Without changes, health costs expected to soar in state | The Press Democrat

The average California family will be forced to spend a third of its annual income for health insurance by 2022 if costs continue to spiral upward at current rates, according to recent reports by industry groups.

Obesity, prescription drugs, unnecessary tests and expensive new technology are driving up health care costs in California, according to a report issued this month by the California Association of Health Plans.

Obesity alone adds $12.8 billion to the state’s $230 billion annual health care bill. More than 60 percent of Californians are overweight or obese, and obesity is expected to double by 2030, increasing its share of health care costs by 15.7 percent.

The state’s total health care bill has tripled since 1991, with cost increases exceeding inflation and expected to keep growing due to multiple factors, including the rollout of the federal Affordable Care Act in 2014 and the increasingly overweight public. (The state’s population has nearly doubled since 1991.)

Area doctors say much of the spiraling cost is due to the way health care services are paid for, echoing a study earlier this year by the Berkeley Forum for Improving California’s Healthcare Delivery System.

That report, by a blue-ribbon group that included Blue Shield of California, Kaiser Permanente and Sutter Health in collaboration with the UC Berkeley School of Public Health, called for sweeping change in the economic model for California health care.

The current model, known as fee-for-service, is not the right medicine for Californians, who are already spending $23 a day on health, said Dr. Stephen Steady, a gastroenterologist who is president of the Sonoma County Medical Association.

Fee-for-service bases patient payments on the number of tests and treatments performed rather than overall efficiency or the medical outcome. That encourages a “duplication of services that may not be needed,” Steady said.

When each independent health care provider is ordering the tests and imaging needed to treat patients — and billing for his or her services — the costs “just start adding up,” Steady said.

And that fragmented care, he said, underlies the California Association of Health Plans report, which said that as much as 30 percent of nation’s health expenditures — $810 billion in 2011 — goes to unnecessary tests, treatments, drugs and hospitalizations.

“The incentives are not aligned in an effort to control costs,” Steady said.

By dramatically cutting back on the fee-for-service model, California could trim $110 billion from health care from the estimated $4.4 trillion expenditures between now and 2022, according to the Berkeley Forum report.

That would cut costs an average of $802 per household per year over that period, and $1,422 per household in 2022, the report said.

“It is time for fundamental change. It is time for action,” the report said, calling its plan “a transformational, bottoms-up approach to creating a more affordable, cost-effective healthcare system.”

Instead of fee-for-service, which accounts for 78 percent of the state’s health care expenses today, the report calls for more integrated systems, similar to Kaiser’s, that draw primary care physicians, specialists, hospitals and even nursing homes into a collaborative effort to provide patient care.

The provider groups would operate under a “risk-adjusted global budget” for each patient, a wonkish term for setting a target cost based on a person’s diagnosis.

This bundled care system provides penalties for exceeding the cost targets and rewards for staying within them, Steady said.

“We are learning that we need to work together for the patient to benefit the most,” said Patrick Johnston, president of the health plans association, which represents 39 plans including Aetna, Anthem Blue Cross, Blue Shield, Health Net and Kaiser.

The Berkeley Forum report proposed reducing the share of fee-for-service expenditures from 78 percent of the state’s health care spending to just 50 percent by 2022. It would do this by boosting the number of Californians now enrolled in integrated systems, 29 percent, to 60 percent.

Dr. Brad Stuart, director of Sutter Health’s home care program in Santa Rosa, said this is one of many calls for increasing integrated care, which he supports.

“Providers are compelled to be more responsible and accountable for what they do,” he said. “They only lose money if they run up the costs.”

Sutter Health, which operates 24 hospitals in Northern California and is building a new $284 million hospital in Santa Rosa, is taking a step toward integration with the launch of a health insurance plan called Sutter Health Plus.

The new plan is expected to be available for enrollment in Sonoma County in the fall of 2014.

Kaiser Permanente, founded in 1945, pioneered the concept of combining health insurance, physicians, and hospitals into a single organization. It remains the nation’s only fully integrated system.

