PNHP

Exemptions for self-insured plans place employees at risk

Exemptions for self-insured plans place employees at risk

Healthwatch

By Julian Pecquet and Sam Baker
The Hill, November 3, 2011

Consumer advocate and law Professor Tim Jost on Thursday urged the National Association of Insurance Commissioners to take a “leadership role” in pressing states to address potential gaps in the healthcare law’s applicability. The law’s consumer protections don’t apply to all types of plans, and Jost said those gaps pose problems for both consumers and insurers.

Self-insured plans are exempt from most of the law’s regulations, and policies offered by large employers also don’t have to meet certain requirements. Jost said small businesses are shifting toward self-insurance, so employees will be stuck without benefits Congress intended to provide. There’s also a risk to insurers, he said, because small businesses could drop their self-insured policies and move into the exchanges as soon as one of their workers gets sick.

http://thehill.com/blogs/healthwatch/other/191759-overnight-health-health-budgets-back-in-spotlight

And…

Self-Insurance and the Potential Effects of Health Reform on the Small-Group Market

By Kathryn Linehan
National Health Policy Forum, December 21, 2010

Self-insured employer plans are explicitly exempted from some requirements, though “self-insured” is a term not defined in PPACA (or elsewhere). The exemptions are described below.

• Self-insured plans are not required to provide coverage with minimum essential benefits.
• Individual and small-group plans are required to participate in a risk-adjustment system, but self-insured plans are exempt.
• Self-insured plans are not subject to provisions (specifically, medical loss ratio requirements and review of premium increases) that are intended to limit insurer earnings.
• Starting in 2014, health insurers are required to pay an annual fee to be calculated by the Secretary, but self-insured plans do not have to pay this fee.

In a September 2010 paper, Timothy Stoltzfus Jost described the “threat” of self-insuring to exchanges:

If small businesses with healthy employees can remain “self-insured” until the health of their pool deteriorates and then join the exchange, premiums within the exchange will increase and the exchange will become less viable. If a state opens its exchange to groups above 100, the threat is even greater, as legitimate self-insured plans will seek to insure their employees through the exchange when their experience deteriorates. Moreover, the self-insured plans that have proven most adept at providing high-quality benefits to their employees at low cost (which exist at many large firms) are likely to remain independent of the exchange, while less successful self-insured plans turn to the exchange for coverage.

https://www.nhpf.org/uploads/announcements/IB840_PPACASmallGroup_12-21-10.pdf

Comment: 

By Don McCanne, MD

Well over half of all employees who obtain their health insurance through their work are enrolled in self-insured plans – plans in which health care bills are paid by the employer rather than by a private insurer (except for stop-loss insurance). By self-insuring, employers escape state insurance regulation, and they are exempt from many of the provisions of the Affordable Care Act.

These exemptions may benefit the employers, but they expose the employees and their families to greater risks, potentially impairing health care access and increasing the cost sharing burden, including costs for care that the plan is not required to cover.

Some say that employers will not compromise their self-insured plans since they would be used to attract better qualified employees, but we are already seeing a shift of risk from employers to employees through greater cost sharing and other plan innovations. As mentioned in a message earlier this week, there has been an increase in the sale of deceptive “self-insured packages” which are merely stop-loss plans that look like health insurance, but that are exempt from the regulatory oversight of private health plans. As health care costs continue to rise, employers surely will continue to leverage lax self-insured rules to accrue to their own benefit, at a cost to their employees.

For those employers who end up facing higher costs in their self-insured plans resulting from deterioration in the average health status of their employee pools, they have the out of transferring their employees to the new state insurance exchanges. Of course, subjecting the exchanges to adverse selection (enrolling more costly patients) will drive up premiums for everyone else enrolled in the exchange plans.

As we have said many times before, the fundamental flaw in the reform process was that Congress elected to build on our highly dysfunctional, fragmented system of financing health care. It wasn’t working before, and the tweaks in the Affordable Care Act are not near enough to make it work now.

We need to start over with an improved Medicare that covers everyone.

