Popular State Worker Health Insurance Plan Projected To Go Up In Price 17% Next Year

Popular state worker health insurance plan projected to go up in price 17% next  year

Source: The Sacramento Bee, by Wes Venteicher

Premiums are projected to grow an average of about 7% for CalPERS health insurance policyholders next year, with two popular PPOs spiking by more than 14%, according to preliminary prices posted online Tuesday by the retirement system.

The California Public Employees’ Retirement System provides health insurance for about 1.5 million people, including roughly 750,000 state and local public employees and retirees and about 770,000 dependents.

The system introduced changes two years ago that boosted PPO premiums while lowering costs for two expensive plans with the richest benefits. The changes are aimed at preserving the top-tier plans and stabilizing prices over the long term.

The plans that will go up in price are the PERS Gold and PERS Platinum PPOs. Together they cover about 278,000 people.

PERS Gold, covering about 124,000, is projected to increase in price by 17.8%, reaching $766 per month for an individual starting Jan. 1, according to preliminary figures.

PERS Platinum, covering about 153,000, is projected to go up 14.5%, to $1,084 per month next year, according to the figures.

The most popular plan by far that CalPERS offers is a Kaiser Permanente HMO that covers about 556,000 people. The Kaiser HMO is slated to go up about 6% next year, reaching about $853 per month.

The preliminary rates posted online are subject to further negotiation, and could change slightly before they are approved by the CalPERS Board of Administration next month. California pays about $650 per month toward individual state workers’ plans, and offers an additional $260 health insurance stipend to members of SEIU Local 1000.

Two years ago, the CalPERS board approved a new rate-setting methodology on the recommendation of its health insurance experts, who said the system needed to make changes to save three of its best plans.

Those plans — Anthem Traditional HMO, Blue Shield Access+ and a plan formerly known as PERS Care — attract people who spend the most on medical treatment. Insurers kept raising their premiums to cover large bills, driving healthy people away and prompting more price hikes.

That pattern, known as a “death spiral,” would have made the plans unsustainable, experts told the board two years ago.

So the board adopted a structure that, in oversimplified terms, essentially shifts money from plans with lower health risk to those with higher risk. As a result, the prices for the Anthem and Blue Shield plans are projected to go down by nearly 7% each next year, in a second year of price drops.

Plans formerly known as PERS Select, PERS Choice and PERS Care were combined into two plans, the Gold and Platinum plans, which under the new methodology are supposed to level off in price starting in 2024.

CalPERS also offers Medicare Advantage policies and Medicare supplemental plans for those who qualify.

Included in the offerings are Medicare supplement plans called PERS Gold and PERS Platinum that cover about 150,000 seniors. The Gold plan premiums are going up 4% and the Platinum premiums are going up about 10%.

Other popular Medicare plans will go up by a couple percentage points or be reduced. A Kaiser Permanente Senior Advantage policy covering about 111,000 seniors will drop in price by about 6.4%.

Open enrollment, during which policyholders may switch plans, will run from Sept. 19 to Oct. 14.

The Ball Is Back In Newsom’s Court On Single-Payer Health Care In California

Single-payer health care advocates rip Gavin Newsom for 'flip-flop'Source: San Francisco Chronicle, by Sophia Bollag

The ball is back in Gov. Gavin Newsom’s court when it comes to creating a single-payer health care system in California. In January, when Newsom was asked if he supported a bill to create a universal, government-run health care system in California, he dodged the questions, saying he was waiting for a report from a state commission studying the issue.

On Monday, the commission finalized that report, which found that health care costs will skyrocket by 30% in nine years under the current system and advocates an overhaul that would eliminate distinctions among private and government coverage, in favor of a new system to provide health care to all Californians.

The Democratic governor has long said he supports creating such a system in California but has not endorsed specific legislation to do so. Now that the report is out, it’s not clear what steps he may take to get there.

“We have been following the progress of the commission’s work, and look forward to reviewing and discussing the final report with the Legislature and stakeholders,” Newsom spokesman Alex Stack wrote in a statement. He pointed to other ways the governor has worked to expand health care access, including by expanding eligibility for the state’s health coverage to more undocumented immigrants.

Newsom’s secretary of Health and Human Services, Dr. Mark Ghaly, chaired the commission and committed in the report to assign staff to coordinate with President Joe Biden’s administration. That’s a significant step toward overhauling California’s health care system, advocates say, because the state would need approval to repurpose the billions of federal dollars that flow into the current system.

“That’s really the key next step, and depends upon the governor’s leadership,” said Michael Lighty, a consultant working with the National Union of Healthcare Workers to advocate for a single-payer system. “This is really a new day for health care reform in California.”

