Guest host Barbara Bogaev leads “The Brave New World of Obamacare”

Listen to or download the Jan 2 podcast of “The Brave New World of Obamacare” on To The Point with Warren Olney.

I joined a panel of experts on exchanges, health care reform and insurance to give insights on ACA plans going into effect. To The Point tweeted key comments from each of us, including:

  • Bryce Williams, Towers Watson, @brycewatch:
    The ACA could be major boost to entrepreneurship
  • Sarah Kliff, Washington Post, @sarahkliff:
    36 hrs into Obamacare, vast majority can signon & signup w/in an hr
  • Susan Shargel, Shargel and Company
  • David Nather. Politico, @DavidNather
  • Gerald Kominski: UCLA Center for Health Policy Research, @UCLAFSPH

In the full podcast, you’ll hear comments on these points and more:

The New Year brought with it medical coverage for millions of Americans under the Affordable Care Act. On Jan 1, about two million people began to receive private health coverage through the state health exchanges or the federal website.

With one of the nation’s most sweeping changes to social policy in decades, no longer can insurers deny coverage to people with pre-existing conditions, or charge them more for their coverage than other customers. It’s also the first time they can’t legally charge women higher premiums for the same coverage as men, and the first time they can’t set a specific limit on the amount they spend on “essential health benefits” for individual policyholders.

But there are a lot of “if’s” in the implementation of Obamacare:

  • Will people be able to find a doctor who accepts their new plan?
  • Are the nation’s healthcare providers ready for the change in policy?
  • How will Obamacare shape the political climate this election year?

Knowledge is power — the power to think, to act, to buy, or even to not do any of the above. Our nation’s health insurers and health care providers need to figure out how to put power back into the hands of consumers. Consumers today have too many constraints when it comes to accessing decision-critical information about the cost of health care. That’s a hard pill to swallow when there’s so much at stake.

A recent post on The Health Care Blog featured a fascinating yet not unsurprising finding: The cost for appendectomies can vary by more than $100,000 between health plans and hospitals.

Dr. Renee Hsia of UCSF was asked what appendectomies cost by a friend who had to pony up over $50,000 in co-pays for one. Dr. Hsia’s research, which looked at pricing variability across the state of California and was published in the Archives of Internal Medicine,  found that an appendectomy could run from $1,529 to $182,955 — varying as much as $7,504 to $171,696 within one hospital.

The question of where to begin is starting to be answered by sites like FAIR Health’s Consumer Cost Lookup. It uses continually updated claims data from insurers and third-party administrators for 126 million people to benchmark costs. Visitors to the site can find typical rates for certain services in their area as well as what Medicare pays.

Fourteen other states have or are setting up searchable databases to help compare health care prices and quality.

The savings that can be realized are impactful not only for consumers but for health insurers themselves. Because half its members had no idea when they were being referred to out-of-network providers, Aetna launched a service to let members know if their outpatient surgery could be done by an in-network provider. In many cases, the surgery could be done less expensively, in-network reducing out-of-pocket costs for Aetna members, not to mention for Aetna.

More and more insurers are trying to help people locate services and compare costs, like UnitedHealthcare’s postcard campaign, which lists costs for common lab services at in-network and out-of-network facilities in members’ local areas and its online tool for estimating the costs of over 100 common treatments.So what’s central to all of these stories? Information.

In the California appendectomy story the information was too hard to get: too many sources, too many different plans. And, technically Aetna didn’t offer consumers (and network doctors) anything they didn’t already have access to. The information was just too hard to piece together and act on.

What these stories show us is that health care consumers today need access to information, plus tools and services to make sense of it all. Like Aetna, United Healthcare and other insurers who have developed cost-comparison tools for consumers, the insurance side of health care has been making cost information more available to aid consumer decision-making. We look to healthcare providers and hospitals to start doing the same.

Bringing transparency to the costs of services and products can supercharge consumer decision-making, forcing healthcare providers and hospitals to be more upfront with price information and to work on getting a better handle on costs for “incidents of care.”

