October 2011

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Industry Consolidation

October 31, 2011 in Health Insurance, Health Reform | 1 comment

Last year, I mentioned how ACO requirements will lead to more industry consolidation.  A recent article by the Economist is finding that my prediction is becoming a reality.

“Cigna, an insurer based in Connecticut, said it would pay $3.8 billion for HealthSpring, which offers services and insurance to the elderly. It is the latest deal to extend insurers’ tentacles into new areas of health care.”

State Health Exchanges will come into effect in 2014 and will extend health insurance to more people.  Individuals who cannot afford health insurance will receive subsidies.  The Economist cites a Boston Consulting Group study which estimates that firms’ revenues will more than double by 2019 to $1.2 trillion.  Profits margins, however, may fall due to a new taxes, minimum benefit standards, and more regulation of premiums appears.

What will plans do about it?

Many are diversifying.  They are moving into the Medicaid market where States outsource the health care provision of their enrollees to insurers or Medicare Advantage where the federal government is doing the same.  Insurers like Aetna are investing in health IT companies; UnitedHealth Group’s IT business (OptumInsight) makes up a large share of their revenues.

Industry consolidation can increase care coordination, but also reduces competition.  The effect on premiums and quality remains to be seen.

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State Governments Providing Health Insurance to More Children

October 28, 2011 in CHIP, HC Statistics, Medicaid | No comments

Of the 6.6 million uninsured children in the nation, 4.3 million are eligible for Medicaid or the Children’s Health Insurance Program (CHIP). Approximately 2.8 million children come from families at or near the federal poverty line (FPL).

Despite the fact that millions of children are uninsured, children’s participation rates in Medicaid/CHIP are increasing. Today I will review the results of an Urban Institute study examining trends in Medicaid participation rates for children.

Data

The authors use data from the 2008 and 2009 American Community Survey (ACS). This large survey data set has replaced the Census long form. The authors use the Integrated Public Use Microdata Series (IPUMS) version of the ACS.

Determining Eligibility

Three main characteristics determine a child’s eligibility: family composition, income, and immigration status.  Medicaid eligibility depends on the family’s income as a share of the federal poverty level (FPL).  The FPL threshold changes based on how many individuals are in the household.  Further, many States restrict Medicaid and CHIP access to citizens or legal residents.  Although survey data often indicate whether the individual is foreign born, the data do not contain information on whether the individual is a citizen, legal resident, temporary resident, or lives in the U.S. illegally.  This paper describes one methodology to impute immigration status from these survey data.

Results

  • The share of children without health insurance coverage fell between 2008 and 2009,despite the ongoing economic downturn;
  • Nationally, the rate of Medicaid/CHIP participation among children rose by 2.7 percentage points to 84.8 percent and cross-state variation in Medicaid/CHIP participation rates narrowed, as larger improvements occurred on average for states that had the lowest participation rates in 2008;
  • Six states (DC, Hawaii, Maine,Massachusetts, Michigan and Vermont) had participation at or above 90.0 percent in 2008 and 2009
  • Six states (Florida, Montana, Nevada, North Dakota, Texas and Utah) had participation rates below 80.0 percent in both 2008 and 2009
  • Participation gains occurred between 2008 and 2009 for children in each race/ethnicity, language, income and age group examined;

Source: Kenney GM, Lynch V, Haley J, Huntress M, Resnick D and Coyer C. “Coverage Gains for Children,” Urban Institute, RWJF Report, Aug 16, 2011.

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Health Wonk Review – SuperHero Edition

October 27, 2011 in Carnivals | No comments

Joe Paduda has the latest edition of the health wonk review available here.  Check it out!

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Quotation of the Day

October 27, 2011 in Quotation | No comments

“People sometimes say ‘But one single can?’ One single can is of great importance. Because 99 is not 100, and that single one will make the difference.”

  • Valter, as seen in the extremely uplifting movie Waste Land.

Newly eligible Medicaid beneficiaries report poorer health than current enrollees

October 27, 2011 in Medicaid | 1 comment

According to Avalere Health the people who will be added to Medicaid through healthcare reform are more sick — and therefore will be more expensive to treat — than current beneficiaries.  This chart below uses data from the 2008 Medical Expenditure Panel Survey (MEPS) to demonstrate this point.

 

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Mid-week Links

October 26, 2011 in Current Events | No comments

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Does the U.S. Really Have a Free Market for Health Insurance?

