Category Archives: Policy and politics

Health Business TV: Medical inflation, health kiosks, Home Care Delivered, hospital clowns

In this third edition of Health Business TV, I discuss Home Care Delivered (whose board I’ve just joined), medical inflation and my appearance on Al Jazeera, health kiosks, Hearts & Noses Hospital Clown Troupe and an upcoming webinar about the small group health insurance market.

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If you’re interested in the AIS webinar on July 9, called Insurer Strategies for the Turbulent Small Group Market you can click here to register. You can use the code I mention during the show to get a $75 discount.

There will be no episode next week, since it’s the Fourth of July.

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

Games health plans play: Understanding 2015 Obamacare premiums

Get your health plan here!

Get your health plan here!

Health plans are starting to announce the rates they’ll be charging on health insurance marketplaces (aka exchanges) for 2015, the second go-round for Obamacare. For students of business strategy, healthcare policy and game theory, the results are fascinating to watch.

According to Avalere Health, average monthly premiums will rise 8 percent across the nine states with rate filings so far. Average premiums in Oregon will drop, and in other states they’ll increase between 2.5 and 16 percent. Meanwhile, the variation in price between the lowest and highest priced plan in each states will actually be bigger in 2015 than this year. The Wall Street Journal pursues a different angle, focusing on the 8.5 to 22.8 percent increases proposed by the largest health insurer in each state.

Here’s my take on what’s going on:

  • Health plans went into the 2014 market pretty aggressively. They didn’t want to miss out on the biggest increase in newly insured patients ever, so they dived in even though they were unsure of how profitable the business would be
  • As expected –and consistent with the intent of Obamacare– customers were able to compare plans on an apples-to-apples basis. Most shoppers paid close attention to price. As a result the health plans with the lowest or second lowest price grabbed the biggest market share in all 10 states the Journal analyzed. That helps explain why the Journal’s 8.5 to 22.8 percent price increase is so much bigger than Avalere’s 8 percent figure. Plans with the lowest prices are increasing rates for two reasons: first, they may have underpriced their products in the first place and are not meeting profitability targets. Second, they hope that consumers won’t bother to switch –since it will be easier just to keep what they have. The amount of switching will depend on how easy the exchanges make life in year two –something that is not known yet. Let’s just say that the big winners from last year are hoping for some friction that makes it easier just to renew
  • In an efficient, commoditized market, one would expect prices for similar products to converge rather than widen, which is why it’s so interesting that price variations are actually increasing for 2015. But we can understand this outcome if we consider the market dynamics. Health plans that over-priced last year did not gain as many new customers as they had planned. So this year they’re being especially aggressive, because they want to gain share and feel the need to overcome the inertia of other plans’ customers, who may not feel like spending time shopping for health insurance again or may worry about disrupting their relationships with providers. In addition, new plans are entering the exchanges, and they realize they need to be aggressive to win customers

One thing that neither Avalere nor the Journal emphasized is that while average premiums are rising and top players are raising their rates more, it should be possible for most consumers to obtain lower rates than they paid in 2014 as long as they are willing to change plans.

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

Health Wonk Review: World Cup fever

Workers’ Comp Insider hosts the latest edition of the Health Wonk Review blog carnival, where you’ll find a roundup of all the latest and greatest healthcare policy posts. This one is the “Undeterred by World Cup Fever” issue.

 

Free ebook: Candidates for Governor of Massachusetts speak on healthcare

Earlier this year I interviewed all nine candidates for Governor of Massachusetts about healthcare policy. The Democrats are holding their convention this weekend and I’m publishing this ebook as a resource for those who are participating and anyone else who wants to educate themselves on where the candidates stand on this important topic.

Click on the link below to download your PDF copy. (No registration is required.)

Candidates for MA Governor speak on Healthcare June 2014

Candidate ebook cover 6-14

Charlie Baker (R), candidate for Governor of Massachusetts

Charlie Baker (R), candidate for Governor of Massachusetts

Martha Coakley (D), Attorney General and candidate for Governor

Martha Coakley (D), Attorney General and candidate for Governor

Evan Falchuk (I), candidate for Governor of Massachusetts

Evan Falchuk (I), candidate for Governor of Massachusetts

Mark Fisher (R), candidate for Governor of Massachusetts

Mark Fisher (R), candidate for Governor of Massachusetts

Jeff McCormick (I), candidate for Governor of Massachusetts

Jeff McCormick (I), candidate for Governor of Massachusetts

Joe Avellone (D), candidate for Governor

Joe Avellone (D), candidate for Governor

Steve Grossman (D), State Treasurer and candidate for Governor

Steve Grossman (D), State Treasurer and candidate for Governor

Juliette Kayyem (D), candidate for Governor

Juliette Kayyem (D), candidate for Governor

Don Berwick (D), candidate for Governor of Massachusetts

Don Berwick (D), candidate for Governor of Massachusetts

The ACA and part-time employment

Is Lady Liberty coming to kill your job?

