Healthcare Measure Routed in Palo Alto

Voters strike down Measure F, which would have required City Hall to regulate hospital bills. Similar measure defeated in Livermore.

From Palo Alto Online:

A proposal by a union of health care workers to impose caps on how much Palo Alto's medical providers can charge patients and insurance companies was emphatically rejected by local voters on Election Day on Tuesday. 

The proposal, known as Measure F, would have placed City Hall in charge of regulating the health care costs of most local medical providers to ensure that none are charging their patients more than 115 percent of the cost of "direct patient care," which excludes administrative salaries. The Service Employees International Union-United Health Workers (SEIU-UHW) had argued that the measure is necessary to curb Stanford's exorbitant costs and ensure that Stanford devotes more resources to reducing its high rate of hospital-contracted diseases. 

With 93 percent of the results counted, the measure was trailing by a huge margin, with 77.03 percent of the voters opposing it and 22.97 percent supporting it. Of all the votes cast, 10,702 went against Measure F while 3,192 went for it. ... 

 

Palo Alto & Livermore, Calif. Attempt Price Controls on Hospitals in Upcoming Election - Unprecedented at Local Level

In Brief: 

• The the best of our knowledge, local governments have never attempted to regulate hospital prices.   
• Measures would cap prices charged by hospitals and other health care providers at 115 percent of “the reasonable cost of direct patient care.” 
• What costs are acceptable and how will we stop providers from increasing costs as much as possible” to compensate for the cap are not clear. 
• Stanford estimates this would cut its total revenue by 25%.   
• Industry competition is much healthier in Southern California than in the North - where hospital charges are typically 55% to 70% higher.   
• Health plans purchased on the state insurance exchange were 35 percent higher in Northern California than in Southern California.  

From Kaiser Health News:  

At a time of mounting national anger about rising health care prices, the country’s largest union of health workers has sponsored ballot measures in two San Francisco Bay Area cities that would limit how much hospitals and doctors can charge for patient care.

The twin measures in Palo Alto and Livermore, sponsored by the Service Employees International Union-United Healthcare Workers West, take aim primarily at Stanford Health Care, which operates Stanford Hospital and Clinics, the facility with the third-highest profits in the country from patient care services, according to a 2016 study.

The union also is sponsoring Proposition 8, a statewide measure that would impose a cap on profits for dialysis clinics. Together, the state and local measures seek to draw on public outrage over sky-high medical prices. And, for municipalities, they amount to a novel and untested effort to rein in those prices through the ballot box.

“I’ve been in this field almost 50 years, and I’ve never seen a local government regulating hospital prices,” said Paul Ginsburg, director of public policy at the Schaeffer Center for Health Policy & Economics at the University of Southern California. A number of states set hospital rates in the 1970s, and two states, Maryland and West Virginia, do so today, he said. ... 

The Palo Alto and Livermore initiatives, which also affect other medical systems in the cities, would cap prices charged by hospitals and other health care providers at 115 percent of “the reasonable cost of direct patient care.”

And there, some experts say, lies the rub.

“What is a seemingly simple idea — limiting prices to 115 percent of ‘costs’ — is neither simple in execution, nor concept,” said Benedic Ippolito, a research fellow at the American Enterprise Institute who studies health care financing. “What costs are acceptable? How will we stop providers from increasing costs as much as possible” to compensate for the cap? ...

Under the initiatives, hospitals and other medical providers would be obliged to pay back any charges above the cap each year to private commercial — but not government — insurers, and to patients who pay for their own care. They would also owe the cities a fine equal to 5 percent of the excess charges. Fines collected by the cities could be used to pay for enforcing the laws.

Stanford estimates that Proposition F, the Palo Alto measure, would reduce the health system’s budget by 25 percent, forcing it to make cutbacks and possibly end essential services, said David Entwistle, the health system’s president and chief executive officer.

Livermore would need to spend $1.9 million a year on the staff required to implement Measure U — its version of the proposal — and would likely incur another $750,000 to $1 million in legal and startup costs, according to an analysis conducted for the city by Henry Zaretsky, a health economist who has worked for the state and the California Hospital Association. ...

Industry consolidation is far more pronounced in Northern California than in Southern California, according to a recent study from the University of California-Berkeley. As a result, inpatient hospital prices in the north were 70 percent higher and outpatient costs as much as 55 percent higher than in the south. The price disparities, even within the Northern California region, can be dramatic.

