Category Archives: Health Care Reform

Health care costs to slow in 2014

This article talks about the slowing of medical cost inflation.  However, it is important to remember when reading data what you are really looking at – in this case its simply the cost of health care.  It is a component of health insurance premiums but hardly the only one.  When you enter the conversation over the effect of Health Care Reform, it has less bearing than the cost of new mandates, taxes, and fees.  For example, in most states Maternity is not covered, and the mere fact of adding the now-mandated maternity coverage drives up the premiums very quickly. – Reeve

BenefitsPro – Kathryn Mayer – 6/18/13

The slowdown in health care spending as previously reported by researchers just may be here to stay.

A report Tuesday from consulting firm PricewaterhouseCoopers projected lower overall growth in medical costs in 2014, even as millions more newly-insured Americans join the health system under the Patient Protection and Affordable Care Act.

PwC’s Health Research Institute projected that health care inflation in the U.S. is projected to dip to 6.5 percent in 2014 but that when other factors are put into the mix, that figure could end up around 4.5 percent.

Though costs are still rising faster than inflation, it’s still a nice reprieve from previous double-digit increases. It’s also slightly less than the 7.5 percent increase PwC estimated for 2013.

“Health care cost increases continue to exceed overall growth in wages, but the gap appears to be shrinking,” said Michael Thompson, principal with PwC’s human resource services practice. “The long-term trends suggest that as the economy improves, the cycle of runaway cost increases will be broken.”

That’s a critical revelation as employers re-evaluate the role of health care benefits to their organizations, and step up efforts to engage employees more directly in value-based health care decision making, Thompson said.

Still, the report notes that uncertainty about the impact of PPACA implementation and what to expect from a largely unknown, newly-insured population are manifested in seemingly contradicting themes: a declining medical cost trend and rising insurance premiums, particularly in the individual market.

Rising premiums are mostly due to new requirements as part of PPACA. Essential health benefits and the pre-existing provision cost more to cover. Industry experts have long warned that individual premiums will rise due to PPACA, especially for younger and healthier adult males.

Though a slowdown in health care spending may be good news for the Obama administration, who have been defending their landmark health reform law, some argue that it’s in part due to the weak economy and consumers putting off care.

PwC researchers said that the slowdown is in part due to consumers making spending adjustments. Many are delaying care, using fewer services and choosing less expensive options such as retail clinics, urgent care centers and mobile health devices.

An analysis earlier this year from Kaiser Family Foundation found that health spending grew by 4.2 percent per year from 2008 to 2012, down from a peak of 8.8 percent from 2001 to 2003 – and that most of the slowdown (77 percent) was due to years of a weak economy “which causes people to put off health services when they can and prompts employers and states to reduce health spending.” The rest is explained by changes in the health system, including increased consumer cost-sharing, tighter managed care and modifications in payments and delivery, that analysis said.

“The problem of health costs is not solved, and we need to be realistic that health spending increases will return to more typical levels as the economy improves,” Drew Altman, president and CEO of the Kaiser Family Foundation, said in April.

Additionally, more employers continue to shift costs to their employees through higher deductibles.

On the plus side, PwC researchers said, some active approaches are contributing to the slowdown in health spending. Major employers are beginning to contract directly with big-name health systems to tackle expensive and complex procedures for employees, such as heart surgery and spinal fusion. According to PwC’s Touchstone Survey, 33 percent of businesses are considering high-performance networks over the next year. Early data suggests this could mean as much as a 25 percent reduction in costs, researchers said.

And the government is ramping up penalties on hospitals that have too many patients coming back with problems soon after being discharged, which also is pushing down overall health care costs.

Regardless, PwC researchers said in their report that the health care industry needs to be proactive and aware in navigating the “rapidly-changing environment.”

“The health industry is at an inflection point as it rebalances, realigns and prepares for full-scale transformation from fee-for-service medicine to consumer-centered, accountable care,” said Kelly Barnes, PwC’s U.S. Health Industries leader.

