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October 13, 2009
America’s Health Insurance Plans have struck a nerve. The carrier’s industry association issued a report warning industry’s Warning that Congress is heading for a set reforms that could dramatically increase the cost of health insurance coverage for American consumers. The study, prepared by PriceWaterhouseCoopers warns that various taxes and fees, combined with a weakening of provisions requiring all Americans to purchase coverage, will raise premiums paid by a family in 2013 by $1,700 more than they would pay without the reform. Premiums for a single person would go up by $600 more than would otherwise be the case.
The AHIP report examined the impact of four provisions of the Senate Finance Committee bill. These are:
- Requirements on carriers to sell coverage coupled with “weak coverage requirements” on consumers along with rating reforms
- Taxes on so-called “Cadillac plans”
- Cost-shifting resulting from $400 billion in cuts to Medicare
- Taxes on insurance companies, medical device manufacturers and other health care sectors
Significantly, the study did not consider other proposals in the reform legislation that might reduce the cost of medical coverage. Even so, what the report has to say about current medical cost trends and these four elements of the reform package is important to understand.
According to PriceWaterhouseCooper, health care costs in America are expected to “grow over the next decade by approximately 6 percent per year under current law, which is more than double the expected growth in the Consumer Price Index of approximately 2.5 percent per year.” This means the cost of private health insurance coverage is expected to increase by 26 percent between 2009 and 2013 and 50 percent between 2009 and 2016. If the four provisions it reviewed are implemented, however, health insurance premiums would increase by 40 percent between 2009 and 2013 and by 73 percent between now and 2016. Meaning the average cost for single coverage, $4,800 today is expected to increase to $5,800 in 2013 under current law, but to $6,400 in 2013 given these reforms. And instead of costing $6,900 in 2016, the average single policy would cost $7,900. These are average increases. The impact by market segment is even greater:
- 49% increase for the non-group (individual) market\
- 28% increase for small employers (those firms with fewer than 50 employees)
- 11% increase for large employers with insured coverage
- 9% increase for self-insured employers.
Again, the impact of other provisions of the Senate Finance Committee’s proposal might reduce this trend, but there’s two conclusions that can be drawn from the report:
First, the status quo is unsustainable. Any system in which the cost of a service increases year-over-year-over-year by more than twice general inflation will eventually become unaffordable. Change is needed.
Second, key elements of the reform package expected to be passed by the Senate Finance Committee today will increase costs significantly beyond the already unacceptable trends.
Not surprisingly, proponents of reform have vociferously attacked the AHIP study. The White House described the report as “Distorted and flawed.” An AARP spokesman called it “Fundamentally dishonest.” Senator Jay Rockefeller described AHIP’s publication of the study as “The misleading and harmful claims made by the profit-driven insurance companies are politicking for corporate gain at its worst.” (That AHIP also represents numerous non-profit health plans has apparently escaped the Senator’s notice).
The harsh tone of the attacks on AHIP and its report reveals correlates with the significance of the study’s conclusions. Supporters of reform had long claimed it would reduce the cost of health care for most Americans or, at the very least “bend the cost curve.” For voters happy with their current coverage this is a critical message. They generally support health care reform, but that support could waiver if the cost to them personally is too high. And AHIP is now demonstrating what the cost to these individuals is in dollars and sense. That could undermine support for reform just as the legislation heads for a crucial stage: consideration and a vote in the next few weeks by the Senate and the House of Representatives.
In the next few days, critics will undermine points in the study. The tax on high-end plans may drive consumers to less rich benefit packages, reducing their premiums. The Medicare cuts could eliminate waste and, consequently, avoid shifting additional costs to individuals with private insurance. The taxes on medical suppliers will be passed through to consumers, but spread over a broader population as more Americans obtain health insurance coverage.
But if nothing else the study will bring highlight an important reality: a requirement on carriers to sell coverage that is not tied to a strong, enforced requirement for consumers to buy coverage will dramatically increase insurance premiums. The Congressional Budget Office concludes the Senate Finance Bill will increase the number of Americans with insurance from 83 percent today to approximately 94 percent. Karen Ignagni, AHIP’s president, says “You really have to have a coverage level in the high 90s to make this work.”
You don’t need high priced analysts to recognize that mandates to buy and to sell coverage need to be balanced. New York and New Jersey currently require health plans to guarantee issue coverage, but has no requirement that their citizens purchase insurance. Not surprisingly, premiums for individual health insurance coverage is two-to-three times what it is in California. The difference is a health reform surcharge paid for by the residents of those states.
