IN CALIFORNIA
California’s Uninsured Rate Plummets
California’s uninsured rate dropped to 12.4% in 2014 from 17.2% in 2013, according to a recent Census report. “Covered California executive director Peter Lee said, “California is having one of the largest impacts in the nation on reducing the rate of the uninsured.” The Census report comes on the heels of a field poll in which 68% of registered voters said that California had been successful in implementing the new law.
Lee noted that California has embraced the Affordable Care Act, including expanding Medi-Cal and establishing a health exchange that has all the tools available to provide coverage and care to millions. California still has millions of people who are eligible for health insurance through Covered California or Medi-Cal. “We cannot rest on our laurels. You don’t change overnight from a culture of coping, where people think they can’t afford coverage and make do without care, to a culture of coverage,” he said.
The full Census report can be viewed here (PDF): census.gov.
Online Tool Allows Californians to Compare Health Care Costs
California Healthcare Compare is a new web-based tool that allows Californians to access and compare healthcare prices and quality ratings online. Commissioner Jones directed the California Department of Insurance to get federal Affordable Care Act grant funds to enhance transparency in healthcare pricing. Commissioner Jones then partnered with the University of California San Francisco (UCSF) and Consumer Reports to create HealthcareCompare.insurance.ca.gov.
A first of its kind in California, California Healthcare Compare allows consumers to compare hospital and medical group quality in the areas of maternity care, hip and knee replacement, back pain, colon cancer screening, and diabetes. The site also reveals estimated regional costs for more than 100 different medical procedures or conditions ranging from appendicitis to prostate cancer, illustrating dramatic price differences depending on where you seek care. To enhance consumers’ knowledge of the healthcare system, Consumer Reports provides expert tips and advice on how to navigate the healthcare system.
R. Adams Dudley, MD, Director of UCSF’s Center for Healthcare Value said, “This website would not be possible in most states because the information simply isn’t available. Because of the advocacy of California consumer and business groups and the vision of California’s insurers and providers, we have much more information about quality of care than most states. Therefore, we can tell a pregnant woman not only about the C-section rate at a hospital and whether she’ll be allowed to try for a vaginal delivery if she’s had a C-section before, but also what percentage of women at that hospital learn to breast feed before going home and how often complications happen.”
Former Insurance Agent Scams Elderly Members of First AME Church
Constance Gail Fortune, 61, was arraigned in Los Angeles Superior Court and charged with three felony counts of grand theft and one felony count of financial elder abuse for allegedly scamming seniors out of more than $100,000, many of whom were members of First AME Church.
Department of Insurance investigators uncovered evidence that Fortune, a licensed agent at the time, sold homeowners, auto and life insurance policies to numerous consumers, but never actually purchased policies and stole their premiums. Fortune’s alleged illegal activities occurred over a two-year period and left consumers with no coverage and at considerable financial risk.
Fortune, a trustee and former spokesperson for First AME Church, hosted meetings and met with fellow church members and others to market insurance products. She fabricated bogus insurance documents on official insurance company letterhead to give consumers the appearance that the policies were legitimate. Fortune used consumers’ premiums to pay for her personal expenses.
The Department of Insurance is encouraging anyone who purchased an insurance product with Constance Fortune to contact CDI Detective Virgil De Los Santos at (323) 278-5000. Her insurance license has been inactive since January 30, 2013.
The Los Angeles County District Attorney’s Office Elder Abuse Unit is prosecuting the case. This case is being investigated and prosecuted under the Life and Annuity Consumer Protection Program (LACPP). LACPP provides grant funds to counties for the prosecution of financial abuse in life insurance and annuity product transactions. Fortune faces up to five years in state prison if convicted.
HEALTHCARE
Societal Expectations of Poor Health in Elderly Contribute to Skyrocketing Costs
The media reinforces the expectation that poor health comes with age. This attitude leads to extraneous medical procedures and skyrocketing healthcare costs, which reached $2.9 trillion in 2013 and are projected to grow an average of 6% annually through 2023. To reverse this unsustainable trend, healthcare practitioners should promote healthy habits to prevent disease, rather than simply treating the symptoms of sedentary lifestyles, according to Robert Drapkin, MD, board-certified physician in Internal Medicine, Medical Oncology and Palliative Care.