Dr. Walt Mills, a Kaiser family practice doctor, described how it worked recently on behalf of a cancer patient.

Mills was studying the patient’s magnetic resonance image and, in order to consult with an oncologist, walked 30 yards down the hall at Kaiser’s Santa Rosa Medical Center.

The two got on a conference call with a Kaiser neurosurgeon in Redwood City and in five minutes determined a care plan that would have taken days or weeks to develop outside an integrated system, he said.

Mills, who was in a private practice with about 50 percent fee-for-service compensation for 17 years before joining Kaiser, felt compelled to join a system that he said saves money and improves the quality of patient care.

Kaiser is 10 percent more cost-efficient than the average health maintenance organization and 15 percent ahead of all plans in the markets Kaiser serves, according to a report in April by Aon Hewitt, a consulting firm commissioned by Kaiser.

Kaiser serves more than 7 million members with 36 hospitals and 12,000 physicians in California. Sonoma County membership totals nearly 188,000.

Fee-for-service is “the elephant in the living room” of health care cost inflation, said Dr. James DeVore, medical director of the Annadel Medical Group of physicians affiliated with Santa Rosa Memorial Hospital.

Costs “will drop considerably,” he said in an e-mail, as health care moves “away from a hospital-based focus of managing illness” to an integrated model that stresses prevention, wellness and “aggressive management” of chronic illnesses like diabetes.

The United States gets a poor bang for its health care buck, said Dr. Mary Maddux-Gonzalez, chief medical officer of the Redwood Community Health Coalition, a network of clinics and health centers.

Health spending per capita in the U.S. was $8,233 in 2010, 56 percent more than Switzerland, the next highest nation, and more than twice as much as the average in seven other developed countries in Europe, according to a California Healthcare Foundation report.

But Americans’ life expectancy, 78.7 years in 2010, was 25th in the world in 2011, while deaths due to medical errors, estimated at about 200,000 per year, rank among the nation’s top five causes of death.

“We are not getting value commensurate with what we’re spending,” said Maddux-Gonzalez, the former county public health officer, who also faulted the fee-for-service system.

“The financial incentives are not lined up for good outcomes,” she said.

You can reach Staff Writer Guy Kovner at 521-5457 or guy.kovner@pressdemocrat.com.

Without changes, health costs expected to soar in state | The Press Democrat.


America’s Health Insurance Plans – AHIP

America’s Health Insurance Plans (AHIP) is the national trade association representing the health insurance industry. AHIP’s members provide health and supplemental benefits to more than 200 million Americans through employer-sponsored coverage, the individual insurance market, and public programs such as Medicare and Medicaid. AHIP advocates for public policies that expand access to affordable health care coverage to all Americans through a competitive marketplace that fosters choice, quality and innovation.

America’s Health Insurance Plans – AHIP.


Affordable Health Insurance | Covered California™

Millions of Californians will be able to choose affordable, high-quality health insurance coverage offered through Covered California™ that will take effect January 2014. Covered California is a new, easy-to-use marketplace where you and your family may get financial assistance to make coverage more affordable and where you will be able to compare and choose health coverage that best fits your needs and budget. By law, your coverage can’t be dropped or denied even if you have a pre-existing medical condition or get sick.

You may have thought you couldn’t afford health insurance, but Covered California will provide the tools for you to shop for health insurance that meets your health care needs and financial realities. The federal law called the Patient Protection and Affordable Care Act provides a number of ways for individuals and employers to help make coverage more affordable. For individuals, financial assistance is available on a sliding scale, with more support for those who earn less. Covered California will help you determine if you qualify for these types of assistance programs.

Covered California is a part of the State of California and was created to help you and your family get health coverage to protect yourself and your loved ones. Having insurance is an important way to stay healthy and to pay for health care if you get sick or injured. Health insurance can not only assure your access to care to keep your body healthy, it also protects your peace of mind – you can rest assured that you will have help when you need it most.

Affordable Health Insurance | Covered California™.


