Anthem Blue Cross: California individual managed care plan market shrinking, necessitating higher premiums
DMHC sent a letter to Anthem Blue Cross asking for an explanation for the rate increase and why it is higher in comparison to indemnity-based insurance products with similar deductibles. DMHC regulates managed care plans in the state.
In an April 25 letter in response to DMHC, Anthem Blue Cross states its individual managed care plan pool is shrinking. The letter strongly implies adverse selection requires it to boost rates to keep up with losses incurred by those members remaining in the pool who tend to use high levels of medical services. Anthem Blue Cross projects it will incur a medical loss ratio of 88.5 percent for individual managed care products for 2011 after a 16 percent rate hike and increased deductibles effective May 1.
More evidence the individual health insurance market segment in the nation’s biggest individual market — California— appeared in today’s Los Angeles Times. While an Anthem Blue Cross spokeswoman wouldn’t confirm the account, the newspaper reports a couple was told by the insurer it was shuttering the couple’s $2,500 deductible plan because the risk pool is shrinking and no longer viable.
“A shrinking risk pool will eventually mean that the only people left in the plan will be ones with preexisting conditions,” John Barrett, a Pasadena health insurance broker told The Times. “Over time, rates would go up more than other plans.” In a nutshell, that describes adverse selection in which insureds likely to place the greatest demands on the risk pool comprise an increasingly larger portion of the pool, forcing the insurer to raise premiums in order to ensure the pool remains solvent.
The report comes a little more than two months after Paul Markovich, COO of Blue Shield of California, told a Sacramento, Calif. health care forum that adverse selection is placing “tremendous stress” on the individual health insurance market.
The Kaiser Family Foundation has published an excellent primer on the actuarial foundation upon which “qualified health plans” must be based under Section 1301 et seq of the Patient Protection and Affordable Care Act (PPACA). The plans will be sold through state health benefit exchanges starting Jan. 1, 2014. The exchanges will serve as marketplaces aggregating purchasing power among the small group and individual markets — the most distressed health insurance market segments where coverage is far less accessible and affordable than large group and government insurance plans.
These plans that cover from 60 percent (bronze) to 90 percent (gold) of an individual’s projected medical costs show the era of health coverage with minimal cost sharing and out of pocket costs has come to an end for individuals and those employed by small businesses. That new reality that emerged in recent years is now institutionalized as public policy in the PPACA. That policy is reinforced by tax policy allowing individuals to establish tax deductible Health Savings Accounts, which have been in existence only since 2004.
The bronze plan’s 60 percent coverage level could be equated to “major medical” plans of decades past that covered as the name implies only major expenses such as hospitalizations but not routine doctor visits. As medical treatment and pharmaceutical costs continue to push up health coverage rates leading up to 2014, it remains to be seen if the higher level silver, gold and platinum (90 percent of projected actuarial costs) will be affordable for individuals and small businesses even with their new purchasing power via the benefit exchanges. Many could find their budgets can handle only the low end bronze plan, shifting the bulk of these market segments to a major medical level of coverage.
For sedentary office-based jobs, workplace wellness is something of a non sequitur. Especially considering American adults spend nearly half their waking hours at work (not counting commute time) as was pointed out earlier this week at a Sacramento, Calif. symposium on wellness incentives hosted by the California Senate and Assembly Health committees and the California Endowment. Employers remain split on the benefit of workplace wellness programs. In a recent survey, equal numbers indicated that the programs have either improved or had no appreciable impact on the health of their workforces.
Symposium participants discussed making it easier for cubicle-bound workers to move around more at work by providing onsite exercise classes and breaks. Also, installing standing “tread desks” that allow workers to walk a treadmill while working. I imagine typing on a keyboard is rather challenging in this moving position that aside from the cost of these machines calls into question its widespread use and adoption. The tread desk has great ironic symbolism attached to it. It represents — to the point of absurdity — how some employers are attempting to accommodate a deeply embedded industrial age notion that knowledge work can only be accomplished in a office or cubicle located in an urban center or office park while at the same time encouraging office workers to get off their duffs and move more in order to reduce health care utilization and absenteeism.
A more elegant and sensible solution is to treat knowledge workers as knowledge workers instead of assembly line workers who can only do productive work at a “bench” or desk during set timeframes. Knowledge workers conceptualize, analyze, synthesize, problem solve, write and report. That work is essentially performed in the brain. The brain goes wherever the worker goes and is location independent. Moreover, as many office workers can attest, it doesn’t easily switch on and off in “work time” and “non work time” mode. With information accessible most everywhere 7/24 via the Internet, it’s potentially always working. The best and most creative ideas and solutions to tough problems are often conceived outside the formal workplace. They bubble up during sleep and exercise, particularly vigorous exercise when the brain is flooded with endorphins and oxygen.
Some of the best thinking and problem solving can be done outside the workplace doing the very things health experts say most Americans need more of to maintain better health: sleep and exercise. That’s a prescription for potentially enhanced employee wellness and improved productivity. Throw in using office space for meetings instead of housing workers in cubicle farms five days a week and there’s the added bonus of saving on office overhead as well as employee health costs.
The ultimate workplace wellness program for knowledge workers is to allow them to work anywhere and manage their schedules. They’ll have a lot more time for exercise when they’re not commuting and sitting in traffic. Measure their work product by the quality of the product — and not by how many hours they put in at the office.