Response to DOJ’s Move To Block Mergers

The Justice Dept. is suing to block two proposed mergers between major health insurance companies, saying the deals violate antitrust laws. The lawsuits argue that a $37 billion merger between Humana and Aetna would lead to higher health-insurance prices, reduced benefits, less innovation, and worse service for over a million Americans. The DOJ also says that the $54 billion acquisition of Cigna by Anthem would be the largest merger in the history of the health insurance industry. California insurance commissioner Dave Jones said, “I urged the DOJ to prevent these health insurance mergers, which would result in a highly concentrated, less competitive health insurance market doing irreparable harm to consumers and businesses. During the public hearings I convened, I questioned executives from Anthem, Cigna, Aetna and Humana. None of the companies were able to substantiate their claims of savings associated with the mergers. Not one company executive was willing to commit to pass along alleged cost savings to consumers through lower premiums. Bigger is not better when it comes to health insurance mergers. History has shown that health insurance mergers result in higher prices, fewer choices, and lower quality of care.”

Dr. Merrill Matthews of The Institute for Policy Innovation said, “The Obama administration is attempting to block the Aetna-Humana and Anthem-Cigna mergers because it wants more competition, but if compounding financial losses force these companies to drop out of the exchanges, there won’t be any competition. Two larger health insurers are better than none. Health insurance company mergers started shortly after the ACA passed in order to survive the new environment of high costs and government regulations…For example, Arizona’s Maricopa County was once praised as a center of robust competition with eight insurance companies competing in its ACA exchange. But in just a few years, that number will drop to only three insurers, two of which are Aetna and Cigna. If Washington stifles these same companies’ attempts to stay afloat in the exchanges, Maricopa County and other areas could see only a single insurer available in its marketplace—if any at all…If the Department of Justice’s stonewalling is successful, those insurers will likely join many others and pull out of the Obamacare exchanges, leaving even less competition and higher prices. And that will force the administration to devise even more excuses for why health care costs are exploding.”

Trump v. Clinton: How They Line Up On Health

The Philadelphia Inquirer offers an analysis on the Candidate’s Position on health care. The following is a summary the article:

Health insurance

  • Clinton: Wants to improve the Affordable Care Act. She wants to reduce the cost of health insurance purchased on exchanges and provide a tax credit of up to $5,000 a family to offset out-of-pocket costs and premiums above 5% of household income. She would expand tax credits and cap the cost of premiums at 8.5% of family income. She calls for fixing the “family glitch” so families can access coverage in the exchanges when their employer’s family plan is not affordable. She would allow undocumented immigrants to buy insurance through the exchanges. In what is seen as a nod to Bernie Sanders’ supporters, she is affirming support for a public option that would allow people as young as 55 to buy health insurance through Medicare.
  • Trump: Opposes requiring people to buy health insurance. He wants to repeal the Affordable Care Act. He proposes to make coverage more affordable by allowing sales of health insurance across state lines and permitting people to deduct health insurance premium payments from their taxes. He would emphasize tax-deductible health savings accounts (HSA) where funds could accumulate if they are not used. He wants to require price transparency by health-care providers so that people can shop around for the best prices. He also wants would-be immigrants to certify that they can pay for their own health care.

Prescription drugs

  • Clinton: Wants to eliminate tax breaks that pharmaceutical companies get for direct-to-consumer advertising, and require those that benefit from federal research spending to reinvest profits into research. She would ban legal settlements in which pharma companies pay competitors so they will hold off on introducing generics and would allow consumers to import cheaper drugs from countries such as Canada. She supports allowing Medicare to negotiate lower drug prices and would cap out-of-pocket costs for people with chronic health problems.
  • Trump: Calls for a free market for prescription drugs, including allowing consumers to import them from countries that regulate prices. This practice is now illegal, though the law is not firmly enforced.

Medicaid

  • Clinton: Supports president Obama’s proposal to let states that sign up for Medicaid expansion to get a 100% match for the first three years. She would expand access to Medicaid and children’s health insurance.
  • Trump: Wants states to get federal Medicaid funding through block grants, which could mean fewer dollars for many states, but would give local officials more authority over expenditures.

Medicare

  • Clinton: Has vowed to fight proposals to privatize or phase out Medicare, and would give Medicare the power to negotiate lower drug costs.
  • Trump: Is against abolishing Medicare.