“Change of this magnitude takes time and will come in stages. Health organizations should learn to adapt to a market in which growth may be lower in the near term, and pursue new sources of growth often in unlikely places.”


One in 5 Amercians can’t pay medical bills

By Kathryn Mayer, BenefitsPro, June 5, 2013

One in five Americans have trouble paying medical bills, the Centers for Disease Control and Prevention said this week.

In the first half of 2012, 54.2 million people — or 20.3 percent of
U.S. adults — lived in a household that had trouble paying its medical
bills, the new government report found.

That’s down, though, from 21.7 percent during the first six months of the previous year, the agency said.

Among those having problems paying medical bills, 36 percent were
uninsured, 14 percent had private coverage and 26 percent had public

Though the number has fallen slightly in the last year, that drop
could mean more Americans aren’t struggling with bills because they’re
skipping health care treatment (or coverage) altogether.

According to previous research
from New York-based Hill & Knowlton Strategies, health care costs
are keeping patients away from the doctor with about one in three saying
it has made them put off medical treatment and skip or postpone a
regular doctor’s visit.

In their research, 45 percent of consumers surveyed said they worried
“a lot” about paying medical bills in the event of a catastrophic
illness or accident, and 36 percent said they’re very concerned with
paying for health insurance coverage. Cost was more worrisome than
receiving the best medical care and having access to the latest, most
innovative medical treatment.

CDC’s report was based on interviews with 155,321 people between January 2011 and June 2012.

Health Care Reform will change your relationship with your broker…

Business Owners, take note.  ObamaCare isn’t only going to change your health plan, options, premiums, who you offer to, how you offer, when you offer, and increase your administrative work load.  Its also going to change how you work with your broker.  Here’s why:

If you have been confused in the past by your health care renewal, its only going to get (much much) worse this year.  You will really need the help of a competent broker.  The typical business owner relies on brokers to provide day-to-day service, guidance, advise on policies, integration with workers comp and disability issues.  Then at renewal they expect a full market search, and recommendations based on their specific business needs, a clear explanation and understanding, and help selecting choices.  Then they expect enrollment support, educational meetings, and hand-holding with the employees.  And we love providing all of that.

And yet, that will be harder to find.

Currently, to provide the services you expect, your trusted advisor got paid 3-5% of premium.  So for a typical 10 life group, 5 singles, 5 families, in most areas of the country that would come to about $285-$475 a month.  (If you think that is a lot perhaps you’re not getting what you are paying for!)  With the Advent of Health Care Reform, a number of changes have come together (Medical Loss Ratios, Exchanges, etc) that have already lowered compensation in all areas of the country.

As an example, Vermont has just proposed limiting broker compensation on the small business exchange to $15/month/employee in 2014, and $10 in 2015.    This would lower the brokers comp from an average of $380 to $150 this year, and $100 next year.  Imagine being asked to provide your current product and service level for 74% less going forward!  You couldn’t do it, either.

Some brokers are leaving the business.  Others are reducing their services.  Many are working on cost-efficiency methods centered around technology.  But in most cases, you will have to agree to pay your broker part of their fee, or do more yourself.

More on rates and choices in the Exchanges…

Ohio Officials reported this week that the average individual premium in the state would increase from $223 per month to $420 – an 88% increase – on the “Affordable Care Act” exchanges.  14 carriers files rates for 214 different plans ranging from $282.51 – $577.40 .

Last week California announced lower premiums on average than currently in place, but it appears they did so by substantially limiting provider access.

4 carriers – Aetna, Blue Cross, Kaiser and United – have agreed to participate in the Washington DC exchange.

Vermont will only have 2 carriers, Illinois 6



It is important to remember a couple of facts about these announcements:

1)  Different states have different mandates.  In a state like NY or California, where everything under the sun is mandated already, premiums increases would be less than in a state where they required little.  States that do not provide maternity coverage, as an example, will now have to – resulting in a larger premium increase.

2)  All we are really getting at this point are premium amounts, and we don’t know what benefits are provided by these rates.  Are we comparing Granny Smith and MacIntosh apples, apples and oranges, or apples and wolverines?

