IN THIS ISSUE:
? EBRI Releases Annual Analysis of Uninsured
? Latest Health Expenditure Analysis in Health Affairs
? Changes in Retiree Health Benefits in Health Affairs
? Consumer Health Plans Driven by Information
? Nurse Staffing Act Closes California Hospital
? Risk-Based Rating Lowers Premiums in Colorado
? Switching to Consumer Driven Health in Texas
? Hawaii?s Rate Regulations Raises Administrative Costs
There is lots of new research coming out right now. Paul Fronstin?s (EBRI) latest analysis of the uninsured has been released. This is based on the Census Bureau?s March, 2003 Current Population Survey (CPS) and is the source of the new 43.3 million uninsured number. There is plenty that is wrong with the CPS count, but it remains the best thing available for year-to-year comparisons. EBRI?s study is always a landmark for the breakdown it provides by state, source of coverage and other demographics such as age and income. On a national basis, 17.3% of the non-elderly population was uninsured in 2002 (versus 16.5% in 2001), 11.9% are on Medicaid (11.4% in 2001), 64.2% have employer-sponsored coverage (65.6% in 2001) and 6.7% buy their own (6.6% in 2001). National averages don?t speak to the considerable volatility between the states. For instance, California?s rate of uninsured actually dropped from 21.4% in 2001 to 20.1% in 2002, while Oregon jumped from 14.2% to 16.5%. Iowa jumped from 8.7% to 10.9%, Vermont went from 10.8% to 12.2%. Vermont is interesting since Gov. Dean has touted his health activities so strongly. It turns out that 13 states have a lower rate of uninsured than Vermont, though only the District of Columbia, Tennessee, and Mississippi have higher rates of people on Medicaid.
SOURCE: EBRI?s Issue Briefs are only available for purchase, but these annual counts of the uninsured are indispensable for anyone who wants to comment on health policy. You can order an electronic version of this publication (EBRI Issue Brief #264) for $7.50 by going to the web site at http://www.ebri.org
Latest Health Expenditure Analysis in Health Affairs
“Health Affairs” has published Katharine Levit?s (and others from CMS) latest count of national health spending. She finds that the United States spent $1.6 trillion on health care in 2002, up 9.3% from the previous year. Most interesting to me is that, despite the growing emphasis on consumer-driven health care and employee cost-sharing, the amount paid directly by consumers continues to drop as a portion of the whole. It was about 15% in 2000, dropping to 14% in 2002. The authors say, ?Continued acceleration of health spending ? without a similar increase in economic growth ? threatens the affordability and generosity of sponsored health care benefits.?
SOURCE: The “Health Affairs” article may be found at: content.healthaffairs.org
Changes in Retiree Health Benefits in Health Affairs
“Health Affairs” also has published a new study by Frank B. McArdle of Hewitt Associates, Patricia Neuman of the Kaiser Family Foundation and others from both organizations on ?Large Firms? Retiree Health Benefits Before Medicare Reform.? The study points out that, ?Since 1988 there has been a well-documented decline in the share of employers offering retiree health benefits, dropping from 66 percent to 38 percent in 2003.? The team surveyed 408 employers with 1,000 or more workers, 97 of them had over 20,0000 employees. The study finds total retiree costs rose 13.7% between 2002 and 2003 and ?average retiree contributions to premiums for employees age sixty-five and older retiring in 2003 rose 18 percent.? Almost half of them (46%) have placed caps on retiree health benefits, largely in response to the FASB 106 rules, 20% said they are likely to terminate all benefits for future retirees and 26% are likely to require retirees to pay 100% of the cost of benefits.
And much more information about the study is available on the Kaiser Family Foundation web site at:
Consumer Health Plans Driven by Information
Kevin Haugh of ProAct Technologies writes a thoughtful article on consumer driven health in ?Business & Health.? He says, ?All the stars are in alignment to make a CDH program work. There is pent-up consumer demand for flexibility and choice, and mature technology tools exist to make it easy for consumers to personalize plans that meet their health care and financial needs.? But he sees an obstacle in ?traditional legacy systems and technologies? that hold a wealth of currently inaccessible information. He cites Humana?s ?SmartSuite? platform as a model for making the transition to engage and educate consumers about balancing health needs with costs to maximize value.
Nurse Staffing Act Closes California Hospital
The “Sacramento Business Journal” reports that a Los Angeles County hospital is closing its acute care services due to a mandatory nurse-staffing requirement that went into effect on January 1, 2004. The 283-bed Santa Teresita Hospital in Duarte says it cannot comply with a regulation that requires the staffing ratio to be met ?at all times? because that would mean hiring extra nurses to fill-in for nurses who are on breaks. The California Hospital Association says, ?This is an impossible standard to meet ? virtually no hospital in California is able to comply with the ?at all times? requirement 100 percent of the time.? It would prefer the ratio to apply to the number of staff at the beginning and end of each shift.
Risk-Based Rating Lowers Premiums in Colorado
In the “Denver Business Journal,” Amy Fletcher reports that ?The cost of health care remained a top concern for employers in 2003 ….? She says health premiums rose more than 20% for 60% of Colorado?s small businesses in 2003, the fifth year in a row for increases of this magnitude. One consequence is a move away from HMOs, with HMO enrollment down 22% in 18 months, or 338,000 people. She adds, ?In recent years, employers have favored giving workers more choice, even opting for new, so-called consumer-driven plans?.? Colorado employers are also looking for legislative relief, including a new law that allows risk-based rating. As a consequence, Anthem announced a 9% decrease in PPO premiums and a 5% decrease in HMO rates. The state also eliminated no-fault auto coverage, which could raise health insurance premiums while lowering auto rates.
Switching to Consumer Driven Health In Texas
The “Dallas Business Journal” also reports on rising costs for local employers. Businesses are looking at premium increases of 13% – 14%, according to staff writer Stephanie Patrick. Eric Bassett, a local Mercer consultant says, ?Over the last few years, companies have insulated their employees from the true costs of health care, but now they are trying to get the consumer back into making their own health care decisions.? Aetna spokesman Carl King reports that more employers are raising deductibles from $500 to $1,000 and raising coinsurance even for in-network services. The article cites Baylor Health Care System and CompuCom Systems Inc. as two examples of local employers who have switched to consumer driven health care plans, though Mr. King predicts such plans won?t be ?mainstream” until 2005 or 2006.
Hawaii?s Rate Regulations Raises Administrative Costs
Some states think the answer to rate increases is regulation. Hawaii is undergoing its first round of rate approvals since a new law requiring prior approval went into effect last year. The market is dominated by two carriers, Hawaii Medical Service Association (HMSA) and Kaiser, which are requesting increases of 9.7% and 14.5% respectively for limited blocks of business. The primary effect seems to be delay of the increases while the insurance department deliberates. HMSA CFO Steve Van Ribbink says, ?Regulation to me has nothing to do with the underlying health-care costs other than the fact that it does add some administrative burden.? But a smaller competitor sees it as a much greater obstacle, Arnie Baptiste Jr., president of Health Management Alliance Association, says the process will add to rates due to the administrative burden ? ?The process is horrible. I have full-time staff people on this and I have attorneys working on this. We?re spending an inordinate amount of money.?
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