Category Studies

Under the health care reform children under 19 can not be denied or pre x on health insurance. This law is now in place and the carriers have developed strategies on the law.

The first thing the carriers have done is completely with drawn from the stand alone children’s policy. So now in this country you are unable to buy a stand alone health insurance policy for your child. The carriers were very concerned that parents would game the insurance market. This means that a parent might wait to take out a health insurance policy on the child until they need it. Since the Government would not address this issue the carriers just  pulled out of that market.

So the only way to insure a child in the private market is for a parent to be on the plan also. This has created some unique situations. The carriers will except the entire family but they now are rating the children up 200% for any on going health conditions. This strategy is making the health insurance unaffordable for most family that have children with medical conditions.  A family of 4 that should run around $400 a month now is over $800 if they have children with major medical conditions.

From the insurance carrier stand point even with the rate increase they will still lose money. Any child needing major health care is going to incur much more than the annual premium in claims.  If a family is paying $9,000 a year in premium plus the deductible but they incur $25,000 in claims the insurance company is going to lose. So then how long will the carriers be able to sustain writing those policies.

This is a very complicated situation that the health care reform has caused.

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Right now the state has taken the federal grant to explore setting up a state base exchange vs a federal exchange.

This is very important on the future of health insurance and health care in the state of Indianapolis.

If it is a state based exchange then we should see competition within the carriers operating inside of the exchange maybe. We would also see the agents role with assisting people on obtaining the best plan.  We are fortunate to have a department of Insurance that works towards finding the best possible option for an exchange. Currently two models are being analyzed. That would be Utah and Massachusetts exchanges. Utah has developed their exchange with lean towards employer based plans. This is where small groups can participate in the exchange. They have had major problems with keeping the exchanges competitive. They also have run into problems with employers being able to admin a small group plan. The Massachusetts exchange is more of a universal health plan with state mandated coverage.  Premiums are very high where a Family of 4 costing $17,000 a year.  The Mass. exchange has major problems because the carriers are losing money and can not stay solvent long term.

If the DOI decides that a state based exchange has really no chance to help Indy residents they will shift it to a Federal Exchange. A federal exchange might have little success in helping Indianapolis residents. Right now the federal government might not see the role of the agent/broker as important. They might establish federal employees that are called health navigator to help people on health insurance. The navigators would not be licensed or be held accoutable for advise that they give. It is also thought that a federal employee will not work as hard a broker/agent that is paid on commission.  The federal exchange might have problem with recruiting carries to participate in it.  In fact we might see carriers that decide to compete against the exchange.

One of the big issues of the health care reform law that must be clarified. Is the tax credit or subsidy for the exchange. If there is a tax credit that mean people will still have to pay the full premium and wait to get the tax credit back. $17,000 could be difficult for most families to pay and then wait for the credit. If its a subsidy then the federal gov. could pay a portion of the premium towards the carriers which would no doubt lead to a higher premiums.

Its going to be very interesting to see what happens on the exchange.

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Small group health insurance can be difficult. The last few years has created a lot of shifting on to the employee in both cost and risk. This has mainly been because of the price of health plans and the economy. If small a company revenues are off its difficult for them to absorb a rate increase on the health insurance.

I have started to witness a alarming trend in the small groups. Employee are starting to ask to have their employee status changed. So an employee might come to the owner and asked to be a 1099 contract employee. One of the reason they might do this is so that they qualify for a subsidized health plan. This is whats called “gaming the system”.

With all of the cost shifting that has a occurred there are many small group health plans that have large deductibles. So if an employee is having a baby they might owe $2,000-$5,000 for that child birth. If they are able to qualify for a subsidized plan through the state then that child birth could cost them nothing.

So if you are small business owner with a high deductible plan in place an employee could be trying to game the system.

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In the past few years I have seen an alarming trend of max loaded small group health cases in Indiana. Under the laws a group plan has to be taken by a carrier (guaranteed issue) but the premium can be almost doubled.

We are seeing about 75% of small group health plans (under 50 lives) being max loaded.

At first I thought it was just one particular carrier and then I see this alarming rate with others. I also thought it might be that the group underwriters are all educated in the same manner and this is leading to state wide max loads. Then what really dawned on me is everyone is sick and the cost care keeps going up with medical inflation.

The state of Indiana along with the rest of the country does not take care of themselves and this leads to health care costs.

With the high percentage of max loaded cases it becomes harder and harder to move to a carrier to save money.   The frustration of the small group employer is at a boiling point.  The groups want to provide health benefits to their employees but it will get to the point where it cost to much.

Health Care Reform has done nothing to address these types of issues. The health care bill is universal health insurance at a cost. No where in the bill does it address cost of care.  As we move forward to the health insurance exchanges small groups locally, will continue to drop their group benefits because of cost. The trade off is those small groups will lose their best talent to a company that will pay for health coverage.  Even when the exchanges go into place an employer that is able to invest into the employee’s health plan will have a huge advantage with employee attraction and retention.