For instance, independent doctors in the Bay Area are reimbursed, on average, a median $2,408.45 for a routine vaginal delivery, which includes prenatal and postnatal visits, according to a 2017 Kaiser Health News analysis of claims data from Amino, a health cost transparency company. That compares with $5,238.13 for the same bundle of services for Stanford physicians (and $8,049.84 for doctors employed by the University of California-San Francisco).

The higher cost of medical care also pushes up insurance premiums for patients. Health plans purchased on the state insurance exchange were 35 percent higher in Northern California than in Southern California, the 2018 UC Berkeley study showed.

Read full article here.

Don't Expect a PPACA Ruling Before Election Day on the Repeal Effort in Federal Court

From HealthLeaders Media: 

An injunction against the Affordable Care Act would create chaos for the statute's Marketplace plans, which begin enrollment on November 1. If such a ruling were handed down before the midterms, it would be a welcome gift for Democrats.

Key Takeaways

• Republican attorneys general from 20 states want a federal judge to impose an injunction on the ACA.

• A ruling is unlikely before next week's mid-terms.

• The severability of the ACA's so-called individual mandate is a key issue in the suit.

• The Court is ultimately expected to hold that the individual mandate is unconstitutional and throw out the guaranteed issued community rating and the pre-existing condition ban.  

It's been nearly two months since a U.S. District Judge in Fort Worth, Texas, heard oral arguments in Texas v. Azar challenging the constitutionality of the Affordable Care Act.

But court watchers hoping for a ruling soon probably shouldn’t expect anything from Judge Reed O'Connor until after the midterm elections next week, says Timothy S. Jost, professor emeritus at Washington and Lee University School of Law, and coauthor of the casebook Health Law.
"I'm sure Judge O'Connor is going to wait until after the election to rule," Jost says. "He's keeping his ear to the political news." ...

Jost says a ruling in favor of Texas Attorney General Ken Paxton and Republican officials from 19 other states who want to slap an injunction on the ACA would provide a pre-election gift to Democrats, as well as create upheaval for Marketplace plans, which begin open enrollment on November 1.

That was not lost on Department of Justice attorneys, who during oral arguments last month urged O'Connor to delay any injunction until 2019 to avoid "chaos."

The Republican attorneys general argued that the ACA became unconstitutional when Congress zeroed-out the tax penalty for the individual mandate, thus invalidating the sweeping legislation in its entirety.
A secondary argument by the plaintiffs focuses on the language in the 2010 statute, which says that the individual mandate is essential to creating a market in which guaranteed issued and preexisting condition exclusion bans are possible.

"The real question is what did the 2017 Congress intend to do when they zeroed out the tax?" Jost says. "Did they intend to get rid of the preexisting condition exclusions or not? You ask anyone in the Senate right now whether they think preexisting conditions should be excluded or not, they'll say, 'Oh no that's not what we did!'"

"So, the important question is when Congress repealed the tax in 2017 did they mean to get rid of the rest of the ACA?" Jost says. "Obviously they didn’t. They tried to amend parts of it in 2017 and they failed. To argue otherwise is just ridiculous."
 
Plaintiffs win likely 

"When O'Connor does rule," Jost says, "he will probably hold that the individual mandate is unconstitutional and throw out the guaranteed issued community rating and the pre-existing condition ban."

"He might also throw out all of Title I, the exchanges, premium tax credits, and the premium stabilization programs, maybe even insurance reforms such as the age rating," Jost says.

"It's very unlikely he is going to throw out the Medicare donut hole closing, and the generic biologics provisions and the reforms to the Indian Health Service and all the other things that are inconceivably, not related to the individual mandate," Jost says. ...

Full story here.
 

California’s Senior Population is Growing Faster Than Any Other Age Group. How the Next Governor Responds is Crucial

From the LA Times:

... The next governor will be confronted with a demographic shift of epic proportions: Seniors will be California’s fastest-growing population. Between now and 2026, the number of Californians 65 and older is expected to climb by 2.1 million, according to projections by the state Department of Finance. By contrast, the number of 25- to 64-year-olds is projected to grow by just more than half a million; the number of Californians younger than 25 will grow by a mere 2,500. 

That radical transformation has been largely absent from discussion as politicians grapple with education, healthcare and environmental policies. 