Extend Health Medicare Exchange Interface

Extend Health Medicare Exchange Interface

The Extend Health exchange platform is a great example of transparency in an insurance shopping site. It delivers information on thousands of private Medicare plans to our customers — and it does it in an easy-to-understand way. Our system supports benefit and cost transparencyby allowing customers to compare plans side-by-side and estimate their prescription drug costs for the year. These tools, along with the opportunity to speak with a benefit adviser if they wish to, help ensure that our customers find the plan or plans that meet their health needs and the needs of their budget.

Massachusetts and Utah already offer the ability to buy health insurance online through their state exchanges. The upcoming Supreme Court decision on the Patient Protection and Affordable Care Act will determine if citizens in every state will have the same opportunity. If all or part of the ACA is struck down, health insurance exchanges — a forum whose effectiveness is based on transparency in costs, benefits, services and products (such as drugs) — could be in jeopardy.

Related articles

For regular commentary on developments and trends in health care, insurance, and health IT, follow @brycewatch and @ExtendHealth on Twitter and check out Extend Health online.

Read my latest post for Fast Company on the opportunity health care reform offers insurance companies to compete for new customers. Can insurers adapt quickly enough to take advantage of this tremendous market opportunity? To find out, read “Can Health Insurance Become Customer-Friendly And Web-Savvy?

Politico reports that the Supreme Court will decide to take on the health care reform case by Dec 10th. But folks — the deed is done. SCOTUS is taking the case. In reaction, AHIP has filed an  amicus brief anticipating the case. Their message? The mandate connects everything. Read it here >

CMS’ Final Rule for ACOs

October 21, 2011

CMS’ final rule for Accountable Care Organizations (ACOs) is now available for download from The Office of the Federal Register. For your convenience, here’s a link directly to the PDF.

Side-by-side comparison of proposed vs. final rule for ACOs

Earlier this year, I wrote an article for InsuranceNewsNet offering my opinion that the individual mandate provision of the Patient Protection and Affordable Care Act (PPACA) is not essential to achieving the law’s goal of ensuring that tens of millions more Americans have health care coverage.  The individual mandate provision requires all citizens to obtain health insurance by 2014 or pay a fine.

In the past 30 days, court rulings on both sides of the question of whether the individual mandate provision is constitutional makes it even more likely that the U.S. Supreme Court will review the matter sooner rather than later.

The unconstitutionally of the individual mandate has become the central argument of opponents in legal challenges to the entire law. They argue that if such a key provision is ruled unconstitutional, the entire law should be unconstitutional. It also remains unpopular with average Americans. In a new poll out last week from the Associated Press and National Constitution Center, 82% of respondents said “no” when asked, “Do you think the Federal Government should have the power to require all Americans to buy health insurance, and to pay a fine if they don’t?”

We’ll have to wait and see how the U.S. Supreme Court rules to know the fate of the provision. But my own opinion hasn’t changed. Based on our experience at Extend Health, if a health insurer offers seniors a private Medicare plan that meets their needs at a price they can afford, they will buy. This is because certain conditions for Medicare-eligible seniors exist that do not exist for all Americans. Most important, Medicare is guaranteed issue and requires standard plan designs.

Guaranteed issue means seniors cannot be denied coverage because of their health status. Standard plan design makes it possible to compare and contrast different plans from different carriers more easily. And these are exactly the conditions all uninsured Americans will experience under PPACA starting in 2014.

While I still believe that these conditions are necessary for large numbers of uninsured Americans to buy health plans without a mandate, today I would also argue they are not sufficient. In addition, the key stakeholders driving the extension of health care coverage to more Americans will need effective outreach programs to ensure that all Americans know their options, understand their eligibility for the federal subsidies that will be offered, and know where and how to purchase health plans.

A large group of these stakeholders – health insurers, health care providers, associations and health care nonprofits – took a major step in the right direction last week when they launched a nonprofit coalition with the mission of ensuring that “all Americans are enrolled in and retain health coverage.” Enroll America  will do this by working to ensure that enrollment processes are simple and streamlined and that people know where they can go to find the right information at the right time.

