Campaign for An American Solution - Health Care Reform Blog

ICYMI: AHIP Statement on New Health Spending Projections

Thu, 04 Feb 2010 12:14:00 -0800

AHIP Statement on New Health Spending Projections

Washington, DC – Karen Ignagni, President and CEO of America's Health Insurance Plans (AHIP), released the following statement today in response to new health spending projections released by CMS which found that health care’s share of the economy grew 1.1 percentage points in 2009 – the largest one-year increase in GDP share since the federal government began keeping track in 1960:

“Rising health care costs are crushing our economy and adding a burden on working families and employers across the country. The new CMS data confirm that rising health care costs are driven by increases in underlying medical costs, not health plan administrative costs. In fact, the proportion of health insurance premiums that go towards administrative costs is declining as overall health care costs continue to soar. Without a national, long-term strategy to address the rapid growth in underlying medical costs, health care spending will continue to grow far faster than the economy as a whole, crowding out other important domestic priorities, such as education, energy, and deficit reduction."

The report, published today in Health Affairs, notes that the “two primary drivers of growth…are medical prices and utilization”, which saw a projected increase in spending by 3.2 percent and 1.5 percent in 2009, respectively. Other key findings include:

• “Hospital spending growth is projected to have accelerated from 4.5 percent in 2008 to 5.9 percent in 2009, as spending reached $760.6 billion.”
• “Spending growth for physician and clinical services is expected to have accelerated to 6.3 percent in 2009, up from 5.0 percent in 2008, with expenditures having reached $527.6 billion.”
• “Prescription drug spending is expected to have grown 5.2 percent in 2009, an acceleration of 2.0 percentage points from 2008, and to have reached $246.3 billion.”

This is consistent with national data and information received from health plans showing that health care costs are expected to increase even further due to the underlying growth in the cost of health care services.

To read the full report in Health Affairs, please click here.

###

Providing Health Benefits for Over 200 Million Americans.

FACT CHECK: Small Businesses and Health Care Costs

Wed, 03 Feb 2010 17:57:00 -0800

In December, AHIP sent a letter to Capitol Hill discussing the cause for rising health care costs particularly for small businesses. Below are some key highlights from this letter:

Data from NHE "...show that increases in premiums are driven by the growth in the cost of health care services and that plan administrative costs are rising at far lower rates than the cost of care."

"...all 50 states and the District of Columbia impose restrictions on the premiums that may be charged for health insurance coverage and require certification that premium increases be consistent with actuarial standards with respect to cost trends and benefits provided."

For more click here for the full letter.

ICYMI: Fortune Magazine discusses the importance of structuring reform properly

Wed, 03 Feb 2010 09:41:00 -0800

Fortune Magazine’s editor-at-large, Shawn Tully, takes a look at several of the health care reform provisions with broad support and how they need to be structured in order to work well.

A few excerpts:

In the battle over health care reform, two ideas seems to bridge the divide between Democrats and Republicans: Private insurers should be required to cover Americans with pre-existing conditions and be banned from charging older, sicker people much more. But where the two camps jibe could also cause the most damage to health care.

The two ideas: Guaranteed Issue and Community Rating.

Guaranteed Issue forces private insurers to accept any and all applicants, regardless of their medical condition. Community Rating bans carriers from charging a different rate, say, for someone with diabetes than a buff tri-athlete. It also imposes tight bands on premiums for customers of different ages, even though older patients cost far more to insure than younger ones.

The pool dries up: So what is the problem with obliging insurers to accept everyone and try to keep pricing uniform? First, the young and healthy -- the group whose premiums carriers count on to make insurance work -- will be less likely to buy in. Community Rating forces them to pay far more than their anticipated medical expenses. Shunning insurance actually makes sense: They can wait to sign up if they get diabetes, cancer or another chronic condition. Remember, under Guaranteed Issue, insurers can't turn them down.

Boosting penalties: A system mandating that insurers take all comers at close to the same premium can work -- but only if it also imposes a powerful "individual mandate" requiring that everyone buy insurance.