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This is a interesting view of plan designs. The specific breakdown of industry and co pays is really interesting.

According to the data, transportation and financial services employees are paying more for office visit copays than those employees in the manufacturing, services and wholesale industries. Based on recent 2010 data from Highroads,  an industry leader in employer health care compliance and benefits management.

•79% of transportation employees pay $25 or more in office visit copays

•69% of financial services employees pay $25 or more in office-visit copays

•97% of wholesale employees pay $20 or less in office-visit copays

•87% of services employees pay $20 or less in office-visit copays

•67% of manufacturing employees pay $20 or less in office visit copays

Across all fully insured plans,  the data  shows average monthly 2010 premiums to be as follows:

•Employee only: $380

•Employee plus one: $788

•Employee plus children: $726

•Family: $1,133

Across all fully insured plans,  shows the median of 2010 plan provisions to be as follows:

Plan Provision              Median 

Office Visit Copay              $20 

Specialist Office Visit              $30 

Inpatient Hospital Copay              $250 

ER Copay              $75 

Infertility Treatment Co-insurance              50% 

This dats is a snap shop of what Indianapolis group health plans look like.

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The  Milliman Medical Index has been released for 2010. This is a very good study of healthcare costs and the effects that they have.  2010 marks the 6th year that the study has been performed. The top 100 leading insurers read this report to estimate future health insurance claims costs.  You would think that our government officials would all take this study into consideration when they are making laws that effect healthcare.

The topics that are discussed in the Study:

Key Findings

The total medical cost for a typical family of four in 2009 was $16,771. In 2010 the study shows an increase of 7.8% to $18,074. Employers and Employee alike shared the increase in cost this year.

Employers cost at an average of $10,744 surpasses $10,000 for the very first time.

Geographic Differences in Healthcare Costs

The study shows that Miami, New York and Chicago continue to have costs at leasts 10% higher than the national average.

Dissecting HealthCare Costs

In this section the $18,074 is broken down into components of spending.

15% Rx+ 33% Physician +17% outpatient+ 31% inpatient +4% other

Employee’s Share of Healthcare Costs

In 2010 the employer is picking up $10,744 of the $18,074 of total healthcare cost to a family of four.

Economic Effects on Healthcare for People with Insurance

This section is addresses the effects of unemployment and health insurance. The study addresses the effects layoffs have on people who continue to be insured under the employer plan.

Cost Implications of Healthcare Reform on a Family of Four

The study states the cost implications are unclear.

Technical Appedix_Milliman Medical Index

This section discuses how the Index is formed.

2010 Milliman Medical Index

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On average, 87 cents of every dollar you pay us is spent
covering medical care and services that members receive like
doctor visits, hospital costs, prescription drugs and more.
So when the costs for these services go up, so must our
premiums. Another 10 cents of every premium dollar funds
the services we provide like claims processing, enrollment
and billing, provider credentialing and complying with
government regulations. We also use this portion of your
premium dollar towards our efforts to control the rising cost
of care. More about that in a bit.
That leaves three cents of every premium dollar for profits.
Let’s put that into perspective. The combined annual profits of
the top 10 health insurers are equal to just two days worth of
national health care expenditures – or 0.5% of the estimated
$2.5 trillion the nation spent on health care in 2009

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It happens whenever you visit a new physician, or one you haven’t seen in a while: You have to fill out an intimidating, mile-long form with dozens of questions about every illness and chronic medical condition that you and close relatives have had, every time you’ve been hospitalized, every prescription drug you’re taking, and so on. Wouldn’t it be great if the doctor could pull the information up without handing you that clipboard?

The technology to bring medical records into the digital age is available–you can already start assembling your own medical history on one of several free Web services. These services are unlikely to replace pencil and paper in most doctors’ offices anytime soon, but they can be useful memory jogs and aides to third-party caretakers.

The largest of these services–Microsoft HealthVault, Google Health, and WebMD Personal Health Record–all offer you accounts with sections for noting your medical history, including chronic conditions, visits to doctors and hospitals, test results, treatments, and prescription drugs. Should you decide to use any of these services, be prepared to spend several hours gathering information and typing it into form fields.

All three seem sensitive to people’s concerns about privacy, promising account holders full control over their data and who gets it. “We have a really strict set of rules about what can happen to this data,” says Sean Nolan, chief architect and general manager for Microsoft’s Health Solutions Group, which created HealthVault.”You as a consumer own it.”

In fact, HealthVault’s homepage enumerates the site’s privacy policy, which among other things promises not to target ads or services based on your information without your consent. Google Health even lists a privacy policy for developers who want their apps to appear on Google Health.

Microsoft HealthVault

Microsoft appears to be the furthest along in bringing interactivity to its app. In HealthVault you’ll find a list of health-care industry participants (insurers, doctors, hospitals, pharmacies) that Microsoft has partnered with for collecting and/or providing data. For example, I was able to download records of drug prescriptions I’ve filled at Walgreens.