Health law’s rule delay could hamper enforcement – Wire Business News – The Sacramento Bee

Published: Tuesday, Jul. 16, 2013 – 11:49 am

Last Modified: Wednesday, Jul. 17, 2013 – 12:35 am

There’s a bit of a domino effect undercutting President Barack Obama’s health care law.

Enforcement of the overhaul’s central mandate — that individual Americans must have coverage — could be weakened by the Obama administration’s recent delay of a requirement that larger employers provide medical insurance.

That’s because the delayed rule also required companies to report health insurance details for employees. Without employers validating who’s covered, a scofflaw could lie, and the government would have no easy way to check.

The Treasury Department said Tuesday it expects any impact to be minor, since most people will not risk telling the government a lie. Still, it’s another incentive for uninsured people to ignore a new government requirement that for many will cost hundreds of dollars.

“If Americans begin to figure out that the individual requirement is toothless for 2014 … younger, healthier uninsured people will stay away in droves,” said Edward Fensholt, director of compliance services for the Lockton Companies, a benefits consulting firm that advises employers. With fewer healthy people in the pool, premiums in new health insurance markets coming this fall could rise.

The latest twist emerged a day ahead of votes in the Republican-led U.S. House to delay both the individual and employer mandates. The House measures, which have little chance of advancing in the Senate, are part of a series of Republican attempts to repeal or defund “Obamacare.”

The administration declined to address the new enforcement concerns on the record.

Instead, a senior Treasury official, commenting on condition of anonymity, said it’s only a hypothetical problem and the administration does not believe a significant number of people will choose to flout the law. After all, most Americans truthfully report their annual income to the Internal Revenue Service, said the official, who spoke only on condition of anonymity because the official was not authorized to comment publicly by name. However, most people know the IRS already has the income information from their employers on W-2 forms.

Coverage for the uninsured through President Barack Obama’s health care law starts next Jan.1. Middle-class people with no access to job-based health insurance will be able to buy subsidized private coverage through new online markets that open for enrollment Oct. 1. Low-income people will be steered to an expanded version of Medicaid, in states accepting it.

The individual requirement that most Americans carry health insurance also takes effect in 2014, when insurers will no longer be allowed to turn away people in poor health. The mandate narrowly survived a Supreme Court challenge last year.

The employer requirement applies to companies with 50 or more full-time workers. They can be fined for not offering affordable coverage. Earlier this month, the White House unexpectedly delayed the employer mandate for a year, until 2015. The administration said more time was needed to work out complicated reporting requirements so they do not become a burden to businesses. Some saw a political motivation in the deferral, removing a controversial issue from the arena during a midterm election year.

The employer requirement was never designed to get large numbers of uninsured people covered. Instead, lawmakers meant it as a guardrail, to keep employers from dropping coverage and shifting responsibility to the government.

The individual requirement, however, was always seen as a linchpin of the law. Although there are exceptions for financial hardship and other circumstances, most individuals risk fines starting next year if they remain uninsured. Those penalties start small — as little as $95 in 2014 — but they ramp up in the years after.

In delaying the employer requirement, the administration underscored the importance of the individual mandate by saying it would remain in full force for 2014. The White House dismissed as political posturing a demand by House Speaker John Boehner for a similar delay for individual Americans.

Largely ignored, however, was the enforcement link between the two mandates. The IRS, which will police both the individual and employer requirements, was to receive the now-delayed coverage reports from employers and use those to check compliance by individuals. That won’t be as easy.

“It may mean that enforcement is light in 2014,” said Neil Trautwein, the top health care policy expert for the National Retail Federation. “It illustrates the interconnectedness of the law, and the difficulty (administration officials) have in making all the pieces work, and work on schedule.”

The Treasury official who spoke on condition of anonymity said that individuals will still have to tell the IRS on their returns for 2014 whether or not they had health insurance. Taxpayers will know that for themselves, so they will have all the information they need to comply. It won’t be a gray area, said the official, and cheaters risk a perjury charge. Enforcement will get tighter with time.

A prominent defender of the health care law, Washington and Lee University law professor Timothy Jost, acknowledged the delay will make it more difficult for authorities to identify people who claim to be insured when in fact they aren’t.