To read the full article, click here.

What You Need to Know: McCarran-Ferguson Act

Wed, 03 Feb 2010 09:15:00 -0800

National Association of Insurance Commissioners letter (10/21/2009):

“The potential for bid rigging, price fixing and market allocation is of great concern to state insurance regulators and we share your view that such practices are harmful to consumers and cannot be tolerated. However, we want to assure you that these activities are not permitted under the McCarran-Ferguson Act and are not tolerated under state law. Indeed, state insurance regulators actively enforce prohibitions in these areas.”

To read the full letter, click here.

Congressional Budget Office analysis (10/29/09):

“The analysis also takes into account the provisions of section 262 of Division A regarding the application of federal antitrust laws to health insurers. CBO estimates that implementing those provisions would have no significant effects on either the federal budget or the premiums that private insurers charged for health insurance. For an analysis of a similar proposal, see CBO’s cost estimate for H.R. 3596, the Health Insurance Industry Antitrust Enforcement Act of 2009 (October 23, 2009).”

To read the full analysis, click here.

Congressional Research Service analysis (8/31/2009):

“Given the courts’ narrowing definition of the ‘business of insurance,’ they would not be likely, in any event, to find such activities as market allocation, tying, or monopolization protected by McCarran-Ferguson from the application of the antitrust laws.”

American Academy of Actuaries letter (1/21/10):

“These analyses of aggregated data serve several purposes; those purposes align with the original intent of the McCarran-Ferguson Act and assist state regulators charged with overseeing the pricing of insurance coverage and solvency of insurers. A few of these purposes are:

1. To provide credible data upon which to base loss estimates and premium rates.

2. To enhance competition by providing access to industry information to enable existing companies to offer products in new markets or for different types of exposure by reducing the uncertainty associated with determining loss estimates and premium rates.

3. To further support competition by providing data to newly-formed companies or self-insurers looking to begin covering medical professional liability exposure.

4. To guide companies, self-insurers, and regulators in reducing the likelihood of insolvencies, a long-term and recent concern. Through the review of industry data, companies, self-insurers, and regulators are better able to evaluate whether too little is being charged or not enough is being set aside in reserves for a given exposure situation.”

To read the full letter, click here.

AHIP letter to Senator Leahy and Representative Conyers (10/8/09):

“In our view, the two bills under consideration may be based on a misperception of the scope and impact of the McCarran-Ferguson Act on health insurers. The Act does not preclude regulation of insurers, but, instead, recognizes that the states play a central role in conducting oversight of health and other insurers.”

To read the full letter, click here.

AHIP letter to Representative Conyers (10/21/09):

“The narrow nature of the Act, as interpreted by courts, means that the types of anticompetitive activity contemplated by the bills already are subject to federal and state antitrust laws. We believe that health insurers have not been engaging in anticompetitive conduct and that McCarran-Ferguson does not provide a shield for such conduct. Thus, the bills attempt to remedy a problem that does not exist.”

“We ask you to consider our strong concerns that such legal uncertainty could chill or limit newly developing activities that will benefit consumers and doctors (e.g., physician portals now developing to streamline administrative processes and data aggregation efforts that are designed to respond to physician concerns that they not be evaluated only through the lens of an individual health plan’s patient population) and add to the already substantial cost that litigation imposes on the health care system.”

To read the full letter, click here.

Scott Harrington op/ed (WSJ, “Competition and Health Insurance”, 11/6/09):

“Repealing the antitrust exemption for health insurers would not significantly increase competition, and it would not make health-insurance coverage either less expensive or more available. There is no evidence that the exemption has increased health insurers' prices or profits or contributed to higher market concentration.”

“In other words, the insurance industry's antitrust exemption is inconsequential to the health-care reform debate. It just distracts attention from important issues and further demonizes private health insurance.”

To read the full article, click here.