October 25, 2011 in Health Insurance, Regulation | 6 comments

Conventional wisdom holds that the U.S. has a free market for health insurance and Europe relies on a state-run, socialist health care system.  The U.S. ‘free market’ for health insurance, however, is in fact strictly regulated.  States exert significant authority over what benefits plans can offer and what premiums they charge.  Consider the following evidence compiled by the GAO regarding the State regulatory environment in 2010.

  • The McCarran-Ferguson Act provides states with the authority to regulate the business of insurance, without interference from federal regulation, unless federal law specifically provides otherwise.
  • Nearly all—48 out of 50—of the state officials who responded to the GAO survey reported that they reviewed rate filings.
  • Insurance departments in 19 states were authorized by their state to approve or disapprove proposed premium rates in all markets before they went into effect—known as prior approval authority
  • Insurance departments in another 10 states were authorized to disapprove rate filings in all markets, but not to approve rate filings before a carrier could begin using the premium rate or rates proposed in the filing. [In 9 of these states, carriers were required to submit rate filings prior to the effective date of the proposed rate—known as file and use authority. In one state, carriers could begin using a new premium rate and then file it with the state—known as use and file authority.]
  • In 6 states, insurance departments were not authorized to approve or disapprove rate filings in any market.
  • In 1 state, carriers were not required to file rates for approval or disapproval each time the carrier proposed to change premium rates.
  • In the remaining 15 states, authority to approve or disapprove rate filings varied by market. For example, a state insurance department may have prior approval authority in the individual market, but have information only authority in the small-group and large group markets subject to their regulation.

With health insurance premiums rising by 20 percent in 2010, the call for even more regulation is growing.

More information on State regulations is provided below:
Read the rest of this entry »

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Will Health Exchanges Really Increase Competition?

October 24, 2011 in Uncategorized | 6 comments

The Health insurance exchanges enacted by the PPACA (i.e., ‘Health Reform’) are meant to bring competition to the small group and individual markets.  These exchanges will begin in 2014.  A GAO survey of States, however, found that the current small group health insurance market is very concentrated.

  • There is significant market concentration.  Twenty-seven states reported that the largest health insurer had more than 40 percent of the market whereas in only 12 states did the dominant carrier own less than 40 percent of the market.  In 23 states, the top five plans captured 90 percent of more of the small group plan market share compared to only 16 where the top five carriers captures less than 90 percent of the market share.
  • Blue Cross/Blue Shield is the dominant player.  Of the 44 states reporting this information, BCBS was the largest carrier for small group health insurance plans for 36 of the states and was the second largest carrier for 3 states.  In only 5 of the states did BCBS non rank as one of the top-2 carriers in terms of market share.

Health exchanges may not increase competition, but instead be a boon for the established players in the individual and small group markets.

Health Care in the NFL

October 21, 2011 in Current Events, Supply of Medical Services | No comments

The National Football Post has an interesting article on health care for NFL players.  Like all individuals, health care for NFL players takes on two broad forms: preventive and treatment. Unlike most individuals, the forms of prevention are different.

When the NFL union and teams argue over preventive care, this does not revolve around vaccinations or PSA tests.  Players who want to maintain their health ask for limiting off-season workouts and full contact practices.

The latest collective bargaining agreement (CBA) also gives players enhanced treatment options as well.  The CBA mandated that players have access to their own medical records, the rights to a second opinion and the rights to their own treatment options.

Yet there are still problems with the health care NFL players receive.  For instance, some patients may worry that financial incentives may affect a doctor’s treatment decisions.  NFL players have additional reasons to worry.

“Trainers and doctors are paid by the team to do what’s in the best interests of the team…While there are brilliant doctors and trainers in the NFL, many players seek treatment outside of their trainers reach and have little confidence in the team doctor.”

Additionally, signalling to your employer that you are not healthy is often bad for your job prospects.

“…several old school thinking coaches make it clear that they don’t want to see their players in the training room.  Some have gone so far as to make direct fun of them in front of the entire team…So his conundrum, like every single young player not drafted in the first round has to battle through, was to keep playing through the injury and thus medicating heavily while his quality of play suffers. Or, tell the trainers and coaches, get treatment, miss practice time and risk losing his position and job security.”

NFL based health care is far from egalitarian as well.

“If you are not a high profile starter you won’t get the best treatment a team can offer. The superstars get treated better in most training rooms. On the contrary, players bringing up the bottom of the roster are expected to take as little time and resources from the trainers. ”

In short, health care for players in NFL is far from perfect.

 

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Thursday Links

October 20, 2011 in Current Events | No comments

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