Social Security

  • Clinton: Opposes privatizing Social Security, reducing annual cost-of-living adjustments, and raising the retirement age. Clinton would expand Social Security for some, such as widows and caregivers, and help to fund the benefit through a wealth tax.
  • Trump: Has voiced support for Social Security and called it “honoring a deal.” He has said that Republicans cannot win elections if they seek to change it substantially.

Veterans Administration

  • Clinton: Says she would ensure more timely benefits, block privatization efforts, and strengthen services for military families and employment programs for veterans.
  • Trump: Has vowed to reform the agency and make it more efficient in delivering service and employment assistance.

Abortion

  • Clinton: Wants to protect access to safe and legal abortion.
  • Trump: Back in 1999, he told Meet the Press that, despite his personal dislike of abortion, “I’m very pro-choice.” More recently, he announced, “I am pro-life.” This year, Trump he said on MSNBC that if abortion were banned, women who violated the law would have to be punished. Soon after, his campaign released a statement saying that providers, not patients, should be held liable. His running mate, Indiana Gov. Mike Pence, has backed some of the nation’s toughest abortion restrictions.

HIV/AIDS

  • Clinton: Her proposals include funding research to seek a cure; finding more affordable treatment, including capping prescription costs; urging all states to extend Medicaid coverage for people living with HIV; and increasing use of HIV prevention medication.
  • Trump: Has not issued a policy on HIV and AIDS, though some in the advocacy media say his goals of lowering prescription drug costs and increasing transparency about health care pricing could be beneficial.

Medical research funding

  • Clinton: Advocates increasing funding for Alzheimer’s research to $2 billion a year, paying for care-planning services through Medicare, and funding a federal program to help locate Alzheimer’s patients who wander.
  • Trump: Has called funding for Alzheimer’s research “a total top priority,” but he has not offered many specifics about policies he would pursue. He has alarmed the research community with scientifically unfounded statements about Ebola, autism, and climate change.

Autism

  • Clinton: Has called for a nationwide early-screening campaign. She wants to push all states to require health insurance coverage for autism services, help get adults on the autism spectrum connected to employment opportunities, and fund more research.
  • Trump: In tweets and during a presidential debate, Trump has linked autism to some vaccinations, a tie that has been widely debunked by international medical authorities and advocates, such as Autism Speaks, a group that Trump has supported.

Addiction and drugs

  • Clinton: Would increase funds for addiction treatment and prevention, and emphasize rehabilitation over prison for low-level and non-violent drug offenses. She wants more preventive services for adolescents, opioid antidotes for all first responders, and more training for drug prescribers.
  • Trump: In New Hampshire, Trump vowed to fight addiction on two fronts saying, “First, we have to support locally based and locally run clinics, and we have got to close the border. That’s where the drugs are coming from.”

Medical marijuana

  • Clinton: Supports the use of medical marijuana.
  • Trump:.Supports the use of medical marijuana.

Family and medical leave

  • Clinton: Advocates a paid family and medical leave of up to 12 weeks with at least a two-thirds wage replacement rate. She proposes paying for the plan with taxes on the wealthy.
  • Trump: He told Stuart Varney on Fox News last year, “Well, it’s something that’s being discussed. I think we have to keep our country very competitive, so you have to be careful of it.”

Federal funding of Planned Parenthood

Clinton: Supports federal funding of Planned Parenthood.
Trump: At a news conference on Super Tuesday, Trump said he would not give federal funds to Planned Parenthood because the organization performs abortions. But he praised the health care it provides, saying, “millions and millions of women – cervical cancer, breast cancer – are helped by Planned Parenthood.”

Retail Healthcare Gains Popularity

The growing number of retail clinics is expected to transform primary healthcare and touch 30 million patients globally by 2022, according to a report by Frost & Sullivan. The global retail care market earned revenue of $1.35 billion in 2015 and is expected to reach $4 billion in 2022. Retail clinics are in pharmacies, grocery chains, supermarkets, and department stores, and address minor health issues. They have longer hours than do traditional clinics.

The retail clinic market is growing due to rising healthcare costs and a lack of access to primary care. In most developing countries, health insurance penetration is low and the out-of-pocket spending pinches patients. Rising premiums and higher deductibles are a concern for those with health insurance. A shortage of primary care physicians is resulting in longer wait times for doctor appointments, even in mature markets like the U.S.

Many patients see retail clinics as the second choice, and use then on weekends or after-hours, which limits patient volume. Opening retail clinics is financially impractical in some states due to regulations. The largest U.S. chain only has retail clinics in 33 states. Siddharth Shah of Frost & Sullivan said, “With increasing experience, retail players will expand their services…and experiment with…product-service bundling, telemedicine, and point-of-care technologies to enhance patient experience.”

