Reuters Money
Patient Protection reform could mean higher healthcare costs
Of the endlessly debated provisions in the Patient Protection and Affordable Care Act (PPACA), the requirements for Medical Loss Ratios (MLRs) stand out for insurance companies because the requirements are designed to dictate how those companies pay their bills.
Until now, it’s been mostly unclear how those requirements will affect consumers. But a new study from the U.S. Government Accountability Office released last week sheds some light. And experts are weighing in.
First, some background: For every dollar taken in by insurance companies for health plans, those companies will now be required this year under the PPACA to spend either 80 or 85 cents – depending on the size of the plan; smaller group plans are held to the lower number – on costs related to healthcare.
In the past, insurance companies have traditionally spent less than that on healthcare costs and as much as 30 or 40 percent on administrative costs. The ratio of healthcare costs to administrative costs is called – you guessed it – the Medical Loss Ratio.
If companies do not meet the new MLR requirements under the PPACA, they are required to send their customers a refund to make up for the difference. This year is the first year that insurers will be held to the MLR requirements; the first set of insurer data is due in June 2012.
The goal of the MLR requirements is to make health insurance companies more efficient, says Dr. Timothy S. Jost, a law professor at Washington and Lee University who is a co-author of a textbook on healthcare law and a consumer representatives to the National Association of Insurance Commissioners, which helped to develop the MLR requirements.
The MLR requirements will “eliminate administrative costs, control profits and hopefully force these companies to provide better care to people,” he says.
8 home issues your insurer doesn’t cover
You won’t believe this, but my house was hit by lightning — twice.
I know this isn’t supposed to happen. Fortunately nobody was hurt and the house didn’t burn down. Yet I think a deity (maybe Thor or Zeus) was reminding me to check my insurance coverage and install lightning rods.
Checking your homeowner’s insurance is a matter of seeing 1) what they won’t cover and 2) your out-of-pocket expenses, based on your deductibles.
Since I carry a $1,000 deductible on my homeowner’s policy, which reduces my premium, I know anything under that threshold is on me.
It could have been worse. In the case of my dual lightning strikes, I only had to pay to replace (2) circuit boards from my garage-door opener, a sump pump and computer board in my stove. Those expenses totaled about $900. The garage-door opener repair service generously offered to send in a claim directly to my insurer, which was helpful, but it still wouldn’t exceed the threshold of my deductible.
I discovered in researching this subject that even if my lightning-related expenses had exceeded $1,000, my insurer may not have reimbursed me anyway since power-surge damages typically aren’t covered. I had bought a cheap surge protector to protect my garage door opener, which didn’t do much good against a million volts. (I noticed in the hardware store, though, that more expensive surge strips carried insurance in case any appliance got fried, so that was some reassurance).
Since I live in the Midwest, I’m most concerned with water and wind damage. In the winter, we get these gremlins called ice dams that back up on frozen gutters and leak into the house. Roof vents have also leaked in the past, which have caused extensive ceiling damage upstairs. Insurance covered that.
Wow, those are terrible stories. I lucked out, I guess. I had pipes that froze and burst in the winter, and because I was away at the time, the damage was very severe, ruining a very large portion of the house. Fortunately, I was covered for that, and after months of a complete rebuilding job, have new walls, resurfaced floors, and a new paint job.
So my insurance was excellent. I also think it has to do with where you are – I’m guessing that if a particular phenomenon happens all the time in an area, insurance companies won’t cover it. I’m in an area with no frequent floods, no tornadoes, and no hurricanes, and I assume that worked in my favor.
Obama moving to address flaws in public option for long-term care
Remember the public option?
Progressives fought for a government-sponsored insurance program in the healthcare reform law, and failed — with one exception. A little-noticed provision of the Affordable Care Act created a public option for long-term care insurance. The Community Living Assistance Services and Support plan (CLASS for short) aims to fill the country’s yawning gap in long-term care (LTC) protection by offering modestly-priced coverage that emphasizes more flexible, community-based care over nursing homes.