A Pew Research study finds that four in 10 adults in the U.S. are caring for sick or elderly family members. As the population ages and medical advances extend lifespans, home caregiver numbers are projected to increase; nearly half of the adults surveyed by Pew Research say they expect to care for an elderly parent or relative in the future.
The Affordable Care Act (ACA)—with tenets of quality care at every age—has abandoned the longstanding fee-for-service model, which unintentionally encouraged office visits, tests, procedures and surgeries. Instead, healthcare providers are incentivized to reduce costs while providing better quality care. In addition, doctors, hospitals, and other practitioners are encouraged to coordinate care through Accountable Care Organizations (ACOs), which have financial incentives to save money by avoiding unnecessary procedures—all changes which Dr. Drapkin says will help reverse the view that wellness is virtually impossible as an individual ages.
Seniors and their families will greatly benefit from an emphasis on improving wellness, rather than endless treatments and over-medication, said Dr. Drapkin. Without a focused effort on education, the soaring costs of healthcare, combined with a disregard for their fundamental health needs, will continue to push the burden of care onto family members. Drapkin says that a more concerted effort, throughout the healthcare system, to promote healthy habits earlier in life would help Americans avoid many of the conditions that cause poor quality of life and financial worries as they age.
He notes that the overburdened healthcare system focuses at least 25% of its resources to treat preventable diseases and disabilities that result from harmful habits, such as smoking, poor diet, lack of exercise, failure to use seat belts, and alcohol abuse. In fact, alcohol, cigarettes, and obesity cost the U.S. healthcare system a combined $177 billion per year.
Along with questions about who should pay for the consequences of unhealthy behaviors, the healthcare system will also struggle with increasing demand for services. Seventy percent of people over 65 will need some form of long-term healthcare. As a result of the ACA, healthcare providers will be seeing more patients as there are fewer uninsured people who forego healthcare. A study published by the Annals of Family Medicine reports that 52,000 additional primary care physicians will be needed in the U.S. by 2025, but too few medical residents are choosing primary care to fill this need.
“Clearly, a new approach is needed to avoid over-stressing the healthcare system and families of the elderly in the U.S. Eliminating preventable diseases through education about healthy habits would not only ease these burdens, but would also reduce healthcare expenditures and increase Americans’ lifespans. It’s a win-win approach that will produce healthier, happier seniors,” said Dr. Drapkin.
How Incentives Can Make Health Care More Affordable
A three-year Cigna study shows how a handful of correctable health conditions contribute to the health care costs of American workers. Study provides evidence that those with unhealthy biometrics and those who have not completed biometric screening measures are more likely to incur high costs. Findings provide evidence that incentive programs can lead to better health engagement and behavior, clinical outcomes and costs.
The bad news is that higher weight, cholesterol, blood pressure and blood sugar can raise health costs and out-of-pocket health expenses. The worse news is that what you don’t know about your health could be even more costly to you.
The good news is there are health improvement programs and incentive strategies that are proven to help people address the conditions that increase costs, according to a three-year study of health plan consumer data by Cigna.
The Cigna study of 200,000 customers shows how a handful of correctable health conditions can contribute to their average annual health care costs. A body mass index (BMI) of more than 30 increases total health care costs by an average of more than $2,460 per customer per year, and adds $492 in annual out-of-pocket costs.
A cholesterol reading of more than 240 translates into an average total health care cost increase of $1,644 per health plan customer, per year, and adds more than $353 in annual out-of-pocket costs.
Two or more chronic conditions indicated by unhealthy BMI, blood pressure, cholesterol, and blood sugar raises annual out-of-pocket expense by almost $1,300 per year, and total healthcare costs by nearly $9,000 per year.
