The open enrollment period for health plans under the Affordable Care Act begins on November 15, 2014. However, many exchange plan members are reluctant to participate again, according to a survey by Bankrate.com. Fifty-one percent of those who used the Obamacare health exchanges during the last enrollment period don’t plan on returning to the exchange during the new enrollment season. Given the troubled roll-out of the exchanges last year, participants are concerned about much higher prices for health plans (43%), too many people remaining uninsured (26%), and more technical problems with the online exchanges (21%). “Households that have already used the health exchanges are just as leery about the new enrollment season as the general public and share the concerns about higher insurance rates and glitchy websites,” said Bankrate.com insurance analyst Doug Whiteman. Fifty-three percent say they are at least somewhat confident that the exchanges will operate properly this time around. Furthermore, 52% say they had a positive experience with the previous enrollment, compared to 43% who report a bad experience. For more information, visit http://bankrate.com/finance/insurance/health-insurance-poll-0914.aspx.
Young Men Saw Steep Premium Increases in 2014
Premiums for ACA plans increased an average of 78% for 23 year-old men and nearly 45% for 23-year-old women in 2014. HealthPocket compared the Obamacare market to the 2013 pre-reform market. Premiums increased 73% for 30-year-old men and 35% for 30-year-old women. Many young people don’t qualify for subsidies because the premium does not reach the percentage of income needed to trigger a subsidy. Premiums increased 37.5% for 63 year-old women and 22.7% for 63 year-old men. Kev Coleman, head of Research & Data at HealthPocket said, “The market trend we observed was an increase in average premium; this increase may have been obscured…by the fact that the first Affordable Care Act health plans were new and had no history against which to declare a rate increase within their state filing.” Some people get subsidies under the Affordable Care Act while others avoid a premium rate-up or rejection due to an expensive pre-existing condition, he added. For more information, visit www.HealthPocket.com.
Biosimilar Medications Could Save Billions
Over the next decade, the United States could save $44 billion by introducing competing biosimilar versions of complex biologic drugs, according to a report by the RAND Corporation. Biologics, which treat conditions, such as cancer and rheumatoid arthritis, are often effective, but expensive. Patient copays can be several thousand dollars a year. In 2011, eight of the 20 best selling drugs were biologics. Also, annual spending on the drugs has grown three times faster than spending for other prescription medications. Introducing biosimilar drugs into the U.S. marketplace is expected to increase competition and drive down prices, saving money for patients, health care payers, and taxpayers. However, savings are not expected to be as dramatic the as savings we have seen for an earlier generation of less-complex generic drugs.
The Affordable Care Act authorizes the FDA to develop a regulatory framework for approving biosimilar drugs. Draft materials released by the FDA suggest that not all biosimilars will be interchangeable with their original counterparts. In addition, nearly all biosimilars will require at least one head-to-head clinical trial to confirm similarity to the original biologic, which is a more-strenuous process than what is required for standard generics. A number of issues will determine the savings and who will benefit. One issue is how much the use of biologics grows as some patients switch to biosimilar drugs as they become more affordable. Patients will see some cost savings. But physicians and hospitals may also benefit because biologicals are often purchased by health providers and administered in clinics and other treatment settings. For more information, visit www.rand.org.
Employers Still Have Strong Incentives to Offer Health Coverage
Employers have a strong incentive to offer health insurance, primarily since employer-sponsored health insurance is not subject to federal or state income taxes, Medicare, or the Social Security payroll tax, according to a report by the Urban Institute. The largest firms still have a strong incentive to offer health coverage under the ACA. Firms with fewer than 50 employees may face significantly lower, but still positive incentives to offer coverage.
The Affordable Care Act is expected to have modest effects on employer-sponsored insurance coverage, with estimates ranging from a loss of 6 million to a gain of 13.6 million covered lives. Studies consistently find larger gains in coverage among small firms than among large firms. The percentage of firms that expect to stop offering employee health benefits because of the Affordable Care Act is in the single digits. The Affordable Care Act could increase incentives for small firms to self-insure in states that don’t regulate stop-loss coverage, particularly those with employees at low risk of high medical expenses. The Affordable Care Act increases incentives to switch full-time workers to part-time to avoid the employer mandate penalty. But the effect of these incentives is likely to be small. So far, there has not been a shift toward part-time work because of the Affordable Care Act. For more information, visit www.urban.org.
Out-of-Pocket Costs Send People Shopping
Research conducted by Change Healthcare confirms what experts have long presumed: As out-of-pocket costs go up, so does the likelihood that people will shop for value-based care. Change Healthcare President and CEO Doug Ghertner said, “Our study looked at employee engagement relative to plan design – across two PPOs and six high-deductible health plans – and out-of-pocket costs, including deductible, co-pay and co-insurance. What we found is that healthcare costs and consumer engagement are directly related – as employees are faced with greater responsibility for the cost of care, they are more likely to shop for medical and pharmacy services…Those with higher out-of-pocket plan designs had consistently higher engagement scores across the three clients.”
