Health reform stakeholders should be careful what they wish for

Andrew Cannon photo
Andrew Cannon

Two thoughts as the 2012 legislative session nears: What is worth your time and attention? And, be careful what you wish for.

Both are vital reminders for all of us in our increasingly busy world. But as Iowa lawmakers again consider proposals for the competitive health insurance marketplace, or health insurance exchange, these reminders are relevant to health reform stakeholders.

Last legislative session, way back before the Fiscal Year 2012 budget gridlock, or the property tax debate, several lawmakers issued proposals for the creation of an exchange.

One proposal (which won the support of the health underwriters’  and insurance brokers’ lobby and no one else) seemed far more interested in protecting the insurance brokers than it was in creating an exchange that helps Iowans get affordable, quality coverage. Under that proposal, every purchase in the exchange would have been mediated by a broker, who, by law, would have received at 5 percent commission on each insurance sale in the exchange.

It’s worth remembering how the exchange is intended: Individuals, families, and small businesses will be able to quickly and easily compare health insurance plans — based on price, value, benefits and other relevant factors — and premiums will be based strictly on age, geographic area, and smoking status. Pre-existing conditions will be a thing of the past.

The exchange should permit small businesses to leverage some of the bargaining power of the larger employers. Many small businesses that offer employees coverage will be eligible for tax credits.

According to projections from the nonpartisan Congressional Budget Office, however, most exchange users will be individuals and families. Low- and moderate-income (up to 400 percent of the federal poverty level, or about $89,000 for a family of four) individuals and families who do not receive insurance through an employer will be eligible to receive sliding-scale premium assistance in the form of tax credits. Small businesses are likely to comprise a much smaller slice of the exchange-user pie.

This brings us back to the question this post opened with, what is worth your time and attention?

Do brokers really want to be involved in every purchase of health insurance in the exchange? Remember that most of these exchange customers won’t be HR folks, familiar with the ins and outs of insurance terminology. Most won’t be the proprietors of small businesses that have dealt with brokers in the past and know what sort of benefit and cost-sharing packages their employees have or haven’t liked.

Most exchange users are going to be members of ultra-small groups — families. Many will have moderate levels of income ($37,000 a year to about $89,000 a year for a family of four). For many, the terminology of health insurance terminology will be a new language. Deciding what benefit package they want or need will be a calculus as difficult as, well, calculus.

Is a bill like last session’s SF391 really the best use of a broker’s time and attention? I’m not a broker, so I’m in no position to say.

But it seems that rather than spending four hours describing insurance terms, benefits, and options to a family of four that has never purchased health insurance and earns $35,000 a year is a far less effective use of time than spending an hour on the phone with a seasoned HR rep from a business with 30, or even just 10 employees. And let’s not forget that many exchange users will end up not even purchasing insurance, but become enrolled in the newly expanded Medicaid.

Regardless of health reform implementation, there will be continued demand for the services of insurance brokers. They provide a valuable service, and are trusted by many small businesses and entrepreneurs. That won’t change.

But if brokers push for a repeat of last year’s offerings, they may just give themselves business that they don’t really want. Be careful what you wish (and lobby) for.

Posted by Andrew Cannon, Research Associate

Health premiums rise again; is there an end in sight?

Stagnant wages give health insurance premium increases more sting — and employers are requiring employees to contribute more toward premiums as they keep rising.

Andrew Cannon photo
Andrew Cannon

Anyone hoping for a reprieve from rising health insurance costs — everyone, in other words — won’t like the results of the Kaiser Family Foundation’s annual “Employer Health Benefits Survey.”

Heck, even those of us who were just hoping for premium growth near the inflation rate are disappointed.

The survey, in which more than 2,000 businesses are interviewed about the health insurance plans they offer (or in some cases, do not offer) to employees, revealed that premiums for singles increased by 8 percent while family premiums increased by 9 percent in 2011. The average premium for single coverage passed $5,400, while family coverage costs averaged $15,000.

Fifteen-thousand dollars. That’s more than the federal poverty level for a family of two. It is more, as Kaiser Family Foundation President and CEO Drew Altman noted, than the cost of a small car.

Stagnant wages give this spike even more sting. Increases in income are not offsetting these increases, and employers are requiring their employees to contribute more and more toward premiums as they continue to rise.

So, is there any end in sight? How long will premiums keep rising, and how high can they go?

It’s hard to say. Health care costs are driven by a number of factors and, as the Kaiser report illustrates, remain difficult to predict.

The health reform law, the Affordable Care Act, offers some hope for relief: Small businesses that offer health insurance to employees can receive tax credits, low- and middle-income households that do not receive insurance through an employer will be eligible for premium assistance, and the law features a number of pilot programs aimed at reducing costs.

Like any policy, however, it will require constant monitoring and occasional tweaking to meet its goals: making health care affordable and accessible for all.

Posted by Andrew Cannon, Research Associate

Census data suggests health reform is working

The new Census data offer promise that health reform may be working.