Obamacare Significantly Reduces Cost of Mental Health Care for Young Adults

The Affordable Care Act (ACA) has significantly reduced out-of-pocket behavioral health care costs for adults 19 to 25, according to a study published in the Psychiatric Services Journal. Young Latinos, African Americans, and other racial and ethnic minorities saw the greatest reduction in out-of-pocket behavioral health expenses. This demographic often has higher unemployment and lower salaries, so they are less likely to seek behavioral health services. The ACA’s dependent coverage provision has reduced the number of uninsured young adults by at least three million. The ACA allows young adults to remain on their family’s health plans until they turn 26. Because of this, the expansion of health care access is also expected to increase the number of users of mental health and substance abuse treatment services. Behavioral health conditions often emerge during the 19 to 25 year age range. Also, this age group has a higher rate of serious mental illness than other adults.

Insurer Obamacare Losses Reach Billions Of Dollars After Two Years

Bruce Japsen ,

CONTRIBUTOR

I write about health care and policies from the president’s hometown

Opinions expressed by Forbes Contributors are their own.

After two years offering uninsured Americans subsidized products on public exchanges, health insurance companies have been hard-pressed to find financial success in this segment of the Affordable Care Act with losses reaching billions of dollars for the industry.

UnitedHealth Group UNH +0.77% lost more than $720 million on its public exchange business last year, and United is a small player in this market compared to Anthem ANTM +0.84%, which operates Blue Cross and Blue Shield plans in 14 states, and said money-losing Obamacare plans caused profits to fall 64% in the fourth quarterAetna AET +0.16%, which hopes to finalize its acquisition of Humana HUM -0.29% later this year, said last week individual coverage sold under the health law “remained unprofitable” last year.

The financial performance has come into view in the last two weeks following release of 2015 annual and fourth-quarter earnings.

A demonstrator in support of  the Affordable Care Act holds an “ACA is here to stay” sign outside the Supreme Court after justices ruled 6-3 to save Obamacare tax subsidies on June 25, 2015. Photographer: Andrew Harrer/Bloomberg

Other Blue Cross and Blue Shield plans, some nonprofits and others owned by policyholders, are also reporting hundreds of millions in losses on health plans they sell on public exchanges. For example, Blue Cross and Blue Shield of North Carolina has reported losses of more than $400 million through last year and Health Care Service Corp., which owns five Blue Cross plans including those in Illinois and Texas, lost more than $240 million in 2014 and remained unprofitable in its public exchange business last year. Health Care Service has yet to disclose 2015 financials for its nearly 2 million members in its individual business that includes Obamacare enrollment, a company spokesman said.

For insurers, the problem has largely been a major increase in medical expenses from these new patients, who were previously uninsured. From an actuarial standpoint, the health plans say they didn’t know what they would be getting and therefore needed more healthy people to buy premiums to cover the costs of the sick. So far, medical expenses are getting the upper hand. For example,Anthem’s fourth-quarter “benefit expense ratio” was 87% compared to 84.5% in the year-ago period.

But insurers, for the most part, see 2016 as a potential breakout year as they get a handle on pricing and narrow provider networks to better control costs.

Anthem CEO Joe Swedish, who has complained rivals have underpriced their products to get enrollment in the first two years, looks for the public exchange business to rebound following two years of pricing he’s described as “unsustainable.” Analysts say Anthem might even have stronger offerings following its acquisition of Cigna CI -0.04%, should that close later this year.

When Midsize Employers Offer HDHPs, 34% of Employees Elect Them

Thirty-four percent of employees who work for midsize employers would choose a high deductible health plan (HDHP) if given the choice, according to a report by Benefitfocus. Millennials over 26 are the most likely to opt in at 40%. Thirteen percent of employers offer at least one HDHP. Regardless of  whether the plan is a PPO or HDHP, employees face higher out-of-pocket costs. With rising copays and coinsurance, the average family could spend nearly 40% more on health care than on food in 2016. To close the gap, many employers are funding health savings accounts (HSAs) and flexible spending accounts (FSAs). Yet adoption is low at large and midsize companies. On average, eligible employees contribute less than half the maximum amount allowed. Shawn Jenkins, Benefitfocus CEO, said that employers will drive more choice and innovation in  benefits and in the plan selection process in order to attract and retain talent. He added that, as the market shifts toward consumer-driven health plans, employers must make make it a top priority to offer decision support, education, and financial wellness resources.

