Trummel, grappling with his second increase of the year, isn’t holding his breath. But he’s hoping that the new state-run marketplace where people will be able to buy health insurance under the federal health law in 2014 will yield an option that offers him some relief until he qualifies for Medicare.
“If I could get into that (the marketplace), I might have only one more year of this agony with Anthem Blue Cross,” Trummel said. “I’m just holding on until either the health law or Medicare will kick in.”
In its rate request, Anthem said its medical costs for this segment of the business are increasing nearly 11% and what it actually pays is rising 13.5% after adjusting for its portion after customer deductibles.
With those cost pressures, Anthem said that the profit margin on its individual insurance business in California is less than 1% this year and that it expects to lose money next year even with these proposed rate increases.
In addition to the 18% rate increase for about 630,000 customers, Anthem is seeking a separate rate hike of 15%, on average, for an additional 100,000 policyholders whose plans are regulated by the California Department of Managed Health Care. An agency spokeswoman said it is reviewing Anthem’s proposed rate increase and those of other companies.
California, which once basked in the suntanned imagery of youthful vigor and health and fitness recognizes the shine has faded as its population grows older and more sedentary and obese, spawning an unprecedented increase in chronic, preventable disease. Earlier this year, the administration of Gov. Jerry Brown formed a task force with the vision of restoring the Golden State to the healthiest in the nation by 2022. This week, the Let’s Get Healthy California Task Force released a draft report outlining how the state will achieve that vision based on six goals and associated priorities and health indicators.
Brown and his Health and Human Services Agency Secretary Diana Dooley – who also chairs Covered California, the state’s health benefit exchange — are to be commended for initiating and championing this monumental project. When it comes to something as big as improving the health status of the nation’s most populous state, one of the task force’s members, Dave Regan, president of Service Employees International Union – United Healthcare Workers West, clearly understands what’s needed to generate the enormous momentum to counter the sickly, sedentary status quo. Here’s what he said with the release of the draft report as reported by the California HealthCare Foundation’s California Healthline:
There’s lots and lots of good stuff in here. What I’m thinking about is what’s not in here,” said Dave Regan, president of Service Employees International Union. “I keep going back to two things — 80% of what drives health care costs is behavioral, and only 20% of the cost of health care can be affected by what we do today.”
Regan said there needs to be a bigger change, a cultural change, to affect some of the root causes of rising health care costs and poor health of Californians.
“When you look at the goals and indicators in here, we may have a forest-and-trees effect. The behavioral culture is far more influential than all of us nibbling at the margins. … Unless we change the behaviors of millions of people, then we’re just tilting at windmills.”
Regan’s exactly right. And he need look no further than the state workforce – a large portion represented by his union – to see a glaring example of a subsection of the bigger California health problem. These thousands of state employees need to get out of their offices and cubicles and exercise more. Especially as they drive up the cost of providing them health care with one third driven by chronic conditions and raise serious questions as to whether the state will be able to afford to provide them health coverage in retirement.
But they are held prisoner by a rigid, outmoded Industrial Age work culture that requires them to be at the desks from 8 to 5, Monday through Friday. Most could shift their work outside this fixed time frame and location, thanks to today’s information and communications technology — much of it innovated in California — that makes it easily possible for them to do their jobs in a home office or other locations where they can be productive.
This “work shifting” is an essential cultural change that Regan correctly says is needed because it affords people control over their daily schedules and frees up hours each week of wasted commuting time. A 2011 University of Minnesota study found when people are afforded control over when and where they perform their jobs, they got more sleep and exercise. Schedule control is thus a potentially powerful cultural shift because it enables healthy living – a goal identified in the task force report – and makes it easier for people to adopt healthier lifestyle choices.
The sale and regulation of commercial health insurance is essentially an intrastate affair. States serve as discrete markets and each have their own rules governing health insurers and managed care plans. However, several provisions of the Patient Protection and Affordable Care Act (ACA) are apparently intended to give the industry a more interstate flavor starting in 2014 when state health benefit exchanges chartered by the ACA open for business in each state.
