HR leaders say there is more pressure to maintain an attractive culture for recruiting because more information about organizations can be easily found on sites like glassdoor.com. Twenty-three percent of HR professionals and 22% of managers say that their employees switch jobs too much to establish a solid culture.
Seventy-two percent of HR professionals and 61%, managers say that training and development improve workplace culture. Forty-five percent of HR professionals and 46% managers say that getting feedback from employees and acting on it improves workplace culture.

Dan Schawbel, founder, WorkplaceTrends says, “Among all of this interesting data, what struck me most is that 40% of Millennial employees believe that employees create the workplace culture, compared to 29% of employees. This is important. Each generation changes the workplace as they rise up the ranks. Millennials…believe the power to impact workplace culture lies predominantly with the people who do the work. HR professionals and managers should take note of this, look for ways to involve employees in the development of workplace culture, and be on the lookout for disengaged workers who may be poisoning the well – they wield more power than you may think.”

 

Source –  www.workforceinstitute.org

Death spirals loom for health insurers

Obamacare enrollment is already millions of people below original forecasts, and we could see two sorts of death spirals in the insurance exchanges of the Affordable Care Act because of premium inflexibility mandated by law and partisan unwillingness to make the necessary compromises to fix it.

It helps to think first about buying car insurance. If auto insurers were mandated to subsidize higher bad-driver premiums with lower good-driver premiums, and the penalties for not carrying insurance were negligible, good drivers would see insurance as a bad deal and would begin leaving the market. Eventually, only the bad drivers would be left, and the premiums would be so high that the car insurance market would collapse.

Now think of selling health insurance. The worst cases mean paying hundreds of thousands per patient for expensive drugs for multiple chronic illnesses and repeated hospital admissions and specialist consultations every year. In health care, the difference between a “safe driver” (i.e., a consumer who might spend a few hundred dollars a year on medical care) and a “risky driver” (i.e., a very sick consumer) is far greater in terms of costs. For every 100 health insurance customers, the rule of thumb is that just one of them will account for 30 percent of all costs, and that just five of them will account for 50 percent of all costs.

As an insurer, you don’t know how sick your customers could end up, and you’re on the hook if you get it wrong. Worse, with the ACA’s state insurance exchanges, you’re limited to pricing the riskier, sicker older customers at no more than three times the least-sick customers. That makes it a bargain for the sick and a bad deal for the young healthy customers. While the penalty for not having health insurance is the maximum of either $695 or 2.5 percent of family income, that’s a lot less than the cost of health insurance.

If an insurer gets its pricing wrong, it will make a loss and be forced to exit the business or increase premiums. But if you raise prices, those customers who don’t value your services as much as others will drop out. And who will be left? The sicker customers who know they’re going to get a better deal by staying insured with you.

But to make a profit, you also need those healthier folks onboard, contributing premiums but using fewer medical services. Without them you’ll make more of a loss, or you’ll fall victim to the death spiral of rising premiums, declining customers and higher costs. This isn’t theoretical; a generous Harvard health plan experienced such a classical death spiral some time ago.

Also, the same way a death spiral can occur within a health insurance company, it can also occur among a bunch of health insurance firms operating on the ACA’s insurance exchanges, like Covered California. If individual firms make a loss on their business or fail to make enough profit, they will withdraw from the insurance exchange. Their previous customers would seek insurance from the remaining participants, who can’t decline them. This would reduce the other firms’ profits and potentially prompt them to leave, too.

Could such a uber-death spiral occur in the insurance exchanges? Chances are yes, despite ACA design features to share losses. We know United Healthcare lost $2 million a day on that business in 2015; Highmark, $1 million a day; and Aetna lost 3 percent to 4 percent on each dollar of ACA business. Blue Cross and Blue Shield of North Carolina may lose more than $400 million on its Obamacare business and is sharply limiting ACA enrollment.

What can be done? On one extreme, a Medicare-for-all approach such as Sen. Bernie Sanders’ proposal dispenses with insurance completely. A more realistic market-based alternative would remove the mandate to purchase insurance and provide credits to poor, high-risk customers. Still other policies could include increasing competition by allowing insurers to sell across state boundaries, or better meeting customers needs by changing plan benefits and making them more affordable.

In an industry as important as health care, we need good, stable trajectories. But with the relentless partisan fights over Obamacare, don’t count on Republicans helping to prevent these ACA death spirals from speeding up.

Joel Hay is professor at USC School of Pharmacy. Marco Huesch is an assistant professor at USC Price School of Public Policy. Both are affiliated with USC’s Leonard D. Schaeffer Center for Health Policy and Economics.

Read Martin Levy’s article in CSQ January, 2016 – Why buying a mattress and life insurance are very much the same – and strikingly different. And, why life insurance companies have not embraced consumerism.

CSQ- Who Do You Love? January 2016