Exemptions for self-insured plans place employees at risk

Healthwatch

By Julian Pecquet and Sam Baker
The Hill, November 3, 2011

Consumer advocate and law Professor Tim Jost on Thursday urged the National Association of Insurance Commissioners to take a “leadership role” in pressing states to address potential gaps in the healthcare law’s applicability. The law’s consumer protections don’t apply to all types of plans, and Jost said those gaps pose problems for both consumers and insurers.

Self-insured plans are exempt from most of the law’s regulations, and policies offered by large employers also don’t have to meet certain requirements. Jost said small businesses are shifting toward self-insurance, so employees will be stuck without benefits Congress intended to provide. There’s also a risk to insurers, he said, because small businesses could drop their self-insured policies and move into the exchanges as soon as one of their workers gets sick.

http://thehill.com/blogs/healthwatch/other/191759-overnight-health-health-budgets-back-in-spotlight

And…

Self-Insurance and the Potential Effects of Health Reform on the Small-Group Market

By Kathryn Linehan
National Health Policy Forum, December 21, 2010

Self-insured employer plans are explicitly exempted from some requirements, though “self-insured” is a term not defined in PPACA (or elsewhere). The exemptions are described below.

• Self-insured plans are not required to provide coverage with minimum essential benefits.
• Individual and small-group plans are required to participate in a risk-adjustment system, but self-insured plans are exempt.
•  Self-insured plans are not subject to provisions (specifically, medical loss ratio requirements and review of premium increases) that are intended to limit insurer earnings.
• Starting in 2014, health insurers are required to pay an annual fee to be calculated by the Secretary, but self-insured plans do not have to pay this fee.

In a September 2010 paper, Timothy Stoltzfus Jost described the “threat” of self-insuring to exchanges:

If small businesses with healthy employees can remain “self-insured” until the health of their pool deteriorates and then join the exchange, premiums within the exchange will increase and the exchange will become less viable. If a state opens its exchange to groups above 100, the threat is even greater, as legitimate self-insured plans will seek to insure their employees through the exchange when their experience deteriorates. Moreover, the self-insured plans that have proven most adept at providing high-quality benefits to their employees at low cost (which exist at many large firms) are likely to remain independent of the exchange, while less successful self-insured plans turn to the exchange for coverage.

https://www.nhpf.org/uploads/announcements/IB840_PPACASmallGroup_12-21-10.pdf

Well over half of all employees who obtain their health insurance through their work are enrolled in self-insured plans – plans in which health care bills are paid by the employer rather than by a private insurer (except for stop-loss insurance). By self-insuring, employers escape state insurance regulation, and they are exempt from many of the provisions of the Affordable Care Act.

These exemptions may benefit the employers, but they expose the employees and their families to greater risks, potentially impairing health care access and increasing the cost sharing burden, including costs for care that the plan is not required to cover.

Some say that employers will not compromise their self-insured plans since they would be used to attract better qualified employees, but we are already seeing a shift of risk from employers to employees through greater cost sharing and other plan innovations. As mentioned in a message earlier this week, there has been an increase in the sale of deceptive “self-insured packages” which are merely stop-loss plans that look like health insurance, but that are exempt from the regulatory oversight of private health plans. As health care costs continue to rise, employers surely will continue to leverage lax self-insured rules to accrue to their own benefit, at a cost to their employees.

For those employers who end up facing higher costs in their self-insured plans resulting from deterioration in the average health status of their employee pools, they have the out of transferring their employees to the new state insurance exchanges. Of course, subjecting the exchanges to adverse selection (enrolling more costly patients) will drive up premiums for everyone else enrolled in the exchange plans.

As we have said many times before, the fundamental flaw in the reform process was that Congress elected to build on our highly dysfunctional, fragmented system of financing health care. It wasn’t working before, and the tweaks in the Affordable Care Act are not near enough to make it work now.

We need to start over with an improved Medicare that covers everyone.

"Narrow networks" take away choice

Health Net set to offer discounted insurance

By Ken Alltucker
The Arizona Republic, November 3, 2011

Health Net of Arizona is teaming with Banner Health to offer a new health-maintenance-organization insurance plan that allows businesses and their workers access to discounted care if they agree to limit their network of health providers.

The Health Net ExcelCare HMO plan offers customers a network exclusively made up of Banner Health Network medical providers and Banner Health hospitals.