But the example of New York and New Jersey isn’t even necessary: common sense shows the impracticality of an unbalanced approach. Imagine if consumers could put off buying auto insurance until the tow truck arrives at the scene of their accident. Auto insurance costs would skyrocket. What would fire insurance cost if it could be purchased after the flames are extinguished?
American consumers will do the math. If the penalty for purchasing coverage is the equivalent of one month’s premium (which is roughly what the Senate Finance Committee is proposing) every month they go without coverage (minus the first month) is money saved. When they face medical charges greater than the penalty, they’ll buy it. Once they’re treated, they’ll drop the coverage. The result will be a surcharge on all those with health insurance coverage.
Passage of the Senate Finance Committee legislation is not the end of the health care reform debate. It’s merely a milestone – and important one, but in the end, just a milestone. As the reforms move forward, lawmakers will need to face up to the need for balanced reforms. That will require making tough decisions, such as telling their constituents they must have coverage. But health care reform, if it’s to be done right, takes both common sense and political courage.
October 10th, 2009
In September, Humana Inc. released 7 new videos in their well known series “Stay Smart, Stay Healthy”, according to the Humana website.
This series is designed to help those looking for Humana quotes and health care, better understand how health insurance works. It also covers factors that go into the costs of health insurance. The options for health insurance in America have become much more diverse over the years and so has Humana’s products. Humana’s short and informative videos can be viewed by consumers to answer common questions.
Continuous interest in these videos encouraged Humana to make more health care videos. They now offer Spanish translations and they can easily be shared through email, bookmarking sites and social sites. Videos are available at staysmartstayhealthy.com and You Tube where they have been ranked highly among educational content because of the fun and easy-to-understand format. Humana continues to be dedicated to educating the public on their health care options.
October 15th, 2009
October is Breast Cancer Awareness month and people in Houston, Texas are gathering together to support the cause. According to the article “Community Breast Health Event at Cy-Fair Hospital” found on the cypresstimes.com, the Women’s Imaging Center at Cy-Fair Hospital is hosting a Breast Health Event on October 29th.
The Cypress Fairbanks Women’s Imaging Center has an experienced and caring staff who understand the importance of supporting breast health. This event will not only raise awareness, but they will be offering education on self exams, general breast health information as well as offering giveaways and bone density testing.
The article points out that breast cancer affects 1 in every 8 women in the US. Early detection is very important in treating breast cancer. The American Cancer Society recommends that women over 40 years of age should get a mammogram once a year and many Houston health insurance companies should cover this screening.
This Week in Health Care Reform:
Legislators from the Senate Finance Committee continued mark-up of the legislation proposed by Sen. Max Baucus (D-MT).
Senate Negotiations
Senate Finance Committee Negotiates Amendments: After days of negotiations, Sen. Baucus indicated on Wednesday that the Senate Finance Committee now had the necessary votes to pass legislation and that he anticipated finalizing the bill by the end of the week. Lawmakers from the Committee convened this week to continue voting on the hundreds of proposed amendments to the health care reform legislation offered by the senator earlier this month. Committee voting this week included:
Rejection of two amendments, one from Sen. Jay Rockefeller (D-WV) and one from Sen. Charles Schumer (D-NY), that would have incorporated a public option in the bill.
Modification of a financing provision that would make it harder to deduct medical expenses on personal tax returns. Lawmakers voted to exempt taxpayers older than 65.
Rejection of Republican amendments that would have strengthened limits on both abortion coverage and medical coverage for illegal immigrants.
Adoption of an amendment by Sen. Chuck Grassley (R-IA) and Sen. Jim Bunning (R-KY) requiring federal employees, lawmakers and their aides to buy health insurance from the health insurance exchanges to be created by the legislation in 2013.
Rejection of an amendment proposed by Republicans to allow individuals to opt out of the bill’s requirement for everyone to have insurance coverage, upholding the bill’s inclusion of an individual mandate.
Rejection of an amendment proposed by Sen. Bill Nelson (D-FL) to require drugmakers to provide $106 billion in rebates over 10 years. The Committee upheld an agreement made last June with drug manufacturers to provide $80 billion in rebates.
Rejection of two Republican amendments that would have blocked cuts in the Medicare Advantage program.
Public Plan
Public Support for Reform Increases: After a summer embattled by contentious town hall meetings and characterized by slipping public support, the latest Kaiser Health Tracking Poll indicates that public support for health care reform is now on the rise. About 57% of Americans now say that tackling health care reform is more important than ever – up from 53% in August. However, 47% of Americans favor taking additional time to craft a bipartisan approach to health care reform, compared to 42% who say Democrats should move faster on their own. In addition, substantial majorities support the individual mandate, the employer mandate and an expansion of programs such as Medicaid and the State Children’s Health Insurance Program.
