October 9, 2013
Living in the health care capital of the country gives us a front seat to one of the most transformative times in the field. Hopefully, the Affordable Care Act will allow many more people to purchase high-quality, affordable health insurance; access care; and improve their health by seeking preventive services.
Unfortunately, health reform, or what many call “Obamacare,” is not yet fully implemented. Headlines around exchange “glitches” are a small part of that story, but iconic in many ways of the times and challenges we all face.
One that we see every day at ReviveHealth is the increasingly aggressive stance some health plans are adopting in their relationships with physicians and hospitals and in contract negotiations. As we’ve seen discussed in The Tennessean, some of this change in posturing happened when health plans narrowed networks for plans on the exchange in order to provide affordable coverage for more people.
Yet, unintended consequences lurk in these waters. For one, hospitals across Tennessee are already dealing with unprecedented financial strains from Medicare and Medicaid reimbursement cuts and the increasing cost of care. Some have had to cut nurses and other staff, meanwhile expecting a significant increase in the number of patients seeking care.
Major health plans also play a role. In Tennessee, we’re particularly talking about Blue Cross Blue Shield of Tennessee. Blue Cross traditionally delivered on its promise to connect members with a broad array of physicians and hospitals.
This year, Blue Cross took advantage of the broader conversation about health care reform and increased premiums for existing members, saying it was the only way to maintain high-quality, high-touch service and broad access. Well, premiums are up. But why are Blue Cross members now looking at an ever-shrinking network of providers?
Given Blue Cross’ size, providers are choosing between bad and worse. Either they take Blue Cross’ new low payment rates, which means cutting staff, delaying important investments and potentially endangering their patients. Or they reject those rates, get pushed out of network with the state’s largest insurance company, and face losing their Blue Cross patients to the physicians and hospitals that accept those low payment rates.
Some negotiations were public; others happened behind closed doors. Many providers never had a fighting chance. The market power of Blue Cross is just too daunting. It’s all part of the Blue Cross Blue Shield Association’s national “playbook,” and we’re seeing a similar pattern deployed by Blue Cross plans across the country.
Blue Cross also maintains deep connections in Tennessee’s state government, reportedly becoming the highest, single-company spender for lobbyist salaries in the first six months of 2013. This outsize political muscle lines up perfectly with Blue Cross’ steady and increasing share of the public insurance market — managing TennCare and state employee benefits and, now, dominating the state insurance exchange.
It’s no wonder Blue Cross continues to earn record profits and boost reserves. As last reported by The Chattanooga Times Free Press, Blue Cross holds $1.7 billion in reserves, or $613 million more than it’s legally required to carry.
Consumers must carefully scrutinize the options available to them, and hopefully elected officials and large employers in Tennessee can help Blue Cross alter course. Everyone in Tennessee would benefit from a more competitive insurance marketplace, with more plans and more choices from more companies.
This article originally appeared in ‘Opinion’ section of The Tennessean. Click here to read the original article.
October 4, 2013
Open enrollment is here and millions of Americans are going to be checking out their state exchanges to enroll in health benefits programs. Headlines from across the country proclaim that Obamacare has finally made it possible for the average American to receive affordable health care coverage – coverage that was only once available to the working insured. Plans for as low as $100-$250 per month (even more affordable than originally projected) now bring health insurance coverage within reach of most of the currently uninsured.
“So please, sign up and see if in addition you can also qualify for a government subsidy to help offset the cost of even these low-cost plans.”
The elephant in the room, and what no one is saying, is that these low-cost plans provide very little first-dollar coverage – beyond very basic preventive care. And, should illness or injury occur, families are going to find that they’ve paid a lot of money each month for insurance premiums that provide almost no benefits until deductibles are met. Those out-of-pocket costs are astronomically high and unaffordable to the people health care reform was intended to help.
For instance, in Tennessee, the monthly premium costs for one of the lowest plans is in the $260-per-month range. That sounds great, right? Well, not when you look a little deeper at the numbers. The deductible and out-of-pocket costs for these plans are incredibly high —$7,000 for an individual and over $22,000 for a family. And, once the deductible is met, you still have to pay 20 percent of incurred in-network charges (higher if you go out of network, if there is any coverage at all).
In California, where there is a larger population than Tennessee, in theory the insurers should be able to spread the risk over more people and lower costs for everyone. For a family of three, the Bronze plan will cost between $680-$800 per month. However, with qualifying tax credits the monthly premium costs drop to $350-$500 per month. And, just as in Tennessee, the deductible and out-of-pocket costs are staggering – $6,300 annually for an individual, and $12,700 for a family.
Unlike what our country’s leaders would like us to believe, focusing on monthly premiums is a terrible barometer of overall cost to the consumer. Data supports the fact that there are not a lot of families in the U.S. who can afford the true costs of these so-called low-cost, affordable benefits plans.
Other losers in this equation may also be the hospitals and health systems who are supposed to have benefitted from having more insured patients, rather than treating a percentage of those with no ability to pay for their care. Instead, they will be faced with trying to collect large deductibles and out-of-pocket costs from many people who have no means to pay for their deductibles. On paper, these patients are “insured,” however, from a collection standpoint, they may as well not be. Add to that the problem of payment recovery from patients who fail to pay their premiums, and hospitals could easily find themselves with even fatter bad debt accounts for treating the newly “insured.”
It would seem that, as of now, health plans are in the catbird seat. They will be collecting premiums on plans that beyond preventive services will basically pay for very little.
Notwithstanding the political vitriol that goes along with any conversation around health reform these days, without bias, simply look at the math. An objective analysis of the numbers makes it very hard to see how this is going to help consumers and health care service providers. The changes that just started in earnest on October 1 are also a potential disaster for taxpayers and the government as subsidies to support lower-income families who qualify for tax credits will be supporting benefits plans that pay for very little.
