HEALTHCARE
Children’s Health Care Spending Increases Under Group Plans
Health care spending for children (birth to 18) increased 5.7% a year from 2010 to 2013 under employee group plans. That compares to a 3.9% yearly increase for the total population (birth to 64) with employer-sponsored insurance, according to a report by the Health Care Cost Institute (HCCI). Per capita spending on children reached $2,574 in 2013, a $391 increase from 2010.
The rise in children’s spending occurred despite a drop in the use of prescription drugs and emergency room visits. Spending on inpatient admissions rose in 2013 as a result of rising prices and slightly higher admission rates for children ─ particularly newborns. The average price of an inpatient admission for a child increased $744 in one year, hitting $14,685 in 2013. Inpatient admissions accounted for about 40% of per capita health care spending for infants and toddlers (birth to three).
Prescription use by children dropped in 2013. This trend, along with a continued shift from branded drugs to generics, meant that spending on children’s prescriptions slowed in 2013. For example, from 2011 to 2013, the use generic prescriptions for asthma and allergies rose more than 300% for babies, more than 700% for younger children (four to eight), more than 800% for pre-teens (nine to 13), and more than 500% for teenagers (14 to 18). At the same time, use of branded versions of these drugs declined to nearly zero.
There were fewer emergency room visits in 2013 for all children. The biggest decline was for teenage boys (a decline of 11 visits per 1,000 teen boys) and pre-teen boys (a decline of 8 visits per 1,000 pre-teen boys). For teenage girls in 2013, labor and delivery admissions declined, falling from five to four admissions (rounded) per 1,000 girls. During the study period, the number of MH/SU admissions continued to rise, increasing by one admission per 1,000 teen girls in every year of the study period, reaching 13 MH/SU admissions in 2013. In 2013, per capita spending for children (birth to 18) was $2,716 for boys and $2,426 for girls. However, spending on health care for girls was higher when children reached their teens: $2,834 compared to $2,661 for boys the same age.
Younger children had the lowest spending among the employer-sponsored insurance population under 19, partially driven by the use of fewer medical services than the other children’s age groups. Spending on these children was $1,703 per child in 2013. This was $3,110 per child less than the spending on babies (birth to 3). For more information, visit healthcostinstitute.org.
Hospitals Well Positioned for Insurer Consolidation
The for-profit hospital industry is well positioned to weather the wave of mergers and acquisitions (M&A) among the largest for-profit health insurers, but consolidation could have some important longer-term ramifications, according to Fitch Ratings.
M&A activity among health insurers is not likely to result in immediate price pressure for hospitals. In many markets, health insurers are already fairly consolidated. Recent actions by hospitals to build market presence will shore up negotiating power. However, it could hurt the competitiveness of smaller insurers in some markets. It could also accelerate the shift towards value-based payments for hospitals and other healthcare providers.
The merger of Aetna and Humana would create the second largest national for-profit health insurer by revenue. The announcement of the merger comes after some favorable developments for the hospital industry. Most importantly, the Supreme Court recently ruled that public health insurance exchange plans could keep the financial subsidies that make these plans more affordable. In part because of the ACA-related expansion of health insurance coverage, hospitals have recently had more patients. M&A activity among acute care hospitals has given them more negotiating clout. Hospitals have been expanding their presence in key geographies through acquisitions and financial partnerships. For more information, visit fitchratings.com.
Dental Care Is Still Out of Reach for Many
In year two of the Affordable Care Act (ACA), one quarter of respondents to a survey by DentalPlans went without dental care in the prior 12 months because they couldn’t afford it. The average American dental expenditure is $6661 a year. Only 7% of adults have dental insurance through a plan purchased on Healthcare.gov. More stand alone dental plans offer family dental benefits, giving adults more dental insurance plan options this year. Bill Chase, vice president of marketing for DentalPlans said, “While the availability of and information on dental benefits was more evident in the 2015 Federally Facilitated Marketplaces, the ACA still fails to meet the oral care needs of most adults and seniors. Once again, oral care for adults is an optional benefit, requiring adults to purchase additional stand alone dental plans if they want coverage, costing additional money, while not being eligible for assistance.” For more information, visit dentalplans.com.