3)  Remember that individuals between 133%-400 % of the Federal Poverty Level (@17k-44K) that do not have employer-sponsored coverage will get a “subsidy” under the exchange.

4)  Medical Care cost more in some areas (typically Urban) and less in others (Suburban and Rural).  As an example, premiums will be 60% higher in Los Angeles than in some rural areas of the state.

ACA’s Not-So-Great Rate Shock Debate

Lara Hoffmans, Forbes online, June 4 2013


It appears that the Affordable Care Act might not be so affordable. Well, depending on your point of view.

Turns out, when the state of California claimed premiums would fall under its new Affordable Care Act (ACA) exchange, the comparisons weren’t perfectly parallel. Or at all parallel. Comparing like plans, premiums are more likely to double, give or take (so argues, quite compellingly, this Forbes columnist). And the same appears true in Oregon—another state that has already unveiled insurance rates for its impending exchange.

Which has kicked up a maelstrom over whose analysis is right and who
is more politically motivated than whom. Fair enough and just what you’d
expect with an issue as heated as ACA/Obamacare (or whatever we’re
allowed to call it now). A better debate is: Why is anyone shocked
premiums are likely to be higher?

Even some ACA advocates
now admit, well yes, premiums in the exchanges will likely be higher,
but only because folks will get more bells and whistles. Regardless of
your credo, we can all agree, if the government mandates a certain level
of services when no prior benchmark existed, prices will rise.
Naturally! You can have all manner of panels and bureaucrats and
lever-pullers trying to cram prices down, and you can advertise it as
“affordable” all you want, but if you legally force people to buy more
of something that doesn’t grow on trees—regardless of the great (or not)
societal benefit of that something—prices will overall rise.

So it shouldn’t be shocking premiums will rise.

By the same token, ACA advocates shouldn’t be shocked that folks on
the other side are upset. Folks already had the option to buy those
bells and whistles. Some chose to, some didn’t—whatever the reason. Some
couldn’t afford it, but that group is just one part of the total pool
of uninsured. A bigger group (according to the US Census Bureau—an
outfit not known for advocating against the ACA) are those folks who,
theoretically, can afford insurance but don’t buy it. Or only buy the
barest minimum. Whatever the reason. Rolling the dice. Waiting for
eligibility at their employer. In between jobs. Prefer to self-insure.
Haven’t gotten to the paperwork yet. These are mostly young, healthy
folks who, rather ironically, will see the largest premium increases. Or
they can opt out and pay a fee. (A tax. A fine. Whatever we’re allowed
to call that now. )

You could make the case (and some try) that some of those folks not
buying the bells and whistles are choosing badly. Dum-dums who need the
government to tell them what basic level of care they need.

Except, it’s not care. It’s insurance. Health insurance and health care
are two different things. Health care is what you get when you visit a
doctor, nurse practitioner, acupuncturist, yogi or shaman—whatever
floats your boat. Health insurance is an increasingly mind-blistering
bureaucracy that divorces payment and decision making from actual health
care delivery—and seems set to get more mind-blistering in the future.
(Is there a single thing you buy, other than health care, that you and
the service provider both don’t know how much said service costs at
point of delivery?)

So maybe some of them are choosing badly. Maybe some of them are
choosing pragmatically. Where you fall on this issue largely hinges on
this age-old debate: Are more people dum-dums with their own money, or
are more people, overall and on average, prone to greater and more
prolonged fits of pragmatism? I won’t settle this debate here. And if
Socrates, Aristotle, Kant, Hobbes, Locke, Rousseau, Proudhon,,
couldn’t settle it amongst themselves, we probably won’t get this
resolved in the very near future either.

But surely, at least some of those folks choosing either no insurance
or a cheaper bundle are being pragmatic. They don’t see value in the
bells and whistles and likely won’t see the value when forced to pay for
it, once via much higher premiums and again via increased taxes. So
let’s make a deal. No more being shocked that ACA premiums will be
higher, and no more being shocked that not everyone is delighted about

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck