Insurance Commissioner, Dave Jones, has come out against a specialty drug proposal by Covered California. Under the plan, Californians would pay up to $500 a month (per prescription) for specialty drugs needed to treat chronic illnesses; that’s in addition to their monthly insurance premiums. Jones said, “Covered California’s specialty drug proposal is a potentially discriminatory benefit plan design that would propel vital, life-sustaining drugs out of reach for many Californians. This plan creates an insurmountable affordability barrier for the average consumer, particularly those who struggle with chronic and life-threatening conditions that require multiple prescriptions.”
Jones said that many Californians with chronic illness, such as MS, Rheumatoid Arthritis, and HIV/AIDS, would pay thousands of dollars for life-sustaining drugs in the first few months of their health plan year. The Commissioner and consumer groups are urging Covered California to adopt a $200 monthly cap for these specialty drugs as other states have done. Anne Donnelly, director of Health Care Policy at Project Inform said, “The caps being recommended by Covered California staff are welcome, but they do not go far enough; $500 per prescription per month for most of those in Covered California plans will mean that many with chronic conditions will be forced to exhaust limited savings or forego necessary health care.”
Californians with chronic illnesses often take multiple drugs, which means that they could have to pay a minimum of $1,000 a month out-of-pocket even though they have health insurance. The Commissioner noted that insurance code sections 10965.5(a)(3) and 10753.05(h)(3) prohibit Covered California’s standard plans from engaging in practices that discourage enrollment from consumers with significant health needs. Over the past two years, the Department of Insurance rejected some plan designs, finding that co-insurance requirements on specialty drugs were discriminatory to patients with certain medical conditions.
How the Insurance Market Influences Hospital Costs
The insurance market is an important factor in determining hospital costs, according to a study by Health care Research & Transformation (CHRT). Researchers compared hospital costs among Indiana, Michigan, and Wisconsin, finding Michigan to have the lowest costs. Wisconsin has the most fragmented health insurance market in the nation, likely reducing the bargaining power of any one insurer. In fiscal year 2013, Wisconsin had per capita hospital costs of $3,107, higher than Indiana ($2,975) and Michigan ($2,624). This is consistent with earlier trends in total health care spending per capita. From 2001 to 2009, Wisconsin had the highest per capita health care costs among the three states while Michigan had the lowest.
State regulations also influence costs. Wisconsin and Indiana have no Certificate of Need laws while Michigan is one of 36 states that does. In FY 2013, Milwaukee health systems had the highest operating margins in the study, ranging from 4.1% to 12.2%, far above the national benchmark of 2.2%. Total margins ranged from 6.6% to 15.2%, compared to a benchmark of 4.2%. For more information visit chrt.org.
CMS Releases Hospital Comparison Ratings
The Centers for Medicare & Medicaid Services (CMS) introduced star ratings on “Hospital Compare,” the agency’s public information website. The comparison site covers topics like the following: how well nurses and doctors communicate with patients, how responsive hospital staff are to patients’ needs, how clean and quiet hospitals are, and wow well patients are prepared for post-hospital settings. For more information, visit HCAHPSonline.org.
FINANCIAL PLANNING
Americans Are More Confident About Retirement
This year, American workers and retirees are more confident about their ability to afford retirement even though there is little sign they are taking the necessary steps to achieve that goal, according to a survey by the Employee Benefit Research Institute and Greenwald & Associates. The increasing optimism is a result of those who say they and/or their spouse have a 401(k) plan, a defined benefit pension plan, or an IRA.
Forty-four percent of workers with no retirement plan are not confident about having enough money for a comfortable retirement, compared to only 14% of those with a plan. The percentage of workers who were confident about having enough money for a comfortable retirement was at record lows from 2009 to 2013, but has increased in 2014 and again in 2015. For more information, visit ebri.org/surveys/rcs/2015/.
IN CALIFORNIA
Home Care Costs Increase in California
Nationally, there has been a dramatic increase in the cost of care at assisted living facilities and nursing homes while the cost of health aide care is rising more moderately. Nationally, it costs $20 an hour for home health aide services from an agency in 2015; it’s $23 in California. Home health aide costs have increased 2.3% annually in California over the past five years.
Nationally, the cost of assisted living has increased 2.5% a year over the past five years to reach $43,200. In California, it has grown 1.3% a year to $45,000. The cost of a room in a private nursing home rose 4% a year over the past five years to reach $91,250 nationally. Costs increased 3.5% to reach $104,025 in California. For more information, visit longtermcare.gov.