Section 1334 of the ACA establishes a shared federal-state regulatory regime requiring health benefit exchanges to offer two “multi-state plans” (one must be a nonprofit) in their individual and small business exchanges. These plans would be established under federal charter through the Office of Personnel Management (OPM) and licensed in all states. The idea behind multi-state plans is to bolster competition in state markets, particularly those with smaller populations and fewer payers, as well as to create a larger risk pool to help assure affordability of premiums and ward off adverse selection. At the same time, multi-state plans could raise fears among payers since by virtue of their large size (and thus their potential ability to offer more favorable coverage terms and rates), they could “crowd out” smaller, state-based players.
However, the Section 1333 of the ACA also provides a mechanism for health insurers and plans to pool risk and sell across state lines via “health care choice compacts” starting in January, 2016. It allows two or more states to enter into an agreement under which health plans could be offered in state individual markets but subject only regulation by the state in which the plan was written or issued. Plans sold outside their state of domicile would still however be subject to licensure and rules in the state in which the purchaser resides relative to market conduct, unfair trade practices, network adequacy, and consumer protection standards including standards relating to rating and handling of disputed claims. The ACA requires the federal Department of Health and Human Services (HHS) to issue regulations governing health care choice compacts by July 1, 2013 and additionally mandates that states must enact legislation authorizing their formation.
Finally, the ACA allows the exchanges themselves to operate across state lines. Section 1311(f) provides for “Regional or Other Interstate Exchanges” operating in more than one state if the involved states and the federal HHS approve.
NCHC recommendations for reducing health care spending overlook schedule control as key to adoption of healthier lifestyles
The National Coalition on Health Care has issued its recommendations for bending the relentless rise in health care costs, Curbing Costs Improving Care the Path to an Affordable Health Care Future. The bulk of the report focuses on treatment and payment reforms with one section devoted to “Prevention and Population Health.” A key recommendation is sin taxes to deter the consumption of tobacco, alcohol and sweetened beverages. That’s hardly a prevention and wellness strategy.
Conspicuously absent are meaningful recommendations to give people more control over their lives and schedules so they can spend more time engaging in healthy behaviors like getting adequate exercise and sleep and eating a nutritious diet. Achieving it will involve nothing short of a transformation of how we conceptualize knowledge and information-based work and when and where it gets done. We no longer need to commute daily to an office to do it, thanks to the widespread availability of information and communications technology. Here’s how one blogger described this arguably obsolete work routine:
1 – Wake up earlier than you want to.
2 – Get stuck in traffic on the way to work.
3 – Feel stressed all day at work.
4 – Go home, throw a frozen dinner in the microwave because you’re too tired to cook.
5 – Plop down in front of the TV because you’re too exhausted to do anything else.
6 – Go to bed later than you meant to.
7 – Repeat.
This is a toxic societal lifestyle that over time sets the stage for the development of chronic, preventable conditions that drive much of the health care spend. A 2011 University of Minnesota study found when people are afforded control over when and where they perform their jobs, they got more sleep and exercise. Bravo. That’s true, low (negligible) cost prevention that can go a long way toward maintaining health and reducing medical utilization and spending.
HBEx Report – A weekly roundup of federal and state developments related to the implementation of American Health Benefit Exchanges
Over the next 18 months, between one quarter and one half of Americans who get insurance coverage through their employers will pay more of their doctor bills themselves as companies roll out healthcare plans with higher deductibles, benefits consultants say. The result: sticker shock.
“They have huge out-of-pocket costs before they get any insurance coverage, it’s a real slap in the face,” said Ron Pollack, the executive director of Families USA, a healthcare advocacy group.
Mr. Pollack is reacting — badly — to a back to the future shift in health insurance, to a period prior to the emergence of all inclusive managed care plans in the 1970s and 1980s. We are witnessing the re-emergence of health insurance that was known in period following WWII as “major medical.” It was a true insurance product insofar as insurance by definition is designed to cover high cost, unexpected needs such as a hospital stay. Routine, out of pocket costs were just that: paid out of the patient’s pocket. And from all indications, it’s here to stay.