Health Care Reform Bulletin #14

Sent: Thursday, April 19, 2012 5:44 PM
Subject: Health Care Reform Bulletin #14

Thank you to all of those who responded to the previous bulletins. It is your input that drives the creation and conversation.


Here is one person's contribution comes from Wikipedia

"The term adverse selection was originally used in insurance. It describes a situation where an individual's demand for insurance (either the propensity to buy insurance, or the quantity purchased, or both) is positively correlated with the individual's risk of loss (e.g. higher risks buy more insurance), and the insurer is unable to allow for this correlation in the price of insurance.^[1] This may be because of private information known only to the individual (information asymmetry), or because of regulations or social norms which prevent the insurer from using certain categories of known information to set prices (e.g. the insurer may be prohibited from using information such as gender, ethnic origin, genetic test results, or preexisting medical conditions, the last of which amount to a 100% risk of the losses associated with the treatment of that condition). The latter scenario is sometimes referred to as 'regulatory adverse selection'.^[2]

The potentially 'adverse' nature of this phenomenon can be illustrated by the link between smoking status and mortality. Non-smokers, on average, are more likely to live longer, while smokers, on average, are more likely to die younger. If insurers do not vary prices for life insurance according to smoking status, life insurance will be a better buy for smokers than for non-smokers. So smokers may be more likely to buy insurance, or may tend to buy larger amounts, than non-smokers. The average mortality of the combined policyholder group will be higher than the average mortality of the general population. From the insurer's viewpoint, the higher mortality of the group which 'selects' to buy insurance is 'adverse'. The insurer raises the price of insurance accordingly. As a consequence, non-smokers may be less likely to buy insurance (or may buy smaller amounts) than if they could buy at a lower price to reflect their lower risk. The reduction in insurance purchase by non-smokers is also 'adverse' from the insurer's viewpoint, and perhaps also from a public policy viewpoint.^[3]

Furthermore, if there is a range of increasing risk categories in the population, the increase in the insurance price due to adverse selection may lead the lowest remaining risks to cancel or not renew their insurance. This leads to a further increase in price, and hence the lowest remaining risks cancel their insurance, leading to a further increase in price, and so on. Eventually this 'adverse selection spiral' might in theory lead to the collapse of the insurance market."

They call this the "Death Spiral" (we have seen this before with early association type plans).

Consumer Directed Health Insurance

Reuters just published an article based on the Towers Watson and National Business Group on Health that highlghts the trend of consumer directed health plans. Regardless of the ruling from the Supreme Court, HDHP and CDHPs are becoming the mainstay of medical plans for employers.

The challenge facing employers is the amount of education and support needed for CDHPs. In the past, employees only needed to know the cost of the plans and the per transaction charges (Co-Pays, Co-Insurance, etc.) CDHPs require a significantly higher level of education before the open enrollment time period, during OE and post enrollment.

Impact

If you clients have not yet implemented a CDHP benefit offering, there is a pretty good chance that they will in the near future. Being involved with the broker/consultant and client early on in the conversation will allow for an education plan and improved communications.


Have a question? Want to learn more about a specific term or commonly used phrase? Send an email or post it on ask.businessolver.com

Health Care Reform Bulletin # 15

Sent: Monday, April 23, 2012 5:08 PM
Subject: Health Care Reform Bulletin # 15

Thank you to those who replied to the last bulletin. If you haven't joined in the conversation, please don't wait any longer.

Possible Outcomes for Supreme Court Ruling

There have been a number of requests to better understand the possible outcomes of the Supreme Court ruling this summer. Here is an article from Milliman, an actuarial and health & wellness consultancy that provides enough detail on the different directions that the courts may take when they render a verdict.

Healthcare Costs Climb

Unfortunately, the cost of healthcare continues to climb. The Standard and Poors Healthcare Economic Composite Index reported last week that healthcare costs increased 5.75% over the past 12 months. You can learn more by visiting www.healthcaretownhall.com but it is interesting to note that the demand for better education, improved modeling for employees doing open enrollment and year round education will increase if the rate of the continues to climb every year.

Our clients want to know what we can offer to help them manage this ever growing expense.

More CO-OPS Announced

Seven states have been approved for hundreds of millions of dollars through a loan project designed to help create CO-OPs ( Consumer Operated and Oriented Plans) The list includes:

"Freelancers CO-OP of Oregon, New Mexico Health Connections, Montana Health Cooperative, Midwest Members Health, Common Ground Healthcare Cooperative, Freelancers CO-OP of New Jersey, and Freelancers Health Service Corporation.   Starting in 2014, these CO-OPs will operate in Oregon, New Mexico, Montana, Iowa, Nebraska, Wisconsin, New Jersey, and New York.  "  - Source

Have a question, comment or want to learn more about a specific topic or buzzword? Drop me a line by hitting reply and help everyone at Businessolver become better educated and more informed.