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Andrew Cannon

Despite disappointing increases in poverty and decreases in median income, new data released by the Census Bureau carried a glimmer of good news.

While the ranks of those lacking health insurance increased in almost every other demographic group, even seniors eligible for Medicare — the number and rate of uninsured young adults (aged 19-25) actually decreased (see Table 8 of this Census Report).

And even more startling: The decrease in the uninsured rate of uninsurance for young adults (1.6 percentage points) was larger than the percentage-point increases in uninsured rates among other adult cohorts.

What was the driving force in reducing uninsured rates among young adults?

Census data provide only a snapshot, and do not offer a definitive explanation.

However, there was one large policy change at the beginning of 2010 that might just help explain this change.

While young adults make up a small share of the overall population, they typically comprise a disproportionate share of the uninsured population. Health reform  — signed into law March 2010, sought to change that. The health reform law, or the Affordable Care Act, contained a provision allowing young adults through age 25 to remain on a parent’s health insurance plan if they did not receive an insurance offer through their employment.

Caution is warranted in ascribing a cause to the change in the uninsured rate among young adults. Nevertheless, reports seem to back up the notion that the change is at least partially due to health reform’s policy changes.

In other words, the new data offer promise that health reform may be working.

By Andrew Cannon, Research Associate

Wellmark’s ‘uncertainty’ should not affect Iowa’s exchange

In a strong, consumer-oriented exchange, small businesses, individuals and families will want to participate. Why would Wellmark not want a share of that playing field?

Andrew Cannon photo
Andrew Cannon

Any business worth its salt can find a way to make a buck in a market with sufficient consumer demand.

Wellmark’s reported uncertainty in its ability to “break even” in the health reform-created insurance marketplace would seem puzzling for a company with 70 percent of the Iowa market.

According to an Aug. 31 Des Moines Register report (“Wellmark undecided on insurance exchange,” by Tony Leys), Iowa’s largest insurer is unsure it will participate in the health insurance marketplace created by the health reform law, citing concerns about its ability to “break even.”

This marketplace could be the place where as many as 156,000 Iowans* seek to purchase health insurance. Those with household income below 400 percent of the federal poverty line (about $89,000 for a family of four) will receive tax credits from the federal government to help cover the premium cost. And small businesses, which will also be eligible to purchase insurance in the exchange, will receive tax credits if they cover at least half of their employees’ premiums.

The stars are aligned to create consumer demand in the new insurance marketplace. Wellmark’s concern about breaking even probably should not be lawmakers’ first concern. The point of the exchange is to enhance the marketplace, not keep it restricted.

Rather, as we have repeatedly stressed, policy makers need to be focused on how to assure that lawmakers create an Iowa exchange that is fair and consumer-oriented.

Two groups heretofore are woefully underserved by the current health insurance market — individuals and families who don’t receive health insurance benefits at work, and Iowa’s small businesses. The exchange’s structure and governance should assure that Iowa individuals, families and small businesses can find affordable health insurance options.

In a strong, consumer-oriented exchange, small businesses, individuals and families will want to participate. Why would Wellmark not want a share of that playing field?

*Note: Data comes from the 2009 American Communities Survey (ACS), analyzed online using the University of Minnesota’s Integrated Public Use Microdata Series (IPUMS-USA). The ACS is conducted on an ongoing basis by the Census Bureau. Those 156,000 Iowans have household income in excess of 133 percent of the federal poverty level – the cut off point for Medicaid eligibility under health reform.

Posted by Andrew Cannon, Research Associate

Report confirms need: Put consumers above insurance biz interests

The report found rural Iowans rural were more likely to skip routine doctor visits, leave prescriptions unfilled or switch to higher-deductible health plans to save on medical costs. Exchanges under health reform can better meet their needs.

We’ve all heard of a neighbor or friend’s difficulty finding or keeping quality, affordable health insurance. A recent study confirms what we all know, and shows that it is an even bigger problem than we may have realized.

Andrew Cannon photo
Andrew Cannon

The report, authored collaboratively by  Healthier Workforce Center for Excellence (HWCE) at the University of Iowa College of Public Health and two private firms, David P. Lind & Associates and the State Public Policy Group — found that while all Iowans are feeling the pinch of growing insurance costs, rural Iowans were more likely to skip routine visits to the doctor, not fill a prescription or cut back on their dosage, or switch to higher-deductible health plans or those with fewer benefits to save on medical costs.

The report notes that “unless substantial changes are made in the way Iowans receive health insurance and health care, their financial future is untenable — especially for small employers and those living and working in rural counties.”

Iowa’s lawmakers have the opportunity to make those substantial changes, as they create the structure and rules to govern new health insurance marketplaces (also known as an exchange; see our one-page backgrounder for more information) created by the new health reform law.

The Affordable Care Act allows each state to create and run a health insurance marketplace. This will stop insurers from denying coverage and varying premium price on anything other than age and smoking status. Additionally, each plan sold in the exchange will offer a complete list of benefits mandated by the law. Consumers earning below 400 percent of the federal poverty rate ($89,400 for a family of four in 2011) will receive sliding scale premium assistance through advanced federal tax credits. Small businesses, the self-employed and families who do not receive insurance through employment will be immediately eligible in 2014 to purchase insurance through these marketplaces.