It’s too early to tell whether Enroll America will be successful. But the importance of its mission cannot be underestimated. While the ACA lays the foundation for insuring tens of millions more Americans with guaranteed issue and standard plan design, finishing the job will require that every American understand what’s coming, and what they can do and when.

Visit Extend Health — the nation’s largest private Medicare exchange.

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In early May, the Psilos Group released its third annual outlook report highlighting trends in the health care marketplace, 2011 Outlook on Healthcare Economics & Innovation. Psilos invests in innovative healthcare companies, (frank and full disclosure: Extend Health is one of Psilos’ investments), and its team has reliably insightful commentary about health care market trends.

This year’s report predicts dramatic shifts in the health insurance market. According to the report, “Psilos believes that the PPACA will accelerate sweeping changes to consumer-oriented business models and distribution channels, as well as increase the competition among insurance companies.” In a few short years, the Patient Protection and Affordable Care Act (ACA) will allow many consumers to play an expanded role in the purchase of their own insurance. State-based Health Insurance Exchanges will be places for millions of new insurance consumers to make educated, informed decisions about their insurance options, and insurance carriers will have to intensify their commitment to the consumer experience dramatically.

But as Psilos points out, carriers will be forced to compete in an entirely new business environment, as “The most likely distribution channel for the exploding individual insurance market will be a new landscape of Internet and call center-based public and private health insurance exchanges (HIXs)….” As individuals begin finding health insurance through exchanges in 2014, and businesses send their employees there over time, insurers will have to shift from selling business-to-business—marketing group plans to employers—to selling business-to-consumer. In a new world of consumer-oriented private and public Health Insurance Exchanges, carriers will deal directly with their consumers from the very beginning of the relationship. This change will force efficiencies throughout their business model, and create competition based on cost, quality and service—all of which will be newly transparent.

As I read the report, I was struck by the similarities between Psilos’ prediction for the evolution of a successful insurance company in the new dispensation, and the business model that Extend Health currently uses to help over 350,000 retirees find health plans. Our exchange allows retirees to choose the right Medicare plan for them, the first time. We are inherently a consumer-facing organization, and our ability to help retirees navigate the insurance market usually results in lower out-of-pocket costs and higher satisfaction levels.

One of our most important “secret weapons” is our unparalleled and innovative proprietary technology that facilitates a friction-less transition from group coverage to individual Medicare plans. The efficiencies gained from our significant investment in technology, including our telephone system, online insurance exchange, and back-end integration with carrier partners, improve the customer experience for our retirees, and (along with the advice and guidance of our licensed and certified benefit advisors) help them find and enroll in the best plan for their health needs.

Psilos is right that carriers who want to remain competitive in the evolving health insurance market will need to improve their efficiency dramatically. Insurance carriers today have first-rate IT systems for claims processing, but the market has not yet demanded sophisticated technology to assist with plan choice, enrollment and ongoing customer service. While some carriers will step up to the plate, this role will often be filled by private and state-based exchanges.

Exchanges will bring new transparency to the cost and quality of health plans offered, and the new health insurance market will mean greater interaction between consumers and carriers. The regulatory environment is also demanding new efficiencies. Just this week [May 19th], the Federal government finalized a proposal to require insurance companies to publicly disclose and justify premium increases of 10% or more. Carriers will have to meet these expectations, AND become much more efficient and consumer-friendly for first-time insurance purchasers, to thrive in the coming health care market environment.

Visit Extend Health — the nation’s largest private Medicare exchange.

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The Ryan plan

April 13, 2011

WASHINGTON, DC - APRIL 05:  U.S. Rep. Paul Rya...

Image by Getty Images via @daylife

At my company, we’re confident that given knowledge and a transparent, competitive marketplace people will be empowered to find and purchase the right insurance for their needs. That’s why we think that Representative Paul Ryan’s proposal to make Medicare a voucher system isn’t necessarily a bad idea, since it puts a lot of power into the hands of consumers — but such a system has to be calibrated right if it isn’t going to shift too much of the cost of health care onto the shoulders of seniors.

