Health Insurance and You!

Imagine being in the peanut butter aisle at the grocery store. You’ve got creamy, chunky, honey-enhanced, and natural varieties, each of which is sold by several different brands and in several different sizes. If all you need is the ingredients for a lunchtime PB&J sandwich, the number of choices can be a little overwhelming. You may even decide to scrap it all and go with a soup and salad instead.

When state-based online health insurance exchanges debut in 2014, customers could have that same reaction if too many plans are available, according to an analysis published in this month’s Health Affairs and summarized in an article by Sam Baker of The Hill. Instead of allowing any plan that meets state standards to participate in the online exchange, the analysts argue, states should take an active role in narrowing down the choices to a manageable number.

Rosemarie Day and Pamela Nadash, the health policy experts who authored the analysis, based their findings on data from Massachusetts, where a state health insurance exchange was established in 2006. Customers in Massachusetts preferred to choose from a small number of plans that had been approved by the state and were described in detail online. Ideally, they would want four to six options with high, medium, and low levels of coverage, Mr. Baker explains. This allows the state to become more of an adviser to the customer, rather than simply regulating and managing the exchange.

In the United States, Medigap and Medicare Advantage follow this general approach, as do the Dutch and Swiss programs internationally, write Day and Nadash. In contrast, Utah’s exchange allows any plan to join the exchange as long as it meets certain minimum requirements.

Readers, if it were up to you, how many plan options would you like to have? At what point would you start to feel overwhelmed by the number of choices?

Related posts:

• Nov. 18, 2011: Doctors Support an Open Marketplace for Health Insurance
• June 20, 2011: Debating the Role of Health Insurance Exchanges

It happens to reveling partygoers across the country every day: the drinking gets out of hand and someone winds up in the emergency room. In most situations, luckily, people are okay in the end – if a little shaken by the near miss and a little wary of the next celebration on their calendar. But in the following weeks or months, many get some unwelcome news in the mail: because they were drinking when the emergency took place, their health insurance has decided not to cover the cost of the ER.

According to an article by Michelle Andrews of Kaiser Health News, laws in more than half of states allow insurance companies to refuse to cover treatment for injuries relating to alcohol or drug use. That can include any injury taking place while the patient is under the influence. Large companies that self-insure their employees can decide whether to cover these ER visits, regardless of state.

The first of these laws was passed in 1947, and others quickly followed. However, explains Ms. Andrews, treatments and understanding of addiction improved over the years, and studies started to show that such policies did not improve health outcomes. As a result, more than 15 states repealed, modified, or outright reversed their laws to forbid denials of coverage based on drinking or drug use.

Instead of discouraging patients from drunk driving, those studies showed, coverage denials actually discourage emergency personnel from testing patients for alcohol or drugs in their system. Thus, the medical staff doesn’t know whether the patient has been drinking or using drugs – though they may be able to guess – and misses an important opportunity to get them into counseling or treatment.

A recent study in the Annals of Emergency Medicine examined that opportunity by measuring whether a seven-minute counseling session combined with a follow-up phone call reduced harmful drinking in ER patients. They found that six and twelve months later, patients who went through the counseling drank significantly less per week and binged significantly less often than those who didn’t. Whether there was a follow-up phone call or not didn’t have much effect.

Readers, does your plan cover emergency treatment for patients who are under the influence? Do you think it should?

With the Supreme Court’s recent deliberations on the constitutionality of 2010’s health reform law, much attention has been given to the law’s individual health insurance mandate. But another important aspect of the law was its medical loss ratio (MLR) rule, which required health insurance companies to spent at least 80% of premium revenue on actual medical expenses, as opposed to profits or overhead costs. For companies working with larger employers, that percentage goes up to 85%.

Many insurers already met the MLR standard, but this was the first time it’s been legally required. If insurers end up with too much revenue at the end of the year, they can return the extra to consumers as rebates.

Now, the first cycle of those rebates has begun, and according to estimates from the Kaiser Family Foundation (KFF), they’ll make a lot of consumers happy. More than 3 million individual market policyholders – one in three of those who buy their own coverage, reports Julie Rovner of NPR – and thousands of employers will receive a total of $1.3 billion in rebates. That averages out to $127 per person, writes Ricardo Alonso-Zaldivar of the Associated Press. Some consumers have already started receiving their rebates, and all must be notified and paid by August 1 of this year.

