Category Archives: Health Care

Employers Seek New Strategies For Dealing With Health Care Cost Increases

Source: Employment Alert, Volume 36, Issue 23, November 12, 2019
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Curbing the cost of health care and increasing its affordability remain the top priorities for almost all employers over the next three years (93%), according to the Best Practices in Health Care Employer Survey by Willis Towers Watson. Yet nearly two in three (63%) employers see health care affordability as the most difficult challenge to tackle over that same period.

Employers expect health care cost increases of 4.9%* in 2020 compared with 4.0% in 2019. Despite this cost increase, 95% of employees are very confident their organization will continue to sponsor health care benefits to active employees in five years. Moreover, employers’ longer-term commitment to sponsoring these benefits 10 years from now hit 74%, the highest level in the past decade. The rising cost of health care puts financial pressure not only on employers, but also their employees. In fact 89% of employers believe rising health care costs are a significant source of financial stress for their employees.

Polarization, Participation, and Premiums: How Political Behavior Helps Explain Where the ACA Works, and Where It Doesn’t

Source: Samuel Trachtman, Journal of Health Politics, Policy and Law, Volume 44, Issue 6, December 2019
(subscription required)

From the abstract:
Context:
Political partisanship can influence whether individuals enroll in government programs. In particular, Republicans, ceteris paribus, are less likely to enroll in Affordable Care Act (ACA) individual marketplace insurance than Democrats. The logic of adverse selection suggests low uptake among Republicans would generally put upward pressure on marketplace premiums, especially in geographic areas with more Republican partisans.

Methods:
Using data from Healthcare.gov at the rating area level, this article examines the association between Republican vote share and growth in ACA marketplace premiums, being careful to account for potential confounding variables.

Findings:
Insurers have increased marketplace premiums at higher rates in areas with more Republican voters. In the preferred model specification, a 10-percentage-point difference in Republican vote share is associated with a 3.2-percentage-point increase in average premium growth for a standard plan. A variety of robustness and placebo checks suggest the relationship is driven by partisanship.

Conclusions:
Partisan polarization can threaten the successful implementation of policies that rely on high levels of citizen participation.

Assessing Responses to Increased Provider Consolidation in Six Markets: Final Report

Source: Sabrina Corlette, Jack Hoadley, Katie Keith, and Olivia Hoppe, October 2019

From the press release:
Most employers are implementing few, if any, changes to their health plans for the 2020 plan year. That’s not surprising – employers are generally reluctant to make big or abrupt adjustments to provider networks or cost-sharing that could cause pushback from employees. But many health care experts believe that if we’re ever to truly tackle out-of-control health care costs in this country, the employer community needs to take the lead.

A newly released report from Georgetown CHIR finds, however, that there are significant challenges facing insurers and employers who seek to constrain the rising provider prices that have driven the annual family premium above $20,000 this year. In six market-level, qualitative case studies, we examined strategies that private insurance companies and employer-purchasers use to limit health care costs and how these strategies are affected by increased provider consolidation. We focused on the following mid-sized health care markets, all of which had recently experienced some kind of provider consolidation activity:

Detroit, Michigan
Syracuse, New York
Northern Virginia
Indianapolis, Indiana
Asheville, North Carolina
Colorado Springs, Colorado

Across the six markets, we found:
Hospitals are empire-building. Hospitals’ motivations for consolidation are similar, with stakeholders reporting a pursuit of greater market share and a desire to increase their negotiating leverage with payers to demand higher reimbursement.

Payers have tools to constrain cost growth, but they lack the incentive and ability to deploy them effectively. While payers in our markets identified several cost containment strategies such as narrow networks and provider-payer partnerships, all come with downsides. Furthermore, some third-party administrators for self-insured employers actually have incentives to keep provider prices high when they’re paid a percentage of the overall cost of the plan.

Employers’ tools to control costs are limited. Employers are frustrated with existing strategies to reduce cost growth such as the exclusion of certain providers or higher deductibles in the face of employee dissatisfaction and limited evidence of savings. However, emerging strategies that could be more effective may be challenging for many employers to implement, and employers lack access to basic data to inform their efforts.

Public policy strategies have had limited effectiveness. Anti-trust and other policies to limit the ill-effects of consolidation have had a limited impact in our study markets, but there are nascent state-level efforts to push back on provider prices that are worth watching.

5 Obstacles to Home-Based Health Care, and How to Overcome Them

Source: Pooja Chandrashekar, Sashi Moodley, Sachin H. Jain, Harvard Business Review, October 17, 2019
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One of the most promising opportunities to improve care and lower costs is the move of care delivery to the home. An increasing number of new and established organizations are launching and scaling models to move primary, acute, and palliative care to the home. For frail and vulnerable patients, home-based care can forestall the need for more expensive care in hospitals and other institutional settings. As an example, early results from Independence at Home, a five-year Medicare demonstration to test the effectiveness of home-based primary care, showed that all participating programs reduced emergency department visits, hospitalizations, and 30-day readmissions for homebound patients, saving an average of $2,700 per beneficiary per year and increasing patient and caregiver satisfaction.

There are tremendous opportunities to improve care through these home-based care models, but there are significant risks and challenges to their broader adoption. Let’s look at five key barriers to moving care to the home and explore potential solutions to overcoming these challenges.