But the graying of California will seep into nearly every nook of the state budget and policy planning under the next governor. It will determine what services will be in demand and how money must be spent. Most significant, it will place enormous strain on the state’s already fragile network of long-term services and supports, including in-home aides and skilled nursing facilities. 

“We are exquisitely unprepared for that [oldest] age demographic pushing through,” said Dr. Bruce Chernof, president of the SCAN Foundation, an aging advocacy group. 

What does it mean to govern an aging state? It means dealing with higher healthcare costs, particularly for low-income seniors who are eligible for Medi-Cal coverage, the state-subsidized healthcare system for the poor. There are currently close to 1.2 million Californians 65 or older enrolled in the program. 

It means grappling with poverty in a different way. California politicians often focus on the state’s child poverty rate, which averaged nearly 23% from 2014 to 2016. But fewer talk about the poverty rate among seniors, which was 20% during the same time period, according to the U.S. Census Bureau’s Supplemental Poverty Measure. The fastest-growing population of homeless people is among older adults; in Los Angeles County, the number of homeless people 62 or older surged by 22% this year, even as the overall homeless population slightly dropped. ...

 Full story here.

Interactive Map Offers Easy Access to Data Breach Laws by State

Click here for the map brought to you by Baker Hostetler.  

  

Coverage for Ex-Spouses under Divorce Court Orders

Question Presented: An employee has brought us a court order that requires the employee to maintain coverage for her ex-spouse under our plan. Do we have to comply?

Short Answer: Generally the answer is no. Neither the employer, nor the group health plan, nor the insurer is typically a party in the underlying divorce proceedings. A court normally has no power to compel a non-party to take action unless there is some other law requiring that party to recognize the order.

For example a health plan would have to recognize a “qualified medical child support order” (QMCSO) even if it was not a party to the underlying divorce because the Employee Retirement Income Security Act (ERISA) requires health plans to follow valid medical child support orders. A QMCSO, however, cannot order coverage of an ex-spouse.

Of course if the employer has more than twenty employees then it would be obligated to offer the ex-spouse COBRA if notified of the divorce in a timely fashion. And, the order could compel the employee to pay the COBRA premiums but the plan would have no obligation to provide coverage if the employee failed to pay the premiums.

State law could also be applicable. A number of states have what are termed “mini-COBRA” laws that vary widely from state to state. Some only cover small employers who are not covered by federal COBRA.

There are other state laws that mandate coverage for ex-spouses even outside of the mini-COBRA laws. A survey of several of those states is contained in the detail to this Q&A.

Many of these state laws are specifically not applicable to self-insured plans. Even if they were applicable on their face, ERISA would likely preempt (supersede) those state laws and they would be inapplicable to ERISA governed self-insured health plans. A more detailed discussion of preemption is also in the detail to this Q&A.

Analysis: When an employer receives a court order directing it to enroll an ineligible person into its health plan, the employer is usually uncertain as to whether it must follow the court order or not. This sometimes happens when an employee gets a divorce and the court in which the divorce is pending enters an order that the employee’s ex-spouse must continue to be covered under the employer’s health plan – regardless of whether the plan’s terms permit an ex-spouse to remain on the plan. Most health plans do not (other than providing COBRA continuation coverage under federal or state law, as applicable, to the health plan).

While disconcerting to receive, such an order is usually unenforceable. Divorce proceedings are between the two married persons seeking to end their marriage. The employers of the two persons are not parties to the lawsuit. Thus, absent an unusual circumstance, a divorce court has no authority to order an employer’s health plan to provide coverage to any particular person, including an ex-spouse.

     A. QMCSOs.

One example of an unusual circumstance is a QMCSO. ERISA Section 609 specifically provides that QMCSOs (qualified medical child support orders) apply to group health plans governed by ERISA. A QMCSO is an order issued by a court of competent jurisdiction that requires a group health plan to provide coverage to a child of a participant in the group health plan. Section 609 provides that the order cannot require the plan to provide any type of benefit, or any option, that is not otherwise provided under the plan. Because ERISA specifically recognizes QMCSOs, group health plans must provide the coverage ordered under the QMCSO.

     B. Ex-Spouse Orders.

Noticeably absent from Section 609 of ERISA is any requirement that ex-spouses be provided coverage if an order so requires. Nor is there any other section of ERISA or any other federal law that requires a group health plan to provide coverage to ex-spouses (other than COBRA).