Health Care Reform Bulletin # 13

Sent: Wednesday, April 18, 2012 6:07 PM
Subject: Health Care Reform # 13

The content for today's bulletin doesn't come from outside experts but from Businessolver's own internal SME (Subject Matter Experts).

Health Care Reform Delegates
Each client service teams appointed a delegate responsible for health care reform. Led by Mandy Abbas, the delegates assembled the knowledge from the bulletins (and other sources) into a presentation deck to address the main points of PPACA and explains how Businessovler helps clients manage them. 

Super Shout Outs to Dave Sorensen, Angel Hower, Mike Parsch, Andrea Bohnenkamp, Wendi Reeves and Mandy Abbas

You can access their highly information yet approachable presentation by visiting: S:\Businessolver\Healthcare Reform

Bulk Buying vs Insurance Theory

Someone asked this question about exchanges:

"The article from Buffalo Bulletin states:

"If I joined a group that had buying power of hundreds or even thousands, then I’d have the same choices as IBM and McDonald’s"

Isn't that argument really bogus, because groups of any size will be largely self funded and exchanges will be offering fully insured products thus still making the types of products large companies have available still unattainable by the little guy?"

This is an excellent question as it allows us to revisit Bulletin # 4 (Exchanges). The promise and purpose of the exchange (or PEO) is that the concept of strength in numbers (the larger the group, the greater the discount.)

While this economic law works for most items (including  Jimmy Buffet tickets), insurance isn't one of those items. One of the reasons is the issue of risk management which is a large factor in insurance but not in other items. Suppliers can offer discounts for large groups due to the fact that the cost for each item is relatively consistent. The actual costs for the tickets for section 203 in a stadium are going to be as section 204.

With medical insurance, the cost of insuring one individual is radically different than another even if they appear to be exactly the same. It is for this reason that there is underwriting of policies. At a very basic level, underwriting compares the risk to the cost of providing a benefit. The higher the risk, the greater the expense and associated premium.  You can learn more by visiting this site.

Exchanges will need to strictly manage the size and type of employees enrolled in their plans. If the exchange has only unhealthy members, the rates will increase which will drive the good risk out (because they can find better rates on their own) which will increase the percentage of unhealthy members and the cycle is repeated.

Self funded or fully insured exchanges are impacted by the quality of the members as much if not more so than the quantity. If IBM was doing a poor job of managing their employees health, they may have fewer options than a well managed state run exchange.

Unfortunately, the government run exchanges will be focused on the uninsured or under insured market which means that they will be starting with the worst risk pool and then hope to lure others into plan based on better rates. Unless they are receiving state or federal money (your money), this new exchanges would defy the bedrock of insurance theory that have been around for thousands of years.

The little guy will not be able to buy the same plan as IBM or McDonald's in part to size but more because of the laws of risk management.

Have a question, thought or comment? Agree with the assessment? Reply to this email or post your thoughts on ask.businessovler.com

Health Care Reform Bulletin # 12

From: Jim Gallic [mailto:jgallic@businessolver.com]
Sent: Tuesday, April 17, 2012 10:44 PM
To: Team
Subject: Health Care Reform Bulletin # 12

So you probably saw the resent Bulletin #10 come across your desk at lunchtime and thought that you were not going to get a "NEW" bulletin for today. But today is your lucky day because you get TWO bulletins. 



It is exactly that effort and excitement that is noticed and ultimately drives clients to want to partner with Businessolver. We received such incredible feedback from the attendees today. They mentioned that they could feel the energy and excitement in every department, were amazed at the smiles on everyone one's faces and the passion for excellence throughout every interaction. Thank you so much for all that you do to make Businessolver truly special!

And now for the News

There are a number of news articles that are worth reading to stay up to date but have a greater impact as you may receive phone calls from clients and members impacted by recent events.

Two Insurers cited for MLRs and Increase Justifications

Reuters is reporting through a Benefit new article that two insurers (Assurant & United Security) are being cited over premium hikes. The two insurance companies could not justify the 24% rate hike and are not within the new Medical Loss Ratios (MLRs) requirement. Both companies will need to rebate the over charged premium to the employers. 

Impact - This is the first citation,based on the new justification and MLR requirements,which will be the test case for the legal challenges should PPACA be upheld.  Employers should be meeting with their brokers and carriers to determine their plan should they receive a rebate due to overcharging.

Final Regs on Summary of Benefit Coverage

There are additional clarifications around the Summary of Benefit Coverages requirement of PPACA. The final regulations released today address the differences between electronic and paper documents. They also address the requirements for different segments of the workforce.  Here is the overview and here is the deeper dive.

Impact - Brokers and employers need to start creating their SBC documents in order to prepare for the revised deadline of Sept 23, 2012.

We will return to reviewing the previous bulletins next time unless there is important news that impacts our clients and channel partners.

Have a question, comment or insight? Reply to this email or post it on ask.businessolver.com!

Health Care Reform Bulletin #11

From: Jim Gallic [mailto:jgallic@businessolver.com]
Sent: Monday, April 16, 2012 7:40 PM
To: Team
Subject: Health Care Reform Bulletin #11

Happy Monday to Everyone! Thank you to those who participate in the conversation. It is your thoughts, questions and ideas that drive the bulletins so keep them coming!!