But the success of CLASS is by no means assured. The law mandates that the plan be self-funded through enrollee premiums, but critics charge it won’t be financially sustainable and will create a long-term drag on the federal deficit. President Obama’s deficit commission recommended reform or repeal of CLASS last December; Republicans in Congress are pushing for the latter option.
Now the Obama Administration is acknowledging the problems, and pledging to make adjustments. Health and Human Services Secretary Kathleen Sebelius told attendees at a recent Kaiser Family Foundation forum that her department is addressing financial sustainability issues as it writes the rules and regulations for CLASS ahead of its anticipated 2013 rollout.
But the key issue isn’t really CLASS or no CLASS. Expenditures for long-term care will explode in the next several decades as the country ages, so the question is how to foot the bill most efficiently?
Medicare covers only a tiny portion of LTC needs. About one-third of Americans turning 65 this year will need at least three months of nursing home care sometime during their lives, according to the Center for Retirement Research at Boston College (CRR); the cost of a semi-private room averages $79,000 per year. CRR calculates that the mean lifetime exposure to long-term care costs for a 65-year-old couple is $260,000, with a five percent risk of a $570,000 expense.
Currently, 40 percent of all care currently is funded through Medicaid, which in most cases requires beneficiaries to spend down assets to poverty levels in order to qualify. Meanwhile, privately-offered LTC insurance remains a mass-affluent product with low market penetration. And many consumers who can afford private LTCI are scared off by the lack of premium predictability, as demonstrated by recent news about double-digit premium hikes. Some key insurance underwriters have had trouble making LTC products work and have exited the market.
@mebfsa
There is no such provision in the law as you’ve stated it:
“…then you need to continue to work until at least two years before you start needing care.”
The only work requirement is that the participants must work 3 of the first 5 years in which they are enrolled in the program.
You are mistaken about the need to work until two years before claiming benefits.
Scott A. Olson
Redlands, CA
5 ways to fill the healthcare gap before Medicare
When Martha Thomas was laid off from her job as a medical editor in San Jose, California, in November 2009, she was four months shy of her 65th birthday and Medicare eligibility. To tide her over, she enrolled in her company’s retirement plan, which offered her health insurance for $450 a month. And she got 18 months of dental coverage through COBRA for $50 a month.
Whether you’re four months away from Medicare eligibility — or even four years — filling the healthcare gap before Medicare eligibility is neither easy nor cheap. The advent of state health exchanges under health reform should ease the process, but those won’t be up and running until 2014.
In the meantime, if you are laid off or experience some other job loss prior to your 65th birthday, there are several techniques you can use to simplify your search for a plan, and to ease the cost burden.
Scrutinize your employer’s offerings. All employers with more than 25 employees must offer COBRA, which will provide the same health, dental and vision coverage you had when you were employed there, but at a higher out-of-pocket cost. In addition, many large employers still offer retirement health plans. Depending on your employer’s choices, you may be smart to mix and match, as Thomas did by getting her dental plan through COBRA and the rest through her employer’s retirement plan.
If you need to cover a gap that’s longer than a few months, though, you may be better off shopping on the open market. In 2009, the average premium paid by individuals age 55 to 64 on the open market was $314 a month, according to eHealthinsurance.com, one of the many sites that sells individual health plans. The average cost of COBRA, on the other hand, was $410 for an individual, according to the Kaiser Family Foundation.
Amir Mostafie, a consumer health insurance expert for eHealthinsurance.com, believes anyone in the middle of being treated for an illness should stick with COBRA, because it allows patients to keep the doctors they already use. Co-pays and other cost-sharing arrangements also stay the same.