Changes In The Equity Of US Health Care Financing In The Period 2005–16

Source: Paul D. Jacobs and Thomas M. Selden, Health Affairs, Ahead of Print, October 16, 2019
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From the abstract:
Spending on health care in the United States amounted to 17.9 percent of gross domestic product in 2017. Households paid for this care through out-of-pocket medical spending and a complex mix of out-of-pocket premiums, employer premium contributions, taxes, and subsidies that combined to finance private employer-sponsored insurance, nongroup insurance, and multiple public insurance programs. Our analysis examined the impact of this complex system of health care financing on households in the period 2005–16, tracking how economic and policy changes affected incidence—that is, the amount paid to finance health care, either directly or indirectly, by households as a share of their pretax income. Health care financing was regressive at the start of our study period, with households in the bottom 20 percent of income paying 26.8 percent of their income compared to about half that amount for those with income in the top 1 percent. By 2016 incidence had become approximately proportional (the same percentage across all income levels). In part, these results reflect increases in coverage through Medicaid and the Affordable Care Act Marketplaces, which are progressively financed through the federal tax system.

Cyberattacks pose growing operational and financial risks for hospitals

Source: Jennifer Barr, Lisa Goldstein, Leroy Terrelonge, Jonathan Kanarek, Kendra M. Smith, Jessica Gladstone, Moody’s, Sector In-Depth, September 12, 2019
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Many cyberattacks result in data breaches and, in the most critical cases, endanger revenue, posing a material risk to financial performance. Small hospitals are the most vulnerable to attack with lesser financial resources.

Related:
Smaller Medical Providers Get Burned by Ransomware
Source: Adam Janofsky, Wall Street Journal, October 6, 2019
Cyberattacks are pummeling doctors, dentists and community hospitals around the U.S., causing some to turn away patients and others to shut down

2019 Employer Health Benefits Survey

Source: Kaiser Family Foundation, September 25, 2019

From the press release:
Annual family premiums for employer-sponsored health insurance rose 5% to average $20,576 this year, according to the 2019 benchmark KFF Employer Health Benefits Survey released today. Workers’ wages rose 3.4% and inflation rose 2% over the same period.

On average, workers this year are contributing $6,015 toward the cost of family coverage, with employers paying the rest.

Despite the nation’s strong economy and low unemployment, what employers and workers pay toward premiums continues to rise more quickly than workers’ wages and inflation over time. Since 2009, average family premiums have increased 54% and workers’ contribution have increased 71%, several times more quickly than wages (26%) and inflation (20%).

Sections include:

Trends in State-Level Opinions toward the Affordable Care Act

Source: Julianna Pacheco; Elizabeth Maltby, Journal of Health Politics, Policy and Law, Volume 44, Issue 5, October 2019
(subscription required)

From the abstract:
Context:
This article argues that the devolution of the Affordable Care Act (ACA) to the states contributed to the slow progression of national public support for health care reform.

Methods:
sing small-area estimation techniques, the authors measured quarterly state ACA attitudes on five topics from 2009 to the start of the 2016 presidential election.

Findings:
Public support for the ACA increased after gubernatorial announcement of state-based exchanges. However, the adoption of federal or partnership marketplaces had virtually no effect on public opinion of the ACA and, in some cases, even decreased positive perceptions.

Conclusions:
The authors’ analyses point to the complexities in mass preferences toward the ACA and policy feedback more generally. The slow movement of national ACA support was due partly to state-level variations in policy making. The findings suggest that, as time progresses, attitudes in Republican-leaning states with state-based marketplaces will become more positive toward the ACA, presumably as residents begin to experience the positive effects of the law. More broadly, this work highlights the importance of looking at state-level variations in opinions and policies.

Death by a Thousand Cuts: The Embattled ACA

Source: Diane M. Soubly, Benefits Law Journal, Vol. 32, No. 2, Summer 2019
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In its first seven years, the Patient Protection and Affordable Care Act (ACA), now almost a decade old, decreased the number of uninsured persons who used highly expensive emergency care as primary care and curtailed double digit medical inflation. In the first two years of the Trump Administration, the President, the Executive Branch and Congress have devised ACA’s death by a thousand cuts. As former Solicitor General Donald Verrelli observes at page 2 of the Opening Brief submitted by Intervenor-Appellant The U.S. House of Representatives in the appeal from the Texas district court decision holding ACA unconstitutional, “Despite all that the Act has achieved, its political opponents have made repeated efforts to repeal it or to disable it through litigation.” This article updates employee benefits plan designers and litigators about those continuing efforts in the legal battle for the death of ACA…..

Michigan Supreme Court Denies Lifetime Benefits To Governmental Employees

Source: Amelia Dantzer, Employment Alert, Volume 36, Issue 18, September 4, 2019
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The Michigan Supreme Court has held in a ruling that governmental employees were not entitled to lifetime health benefits because their collective bargaining agreements (CBA) did not create a vested right to lifetime coverage. The court found that none of the relevant bargaining agreements included express language providing for vested, lifetime health benefits, and all the agreements contained “durational” clauses providing that the terms are only in effect for three years. Specifically, the court held that “[t]he CBAs contain a general three-year durational clause, and no provision specifies that the benefits in dispute are subject to any different duration. If the parties meant to vest healthcare benefits for life, they easily could have said so in the CBAs, but they did not.”