We are going to review the major issues of Health Care Reform this week with a focus on the impact to our clients and channel partners.

Issue # 1 - Anti Injunction Issue

Overview - The court systems does not allow for challenges to the new law until it goes into effect. Due to the amount of work that needs to be completed and the number of legal challenges pending,  this issue will be need to be allowed to be argued and decided.

Outcome: The vast majority of legal experts believe that this issue wil be deemed to be required to be resolved. This issue must be resolved in order to address the other three issues so it is not seen to be of great concern.

Issue# 2 - Minimum Coverage/Individual Mandate

Overview - The new health care reform bill requires every American to have some form of insurance. Any employer that doesn't provide a minimum level of coverage will be subjected to a fine or penalty. Employers will have the option of allowing employees to utilize a private or public exchange. 

Impact: If the law stays the way it is written, employers will need to determine if there is a value in offering employee benefits. Many of the experts believe that small employers (under 500 employees) will move to the exchange while larger employers will not see any savings and will want to use their benefits package as a competitive advantage.

Possible Action: Employers should review the possibility of paying a penalty vs offering insurance to their employees. The  website created by the law firm of LarsonAllen provides detail on the various penalties and formulas required for calculating employer options.

What do you think? Are there other issues that should be considered when looking at these two items?

Respond now by replying to this email or visiting ask.businessolver.com

R

Health Care Bulletin Bulletin #9

Sent: Thursday, April 12, 2012 10:40 PM
To: Team
Subject: Health Care Bulletin #9

Thank you to those who responded to the previous bulletins. Join the conversation and be heard!

Health Care Costs

There is no disputing that the cost of health care has risen dramatically over the last 50 years. The infographic below illustrates how much costs have risen.

Health care costs increased 1.5X faster than employee wages and are now equal to the cost of new car!

Helping Americans to have better control of this large expense was one of the main reasons why the President and Congress decided to pass PPACA.

Need for Transparency

In the current health care system, there is very little transparency or sharing of information including costs with patients. There is even fewer options for understanding the costs and alternative solutions before a patient has a procedure.

Watch the video below to see the challenges of the current system when compared to shopping.

While very funny (and frighteningly accurate), the video demonstrates why so many people are frustrated with the current system.

Value Driven Health Care Reform

The new requirements of PPACA include a more open and transparent health care system through Four Cornerstones listed below. You can learn more about visiting the links for each cornerstone.

1.     Interoperable Health Information Technology (Health IT Standards) 

2.     Measure and Publish Quality Information (Quality Standards):

3.     Measure and Publish Price Information (Price Standards): 

4.     Promote Quality and Efficiency of Care (Incentives):

The third item, Price Standards, focuses on providing more information on the costs of care before the patient has a procedure. It is also the driver for the new Summary of Benefit Coverage rule that went into effect this year.

The goal of controlling health care costs becomes more attainable when there is the ability to provide the average cost of a procedure, comparison shopping based on outcome and allowing for provider feedback from other patients. In addition to the provider information being published by the government, private companies are now offering comparison tools for employees including the following

• FairHealth - www.fairhealth.org
• HealthCareBlueBook - www.healthcarebluebook.com
• LeapFrog - www.leapfroggroup.org

Your Thoughts

Do you think that costs are out of control?
What are you hearing from our clients and partners?
What are they doing to help control costs?
What is Businessolver doing to help our clients?
What else can we do to help control costs?
What can Businessolver do to promote better cost controls with our clients' employees?

Share your thoughts by emailing me at jgallic@businessolver.com

Health Care Reform Bulletin #7

Sent: Tuesday, April 10, 2012 12:02 PM
To: Team
Subject: Health Care Reform Bulletin #7

Thank you to all of those who sent in response, questions and thoughts. After a short break, the bulletins are back and ready to help everyone learn more about Health Care Reform.

DIFFERING VIEWS

There are a couple of recent news articles, (Washington Post), (CNN) discussing President Obama’s view on the Supreme Court recent hearings on health care reform and the cost of the repealing the bill. While this bulletin isn’t a forum for political discussion, it is always helpful to learn the views of both sides of the debate.

There are other great sources of information beyond the newspapers, blogs and TV.
Barb Storm and Brian Billings both sent in an email update from the insurance company UNUM. They provides excellent coverage and insight from the perspective of a carrier on their website http://unum.com/healthcarereform/ 

In particular, review their update regarding the new ruling on Auto Enrolling employees in a benefit plan if the employer has more than 200 employees. This update illustrates how many of the proposed items in PPACA have not be implemented and are awaiting the ruling coming from the Supreme Court in June.

INPUT NEEDED
Now it’s your turn to be involved! What else do you want to know about health care reform? What questions are your clients asking you that you want to answer?

Respond to this email or post your thoughts on ask.businessolver.com so that these bulletins continue to be of the highest value to you!