CMS Changes Chronic Care Management
The Centers for Medicare and Medicaid Services (CMS) is trying out remote doctor visits for patients with two or more chronic conditions, according to an analysis by Frost & Sullivan. Medical practitioners can now bill non-face-to-face communications with Medicare beneficiaries. This promising revenue-generating system involves a minimum of 20 minutes of non-face-to-face service. This service can only be billed by one practice per month. The practice will assume full care-coordination responsibility including the use of certified electronic health records needed when communication is necessary among medical experts. If this model lives up to its potential, private payers and benefit plan managers may establish similar coverage. For more information, visit connectedhealth.frost.com.
IN CALIFORNIA
Don Goldmann Named President of NAHU
Don Goldmann was named as president of the National Association of Health Underwriters (NAHU) at the 85th Annual Convention and Exhibition in New Orleans, LA. After accepting the gavel from outgoing president Ryan Thorne, Goldmann vowed to reinforce NAHU’s mission to educate consumers and lawmakers about the value that health insurance agents and brokers bring to the health care system and increase NAHU members’ ability to serve consumers. “Don has been an incredible asset to NAHU and our goals of supporting agents and educating the American public about the healthcare options available to them,” said Janet Trautwein, NAHU CEO. Goldmann, vice president of Word & Brown General Agency, has been in the insurance industry for more than 35 years, and has been a member of NAHU since 1986. He is a highly sought-after speaker and frequently published contributor to national, state and local journals. During his membership in NAHU, he has served as a regional, state and local leader and has received numerous awards for his efforts.
Serving on the Financial Committee five times, Goldmann helped to write five annual budgets, which have contributed to NAHU’s continued growth and success. As NAHU secretary, Goldmann oversaw the review of 34 important policies and procedures and drafted a major restructuring of the policies and procedures dealing with the bidding of contracts and services. “The members of NAHU are my professional family and to be selected by them is the greatest honor that I could have ever been given. I am most grateful to be allowed to serve them and our cause of promoting private market solutions for the financing of healthcare in America,” Goldmann said. Goldmann received a bachelor’s degree from Middle Tennessee State University and a master’s in business communications from the University of Michigan. He lives and works in Orange, Calif.
Dave Fear Sr. Named NAHU Person of the Year
The National Association of Health Underwriters (NAHU) honored David Fear Sr. as the industry’s Person of the Year. Janet Trautwein, CEO of NAHU said, “Dave has embodied what we call a leader: someone with endless drive, devotion, ability and great ideas. His contribution to the advancement of NAHU has been invaluable. We are incredibly pleased to present Dave with this award, and we look forward to many more years of benefiting from his wisdom and dedication to the health insurance industry.”
Fear helped found the Sacramento AHU in 1991. He then served as the chapter’s media, legislative, membership and education chair. Fear spent countless hours lobbying in Sacramento then providing legislative details and insight to his chapter. Fear went on to serve the California AHU (CAHU), the largest state chapter in the country. He was chairman of the legislative and communications committees before moving to CAHU’s Board, where he eventually served as president. Fear successfully ran for the position of secretary on NAHU’s Board of Trustees. In the ensuing years, he worked hard to improve the association’s governance and value to its members. In 2006, Fear was named president of NAHU. Under his leadership, the association saw growth in membership, revenue and prestige. His greatest legacy as a member was pushing to reenergize NAHU’s Education Foundation. He worked to make the NAHU Education Foundation a force in our industry, competing successfully for grant funding.
Fear began his tenure in the insurance industry in 1979 and has worked in various capacities including sales, service, consulting, administration, marketing and product development while residing in California, Colorado, Texas and Kentucky. He attended Brigham Young University and California State University at Fresno. He lives in Sacramento, Calif., with his wife. They have seven children and 13 grandchildren.
