IN CALIFORNIA
Covered California Releases Rates for 2016
In 2016, the majority of Covered California consumers will see a decrease in their health insurance premiums or an increase of less than 5% if they keep their current plan. Covered California’s rates for 2016 reveal that the average increase will be 4%, which is lower than last year’s increase of 4.2%. In addition, consumers who change to a lower-cost plan in the same metal tier consumers can reduce their premiums by an average of 4.5% and more than 10% in some regions.
California Health and Human Services Secretary and Covered California Board Chairwoman Diana Dooley said, “Since Covered California requires health insurance carriers to offer the same products at the same prices inside and outside Covered California’s marketplace, all people seeking to buy health insurance benefit from these rates.” Southern California Consumers can save an average of nearly 10% by moving to a lower-cost plan in the same metal tier while Northern California consumers could limit their rate increase to an average of 1%. The average premium increase is 1.8% for Southern California consumers who stay in their plan and 7% for Northern California consumers who stay in their plan.
| COVERED CALIFORNIA RATE CHANGES | ||
| 2014-2015 Change | 2015-2016 Change | |
| Weighted Average Increase | 4.2% | 4.0% |
| Lowest-Priced Bronze (unweighted) | 4.4% | 3.3% |
| Lowest-Priced Silver (unweighted) | 4.8% | 1.5% |
| If a consumer shops and switches to the lowest-cost plan in the same tier | – | -4.5% |
Covered California executive director Peter Lee said, “The sheer numbers and health of our enrollees allowed us to sit down with the health insurance companies and negotiate rates downward, which will save our consumers more than $200 million in premiums.” In 2013, Covered California discontinued health plans that did not meet basic standards. Lee said that this decision stabilized the market and helped create a healthier pool of enrollees. Lee said, “Covered California used recent data analysis in its negotiations with plans to prove that our mix of young and ethnically diverse enrollees are among the healthiest in the country; health plans responded by lowering their rates.”
Because of the ACA’s reinsurance and risk adjustment programs, premiums are lower, in general, and health plans cannot benefit by seeking to enroll a healthier population. Lee noted that Covered California is an active purchaser, which means that it can choose which plans participate in the exchange and negotiate the rates, networks, and quality elements to get the best value. Covered California’s standard benefit design creates a level playing field in which health insurance companies must compete on price and quality, Lee added. For details on factors that went into the rates, visit CoveredCA.com/news.
Covered California Adds New Health Plans
Two new health insurance companies will be joining selected regions of the California marketplace in 2016: Oscar Health Plan of California and UnitedHealthcare Benefits Plan of California. Twelve health plans are now offered through the exchange. Below is the complete list of the companies selected for the 2016 exchange:
- Anthem Blue Cross of California
- Molina Healthcare
- Blue Shield of California
- Oscar Health Plan of California
- Chinese Community Health Plan
- Sharp Health Plan
- Health Net
- UnitedHealthcare Benefits Plan of California
- Kaiser Permanente
- Valley Health Plan
- L.A. Care Health Plan
- Western Health Advantage
UnitedHealthcare will be offering coverage in California in pricing regions one, nine, 11, 12 and 13. Oscar is a new health insurance company that offers intuitive technology tools to guide members to better care. Oscar will offer plans in regions 16 and 18.
Californians in large metropolitan areas will have five to seven health insurance companies to choose from. In 2016, 99.6% of Covered California members will be able to choose from three or more carriers. All will have at least two to choose from. This is an improvement for consumers who live in areas that have historically had a limited choice of providers. In 2016, more than 90% of hospitals in California will be available through at least one health insurance company; 74% will be available through three or more companies. Additionally, several quality health care improvements were achieved as part of Covered California’s negotiating process. For more details on the plans in specific pricing regions, see the booklet Health Insurance Companies and Plan Rates for 2016, posted online at CoveredCA.com.