But COBRA might not be the best option for everyone in the family. When Mostafie’s father retired recently, he enrolled Mostafie’s mother in COBRA because she was being treated for kidney disease and they wanted to stick with the doctors they had. “But my dad was healthy when he retired, so he bought a bare-bones plan on the open market,” saving the couple hundreds in premiums, Mostafie says. “Run your quotes both ways — as a family and separately,” he advises.
I got quotes from HealthInsuranceProviders.com (emailed from a bunch of different insurance companies they matched me up with though). eHealth is also good but one nice thing that HealthInsuranceProviders has is a bunch of reviews and ratings of different health insurance providers which is helpful.
Hey GOP, cut Medicare Part D first
Now that House GOP members are off and running with scissors to trim the federal budget deficit and healthcare, I have a suggestion for immediate cost savings: Medicare Part D.
This is the part of Medicare that pays for most of prescription-drug costs for about 45 million Americans. While it may seem that this is cruel and unusual punishment to take away this benefit for older Americans, I have an alternative plan that will reduce the deficit and save money for taxpayers.
Contrary to the House leadership’s position, my health reform would save taxpayers billions, lower drug costs and engage the noblest of free-market principles.
Let’s look at the numbers first. When Part D was first proposed more than seven years ago, the Congressional Budget Office, estimated it would cost taxpayers about half a trillion dollars from 2004 to 2013.
Subtracting premiums paid by beneficiaries, the net cost would be about $400 billion.
As part of the “Medicare Modernization Act,” the idea behind the drug benefit was to pay private companies to be part of the plan. The theory went that if you offered incentives to be in the program, you’d compete vigorously against other companies to offer the lowest-possible drug prices to seniors. A brilliant cost-control strategy, no?
If you had direct access to 45 million-plus possible customers, wouldn’t you relish the opportunity? And aren’t prescription drugs one route to reducing overall health costs?
Ok, let’s set the record straight here. 1) I am not a member of the “East Coast Media.” I write from Chicago and always have. 2) Nobody is throwing anyone “under the bus.” My proposal seeks to employ free-market economics to reduce overall drug costs so that seniors pay less, 3) this idea could be expanded to everyone and it makes sense as a single-buyer program because of its efficiency and bargaining power, 3) I understand some Medicare rules may have reduced the number of providers; my issue is with the subsidies themselves (“pay to play”). They should all be competing against one another to deliver the lowest prices, 4) If this works, more drugs will be sold because more people can afford them whether they are in Medicare or not — provided that the single-buyer approach is extended to non-Medicare recipients. As far as Medicare’s fiscal problems go, it’s time to own up to them. This is a crisis that will implode much faster than Social Security. The key is to introduce competition and allow Medicare to bargain for the lowest prices — just like Wal-Mart, the VA and Medicaid.
Year-end tip: How to get an insurance deal
I doubt if many year-end checklists include the item “insurance policy review.” It’s about as exciting as road salt.
Yet this is a great time of year to see how you can save on all of your policies. Since my homeowner’s policy is up for renewal the end of the month, I usually check to see how I can cut my premium.
Last year I took the plunge and pulled nearly all of my policies from one insurer. I got a better deal, surprisingly enough, through a college-savings program in which I’m enrolled (Upromise.com).
Since insurers want to sell you as many policies as they can — auto, homeowner’s, life, umbrella liability — they will give you a reasonably good discount for getting most of your property-casualty business. In my case, I placed both of my cars and homeowner’s policies with a new insurer and saved a few hundred dollars.
When I did a policy review on my homeowner’s plan recently, I discovered discounts that I didn’t know existed.
There are the usual breaks for multiple policies, smoke detectors and new/renovated home. (My house is 11 years old.) Then there are more-obscure reductions like dead-bolt locks and not having filed a claim in the last five years. (Insurers have access to this information.)
In addition to covering my home and its contents, I always make sure that I have inflation protection. Even though the value of my house dropped in the past few years, the replacement cost of rebuilding it hasn’t.