The commission’s report stops short of explicitly endorsing a universal, government-run health system in California, as proponents of so-called single-payer health care had hoped, and instead leaves the door open for private health insurers to have some role in a new system. But the report does endorse a major shakeup to a “unified financing” system. The report outlines several options for how that system could look, including a “single-payer” system that would eliminate private insurance.

Carmen Comsti of the National Nurses United union, was the lone commissioner to vote against sending the report to Newsom and the Legislature on Monday, arguing it didn’t go far enough in specifically recommending to the Legislature how to implement single-payer in California.

“This report falls short of presenting clear, concrete, formal actions to get us to single-payer,” she said. “We bury the lead on single-payer and its benefits. The report scarcely uses the phrase single-payer at all.”

Newsom has long said he supports a single-payer system. Since taking office, however, he has not endorsed legislation to transition to single-payer, but has taken other steps toward expanding health care within the existing system.

He said in January that he believes it’s “inevitable” that the United States will transition to a single-payer system eventually, but stopped short of laying out a plan for how he would work toward it. He pointed to the commission’s report as a critical next step.

Any overhaul of the health care system will meet major resistance from many parts of the industry. That was illustrated earlier this year when a coalition of health care organizations and business groups, including the California trade groups representing doctors, hospitals and health insurance plans, came out in fierce opposition to a single-payer bill in the Legislature.

The bill, AB1400, was shelved by its author before coming up for a vote on the Assembly floor.

Ned Wigglesworth, a spokesman for the coalition, said the group is still reviewing the commission’s report and doesn’t want to comment yet. Previously, however, the group blasted the concept of single-payer health care. During the debate over AB1400, the coalition wrote that it would “immeasurably disrupt the health care that millions of Californians rely on every day” by forcing them all onto a government plan.

Anthony Wright, executive director of the consumer advocacy group Health Access, told The Chronicle he thinks the report could have made clearer recommendations on how to implement single-payer. Wright, who supports transitioning to single-payer and voted in favor of the report, said it’s still a significant step.

He said the discussions with the federal government that Ghaly commits to in the report are particularly consequential. In the meantime, he said there are many piecemeal steps the Legislature can take toward expanding health care access to more people and laying the groundwork for a big transition that will take many years.

“It would be a mistake to think there’s just going to be one bill. … This is too big a project,” he said. “There’s some fairly big conceptual pieces that need to pass the Legislature. It can’t all be done piecemeal, but I think it needs to be an iterative process.”

How Medicare Advantage Plans Can Increase Consumer Satisfaction

Medicare Advantage plans are more likely to achieve high satisfaction scores when they offer a consistent product message and brand experience and have control over the delivery of care, according to a J.D. Power study. Members frequently choose a plan they understand and find easy to work with. The study measures member satisfaction with Medicare Advantage plans based on six factors in order of importance: coverage and benefits (26%); customer service (20%); provider choice (15%); cost (14%); information and communication (13%); and claims processing (13%).

Improving communications with enrollees is one of the greatest opportunities for health plans to improve member satisfaction. It’s the only factor in the study that has not seen a significant improvement in member satisfaction. Valerie Monet, director of the insurance practice at J.D. Power, said that many plans have multiple product design features and come with technical manuals that are 20 pages or longer. Expecting members to be experts on these services and benefits is a losing battle for the plan and the member. Members expect their plan to provide guidance, ranging from assistance in selecting a doctor to helping them understand prescription costs.

Forty-eight percent of members agree strongly that their health plan is a trusted partner in their health and wellness, which increases satisfaction by 166 points. Satisfaction is 136 points higher among the 89% of members who completely understand how to find a doctor under the plan. Satisfaction is 110 points higher among the 88% of members who say their doctor spends the right amount of time with them.

Members expect immediate attention or advice when they call their health plan provider. Forty-one percent of those who called their plan had to give the same information more than once to get their issue resolved. Only 35% of members said that customer service provided all of the information they needed on the costs of prescription medications. Ninety-one percent of customers who are delighted with their Medicare Advantage plan (satisfaction scores of 901 or higher), say they will definitely renew their policy, and 89% will definitely recommend their plan to family and friends. Loyalty drops to 71% and advocacy to 66% among members who are pleased with their plan (scores of 751-900). Plans garnered the following member-satisfaction scores:

  • Kaiser Permanente 851
  • Highmark 791
  • Humana 782
  • UnitedHealthcare 775
  • Cigna 774
  • Aetna 773
  • Anthem 765
  • Health Net 756
  • WellCare 742

In 2016, members reported an average increase of $117 in annual premiums to $1,497. They also have more out-of-pocket expenses. On average, member deductibles are $1,705 in 2016, a $310 jump from 2015. Satisfaction is 136 points higher when members completely understand their out-of-pocket costs. Monet said that members are more satisfied and see the value of their plan when they have a better understanding of how much they are paying and what the costs cover.” For more information visit http://www.jdpower.com/resource/us-medicare-advantage-study.