Superior Court Judge Upholds Independent Contractor Decision
Los Angeles Superior Court Judge Ross Klein ruled that a Los Angeles trucking company misclassified an employee as an independent contractor. The court affirmed that Laca Express Inc. owes driver Ho Woo Lee $179,390. The court ruled that back pay and expenses were deducted unlawfully from his paycheck. Lee filed a claim with the Los Angeles Labor Commissioner’s office in December 2012 claiming that Laca Express deducted $83,292 from his paycheck in violation of Labor Code section 221. Laca Express deleted more than $80,000 in weekly lease and insurance payments for a truck he was using. The company repossessed the truck after terminating Lee’s employment.
The Wage Theft is a Crime public awareness campaign has helped inform workers of their rights. The campaign includes multilingual print and outdoor advertising and radio commercials on ethnic stations in English, Spanish, Chinese, Vietnamese, Hmong and Tagalog. Employees with work-related questions or complaints may contact DIR’s Call Center in English or Spanish at 844-LABOR-DIR (844-522-6734). The California Workers’ Information line at 866-924-9757.
NEW PRODUCTS
Linked Benefit LTC Product
Nationwide enhanced its YourLife CareMatters linked benefit long-term care (LTC) product, featuring an increase in the LTC benefit pool for most new policies. For the most commonly selected six-year benefit scenario, the LTC benefit will increase up to 21% for single-pay cases and up to 15% on 10-pay cases. Other benefit periods will also see an increase or stay the same depending on age, gender, payment plan and benefit option. For more information, visit nationwidefinancial.com/carematters or call 1-800-321-6064.
Multi-Carrier Exchange Solution for Retirees
HPOne launched the ClearChoice Exchange, a health care exchange solution created for employers seeking to manage retiree health care costs.The ClearChoice Exchange offers the following:
- Plans from multiple carriers for pre-65 retirees
- Individual Medicare Advantage plans from multiple carriers
- The UnitedHealthcare Group Medicare Advantage PPO
For more information, visit www.HPOne.com.
Health Plan Guide to Leveraging Trends in Post-Reform
The Healthcare Trends Institute released a free guide for health plans seeking insight on how to leverage the constantly shifting trends in the post-reform marketplace to educate and attract consumers. Titled, “Health Plans: Your Guide to Leveraging Trends in the Post-Reform Consumer Marketplace,” the guide highlights changes over the past five years as a result of the Affordable Care Act, as well as how a health plan can act on these changes to reach consumers. It is available for download from the Healthcare Trends Institute website here: http://www.evolution1.com.
LIFE INSURANCE & ANNUITIES
Dept. of Labor Proposals May Squeeze Annuity Products
Proposed regulations from the Dept. of Labor could have unintended consequences for the investment and annuity market, according to Fitch Ratings. The Labor department’s April 21 fiduciary proposals would greatly expand the universe of people and corporations covered under the 1974 Employee Retirement Income Security Act (ERISA). Investment advice to people planning for retirement has not been covered under ERISA, but the proposals sweep general wealth and retail advisors under the rule. Brokers would be have to meet certain requirements for acting in their clients’ best interest and disclose any conflicts of interest between corporations and selling agents. Asset managers and insurance companies would have to examine distribution policies and commission structures for independent and affiliated distributors that sell many of the investment products reaching retirement accounts.
Registered investment advisors would have to do more to prove that a client’s product choices meet the their best interest. Fitch says that advisors may become less willing to promote complex and higher fee products. The rules may encourage some brokers to adopt advice-for-fee models for advisors.
Meanwhile, life insurance companies and asset managers would be contractually bound to enhance conflict risk management, disclose fee practices and provide enhanced disclosures of compliance to regulators.Under fiduciary rules, a person responsible for serving in a fiduciary’s best interests (such as a trustee) may not get compensation for selling to the fiduciary and may not self-deal in the same investment scheme for which he or she oversees as a fiduciary. To preserve commissions, the Dept. of Labor has established multiple levels of exemptions that could keep many practices in place. The precise extent to which an advisor would be required to explain product solutions not offered in order to demonstrate serving a client’s best interest is not yet entirely clear.
