A recent report was released revealing information related to healthcare spending in 2013. The most important information taken from the report seems to be that the use of healthcare services decreased on average while the cost of services increased. This research was compiled from nearly five billion claims that were submitted.
The key takeaways:
- Health spending increased by 3.9% in 2013
- Health spending increased because of rate increases rather than use of services
- The number of outpatient services as well as inpatient services decreased as prices increased
- Emergency room visits and outpatient surgeries decreased
- Prescription drug prices increased while generic drug prices dropped (this also lead to a 15.5% decline in brand name drug use and an increase in generic prescription use)
What does this mean for healthcare?
This report is stating that the cost of healthcare is continuing to increase. People are no longer utilizing their benefits most likely due to the high cost associated with them. Individuals and families are more concerned with generic prescriptions that are affordable rather than pay the high cost associated with brand name drugs. Unfortunately, the cost of healthcare is rising at a rate that is deemed affordable to many.
Prop. 45 is a under consideration on the ballot and it is extremely important to be fully educated on what this proposition entails and what it means for the future of health insurance.
If Prop. 45 is elected, it could give one state elected commissioner 100% rate-regulation authority over the health insurance marketplace. This will affect nearly 6 million people in California who purchase their insurance through a small business employer or as an individual or family (on or off the exchange). While the state would be able to regulate certain policies, the person assuming the title of health care commissioner would be the only one who could actually approve rates insurers charge.
What is Prop. 45:
- Allows one person (the commissioner) to review and approve rates
- Individual and small group health insurance rates, premiums, deductibles, co-payments, and other benefits would be approved by a single person (the commissioner)
Why are people against Prop. 45:
- It gives one person too much power over an individual’s health insurance premium
- The state commissioner can accept funding to help assume the role meaning that they can be persuaded to adjust rates based on the people helping them get into office
- This could increase the cost of Covered California since the process would delay approval for some plans on the exchange
Many of the opponents of this ballot initiative include health insurance companies including Kaiser and Blue Shield of California. While supporters claim that this would give more transparency to the rationale for certain rates determined by health insurance companies, opponents argue that it gives one person too much power.
In 2017, the ACA will allow states to sell large group health plans through the exchange operating within that state. For example, Covered California will be able to sell fully-insured large group health plans under the state operating insurance marketplace. Currently, large group health plans do not have to abide by the same policies established for small group health plans because Congress feared that it would actually mean more cost to individuals covered by large group insurers. Since most large businesses pay an average of 60% of the cost of their employee’s coverage, large group insurers were not subject to the same rules and regulations of small group plans. If the large group policies were held to to same standards as the small group policies, they would have to include:
- Adjusted community premium rating rules
- A “metal level” system
- Minimum essential benefits
- Employees covered under a large group plan with a specified insurance company would likely be part of that insurer’s risk pool
The premium rating rule states that there can’t be any significant changes to rates for insurance based on an employee’s health. The rates can only be determined by age but must comply with a 3 to 1 ratio. The rates can also differ for tobacco users. States are allowed to establish single vs. family rates in different areas (known as the adjusted community premium rating rules). This rule was not regulated for large group health plans because Congress believed that large groups could still function without adjusted rates.
Essential health benefits must meet minimum standards of care. According to the ACA, an essential health benefits package must provide essential health benefits, limit cost sharing, and provide a certain level of coverage determined by the value of benefits within the plan (this is also known as the metal level requirement). These rules did not impact large group insurance coverage because it may have meant higher cost of premiums for the employer which could have resulted in employers paying a lower percentage of coverage for their employees (thus employees would be paying more for their benefits when the ACA is supposed to help them pay less).
In 2017, large group insurance plans purchased on and off the exchange may be subject to the same rules and regulations established under the ACA for small businesses. It’s important that large group employers keep an eye on state and federal decisions regarding the sale of large group insurance coverage and required benefits.
Covered California has survived its first year on the market and many executives are looking back on issues, achievements, and improvements to make the next open enrollment period a success. While the first open enrollment period had long wait times and website glitches, directors are now looking back on these issues are searching for resolutions. In response to lessons learned from the launch of Covered California, Executive Director Peter Lee stated that “The top lesson learned is the incredible response we saw from consumers. [...] We weren’t ready for it. Our call centers weren’t ready. We are changing what we’re doing going into 2015.”
What are the top lessons learned from Covered California Year 1:
- Education about insurance and plan details is a priority
- Affordability has different meanings to different people
- Consumers needed multiple touch points in order to enroll (online, in person, on the phone etc.)
- Interest in enrollment surpassed expectations causing challenges for the website, call centers, etc.
What Are the Changes/Solutions to Expect in 2015:
- More training is needed to educate consumers on health insurance options and plan details. Covered California is responding by getting 6,400 Certified Enrollment Counselors and 12,000 Certified Insurance Agents to help in 2015
- Covered California is expanding the Service Center and reassessing staffing capacity to ensure shorter waiter times and appropriate staffing
- Website has been improved so that it can manage greater demand
- The chat functionality is improving so people can get help in a timely manner
- The Spanish-language app is getting improvements to help for that demographic
- The number of people managing call centers is increasing
Open Enrollment begins November 15th and lasts until February 15th. If you have any questions regarding your plans, please feel free to reach out. For consumers who want to continue on their current plan, all they have to do is pay their premium no later than December 15th. Coverage will automatically begin starting January 1st.
Understanding health insurance is not an easy task. Many Americans are confused by the terms, how their benefits work, which doctors and hospitals they can see, what type of coverage they have, what’s included in their coverage, etc. Last year, a report by the American Institute of Certified Public Accountants revealed that more than half of Americans surveyed could not explain common health insurance terms including premium, co-pay, deductible, etc.
Typically, Americans choose health plans based on preferred doctors they want to see or based on which plans provide the most coverage for the health benefits they are seeking. If an individual does not have a specific health need, they usually just pick the most affordable plan with what they think is “good coverage.” Today, network provider coverage is much more limited in order to keep costs down.
To help you better understand your benefits, we’re breaking down the five main insurance terms you need to know in today’s lesson of “Health Insurance 101″:
- Deductible: The amount of expenses you pay out of pocket before an insurance provider will pay for any of the expenses.
- Co-pay: A fixed cost for a service. This is typically the amount you pay when you visit your regular physician (not a specialist) for help.
- Premium: The amount you pay each month, quarter, or year to the insurer to obtain health insurance.
- Preventive Care: All health plans have certain services they cover known as “preventive care” which include some immunizations, cholesterol screening, blood pressure screening, many cancer screenings, and more. These services do not require you to pay any out of pocket costs or require that you meet your deductible before seeking attention.
- HMO/PPO: An HMO plan limits the number of in-network providers you can seek but usually for a more affordable cost. To seek an out of network provider, one must have a note from their physician first. A PPO plan has more flexible benefits and usually more providers. However, the cost of a PPO plan is generally higher than that of an HMO plan.