Reactions to Anthem/Cigna Merger
Anthem and Cigna have entered into a definitive agreement whereby Anthem will acquire all outstanding shares of Cigna in a cash and stock transaction. The Anthem board of directors will be expanded to 14 members. David Cordani and four independent directors from Cigna’s current board of directors will join the nine
Joseph Swedish, president and CEO of Anthem said, “The Cigna team has built a set of capabilities that greatly complement our own offerings and the combined company will have a competitive presence across commercial, government, international and specialty segments. “The complementary nature of our businesses will allow us to leverage the deep global health care knowledge, local market talent, and expertise of both organizations to ensure that consumers have access to affordable and personalized solutions across diverse life and health stages and position us for sustained success,” said David M. Cordani, president and CEO of Cigna. The transaction is expected to close in the second half of 2016, pending state regulatory approvals. Anthem is confident in its ability to obtain all necessary regulatory and other approvals.
Insurance Commissioner Dave Jones said, “California’s health insurance market already suffers from consolidation with the four largest health insurers in the individual market controlling more than 85% of the market. Further consolidation will result in even less competition among health insurers and will leave consumers and employers with fewer choices and the potential for greater premium increases. Studies of prior mergers of health insurers found that health insurance prices increased as a result of mergers. “Health insurers are enjoying record share values and profits, which are paid for by consumers and employers. There is no requirement that any savings from these mergers be passed along to consumers or employers. In California, there is no authority to reject excessive health insurance rate increases, unlike 35 other states. We will review the mergers based on what is best for California consumers and employers. We will also work closely with other state and federal regulators,” he added.
Steven Stack, MD, president of the American Medical Association said, “The lack of a competitive health insurance market allows the few remaining companies to exploit their market power, dictate premium increases, and pursue corporate policies that are contrary to patient interests. Health insurers have been unable to demonstrate that mergers create efficiency and lower health insurance premiums…The U.S. Department of Justice has recognized that patient interests can be harmed when a big insurer has a stranglehold on a local market. Federal and state regulators must take a hard look at proposed health insurer mergers. Antitrust laws that prohibit harmful mergers must be enforced and anti-competitive conduct by insurers must be stopped.” “Based on federal guidelines, the proposed Anthem-Cigna merger would be presumed to be anticompetitive in the commercial, combined (HMO+PPO+POS) markets in nine of the 14 states (NH, ME, IN, CT, VA, CO, GA, NV, KY) in which Anthem is licensed to provide coverage,” he added.
An AMA study of the 2008 merger involving UnitedHealth Group and Sierra Health Services found that premiums increased after the merger by almost 14% compared to a control group. The study reveals a serious decline in competition among health insurers with nearly three out of four metropolitan areas rated as highly concentrated. In fact, 41% of metropolitan areas had a single health insurer with a commercial market share of 50% or more.
HEALTHCARE
The HSA Market at a Glance
Starting from nothing about a decade ago, enrollment in HSA-eligible health plans is estimated to be about 17 million policyholders and their dependents in 2014, according to a study by the Employee Benefits Research Institute (EBRI). More employers are expected to offer an HSA-eligible health plan as an option or as the only health plan. As a result, HSA-eligible health plans and HSAs are expected to grow as a vital component of employment-based health coverage. The following are highlights of the study:
- 78% of HSAs were opened since the beginning of 2011.
- Average balances increased from $1,408 to $1,933 during calendar year 2014.
- 70% of the accounts in the EBRI HSA database had an individual or employer contribution in 2014. Average balances in these accounts increased from $1,562 to $2,384. About 4% of them ended 2014 with a zero balance.
- Just over one-half of accounts had individual contributions, with deposits averaging $2,096.
- Among the 52% of accounts receiving employer contributions, the accounts received an average of $1,021.
- Distributions for health care claims averaged nearly $2,000 among the 61% of accounts with a distribution.
For more information, visit ebri.org.
Alzheimer’s Costs Loom on the Horizon
By mid-century, more than 28 million Baby Boomers are projected to have Alzheimer’s. The cost of caring for them will consume nearly 25% of Medicare spending in 2040, according to research from Alzheimer’s Assn. (conducted by the Lewin Group). Without significant advances in treatment or prevention, there will be a shift toward more severe forms of the disease as the Baby Boomers with Alzheimer’s age, leading to higher Medicare costs. In 2020, the projected Medicare costs of caring for Baby Boomers with Alzheimer’s in the community ($11.86 billion, in 2014 dollars) will be 2.1% of total Medicare spending. By 2040, when the Baby Boom generation is aged 76 to 94, the projected Medicare costs ($328.15 billion, in 2014 dollars) increase to 24.2% of total Medicare spending.