Is Lady Liberty coming to kill your job?

The Affordable Care Act requires employers to provide coverage for full-time employees but not part-timers. That sounds like a straightforward and reasonable provision, but as usual the devil is in the details. ACA opponents have taken up the argument that this provision is a “job killer” because it will cause employers to limit employees’ hours, thereby pushing people into part-time roles to deprive them of benefits. That view strikes me as simplistic, since in my experience companies are in business to make money, not to hammer their employees.

I had an opportunity recently to chat with some HR heads from big employers –retailers and restaurants—that employee many part timers as well as full timers. I asked them for their take on the controversy. Unsurprisingly they provided a pragmatic, non-political view of the situation.

Here are the main takeaways:

  • Prior to the ACA, each company had its own definition of full and part time. As a rule they knew who they intended to pay benefits to and who not
  • The ACA is causing them to track hours of part-timers closely, with the goal of not inadvertently having to pay benefits to someone they don’t consider full time
  • The result is that work hours are being spread around more evenly among part-time workers whereas in the past some part-time workers got a lot of hours while others had fewer
  • From the standpoint of corporate HR, this is a good result, because part-timers who are assigned more consistent hours are more likely to stay. This increase in retention is good for productivity and profits. In this case the ACA is reinforcing an HR best practice that companies have started to implement in any case
  • Companies have not been trying to take away benefits from those who had them prior to ACA implementation

It’s arguable that the losers here are the few part-time employees who used to get lots of hours because their managers preferred them. Some of those are likely to make the jump to full time. Others may seek opportunities elsewhere.

These discussions are about the short term. Longer term it’s possible that employers will take the ACA into account when designing the structure of their workforce. Still, it’s just one factor among many.

photo credit: dullhunk via photopin cc

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

Castlight Enterprise Healthcare Summit: Magic and the President

Castlight Health is expanding beyond its origins in cost transparency, today announcing the Castlight Enterprise Cloud, which includes four “solution centers” — that encompass analytics, incentives, and personalization. The company made the announcement in a grand way, with an Enterprise Healthcare Summit featuring President Bill Clinton, Earvin “Magic” Johnson, Steve Forbes, Toby Cosgrove (Cleveland Clinic) and Castlight executives Giovanni Colella and Naomi Allen.

I had the opportunity to attend, learn more about the company’s latest, and mix and mingle with a high-powered crowd. Here’s my scrapbook:

Magic Johnson reflected on his basketball and business career, while dropping in a few words about price transparency in healthcare

Magic Johnson reflected on his basketball and business career, while dropping in a few words about price transparency in healthcare

Magic Johnson gave President  Clinton a rousing introduction

Magic Johnson gave President Clinton a rousing introduction

I expected Clinton to give a stump speech, but instead he personalized the speech to focus specifically on price transparency and Castlight's role

I expected Clinton to give a stump speech, but instead he personalized the speech to focus specifically on price transparency and Castlight’s role

CEO Giovanni Colella asked Clinton some follow-up questions, and the prez had plenty to say in reply

CEO Giovanni Colella asked Clinton some follow-up questions, and the prez had plenty to say in reply

Once Giovanni was done with the President he found some time for me

Once Giovanni was done with the President he found some time for me

The Cleveland Clinic's CEO Toby Cosgrove took part in a panel discussion. His fellow panelists were a little surprised when he called for provider monopolies

The Cleveland Clinic’s CEO Toby Cosgrove took part in a panel discussion. His fellow panelists were a little surprised when he called for provider monopolies

Steve Forbes never got to be president but he did get to speak in the same conference as one

Steve Forbes never got to be president but he did get to speak in the same conference as one

Castlight's Naomi Allen laid out the details of the new Castlight offerings

Castlight’s Naomi Allen laid out the details of the new Castlight offerings

American Social Club played some great crowd pleasers

American Social Club played some great crowd pleasers

82 Mercer might never be the same after Castlight's conference wraps

82 Mercer might never be the same after Castlight’s conference wraps

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

Why the individual mandate is important

Be careful

Be careful

As a reasonably young and healthy person, freelance social worker Tammy Boudreaux wasn’t a big believer in health insurance. But then she hurt her finger. She paid out of pocket for emergency room care, but then when the finger didn’t get better she realized she’d have to pay a heck of a lot more for additional medical treatment and rehab.

