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.

It’s been an insane month – lots of travel, and I haven’t had a chance to post anything lately.  The Extend Health blog just posted a great roundup of news and opinion on the Ryan-Wyden plan, which is worth a read – reprinted here in its entirety for your convenience.

Bryce

Overview:

Paul Ryan (R-WI) and Ron Wyden (D-OR) released their proposal to overhaul Medicare this week. It is not at the bill stage yet, as the authors hope to cut down on the political rhetoric and start a serious national dialogue about the future of Medicare. Ryan and Wyden have not asked the Congressional Budget Office to review their proposal yet, so it is not known how much their plan would save compared to current Medicare.

Here is a brief overview of some of the plan’s key points:

People over 55 would see no change to their benefits. They would be free to opt into a private plan when the Medicare Exchange is established in 2022.

The “premium support” system would ensure affordable coverage by empowering seniors to choose either traditional Medicare or private plans. And there would be more help for low-income seniors who need it, and less for wealthier seniors who don’t need the assistance.

Medicare plans could be purchased on an insurance exchange established by congress.

Strong consumer protection would include:

  • All participating plans would have to offer benefits that are at least equal to traditional Medicare plans.
  • Risk-adjusted premium-support payments would guarantee affordable coverage for those with the greatest health needs.
  • Plans could neither refuse coverage for pre-existing conditions, nor charge rates that discriminate based on health status.
  • CMS would oversee all plans to ensure transparency and fairness.

Competition would drive program growth. Competitive bidding would force providers to reduce costs and improve quality. Competition between private and traditional Medicare plans would incentivize both to develop better delivery models and ways to care for patients.

Employees in small businesses with up to 100 workers could use their employer’s contributions to purchase their own health insurance, and the cost of free choice options would be fully tax deductible to the employer. In addition, allowing workers to keep the same insurance when they retire would ease their transition into Medicare.

Medicare spending would be capped to GDP plus one percentage point.

Read the full report:  http://budget.house.gov/UploadedFiles/WydenRyan.pdf

 

News Roundup:

Here’s a roundup of news articles written this week about the Ryan/ Wyden proposal, with reactions and opinions from across the political spectrum.

Bloomberg BusinessWeek: Bipartisan Medicare Plan May Spur More Compromise, Ryan Says

The Washington Post: Interview with Rep. Paul Ryan

Politico: Ryan-Wyden under ‘no illusion’ their plan will pass tomorrow – Looming shutdown? W.H. says to pass a short-term CR – Essential benefits, politically speaking

Boston.com: Clipboard: The “Ryden” Medicare proposal

Chicago Tribune: White House blasts new Medicare plan by GOP’s Ryan

Reuters: Republican Ryan backs new bipartisan Medicare Plan

Forbes: Ron Wyden and Paul Ryan’s Bipartisan Plan for Health Care and Medicare Reform

The Wall Street Journal: A.M. Vitals: Ryan, Wyden to Introduce Proposal for Changing Medicare

Time: Wyden-Ryan: A Move Toward Health Care Sanity

The Washington Post: What Wyden-Ryan hath wrought

The Wall Street Journal: The Wyden-Ryan Breakthrough

Kaiser Health News: Wyden And Ryan Join Forces On New Medicare Overhaul Plan

The Hill: Paul Ryan moves away from controversial Medicare reform plan

The New York Times: Lawmakers Offer Bipartisan Plan to Overhaul Medicare

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

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

We recently posted this on the Extend Health blog and I thought you might find it interesting.

On Wednesday (10/12), the federal government released its annual review of private Medicare Advantage health plans. In addition, 5-Star quality ratings are now posted along with the plans loaded in “Medicare Plan Finder available on Medicare.gov.

This year health plans are paying much closer attention to their ratings because they stand to make more money if they score higher on Medicare’s 5-star quality rating system. The bonuses could be substantial, even for insurers that only make small increases in their ratings. Carriers with well-rated plans hope that the droves of baby boomers becoming eligible for Medicare will pay attention to the star ratings and choose their plans.

The ratings are based on 36 measures in five categories, covering things like screenings, tests, complaints, service, and other relevant measures. There’s a helpful CMS document called, “Choose Higher Quality for Better Health Care,” that provides a very good overview of the program. We also recommend reading our previous blog post, “New MA star ratings released by CMS.”

For more, check out these very good articles written recently on the subject.
Private Medicare Plans Use Stars To Navigate For Profits” from NPR

Chasing The Stars, Insurers Improve Quality — And Revenue” from Kaiser Health News

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

The road map for state exchange health plans in 2014 was just released. Posting it here to make the whole report available.

Essential Benefits Package (IOM Oct 6 2011)

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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Barack Obama signing the Patient Protection an...

Image via Wikipedia

A prime example of the need for citizens to understand what’s in the health care reform bill is the controversy over the individual mandate.  A majority of those polled say they approve of many or all of the bill’s provisions –except for the mandate.

But I don’t think the mandate is critical to the success of PPACA. There are other ways to incentivize people to buy health insurance, and our experience running a large exchange is informative on this issue too.

Why do so many people buy Medicare supplemental insurance? Two key reasons: guaranteed issue and standardized plan designs. With guaranteed issue, they know they can’t be turned down, and standardized plans offered on an exchange make it easy to compare benefits and find plans that fit their needs.

If you add an annual enrollment period (AEP) to PPACA — which already includes guaranteed issue, standardized plans, and exchanges — you’ll have something that looks a lot like Medicare. People will enroll during the AEP because they won’t want to risk getting sick without coverage – no mandate necessary.

Informed citizens who understand what’s in PPACA can debate my argument and lobby their representatives for or against provisions of the bill – in short they can help shape the future of reform, and make sure it does what it was meant to do: provide health insurance for more citizens of the United States.

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

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