Of course, in the short run, health plans are well positioned to reap the rewards of reform. Interesting to think how supporters of Obamacare will feel about this.
October 1, 2013
Thought I’d spend a few minutes during my lunch hour to see how all this Health Insurance Exchange stuff is working. I have to admit, I have an excellent health care insurance plan and coverage so my efforts were purely experiential.
I visited HealthCare.gov and happily entered my home state of Tennessee and hit “APPLY NOW.” I was immediately whisked to the Health Insurance Marketplace home page where I entered the virtual waiting line …
Well, this can’t be too bad. After all, it sure beats waiting in the real line at the Department of Motor Vehicles for hours only to find out I don’t have the right paperwork.
Hmmmmm, 23 minutes later it was beginning to feel a lot like the DMV, but alas I was finally directed to the login page to create my account. I was making great headway now. A few keystrokes for my name and email, and the unchecking of the box entitled “I want to have news and updates sent to this email address” — lest I be spammed by promotions for lay-away programs for the latest surgical break through or half-priced IRS financial planning sessions — and I was on my way to opening an account.
The next step — Create a Marketplace Account — required choosing a Username and Password. Ughhh, should I go with the same old one I use for everything else, or is this the one time I create something new, clever and completely forgettable? I used the same old, same old. NEXT!
Not so fast. There were some security questions that needed to be answered. Thank goodness. I feel better knowing only I … and no one else … can access my soon-to-be new health insurance exchange account. It even let me choose three from the various security questions. I went with favorite cuisine, favorite pet’s name and favorite toy as a child. Next step!
I’m almost there. I can feel it. I certainly feel something as I hit “Create Account” and the swirling hourglass and message lets me know my “Information is Being Reviewed.” A full two minutes later I learn the answer to the 3rd Security Question is not in the correct format. I back up a page and re-type “Tonka Truck” and hit enter. More hourglass and anticipation. And again, rejection of my favorite toy as a child.
I try three more times with “Tonka Truck” to no avail, and then decide to fib a little and answer “GI Joe”. The screen goes blank and a few moments later I find myself back at the HealthCare.gov home page asking for my home state.
I think I’m gonna be sick. Did I mention I have good insurance?
September 30, 2013
IBM and GE have decided to stop purchasing health plan benefits for their retirees and instead provide them with a stipend to purchase their own benefits in the Health Exchanges.
Conventional wisdom suggests this is likely a harbinger of things to come for folks who are currently employed and receive employer-sponsored health benefits.
A look at health plan stocks supports the notion that Wall Street is bullish on the prospects for health plans in the exchanges and in general. Of course, that pre-supposes that the current giants in the space can lead, innovate and connect with consumers in the short and long run.
The relationship between health plans and their members has never been stellar, and scale has rarely proven to be an assurance of market survival – you don’t need to look any further than the airline, automotive, financial services and retail markets for evidence of that. Yet, scale has clearly benefited health plans in the last 20 years, and there is reason to believe that it will aid their success in the near future.
However, in thinking through who may ultimately win over consumers and become the brand of choice, we might consider discounting current market dominance as a determining factor in the longer term. Instead, two other key factors may prove to be the more dominant factors in determining marketplace winners in the years ahead:
Choice is coming to the health plan marketplace in ways that could be much more significant than initially conceived. For health plans, it may be best to think and act more like Curves and Dollar Shave Club than a financial services or health services company.
If thinking through ways to connect with consumers in the health benefits landscape is on your mind, let’s talk. ReviveHealth’s ability to understand the evolving reform landscape, translate complexity into simplicity and challenge conventional wisdom with breakthrough ideas could make for an interesting partnership.
September 20, 2013
For nearly four years, ReviveHealth has been a lone voice in the wilderness, loudly proclaiming the need for hospitals and physician groups to define and deliver value. Our long-held belief is that the elusive definition of value in health care has allowed payors to “own” the concept of value, to serve as the referees, and to steer patients to the lowest-price hospital or physician rather than the highest-value provider. This has made progress toward defining and delivering value even more challenging.
In the last six months, we’ve heard a lot more talk about value in the marketplace, and now a recent Health Leaders article has provided some great food for thought for health systems across the country. The essential premise of the article – that employers are seeking high-value partners – is a call to action for every health care provider to carefully consider its own market and how to establish and articulate its value proposition.
Much that has been written (including this recent Health Leaders article) focuses too much on the big, complex narrow network and value network arrangements like the Wal-Mart program or the Cleveland Clinic arrangement with Loews. There are some providers that have the scale, brand, and reach to benefit from this type of arrangement, yet nearly every health system can benefit from a value story and arrangements with local self-insured employers and patients who are increasingly shopping based on price. Almost every health system needs them to shop on value, not price.
As the article points out, “Proxies for value are often price and quality, but value can be difficult to discover where prices are obscured by the third-party payer system, among many other factors peculiar to healthcare. Quality often can be determined only by measuring factors that aren’t clear until long after service is rendered, if ever. But science and intelligence based on data is getting better.”
This means that health systems should define value, either on their own or working in collaboration with local employers and business groups. And then they need to communicate loud and clear how they will deliver that value, and how they’re making progress against that goal. There is a vacuum in most markets right now, yet it might not last for long.
The truth is, there are millions of health care blogs, and it's impossible to keep up with everything that matters. There's never enough time to read, comment, and participate in discussions. Yet, when there's something too good to pass up, we will share observations, thoughts, and ideas about health care marketing, branding and communications strategy as it relates to Health Services, Healthy Living and Health Technology. Check back periodically; it will never be boring.