Thanks to Obamacare she was able to get reasonably priced health insurance even though she had a pre-existing condition –in her case a finger that was certain to need surgery and therapy. A week after signing up for an Obamacare plan on the exchange she had surgery followed by rehab and other services.

I’m glad Tammy was able to get insurance and that she’s now a proponent of Obamacare. But let’s face it, Blue Cross isn’t going to do so well if everyone is like Tammy, only signing up once they need services. Blue Cross lost money on Tammy right away. If they’re lucky she’ll be profitable a few years down the road if she sticks with Blue Cross and gets and stays healthy.

For insurance to work, there needs to be a broad pool of customers who cost very little to make up for the few who cost a lot. That’s the purpose of the individual mandate, and it’s a good reason for it.

You can’t wait to buy fire insurance until you smell smoke and you can’t get life insurance after you’ve been diagnosed with a terminal illness. As a result people sometimes have losses for which they can’t make a claim. But health insurance is different. As a society we aren’t –and shouldn’t– be willing to tell people “tough luck” if they didn’t buy health insurance. But it’s not fair to health insurers to make them take all sick people who are sure losses without giving them the benefit of more customers who are healthy.

Republicans have been very slow to lay out the “replace” part of “repeal and replace.” One reason is that while it’s easy to get people riled up about the individual mandate, it’s hard to propose a fiscally responsible alternative without shutting people out of the system. The Republican plan of 2014 calls for insurers to accept customers with pre-existing conditions who have maintained “continuous coverage.” In other words, if someone acts like there’s an individual mandate by buying insurance before they need it, they can continue coverage once they get sick. If not they’re shut out. Doesn’t sound like much of an improvement, does it?

 

photo credit: watchingfrogsboil via photopin cc

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

 

 

Are we picking on VA hospitals too much?

How long do you think we'll have to wait?

How long do you think we’ll have to wait?

Ugly stories about waiting lists and poor care in VA facilities are coming out in the press. The VA’s head, Eric Shinseki has been run out of town. And investigations are underway into what’s going on and how to fix it.

The Wall Street Journal (Veterans Affairs Hospitals Vary Widely in Patient Care) used the VA’s internal data to compare the worst VA hospital (Phoenix) with the best (Boston) and to compare both with other VA hospitals that earn five stars. There are dramatic differences in areas like bloodstream infections and pneumonia rates and significant differences in death rates. The VA can and should use this information to share best practices, make improvements, reward those who do well, and weed out those who are not up to the task.

Waiting lists and uneven quality are a serious problem and they need to be addressed. These problems also play into an anti-Washington narrative about the poor quality and lack of accountability in government provided services compared to the private sector. I wouldn’t want to be treated at the Phoenix VA. Would you?

On the other hand, the Journal article points out that the VA measures and in some cases reports more on the performance of its hospitals than do private sector providers. In truth, there is not enough information to say whether the VA system is worse or better than the private system as a whole or even to compare the VA with individual private sector hospitals.

Some well regarded public sector providers in other parts of the world do a good job reporting on waiting times for appointments and procedures. See for example, the Waiting Times home page on England’s National Health Service website, which provides detailed, frequently updated statistics on waiting times.

Compare that with what we have in the US: a survey of physician practices taken a year ago in five specialties, conducted by a physician recruiting company looking for publicity. Even that survey shows we have serious problems. For example, in Boston it takes 10 weeks to get an appointment with a dermatologist or family doctor, we’re told. In a government run system like the VA or NHS, the public or elected officials can demand improvement. By contrast, who is going to force Boston doctors to see patients sooner?

photo credit: Rennett Stowe via photopin cc

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

 

Charlie Baker and Mark Fisher on healthcare

Republican candidates for Governor of Massachusetts discussed healthcare and other topics in their debate yesterday. If you’d like to hear more about what they think about healthcare, listen to the interviews I did with them on the topic earlier this year.

Charlie Baker speaks with the Health Business Blog.

Mark Fisher speaks with the Health Business Blog.