Small Business Owners Support Health Care Reform: A recent study by Small Business Majority, a California-based advocacy group, found that small businesses in 17 states are struggling to keep up with health care costs and favor health care reform. Of small business owners in Pennsylvania who do not offer health insurance to employees, 87% say they cannot afford to do so; and, of those who do provide health insurance, 71% are struggling to afford it. Across the 17 states surveyed, 67% of small business owners agreed that health care reform is “urgently needed to fix the U.S. economy” – revealing a growing divide between small business and its traditional Washington ally, the Republican Party.
Young Adults Support Health Care Reform: While many young adults acknowledge that they do not fully understand the health care reform proposals and the potential costs that younger generations may bear, the group remains one of the strongest supporters of reform legislation.
House Activities
House Leaders Merge Bills: House Democratic leaders are working to merge the bills from the three House committees: the Energy and Commerce Committee, the Education and Labor Committee and the Ways and Means Committee. While House leaders now hope to have a final bill sometime in October, they are still debating major elements of the legislation, including whether public-option provider reimbursement rates should be based on Medicare rates and how to reduce the overall cost of the reform legislation. Managing the cost of the legislation is a key requirement for President Barack Obama, who has indicated that a viable bill must be deficit-neutral and cost $900 billion or less over 10 years. The Congressional Budget Office (CBO) has estimated that the cost of the current House package stands at more than $1 trillion.
Additional Activities
President Obama Allocates Money for New Medical Research: On Wednesday, President Obama announced the allocation of $5 billion in grants for medical and scientific research, medical supplies and upgrading laboratory capacity. The funds will be drawn from the $787 billion American Recovery and Reinvestment Act of 2009.
Looking Ahead
Sen. Baucus seeks to finalize the Senate Finance Committee bill today. The Committee vote will be delayed until early next week to give the CBO time to assess the cost of the revised legislation.
By Betty Berry
Q: I can’t understand why they make senior healthcare coverage so difficult to understand. Plans refer to deductibles, co-insurance, co-payments and share-of-cost. Are these terms interchangeable?
A: The insurance industry like all other businesses has a unique vocabulary to describe its services. The government plans that cover senior healthcare are no different.
While the terms you mention do sound alike, there are subtle differences, and the terms are used in conjunction with different types of healthcare coverage.
A deductible is the initial specific amount of money the insured is required to pay toward healthcare expenses before the insurance company will start to cover the cost.
You will find this term is used by Medicare in Part A (hospital coverage), which has a deductible of $1,068, in 2009, each time you enter the hospital.
Medicare Part B (medical coverage) has an annual deductible of $135, in 2009, and Medicare Part D Prescription Plans can have an annual deductible of up to $295 in 2009.
Co-insurance is the percentage of the cost of care the insured is required to pay after the healthcare plan has paid. With Medicare Part B, the co-insurance is usually 20 percent of the Medicare-approved amount.
Many employers’ plans also use the 80/20 co-insurance ratio with the insurance paying 80 percent of the cost and the patient being responsible for the remaining 20 percent.
A co-payment is a fixed amount the insured is required to pay for each medical service received such as doctor’s visit or prescription purchase.
Co-payments usually range from $10 to $25 per service.
The term share-of-cost is associated with the MediCal program.
It is actually another way of describing a deductible.
The amount of share-of-cost, however, is not a fixed amount but varies depending on the income of the insured.
Q: I realize that everyone should have some type of written instructions about healthcare in case they can’t speak for themselves.
Would a living will be an appropriate document for this purpose?
A: An excellent question. Many people are confused about which document — a living will or an advance directive for healthcare — best serves their needs when it comes to addressing healthcare choices if they are not able to speak for themselves.
While a living will certainly is a viable document that addresses end-of-life healthcare decisions, it is not necessarily the best choice for most people.
One drawback with a living will is that the instructions given almost always need some interpretation.
A better choice would be an advance directive for healthcare, which allows the person executing the document to name an agent to speak for them if they can’t do so for themselves.
The named agent, who should know the patient’s wants and values, can interpret the instructions based on facts and variables known when an actual healthcare decision needs to be made.
While most people don’t think about executing this type of document until later in life, it is not something that should be associated with old age.
This document is an important legal planning tool for adults of all ages.
— Betty Berry is a senior advocate for Senior Concerns. The advocates are at the Goebel Senior Adult Center, 1385 E. Janss Road, Thousand Oaks, CA 91362; phone 495-6250 or e-mail betty@seniorconcerns.org.