Although it’s Health Net’s initial foray into “narrow networks” in Arizona, the health insurer said that it has had success enticing both large and small employers in California to choose similar plans with slimmed-down networks.

Health Net has been among the most aggressive in promoting HMO plans with narrow networks, but other insurance companies such as Aetna and UnitedHealth Group have also offered such plans.

http://www.azcentral.com/business/articles/2011/11/01/20111101health-net-offer-discounted-insurance.html

Comment: 

By Don McCanne, MD

“Narrow networks” – sharply limiting the network of physicians and hospitals that the insurer will cover – is yet another example of private insurer innovation in their marketed products. Only in the private sector can taking away patients’ choices in their health care professionals and institutions be considered an improvement in product design. A public single payer system would be designed to enhance access, not restrict it.

“Narrow networks” take away choice

Health Net set to offer discounted insurance

By Ken Alltucker
The Arizona Republic, November 3, 2011

Health Net of Arizona is teaming with Banner Health to offer a new health-maintenance-organization insurance plan that allows businesses and their workers access to discounted care if they agree to limit their network of health providers.

The Health Net ExcelCare HMO plan offers customers a network exclusively made up of Banner Health Network medical providers and Banner Health hospitals.

Although it’s Health Net’s initial foray into “narrow networks” in Arizona, the health insurer said that it has had success enticing both large and small employers in California to choose similar plans with slimmed-down networks.

Health Net has been among the most aggressive in promoting HMO plans with narrow networks, but other insurance companies such as Aetna and UnitedHealth Group have also offered such plans.

http://www.azcentral.com/business/articles/2011/11/01/20111101health-net-offer-discounted-insurance.html

“Narrow networks” – sharply limiting the network of physicians and hospitals that the insurer will cover – is yet another example of private insurer innovation in their marketed products. Only in the private sector can taking away patients’ choices in their health care professionals and institutions be considered an improvement in product design. A public single payer system would be designed to enhance access, not restrict it.

IBEW International Convention Endorses Single Payer

By Kay Tillow
All Unions Committee For Single Payer Health Care–HR 676, 11/02/2011

The 38th convention of the International Brotherhood of Electrical Workers (IBEW) has endorsed single payer health as a solution to the nation’s health care crisis.

The 3,000 delegates who attended the IBEW convention called upon “…our international officers (to) do everything in their power and authority to work with other groups and elected officials to build support and action for universal single payer health insurance….”

The IBEW represents over 725,000 members in the United States and Canada and is one of the largest building trades unions affiliated with the AFL-CIO.  The September 2011 convention was held in Vancouver, Canada.

Ed Hill, IBEW International Union President who presided at the convention, said afterwards:

“The IBEW believes that single-payer health insurance in the United States is a worthy long-term goal.  While a national single-payer system currently has little chance of becoming a reality in the near future, the 38th IBEW International Convention wanted to go on record in support of the concept in order to help nudge the debate forward and keep the issue in front of elected officials.”

Resolution 60 on single payer, which was submitted by IBEW Local 23 in St. Paul, Minnesota,  and passed by the convention, cites the fact that the United States is spending 16 percent of our Gross Domestic Product on health care but:

“…(T)he battle with employers is on-going concerning the increases in health care costs;  battles which for the most part we are losing in the form of costs being passed on to our members;”

Resolution 60 states that, “…(R)etirees who have previously sacrificed to obtain health care benefits are now being stripped of those benefits;”

and says that “a universal single payer health care plan would reduce wasteful costs to all Americans while continuing to provide excellent health care coverage.”

Resolution 60 also calls for sending a copy of the resolution “… to all elected officials in the United States House and Senate and to all elected state legislators.”

http://unionsforsinglepayer.org

Dave Zweifel on single payer

Plain Talk: Health care solution is simple: single-payer

By Dave Zweifel
The Capital Times, November 2, 2011

The answer to the nation’s health care crisis is staring everyone in the face, yet as a country we continue to refuse to come to grips with it.

It is far from rocket science. What this country simply needs is a single-payer national health insurance program that covers all American citizens from the day they’re born to the day they die — just as other advanced countries have done for decades.

