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Feds Ban Defined Contribution

Employers who have implemented Defined Contribution approaches to financing employee health benefits, or who are thinking about doing so in the future, can forget it. Federal bureaucrats have just made it illegal starting in 2014.

The announcement came in the form of a little-regarded “Frequently Asked Questions” (FAQ) document jointly released be the Departments of Labor, Health and Human Services, and Treasury on January 24, 2013.

This will kill promising developments such as the one John Goodman posted here a few days ago, or a more complete story about the same phenomenon published in CFO Magazine. Both these stories are about the remarkable success of a new “private exchange” (PHIX) set up by Aon Hewitt. The PHIX enabled 100,000 employees from Sears, Darden Restaurants and Aon itself to choose from a selection of health plans. Thirty-nine percent of them a chose less costly “consumer directed plan” over more expensive PPO or HMO coverage. This was up from only 12% with a CDHP the year before.

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Mar 20, 2013 | 34 comments | by

Three from the Washington Post

The Washington Post has been doing a pretty good job of chronicling the ObamaCare follies lately. Here are three from the past week or so.

Strange Bedfellows. The first is by Sarah Kliff about how the tobacco industry and the American Cancer Society have joined forces to call for the overthrow of the tobacco user surcharge of 50%. Neither group thinks that smokers should be punished, the tobacco industry for obvious reasons and the Cancer Society because the surcharge will deter smokes from getting coverage at all. A spokesman for the group is quoted as saying, “We’re anti-smoking, not anti-smoker.” (Coulda fooled me.)

The article reports −

One analysis, prepared by the nonpartisan Institute for Health Policy Solutions, estimated that the tobacco surcharge could cause a low-income individual’s annual premiums to jump from $708 to $3,308.

This is because the premium subsidy is not allowed to offset the tobacco surcharge, so the individual is required to pay the full extra charge of 50% (or more) of the premium.

The groups will be working at the state level. States are allowed to forbid the rate-up for tobacco users and five states prohibited these add-ons even before the ACA.

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Feb 26, 2013 | 22 comments | by

Deloitte’s Consumer Engagement Survey

For the past five years Deloitte has been conducting an annual survey of consumer “opinions and expectations about our health care system.” I love this survey because it treats health care consumers with the respect they (we) deserve. Deloitte contrasts its attitude with that of other players –

In the health care industry, physicians call consumers “patients,” health plans call them “enrollees” or “members,” and bio-pharma companies refer to them as “users” or sometimes “subjects,” if they are involved in a clinical trial. Many of the designations in health care infer that individuals play a primarily passive or reactionary role.

Deloitte reports –

Based on the results of our survey, among consumers, there is a widening gap between their unmet needs and the system’s performance.

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Feb 13, 2013 | 9 comments | by

Fifty-Two Card Pick Up

Remember when you were a kid and someone asked you if you wanted to play “fifty-two pick up” with your new deck of cards? He would throw them all into the air and you would pick them up. Fun!

The health care industry today resembles this game. All of the cards have been thrown into the air and we are gradually picking them up. But the order has changed completely. Things are no longer assembled in tidy boxes by suit and number but completely re-ordered into new relationships.

I am not speaking here about “health reforms” as envisioned by Washington, but about what is happening in the market. The “reforms” just add to the complexity of the environment for the real players in health care. If anything, Washington will serve to retard the transforming re-arrangements.

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Feb 11, 2013 | 12 comments | by

Physician-Owned Hospitals Rated High but Are Doomed

Writing in Investor’s Business Daily, David Hogberg reports that nine of the ten best hospitals ranked by the administration’s Hospital Value Based Purchasing program are physician-owned, but these are the very same hospitals slated for extinction by the Affordable Care Act (ObamaCare). The law withholds Medicare funds from any physician-owned hospitals built after 2010 and makes expansion of existing ones very difficult.

Jan 31, 2013 | 18 comments | by

What If They Threw an Exchange and Nobody Came?

Bill Boyles writes in his HealthPlan Markets newsletter –

Health plan chains (multiple insurance companies with a single owner) gave notice that they will not even bother to apply to participate in health exchanges in half of all states. The revelation at investor conferences is a warning that despite all the political verbiage most private carriers do not need (or want) a large book of business in the small group and individual markets, and have no intention of losing money to sell rich benefits to people with higher-than-average underwriting risk. The timing is no coincidence: many states are still deciding how much price competition they want to impose on the assumption that they will have lots of plans to pick from. But it’s bad news for Blues plans and Wellpoint, often the carriers of last resort.

Source: HealthPlan Markets. See also The Associated Press‘ take on this issue.

Jan 29, 2013 | 15 comments | by

The HIT Scam

Last week John Goodman posted a brief blurb about the latest problems with Health Information Technology (HIT). The issue deserves a little more attention because it is an abject lesson of how health policy always fails these days.

The articles from the New York Times and the RAND Corporation indicate that HIT has not lived up to expectations. Actually, it is quite a bit worse than that. The RAND piece is a sort of mea culpa for an earlier RAND “study” that predicted $81 billion in annual savings if we adopted HIT (the version I have said $77 billion, but what’s $4 billion between friends?) This RAND piece was the main rationale for spending over $20 billion (in two years) on HIT, but rather than saving money, HIT seems to have cost more money because it made it easier to bill for more services, according to the Times. It may also be creating more errors and inefficiencies in medical practice.

httpv://www.youtube.com/watch?v=im9XuJJXylw

Round and around and
up and down we go. 

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Jan 23, 2013 | 32 comments | by

EBRI’s Consumer Engagement Survey

The Employee Benefit Research Institute (EBRI) has released its latest annual survey of people with Consumer Driven Health Plans.

This is a large online survey the organization has been conducting annually since 2005, so it has the ability to track trends rather than just look at a point-in-time. This one should be encouraging for people who believe in consumer empowerment.

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Jan 22, 2013 | 3 comments | by

Navigating the ObamaCare Rules

Okay, I admit it. I am completely baffled. Maybe one of you smart folks can help me out here.

I am reading a new Kaiser Family Foundation issue brief on “Implementing New Private Health Insurance Market Rules,” and scratching my head. Is it the summation from KFF that is the problem? The rules themselves? Or have I just grown a lot dumber in my dodderage? (I’m perfectly willing to fess up to the latter if that’s what it is.)

In either case, this doesn’t make any sense to me. Where to begin –

First, it seems the new rules effectively do away with association plans. Employers in such associations will now be subject to all the same regulations and choices as other independent employers. This is puzzling because I thought small business associations had worked to get a so-called “SHOP” provision in the law to encourage the efficiency such associations provide.

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Jan 16, 2013 | 15 comments | by

What’s Next?

Two days after the election, the Institute for Health Improvement (Don Berwick’s old outfit) held a conference to discuss where the health system goes from here. Among the 100 invitees were former Senate majority leaders Tom Daschle and Bill Frist, so you know it was pretty high-powered.

In the write-up of the conference the sense of both urgency and opportunity was palpable. (You can get a copy by going to Berwick’s Health Affairs blog post on it and then following the links and registering with IHI.) But the discussion is also disturbing and sobering.

There isn’t much question that the participants are hands-on experts at running hospitals, physician groups, health plans and the like. They know the ropes. They know the challenges. But, still, they are allowing fine rhetoric and political optimism (read “hope and change”) to blind them to reality.

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Jan 04, 2013 | 14 comments | by
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