However, for consumers to fully benefit from the health law, state policymakers must act before January 1, 2013, (though the marketplaces will not be operational until 2014) and do so in the interest of consumers. The most recent legislative session saw two exchange or marketplace proposals, both of which ultimately failed; one contained strong consumer protections, while the other sacrificed the needs of Iowa health consumers to the insurance broker industry. That leaves Iowa legislators with one more complete legislative session to create a strong marketplace that will benefit Iowa consumers.

All Iowans, and especially owners and employees of small businesses and those in rural areas, need Iowa’s lawmakers to put health insurance needs above the interests of the insurance companies and insurance brokers.

Health reform turns 1

Despite heated rhetoric, health reform will help thousands in Iowa receive better and more affordable coverage, and better protect their rights as patients.

Andrew Cannon photo
Andrew Cannon

A year after it was signed into law, confusion about the health reform law remains high. With the heated rhetoric and widespread misinformation about the law, citizens can hardly be blamed for not yet understanding the Affordable Care Act.

Over the course of this week, the Iowa Fiscal Partnership — a joint project of the Iowa Policy Project and the Child and Family Policy Center — has tried to combat some of that confusion and outright misinformation. In a series of five “issue snapshots,” we have succinctly explained how certain groups of Iowans will be impacted by the health law.

On Monday, our brief snapshot described some features of the law designed to help small businesses, which provide insurance to employees in far lower numbers than larger firms. Small businesses may qualify for tax credits if the provide coverage to employees now, and will have access to a new health insurance marketplace beginning in 2014.

Our Tuesday release focused on how senior citizens will be impacted by the new law. Gaps in Medicare prescription drug coverage will gradually be phased out and Medicare enrollees need no longer worry about co-pays for approved preventive treatments.

On the actual anniversary of health reform becoming the law of the land, our Wednesday snapshot explored some of the consumer protections featured in the law. Patients’ need no longer worry about bumping against a benefits ceiling; lifetime benefit limits are eliminated and annual benefits limits will be phased out. The law enshrines the right of patients to choose their own provider; that choice may not be dictated by insurance carriers or the government.

Our Thursday snapshot focused on the law’s impact on Iowa women. Many women are only one family tragedy away from losing their coverage. Just 28 percent of Iowa women have their health coverage through their own job.  In 2014, Iowa women, along with all Iowans, will have a host of new health coverage options. Medicaid eligibility will be raised and lower- and middle-income families will be eligible for premium assistance from the government to purchase insurance coverage in the new state-based marketplaces.

Today, our snapshot details some of the law’s benefits for Iowa’s youth — from infants up to 25-year old young adults. The 51,300 Iowa children with a pre-existing condition will never be denied coverage for that reason; insurers are prohibited from denying children health coverage due to pre-existing conditions. Young adults through age 25 may also remain on their parents’ insurance plans, regardless of whether they are in school or just starting a career.

In spite of some of the heated rhetoric that continues against health reform, it will help thousands of Iowans receive better and more affordable health coverage, as well as protecting their rights as patients.

Posted by Andrew Cannon, Research Associate

Public employees pay for, earn insurance

Public employees pay for whatever health-insurance arrangement they have in the form of lower take-home pay.

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Andrew Cannon

The news media need to call out some folks on their claims about public workers’ pay and benefits.

Health insurance is part of compensation for hours worked, skills used and services rendered on the behalf of the employer — in the context of current Iowa political discussion, on behalf of taxpayers who benefit from those hours, skills and services.

Thus, it’s puzzling to see references such as these:

•   A Des Moines Register editorial today cited “growing resentment — envy, perhaps? — among private-sector workers” about some public-sector workers’ benefits, including “free health insurance in some cases.”

•   A KCCI-TV report on the Des Moines Business Record Daily e-newsletter noted one lawmaker opened debate by “calling for public employees to begin paying something for their taxpayer-funded health care plans.” This lawmaker further claimed “it’s not fair for Iowans to foot the bill for the 84 percent of state workers who pay nothing for their benefits.”

I’ll bet no one quoted in such reports can produce one public employee who is receiving free health insurance. Public employees pay for whatever health-insurance arrangement they have in the form of lower take-home pay. Plus, in many cases, there are employee contributions to health insurance, particularly for family coverage, and there are co-pays and deductibles. So let’s take a step back and see what the facts are before spouting off.

As Iowa Policy Project research has shown, public workers’ pay is generally lower than for workers in the private sector with comparable education or skill levels. Where they do make up some of that gap is in negotiated health-insurance benefits. And even then, the total “deal” is likely to be lower than it is for a similar worker in the private sector.

No decision on the current collective bargaining legislation should be made under the mistaken notion that public workers are getting something for free. They have negotiated for it, and they are working for it. And if they’re not paid there, they have a right to negotiate for it in some other way.

Posted by Andrew Cannon, Research Associate