Eighteen months following enactment of health care reform, the cost of group medical benefits continued to rise but those cost increases moderated, according to the November 2011 Employee Benefits Market Survey, conducted by The Council of Insurance Agents & Brokers (CIAB).
“Our latest survey indicated that premium increases have ebbed somewhat after initial shock and uncertainty following enactment of ACA in 2010,” said Ken A. Crerar, president and CEO of The CIAB. “The market has begun to adjust to initial new requirements in health care reform, but some uncertainty may persist as additional aspects are phased in over the next several years,” he added.
Although this survey revealed that all groups—small, medium and large—faced significant price hikes for group health care coverage during the last six months, small groups of 50 or fewer employees saw the largest hikes, with 39 percent receiving increases of 11 percent to 20 percent, compared with 62 percent reporting increases in that range in the CIAB’s May 2011 survey. Thirty-five percent of small groups received smaller increases ranging from 1 percent to 10 percent, compared to 13 percent in the earlier survey. Ten percent of small groups received no changes or price decreases compared to 3 percent in the earlier study.
In medium-size groups with 51 to 500 employees, 69 percent experienced hikes in the range of 6 percent to 15 percent, compared with 75 percent in the May survey. Sixteen percent experienced increases of 1 percent to 5 percent, no change, or decreases, compared to 8 percent in the May 2011 survey. Large accounts of greater than 500 employees also saw some moderation in pricing. Fourteen percent experienced no change or price decreases, compared to 5 percent in the May survey. For the majority (61 percent) of large accounts, prices rose in the range of 1 percent to 10 percent. Prices rose more than 10 percent for 9 percent of large accounts, compared to 21 percent which had increases of that magnitude in the May survey.
Comments from brokers on group medical plan pricing presented a nuanced picture consistent with adjustments underway to ACA, according to the survey. “As a whole, recent renewals have been lower than any other time I can remember,” said one broker. “The trend is lower, renewals more reasonable,” commented another. “We have seen more competitive new business rates coupled with lower renewals,” a third broker added.
Other brokers saw prices rise due to the impact of ACA, but noted that increases were tempered by continued interest in and movement toward consumer driven health plans and wellness plans. These plans typically have higher deductibles. “Interest in high deductible (plans) is taking off,” said one broker. “Deductibles and co-insurance continue to rise to keep the rates down,” another broker commented. Still another noted, “Carriers, especially trusts, seem to be more willing to come off of the original renewal position. (There is) continued interest in high deductible plans, HSAs (health savings accounts).”
Still another development that emerged in this and previous surveys is that carriers and employers are offering fewer options since enactment of the ACA. “In the small to medium account range, we have noticed a tightening of the amount of plan options offered to groups,” one respondent wrote.
In the CIAB’s May 2011 survey, 100 percent of responding group benefit consultants expressed some level of concern about the impact of the ACA on their business, with 59 percent being “very concerned.” By this latest survey that concern had moderated to 97 percent of respondents expressing some level of concerns, with 51% “very concerned” and 46 percent “somewhat concerned.”
Wednesday, December 7, 2011
Monday, December 5, 2011
States' Continue Own Health Reform Efforts
As the various provisions of the Affordable Care Act are implemented over time, the states continue to apply their own health care reform and cost-containment measures. Below we review some of the states’ recent actions.
California. Gov. Jerry Brown has signed a pair of bills designed to close a loophole that denies women maternity services. More than 200,000 women between the ages of 19 and 44 in California have health insurance plans that do not cover maternity care. The first bill requires health insurance companies to provide maternity coverage as a part of their individual insurance plans, and the second bill requires group health insurance policies to provide women with maternity coverage. These laws take effect on Jan. 1, 2012. Mr. Brown also signed a bill that makes insurers cover autism therapy, including behavioral health treatments. The law will be in effect from July 1, 2012, through July 1, 2014.
Indiana. The Obama Administration has denied a waiver for the Healthy Indiana Plan, the state’s Medicaid program, which means that over 45,000 state residents will lose coverage under the plan unless Indiana makes coverage changes that are more acceptable to the Obama Administration. In 2007, Indiana enacted the plan, an expansion of Medicaid that used consumer-driven (high-deductible) health plans with a spending account supposedly to encourage low-income beneficiaries to take a more active role in their own care. The state also has been promoting so-called consumer-driven health plans to its employee population. The Healthy Indiana Plan’s waiver expires at the end of 2012.
Louisiana. Helped by a $10 million federal grant, state officials and industry leaders have launched a web-based medical records exchange. Supporters of the platform indicated that the Louisiana Health Information Exchange is a way to link disparate health care providers, from primary care doctors to hospitals and pharmacists, so they can collectively provide better and cheaper patient care.
Minnesota. Gov. Mark Dayton has announced that a competitive-bidding process for state health insurance programs will save $242 million over the next two years. The measure was a part of his drive to improve government efficiency. The state required HMOs to competitively bid for state contracts in the seven-county metro area, and the savings will reduce the money taxpayers spend for health care without cutting any services.
