The California HealthCare Foundation has published an issue brief on pre-paid primary care plans, known as direct primary care. Direct primary care (DPC) unbundles physician office visits and some other limited services from health insurance coverage and is directly paid out of pocket by consumers, leaving insurance to cover hospitalizations and catastrophic care events. It has the potential to lower premiums since it eliminates the administrative burden on both payers and providers to process routine care reimbursements as well as potentially avoiding higher cost care by allowing primary care providers to offer more intensive preventative care and lifestyle coaching to ward off preventable, chronic conditions.
The issue brief notes some DPC providers have pegged overall health care cost savings in the 20 to 30 percent range. Cost reductions of that size can go a long way toward achieving the triple aim of better care at lower cost and with better outcomes and warrant independent research to more fully investigate the potential savings. The research should also examine how DPC might favorably affect the business model of primary care medical practice and its potential to attract more physicians to the field at the same time the number of people with insurance coverage – and the concurrent need for primary care practitioners – is expected to increase starting in 2014 under the Patient Protection and Affordable Care Act.
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.
Late last week Boston.com’s White Coat Notes reported Massachusetts House leaders are proposing legislation that would create new state agency to monitor health spending and order reductions in hospital and doctor fees it finds excessive. Hospitals charging patients 20 percent or more above the comparable median statewide contracted price would be face a 10 percent tax surcharge that according to the article would support struggling hospitals. The California HealthCare Foundation’s CaliforniaHealthline has more details on the bill, H 4070.
Whatever happens in the Bay State bears watching inasmuch as its 2006 omnibus health care reforms served as a prototype for the federal Patient Protection and Affordable Care Act.
Meanwhile, CaliforniaHealthline reports a California ballot initiative that if qualified for the November 2012 ballot would have limited hospital profit margins to 25 was dropped by its sponsor, the Service Employees International Union (SEIU). The California Hospital Association had termed the measure along with another SEIU-sponsored initiative requiring nonprofit hospitals provide at least five percent of their care on a charitable basis a “thinly veiled negotiating tactic.”
UCLA report finds economic downturn and job loss pared health coverage for middle class Californians
Critics of employer-based health insurance (and single payer advocates) will likely point to this recent article by the California HealthCare Foundation’s California Healthline reporting on a recent UCLA Center for Health Policy Research report finding 670,000 Californians lost employer provided health insurance in 2008 and 2009. The article quotes Shana Lavarreda, lead author of the report, describing the numbers as an indication that medical coverage among middle class Californians was significantly undermined by the economic downturn and resulting job losses. “The uninsured here is less and less an undocumented [worker] problem, and now it’s more of a Main Street problem,” Lavarreda told California Healthline.
The report has implications for the Patient Protection and Affordable Care Act, which is predicated on all Americans being in a public or private managed care or health insurance plan by 2014 — with the bulk of private coverage employment-based. The experience of California (and certainly other states) in the two years leading up to the enactment of the Act in 2010 shows that employer-based coverage — which had been eroding even prior to the recession with fewer small employers providing coverage — remains quite vulnerable to fluctuations in the economy that disrupt employment.
The California HealthCare Foundation’s CaliforniaHealthline reports today on an about face by California’s Pre-Existing Condition Insurance Plan (PCIP) that could be a warning of things to come for other state high risk pools.
California’s PCIP was among the first state pools to open for business under a provision of the Patient Protection and Affordable Care Act (PPACA) that created interim high risk pools to provide temporary coverage at standard market rates until insurers and managed care plans must accept all applicants starting Jan. 1, 2014. The PPACA allocated $5 billion to subsidize the pools since by definition they are an adverse risk selection mechanism and aren’t likely to cover claims costs solely with insureds’ premium dollars.
After getting off to a slow start in 2010, federal and state officials grew concerned that too few people were signing up for coverage. So this summer, the Obama administration opened the tap wider on the $5 billion interim high risk pool subsidies, reducing premiums effective July 1 in two dozen states where the federal government runs the pools. California’s PCIP soon followed, reducing premiums by as much as 20 percent to attract more enrollments. The tactic worked, but perhaps too well. Previously believing there were too few enrollees, California’s Managed Risk Medical Insurance Board (MRMIB), which oversees the PCIP, is now apprehensive too many will come aboard and sink the ship.