Overhauls over the past years to the UK, German and Australian retirement markets have included complete bans on commissions without resulting in significant curbs to dollar sales of the products, although there have been indications of the middle-market customer being less targeted. Higher end customers have been offered and generally accepted moving to fee-for-advice models.
In a sign of the political sensitivity of the issue, earlier in June, the House of Representatives’ 2016 appropriation bill would block the agency from spending any of the annual funds on finalizing, implementing, administering, or enforcing the proposed rules. Full implementation is not envisioned until third-quarter 2016 at the earliest, giving all affected parties meaningful time to prepare for and respond to the changes. A comment period on the proposals closes on July 21. For more information, visit fitchratings.com.
New York Life Acquires Whole Life Block from John Hancock
New York Life has completed the acquisition of 60% interest in John Hancock Financial’s closed block, comprised primarily of participating whole life insurance policies. The transaction, which was initially announced in December 2014, has received all necessary regulatory approvals.
The closed block of 1.3 million in-force policies with a face amount of more than $25 billion was established in connection with John Hancock’s demutualization in 2000. With these additional assets, New York Life’s general account assets now exceed $213 billion, a record high for the company.John Hancock, the U.S. division of Manulife Financial Corporation, will continue to administer the closed block policies, including paying claims and dividends. Terms of the transaction were not disclosed.
New York Life Chairman and CEO Ted Mathas said that the transaction brings New York Life a significant infusion of high-quality, whole life insurance assets. He noted that the company is interested in acquiring other blocks of high quality life insurance. Mathas said, “Our company’s ratings for financial strength are substantially driven by our ability to maintain a thriving block of participating whole life insurance business. Together with our surplus and asset valuation reserve, a cushion of safety that now stands at more than $22 billion, New York Life’s financial strength is unsurpassed in the industry, as validated by the four major rating agencies. In fact, of the 800 life insurers operating in the United States today, New York Life is one of only two with the highest possible ratings for financial strength currently awarded by all four rating agencies.” Earlier this year New York Life’s general account, managed for the benefit of policy owners, exceeded $200 billion in assets for the first time in its 170 year history. For more information, visit newyorklife.com for more information.
EMPLOYEE BENEFITS
Takeovers Are an Ever-Present Trend in Today’s Voluntary Market
Back in the old days, voluntary was almost all new business. But times have changed, with takeover business (defined as one carrier replacing another carrier in an account with a similar product) now accounting for over half of voluntary sales. Carriers say they have seen significant increases over the past three to five years and they expect that trend to continue, according to a report by Eastbridge. Eighty-nine percent of carriers expect to see more increases in takeovers.
Most carriers do not encourage takeovers and would prefer new cases, but consider takeovers to be a necessary part of their voluntary business. Takeover rates vary by product or line of business, but voluntary AD&D, term, and long-term disability had the highest rates in the current study.
Carriers are concerned that takeovers may affect employees, particularly the possibility of them having to pay higher premiums or not really understanding their coverage. The report is available for purchase for $2,000. For more information call 860-676-9633 or email info@eastbridge.com.
Employees Want Financial Incentives for Wellness
A HealthMine survey reveals that 43% of 1,200 employees surveyed want financial incentives in a wellness program for their dependents and themselves. However, new proposed wellness regulations from the EEOC state that employers may only be able to provide incentives of up to 30% of the total cost of self-only coverage even if the employee is enrolled in a different coverage tier and the employee’s spouse or dependents are eligible to participate in the wellness program. This proposed limit (based upon self-only coverage) may run counter to consumer wishes for financial incentives that apply more broadly to the entirety of their enrolled family.
Fifty-two percent say that cash rewards would most increase their likelihood of participating in wellness programs; 46% prefer lower health insurance premiums; and 39% want gift cards. Bryce Williams, CEO and President of HealthMine said, “Cash and lowered insurance premiums are two of the most powerful levers plan sponsors have to pull.” For more information, visit healthmine.com.