And that’s why we think this analysis provided by the Bipartisan Policy Center is a must-read for anyone who wants to understand how the Ryan proposal would work out over the next 40 years.  Ryan’s plan is compared to the BPC’s own Domenici-Rivlin Debt Reduction Task Force plan, which is also premium support based but maintains traditional Medicare, and allows support to grow at a rate that more closely approximates the actual projected rate of growth in medical costs for Medicare beneficiaries.

Visit Extend Health — the nation’s largest private Medicare exchange.

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In the 1980s and 90s, the uber dry-witted comedian Steve Wright tickled audiences on the Tonight Show with thoughts such as “I received a package of powdered water today, but I’m not sure what to mix it with.” I saw him recently on the Craig Ferguson Show and it reminded me of one of his best jokes from his heyday:

 “Why don’t we make the entire airplane from the stuff the “black box” is made of?”

 Of course, he is referring to the fact that after every major airplane crash, the NTSB finds the “black box” flight recorders intact and usually in perfectly good working condition. The plane, of course, no longer exists – along with the dozens of unfortunate passengers who happened to be aboard.

 It doesn’t take long to note that airplanes are made of aluminum (and not steel, as is the “black box”) for one simple reason: weight. Aluminum in structured form is relatively strong and only a fraction of the weight of steel.  It is not a strong as steel, but it doesn’t need to be. Aluminum does the job. Of course, this allows the airplane to fly. In contrast, an airplane made of “black box” materials has a big problem: It won’t fly. It probably wouldn’t even get to the end of the runway as the landing gear would buckle at the first turn onto the active taxiway.

As HHS looks at creating the definition of “essential benefits package” required by PPACA, word came last month that over 300 lobbying groups and health care special interests had submitted their “issue/condition/solution” for consideration in the definition of “essential benefits package.” If HHS includes even a small fraction of “The 300,” it will build a plane made of “black box” material. It won’t fly; even the basic bronze plan will be so unaffordable as to be a non-starter.

It would be disastrous to see the linchpin of the new exchange benefit delivery system fail before take off. But there is an interesting idea that might appeal to both parties – and cause the exchange concept to flourish in earnest in both Republican- and Democrat-led states.

 President Obama recently issued a waiver giving states more flexibility in designing, launching and managing their exchanges. This was a good start. State leaders worried about “ObamaCare” in general, and the “black box” problem in particular, should ask that the waiver be expanded to allow states to define “essential benefits” as meaning their current individual plan mandates.

 This should work for everyone. The Federal government wants to cede more health care control to the states. The states don’t want Washington telling them what to offer. This change would make plans in states like Idaho (with only eight coverage mandates) attractive to Idaho residents, and potentially all Americans, due to their “aluminum” design that gets the job of health care coverage done at less cost.

 Next, the 29 states with GOP governors and/or state house leadership should bring back one of their better health care ideas and allow individual plans to be sold across states lines subject only to the home state’s mandates and resulting product design. Almost every state requires today that an individual plan provide a minimum $5 million of lifetime coverage – not a bad deal at all, especially if all plans in the USA are guaranteed issue. PPACA will require that all plans have unlimited lifetime caps. This sounds expensive. It really isn’t. The bulk of claims in health insurance happen in the $0-$10,000 amounts and the $100,000 to $1 million range.

 Requiring unlimited lifetime maximums, when spread across a large guaranteed issue individual pool, won’t impact plan pricing in a material way. Having up to 300 “conditions” included in an “essential benefits package” is the real problem. We will be buying coverage for conditions very few people will contract – exploding the cost of even the most basic health plan and therefore the entire PPACA bill as we expand coverage to tens of millions of new entrants.

 A state mandate and interstate competition model could also start a massive job-creating cottage industry. We envision this happening in smaller states willing to offer more basic plans at a better price. Don’t believe me? Look at what happened when South Dakota changed its banking laws to entice Citibank and others to move all retail credit card operations to their state in the 1980s: unemployment in South Dakota in those years was practically non-existent. The same would happen in Idaho and other states unwilling to allow their health care airplane to be built of steel.

