Category: Health Insurance

Workers Increasingly Prefer Pay to “Benefits”

Businessman Sitting at His DeskThe Employee Benefits Research Institute (EBRI), a research organization with a mission “to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education” includes members as diverse as AARP, Aetna, Boeing, Charles Schwab, and Wal-Mart. In the benefits world, it sits firmly inside the establishment.

That is why EBRI’s latest research on how employees view their benefits should give some encouragement to reformers who want to change the tax treatment of health insurance, and weaken the iron triangle of big business, big labor, and big government which enforces the discrimination against individually owned insurance. From EBRI’s latest Note:

The Interstate Health Insurance Compact: An Idea Whose Time Has Come

UptonIn a recent Health Alert, I noted the very positive news that House Speaker Paul Ryan has appointed six task forces, comprised of Congressional committee chairmen, to develop a governing agenda. One of those tax forces has a mandate to develop (finally) the Republican alternative to Obamacare.

Two of the members, Dr. Tom Price (Chairman of the Budget Committee) and Mr. Fred Upton (Chairman of the Energy & Commerce Committee) have already sponsored health reform bills that would replace Obamacare, and contain tax credits for individual health insurance. I conclude Dr. Price’s version is superior, both in administrative simplicity and economic effect.

However, Mr. Upton’s bill (which is sponsored in the Senate by Senator Hatch and Senator Burr) includes a good idea absent from Dr. Price’s bill: An interstate compact for health insurance.

Clinton Attacks Sanders on Medicaid-for-All Despite Strong Democratic Support

Presidential candidate Hillary Clinton is attacking Senator Bernie Sanders because he backs Medicaid-for-All (i.e. a single-payer health care system), calling it a ‘risky deal.’ Clinton also dispatched daughter Chelsea to attack Sanders claiming he would take health care away from millions.

Clinton’s stance on a national health care is somewhat odd given that 81% of Democrats favor a single-payer health care system. Moreover, President Truman first proposed national health care in 1945 and it was a campaign issue of his in 1948.

What’s the reason for Hillary’s change of heart? That’s hard to say. But Clinton made nearly $3 million off speeches to the industry from 2013 to 2015. Maybe losing a steady source of campaign funds and speaking fees is risky.

Health Insurers’ Collapsing Obamacare Consensus

Marilyn Tavenner, CEO of AHIP

M. Tavenner, CEO of AHIP

The health insurance industry is undergoing a crisis of consensus on how to respond to the failure of Obamacare. That is the only way to interpret the departure of another large, national carrier, Aetna, from America’s Health Insurance Plans (AHIP). This follows UnitedHealth Group’s departure from the industry’s trade group last June:

Those misgivings manifested most recently during the debate over ObamaCare when the so-called “big five” — UnitedHealthcare, Anthem, Aetna, Humana and Cigna — formed their own informal coalition.

Another healthcare executive, who asked for anonymity in order to speak freely, said that, for some, “there’s a sense that AHIP has become a one-trick pony for the Obama administration,” referring to the goal of advancing ObamaCare.

With the country’s first- and third-largest health insurers gone from its ranks, the insurance group could see problems arise from the divisions between large and small companies.

(Peter Sullivan & Megan R. Wilson, “Aetna departure a major blow for insurers group,” The Hill, January 5, 2016).

Yet Another and then Another Health Insurance CO-OP Bites the Dust

Last Summer I wrote, “Consumer Operated and Oriented Plans… are slipping into insolvency.” Last week I wrote, “Obamacare health insurance cooperatives are falling by the wayside like drunken ice skaters on a frozen pond.” The pace of failure is accelerating!

The latest two failures are the CO-OPs in Utah and South Carolina. In the past week, Consumers’ Choice Health Insurance Company in South Carolina and Utah’s Arches Health Plan are the latest CO-OPs to announce they will close. CO-OPs in New York, Nevada, Tennessee, Louisiana, Colorado, Iowa, Oregon and Kentucky have either closed or announced they were not continuing into 2016.

Another Day, Another Obamacare COOP Closes

Did the sun come up this morning? That must mean another Obamacare COOP has closed. This time, it is in South Carolina:

CCHP

High-Deductible Health Insurance Crushes Health Spending

A new working paper published by the National Bureau of Economic Research (NBER) shows how much high-deductible health plans reduce spending:

We study consumer responsiveness to medical care prices, leveraging a natural experiment that occurred at a large self-insured firm which forced all of its employees to switch from an insurance plan that provided free health care to a non-linear, high deductible plan. The switch caused a spending reduction between 11.79%-13.80% of total firm-wide health spending ($100 million lower spending per year). We decompose this spending reduction into the components of (i) consumer price shopping (ii) quantity reductions (iii) quantity substitutions, finding that spending reductions are entirely due to outright reductions in quantity. We find no evidence of consumers learning to price shop after two years in high-deductible coverage. Consumers reduce quantities across the spectrum of health care services, including potentially valuable care (e.g. preventive services) and potentially wasteful care (e.g. imaging services).

(Z.C. Brot-Golberg, et al., What Does a Deductible Do? The Impact of Cost-Sharing on Health Care Prices, Quantities, and Spending Dynamics,” NBER WP No. 21632, October 2015.)

Colorado Health Insurance COOP Closed

CO COOPLast Friday, Colorado’s Division of Insurance ordered the state’s Obamacare COOP not to offer policies in the state’s Obamacare exchange next year. Obamacare’s COOPs are cascading into collapse quite quickly. NCPA has been studying them since last June, and our research has been prescient.

Obamacare COOPs were specifically stood up by the Affordable Care Act with government loans. They cannot hide their Obamacare losses like larger, incumbent insurers (for which Obamacare exchanges are small parts of their businesses) can.

To show how fast the fall of this COOP has happened, I’ll share three stories:

Obamacare COOPs’ Loans Are “Assets”

My colleague Devon Herrick was prescient about the collapse of Obamacare’s COOPs (nonprofit cooperative insurers set up with government loans to compete unfairly in Obamacare’s exchanges), writing an Issue Brief on the topic last June.

Since, then Obamacare’s COOPs have continued to collapse, stranding almost half a million Obamacare beneficiaries. Chris Jacobs of the Conservative Review has written about the administration’s latest attempt to rescue the remaining COOPs, by rebranding their liabilities as “assets”:

Selling Health Insurance Across State Lines

Here we go again: Republican politicians are rolling out the easily digested soundbite of “selling health insurance across state lines” as a solution to high premiums.

In the New York Times, Margot Sanger-Katz examines the idea:

At the Fox News Republican debate last month, Donald Trump offered a way to lower health care costs: allow insurers to sell their policies across state lines.

The idea of developing a more national market for health insurance has become a major part of Republican health reform orthodoxy. A bill to allow interstate insurance sales was introduced in Congress in 2005, and, since then, has been a part of the platform of every Republican presidential nominee. Mr. Trump is not alone in his view: Scott Walker, Marco Rubio, Ted Cruz, Rand Paul, Rick Santorum and Bobby Jindal have all endorsed it.

The only problem? It makes no sense. “I’ve tried for 10 years to explain this to Republicans; it is a big problem,” said Merrill Matthews, a resident scholar at the Institute for Policy Innovation.