BNA article (“Bills to Repeal McCarran-Ferguson Act for Health, Malpractice Insurers Introduced”, 9/23/09):

“Attorneys who spoke to BNA said, however, there is no evidence that the act has been an impediment to either federal or private efforts to prevent or curtail anti-competitive conduct in these sectors.”

The article also quoted Jack A. Rovner, with The Health Law Consultancy in Chicago: “While the law does not have much impact on the health insurance industry, it makes a good political target,” he said. “This is more about politics than an effort to correct anti-competitive conduct by health insurers because the fact of the matter is that repeal would not make a significant difference with respect to either compliance or enforcement,” Rovner said. “McCarran-Ferguson has never been a valid defense to the price-fixing or other per se antitrust law violations targeted by the legislation, whether pursued by government or private parties,” he added. “While repeal could have a significant impact on the balance of state and federal relations, the proposed legislation will not change a lot in the legal landscape concerning the way health and malpractice insurers are regulated,” he said.

To read the full article, click here.

Business Week article (“Reviving an Old Threat in Health-Insurance Battle”, 10/19/09):

“’There would be quite a bit of confusion and legal action on the state and federal level as regulators try to figure out who's responsible for regulating what,’ says Joseph Paduda, principal of Health Strategy Associates, a managed-care consulting firm in Madison, Conn.”

“Austin Frakt, a health economist and assistant professor at Boston University's School of Public Health, says lawmakers also would have to take into account the other parties that contribute to driving up health-care costs—including doctors, hospitals, and drug companies—which McCarran-Ferguson does not address.”

“Threatening a repeal of McCarran-Ferguson ‘doesn't seem like it has been thoroughly thought through,’ says Frakt. As with every aspect of the proposed reform, the question of whether to regulate insurance at the federal or state level ‘requires a nuanced approach.’”

To read the full article, click here.

Health insurance is one of the most regulated industries in America at both the federal and the state level: http://bit.ly/PJuzm

ICYMI: The market clout of Massachusetts providers is a “main driver of the state’s spiraling health care costs”, investigation finds

Fri, 29 Jan 2010 16:30:00 -0800

A year-long investigation into the rising costs of health care in Massachusetts, which are growing by 7.5 percent each year, found that hospitals and physicians are leveraging their market power and driving up health care costs in the state. The Boston Globe reports on the investigation by the state attorney general’s office. Here are some key findings:

“Massachusetts insurance companies pay some hospitals and doctors twice as much money as others for essentially the same patient care, according to a preliminary report by Attorney General Martha Coakley. It points to the market clout of the best-paid providers as a main driver of the state’s spiraling health care costs.”
“Coakley’s staff found that payments were most closely tied to market leverage, with the largest hospitals and physician groups, those with brand-name recognition, and those that are geographically isolated able to demand the most money.”
“’These rising costs are unsustainable. If we don’t do something about it, the only thing we’ll be able to afford is health care. No one will have money for food or housing,’[said Coakley].’’
“The report shows that a small group of about 10 hospitals statewide command significantly higher payments than the other 55, ranging from 10 to 100 percent more than their competitors for similar work.”
“Investigators found that Massachusetts health care costs, which are growing by 7.5 percent annually, are mostly the result of rising prices, not patients getting more imaging tests, surgery, and other procedures.”

For the full article, click here.

To read the preliminary report, click here.

Fact Check: Fast Facts about Fraud

Thu, 28 Jan 2010 10:14:00 -0800

$60 billion: the estimated amount of fraud within Medicare each year

$17 million: the average annual amount of money saved by each health plan’s anti-fraud operations

$7.60: the average amount of money a health plan returns to the company and policyholders for every one dollar invested in anti-fraud operations – which keeps health care costs down for businesses and working families

Source: Anti-Fraud Management Survey Report for 2007 by the National Health Care Anti-Fraud Association

Health care fraud leads to higher costs for businesses, workers, and families. The overwhelming majority of health claims are legitimate and paid on-time, but for those that might be fraudulent, health plans use a variety of measures to prevent and detect them, including:

· Education and awareness campaigns: Policyholders, providers, and the public are encouraged to report any suspected fraud through telephone hotlines and websites.