I work at eHealthInsurance and for our blog, we asked our licensed agents to create a year-end checklist just on health insurance and how to maximize your dollars. Hopefully this is a helpful addendum to your post, John: http://blog.ehealthinsurance.com/2010/12 /get-the-most-for-your-2010-health-insu rance-dollars/#more-1468
Will healthcare reform lead to higher premiums?
Many Americans this week are finally getting to try on for size the Affordable Care Act. September 23 marks, just for starters, the end of lifetime payment caps as well as the expansion of parents’ benefits to children under 26. Insurers can also no longer cancel coverage if a policyholder falls sick.
Yet, as the public and lawmakers continue to sift through the details of President Obama’s health package passed last March, one questions lingers in most people’s minds: What is this all going to cost? Not surprisingly, the answer isn’t simple.
To start, important to keep in mind are the long-term savings. By 2019, the legislation is expected to reduce the nation’s uninsured population by 32 million people, which should dramatically cut overall expenditures going forward. Consider, for one, that a study last year by the Center for American Progress Action Fund, a liberal think tank, concluded families pay, on average, as much as $1,100 extra each year in order to cover the cost of treatment to uninsured patients who cannot afford to pay their bills — that amounts to as much as 8 percent higher premiums.
Also expected to improve is the U.S.’s fiscal health. In March, the Congressional Budget Office projected the $940 billion package of reforms could reduce the deficit by $143 billion over the first 10 years, and by more than $1 trillion over the second decade.
Still, such gains are intangible right now for most people. Indeed, several polls this summer suggest that as many as four out of five Americans are concerned the healthcare overhaul will significantly raise their healthcare costs. Even more concrete, too, are the soaring health premiums most employees have seen in their paychecks this year.
Workers on average are paying nearly $4,000 in 2010 toward the cost of family health coverage, a 14 percent increase over last year, according to a September survey by the Kaiser Family Foundation. What’s more, workers’ contributions to premiums have gone up 47 percent since 2005, while premiums rose 27 percent and wages increased 18 percent.
“With the economy struggling, businesses have been shifting more of the costs of health insurance to workers through premiums, deductibles and other cost-sharing,” Kaiser President and CEO Drew Altman said in a statement. “From a consumer perspective, the cost of health insurance just keeps going up faster than wages.”
Are you a fool?
You are a fool if you believe that ending lifetime medical caps on individuals will lower costs. You are a fool if you believe that the many new mandated illnesses covered will lower your premiums. You are a fool if you believe that the tens of thousands of new federal employees hired will lower your taxes. You are a fool if you believe that adding millions of 25 and 26 year old “children” to parents policies will lower your premiums.
Are you a fool?
There are great investments out there in Healthcare IT, you just have to find them,, here is one….
After following MMRGlobal for the last 3 years our research has concluded that OTC: MMRF is one of the most undervalued health care IT plays we’ve seen in recent years. The definitive agreement announced by the company on September 19th adds the credibility we were looking for to the earlier September 7th announcement of the non-binding term sheet with the same company. From sources in the industry, if MMRGlobal acquires over $150 million in revenue this stock currently trading at $.03 could realistically trade at a valuation of $3.50- $4.00 stock with a market cap in the $800mm to 1.2b range. We base this on comparable valuations in the health care IT sector such as Accretive Health and Merge Healthcare Inc. It is important to note that MMR is the only pure play personal health record company with connectivity to any health care professional, EMR, patented technologies, with an emerging global footprint and very credible strategic partners including AIG/Chartis, Kodak, Unis and others. Considering the most recent industry valuations, health care IT firms are being valued at 4 to 6 times revenue. With the MMR announcement of a definitive agreement with the firm who invested almost half a million dollars in MMRPro, the combined companies will offer health IT proprietary software and revenue cycle management solutions to its own surgery center clients in addition to the PHR solution it offers to the surgery center patients and the mass market. Additionally MMRF has a biotech portfolio that could have a value of at least the 140 million dollars the company invested in it