California’s biggest healthcare buyer isn’t happy about its $7-billion annual medical bill climbing almost 10% next year, and the state’s big insurers may be feeling the heat.
The California Public Employees’ Retirement System is preparing to rebid its health insurance business this fall for 1.3 million members, and two of its current plans, Anthem Blue Cross and Blue Shield of California, are likely to face intense competition as the giant pension fund considers its options.
Perhaps the boldest move under consideration for 2014 would be to bypass insurers altogether in some areas of the state and begin contracting for medical services directly with large physician groups.
The Los Angeles Times notes the move could put large medical groups in direct competition with their contracted insurers. A key motivation for the CalPERS strategy is to better manage its risk pool and control costs associated with chronic conditions such as diabetes and congestive heart failure.
Aetna CEO Mark Bertolini reveals to Sarah Kliff of The Washington Post’s Wonkblog that a strategic review Aetna undertook in 2005 showed the individual health insurance market segment failing and the small group segment in decline. Market failure can be a strong motivator to act — and will remain a mortal threat notwithstanding how the U.S. Supreme Court opines this week on the constitutionality of the Patient Protection and Affordable Care Act.
Some excerpts from Kliff’s post:
“We saw an individual market in inexorable decline and, on the small group side, fewer were offering benefits and costs were rising. We knew we had to change something,” Bertolini said.
Aetna has a strong business reason to create a cheaper insurance product: Namely, getting more people to buy it. That motivation stays in place regardless of what happens with the Supreme Court this month.
“We’re really working right now on the underlying cost of health care,” he says. “These investments we’re making are about finding a different way to make models work. We’re committed to fixing that, and feel like we need to fix that.”
A recurrent theme of this blog is how American cultural values relative to work and the workplace affect and limit health promoting behaviors — particularly vigorous exercise and adequate sleep time. For most Americans, a tradeoff has been made between these activities. Work and the often stressful time suck of commuting to and from the workplace win out. Even for those who by virtue of their positions such as physicians and public health officials who are cognizant of the need to set a good example of healthy behaviors.
Case in point: Ron Chapman, a physician and director of the California Department of Public Health. This profile of Chapman appearing earlier this week in The Bay Citizen tells of Chapman’s struggle to find enough time for a consistent, meaningful exercise routine. The article contains a link to a survey Chapman’s department conducted in 2009 and points to the findings at Table 78 indicating one third of survey respondents indicated they don’t have time to be more physically active.
If we are going to bend the relentless rise of the heath care cost curve that’s driving America’s health insurance rates, I believe we as a society need to rethink how we work in order to free up more time during the day for exercise. Do we really need to be in a sedentary position in a designated office space 8 hours a day (plus sitting another hour or two commuting) to be productive? And most importantly, is the tradeoff in terms of potential adverse health effects really worth it?
I believe the answer is no. To improve our overall health status, we should change how we work, shifting and staggering work times and breaking up the pace of work. There is no natural law that holds information work can only be accomplished between the hours of 8 and 5 in an office building. Information and knowledge work can be performed at any time and place we can relax and concentrate, particularly with Internet access becoming nearly ubiquitous. In fact, for this type of work, much productive thinking occurs during exercise when the brain is stimulated by activity, hormones and oxygen. Getting adequate sleep also keeps the mind sharp, creative and productive.
Dr. Chapman, how you resolve your struggle has implications for all of us. Use your position of influence as the top health official of the nation’s most populous state to raise some of the questions here and spark reassessment and positive change in how we define work that can improve and preserve the health of all Americans.
While about another development, buried in this San Francisco Chronicle story published today is a revealing disclosure by Janice Rocco, deputy commissioner of the California Department of Insurance. Rocco told the Chronicle Blue Shield of California will have only three individual insurance plans open for enrollment after it closes nearly two dozen existing plans next month. Rocco is quoted as saying the insurer is seeking approval from the Golden State’s managed care plan regulator, the Department of Managed Health Care, to nearly double the number of managed care plans to 20.
This development is counter to the market trend of the previous decade in which individual market consumers shifted out of more comprehensive and costlier managed care plans to cheaper, high deductible insurance plans overseen by the Department of Insurance. Blue Shield could be preparing to offer richer, lower deductible managed care plans that can meet the essential health benefit requirements of the Patient Protection and Affordable Care Act in order to potentially qualify them for the California Health Benefit Exchange in 2014. Blue Shield’s shuttering of the nearly two dozen individual insurance plans is likely due to their falling into the death spiral of adverse selection.
The Sacramento Bee reports today the California Public Employees’ Retirement System will boost health insurance premiums next year for its 1.3 million public workers and retirees that pencils out at 9.5 percent and represents “one of the biggest increases in years for CalPERS,” which is one of the largest purchasers of the health care in the nation. As such, CalPERS health insurance costs serve as a closely watched barometer of where health coverage costs are headed.
Can Active States Endure A Ground Shift? Implications Of The Supreme Court’s Health Reform Decision – Health Affairs Blog
If the Supreme Court invalidates components of the Affordable Care Act, active states will try to adapt to the shifting ground by designing new policies to mitigate adverse selection and cover the uninsured. However, their success in doing so will depend in part on how much the ground shifts.
This is a thorough discussion of how state Medicaid and health benefit exchanges could fare after the U.S. Supreme Court issues its ruling on the Patient Protection and Affordable Care Act this month. The focus of the article is the 14 states that are moving forward with putting their exchanges in place.
The burden for patients in high-deductible plans is hard to measure. Out-of-pocket costs as a portion of national health spending have been declining since the 1960s, but the latest government data are from 2010. As consumer-driven insurance gains popularity among employers, however, analysts say they wouldn’t be surprised to see that five-decade trend reverse itself. In the Kaiser Family Foundation’s 2011 employer survey, 17 percent of the covered workers were enrolled in a high-deductible plan, up from 4 percent in 2006.