Category: Health plans

HighRoads CEO Brian Kim talks next gen health plan product management

published date
May 25th, 2017 by

HighRoads helps health plans automate the creation of new products to help them get to market faster and more flexibly. It may sound like an arcane corner of the healthcare world, but in this podcast interview, CEO Brian Kim argues that his company’s platform is a game changer in the market.

Here’s what we discussed:

  • (0:15)What are the fundamental functions performed by health plans?
  • (3:40) Why has the process of defining and selling plans changed much more slowly than payment processing?
  • (10:29) What is needed to spur innovation on plan definition and selling within existing organizations?
  • (13:41) What’s the impact on these topics of action in Washington DC?
  • (15:46) What does HighRoads offer the market?
  • (18:02) Where are you getting the most traction?
  • (21:50) What can we expect on your road map over the next few years?

———-

By healthcare business consultant David E. Williams, president of Health Business Group.

How AHCA makes healthcare unaffordable

published date
May 17th, 2017 by

Some opponents of the Affordable Care Act (aka Obamacare) like to trash individual insurance policies sold on the exchanges for having out of pocket costs that make them too expensive to actually use and premium increases that make them too expensive to keep.

I’ve always been annoyed by this criticism because it doesn’t stand up to reality. That’s because the detractors ignore the cost sharing reduction (CSR) subsidies that sharply reduce deductibles and out-of-pocket payments for lower income individuals. More than half of individuals who buy coverage on the exchanges receive CSRs, so we are talking about a major part of the market.

As a new analysis by Avalere demonstrates, average deductibles for individuals at 100-150% of the federal poverty level (FPL) in silver plans are only $243 compared with $3703 for people who don’t qualify for CSRs. For maximum out of pocket costs, the figures are $978 and $6528 respectively.

1494937058_csr chart

As for premiums, those increases have been absorbed by the federal government through increased subsidies for those who qualify and are not a deterrent to purchasing or renewing a plan.

Dismantling the ACA and replacing it with the American Health Care Act (AHCA) will eliminate the CSRs. The AHCA tax credits are stingier and not targeted based on need or premium cost. The enhanced flexibility plans have to modify benefits won’t make insurance more affordable, especially for those who actually need treatment.

———-

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Can Congress agree on the Cadillac tax?

published date
February 16th, 2017 by
3665019700_871e103b4b_z
Cadillac taxi?

Health care is too costly in the US. One reason is that health insurance premiums are fully tax deductible for employers. This distorts the market, causing employers and employees to prefer devoting the next dollar of compensation to healthcare rather than wages. That’s fine in any given year but over time it’s helped drive up healthcare spending and hold down wages.

One of the many things the Affordable Care Act did right was to start to address this issue with the so-called Cadillac Tax, an excise tax on high cost employer plans. Like everything in the ACA it has been attacked and derided by the law’s opponents. But many Republican plans have equivalent measures, which would cap the deductibility of health insurance. Either one of these approaches would help by causing employers to work harder to hold down healthcare spending and by generating tax revenue that could be used for other health law goals or for general purposes. The end of tax deductibility only kicks in at a high threshold, which means the impact in the early years is limited and everyone has time to get used to the new rules. I’d like to see Congressional leaders be brave and embrace some form of cap as a bi-partisan consensus move.

Alas, the caps are opposed by an array of forces: employers don’t want a new tax, labor groups are worried that benefits will be eroded and out-of-pocket costs increased, and the healthcare industry worries about a squeeze on revenue.

Without strong leadership in Congress, it seems doubtful that new legislation will be passed. So maybe the best bet is to leave the Obama era Cadillac tax in place, imperfect as it may be.

By healthcare business consultant David E. Williams, president of Health Business Group.

 

Public option pops up again

published date
September 23rd, 2016 by
private-or-public-signpost-10067190
Where do we go from here?

The so-called “public option” is back on the table. According to Politico there’s a “feud” between liberal and moderate Democrats about the wisdom of such an approach. That’s an overstatement, and really it doesn’t even matter if they are fighting about it or not.

Health insurers have a problem, which is that it’s hard for them to prove that they add value. Does all their utilization management, network development, formulary administration and price negotiation improve cost, quality and patient experience enough to justify the extra administrative costs and hassles they impose on the system? It’s an open question, and one that health plans have a hard time answering convincingly.