· Commitment to safety: Health plans ensure their networks include only credentialed providers to protect consumers from unlicensed providers.

· Cross-disciplinary teamwork: Employees from a variety of backgrounds investigate potential fraud and collaborate across a health plan in order to weed out only potentially fraudulent claims for investigation.

· Communications with policyholders: Policyholders are encouraged to monitor their explanation of benefit forms for medical services they did not receive and to report known instances of health fraud.

· Monitoring and collaboration: Working with external law enforcement agencies at the state and federal levels, health plans prevent and protect consumers from fraud.

· Use of sophisticated software: Analyzing claims data helps predict potential fraud and weed out the “outliers” for further investigation, allowing effective and efficient investigation of the few claims with potential for fraud.

· Commitment to professional excellence: Health plans require credentialing and ongoing annual training for their staff dedicated to investigating health fraud in order to keep up with changes in technology and laws and effectively weed out health fraud and abuse.

FACT CHECK Redux: Polls Show American People Satisfied With Their Health Plan

Wed, 27 Jan 2010 14:50:00 -0800

Much of the focus of recent polling has been on specific reform proposals. However, a number of surveys conducted throughout 2009 showed a common thread -- people's satisfaction with their own health insurance or health coverage.

We have included a number of these findings below:

CNN/Opinion Research:

74% of people are satisfied with their personal health insurance coverage.
83% of people are satisfied with their own health care.

Employee Benefits Research Institute:

Fifty-eight percent of those with health insurance coverage are extremely or very satisfied with their current plan, and approximately one-third (30 percent) are somewhat satisfied.

Fox News/Opinion Dynamics:

84% of people surveyed said the quality of their personal health insurance was either excellent or good.
83% of people surveyed said the quality of care they receive is either excellent or good.

Quinnipiac University:

85% of Americans are very or somewhat satisfied with their own health insurance plan.

The University of Texas/Zogby International:

84% of people are satisfied with their health care.

The Washington Post:

81% of people are satisfied with their health insurance coverage.
88% of people are satisfied with the quality of care they receive.

The New York Times:

77% of people are satisfied with the quality of their own care.
77% of people said that basic medical care covered by their health insurance plan is affordable.

Democracy Corps:

72% of people are satisfied with their own health insurance coverage vs. 75% in 1993 - not a significant change.
76% of self-identified independents are satisfied with their coverage as are 72% of Democrats and 78% of Republicans.

Gallup:

"Among all Americans, 83% say the quality of healthcare they receive is either ‘excellent' or ‘good.' Only 16% say it's either ‘only fair' or ‘poor.'"
"Americans are only a bit less positive about their own healthcare coverage, with 67% describing the coverage they now have as excellent or good."
Gallup's conclusion: "At the same time, [Americans surveyed] are pleased with the quality of medical treatment in the country, and are mostly satisfied with their own healthcare quality, coverage, and costs."

CNN/Opinion Research Poll:

In March 2009, 73% of Americans were satisfied with their own health insurance coverage. NOTE: In November 2007, the satisfaction rating was 69%.

Employee Benefits Research Institute:

93% of people enrolled in a traditional health care plan were satisfied with the quality of coverage they received through their health plan (including 31% extremely satisfied).
93% of people enrolled in a traditional health care plan were satisfied with their plan.
86% of people enrolled in a traditional health care plan were likely to stay with their current plan.

BREAKING NEWS: Forbes Magazine Examines How Current Reform Proposals Will Not Lower Costs

Mon, 18 Jan 2010 12:08:00 -0800

The debate over whether the current reform proposals will lower costs continues, and it seems that the CW is moving toward the idea that we have talked about in this blog -- current reform proposals will not do enough to lower costs.

Forbes magazine picks up on this story and examines what will happen to people's health insurance costs.