We could finance health care coverage for every American by taking the resources that employees and employers are pumping into the current broken system and still have money left over for a substantial tax cut, not to mention that it would put U.S. employers back on a level playing field with their competitors in the world market.

Yet we refuse to even put that debate on the front burner where it belongs, plodding along with a system that with each passing year continues to hurt more and more Americans in many different ways.

(Dave Zweifel is editor emeritus of The Capital Times.)

http://host.madison.com/ct/news/opinion/column/dave_zweifel/article_e26dbb61-a1d2-5a03-86b6-ff2e6524596f.html

Comment: 

By Don McCanne, MD

As the implementation of the Affordable Care Act unfolds, it becomes ever more evident that it won’t accomplish our goals and that we will need to enact a single payer national health program.

Dave Zweifel on single payer

Plain Talk: Health care solution is simple: single-payer

By Dave Zweifel
The Capital Times, November 2, 2011

The answer to the nation’s health care crisis is staring everyone in the face, yet as a country we continue to refuse to come to grips with it.

It is far from rocket science. What this country simply needs is a single-payer national health insurance program that covers all American citizens from the day they’re born to the day they die — just as other advanced countries have done for decades.

We could finance health care coverage for every American by taking the resources that employees and employers are pumping into the current broken system and still have money left over for a substantial tax cut, not to mention that it would put U.S. employers back on a level playing field with their competitors in the world market.

Yet we refuse to even put that debate on the front burner where it belongs, plodding along with a system that with each passing year continues to hurt more and more Americans in many different ways.

(Dave Zweifel is editor emeritus of The Capital Times.)

http://host.madison.com/ct/news/opinion/column/dave_zweifel/article_e26dbb61-a1d2-5a03-86b6-ff2e6524596f.html

As the implementation of the Affordable Care Act unfolds, it becomes ever more evident that it won’t accomplish our goals and that we will need to enact a single payer national health program.

Health care solution is simple: single-payer

By DAVE ZWEIFEL | Cap Times editor emeritus
The Capital Times (Madison, Wis.), Nov. 2, 2011

The answer to the nation’s health care crisis is staring everyone in the face, yet as a country we continue to refuse to come to grips with it.

Late last month, the state’s secretary of health services, Dennis Smith, held hearings to let people sound off about planned cuts to Wisconsin’s BadgerCare and Family Care programs. The state says it needs to reduce health care spending by some $554 million over the next two years, which is likely to leave tens of thousands of Wisconsin low-income citizens without health care coverage once again.

At around the same time Smith was holding his hearings, former Wisconsin governor and U.S. health secretary Tommy Thompson was telling a WisPolitics.com luncheon audience that American companies often find themselves at a competitive disadvantage because their health insurance costs are so much higher than those of companies in other countries.

But neither Smith nor Thompson, nor most of our state and national leaders, can bring themselves to a simple obvious solution to this continuing quandary that has faced Americans for the past several decades.

It is far from rocket science. What this country simply needs is a single-payer national health insurance program that covers all American citizens from the day they’re born to the day they die — just as other advanced countries have done for decades.

Bill Kraus, who was a confidant of the late Wisconsin Republican Gov. Lee Dreyfus, in a column on FightingBob.com last week traced the sad history of America’s health system. He went back to the days of Franklin D. Roosevelt, pointing out that Secretary of Labor Frances Perkins first proposed a national health care plan as part of the president’s vast New Deal program aimed at ending the Great Depression.

Before Congress was able to seriously debate the plan, World War II intervened, but it was revived again by President Harry Truman, only to run into stiff opposition from a Congress that was sympathetic to the American Medical Association and the U.S. Chamber of Commerce.

“The AMA exploited the power of the Chamber of Commerce to expand the fledgling health insurance industry by convincing its insurance company members to go into that business despite the dim prospects that (they) could make a profit,” Kraus wrote. “Over time the insurance industry solved the profit problem and private health insurance became a member of the status quo which is committed to protecting the status quo against change.”

The insurance lobby and others who benefit from the current system — decrying what they call “socialized medicine” — beat Richard Nixon when he tried to reform health care, destroyed Bill Clinton’s plan in the 1990s and now continue to fight tooth and nail against Barack Obama’s plan, which promises to at least provide health care coverage to most Americans but hasn’t been able to stem the rising costs.