     C. COBRA.

If an employer has more than 20 employees, its health plan is subject to federal COBRA, and divorce is a qualifying event that triggers the right to COBRA coverage if the ex-spouse was covered under the plan at the time of divorce. Under federal COBRA, if the employee or ex-spouse notifies the group health plan within 60 days of the date of divorce, the ex-spouse must be offered COBRA continuation coverage for up to 36 months.

     D. State “Mini-COBRA” Laws.

Many states have some version of state required COBRA like coverage intended to fill in the gaps where federal COBRA does not apply, so in the case of employers who have 2-19 employees. These laws vary greatly in the amount of time they allow coverage to continue as well as eligibility for the coverage. For example, Arkansas provides continuation coverage for only 120 days after a qualifying event and requires an employee to be covered under a policy for a three month period prior to termination of employment or a divorce. Arkansas Code §§ 23-86-114 – 23-86-116. Colorado and North Carolina permit continuation coverage for 18 months. Colo. Rev. Stat. 10-16-108; N.C. Gen. Stat. §58-53-1 et seq. And California allows coverage to be extended for up to 36 months following a divorce. California Insurance Code § 10128.59.

The state mini-COBRA laws are typically part of each state’s insurance laws and are applicable only to fully insured plans. These laws vary as to their applicability. Some, on their face, apply to all insured plans while some apply to only those insured plans that aren’t covered by federal COBRA. If the mini-COBRA law did purport to govern a self-insured plan it would likely be preempted by ERISA as discussed below. But remember, self-insured plans of entities that do not fall under ERISA, like local governments and churches, may have to pay attention to these mini-COBRA laws if they purport to cover self-insured plans.

     E. State Mini-COBRA and Other State Laws Extending Coverage for Ex-Spouses.

As part of, or in addition to, mini-COBRA laws, some states have laws that specifically mandate continued health coverage for ex-spouses for an extended period of time as discussed below. This list should not be considered exhaustive and is just for illustration on the importance of consulting these state laws for fully insured plans.

1. Georgia. Group policies must provide continuation coverage for an ex-spouse who was covered by the plan for 36 months. Group policies that cover 20 or more employees must provide coverage to ex-spouses who are 60 years or older at the time of divorce for themselves and any covered dependent children to the earliest of (1) failure to pay premiums when due; (2) plan is terminated for all group members; (3) ex-spouse becomes insured under any other group health plan; or (4) ex-spouse becomes eligible for Medicare. O.C.G.A. §§33-24-21.1 and 33-24-21.2. 

2. Illinois. All fully insured plans regardless of size are required to provide continuation coverage for an ex-spouse who was covered by the health plan prior to the divorce (and dependent children) for up to 2 years if the ex-
spouse is under 55 years old or until the ex-spouse is eligible for Medicare if the ex-spouse is 55 years old or older. 215 ILCS 5/367.2. The statute states that it is inapplicable to self-insured plans. 

3. Maryland. Group policies must provide continuation coverage for an ex-spouse until the earlier of when the ex-spouse (1) becomes entitled to coverage or obtains coverage under another group health plan; (2) becomes entitled to Medicare; (3) remarries; or (4) elects to terminate coverage. Maryland Code §15-408. 

4. Massachusetts. Coverage must be continued for ex-spouses until the ex-spouse remarries or until the date for termination of coverage set forth in the court’s decree, if sooner. If the employee member remarries, the ex-spouse must be covered by a rider to the employee’s participation in the plan if the divorce decree so requires. The cost of coverage cannot be more than it would have been if the insured and ex-spouse had not divorced until at least the time the employee member remarries. Mass. Gen. Laws, Part I, Title XXII, Chapter 175, §110I. 

5. Minnesota. Group health plans must continue ex-spouse coverage until the ex-spouse is covered by another group plan or when the coverage would otherwise terminate, if sooner. Minnesota Statutes §62A.21. 

6. Missouri. Ex-spouse is entitled to continuation coverage similar to federal COBRA but if over age 55, coverage can continue for up to 10 years but can terminate sooner if the ex-spouse obtains coverage under another group health plan. Missouri Revised Statutes §376.428, §§376.892-894. 

7. New Hampshire. Ex-spouses entitled to continuation coverage until the earliest of (1) 3 year anniversary of final decree of divorce or legal separation; (2) remarriage of ex-spouse; (3) remarriage of employee member; (4) death of member; or (5) such earlier time as set forth in the divorce decree. RSA 415:18, VII-b. If the ex-spouse is age 55 and loses coverage due to divorce, the ex-spouse is entitled to continuation coverage until eligible for participation in another employer group health plan or eligible for Medicare. RSA 415:18, XVI(c)(5). 