© 2009 Ventura County Star
September 27, 2009
By JOE FLOWER
Being a futurist is not really about making predictions, but people ask for them anyway.
So here is one: The way things are trending right now, Obama and the Democrats will succeed in getting a reform bill – and it will cost them the Congress in 2010 and possibly the presidency in 2012. Why? Because it will be ineffective at bringing most voters any tangible benefits soon, and ineffective especially at bringing down the cost of health care.
Obama (along with everyone else) repeatedly talks about “affordable” health care. What the bill is most likely to bring is health insurance reform. This is very important, and will bring tangible benefits especially for those who must go without insurance now because they have “pre-existing conditions.” But there is nothing in the bills that are most likely to pass that will really bring down the costs of health care any time soon. Yet the bills demand that the health plans cover many more people, and the providers treat them, while putting in place no mechanisms that would forcefully and quickly control costs – so costs are likely to go up even faster than before.
Special interest groups are going to great lengths for the chance to participate in health reform. According to the Associated Press, the pharmaceutical industry and hospitals have both agreed to give up billions of dollars now in order to protect their interests in the future. Providers are especially interested in ensuring that if healthcare reform includes a public plan option, payment rates are comparable to those provided by private insurance plans rather than Medicare rates.However, these special interests cannot come close to footing the bill for health reform, which has been estimated at $1 trillion over the next 10 years. This means that their offer is a calculated risk – they hope that the President remembers their support when it comes time to sign a reform bill into law.
Posted on August 21, 2009
Health System Reforms Could Save Families Thousands in Insurance Premiums, Report Finds
National healthcare reforms that slow healthcare cost increases by between 1 percent and 1.5 percent per annum would yield substantial savings in premiums for families and businesses across the country, a new report from the Commonwealth Fund finds.
The report, Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes (20 pages, PDF), found that family premiums for employer-sponsored health insurance increased by 119 percent nationally between 1999 and 2008 and could increase another 94 percent, to an average $23,842 per family, by 2020 if cost growth continues on its current course. However, if the annual rate of growth were slowed by 1 percent, premiums for family coverage would be reduced by more than $2,500 by 2020, while a reduction in the growth rate of 1.5 percent would yield more than $3,700 in premium savings.
According to the report’s state-by-state analysis, between 2003 and 2008 increases in employer-based premiums for family coverage averaged 33 percent, ranging from a high of 45 percent in Indiana and North Carolina to a low of 25 percent in Michigan, Texas, and Ohio. Most states saw increases of 30 percent to 40 percent. At the same time, insurance premiums have been rising much faster than household income. As a result, by 2008 total premiums — including employee and employer shares — equaled or exceeded 18 percent of the average household income for the working-age population in eighteen states, compared to just three states in 2003.
“With health spending projected to double if we stay on our current path, middle- and lower-income families are at high risk of losing their coverage or facing long-term stagnant incomes,” said Commonwealth Fund senior vice president Cathy Schoen, who was lead author of the report. “Employers and employees share premium costs but we know that take-home pay and retirement savings are being sacrificed to maintain health benefits. Reforms that slow the growth of healthcare costs could go a long way toward health and financial stability for working families.”
“New Report: Employer-Sponsored Health Insurance Premiums Increase 119 Percent from 1999-2008; Projected to Double Again by 2020.” Commonwealth Fund Press Release 8/20/09.
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Anacapa Insurance Services (AIS) is not your average California Insurance full-service insurance brokerage. We have been serving the needs of individuals and small businesses throughout Ventura and Santa Barbara counties with our unique service. We specialize in health and life insurance coverage and offer exceptional benefits at affordable rates with the very best insurance carriers in the country. The real difference is in the service we provide. By listening to you, the customer, and paying attention to your needs and your particular situation, we will find the best plan for you. And as your life and situation changes, we will make sure that your insurance plan changes with you. We pledge to keep you updated so that you have the maximum comparable coverage anyone can offer at the lowest possible price. We will keep you up to date on changes in the industry and inform you of new plans and options that might be of interest and benefit for you. With health insurance in particular, we will also check with you from time to time to make sure that you understand your current insurance policy and are getting the most out of it. Many health insurance companies provide a range of preventative services to help you, the insured, stay healthy and enjoy your life to the fullest. These services include online health monitoring programs and assigned nurse coaches for specific chronic conditions including heart disease, high blood pressure, diabetes and asthma. We are the California Insurance Agent that you can trust: 800-578-8581 – Anacapa Insurance Services, Inc.
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