CaliforniaHealthline’s David Gorn explains:
The threshold for the number of Californians who might participate in PCIP was estimated at about 23,000 people. Since a few more than 5,000 people signed up in that first year — and new enrollees came on board at a rate of roughly 500 a month — it seemed that the program was financially stable and able to take on more participants.
But after the first year, state officials got their first real claims data to test that estimate, and the amount required by recipients was much higher than expected. That 23,000-person threshold estimate was reduced to 6,800 Californians.
That means (given current enrollment of 5,290 including last month’s bump of 726 new subscribers), there’s now only room for a little more than 1,500 new enrollees (which is about two months’ worth of enrollees, given October’s bump of 726 new subscribers).
Unless the federal government pumps more money into the program.
In other words, more people are enrolling, but bringing with them high medical utilization costs that challenge the ability of the MRMIB to keep the PCIP solvent until 2014 when it will no longer be needed. Other states may soon experience a similar conundrum: fulfilling the PPACA’s mandate to have the interim high risk pools serve markets of last resort that must accept applicants without medical underwriting while having enough money to pay for their care. And manage to do so for nearly four years.
A little more than one year ago, this blog discussed how the interim risk pools could become a catastrophic coverage pool for those requiring very high cost care and threaten to rapidly draw down the $5 billion appropriated for them in the PPACA. This may well be happening now.
The bulk of individuals buying health plans through health benefit exchanges established by the Patient Protection and Affordability Act (PPACA) starting Jan. 1, 2014 will be low to low moderate-income earners, making less than 400 percent of the Federal Poverty Level (FPL). An actuarial projection by Mercer Government Human Services Consulting presented this week at a Sacramento, Calif. symposium sponsored by the California HealthCare Foundation estimates that just 25 percent of about 4.6 million Californians not covered by employer or government plans will purchase coverage through the California Health Benefit Exchange.
Most in the state’s individual market earning more than 400 percent of the FPL will purchase commercial insurance and managed care plan products offered outside the exchange, the Mercer estimate concludes. On the other hand, “virtually all” individuals earning between 200 and 400 percent of the FPL will opt to purchase their coverage through the exchange, Mercer projects, in order to benefit from subsidies in the form of tax credits.
That’s shaping up as a bifurcated individual market, giving rise to insurer concerns over the prospect of adverse selection, with higher cost insureds gravitating toward the exchange, particularly if commercial insurers continue their primary competitive strategy of avoiding those with pre-existing conditions. But as noted at this week’s Sacramento forum, insurers won’t be able to wall off higher risk individuals in the exchange since they will be required to pool risk from both exchange and non-exchange insureds. That has some insurers concerned that the experience of the exchanges could actuarially jeopardize commercial markets outside the exchanges.
The nascent California Health Benefit Exchange hopes to stave off adverse selection by penalizing or excluding from the exchange insurers that engage in marketing practices designed to cherry pick healthy individuals while directing higher-risk consumers to the exchange.
A New York Times piece published May 13 suggests insurers see tougher times coming once the exchanges open for business in less than three years. In the meantime, they’re making hay while the sun is shining and medical utilization is suppressed by a weak economy. “I think they’re going to go through a winter,” Paul H. Keckley, executive director of the Deloitte Center for Health Solutions, a research unit of the consulting firm Deloitte, told The Times.
In another sign of the breakdown of traditional, all inclusive employer paid health insurance, the (Santa Rosa) Press Democrat reports today that the now common 75-25 percent employer/employee premium cost share is morphing into a straight split. “Often we see companies cutting their contributions down to as low as 50-50,” David Hodges, a Santa Rosa insurance broker, told the newspaper.
Marian Mulkey, director of health reform and public programs at the California HealthCare Foundation, is quoted, pointing to a rapid rise in health care costs and utilization that have ratcheted up premiums 117 percent in California over the past eight years. “We use more services and we pay more for what we use,” Mulkey noted.