Tag: health insurers

Will Zika help or hurt health plans?

May 31st, 2016 by

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Health insurers are starting to think about the impact of the Zika virus, which may arrive in force in the US over the coming months. Actuaries are looking for analogous examples for their models, such as other mosquito born illnesses including dengue fever.

Some insurers aren’t too concerned, according to Healthcare Finance News. Others are looking at reinsurance opportunities and considering premium increases.

Most Zika infections cause only mild illness, so the costs of treatment will be modest or zero much of the time. The real impact is likely to come from the cost of lifelong care for babies born with microcephaly or other problems, which could be millions of dollars per case.

But does that mean Zika will hurt health plans financially? Not necessarily.

For commercial health plans, maternal and newborn care is one of the largest categories of expenses. If a Zika epidemic looms, I would expect women to stop having babies, at least for a while. After all, in El Salvador the government has suggested women not become pregnant for the next two years.

If that happens, insurers will enjoy a windfall from avoided expenses that will show up right away. Meanwhile, the costs of Zika babies will be spread over many years and no doubt much of the cost will be shifted to Medicaid one way or the other.

Zika is a huge threat and we should be doing much more about it as a society. But health plans may not suffer as much as people assume.

Image courtesy of duntaro at FreeDigitalPhotos.net

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

 

Do health plans have a future?

January 29th, 2015 by

Not to be cynical but in the insurance business the best way to make money is to discourage risky people from becoming policyholders and to exclude from coverage anything that a policyholder is likely to file a claim for.

In the real world, insurance regulations temper these strategies, but don’t eliminate them completely. Health insurers in particular now have to operate within a narrow corridor. Under the Affordable Care Act they can’t discriminate against people with pre-existing conditions and must offer a fairly standardized set of benefits. Their profitability is also capped by the minimum Medical Loss Ratio (MLR) rules.

Theoretically that still gives health plans the opportunity to compete on other facets, such as provider networks, quality, disease management, and customer service. Some of this competition is taking place and benefits the consumer.

However, it remains tempting for plans to try to avoid costly patients even though the rules would seem to preclude that.  A New England Journal of Medicine article (Using Drugs to Discriminate — Adverse Selection in the Insurance Marketplace) describes a common tactic: using the drug formulary to scare away pricey patients. For example, many health plans on the ObamaCare exchanges make drugs for HIV expensive by putting all of them –including generics– in the highest tier.

This type of strategy, if not stopped, will undermine the Affordable Care Act’s goals. And therefore the authors propose some regulatory fixes to further micromanage the insurance market. But insurers are pretty clever and can be expected to look for other, similar opportunities. And such creative approaches are not new. A couple decades ago, when Medicare managed care plans were first introduced, I knew of a company that offered great benefits but placed its enrollment center on the 3rd floor of a non-elevator building. That way only the fit could make it up the stairs to sign up.

At some point the insurance market becomes so regulated and micromanaged that we have to ask the question: are the benefits of competition worth all the hassle and administrative costs? The jury is out on that one.

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

eVisits: the 30 year march?

July 16th, 2014 by
This guy moves faster than eVisit adoption
This fella moves faster than eVisit adoption

When I first started working in healthcare I was told that innovations can take a long, long time to be adopted. Now I’m old enough to have experienced it for myself.

The big news in the Seattle Times this week?

“To cut medical costs and diagnose minor ailments, WellPoint and Aetna, among other health insurers, are letting millions of patients get seen online first.”

“In a major expansion of telemedicine, WellPoint this month started offering 4 million patients the ability to have e-visits with doctors, while Aetna says it will boost online access to 8 million people next year from 3 million now.”

This has been a long time coming, and we’re still at the early stages of adoption, with plenty of naysayers remaining. I first worked on eVisits (or webVisits) in 2001, when Healinx (now RelayHealth) commercialized them. Researchers at Stanford and UC Berkeley studied the webVisit and concluded that their use cut total medical costs while improving patient and physician satisfaction. Here’s a press release from January 2003 on the study (Final Results: webVisit(SM) Study Finds RelayHealth Reduces Cost of Care While Satisfying Doctors and Patients).

Here’s what I said about it five years ago (eVisits continue their slow, steady rise) –before the iPad, Meaningful Use, or the Affordable Care Act:

It’s interesting to be in late 2009 and see e-visits described as a “disruptive innovation” that “the medical establishment is fighting.”  It’s a sensible concept, fairly straightforward to implement, efficient, and effective for certain situations. Yet growth has been slow. Part of the issue is that it’s health care we’re talking about, where innovation tends to be retarded when it involves changing physician practices. Another, related problem is that there’s no great financial incentive for the physician or patient to make a change. Health plans that do cover e-visits often charge the same co-pay for patients as for in-person visits, even though they often reimburse physicians at a lower rate.

My guess is that over the next decade we’ll see e-visits become common. Why?

  1. Adoption will follow the typical S-shaped curve, and we’ll soon get to the steep climb almost regardless of other changes
  2. More patients and physicians will simply expect to communicate online, as they do in every other area of their personal and professional lives
  3. Payment systems will evolve to support e-visits, rather than penalize them
  4. Adoption of electronic systems in physician offices in general will enable e-visits
  5. Supporting technologies will evolve and emerge. These include remote monitoring, higher bandwidth, personal health records, and mobile applications

Enjoy the next decade and don’t expect things to change too quickly.

Halfway into the decade these five factors are still playing out. Having said that I could probably have just reposted the article and changed the date and no one would have noticed.

Will things speed up dramatically over the next five years? In 2019 will we still be reading articles about this “novel” approach? I hope not but fear that we may.

photo credit: Nasitra via photopin cc

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

 

 

ObamaCare signups: More than just the exchange numbers

April 17th, 2014 by
All that hyperbole for nothing!
All that hyperbole for nothing!

President Obama just announced that 8 million people signed up for coverage on federal and state health insurance exchanges during the initial open enrollment period for the Affordable Care Act, aka ObamaCare. That’s higher than originally projected, and much higher than how things looked when the glitch-filled healthcare.gov sputtered out of the gate. Cynics will pick at that accomplishment, claiming that it overstates the law’s impact by counting people who already had insurance, and those who don’t end up paying their premiums.

ObamaCare is a complex law (remember the big excitement about how many pages it takes to spell out) and it’s much more than just the exchange websites.

Focusing just on the 8 million who have signed up through the exchanges actually seriously underestimates ObamaCare’s impact on the number of people with insurance. Consider:

  • Close to 4 million people have signed up for Medicaid since October. It would have been more if opponents hadn’t blocked Medicaid expansion in so many states
  • Millions have signed up for private health insurance outside of exchanges: through brokers or directly with the health insurers
  • Many formerly uninsured young adults are insured through their parents up to age 26 instead of being dropped

There’s also another way to look at the folks who already had insurance who have signed up on the exchange. ObamaCare opponents have made a big deal out of people having their plans canceled because those plans didn’t meet the new law’s requirements. We’re suddenly told how everyone loves their existing plan –something I never heard touted prior to ObamaCare. Considering the hassle involved in getting a policy through an exchange, one could reasonably assume that people are getting better, cheaper coverage than what they had before. Even if that doesn’t increase the number of insured people, it improves the overall level of insurance within the population.

 

photo credit: Fresh Conservative via photopin cc

By healthcare consultant David E. Williams of the Health Business Group