When it comes to health conditions, those who have not undergone a biometric screening have higher health costs. For example, those who have not had blood pressure screening have total health costs that are $2,064 higher per year, and $400 more in out-of-pocket costs, than those who have verified that their blood pressure is lower than 140/90.
Those who have not had a blood glucose screening have total health costs that are $1,332 higher per year, and $266 more in out-of-pocket costs, than those who have verified that their blood glucose is lower than 100.
Incentives more than doubled biometric screening rates from 20% to 55% in 2014.
Incentives increase the probability of engaging in a coaching program by 24% and by 30% for those with chronic conditions. Incentives increase the probability of setting and meeting goals by 18% and meeting with a health coach by 43%. Incentives also increased the probability of meeting biometric targets.
Cigna’s chief nursing officer, Mary Picerno said, “Employers are increasingly rewarding employees who identify and address their potential health risks by discounting the employee’s health plan premiums or adding funds to their health spending account to lower their annual out-of-pocket expenses.”
Medicare Advantage Premiums Remain Stable; Enrollment at All-Time High
The Centers for Medicare & Medicaid Services (CMS) announced that Medicare Advantage premiums will remain stable and more enrollees will have access to higher quality plans while enrollment is projected to increase to an all-time high. In addition, CMS released today new information that shows that millions of seniors and people with disabilities with Medicare continue to enjoy prescription drug discounts and affordable benefits as a result of the Affordable Care Act. Today’s announcement comes as CMS releases the premiums and costs for Medicare health and drug plans for the 2016 calendar year.
CMS estimates that the average Medicare Advantage premium will decrease by $0.31 next year, from $32.91, on average, in 2015 to $32.60 in 2016. Fifty-nine percent of Medicare Advantage enrollees will face no premium increase.
Sean Cavanaugh of CMS said, “Seniors and people with disabilities continue to experience stable premiums in Medicare health and drug plans while benefiting from a transparent and competitive marketplace. Medicare Advantage and prescription drug plans remain affordable and provide high quality care.”
Access to the Medicare Advantage program will remain strong, with 99% of beneficiaries having access to a plan. In addition, in 2016, more Medicare Advantage plans will offer supplemental benefits for enrollees, such as dental, vision, and hearing benefits. From 2010, when the Affordable Care Act was enacted, and 2016, premiums are expected to decrease by nearly 10% and enrollment is projected to increase by more than 50% to approximately 17.4 million enrollees, which is about 32% of the Medicare population. At the same time, beneficiaries are receiving higher quality care. About 65% of Medicare Advantage enrollees are enrolled in plans with four or more stars for 2016, a significant increase from 17% of enrollees in such plans in 2009.
Premiums in the Medicare Prescription Drug Program (Part D) will also be stable next year. Earlier this year, CMS announced that the average basic Medicare prescription drug plan premium in 2016 is projected to remain stable at $32.50 per month. Because of the Affordable Care Act, people with Medicare are seeing reduced costs through savings on covered brand-name and generic drugs and access to certain preventive services at no cost sharing. Since the passage of the Affordable Care Act, which closes the prescription drug donut hole over time, more than 9.8 million people with Medicare have saved over $17.6 billion on prescription drugs through July 2015 as a result of the discounts in the donut hole and rebates in 2010, for an average of $1,796 per beneficiary.
Quality in Part D continues to be strong, with close to 50% of prescription drug plans receiving four or more stars. These plans serve about one-third of prescription drug plan enrollees, compared to 27% of enrollees in plans with four or more stars in 2009. CMS calculates star ratings from one to five (with five being the best) based on quality and performance for Medicare health and drug plans to help beneficiaries, their families, and caregivers compare plans.
The annual election period for Medicare health and drug plans begins on October 15, 2015 and ends December 7, 2015. Plan costs and covered benefits can change from year-to-year. For more information, visit cms.gov.