It’s Gotten Harder for Hispanics to Afford Healthcare

An increasing number of Hispanics are finding it harder to afford healthcare. The percentage of those without health insurance is up slightly over a year ago, but a majority still have a favorable view of the Affordable Care Act (ACA). For the first time more women are insured than men, according to a new survey by the Florida Atlantic University Business and Economics Polling Initiative. “The increased healthcare costs compared to last year is probably making it harder for Hispanics to afford health insurance,” says Monica Escaleras, director of the Initiative.

More than 43% of respondents in the April poll say it is harder to afford healthcare, up almost 6% from a similar survey in March 2015. Only 13.7% say it’s easier, down more than 9% from last year. The number of uninsured increased 5%, from 7.8% in March 2015 to 12.8% last month. However, Hispanics have still benefited since the enactment of the ACA, resulting in 4 million adults gaining coverage, according to the Department of Health & Human Services’ March 2016 report. Hispanic women are increasing their access to health insurance through the ACA with 52% saying they have government healthcare coverage compared to only 23.3% of men.

According to an analysis by McKinsey & Company, premiums for the lowest-cost ACA plans are expected to increase 10% to 13% in 2016. More than half of the government-sponsored nonprofit insurance co-ops have failed, leaving more than 750,000 families and individuals scrambling for new health insurance. Fifty-one percent of Hispanics gave Obamacare a favorable rating, compared to 35% unfavorable.

The Drivers of Health Insurance Premium Changes for 2017

 

rising healthcare costs
The American Academy of Actuaries offers an early look at what’s driving changes in premium in the Affordable Care Act (ACA) individual and small group markets. Academy Senior Health Fellow Cori Uccello said, “Increased health care costs and the end of the ACA’s transitional reinsurance program are two of the biggest factors pressuring rates higher. The one-year moratorium of the health insurance provider fee will partially offset these increases.”

The issue brief identifies the following factors that will affect 2017 premiums:

  • The underlying growth of health care costs: Although increases in health care spending are still relatively low, prescription drug spending is expected to increase faster than other medical spending.
  • The sun-setting of the ACA’s transitional reinsurance program: Each year, the gradual reduction in the reinsurance program has increased premiums. The final impact will occur in 2017 when projected claims are expected to increase 4% to 7% due to the program ending in 2016.
  • The composition of the risk pool and any changes in the assumptions used in premium calculations: Insurers will revise their assumptions for underlying 2017 premiums if enrollment levels, risk profiles, or claims are different than expected when they developed 2016 premiums.
  • The one-year moratorium of the ACA health insurance provider fee: This will lower premiums by 1% to 3%.
  • The repeal of the ACA’s original expansion of the small group definition, and modifications to provider networks:Premium changes for individuals will reflect increases in age, and changes in geographic location, family status, or benefit design. If a consumer’s plan was discontinued, the premium change will reflect the increase or decrease resulting from being moved into a different plan. Average premium change information (released by insurers or states) could reflect consumers moving to different plans when their plan was discontinued.

Millennial Women Want Wellness Care

Millennial women see health as total well being − physical, mental, and spiritual in contrast to the traditional healthcare model that emphasizes disease management. They want to minimize their use of the healthcare system, according to a survey by womenshealthconversations.com. Survey respondents are 22 to 36, hold college or post-graduate degrees, and are working professionals. Also, most are single.

Participants estimate that they spend 25% of their monthly income on preventative and integrative behaviors. Respondents are skeptical about doctors and pharmaceutical companies that are only concerned with prescriptive care. One participant said, “Why isn’t massage or acupuncture covered under insurance? I think the whole system is focused on procedures and not prevention; there needs to be a shift.”

The Benefit Gap for Small Businesses

Health insurance is offered to 96% of employees at large and small companies and 89% of employees at small-businesses, in particular. But the study by Lincoln Financial reveals a much larger gap when it comes to other benefits:

Benefits offered Small Business Employees Employees of businesses of all sizes
Dental Insurance 74% 91%
A retirement plan 72% 89%
Vision insurance 66% 84%
Life insurance 62% 81%
Disability insurance 52% 74%

Employees at small businesses say that it’s important for their employers to offer these benefits:

  • 90% a retirement plan.
  • 87% dental coverage.
  • 83% vision insurance.
  • 76% life insurance.

Almost 70% of employees at small businesses say that benefits have influenced their employment decisions. Business-continuation strategies are critical since more than 50% of small-business owners are 50 to 85. Life insurance can help ensure that the business continues in the event of the death of an owner, co-owner, or key employee.

Last Updated 10/28/2020

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