Here are a few key excerpts:

"If you're thinking the legislation will tamp down overall health care spending, reconsider. Policy analysts ranging from the neutral Congressional Budget Office to the HMO lobby see no abatement in the growth rate of health care spending."

"The premium hikes will result from cost shifting, better known as passing the buck. The House and Senate insurance bills aim to cover their costs in part by cutting annual Medicare reimbursements to hospitals, doctors and drug companies by $45 billion. Those providers will likely try to offset the cuts by negotiating higher rates with private HMOs--which then get passed along through higher premiums. That's exactly what occurred after past Medicare and Medicaid cuts, according to the CBO analysis."

"Also, the legislation requires HMOs to pay $7 billion annually in new fees. That will get passed on to individuals and employers who buy the policies."

"The biggest losers, or rather spenders, will be those who currently pay for their own insurance but make more than four times the federal poverty level, a multiple that comes to $88,200 for a family of four. They will not be eligible for subsidies. The CBO calculated premiums for that group will rise 10% to 13% above and beyond the increases that could be expected without new laws."

"...rest assured premium increases will occur as costs trickle down from doctors, hospitals and HMOs looking to cover their costs."

For the full article click here.

ICYMI: AHIP, BCBSA, Employer Group Joint Letter on Immediate Reforms in Current Legislation

Fri, 15 Jan 2010 15:10:00 -0800

AHIP joined the Blue Cross Blue Shield Association and several employer organizations in sending the attached letter to congressional leaders, requesting that the effective dates for certain health reform provisions be extended to help minimize disruption and ensure a smooth transition for health reform.

The letter notes that the House and Senate bills include a number of provisions that will require employers and health plans to take significant action to achieve compliance, including making policy and contract revisions, information technology system upgrades, modifications to employee benefit and marketing materials, and development of employee and customer communications. It further emphasizes that many provisions will require regulations to be issued, state laws to be changed, and approval from state insurance departments.

For the full letter click here.

ICYMI: American Academy of Actuaries Comment Letter on Health Care Reform Legislation

Fri, 15 Jan 2010 10:43:00 -0800

The American Academy of Actuaries sent a letter to Speaker Pelosi and Majority Leader Reid providing comments on the Senate-passed health care reform legislation.

From the press release:

“The individual mandate language should be strengthened,” Uccello said. “The viability of health care reform depends on attracting lower-risk individuals. Strengthening the mandate through higher financial penalties and non-financial incentives would increase the likelihood that these individuals will purchase coverage.”

Here are a few highlights from the letter:

On individual mandate:

An individual mandate is an integral component of both bills. Such a mandate is necessary to ensure that adverse selection will not lead to dramatic premium increases or a premium spiral. However, the financial penalties associated with the bills’ individual mandates are fairly weak compared to coverage costs, especially during the first years of the Senate plan when the financial penalties are being phased in.

On age rating:

Moving to a narrow limit on premium variations by age, such as the proposed 2-to-1 and 3-to-1 limits, could result in dramatic premium changes, compared to what individuals are facing currently. In particular, younger individuals in states that currently allow underwriting and wider premium variations by age could see much higher premiums than they face currently (and may have chosen to forgo).

On MLR requirements:

Imposing unrealistically high medical loss ratio requirements may threaten plan solvency by making it difficult for premiums to cover claims and expenses. In particular, it would be difficult for insurers in the individual market to satisfy the loss ratios that are typical in the current small and large group markets. Imposing such requirements could result in individual market insurers exiting the market.

From a practical standpoint, it would be difficult to impose a minimum loss ratio requirement in 2010, as contained in the House bill. Plans typically file their premiums six to 12 months before they become effective, and need time prior to rate filing in order to develop the rates. Therefore, a sufficient lag time would be needed between the enactment of the legislation and the effective date of the minimum loss ratio provision.

On CLASS Act:

However, given the way the program is structured, severe adverse selection would result in very high premiums that are likely to be unaffordable for much of the intended population, threatening the viability of the program.

Without significant program changes to minimize adverse selection, the program would not be sustainable in the long term without premium increases or benefit reductions.