Workers Get a Break from Health Cost Increases
Forty-seven percent of workers say they have not experienced a change in health care costs in 2015 compared to 36% in 2014. One-half of workers with health insurance coverage have had an increase in health care costs in the past year, according to a survey by the Employee Benefits Research Institute (EBRI). Twenty-five percent of workers say the U.S. health care system is poor; 30% say it’s fair; 13% say it’s very good; and 4% say it’s excellent. Dissatisfaction appears to be focused primarily on cost. However, 50% of those with health insurance coverage are extremely or very satisfied. Only 9% are not satisfied with their health plan.
Health Exchange Players: Growing Membership, Questionable Earnings
Although the period was extended for applicants to request coverage, enrollment from the U.S. health insurance exchanges was lower than initial government projections in the initial and second open enrollment periods, according to a report by A.M. Best. The individual market was expected to completely transform in 2014, with the anticipated cancellation of all plans that were non-Affordable Care Act (ACA) compliant legacy plans. While individual commercial enrollment surged, ACA implementation in 2014 was less negative than initially anticipated due to delays in the implementation of certain key provisions, enhanced government transitional risk payments and multiple changes to health insurance products and networks.
The following are some of the highlights in this latest briefing:
- For exchange participants, individual enrollment now accounts for 31.4% of all commercial enrollment compared to 10.9% in 2005. Individual enrollment accounted for 6.8% of total enrollment in 2005, doubling to 13.3% at year-end 2014. Conversely, non-federal exchange companies’ individual enrollment (as a percentage of total commercial) enrollment has increased to 15.3% in 2014 from 5.9% in 2005. However, individual enrollment is still a very modest 2.6% of total enrollment for companies that did not enter the federal exchanges.
- Individual commercial premiums follow a similar trend for the individual and commercial populations, accounting for 24.3% of commercial premiums in 2014 for exchange participants—over triple the 7.5% reported in 2005. Conversely, non-exchange companies saw their individual premium allocation double from 7.4% in 2005 to 16.3% in 2014 (as a percentage of commercial premiums). Comparatively, there was more of an increase in 2014 rising to 5.2% from a consistent range of 4.2% to 4.7% from 2005 to 2013.
- Exchange participants increased their individual commercial premium mix to 12% in 2014 from 5.3% in 2005.
- The commercial group business segment is an important market for insurers, even with its decline since employer-sponsored health benefits are the predominant coverage for individuals. About 149 million people get coverage through the workplace.
- Over the past several years, carriers have already incurred expenses leading to depressed earnings.
To get the full report, visit www3.ambest.com.
More Consumers Are Using Alternative Sources for Health Insurance Coverage
Americans are spending more time evaluating their insurance options, and are securing coverage from sources other than their employer. This is despite widespread consumer unfamiliarity with non-traditional health plan options, including provider-sponsored health plans (PSHPs). Consumers consider a health plan’s cost the most important factor when selecting coverage, according to a report by Valence.
The news comes on the heels of a U.S. Centers for Disease Control and Prevention report announcing that more than 90% of Americans are now insured for the first time in history. The ACA, in combination with the industry’s movement to fee-for-value and incentive-based payment models for providers, translates to more empowered healthcare consumers.
Phil Kamp, Valence Health’s chief strategy officer said, “In the two years since we first conducted this study, millions of Americans have gained access to health insurance, and significant shifts in the industry have placed more consumers in the driver’s seat when it comes to their care. The survey results show that, when given a choice, individuals readily take on more responsibility when selecting a health plan. They may be paying less out-of-pocket for healthcare services than other industry reports suggest.” The following are key findings:
- Compared to 59% in 2013, 38% of those surveyed get insurance through an employer.
- 73% of respondents report being very or somewhat satisfied with their health insurer.
Choosing Health Insurance - When selecting health insurance, in order of importance, consumers rank coverage of major medical expenses first, followed by prescription coverage and routine preventative care.
- Nearly 40% spend seven or more hours evaluating their health insurance options.
- Consumers are considering non-traditional forms of health insurance, but they need more information on managed care and its effect on cost and quality. Twenty-one percent are interested in purchasing insurance through a local hospital or health plan, leaving ample opportunity for more education.
- The number of respondents seeking to get Medicare coverage in the coming year doubled from 12% in 2013 to 24%.