“These oversights brought the shortsighted Chamber of Commerce into the battle against ‘socialized medicine’ again despite the woes many of their members were experiencing as they tried to price the products they were trying to sell abroad competitively,” Kraus noted.

So what we have today is a system that costs Americans nearly double the cost of single-payer national health insurance — in short, Medicare for all — in countries like England, France, Germany, Canada and even China.

We could finance health care coverage for every American by taking the resources that employees and employers are pumping into the current broken system and still have money left over for a substantial tax cut, not to mention that it would put U.S. employers back on a level playing field with their competitors in the world market.

Yet we refuse to even put that debate on the front burner where it belongs, plodding along with a system that with each passing year continues to hurt more and more Americans in many different ways.

Dave Zweifel, editor emeritus of The Capital Times, has been with the newspaper since June 1962, a day after he graduated with a journalism degree from the University of Wisconsin-Madison.

http://host.madison.com/ct/news/opinion/column/dave_zweifel/article_e26dbb61-a1d2-5a03-86b6-ff2e6524596f.html#ixzz1cYgAiYy1

Roll cuts won’t aid Medicare

By Jonathan D. Walker, M.D.
The Journal Gazette (Fort Wayne, Ind.), Oct. 30, 2011

When it comes to our health care system, sometimes the obvious thing is the wrong thing. For instance, it seems obvious that if Medicare is a big part of government spending, we simply need to reduce the number of people on Medicare to save money. Unfortunately, what seems obvious on the surface can backfire in practice.

There is a proposal to raise the Medicare eligibility from 65 to 67 years of age. Sen. Dan Coats discussed it just last week at the Chamber of Commerce. That sounds like it would save a lot of money, but it doesn’t. The Kaiser Family Foundation, a nonpartisan organization that evaluates health care issues, estimated that raising the age will save about $5.7 billion. Medicare pays out more than $500 billion a year, so it saves only about 1 percent.

Plus, someone else will have to cover the cost of caring for those people. It is estimated that those 65- and 66-year-olds will end up with an additional $3.7 billion in out-of-pocket costs when they lose Medicare. In addition, their employers will need to get them insurance, and people in that age range are expensive to insure – for-profit insurers are reluctant to cover them. Employers would have to pay an additional $4.5 billion for their insurance, and that means higher costs for the rest of us.

This next problem shows how complex our health care system is. Compared to other patients on Medicare, 65- and 66-year-old patients are relatively healthy. When they are taken out of Medicare, the result is that Medicare has to cover a risk pool that is sicker. Those younger and healthier 65- and 66-year-olds are no longer paying premiums into Medicare, so it costs us more to insure everyone over 67.

But those same 65- and 66-year-olds are sicker compared to younger people, so when they are added to the risk pool of people below 65, they drive up the cost of insuring everyone below that age. All this means that both private insurance and Medicare costs would be driven up, estimated to cost the rest of us about $2.5 billion. Finally, some of them will end up on Medicaid, costing states about $700 million.

In other words, in order to save the government $5.7 billion, we have to pay at least $11.4 billion, mostly because it is so much cheaper to cover people with Medicare than with private insurance. Furthermore, a lot of those 65- and 66-year-olds would no longer be able to afford insurance at all, so their health would suffer.

Raising the Medicare age is one of those things that seems like a great idea, but we would be paying at least $2 to save the government $1. There are far more effective ways for Medicare to save money without compromising care, but politicians and lobbyists don’t want to go there.

Dr. Jonathan D. Walker is a member of Hoosiers for a Commonsense Health Plan. He wrote this for The Journal Gazette.

http://www.journalgazette.net/article/20111030/EDIT05/310309977/1144/EDIT05

Health Care Blues – or, Why Exactly Don’t We Have Single-Payer National Health Insurance?

By J. Wesley Boyd, M.D., Ph.D.

Imagine the following exchange on the phone:

“Is this 911?”

“Yes.”

“I have an armed intruder in my house. Please send the police right away. I’m afraid he’s going to kill us all.”