“It’s going to be like much of the rest of our tax system,” said Jost. “People are supposed to be honest, and there are criminal penalties if they catch you being dishonest.”

Read more here: http://www.sacbee.com/2013/07/16/5570755/health-laws-rule-delay-could-hamper.html#storylink=cpy

Health law’s rule delay could hamper enforcement – Wire Business News – The Sacramento Bee.


UnitedHealthcare Is The Second To Leave California’s Individual Insurance Market Ahead Of Obamacare

SACRAMENTO, Calif. — A second health insurer notified state regulators Tuesday that it will stop selling individual policies in California.

UnitedHealthcare announced it will no longer offer individual insurance plans after the end of the year. It will focus instead on its core business of group plans for large and small employers.

“Our individual business in California has always been relatively small and we currently serve less than 8,000 individual customers across the state,” the company said in a statement. “Over the years, it has become more difficult to administer these plans in a cost-effective way for our members in California.”

The announcement comes two weeks after Aetna Inc. said it also plans to exit California’s individual insurance market. Both insurers avoided participating in the state exchange that is being established as part of the Affordable Care Act.

State Insurance Commissioner Dave Jones says the departure of UnitedHealthcare and Aetna is bad news for consumers.

“While both UnitedHealthcare and Aetna have a very small share of California’s individual health insurance market, their departure means less choice, less competition, and more market consolidation by the remaining big three health insurers – Anthem Blue Cross, Blue Shield of California, and Kaiser – which means an increased likelihood of even higher prices from those health insurers downstream,” Jones, a Democrat, said in a statement.

According to 2011 figures compiled by the California HealthCare Foundation, Anthem Blue Cross, Blue Shield and Kaiser have 87 percent of the individual market.

Starting Oct. 1, those seeking to buy their own health insurance will be directed to Covered California, the state’s new exchange, where 13 insurance carriers will sell individual policies.

Aetna and UnitedHealthcare chose not to participate in the exchange.

UnitedHealthcare Is The Second To Leave California’s Individual Insurance Market Ahead Of Obamacare.


Health Reform Weekly – Aetna Health Reform Connection

Health Reform Weekly

A weekly compilation from Aetna of health care-related developments in Washington, D.C. and state legislatures across the country.

Week of July 22, 2013

It’s been more than three years since the adoption of the Affordable Care Act (ACA), but the public relations battle over the law continues.  President Obama last week kicked off a campaign to educate Americans and build enthusiasm for the law with a White House event that touted costs savings under the law. The event, however, came on the heels of two Republican-led House votes that propose delays in implementing both the ACA’s employer mandate and individual mandate. The House has voted 37 times to repeal all or part of the President’s signature health care law. Supporters of the law last week cited newly approved health insurance rates in New York as evidence that the ACA is helping to drive down costs – average approved rates will be 50 percent lower than what’s currently available in the state. But a Society of Actuaries report clarifies the ACA’s impact on rates will vary significantly across state borders, with many states likely to see significantly higher rates. The lower rates for New York reflect the fact that the state has among the highest premium costs in the nation because of health reforms passed in the 1990s without a coverage mandate.


The House passed two bills last week that would delay key provisions of the ACA.  By a vote of 251 to 174, the House approved legislation proposing a one-year delay in implementation of the ACA’s individual mandate.  Twenty-two Democrats joined a majority of Republicans in voting for the legislation.  The House also approved legislation proposing a one-year delay in implementation of the ACA’s employer mandate.  Thirty-five Democrats joined all but one Republican in voting for the legislation.  Both bills fell short of the two-thirds majority needed to override a presidential veto.  The bills are not expected to be considered on the Senate floor.


CALIFORNIA: As expected, Medicaid expansion and several other ACA-related matters were passed by the legislature in a special session. Special session legislation is effective 91 days after adjournment. The regular legislative session has adjourned for summer recess and will reconvene on August 12. The crossover deadline – the date by which legislation passed by the House or Senate must be forwarded to the other chamber – for 2013 legislation was May 31. Bills that did not meet the deadline cannot advance this year and instead will carry over to the 2014 session. More than 2,200 bills have been introduced this year. In other news, Anthem Blue Cross announced that it will not be participating in California’s small-business exchange. Anthem is the state’s largest small group insurer. It will still participate off the exchange and in the state’s individual  exchange in 2014.