- Roughly 30% have delayed receiving care or getting prescriptions due to costs.
- Paradoxically, more than 40% say they’ve paid less than one hundred dollars in out-of-pocket healthcare costs in the past 12 months.
For more information, visit valencehealth.com.
NEW PRODUCTS
Provider-Network Transparency
Vericred launched its provider-network data application programming interface (API). It allows private healthcare insurance exchanges, health insurance quoting and enrollment platforms, and web-based health insurance brokers to help clients find a health plan in which their doctors participate. Last month, Vericred introduced PlanCompass Pro, a Software-as-a-Service (SaaS) application for insurance brokers to show which of a client’s doctors are in every available plan’s network. Now the same provider-network data is available to power doctor-centric search on every platform where an individual or business shops for insurance, or seeks to find a new doctor. Licensing sales for the API have begun. One prominent web-based insurance broker has already licensed Vericred’s data. For more information, visit vericred.com.
Income Annuity Website
Golden Retirement LLC relaunched its Go2Income.com website. Go2Income enables investors to educate themselves about income annuities, quickly customize an income annuity according to their needs, and get real-time, competitively bid annuity quotes from top-rated carriers through the go2income annuity shopping service. Go2Income.com offers a learning center that enables visitors to learn about immediate annuities at their own pace. For more information, visit Go2Income.com.
CA Payroll Software
State of California requires employers to provide paid sick leave for all eligible employees from July 1, 2015. The ezPaycheck payroll software released a new edition in time support PTO plan. Employers and team members are accommodated by this feature from Halfpricesoft.com at no additional cost to 2015 ezPaycheck customers. The latest version has just been updated for California employers who need to provide paid sick leave plan to employees. For more information, visit halfpricesoft.com.
Group Critical Illness Insurance Product
The enhanced Symetra Critical Illness (CI) Insurance policy is a new group product that allows employers to offer an added layer of financial protection in the event of a covered critical illness with added flexibility for the employer and the employee and more covered conditions than with traditional CI policies. The policy is available as standalone coverage or with other Symetra group products, including stop loss, life, disability and Select Benefits fixed-payment medical insurance.
Symetra Critical Illness provides a lump-sum payment to the insured employee or family member upon diagnosis of a covered condition, after the policy is in effect. Covered conditions are divided into three primary categories, with each condition paying a fixed percentage of the benefit amount—25% to 100%. Benefits are paid directly to the insured, regardless of any other coverage they may have, and may be used for anything, including expenses like co-pays, child care and transportation. For more information, call 800-706-0700 or visit symetra.com.
GUL with Chronic Illness Plus Rider
Symetra has strengthened its flagship no-lapse guarantee universal life insurance — Symetra UL–G — enhancing the product’s chronic illness and terminal illness riders and adding an optional chronic illness plus rider. Selected at issue and available at an additional cost, the new Chronic Illness Plus Rider gives policyholders a greater level of control over their insurance protection when they have a qualifying event. For more information, visit symetra.com.
Critical Illness and Hospital Indemnity Insurance
The Standard has added three new products to its suite of voluntary employee benefits. Group accident, critical illness and hospital indemnity insurance are now available in addition to the company’s group long term disability, short term disability, life, AD&D, dental and vision products. The Standard’s comprehensive suite of insurance products helps simplify administration as employers can now work with one carrier for their non-medical employee benefits needs. For more information, visit standard.com.
Low-Cost, Investment-Focused Variable Annuity
Nationwide continues its busy year of introducing several new and enhanced annuity and life insurance products with the launch of Nationwide Destination Freedom, an investment-focused variable annuity for clients looking for a low-cost solution with the flexibility to choose from more than 130 funds. Freedom+ provides clients with a tax-deferred investment option for their portfolio, potentially helping to create more retirement income. It also offers more four-star and five-star Morningstar rated funds than the leading competitor among the more than 130 available fund investment options, allowing advisors and clients to choose their own investment strategy mix for broader diversification. For more information, visit nationwide.com.