“I’m sorry. From our database, I see the household you are calling from does not have anyone who is employed and therefore you are not entitled to police protection. You’ll have to fend off the intruder yourself. Bye.” (Click.)

Or imagine this scenario, which might hit a bit closer to home for those of us who have a family member who is employed:

“Is this 911?”

“Yes.”

“I have an armed intruder in my house. Please send the police right away. I’m afraid he’s going to kill us all.”

“I see from our database that your employment provides you with our Best Blue police coverage. Best Blue is a wonderful protection plan. We will be able to send an officer out just as soon as we receive your credit card number for your $10 co-pay. Also, once the officer arrives – assuming your credit card payment is approved by MasterCard – he will be able to use his revolver to stop the intruder but not his shotgun. You’ll have to pay the full cost of shotgun coverage yourself. With the Blue plan, the officer can pursue a suspect on foot free of charge to you, but if the officer needs to pursue in his cruiser, you would have to foot (I’m so sorry for the pun) that bill yourself. Also, we would not be able to provide you with the aerial support that we provide our Gold members but, don’t worry, almost nobody needs that kind of service. And finally, as it states on page 28 of your coverage manual, Blue coverage does assume you are at least a Brown Belt in Karate, so that statistically you would be able to fend off intruders half of the time by yourself . . .”

Sounds pretty bizarre, right? But we Americans accept the same reasoning all of the time with respect to our health care coverage. And it’s going to get even more interesting — and that’s a euphemism — once national health reform is fully implemented.

Why is that? Because the simplest and fairest and most ethical and least costly option for health reform, namely single-payer national health insurance, is not the law of the land.

For more, see Physicians for a National Health Program: pnhp.org.

J. Wesley “Wes” Boyd, M.D., Ph.D., is on faculty in psychiatry at Harvard Medical School, is a staff psychiatrist at Children’s Hospital Boston and at Cambridge Health Alliance (CHA), and is the founder and co-director of the Human Rights and Asylum Clinic at CHA.

http://www.jwesleyboyd.com/

Medicare Advantage patients for sale on Wall Street

How much are you worth to HMOs?

By Carol Gentry
Health News Florida, October 28, 2011

Medicare health plan members are worth more than any other category of enrollee in a merger or acquisition deal, Wall Street analysts say.

In fact, they’re worth four times as much as members of employer-based plans and five times as much as members of Medicaid plans, according to a report from Goldman Sachs researchers Matthew Borsch and Samuel Wass.

By their calculations, Medicare Advantage (HMO or similar managed-care plan) enrollees have a “value per member” of $6,000 in a merger or acquisition.

That compares with $1,500 for commercial plans – the ones that employers offer but in which the insurer takes the financial risks – and $1,200 per member for Medicaid plans.

The researchers prepared the analysis in the wake of Monday’s announcement that Cigna will buy HealthSpring, a holding company that includes Medicare plans in 11 states and Washington, D.C. that encompass 340,000 members.

Other analysts have also noted the mega-insurers’ growing desire to acquire Medicare customers. As Carl McDonald of CitiGroup wrote today in a note about Universal American: “It’s hard to overstate how much the attitude of the largest plans …has changed toward the Medicare business in just the last six months.”

United Health Group was first to discover the pot of gold Medicare plans offered and bought PacifiCare in 2005, as McDonald notes, but now WellPoint, Cigna and Aetna are waking up.

http://www.healthnewsflorida.org/top_story/read/how_much_are_you_worth_to_an_hmo

Comment: 

By Don McCanne, MD

Bet you didn’t realize that by signing up with a taxpayer-financed, private Medicare Advantage plan you can command a price of $6000 for the sale of yourself when your plan is acquired by another plan. Well, actually you don’t get the $6000. Neither does it revert to Medicare and the taxpayers. No, it goes to the top 1 percent, while leaving the 99 percent of us once again dumbfounded.

What price does a person in the traditional Medicare program command? What a ridiculous question. Medicare doesn’t buy and sell patients. That happens only when Medicare patients are privatized. Selling patients is a function limited to private plans, not public social insurance programs.

When are we finally going to say that we are not for sale to the 1 percent? Since it was Congress that arranged the sale, let’s Occupy Congress!