Researchers measured engagement by looking at how people used the Change Healthcare Engagement Platform, including logging in, updating user preferences, completing savings thresholds, and using online tools. Employees with higher out-of-pocket costs used the transparency tool more often and in a more meaningful way. It’s important to understand the correlation between cost and consumer engagement, especially since more than 80% of employers will offer a CDHP option in 2015, and 30%-plus will offer only a CDHP, he added. “For plan sponsors considering such moves, transparency tools will prove critical, as they support employee/member satisfaction and retention, as well as population health and cost containment,” Ghertner added. For more information, visit www.changehealthcare.com.
LIFE INSURANCE
Life Insurance Industry Increases Credit Risk
The extended low interest rate environment continues to reshape the life insurance industry’s investment portfolio, according to a study by Conning. “Insurers have responded to the continued low interest rate environment by adding credit risk to their portfolios,” said Mary Pat Campbell, analyst at Conning. “The spread between industry book yields and reference rates has been widening since 2009, which we believe reflects the increasing risk within the industry portfolio. Despite insurer movements, gross total returns for the industry turned negative in 2013, driven largely by interest rate movements,” she added. For more information, visit www.conningresearch.com.
IN CALIFORNIA
NAHU Celebrates Rejection of Prop 45
Californian voters rejected a controversial ballot measure that would have given the state’s insurance commissioner the power to approve rate changes for individual and employer small-group plans. Proposition 45 failed with nearly 60% voting against it. “Rejection of Prop 45 by Californians means that plan choices will remain robust and available with a high degree of certainty,” says John Greene, vice president of congressional affairs at the National Association of Health Underwriters, which was one of the top five contributors to the campaign against the measure. NAHU and other opponents said the ballot measure would have given one person too much power to regulate insurance rates. “The vote against Prop 45 is one example that the midterms showed U.S. citizens are against government overreach. It runs counter to the American spirit of business,” says Perry Braun, executive director of the Benefit Advisors Network.
Blue Shield Introduces ACO Product
As open enrollment season kicks off, Blue Shield of California is doubling down on the success of its ACO program, and is announcing an innovative HMO ACO product for employers — Trio. Blue Shield’s ACO model forges collaborations among doctors, hospitals, and Blue Shield to share responsibility for patient care in order to lower healthcare costs and enhance quality. Blue Shield’s Trio ACO HMO provider network is available in 16 California Counties and includes all specialties and levels of care.
Trio does the following:
- Offers a lower cost option and premium savings compared to traditional HMO plans.
- Provides access to an integrated care model, creating a more coordinated and effective delivery system.
- Improves flexibility of plan options and network access; employers can offer three options to employees – Trio, Blue Shield’s traditional Access+ HMO product, and a PPO product.
- Delivers future year trend management by curbing healthcare cost increases and year-over-year premium growth, with achieved savings contributing directly towards future premiums.
Blue Shield’s ACO program has grown to include 20 ACO collaborations with providers across the state, delivering coordinated care to more than 260,000 HMO members. The Blue Shield says that its’ ACO model has saved more than $250 million in healthcare costs since inception. This model improves information sharing and decision-making between providers, hospitals and BSC as the three parties work together side-by-side under a set of aligned incentives.
SHOP Premiums Increase 5.2%
Carriers have submitted their proposed health insurance premiums for Covered California’s Small Business Health Options Program (SHOP). Small-business consumers can expect to see an average increase of 5.2% for the 2015 plan year. As an active purchaser, Covered California was able to keep increases low for a majority of SHOP consumers. Some consumers can expect to see an increase of less than 2%.
New to SHOP in 2015 is the dual-tier option, which allows for the employer to offer plans at two metal tiers as long as they are contiguous (e.g., the Bronze and Silver levels, the Silver and Gold levels or the Gold and Platinum levels). Also, Health Net, Western Health Advantage, and Kaiser are offering additional plan designs to offer consumers essential health benefits required under the Affordable Care Act with a little more flexibility with their premiums.
Also new to Covered California’s SHOP is embedded children’s dental coverage in Sacramento, San Francisco and San Diego. The plans offering embedded children’s dental are Chinese Community Health Plan, which is contracting with Delta Dental’s DHMO, Sharp Health Plan, which is contracting with Access Dental Plan’s DHMO, and Western Health Advantage, which is contracting with Access Dental Plan’s DHMO. Also, most of the dental carriers will offer new family dental plans, giving the consumer the option to purchase adult and children’s dental. This optional coverage is purchased by the employee at no cost to the employer and is not required.
For more information, visit http://news.CoveredCA.com/2014/09/covered-california-announces-insurance.html.
