Some Funny Math at Anthem Blue Cross

Anthem Blue Cross has agreed to lower premium rate hikes for about 630,000 individual policyholders in response to pressure from California insurance regulators, the Los Angeles Times reports (Terhune, Los Angeles Times, 2/15).

Background

On Feb. 1, Anthem Blue Cross enacted premium rates increases that averaged 18% for certain individual policyholders(AP/Sacramento Bee, 2/14).

In a rate filing last fall, Anthem said certain medical costs have increased by nearly 11%, while the price that the insurer actually pays is rising by 13.5% after adjusting for customer deductibles.

According to Anthem, the profit margin on its individual insurance plans in California was less than 1% in 2012. The insurer said it expects to lose money in the individual market in 2013 even with the rate hike (California Healthline, 11/28/12).

The state Department of Insurance deemed the premium hike excessive, saying that the rate request included unsubstantiated estimates of expected medical costs.

While the agency can review rate filings, it does not have the authority to reject them.

Details of New Rate Increase

On Thursday, Insurance Commissioner Dave Jones (D) announced that Anthem has agreed to reduce the average premium increase to 14%. The decision will save consumers an estimated $54 million.

The Times reports that even with the lower rate hike, some individual policyholders still could see their premiums increase by as much as 25%.

Anthem plans to provide refunds or premium credits to policyholders who already paid the higher rates this month (Los Angeles Times, 2/15).

Comments

In a statement, Jones said, "Health insurance has become unaffordable for far too many Californians." He added, "I appreciate that Anthem Blue Cross has agreed to lower these rates."

On Thursday, Darrel Ng -- spokesperson for Anthem -- said that the agreement between Anthem and California regulators still reflects rising health care costs (AP/Sacramento Bee, 2/14).

Source text: http://www.californiahealthline.org/articles/2013/2/15/anthem-agrees-to-reduce-rate-hikes-for-individual-policyholders.aspx#ixzz2L01jkZis

 

ObamaCare Appetizer: RomneyCare Bill Comes Due

Here is an indicator of what we are in for:   

• Health care was 23% of the MA state fisc in 2000
• It was 25% in 2006 (when RomneyCare was passed) 
• But it has climbed to 41% for 2013
• On current trend it will roll past 50% around 2020—and that best case scenario assumes the current Governor's price controls work as planned. (They won't.) 

In real terms the state's annual health-care budget is 15% larger than it was in 2007, while transportation has plunged by 22%, public safety by 17% and education by 7%. 

Today Massachusetts spends less on roads, police and schools after adjusting for inflation than it did in 2007.

Full text: http://online.wsj.com/article/SB10001424127887323968304578249694095831444.html?mod=googlenews_wsj  

Who Won't Pay the ObamaCare Individual Mandate Penalties?

Well, to name a few:    

• Illegal aliens 
• Criminals 
• The half of Americans who don't pay federal income tax, and 
• Anybody else generally deemed too vulnerable    

In fact, only about 2% of Americans actually will have to pay the penalty.  Yes, this is the topic about which the country fought vehemently for two years and ended in a Supreme Court case.  Why did we waste all of that time and money?   

Read more here from Katy Grimes in an article that I was quoted in extensively.  

Facts about America's Health Care Quality that the World Doesn't Know

An oft-cited rationale for the Affordable Care Act is that Americans have poor access to quality health care. In reality, a variety of other factors, such as disease and lifestyle, are the real reasons why Americans have lower life expectancies despite our advanced medical technology, says Scott W. Atlas, the David and Joan Traitel senior fellow at the Hoover Institution.

• Obesity is the epidemic linked to a greater risk of death from heart disease, stroke, diabetes, high blood pressure and cancer.
• More than 33 percent of Americans are considered obese, compared to 17.1 percent of Western Europeans.
• Japan has a very low rate of obesity, only 3.4 percent, and also the greatest longevity.
• The United States also has a very high incidence of cigarette smoking, which negatively affects health outcomes.

Despite these burdens, American cancer patients survive at much higher rates that their European counterparts in the Organization for Economic Cooperation and Development. Indeed, for breast cancer, the mortality rate in Germany is 52 percent higher and in the United Kingdom it is 88 percent higher than in the United States. For prostate cancer, the mortality rates are even worse.