8. Oregon. Group health plans must provide continuation coverage for ex-spouses for up to 9 months unless the ex-spouse is age 55 or older, and for them coverage continues until the ex-spouse is eligible for Medicare, or if sooner, the date the ex-spouse remarries or becomes insured under any other group health plan. ORS §§743B.343-743B.347. 

9. Rhode Island. Ex-spouses entitled to continuation coverage until the remarriage of either party, or until such time as provided in the judgment of divorce, or if the ex-spouse becomes eligible for coverage through own employment. Rhode Island General Law §27-20.4-1.

Some of the above state laws specifically recognize that they do not apply to self-insured plans which are governed by ERISA. But even those state statutes that do not explicitly recognize this fact cannot escape the application of federal preemption under ERISA.

    F. ERISA Preemption.

By its terms ERISA specifically preempts state laws that relate to ERISA plans. ERISA §514(a). Court orders and state laws that purport to require a health plan governed by ERISA to provide continuation coverage to ex-spouses “relate to” the ERISA plan. But ERISA exempts state insurance law from preemption. This is sometimes referred to as the “savings clause” because those state insurance laws are “saved” from preemption, and the savings clause is found in ERISA §514(b)(2)(A). Therefore any state laws described above would not be preempted for fully insured plans while they likely would be preempted for self-insured plans. The result for self-insured plans is made explicit in ERISA Section 514(b)(2)(B) which states that any self-insured plan will not be “deemed” to be insurance. This clause is sometimes known as the “deemer” clause.

     G. Alternatives for Ex-Spouses.

While ERISA preemption prevents the application of certain state laws to self-insured health plans, ex-spouses do have some alternatives. First, while a court order cannot force a plan to provide continuation coverage outside of COBRA, a court order can direct a person to pay for the coverage obtained by the ex-spouse, regardless of where that coverage is obtained. Then, the ex-spouse could elect COBRA for some period of time and/or obtain an individual insurance policy in the private market or on the exchange. Counsel for the divorcing ex-spouse should discuss these options with the client and insure that the parties’ expectations are documented in a court order that can be enforced instead of trying to force a group health plan to operate outside of its usual terms.

Source: BB&T of California, McGriff Insurance Services and its representatives. BB&T of CA and McGriff do not offer tax or legal advice. Please consult your tax or legal professional regarding your individual circumstances.

 

CVS Health and Aetna $69 Billion Merger Is Approved With Conditions

From the NYT:  

The Justice Department’s approval of the $69 billion merger between CVS Health and Aetna on Wednesday caps a wave of consolidation among giant health care players that could leave American consumers with less control over their medical care and prescription drugs.

The approval marks the close of an era, during which powerful pharmacy benefit managers brokered drug prices among pharmaceutical companies, insurers and employers. 

But a combined CVS-Aetna may be even more formidable. As the last major free-standing pharmacy manager, CVS Health had revenues of about $185 billion last year, and provided prescription plans to roughly 94 million customers. Aetna, one of the nation’s largest insurers with about $60 billion in revenue last year, covers 22 million people in its health plans. 

The two companies say that they will be better able to coordinate care for consumers as the mergers help tighten cost controls. Larry J. Merlo, the chief executive of CVS Health, said in a statement that the approval “is an important step toward bringing together the strengths and capabilities of our two companies to improve the consumer health care experience.” 

But critics worry that consumers could end up with far fewer options and higher expenses. 

Just last month, the Justice Department also approved the takeover of Express Scripts, a major CVS rival, by the big insurer Cigna. ...

The preliminary approval was based on Aetna’s decision to sell its plans to WellCare Health Plans to address the government’s concerns that the combined companies would control too much of the market. But state regulators and consumer groups have also raised other concerns about the impact of the merger, saying that the lack of large pharmacy managers that aren’t affiliated with insurers could make it difficult for smaller competitors in either sector. 

Previous mergers in the industry have left consumers with fewer choices and higher drug bills, said David A. Balto, an antitrust lawyer who is a critic of the pharmacy managers. 

“This is a marketplace that hasn’t done well because of lack of transparency, and transparency may be even weaker,” said Mr. Balto, who had worked at the Federal Trade Commission and the Justice Department. Affiliations with large insurers could change that dynamic, he added. “It might correct some of the more pernicious practices.” 