By the numbers:

• Individual market consumers will receive about $426 million total, mostly in Texas, Oklahoma, South Carolina, and Arizona.
• Hawaii is the only state where no one will receive a rebate (Alex Wayne, Bloomberg).
• Texas consumers and businesses will receive the most in rebates of any state, totaling about $186 million (Susannah Jacob, Texas Tribune).
• Florida comes in second, with about $148.5 million in rebates (John Dorschner, Miami Herald). Other state-specific totals come in at $14.6 for Connecticut residents and businesses (Arielle Levin Becker, Connecticut Mirror) and $30 million for Georgians (Andy Miller, Georgia Health News).
• According to a separate analysis by Goldman Sachs, UnitedHealth will pay about $307 million, Blue Cross Blue Shield Plans will pay about $250 million, Aetna will pay about $177 million, WellPoint will pay about $94 million, and Coventry will pay about $50 million.

Supporters of the health overhaul see the rebates as a sign that the law is cutting health costs and returning surplus profits to consumers, as it was intended to do. According to the KFF analysts, the MLR rule – in combination with federal review of premium increases over 10% – also discourages excessively high premiums in the first place, since insurers don’t want to be criticized when they issue rebates or lower their proposed rate increases.

But skeptics of the law say that for many people, $127 won’t cover even one month’s premiums. They add that other parts of health reform, such as benefit requirements and restrictions, will end up increasing premiums and other costs for consumers.

Readers, did you receive a rebate? Were you surprised to get it? Were you surprised by the amount?

For more information, see:

• Kaiser Family Foundation, 4/26/2012: Insurer Rebates under the Medical Loss Ratio: 2012 Estimates

How high was your co-payment the last time you visited your primary care doctor? What about your most recent specialist visit? Chances are, the specialist visit cost a little bit more.

When thinking of different types of health professionals, physical, occupational, and speech therapists are generally classified as specialists. As a definition, it makes sense; therapists go through special training and rarely, if ever, provide primary care. But when it comes to health insurance fees for therapy appointments, the question gets murkier. Unlike a one-off consultation or small set of appointments with other kinds of specialists such as neurologists or surgeons, a bout of therapy usually involves a series of appointments scheduled frequently – something like twice a week for three months. And higher co-payments for so many sessions can add up.

That’s the reasoning behind proposals in several states to place limits on how much insurance companies can charge patients for therapy. According to an article by Julie Appleby of Kaiser Health News, South Dakota and Kentucky have already passed such limits, and similar bills are being debated in Pennsylvania, Missouri, and New York. The details vary from state to state, but most would force insurers to charge the same price for therapy co-payments as primary care co-payments.

As may be expected, insurance companies tend to oppose these limits. In Ms. Appleby’s article, Robert Airkelbach of America’s Health Insurance Plans is quoted as explaining, “Anytime you have benefit mandates, it results in more expensive coverage (premiums), and in some cases, can inhibit patient access.” Rules that set co-payments for therapy – or any other specific treatment – cut down the range of possible options for consumers. For example, a consumer who doesn’t anticipate needing therapy may prefer a plan with lower premiums but higher therapy co-payments. If co-payments are set, such plans would not be available.

Readers, what do you think of such proposals? Would you prefer to have lower premiums, risking higher co-payments in case you one day need therapy?

The Affordable Care Act, which was debated last month by the Supreme Court, granted the federal Department of Health and Human Services (HHS) the authority to review proposed health insurance premium increases higher than 10%, along with the insurer’s justification for the increases, and decide whether or not they were reasonable.

Recently, two insurers with customers in six states proposed premium increases that HHS has designated as ‘unreasonable.’ HHS has asked the two insurance companies, Assurant Health and United Security, to either reduce the rate hikes or offer customers rebates. It’s important to note that although HHS can ask insurers to publicly explain increases, it does not have the authority to block the ones it finds unreasonable.

According to an article by David Morgan of Reuters, the proposed increases would affect about 60,000 people in individual and small group plans living in Arizona, Louisiana, Missouri, Montana, Nebraska, and Wyoming. The rate hikes were, for some plan members, as high as 24%.

In addition to being unusually high, the federal analysis found that the higher prices would break the health law’s medical loss ratio (MLR) requirement, which states that insurers must spend at least 80% of premium revenues on actual medical expenses. (Assurant’s analysts disagreed, and said that the increases were calculated with the MLR in mind.) If revenues are too high for that, insurers must give customers rebates for the excess amount.

Readers, under what circumstances would you consider a 24% premium increase reasonable – are there any? Given the goal of reducing unnecessary premium hikes, does HHS have the authority it needs to fulfill this goal, without being able to directly block rate increases?