More Americans with heart disease receive medication or are operated on for their condition.

• Americans have twice as many bypass procedures and four times as many angioplasties when compared to 10 Western European nations (Austria, Denmark, France, Germany, Greece, Italy, Netherlands, Spain, Sweden, and Switzerland).
• Evidence suggests that Americans actually benefit from this extra treatment, with a longer five-year survival rate than Canadians who have a nationalized health system.

The United States also has a lower death rate from strokes, most likely due to modern therapy that expanded in America far quicker than it did under nationalized insurance.

• Less than 50 percent of high blood pressure patients go untreated in the United States compared with the 66 percent to 75 percent that go untreated in Canada and Europe, respectively.
• The United States is much more effective at controlling blood pressure through its better hypertension treatment delivery.

Source: Scott W. Atlas, "Facts about America's Health Care Quality that the World Doesn't Know," Fox News, January 15, 2013. 

This is how wellness programs save employers money

Heresy at Health Affairs:

Virtually unheard of thirty years ago, workplace wellness is now embedded in large self-insured companies. These firms pay their workers an average of $460/year to participate in worksite wellness programs. Further, wellness is deeply enough engrained in the public policy consciousness to have earned aprominent place in the Affordable Care Act, which allows large employers to tie a significant percentage of health spending to employee health behavior and provides direct subsidies for small businesses to undertake these workplace wellness programs.

Yet the implausible, disproven, and often mathematically impossible claims of success underlying the “get well quick” programs promoted by the wellness industry raise many questions about the wisdom of these decisions and policies.

So why are we doing this? I proposed an answer in Priceless: wellness programs attract employees who are already healthy and repel those who aren’t. 

via John Goodman's Health Policy Blog by John Goodman on 1/17/13. 

GINA ALLOWS life, LTD and LTC companies to use your genetic data against you

But, hey, it can't be used in medical underwriting.  That is such a beautiful illustration of legislative genius.  

There’s a federal law that’s supposed to protect people from having their own genes used against them, the Genetic Information Nondiscrimination Act, or GINA. Under GINA, it’s illegal for an employer to fire someone based on his genes, and it’s illegal for health insurers to raise rates or to deny coverage because of someone’s genetic code. But the law has a loophole: It only applies to health insurance. It doesn’t say anything about companies that sell life insurance, disability insurance or long-term-care insurance.

Source: NPR.

Colleges roll back faculty hours in response to Obamacare

Look away from this reduction in hours. You don't see a reduction in hours. Everybody is fully employed and happy with ObamaCare. Move along ... 

As employers prepare to implement the Affordable Care Act, it’s not just low-wage fast food workers who are feeling the heat. Adjunct faculty from at least four universities will also see their hours cut as colleges try to reduce the number of full-time employees whose health care they need to cover.

Via: http://tv.msnbc.com/2013/01/14/colleges-roll-back-faculty-hours-in-response-to-obamacare/ 

The Power of Negative Thinking

The Wall Street Journal describes a technique I often use and rarely hear discussed:

Just thinking in sober detail about worst-case scenarios—a technique the Stoics called "the premeditation of evils"—can help to sap the future of its anxiety-producing power. The psychologist Julie Norem estimates that about one-third of Americans instinctively use this strategy, which she terms "defensive pessimism." Positive thinking, by contrast, is the effort to convince yourself that things will turn out fine, which can reinforce the belief that it would be absolutely terrible if they didn't.

Quite simply, once you have prepared yourself to deal with the absolute worse case scenario, everything else is a piece of cake.  

The Power of Negative Thinking | Wall Street Journal

Gov't Disability Benefits: Safety Net Turning to Hammock

• Since 1980, disability benefits grew by 82 percent and the termination rate fell by 42 percent.
• Furthermore, 50,000 awards to beneficiaries were paid per year on average in the past decade.
• That number peaked at 1.7 million awards after the economic crisis.
• The termination of benefits continues to fall, which allows people to stay on SSDI for a longer time -- 163 per 1,000 beneficiaries in 1982 compared to 74 per 1,000 in 2011.

More and more beneficiaries tend to receive awards as long as they are disabled or until they reach the full retirement age, at which point they'll receive retirement benefits.