NEW PRODUCTS
HRA
Aon’s new Retiree Contingent HRA delivers tax-free reimbursement to retirees and market areas that need it the most instead of more efficient market areas that can deliver greater value to retirees without significant employer funding. This creates a more efficient and cost-effective HRA strategy and eliminates much of the waste associated with traditional HRA approaches. For more information, visit http://www.aon.com
Voluntary Benefits
Transamerica is expanding enrollment options for employers with the help of the BENEFITFOCUS Marketplace (www.benefitfocus.com). Employers can streamline enrollment, administration, and communication. There are fewer registration steps now that employees have access to voluntary benefits from the same enrollment portal they use for their core medical plans. Reporting features allow employees to understand the true value of coverage. For more information, visit www.benefitfocus.com/ecosystem/apps/transamerica.
Online Benefit Administration
BenefitMall is upgrading its online benefit administration system. Enhancements make it easier for employees, employers, and agents to administer every facet of their insurance needs. Furthermore, the enhanced site grants features greater ease of use, links to relevant human resources topics as well as customization and branding. For more information, visit www.benefitmall.com.
Choosing ACA Dental Plans
With the second open enrollment period of the Affordable Care Act approaching, DentalPlans offers these tips to find affordable dental care. Under the Affordable Care Act, all health plans sold to individuals and small businesses must cover these 10 categories of Essential Health Benefits:
• Ambulatory patient services
• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative and habilitative services and devices;
• Laboratory services
• Preventive and wellness services and chronic disease management
• Pediatric services, including oral and vision care (Adult dental care is not included.)
Bill Chase, vice president of marketing for DentalPlans said, “There was a lot of confusion for consumers in the healthcare exchanges as to whether dental care was covered for adults or children during the first enrollment period. One would have assumed that pediatric dental care would be part of every plan because it’s an Essential Health Benefit. But it didn’t quite work out that way in 2014, and nothing was done to address this on the federal level for the upcoming enrollment period.” DentalPlans offers these factors to consider when choosing a dental plan:
• Will a family member or I need any work beyond two annual cleanings, exams, and x-rays?
• What does the annual dental insurance cover? What are the co-pays and what are the yearly maximums (sometimes as low as $1,000/year)?
• Does my health plan cover my children’s dental care or do I need to get a stand-alone plan?
• What is the deductible for non-preventive dental services?
• If my health plan covers my children’s dental care, does the medical out-of-pocket apply or does the out-of-pocket maximum apply separately to dental?
• Is there a waiting period for major dental work like a root canal and for minor work like a cavity?
• How much would the dental services cost with and without dental insurance?
Many Americans cannot afford the cost of a stand-alone dental insurance policy on top of buying their health insurance plan, adds Chase. Dental savings plans can offer an affordable option to alleviate some out-of-pocket costs. The benefits of a dental savings plan include savings of up to 60% off the dentist’s typical rates. There is no waiting to use your plan, no forms to file, no health restrictions, and no limit on how often you can use your plan and open enrollment all year long. Members pay a low annual fee for access to a network of participating dentists, who have agreed to charge less for their services for plan members. Services may include annual cleanings, x-rays, crowns, root canals, and even cosmetic and orthodontic procedures, which are not typically covered by insurance. Depending on the plan, savings on vision and prescriptions are available as well. For more information, visit www.dentalplans.com.
CAREER UPDATE
Insurance Industry Adds Jobs
The insurance industry added 6,300 jobs in September, according to the latest employment numbers from the U.S Bureau of Labor Statistics. The insurance carriers and related activities sub-sector grew 0.25% and now sits roughly at 2.45 million employed insurance workers. Over the past year, the total number of employed workers has increased 62,400 jobs or 2.61%. The finance and insurance sector increased 11,100 jobs in September, or 0.18%. Over the last year, the sector has increased 0.73%, from 5.88 million workers to 5.92 million. The largest gains of the past year occurred within the last 4 months: September (11,100), August (11,400), July (10,200), and June (10,000).
EMPLOYEE BENEFITS
Are Employees Getting What They Need From Their Workplace Benefits?
Seventy-four percent of middle-income employees get the majority of their financial security from workplace benefits, according to the 2014 Guardian Workplace Benefits Study. Despite the importance of benefits, only one in four employees says their company’s benefit communications are helpful. “The benefits landscape is changing with employers shifting more costs to employees, so employees must fully understand their choices and needs, especially when voluntary or less traditional benefits are offered, such as critical illness or accident insurance. Workplace benefits are essential to most Americans’ financial security and employers have a responsibility to improve their employee communications and participation programs to ensure their workforce is adequately covered,” said Phyllis Falotico, Head of Group Marketing at Guardian. Four out of five employees say that benefits are the deciding factor in taking a new job or staying with their company. Few employees purchase benefits, such as disability insurance, life insurance or retirement accounts, outside of the workplace benefits package. Employees’ reliance on workplace benefits underscores how valued these options are for creating the foundation for a robust financial plan. To view the complete Study, visit Guardian Anytime.