Keith Fargo, PhD of the Alzheimer’s Assn. said, “As Baby Boomers get older, the number of people developing the disease will rise…far beyond anything we’ve ever seen. Fortunately, there is a pipeline of experimental therapies that have the potential to delay the onset of Alzheimer’s and perhaps even prevent the disease.”
Fargo said, “Alzheimer’s is extremely underfunded compared to the magnitude of the problem. If we’re going to change the current trajectory of the disease, we need consistent and meaningful investments in research from the federal government to ensure a more robust pipeline. Where we’ve made significant commitments – heart disease, cancer, HIV/AIDS – we’ve generated effective treatments and prevention strategies, and reduced death rates. Now is the time to do the same for Alzheimer’s disease.”
An Alzheimer’s Association report released this year, “Changing the Trajectory of Alzheimer’s Disease: How a Treatment by 2025 Saves Lives and Dollars.” According to the report, a treatment that delays disease onset could save $220 billion within the first five years of its introduction. It would also cut the number of people who have the disease in 2050 by 42% – from 13.5 million to 7.8 million. For more information, visit alz.org/aaic.
How Consumers Make Elective Healthcare Decisions
When making elective healthcare decisions, consumers do extensive research about the procedure and how they are going to pay for it, according to a study conducted on behalf of CareCredit. Consumers take an average of 76 days to conduct research. Consumer research is conducted online and off, including a preliminary visit to the provider’s office and discussions with family and friends. Cost is considered at the same time as other factors, including whether to invest in the procedure or device itself and the selection of provider. Seventy percent of respondents researched the procedure while 73% researched costs, including the availability of financing. The survey of CareCredit cardholders also reveals the following:
- 90% say the financing helps them be prepared for unplanned health expenses.
- 47% would not have made the purchase or would seek another provider if theirs did not have financing available.
For more information, visit carecredit.com.
Pharma Company Criticized for Blacklisting Patients to Punish Insurers
The AIDS Healthcare Foundation (AHF) criticized Gilead Sciences and its CEO John Martin over news that the Bay Area drug giant is pushing certain Hepatitis C patients from its lifesaving Gilead Patient Assistance Programs (PAP) if a patient’s health insurer refuses to cover the drug or puts limits on their coverage. AHF says that the drug company is disqualifying thousands from its PAP. According to a community letter Gilead has circulated, the drug maker is changing its patient assistance program criteria to exclude patients whose insurers have set limits, or are only willing to cover AbbVie’s competing Hepatitis C treatment, the Viekira Pak.
Michael Weinstein, president of AIDS Healthcare Foundation said, “If a patient’s insurer balks at paying the $1,000 per pill cost of Sovaldi or the $94,500 cost of Harvoni, Gilead may now deny the patient medication access via its own patient assistance program…Gilead is holding Hepatitis C patients hostage as a negotiating strategy with health insurers for drugs that they ridiculously overpriced in the first place, so whatever discounts Gilead offered are most likely rendered moot. Gilead has always been at the forefront in overpricing its medications and price gouging government programs, but this is entirely new territory—it so plainly shows what little regard and compassion Gilead actually holds for patients. Blacklisting these patients is nothing more than a means for Gilead to pressure—shake down, really—the patients’ insurers.” For more information, visit aidshealth.org.
EMPLOYEE BENEFITS
Most Voluntary Benefit Companies Use Social Media
Over 70% of the voluntary carriers surveyed by Eastbridge use social media marketing compared to only 29% in 2009. The study also finds the following:
- Facebook and LinkedIn are the most commonly used social media sites.
- Most companies have a general corporate social media presence and not one specifically for their voluntary program.
- In response to the key audiences targeted by social media, most carriers listed brokers at the top, but employees and employers are also targeted.
- Most of those using social media are not sure about the effectiveness of their sites, but believe that the benefits of being on social media outweigh the costs.