MASSACHUSSETTS: The 2014 budget signed into law by Governor Deval Patrick contains several significant health care-related changes.  Effective July 1, 2013, the budget eliminates the $295 per employee Fair Share assessment that employers have been paying under state health reform since 2006.  In addition, the newly created Center for Health Information and Analysis (CHIA) was funded at $26.7 million. This amount is financed by an assessment of 50 percent on surcharge payers and 50 percent on hospitals. The Department of Mental Health (DMH) is required to expend not less than $3.1 million on the Massachusetts Child Psychiatry Access Project and DMH may assess surcharge payers for the services rendered to commercial members.  The budget moves the administrative cost for operating Health Safety Net Funding outside of the annual appropriations of the fund, and the administrative costs will be split 50/50 between the acute hospitals and surcharge payers.  Finally the budget requires the Division of Insurance and MassHealth (Medicaid) to implement regulations by October 1, 2013 to create a process for carriers and MassHealth’s programs to certify and specify their compliance with the federal and state mental health parity laws.

NEW HAMPSHIRE:  The Medicaid Expansion Study Commission met last week and will continue meeting through much of the summer to explore the possible impact of proposed Medicaid expansion in the state.  This week, the commission will hear from representatives of Health and Human Services regarding the Medicaid program and managed care, Medicaid changes under the ACA regardless of expansion, fiscal impacts and new revenues under various expansion options, and changes to uncompensated care.  The Insurance Department will also provide information about the state’s health insurance exchange as it relates to Medicaid.  An August 30 meeting will be dedicated to taking public comments. Materials can be found on the Commission’s website. Legislative leaders could call a special session to vote on Medicaid expansion after the commission files its report.

NEW JERSEY: The Department of Banking & Insurance has issued a bulletin amending the Individual Health Coverage Program (IHC) and Small Employer Health Benefits Program (SEH) rating rules under the ACA, while also significantly changing how medical loss ratio (MLR) under the ACA is calculated in the state. This bulletin clarified rating requirements beginning January 1, 2014 with respect to rate bands and separate rating pools.  Additionally, it noted the new taxes and fees effectively imposed under the ACA were never anticipated under current New Jersey law and therefore should be excluded by carriers when calculating MLR.  New Jersey’s MLR criteria differs significantly from that of the federal government in that previously taxes have essentially been counted as an administrative expense.

NEW MEXICO: State officials announced last week that the Centers for Medicare & Medicaid Services (CMS) has approved the state’s plan to reform Medicaid.  Under the new Centennial Care program, Medicaid recipients will be responsible for new copays for some services, including a $3 fee for brand name drugs.  Medicaid managed-care organizations will hire care coordinators to monitor the use of health and behavioral services.  The state plans to implement these and several other program reforms in 2014, at the same time it expands Medicaid eligibility.  The program currently serves 550,000 New Mexicans.  An estimated 170,000 additional residents will become eligible for coverage under the expansion.

NEW YORK: The Cuomo administration announced that it has approved health insurance plan rates for 17 insurers seeking to offer coverage through New York’s health exchange. Four Medicaid-only plans have filed to offer individual coverage on the exchange; additionally several new players to the state’s insurance market have filed products largely to serve the metro-New York City area.  While the rates published by the administration are lower than current direct-pay market rates, the cost of coverage may still be out of reach for many of the 600,000 estimated to become eligible to purchase coverage through the exchange.  Fewer plans submitted products for New York’s SHOP.


Health Reform Connection
America’s Health Insurance Plans
Aetna 2011 Annual Report

Health Reform Weekly – Aetna Health Reform Connection.