During our discussions with dozens of states about powering their insurance exchanges, we also talk to state development officers, and they tell us there is a fierce battle being waged for corporations and jobs. This dynamic of state vs. state competition is happening now as states seek to attract corporations with low personal and corporate income taxes.  What would it mean to the great State of Nevada if health plans based there were to enroll 20 million lives across America over the course of the next 10 years in individual health plans with manageable “essential benefits” at a lower cost than other states? It turns out it would mean a lot. Becoming the leading provider of individual health plans could mean 20,000 jobs in Nevada – making a huge dent in its high current unemployment rate.

 One would think that the federal government and Democrat-led states would be in favor of this also. There is going to be a firestorm when the “essential benefits package” is published for comment and the word “essential” gets abused by special interests and lobbyists who insert their motorized scooter or [name another benefit] in the definition of “essential.” Voters wrath will know no limits when they find out the plane we thought we were all building together won’t fly because the designers forced the use of steel when aluminum was available and more than good enough.

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We all know that many Americans do not have health insurance because it costs too much. Even people who can afford it are often denied coverage because of the current state of their health or preexisting conditions. That’s because unless you are guaranteed coverage under your employer’s group plan or a group plan from some other source such as a professional association, you must buy health insurance on the individual market. Without guaranteed issue, good luck with that.

In contrast, consider the experience of purchasing homeowners’ insurance.

Like most American homeowners, I buy homeowners’ insurance from a local agent. When I bought the house I live in now, my real estate agent referred me to someone who was friendly, appeared competent and gave me what seemed like a reasonable quote. I signed a contract on the spot and didn’t think much more about it for the next three years.

Then one day out of the blue, I got a letter from my insurance company – a “Premium Increase Notice.” The notice informed me that my homeowners’ insurance premiums would be going up by 25%. I was stunned. In three years, I had never filed a claim and I had never been late with a premium payment. I called my insurance agent, expecting to learn that the letter was sent to me by mistake.

Instead, my agent began mumbling about “state building regulation changes, “ “recent company losses due to severe weather,” and other extraneous points that had nothing to do with me or my house or how I had used my homeowners’ insurance benefits – which was not at all. Bottom line, the letter was not a mistake, and if I wanted to renew my policy, it would me cost 25% more.

That very day, I became an empowered consumer of homeowners’ insurance. I have never looked back. With some Internet research and a few phone calls, not only was I able to purchase a new policy from another reputable company, I got nearly identical coverage for less money than my previous policy before the premium increase.

What does homeowners’ insurance have to do with health insurance?

If only health insurance was more like homeowners’ insurance. The homeowners’ insurance market is highly competitive and consumers unhappy with their coverage or the price of it can switch carriers and plans at will. We have no such luxury in the individual health insurance market.

For a compelling account of just how bad it can be, I recommend a recent guest editorial New York Times in which a successful CEO chronicles her nightmarish experience when, after the sale of her company, she had to shop for health insurance for her family in the individual market. The editorial is called “Money Won’t Buy You Health Insurance.”

My point is this: If we are serious about controlling health insurance costs in America, it is imperative that we turn more Americans into empowered consumers.  To do that, we need a viable individual health plan market with guaranteed issue and standardized plan design – both key provisions of the Patient Protection and Affordable Care Act (PPACA). For good measure, PPACA also includes a provision for state-run health insurance exchanges.

The signatures of President Barack Obama, Vice...

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With guaranteed issue, consumers cannot be denied health insurance based on the status of their current health or a preexisting condition. With standardized plan design, they can compare and contrast different plans from different carriers. With exchanges, they can quickly and easily identify and chose a plan that both meets their health care needs and budgets.

I know this from my own experience operating the nation’s largest private Medicare exchange for the past six years. In fact, because Medicare-eligible seniors today are the only group in America with guaranteed issue and standardized plan design, they are the most empowered and the most relevant individual consumers of health insurance in the nation.

Simply put, there is nothing like a little competition between carriers to keep costs down.

Don’t believe me?

The average premium increase in the group health insurance market over the past three was 9-12%. In the Medicare supplement market, it was 2-3%.

Visit Extend Health — the nation’s largest private Medicare exchange.

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