Health Insurance

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Heroes without Health Insurance

May 25, 2012 in HC Statistics, Health Insurance | No comments

This weekend is Memorial Day Weekend.  It is a time to celebrate the service of current and former members of the military. Although military veterans garner a lot of attention around Memorial Day, some veterans are not having their needs met the rest of the year.

A recent study, for instance, finds that many veterans lack health insurance.  As summarized in the National Journal:

“About 10 percent of U.S. veterans under the age of 65 lack health insurance and are not being cared for by the Veterans Affairs Department, either, according to a study published on Thursday.

The study estimated that 1.3 million veterans and nearly 950,000 members of their families lack health insurance. These uninsured military families account for 4.8 percent of the 47.3 million uninsured Americans, the Urban Institute and Robert Wood Johnson Foundation reported.”

The share of veterans without health insurance varies widely across states.  According to the study,

“Just four states have uninsurance rates below six percent—Massachusetts, Hawaii,Vermont and North Dakota.  Meanwhile,four states—Louisiana,Oregon,Idaho, and Montana—have uninsurance rates above 14 percent.”

But doesn’t the Department of Veterans Affairs (VA) provide health insurance to all veterans?

It is true that the VA is “the nation’s largest health system and provides health care for many veterans through a system of medical centers, clinics, and other facilities…However, some veterans do not use VA health care services. Eligibility is based on veteran status, service-related disabilities, income level, and other factors, and even within the groups eligible for VA care, other factors, such as their proximity to VA facilities and the cost-sharing requirements, may affect the likelihood
that they seek care in the VA system.”

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How to drop the individual mandate and avoid the collapse of the private health insurance market

March 28, 2012 in Health Insurance, Health Reform, Medicare Part D | 1 comment

Today, the Supreme Court is deciding  whether to let many of the provisions of the Affordable Care Act (a.k.a. ACA, a.k.a. Health Reform, a.k.a. Obamacare) stand.  One of the key provisions is the individual mandate.  The individual mandate requires all individuals to purchase health insurance.  If you don’t buy health insurance, you must pay a penalty or fine.

The reason Obama claims the individual mandate is necessary is due to the prohibition of setting premiums based on pre-existing conditions.  Currently, if you don’t have insurance, you become ill and try to buy insurance, it is very expensive.  The ACA, however, would prohibit insurers from price discriminating based on your health status.  Although this may sound good in theory, there are problems in practice if the individual mandate is not in place.  Many individuals will have an incentive not to buy insurance when they are healthy.  When they become sick, they can purchase an insurance plan for the same price as someone who has had insurance for 10 years.  Because only sick people will be insured, the average cost of health insurance will rise for everyone.  Hence, the need for the individual mandate arises.

The individual mandate, however, may not be constitutional.  Can the government compel individuals to buy something?  Many states already require auto insurance.  This requirement is only applied to those who own a car whereas the only condition for the health insurance mandate is that you are alive.

Americans have already found a way around this problem, however.  Medicare’s prescription drug program (Medicare Part D) is an optional program.  No one has to buy prescription drug coverage.  Further, premiums do not vary based on health status (although insurers receive different subsidies based on individual’s health conditions).

To incentivize individuals to purchase prescription drug coverage while they are healthy, Medicare Part D relies on a late enrollment penalty.  Any individual who does not purchase prescription drug coverage when they are eligible has to pay an increased premium when they are eligible.  This increased premium depends not on your health status, but on the number of months you were not enrolled when eligible.  From the Medicare website:

The late enrollment penalty is calculated by multiplying 1% of the “national base beneficiary premium” ($31.08 in 2012) times the number of full, uncovered months you were eligible but didn’t join a Medicare drug plan and went without other creditable prescription drug coverage. The final amount is rounded to the nearest $.10 and added to your monthly premium.

This approach could solve both problems.  The one short-coming is determining how much the late-enrollment penalty should be for private plans.  Allowing the government to set prices is generally a poor idea.  One could allow private plans to set the late enrollment penalty, as long as this were regulated to prohibit price discrimination based on individual health status.  Although this approach certainly has a number of challenges, it may be more palatable to the American public (and the Supreme Court) than an individual mandate.

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Employer Health Benefits in California in 2011

January 24, 2012 in HC Statistics, Health Insurance, Managed Care | No comments

Each year, the California Health Care Foundation (CHCF) examines trends in employer health benefits in the state of California.  Last year, I reported on the 2010 CHCF report and now I will examine the 2011 report.

Between 2010 and 2011, some things have remained the same.  Healthcare premiums are far outpacing inflation over the medium run and California premiums remain higher than average. Workers at small California firms have to cover a large share of premiums and receive less generous insurance coverage (i.e., deductibles more than $1000).

High-wage firms (66% vs. 42%), firms with few part-time workers (70% vs. 41%) and firms with at least some unionized staff (84% vs. 61%) are more likely to offer health insurance to their workers.

Growth in California health insurance premiums (9.1%) in 2011 fell below the growth rate of the U.S. overall (9.5%). In 2010, the opposite was true. California health insurance premiums rose by 7.5%, but overall U.S. premium growth rose by only 3.0%.