Health Insurers Increase Debt in Wake of the ACA

Since 2011, U.S. health insurers have nearly doubled their borrowing levels due to the Affordable Care Act (ACA), according to a report by A.M. Best. With traditional health insurance products, insurers receive full premium payment every month before paying any claims. But that’s not the case with exchange products. In the first few years of the exchanges, insurers relied heavily on risk-adjustment, reinsurance, and risk corridors. The timing of paying direct premium subsidies fluctuated significantly. So health insurers had to pay the claims because their liquidity was under pressure. They turned to borrowing to alleviate this pressure. A.M. Best has not seen any significant rating pressures due to borrowing. However, heavy reliance on borrowed funds could put pressure on ratings if it reduces financial flexibility or slows the growth of capital and surplus. However, financial institutions see the use of borrowed funds as favorable since many top borrowing insurers are very big, highly capitalized, and highly rated, according to the report. 

CBO updates ACA cost projections

Over the next 10 years, the Affordable Care Act will cost $1.34 trillion, according to the Congressional Budget Office, up 11% from projections a year ago, mostly because of higher-than-expected enrollment in Medicaid. The law gave 22 million people access to coverage they otherwise would not have had, the report found, and the cost of providing that coverage from 2016 to 2019 will be $465 billion, 25% less than projected when the law was passed. The New York Times (free-article access for SmartBrief readers) (3/24), San Francisco Chronicle (free content)/The Associated Press (3/24)

PBMs Say They Increase Competition and Reduce Rx Costs

Testifying before the House Committee on Oversight and Government Reform, Pharmaceutical Care Management Association (PCMA) president and CEO Mark Merritt outlined ways to increase competition and lower prescription drug costs. The Committee is examining methods and reasoning behind recent drug price increases at a hearing titled, Developments in the Prescription Drug Market.

PBMs administer prescription drug plans for more than 266 million Americans who have health insurance from a variety of sponsors including: commercial health plans, self-insured employer plans, union plans, Medicare Part D plans, the Federal Employees Health Benefits Program, state government employee plans, managed Medicaid plans, and others.

PBMs are projected to save employers, unions, government programs, and consumers $654 billion—up to 30%—on drug benefit costs over the next decade according to new research. PBMs reduce drug costs by doing the following:

  • Negotiating rebates from drug manufacturers.
  • Negotiating discounts from drugstores.
  • Offering more affordable pharmacy channels.
  • Encouraging use of generics and more affordable brand medications.
  • Managing high-cost specialty medications.
  • Reducing waste and improving adherence.

Merritt said, “There is a growing use of bait-and-switch copay assistance marketing programs that encourage patients to ignore generics and start on more expensive brand drugs.” Unlike programs for the poor and uninsured, copay offset programs are designed to encourage insured patients to bypass less expensive drugs for higher cost branded drugs. Such practices are considered illegal kickbacks in federal programs and have long been under scrutiny by the Health and Human Services Office of Inspector General (OIG).

PCMA outlined several potential solutions for high drug prices that policymakers could consider, including:

  • Accelerating FDA approvals of “me-too” brands against drugs that face no competition.
  • Accelerating FDA approvals of generics to compete with off-patent brands that face no competition.
  • Creating a government watch list of all the off-patent brands so potential acquirers are aware that policymakers can monitor these situations.
  • Making copay coupons an illegal kickback for all insurance that gets any federal subsidy.

More Companies Increased Contributions to Help Employees Pay Premiums

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Companies are more likely to have added or increased contributions to their employees’ premiums this year compared to the last two years, according to a study by the Transamerica Center for Health Studies (TCHS). The study of 1,500 employers was conducted by the Harris Poll from August 14 to September 3. Forty-four percent of companies expect their healthcare costs to increase in the next 24 to 36 months.

Most employers are trying to keep constant their contribution to employees’ premiums (57%), deductibles (60%), and co-pays/coinsurance (58%). Thirty percent want to maximize their contributions to employees’ premiums to help manage health insurance costs. TCHS Executive Director Hector De La Torre said, “The anticipated increase in healthcare costs correlates to improved quality for many employers.” Forty percent expect the quality of health insurance they offer employees to improve in the next 12 to 36 months while only 10% expect the quality to decline. Companies are most concerned about managing healthcare costs related to cancer (71%), drug expenses (69%), and diabetes and obesity (68%).