New York. Gov. Andrew Cuomo has signed a bill that will require insurers to cover screening, diagnosis, and treatment for autism spectrum disorders. The law includes routine toddler screenings, behavioral health treatments, speech therapy, occupational therapy, and physical therapy. The measure was vetoed last year by former Gov. David Paterson as too expensive, but Mr. Cuomo said the current bill puts an important $45,000 annual cap on the coverage insurance companies would have to fund. The law takes effect Nov. 1, 2012, for insurance policies issued or renewed after that date.
In other New York news, the state’s Department of Financial Services has ordered 11 health insurers to refund $114.5 million to policyholders under minimum medical spending requirements. Implemented in June 2010, health insurers are now required to spend 82 cents of every dollar collected in premiums on medical care or refund the difference to policyholders. The federal Patient Protection and Affordable Care Act imposes a similar minimum medical loss ratio requirement on insurers nationally beginning in 2011. The refunds in New York will be paid to holders of group and individual health insurance policies that cover 573,748 people in the state.
California. Gov. Jerry Brown has signed a pair of bills designed to close a loophole that denies women maternity services. More than 200,000 women between the ages of 19 and 44 in California have health insurance plans that do not cover maternity care. The first bill requires health insurance companies to provide maternity coverage as a part of their individual insurance plans, and the second bill requires group health insurance policies to provide women with maternity coverage. These laws take effect on Jan. 1, 2012. Mr. Brown also signed a bill that makes insurers cover autism therapy, including behavioral health treatments. The law will be in effect from July 1, 2012, through July 1, 2014.
Indiana. The Obama Administration has denied a waiver for the Healthy Indiana Plan, the state’s Medicaid program, which means that over 45,000 state residents will lose coverage under the plan unless Indiana makes coverage changes that are more acceptable to the Obama Administration. In 2007, Indiana enacted the plan, an expansion of Medicaid that used consumer-driven (high-deductible) health plans with a spending account supposedly to encourage low-income beneficiaries to take a more active role in their own care. The state also has been promoting so-called consumer-driven health plans to its employee population. The Healthy Indiana Plan’s waiver expires at the end of 2012.
Louisiana. Helped by a $10 million federal grant, state officials and industry leaders have launched a web-based medical records exchange. Supporters of the platform indicated that the Louisiana Health Information Exchange is a way to link disparate health care providers, from primary care doctors to hospitals and pharmacists, so they can collectively provide better and cheaper patient care.
Minnesota. Gov. Mark Dayton has announced that a competitive-bidding process for state health insurance programs will save $242 million over the next two years. The measure was a part of his drive to improve government efficiency. The state required HMOs to competitively bid for state contracts in the seven-county metro area, and the savings will reduce the money taxpayers spend for health care without cutting any services.
New York. Gov. Andrew Cuomo has signed a bill that will require insurers to cover screening, diagnosis, and treatment for autism spectrum disorders. The law includes routine toddler screenings, behavioral health treatments, speech therapy, occupational therapy, and physical therapy. The measure was vetoed last year by former Gov. David Paterson as too expensive, but Mr. Cuomo said the current bill puts an important $45,000 annual cap on the coverage insurance companies would have to fund. The law takes effect Nov. 1, 2012, for insurance policies issued or renewed after that date.
In other New York news, the state’s Department of Financial Services has ordered 11 health insurers to refund $114.5 million to policyholders under minimum medical spending requirements. Implemented in June 2010, health insurers are now required to spend 82 cents of every dollar collected in premiums on medical care or refund the difference to policyholders. The federal Patient Protection and Affordable Care Act imposes a similar minimum medical loss ratio requirement on insurers nationally beginning in 2011. The refunds in New York will be paid to holders of group and individual health insurance policies that cover 573,748 people in the state.
Friday, December 2, 2011
Most insurers have already met health reform’s medical loss ratio standards, GAO says
The early results are in and, as of last year, most insurers have already met the new medical loss ratio (MLR) standards imposed by the 2010 health reform law, the Patient Protection and Affordable Care Act (PPACA), according to newly-released figures from the Government Accountability Office (GAO).
Under the PPACA, beginning in 2011, insurers are required to spend most of their customers' premium payments on medical care rather than on administrative costs or profit. In the large group market, insurers have to spend at least 85 percent of the premium payments on medical care and, in the small group market, they need to spend 80 percent on medical care. If they fail to meet these MLR rules, health reform legislation requires insurers to pay rebates to their enrollees.
These early GAO results are truly preliminary as 2011 numbers don’t have to be submitted to the Department of Health and Human Services (HHS) until June of 2012. However, these numbers are interesting as early indicators of compliance. Based on the early numbers, the GAO says, nearly two-thirds (64 percent) of all credible insurers would have met or exceeded the 2011 MLR standards. According to the GAO, a “higher percentage of insurers in the large and small group markets met or exceeded the standards compared to those in the individual market. Insurers in the individual market averaged higher nonclaims expenses, including expenses for brokers' commissions and fees, than those in other markets.” Seventy-seven percent of large group market insurers and 70 percent of small group market insurers would’ve met or exceeded the MLR standards, the GAO reports, while only 43 percent of insurers in the individual market would’ve met the standards.
In addition, the health reform law requires insurers to report MLRs by state. The GAO reports that, based on the early numbers, it found a “wide range” of reported MLRs for multistate insurers.
Overall, the GAO finds, 85 percent of insured Americans are covered in the large or small group markets. Only 15 percent of insureds are covered in the individual market.