- Most participants are positive about the future potential for these marketing tools, with over 60% rating the potential as high.
For more information, visit eastbridge.com.
FINANCIAL PLANNING
Successful Advisors Use Robo-Advice for Older and Wealthier Clients
Contrary to popular belief, registered investment advisors and fee-based financial advisors use robo-advice for wealthier and older clients. A robo-advisor is an online wealth management service that provides automated, algorithm-based portfolio management advice. The study by Jefferson National finds that the most successful advisors are early adopters when it comes to using technology, including robo-advisors.
Fifty-two percent of advisors who use robo-advice use it most often for clients with over $1 million in investable assets. Twenty percent use it most often for clients with over $10 million in investable assets. Forty-nine percent of early adopters use robo-advice for Baby Boomer clients, and 49% also use it for Millennial clients, challenging the general perception that only younger clients are open to newer technologies.
Still, just 19% of advisors use robo-advice. Only 15% of advisors who are not using robo-advisors say they are very likely to integrate this model into their practice in the next 12 months. Even advisors who are familiar with the robo-advice model are almost evenly divided on their outlook. While 48% say robo-advisors do not pose a threat, 42% say robo-advisors do pose a threat. Mitchell H. Caplan, CEO of Jefferson National said, “While there is no replacement for…holistic guided advice,…this new generation of digital advisory solutions can be incorporated into a successful advisor’s practice to create greater efficiencies and create more value for their clients. The most successful advisors understand that rather than being a threat, robo-advisors are an important part of a comprehensive offering.” For more information, visit jeffnat.com/advisorauthority.
NEW PRODUCTS
Affordable Care Act Reporting
AccuFund is offering Affordable Care Act reporting capabilities for its payroll customers. For more information, visit accufund.com/payroll.
Unum Adds Claims App
Unum is offering an app to help customers manage disability claims or leave events. The new mobile app – now available in Apple, Android and Windows app stores – will help customers monitor family and medical leave and manage disability claim details. For more information, visit unum.com.
Benefit Enrollment Tool
Rally Healthbenefit enrollment has launched Rally Choice. It provides consumers education and guidance to make health benefit decisions. It takes them through the enrollment process when signing up for health benefits offered through their employer or health insurance provider. With Rally Choice, they can research, compare and purchase their benefits through an intuitive, guided experience that helps them better understand the often complex benefits options available to them. For more information, visit RallyHealth.com.
Retirement Designation Course
LOMA launched an online course, “Successful Retirement Outcomes” (SRI 210). It is offered in a self-paced online format featuring video scenarios and highly interactive learning features. For more information, visit limra.com/sri.
Access to Hospital Discharge Data
The Agency for Healthcare Research and Quality has released Fast Stats. The online tool allows users to analyze state-by-state information on hospital discharges, including all-payer data on discharges in 2014 from 17 states. It provides information on the number of discharges paid for by Medicare, Medicaid and private insurance, and the uninsured, for categories of conditions – surgical, mental health, maternal, injury and medical. For more information, visit hcup-us.ahrq.gov.
Online Eye Exams
Opternative, the world’s first online eye exam service, is now available to provide convenient and affordable physician-issued prescriptions for glasses or contacts. By using a computer and smartphone, consumers can take a 25-minute or less eye exam from home and get a prescription within 24 hours to use at any online or neighborhood optical retailer. Opternative exams cost $40 for a prescription for glasses or contacts. Prescriptions are issued and signed by an ophthalmologist licensed in the patient’s state. There are no additional fees. For more information, visit Opternative.com.
Employee Program
Colonial Life is teaming up with Entrepreneur Magazine to help small businesses develop a culture of employee ownership. Called “entreployees,” these workers are encouraged to think like entrepreneurs: take responsibility, innovate, and voice their opinions. The payoff is a team that performs better and is more satisfied. The program runs July through November and includes a series of articles on how small business owners can develop “entreployees”. The articles will be promoted on Entrepreneur’s website and hosted on Colonial Life’s small business website. The website also offers new content on how businesses can identify, develop and get the most out of their “entreployees”. For more information visit coloniallife.com.