Sixty-one percent of employers offer wellness programs. Forty-nine percent of employers that have had a wellness program in the past 12 months say that saving money was the motivation. Eighty-two percent of companies say their wellness program improved workers’ health; 80% say it improved productivity and performance, and 71% say it reduced healthcare costs. De La Torre said, “Providing the best healthcare benefit package possible remains the top healthcare-related priority for employers. Interestingly, employers that offer healthcare benefits are more likely to anticipate profitability, hiring and wage increases in the next two years.”

The Medicare Advantage Market in 2016

A total of 2,174 Medicare Advantage (MA) plans are in the market lineup for 2016, an increase of 90 plans over 2015, according to a report by Mark Farrah Associates. Researchers looked at data from Centers for Medicare & Medicaid Services (CMS). The Medicare market continues to be a key target for health insurance business with more than 17.6 million beneficiaries enrolled in a Medicare Advantage plan and another 37 million eligible.

Many Medicare Advantage plans are designed to be marketed in targeted regions while others are approved to be offered nationwide. For 2016, HMOs continue to be the dominant plan type; comprising 67% of plan offerings. The number of distinct HMO plans will increase to 1,463 for 2016.

2016 Medicare Advantage Preview

MA Plan Type 2015 Plan Count 2016 Plan Count 2016 %
HMO 1,358 1463 67%
Local PPO 521 516 24%
Cost 86 81 4%
PFFS 69 63 3%
Regional PPO 43 47 2%
MSA 7 4 0%
Total 2,084 2,174 100%
Source: Mark Farrah Associates.

Open enrollment will begin on October 15, 2015, and competitors are gearing up to promote 2016 benefit plans. As Medicare companies finalize sales and marketing strategies, they look forward to the release of the Medicare Plan Finder data on or around October 1. The Plan Finder is an online tool that helps seniors shop select new Medicare plans. It is also a rich market analysis resource for the industry. Analysts within Medicare plans use the detailed benefit attributes including benefit copays and cost sharing, plan by plan, to assess competition and opportunity, county by county.

What You Need to Know for Medicare Fall Open Enrollment

Medicare’s Fall open enrollment occurs from October 15 to December 7, and is the time of year when people with Medicare can make unrestricted changes to their coverage. As we approach Fall open enrollment, the Medicare Rights Center offers the following important updates for 2016:

  • Part B Premiums May Increase for Some
    The standard Part B Premium is expected to remain stable for 70% of Medicare beneficiaries at $104.90 per month; it may increase to $159.30 per month for the remaining 30%. This group includes people who enroll in Medicare during 2016 and people who do not collect Social Security benefits. Also affected by this increase are beneficiaries who pay a higher, income-related premiums based on their income, according to the Medicare Trustees report. Final 2016 Part B premiums will be announced in the fall. People with Medicare should consider the final premium amounts as they make plan selections during open enrollment.
  • There Are More Four-Star and Five-Star Plans
    In 2015, 61% of Medicare Advantage plans are rated from four to five stars in Medicare’s Star Quality Rating. This is up from 52% in 2014 and 37% in 2013.

Medicaid Poses Increasing Risks to State Budgets

A rebound in healthcare spending and a shift in federal support will put more pressure on U.S. states’ long-term budgets, Fitch Ratings says. While state and local Medicaid spending growth will remain below historical levels, Fitch believes it will still outpace revenue growth, forcing states to make challenging budgetary decisions. Fitch expects most states to accelerate efforts to slow Medicaid spending and take other budgetary actions. If they do not, they face long-term budget imbalances.

The Centers for Medicare and Medicaid Services (CMS) expects state and local Medicaid spending growth to average 6.3% annually from 2014 to 2024. The increase is partially due to normalization after recession era rates bottomed at 5.2% in 2007, as well as the downshift in federal funding for the Medicaid expansion that will begin in 2016.

However, spending growth will remain below historical trends.  Fitch says that states have had some success in controlling growth in Medicaid spending, though the challenge remains substantial. Implementing managed care has been a key initiative for a number of states. From 2001 to 2013, Medicaid managed care spending increased at nearly double the rate of total Medicaid spending. Fitch says that the shift toward managed care is likely to continue.

Several states have reported net budgetary gains from ACA expansion that could offset those increased costs. CMS expects overall health spending growth to accelerate to 5.8% annually through 2024, up from 4% in 2007. The recession and its aftermath played a key role in suppressing costs in recent years.

Last Updated 06/29/2022

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