Health Insurance and You!!

It seems like all individual health insurance plans in Colorado will soon be required to carry maternity health insurance.

Our own viewpoint — regulation of this sort is sometimes necessary to ensure access to necessary services. But all regulation comes at a cost. Our hope is that addition of this mandate will not raise premiums by so much that affordability becomes an issue. Health Plans in Colorado right now for a 38 year old woman begin in Denver begin at about $66/month for a high deductible plan.

To your health,
Chini

Since 1985, many laid off workers have been protected by the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows workers the option of keeping the health insurance coverage they had while employed for up to 18 months, as long as they can pay the full amount of the premium.

According to the Kaiser Family Foundation, a not-for-profit foundation focusing on major health care issues, the number of people taking advantage of COBRA is not available. But one study implies that only 19% of eligible people were using COBRA in early 2009. Because employer-sponsored programs cover on average 83% of health insurance premiums, individuals who find themselves laid off have the double-edged burden of a fourfold increase in their health care costs and the loss of their incomes. It is not at all surprising that so few people choose to continue their coverage.

Last March, as a part of the economic stimulus package known as the American Recovery and Reinvestment Act of 2009 (ARRA), the federal government began offering substantial subsidies to help laid off workers pay their COBRA health insurance premiums for nine months. The package offers unemployed workers a 65% discount in the cost of their premiums. The program has proven effective in that Kaiser estimates that twice as many eligible people are keeping their health insurance benefits.

Those who were among the first to apply for the ARRA subsidies are coming to the end of their eligibility for the federal discount. And eligibility to begin receiving the discount is ending in two months. While congress is considering a bill to extend the subsidies, many people are finding themselves in a difficult situation. Should they stay on COBRA even though their costs may skyrocket, or should they seek other less expensive options?

An article by M.P. McQueen in today’s Wall Street Journal quotes one human resources expert who advises that participants should remain on COBRA if they can afford it especially if they or their dependents have any pre-existing conditions. For others, Mr. McQueen exploring their options by comparison shopping for private health insurance plans.

If you find yourself in such a situation, GetInsured.com is a great place to explore your options. Knowledgeable and helpful associates will listen to your situation and provide you with easy to use information about private health plans to meet your health needs as well as your budget.

The goals of health care reform legislation are universal coverage and cost control. Logic tells us that increasing the demand for medical care while keeping costs in check is a formidable challenge. Now we have data to confirm and quantify just how challenging it is. Over the weekend, The Boston Globe reported the results of a study by a non-profit health care foundation called The Commonwealth Fund that tracked the cost of premiums for a family of four from 2003–2008. Massachusetts is being watched as a case study for health reform because in 2006 it enacted the nation’s first universal coverage law.
Over that five-year period, health insurance premiums offered by employers, rose 40% to $13,788, the highest in the country. For the rest of the nation the increase was lower than Massachusetts, but still unacceptably high at 33%. This can’t go on.

There are many cost-savings ideas being debated. We should consider the options based on the potential benefit and also on their ease of implementation. Those ideas that are high on both dimensions should be at the top of our national to-do list. The ideas that are most hotly debated are actually those that are high-impact but difficult to implement or low-impact and easy to implement. They include pay-for-performance, incentives for primary and preventive care and reducing profits and administrative costs for insurers.

High-impact/difficult to implement

• Pay-for-performance: While we are very likely heading toward a pay-for-performance model, the details are controversial and implementation will take many years.
• Incentives for primary and preventive care: Motivating patients to rely more on primary care sounds reasonable, but we have a critical shortage of primary care physicians across the country. Waits to see a primary care physician for an initial examination can be more than a year. Remedying the shortage will take time.

Moderate-impact/some difficulty to implement:

• Reducing profits and administrative costs for insurers: For-profit health insurance companies earn an average of 3-4% of revenues – so there is not too much to gain here. On the other hand, administrative costs average 12-13% of revenue and represent some opportunity for savings. We should be careful here – for-profit companies have a strong built-in incentive to reduce costs, so getting below 12% must be difficult to do.

While these ideas should be pursued, there are some cost savings ideas that are high-impact and easy to implement. They have not received as much attention but are worthy of a closer look.

High impact/easy to implement

• Fraud control: Detecting and combating fraud is an opportunity for savings that is both substantial and uncomplicated. Fraudulent claims cost payers, and consumers, more than a hundred billion dollars each year. Efforts on this front will benefit everyone while more systemic changes get underway.
• Incentive compatibility: Health savings accounts, HSAs, with higher deductibles are an innovation in both employer-sponsored and individual plans that merit close observation. HSAs effectively put consumers in charge of their own health care spending and reward them with tax-deferred medical accounts. Finally, the incentives of the consumers match the incentives of the providers instead of working against each other.