• Less than 10 percent of individuals stop receiving disability benefits by improving their medical condition or returning to work.
• Of the 653,877 terminated benefits, 51.7 percent were due to a conversion to retirement benefits and 36.1 percent owing to death.

The current system incentivizes people to stay out of the labor force and defer termination of their disability benefits until they reach retirement age.

 

The result of this has been more backlogs in the application process, hurting the people that need SSDI the most. Furthermore, SSDI is becoming unsustainable as the trust fund is being used up at increasing rates. 

 

Source: Veronique de Rugy, "More Americans Dependent on Disability, Longer," Mercatus Center. 

2013 Health Plan Increases About 9% Nationwide (California Has Been A Bit Higher)

Trend is a forecast of per capita claims cost increases that takes into account various factors, such as price inflation, utilization, government-mandated benefits, and new treatments, therapies and technology. Although there is usually a high correlation between a trend rate and the actual cost increase assessed by a carrier, trend and the net annual change in plan costs are not the same. Changes in the costs to plan sponsors can be significantly different from projected claims cost trends, reflecting such diverse factors as group demographics, changes in plan design, administrative fees, reinsurance premiums and changes in participant contributions.

In California we continually suffer from the reality that our state mandates more benefits and implements more legislative change on average than just about any other state in the country.

With that said, here is Segal's 2013 Projection:

Sitting is killing you - even if you go to the gym 5 times a week

Get ready for treadmills and exercise bikes at your standing desk: 

[A] closer look at the accumulating research on sitting reveals something more intriguing, and disturbing: the health hazards of sitting for long stretches are significant even for people who are quite active when they’re not sitting down. That point was reiterated recently in two studies, published in The British Journal of Sports Medicine and in Diabetologia, a journal of the European Association for the Study of Diabetes.

Suppose you stick to a five-times-a-week gym regimen, as I do, and have put in a lifetime of hard cardio exercise, and have a resting heart rate that’s a significant fraction below the norm. That doesn’t inoculate you, apparently, from the perils of sitting.

The research comes more from observing the health results of people’s behavior than from discovering the biological and genetic triggers that may be associated with extended sitting. Still, scientists have determined that after an hour or more of sitting, the production of enzymes that burn fat in the body declines by as much as 90 percent. Extended sitting, they add, slows the body’s metabolism of glucose and lowers the levels of good (HDL) cholesterol in the blood. Those are risk factors toward developing heart disease and Type 2 diabetes. 

http://www.nytimes.com/2012/12/02/business/stand-up-desks-gaining-favor-in-the-workplace.html 

Want to Fire an FMLA-Abuser? Here Are Some Legitimate Reasons to Do So

The following appeals court rulings show that there are legitimate reason an employee can be fired if he or she is clearly using FMLA leave improperly. Here are some recent examples.

• Employee doesn’t adequately demonstrate a need for FMLA leave: After being passed up for a promotion, one employee said she developed post traumatic stress disorder and asserted her right for FMLA leave. The employer (U.S. Air Force) requested a DOL WH-380 medical certification form to support her FMLA request for leave. She refused to submit that form, and employer terminated her. The 9th U.S. Circuit Court of Appeals backed the Air Force.

• Employee uses FMLA leave for non-caretaker activities: In this case, an employee was not in Miami taking care of his injured daughter (which was the reason he claimed FMLA leave). Instead he was in Texas, taking care of his residence. After his company, McLane Foodservice, terminated him, the 5th U.S. Circuit Court of Appeals said he had no retaliation claim.

• Employee disregards workplace FMLA leave policies: An employee was dismissed after taking an unapproved week-long vacation in Mexico while on FMLA leave, supposedly to recover from surgery. She did not inform her employer she would be leaving the country, nor did she request permission to travel. This was significant, according to this ruling by the U.S. District Court for the Western District of Pennsylvania, because CWA’s work rules specifically required employees to “remain in the immediate vicinity” of their home while using sick leave.

• Employee abuses workplace FMLA leave policies: In another case, it became apparent that an employee was using FMLA leave to buttress holidays and vacations, under the pretext of a back injury. The employer counted 35 times that his back issues flared up on the days just before or after his previously scheduled time off, says this ruling by the federal district court in Utah.

Source: Thompson's Smart HR, October 5, 2011.  Link to Full Text.