CAHU Summit
CAHU is holding its Capitol Summit May 19 and 20 in Sacramento. For more information, visit cahu.org.
Californians Encouraged to Plan for Their Financial Future
This week is National Retirement Planning Week, and the California Department of
Insurance is encouraging all Californians to take a good look at their financial needs as they move toward retirement. The Department of Insurance and the National Retirement Planning Coalition have resources available to help jump start financial planning at retireonyourterms.org.
Affordable Care Act Compliance Toolkit
The Word & Brown General Agency’s new Affordable Care Act (ACA) Compliance Toolkit is now available for brokers to help clients with 50 or more full-time equivalent employees comply with IRS reporting requirements. The ACA Compliance Toolkit, which is only available to Word & Brown brokers, offers an overview of the new IRS reporting requirements and a copy of IRS Form 1095-C, so brokers can see what employee and group information is required. The Toolkit also includes an example of how the IRS Section 6056 Reporting Data Calculator works. The Toolkit provides links to resources on where to find related 1095-C and 1094-C forms and answers to IRS frequently asked questions. For more information, visit wordandbrowncompanies.com.
NEW PRODUCTS
Travel Protection Plans
HTH’s TripProtector plans now come in three levels, topping out at $50,000 of trip cancellation, 200% of trip costs for trip interruption, $500,000 in medical benefits, and $1 million in medical evacuation. The plans, which are underwritten by Nationwide, cover domestic and international trips. TripProtector plans cover trip cancellation and interruption for illness, terrorism, and dangerous weather, as well as baggage loss and trip delay. Medical benefits include outpatient and inpatient services for sickness and injury, and medical evacuation. For more information, visit hthtravelinsurance.com.
Tools in Spanish to Buy Coverage Outside of Open Enrollment
The Health Insurance Marketplace may have shut its doors on February 15, but it’s still possible to get health insurance outside of the official enrollment period under certain conditions. HolaDoctor.com, which is entirely in Spanish, offers an interactive tool to determine when a person would qualify for a Special Enrollment Period. For more information, visit holadoctor.net.
Accident Insurance
Prudential has added accident insurance to its suite of products available through the workplace. Prudential’s accident insurance solution provides employers with more than 500 employees an optional benefit that helps workers deal with the financial impact of an accident such as a fracture, dislocation or concussion. For more information visit prudential.com/financialwellness.
Dental Plan
Colonial Life is offering a dental plan that pays a fixed benefit amount for each covered procedure. Unlike traditional PPO dental plans, there is no deductible, precertification, coordination of coverage, and or coinsurance. Policyholders are eligible for benefits for wellness visits and X-rays from their first date of coverage. For more information, visit coloniallife.com.
ANNUITIES
DIAs Reduce Cost of Funding Retirement
Including a deferred income annuity (DIA) in a retirement portfolio comes with some important benefits. It helps reduce the cost of funding retirement, it offsets risk, and it offers flexibility in asset allocation, according to an academic paper by Michael Finke of Texas Tech University and Wade Pfau of the American College. Northwestern Mutual partnered with the professors on the paper. When a retirement plan allocates a portion of assets to a DIA, it guarantees a portion of retirement income, thereby softening the financial blow of a long lifetime or poor market returns.
When the consumer buys a DIA before retirement, a portion of the retirement portfolio is placed into a bondlike asset. With a level of income guaranteed, the consumer can invest the rest of their assets more aggressively while maintaining the same risk profile.
Innovative DIA products provide additional value given the low interest rate environment since they may allow for potential payout increases over time via dividends while providing protection against inflation and longevity. For more information, visit northwesternmutual.com.
WELLNESS PLANS
Employers Miss the Boat When Evaluating Wellness Programs
Seventy-two percent of employers measure the effectiveness of their wellness program, but only 37% evaluate whether it actually reduces health care costs, according to a study by WorldatWork and HealthMine. Disease management programs offer the biggest opportunity to save on long-term health care costs. But 43% of workplace wellness programs don’t include disease management. What’s more, 81% of employers don’t offer incentives for employees who participate in disease management programs or penalties for those who don’t. Consumers overwhelmingly want employer incentives. According to a 2014 RAND study, disease management can deliver 74% greater ROI per member than lifestyle management.
Fifty percent of employers don’t provide incentives for smoking cessation or penalties for continuing to smoke. Sixty-three percent of consumers say that employees who smoke should pay more for health insurance. For more information, visit healthmine.com.