Mr. Balto warned that while state officials have not traditionally overseen pharmacy managers, the combined mammoths “could bring them into the cross hairs of regulation.” ...

 

Administration Plans to Require Drug Companies to Include Prices in Ads

From The Hill: 

Drug companies would be required to list prices in advertisements under a Trump administration proposal released Monday. 

Under the new proposal, which was announced by Health and Human Services Secretary Alex Azar, drug manufacturers would need to state the list price of a 30-day supply of any drug that is covered through Medicare and Medicaid and costs at least $35 a month.

The plan is the boldest step the administration has taken to date as part of its efforts to bring down drug prices, and puts the administration squarely at odds with the powerful prescription drug lobby. 

"Patients deserve to know what a given drug will cost when they're being told about the benefits and risks it may have," Azar said during a speech Monday in Washington, D.C. 

"And they deserve to know when a drug company has pushed its prices to abusive levels, and they deserve to know this every time they see a drug advertised to them on TV."  

The proposal will be officially published Wednesday, and will be open for public comment for 60 days.  

According to HHS, the 10 most commonly advertised drugs have list prices ranging from $535 to $11,000 per month for a usual course of therapy. Under the proposal, companies would be required to post that information in clear, legible text onscreen at the end of the ad. 

HHS officials said the agency will publish a list of companies that don’t comply with the policy. Those companies would also be subject to potential litigation, officials said during a press call.  ... 

Full story here. 
 

ACA Regulations Watch: What to Expect This Fall

From Health Affairs:

The past few months have been relatively quiet for regulatory changes under the Affordable Care Act (ACA). Indeed, much of the attention has been focused on the courts as attorneys general, patient advocates, and others file lawsuits challenging, or defending, the ACA, and on Congress as members continue to debate protections for people with preexisting conditions ahead of the midterm elections. 

That could, however, change soon given the many ACA regulations currently pending at the Office of Information and Regulatory Affairs within the Office of Management and Budget (OMB) at the White House. This post highlights the regulations that are currently pending at OMB as well as those outlined in the recently released fall 2018 regulatory agenda. Although timing is never certain, the number of pending regulations sets up what is likely to be a very busy regulatory fall that coincides with the 45-day 2019 open enrollment period.

 

Is Your Severance Arrangement Subject to ERISA?

From: The Emplawyerologist:

Suppose your company, Wonderful World of Widgets, Inc., finds itself needing to lay off some employees. You are tasked with effectuating the terminations, making sure they go smoothly, including offering severance benefits. You read The EmpLAWyerologist’s previous posts on severance agreements (click here, here, here and here for review). You have taken those points to heart and even gone beyond that, offering a package that you believe will take care of your terminated employees. But wait. There may be more. Could the benefits you have offered be subject to ERISA? Let’s take a look — after the jump…

Before we get into the nitty-gritty, we need some definitions. First, what is ERISA? The acronym stands for the Employee Income Retirement Security Act. ERISA is a federal law, enacted on September 2, 1974 that establishes minimum standards for pension plans and sets forth extensive federal income tax rules for transactions associated with employee benefit plans. Its mission is to protect employee beneficiaries of pension and benefit plans. It includes disclosure and reporting requirements, standards of conduct for plan administrators (also known as fiduciaries) and to provide for appropriate remedies and access to federal courts.  Unlike many other federal laws, ERISA applies to all employers whether they have 1 employee or billions of employees.  

Now let’s discuss some terms that look and sound alike, but carry some significant differences. You already know that a severance agreement is the actual contract between the employer and the terminated employee that a) governs the post-termination relationship; and b) discusses the severance benefits that the employer has agreed to provide the former employee. A severance package is the entire set of benefits provided to the terminated employee(s). Severance  packages may include without limitation pay, stock options and medical/dental benefits to name a few things.

Full post here.

Summary of the 2018 Employer Health Benefits Annual Survey

Each year, the Kaiser Family Foundation and the Health Research & Educational Trust conduct a survey to examine employer-sponsored health benefit trends. This document summarizes the main points of the 2018 survey and suggests how they could affect employers. 

Health Insurance Premiums

In 2018, the average premium rose 3 percent for single coverage and 5 percent for family coverage. The average premiums were $6,896 and $19,616, respectively.