The stereotype that California is the land of managed care holds true. Whereas the national proportion of covered workers enrolled in an HMO declined from 20% to 17% between 2009 and 2011, in California the proportion of covered workers enrolled in an HMO held steady at 54%. Also, although the U.S. overall has seen significant growth in high-deductible health plans (HDHPs) so that 17% of covered workers are enrolled in these plans, in California, only 6% of workers have enrolled in this plan type.

Is the ACA working? The answer is probably no. “Just 32% of small California firms not currently offering health benefits were aware of the small firm tax credit that is part of the Affordable Care Act.”

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Does California really love Managed Care?

November 28, 2011 in Current Events, Health Insurance, Managed Care, Medicaid, Medicare, Medicare Advantage | 1 comment

In short, yes. California is the land of managed care. Kaiser-Permanente–the managed care poster child–owns one third of the market.  Love for managed care is not just in the private market; in 2010, over half of all Medi-Cal and more than one-third of Medicare beneficiaries were enrolled in managed care plans.  Further, California managed care plans even have their own regulator.  Whereas the California Department of Insurance (CDI) regulates non HMOs, the California Department of Managed Health Care (DMHC) regulates HMOs.

A recent report by the California Health Care Foundation investigates managed care in California and provides a high quality overview of the California health insurance market.  Some of their findings include:

  • Five insurance carriers (Kaiser, Anthem Blue Cross, Health Net, Blue Shield, United Healthcare) accounted for three-fourths of the $105 billion health insurance revenues in California in 2010. Revenue growth has been slower for managed care plans in recent years, however.
  • The six largest managed care plans together lost more than 400,000 commercial enrollees. On the other hand, Medi-Cal and Medicare managed care enrollment grew.
  • Anthem Blue Cross and Blue Shield experienced enrollment decline in 2010, which reversed a previous growth trend.
  • Large majorities of HMO and PPO members rated their plan highly in terms of getting appointments quickly, finding a doctor, and getting the care they need. HMO enrollees more often rated their care highly than those enrolled in PPOs, while PPO participants were more likely to favorably cite their ability to get an appointment quickly.

Source: Katherine Wilson, “California Health Plans and Insurers” California Health Care Foundation, November 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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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:
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Health Insurance Snapshot for 2009

October 19, 2011 in HC Statistics, Health Insurance | No comments

There are approximately 265 million individuals in the United States under age 65 in 2009.  Using the 2010 March Current Population Survey (CPS) data, the employee benefits research institute provides the insurance coverage breakdowns.

  • Employer-sponsored group plan: 156.1 million (59.0 percent)
  • Insurance bought directly from insurer on individual market: 16.7 million (6.3 percent)
  • Medicaid: 44.1 million (16.7 percent)
  • Medicare: 7.3 million (2.8 percent)
  • Tricare/CHAMPVA: 8.3 million (3.1 percent)
  • No Health Insurance: 50.0 (18.9 percent)

Employer-based coverage has dropped from 65.9 percent in 2000 to 55.8 percent in 2009 for children and from 69.3 percent to 60.2 percent for adults under 65.  The advent of CHIP has meant that many more children are now covered by Medicaid (33.8 percent today versus 20.9 percent in 2000) and the uninsurance rate has dropped over the last 10 years from 11.3 percent to 10.0 percent. Medicaid enrollment for adults has also increased, from 6.4 percent of adults to 9.9 percent of adults today. Uninsurance rates, however, have also grown for adults: from 17.2 percent in 2000 to 22.4 in 2009.

 

Source:

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Health Insurance Premium Growth

October 4, 2011 in Employee Benefits, Health Insurance | 7 comments

Health Insurance premium inflation is back.  According to the Kaiser Family Foundation Employer Health Benefits Survey 2011, health insurance premiums for single individuals was $5,429 for single individuals and $15,073 for a family plan.  Premium growth for single and family plans was below 6 percent per year over the last 5 years (2005-2010). However, between 2010 and 2011, premiums grew 7.5 percent for single plans and 9.5 percent for family plans.

Many economists may think that inflation is a driver, but the overall inflation rate in 2011 was only estimated to be 2.1 percent.

Additional Information from the EHBS is below.

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Estimates of Health Reform’s Effect on Employer-Sponsored Insurance (ESI)

August 23, 2011 in Health Insurance, Health Reform | 1 comment

Avalere Health provides a nice summary of some of the estimates of how health reform will affect the rate at which employers offer health insurance.  The provisions which may have an impact on health insurance offering include:

  • Free-rider penalties (+)
  • Exchanges (?)
  • Medicaid expansion (-)
  • Individual mandate (+)
  • Small business tax credit (+)
  • Insurance market reforms/grandfathering (-)
  • High-cost plan excise tax (-)

Using different methodologies and data files, a variety of reputable research firms have arrived at differing conclusions on the impact of health reform on ESI. Here are six estimates ordered from most negative to most positive impact:

  • Holz-Eakin: -22.3%
  • Booz Allen Hamilton: -4.5%
  • Congressional Budget Office (CBO): -1.9%
  • The Lewin Group: -1.8%
  • Urban Institute: Little net change
  • RAND: +8.7%

Sources:

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