Since the Affordable Care Act (ACA) passed, health plans haven’t really had to address this fundamental question. With all the new regulations, marketplaces, and mandates, customers and plans have been busy getting themselves into compliance and learning and testing out the new system. No one has really asked the question about whether we need plans or not.

ACA health insurance marketplaces in some parts of the country are seeing less competition than is ideal as some health plans give up. Aetna gave the feds the middle finger by announcing plans to exit exchanges in retaliation for the government’s opposition to the company’s mega merger plans. The exchanges are fixable but opponents in Congress prefer to let them die if possible rather than fix them. However, this passive aggressive approach to the exchanges could ultimately backfire if it means the government sponsors a “public” competitor to give people choice.

For some, opposition to the ACA is ideological. They don’t like federal mandates, or expanding access to birth control, or they just don’t like Obama. But opposition to the public option is more about business considerations than ideology. Apple wouldn’t be worried if the government started making smartphones, but health insurers are worried about whether they can do a better job than Uncle Sam.

And let’s face it, a government option brings us a big step closer to a single payer system under which insurance companies would essentially be out of business.

Health plans don’t have to worry too much today about single payer or even a public option. Even Senate Democrats can’t agree, so it’s unlikely a public option will make it through Congress. But give it another 10 to 15 years and we’ll see.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

——-

By healthcare business consultant David E. Williams, president of Health Business Group.

Surprise, surprise! Exchange customers are price sensitive

published date
August 18th, 2016 by

loser-winner-keys-10095115

Uh oh. Another big national health plan, Aetna has decided to pull back from the individual health insurance marketplaces (aka exchanges) deciding they can’t make money because customers are focusing on price, not brand name. The headlines give a sense of it:

Cost, Not Choice, Is Top Concern of Health Insurance CustomersNew York Times

Customers’ Laser-Like Focus on Plan Prices Is Causing Concerns in Health Insurance MarketKaiser Health News

The articles quote insurance executive and experts claiming that “price competition has turned out to be much more cutthroat than anyone expected” and that “people signing up for [broad network, big employer style coverage offered by the big name national health plans] are less healthy –and more expensive to treat– than anticipated.”

Hah!

As I have written before (Good riddance: United finally gives up on ACA marketplaces):

Health plans thinking of competing in the marketplaces should say this to themselves a few times before diving in: “Exchange business is price sensitive business. If we can’t compete on price we might as well stay home.”

The exchanges do have problems. For example, insurers are limited to charging older people 3x what they charge younger ones, whereas actuarially it should be more like 5x. The problems are eminently fixable, except that opponents of the law still want it to fail. As for Aetna, specifically, it seems they are retaliating against the feds after the government announced its opposition to Aetna’s merger plans.

Nonetheless, why would we measure the success of the exchanges by whether the big, fat brand name health insurers can make money? Exchanges allow customers to compare plans on an apples-to-apples basis and they are deciding that there’s no big reason to pay higher prices. Some health plans are thriving on the exchanges by negotiating hard with providers (Medicaid oriented plans like Centene and Molina) or by having local market knowledge and density (Blue Cross Blue Shield of Florida  –which has almost as many Obamacare customers in Florida as Aetna has in the whole country).

Here’s the real problem for health plans: they have largely failed to demonstrate that they add significant value. Aetna, United and their ilk don’t accomplish a lot compared with Joe’s health plan. And even when they do add value, they still add large administrative costs and inefficiencies to the system that may outweigh their benefits.

The Affordable Care Act has actually given health plans a new lease on life, by herding in new groups of individual customers and by imposing whole new sets of standards and rules. Health plans fear a so-called “public option” because it could reveal that commercial plans don’t bring much. And as unlikely as it seems now, it’s quite possible that the failure of commercial plans to demonstrate value could lead us eventually to a single-payer system.

Ideally, I’d rather not see single payer. If some of the plans were a little more ingenious and capable they could actually prosper in the exchange business, in ways that would boost their success in the commercial market as well. In particular, there are opportunities to better manage the way specialty care is delivered and paid for, by emulating the approaches used by the most efficient and innovative specialists. This would drive down the overall cost of insurance and improve care for patients.

Plans could also be more creative and resourceful in helping providers take risk or even full capitation.

Meanwhile, Aetna will struggle to grow. After all, the US is moving toward marketplaces and government coverage. Aetna, not Obamacare or the exchanges, may turn out to be the big loser here.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.