An Exciting Time to Age-In To Medicare Insurance

If you are just aging-in to Medicare, you may be very interested in all of the media attention it has been getting during the past few months in light of the Annual Election Period, or Open Enrollment.  Even though the AEP occurs every year giving Medicare beneficiaries the opportunity to make changes to their coverage, this year AEP started and ended earlier than ever before, adding to the excitement and importance of the advertising campaign.  If you are approaching Medicare eligibility, you may have noticed the advertisements for different benefits, choices, or potential costs, but it’s important to start with the basics so you can make the right choice for your individual needs.

If you are just turning 65, you have a 7-month Initial Enrollment Period, from 3 months prior to your 65th birthday, the month of your 65th birthday, and ends 3 months after your 65th birthday. During this Initial Enrollment Period, you can sign up for Part A and/or Part B.  If you have met Medicare requirements, you most likely will receive Part A premium-free, but if you choose to sign up for Part B, you will have to pay a monthly premium.  It is important to enroll in Part B when you are first eligible to avoid late enrollment penalties. If you do not sign up for Part A and/or Part B when you are first eligible, you do have a General Enrollment Period from January 1 through March 31, but you may have to pay a higher premium due to late enrollment in Part B.

As you approach eligibility, you may choose to receive your Medicare benefits through Original Medicare, which is coverage managed by the Federal government, or through Medicare Advantage plans, which are offered by private insurance companies who contract with Medicare.  If you choose Original Medicare, you may decide that you need supplemental insurance to help pay some of the expenses that Original Medicare does not cover.  You have a 6-month Medigap enrollment period that begins on the first day of the month in which you’re 65 or older and enrolled in Part B. During this time, you have a guaranteed right to purchase a Medigap policy. (Some states have additional open enrollment periods.)  Original Medicare and Medigap policies do not cover the costs of prescription drugs, so you may consider adding a Prescription Drug Plan (PDP) to help cover the costs of medications you need now or in the future.

If you choose to enroll in a , you will have many choices to make. MA plans must offer at least the same coverage as Original Medicare, but most offer additional benefits. These additional benefits can include, but are not limited to, prescription drug coverage, vision care, dental services, hearing exams, or even membership in a fitness club. Plan comparison is crucial when you are choosing Medicare health care coverage for the first time. On-line comparison sites like Joppel.com can help you narrow down your choices of Medicare Advantage, Medigap, or Prescription Drug plans.  Plans can vary state to state and within the same area, you might find a difference in costs and benefits. As you age-in to Medicare, you should take the time to explore your options and find the right coverage for your personal needs and preferences.

Medicare has neither reviewed nor approved this information.

Via: An Exciting Time to Age-In To MedicareMedicare Insurance Resources.


House votes to delay parts of health care law | BenefitsPro

John Boehner

WASHINGTON — House Republicans voted on Wednesday to delay core provisions of President Barack Obama’s health care law, emboldened by the administration’s concession that requiring companies to provide coverage for their workers next year may be too complicated.

After a day of heated rhetoric, the House voted largely along party lines, 264-161, to delay by one year the so-called employer mandate of the Affordable Care Act. It voted 251-174 to extend a similar grace period to virtually all Americans who will be required to obtain coverage beginning Jan. 1, the linchpin of the law.

More: House votes to delay parts of health care law | BenefitsPro.


Affordable Care Act Employer Mandate Delayed Until 2015 – FOX News Radio

Affordable Care Act Employer Mandate Delayed Until 2015


A major provision of the Healthcare law that would require employers to provide health insurance for their workers has been delayed until 2015.

FOX News Radio’s Jared Halpern reports from Washington DC:

Recognizing concerns about the complexity of Healthcare law requirements, the Treasury Department is announcing a deadline delay for businesses to comply with the new health insurance mandates. The law requires companies with fifty or more employees to offer affordable health insurance options or face pricey fines. That mandate was supposed to kick in next year, employers now have until 2015. This delay does not change the individual mandate requiring American workers purchase health insurance or pay a tax by next year.

In Washington, Jared Halpern, FOX News Radio.

Affordable Care Act Employer Mandate Delayed Until 2015 – FOX News Radio.