However, premiums for high deductible health plans with a savings option (HDHP/SOs) were noticeably lower than the average premiums. HDHP/SOs annual premiums for single and family coverage were $6,495 and $18,602, respectively.

The premium for family coverage was, on average, lower at small employers (three to 199 employees) than at large employers—$18,739 compared to $19,972. Yet, premium costs varied widely across industry and regions in 2018. 

 

 

Worker Contributions

The average worker contribution toward the premium was 18 percent for single coverage and 29 percent for family coverage. Although, employees at organizations with a high percentage of lower-wage workers (where 35 percent make $25,000 or less annually) made above average contributions—24 percent and 42 percent of the premium for single coverage and family coverage, respectively.

In terms of dollar amounts, workers contributed $1,186 and $5,711 toward their premiums for single coverage and family coverage, respectively. Workers enrolled in HDHP/SOs contributed less on average, paying $1,074 for single coverage and $4,631 for family coverage. 

Plan Enrollment

The following were the most common plan types in 2018:

• Preferred provider organizations (PPOs)—49 percent of workers covered 
• HDHP/SOs—29 percent of workers covered 
• Health maintenance organizations (HMOs)—16 percent of workers covered 
• Point-of-service (POS) plans—6 percent of workers covered 
• Indemnity plans—under 1 percent 

PPO enrollment has decreased by 8 percent over the last five years, and enrollment in HDHP/SOs has risen by 9 percent over the same period.

 

Employee Cost Sharing

Most workers must pay a share of their health care costs, and 85 percent had a general annual deductible for single coverage in 2018. Fifty-eight percent of workers had a deductible of $1,000 or more for single coverage. The average deductible for all workers was $1,350. The prevalence of HDHP/SOs has contributed to the increase of deductible amounts.

Even without a deductible, the vast majority of workers cover some portion of the costs from their in-network physician visits. For instance, 66 percent have a copayment for primary doctor visits and 24 percent have coinsurance.

 

Nearly all workers are covered by a plan with an out-of-pocket maximum (OOPM), but the costs vary considerably. Fourteen percent of workers with single coverage have an OOPM of less than $2,000, and 20 percent have an OOPM of $6,000 or more.

Availability of Employer-sponsored Coverage

Similar to the last few years, employers offer health benefits to at least some workers. Only 47 percent of very small employers (three to nine employees) offer benefits, while virtually every large employer (1,000 or more employees) offers coverage.

Health and Wellness Promotion Programs

Wellness programs help employees improve their lifestyles and avoid unhealthy habits. Small and large employers both offer wellness programs, with 53 percent of small employers and 82 percent of large employers offering at least one. Of these large employers, 35 percent offer participation incentives like gift cards or merchandise. Programs vary in topic and include subjects like smoking cessation, weight management and lifestyle coaching.

Telemedicine

Over half of large employers have embraced telemedicine, with 74 percent offering health care services through this method. Of these employers, 39 percent offer financial incentives to receive health care services this way, opposed to an in-person physician visit.

Self-funding

Similar to the previous year, 13 percent of workers with small employers are elected in plans either partially or entirely self-funded, compared to 81 percent of workers with large employers. Despite conversations about insurers offering more self-funded plans to small employers, there has not been a noticeable increase in their enrollment.

In the past few years, level-funded plans have become more popular. Level-funded plans are health plans provided by insurers that include a nominally self-funded option for small or mid-sized employers that incorporates stop-loss insurance with relatively low attachment points. Of the employers with fewer than 200 workers, 6 percent reported that they had a level-funded plan, or nearly one-third of the respondents who said they had a self-funded plan. 

Conclusion

This year continues a period of a stable market, characterized by relatively low-cost growth for employer-sponsored coverage. While premium growth continues to exceed earnings and inflation increases, the differences are moderately small. Additionally, while there have been some changes in terms of employer-sponsored health benefits, no trends have gained significant traction. 

The recent trend of raising deductibles to offset premium increases is popular, but its growth has slowed. A reason for the slowed growth is that health benefits are a highly effective attraction and retention tool, especially in a strong economy and tight labor market, and employers want to recruit and retain top talent. 

Looking forward, employers should begin to identify tools and resources they can use to offset higher premium growth. As costs continue to rise, the individual mandate repeal takes effect and possible political changes ensue, employers and employees may begin to see increased market movement. 

Proposed Rule Would Expand Options for HRAs