Related post:

• 11/22/2011: HHS Deems Proposed Premium Increase in Pennsylvania ‘Unreasonable’

This week, the Supreme Court spent six hours over three days debating the constitutionality of the Affordable Care Act, which was passed in 2010. The biggest issue on the table was the individual mandate: whether the government could require people to buy health insurance coverage. While the Court hasn’t yet made its decision on whether the mandate will be overturned – and if so, how much of the law will remain on the books – the arguments offer some clues about what may come next.

Monday’s arguments suggested that a ruling will come sooner rather than later, according to an article by Louise Radnofsky of the Wall Street Journal. If the individual mandate were defined as a tax, which it is by many of its critics, there is a precedent that people must pay a tax before challenging it in a court. Since the mandate wouldn’t take effect until 2014, this would suggest that it can’t be challenged until then. However, the justices did not take much notice of this tradition, and mentioned another instance when it was not followed, in 1937.

While some justices’ votes are almost certain, a few are not, and these could determine the outcome of the case, explains Ms. Radnofsky. From their remarks before and during the arguments, it seems that Justices Clarence Thomas, Antonin Scalia, and Samuel Alito are likely to vote against the law. Liberal Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan will probably vote to uphold it. Thus, the decision may come down to Justice Anthony Kennedy, who in today’s Court is often the swing vote, and Chief Justice John Roberts, who asked questions during the arguments that could support both sides.

The decision on the individual mandate could impact many other parts of the law, which could be impossible, unfair, or less effective without the mandate. For example, if there were no mandate, allowing government to regulate premium increases and requiring insurers to provide coverage to people with preexisting conditions would present a serious challenge to health insurance companies; they would be required to dramatically expand their coverage without being guaranteed the revenue from premiums to pay for it. According to an article by Josh Gerstein and Jennifer Haberkorn of Politico, the justices did not seem eager to throw out the whole law, but certain other aspects such as expansions to Medicaid could come under fire.

So, what now? Following the arguments, which were open to the public and transcribed, the Court will review the details in a series of closed-door sessions before writing and issuing their final opinion. The private sessions begin tomorrow.

For more information and previous coverage of this case on our blog, please read:

• Mar. 19, 2012: Update: Supreme Court Will not Allow Cameras in the Courtroom
• Jan. 30, 2012: Can Health Reform Survive without the Individual Mandate? HHS Says Yes
• Nov. 14, 2011: Confirmed: Supreme Court Will Rule on Health Reform
• Nov. 11, 2011: D.C. Appeals Court Rules in Favor of Individual Mandate
• Nov. 4, 2011: Insurers Worried about Potential Repeal of Individual Mandate
• Additional posts about health insurance policy and regulation

This week, the Kansas House of Representatives discussed two bills that would address the services covered by health insurance plans in the state: one relating to autism treatment and the other to preventive health screenings for newborn babies.

House Bill 2764, which was endorsed by the House yesterday evening, would require health insurance companies and the state’s HealthWave program to cover autism disorders, according to an article by Mike Shields of the Kansas Health Institute (KHI) News Service. (HealthWave covers children enrolled in Kansas’ Medicaid and children’s insurance programs.) The coverage expansion would cost the state about $26 million, and would be paid for by the state’s general fund and Medicaid funds from the federal government. Children age six and younger will receive a maximum of $36,000 per year, and those age seven and older will receive up to $27,000 per year.

Originally, the bill would have required only private insurers to cover autism, but some argued that the state should not force insurers to pay for a benefit that it would not cover in its own programs. While the measure will extend coverage to thousands of children, it is likely to have some effect on premiums.

Also yesterday, writes Phil Cauthon of KHI News Service, the House Appropriations Committee approved Senate Bill 436, which would direct money from an existing tax on HMOs to pay for the state’s screening program for newborns. The screenings are currently paid for using revenues from a settlement with tobacco companies many years ago. However, those revenues are expected to go down in the coming years, and state officials are searching for a new source of funds.

According to Mr. Cauthon, Kansas is one of just three states that does not charge a fee for newborn screenings, and while there have been attempts to add a fee, they have not succeeded. The HMO tax, which averages about 1% of annual premiums, collects about $8.4 million per year, all of which is currently added to the state’s general fund. If the bill passes, the total cost of the screenings, which amounted to $2.2 million last year, will come from HMO tax revenues. The remainder will continue to go to the general fund.

When the Supreme Court announced earlier this year that it would rule on the constitutionality of the 2010 health overhaul, experts immediately began speculating about the issues that would be debated, what the verdict would be, and the role that public opinion would play. With the intense interest surrounding this case, some wondered whether the Court would take the unprecedented step of allowing the arguments to be televised.

As we blogged a couple of months ago, those in support of broadcasting the proceedings said it will educate the public, encourage interest in what the Court does, and allow people to interpret the arguments on their own. Opponents worried that it would set a precedent for always televising Supreme Court hearings and that being filmed would change the dynamics of the courtroom.

On Friday, the Supreme Court gave an answer: While it won’t allow the proceedings to be aired on TV, it will release audio recordings and transcripts of the arguments immediately after they take place. According to an article by Joan Bikuspic of Reuters, the Court’s usual practice is to release recordings at the end of every week. But because of the intense interest surrounding this case, they will be released early.

Yesterday, the federal government released a 644-page document comprising its final regulations on the health insurance exchanges created by health reform, a key part of the law that would allow consumers to buy health insurance coverage online much like any other consumer product. The exchanges, which are scheduled to launch in 2014, will be run at the state level, either by the states themselves or using a framework developed by federal agencies.

According to an article by Julie Appleby of Kaiser Health News, yesterday’s regulations pertain only to state-developed exchanges. Similar guidance for states that choose to use the federal framework will be published soon.

The rules were developed with input from individuals, organizations, companies, and providers who submitted formal comments or attended meetings across the country, explains a fact sheet posted at Healthcare.gov. They leave states considerable freedom to develop an exchange that meets their residents’ needs. For example, states can choose whether the exchange is operated privately or by a government agency, the number and type of health plans offered, the minimum standards for a health plan to qualify, and how to determine customers’ eligibility. States may choose to partner with their neighbors to create regional exchanges, and may also operate multiple exchanges within their own borders. Each exchange will be governed by a board that includes insurers and at least one consumer advocate, writes Ms. Appleby.

The goal is to make enrollment as easy as possible for consumers. To that end, the rules state that there must be one standardized application for enrollment, regardless of which plans an applicant may qualify for. In order to reduce paperwork and minimize duplication of efforts, states must use electronic resources as much as possible and manage coordination with other programs such as Medicaid. The shopping process must be simple, impartial, and in plain language, allowing consumers to directly compare the plans they may be interested in. The rules provide for funding to establish health insurance ‘navigators,’ organizations that help consumers manage the shopping process.

Finally, state exchanges must include a Small Business Health Options Program (SHOP) with specialized information and processes tailored to small businesses. States may choose how the SHOP is structured, what plans to offer, and how small a business must be to participate.

Experts were divided on whether all that flexibility was a good thing, according to a blog post by Jason Kane of PBS NewsHour. Those who support it say it empowers consumers, while critics say it provides states with too little guidance and fails to answer key questions.

These regulations come at a pivotal time for the health overhaul – just as the Supreme Court is preparing to debate its constitutionality. But until a decision is made, the Obama administration is proceeding as usual with its original plan to fully implement the law by 2014.

Assuming the Supreme Court upholds the law and the creation of exchanges, the next step will be for states to finalize their exchange plans and have them approved by the federal government by January 2013. States that can’t meet this deadline must apply for an extension to delay the launch of their exchange. However, federal funding will run out by the end of 2014.

We’ve written extensively on this blog about the government-run health insurance exchanges created by health reform, which are currently being developed. States vary in the progress they’ve made toward setting up the exchanges, which are slated to launch in 2014. Given that the Supreme Court’s arguments on the health law are scheduled for later this month, some states have chosen to wait until the Court makes a firm decision on the law’s constitutionality before planning the exchanges in detail.

Now, two state-level policymakers in Minnesota have proposed an alternative to health insurance exchanges: allowing people to open personal accounts to pay premiums for private insurance outside of the exchange. The two legislators, Republican Sen. David Hann and Rep. Steve Gottwalt, do not support online exchanges. According to a post by Jim Ragsdale of the Star Tribune’s Hot Dish Politics blog, they don’t think the federal plan is financially sustainable, and expect that eventually, states will have to contribute to its costs.

In contrast, they say, their proposal would not increase costs for the state. Instead, individuals, employers, family members, charities, and other organizations could contribute to a person’s health account. Employers would not be required to contribute.

Readers, what do you think of this plan? Do you think personal health accounts could coexist with an online exchange, or must the state choose one or the other?