Also, a growing number of health-monitoring devices-blood-pressure and glucose-level readers or weight scales, for example-can import readings into HealthVault, which can vastly simplify some tedious record-keeping. Microsoft maintains a list of HealthVault-enabled devices on its site, and a device’s packaging will also say if it works with HealthVault.

The data can travel both ways: One of the newest destinations for your data is the U.S. Department of Health and Human Services, which lets you import data from HealthVault to fill in the Surgeon General’s My Family Health Portrait, an XML-based health genealogy tool.

HealthVault includes links to a number of applications that use your data to help you make informed decisions. For example, the free Mayo Clinic Health Manager application will make recommendations based on data you store in HealthVault–say, more frequent cancer screenings based on family history. Again, the HealthVault site maintains a list of apps that use HealthVault to store information.

Google Health

Google Health supports importing health records from a list of sources such as medical centers and pharmacies. It has links to a couple of fee-based services that will convert paper medical records–obtained from you via fax or from your health care providers–into electronic data that you can import into Google Health.

Google Health also has links to online health tools (a diabetes risk assessor, for example) and services that will help you find health-care providers. Finally, it gives you access to services that will let you share your medical data, by printing a card to carry with you in case of emergency, for example, or by creating a record that some doctors will take in lieu of a clipboard form.

WebMD Personal Health Record

More of a do-it-yourself proposition, WebMD Personal Health Record leaves you on your own for entering data. But filling out the site’s lengthy HealthQuotient questionnaire can be a valuable wake-up call for embracing a healthier lifestyle: At the end of the exercise you get a numerical rating for your overall health. You also receive an explanation of how you ranked compared with other users your age, and bar graphs showing your risk levels for serious problems such as stroke and heart attack.

Other Tools for Tracking Medical History

Some insurance companies are providing their customers access to patient-centric medical records–histories that present a better picture of a person’s health as a whole rather than the traditional claim-by-claim records that focus on specific services in single visits. And some are also starting to offer patients tools to help track the costs of their care, in order to ensure that they are being properly reimbursed and, in some cases, to help set priorities when budgeting is required.

One of these tools is the Quicken Health Expense Tracker, which makes it easier to manage medical claims and doctor bills. The Health Expense Tracker helps you figure out what a claim was for (it can look up medical codes and explain them in plain English) and then match it with the appropriate doctor bill, so you can see if you’re being charged correctly. In a related development, Intuit has begun marketing an online bill-payment system to physicians, who have been extremely slow to allow patients to settle their bills electronically.

Slow Adoption Rate

Most insurance companies make claim information available online to their customers. But, says Forrester Research analyst Elizabeth Boehm, these records are designed for billing purposes and aren’t nearly as good as patient-centric records for help in assessing an individual’s overall health.

Unfortunately, Boehm adds, very few people (no more than 3 percent of the U.S. population) are taking advantage of online medical-history tools because they’re a lot of work-and because doctors don’t really trust them anyway.

It’s a sort of Catch-22: Electronic health records won’t be useful until more doctors and hospitals contribute to them, but doctors and hospitals won’t contribute to them until they’re more useful. Still, even without doctor buy-in, these records can be invaluable in some instances–for example, to other caregivers (such as relatives of the patients)–who may not be familiar with the family history.

The transition to electronic record-keeping is getting a boost from the Obama administration’s stimulus plan, which includes incentives for physicians who move to electronic medical records. The administration considers the adoption of this technology crucial, as it can help cut costs by eliminating duplication of effort (for example, tests that one doctor performs because he doesn’t have the results of the same test performed by another doctor). It will take some time, but systems that allow patients to manage their own health-care information will continue to pick up speed. The clipboard’s days are numbered.

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Anthem plans across the country are working to develop innovative products and programs that help address rising health care costs. Through pay for performance initiatives, consumer directed health plans and transparency initiatives; Anthem is providing access to the information needed to drive down health care costs.

While many people may believe that insurer profits are the driving force behind increasing health insurance premiums, research reveals very different reasons for the high cost of health insurance.

A May 2009 report titled “What’s Really Driving the Increase in Health Care Premiums?” addresses the issue. The report, issued by the WellPoint Institute of Health Care Knowledge, compiles research from sources such as PricewaterhouseCoopers, the Robert Wood Johnson Foundation, the Kaiser Family Foundation, the Bureau of Labor Statistics and the Congressional Budget Office.

According to the report, the “key drivers” of spiraling U.S. health care costs are:

  • Advances in medical technology and subsequent increases in utilization;
  • Price inflation for medical services that exceeds inflation in other sectors of the economy;
  • Cost-shifting from people who are uninsured and those receiving Medicare and Medicaid to the private sector;
  • High cost of regulatory compliance; and
  • Patient lifestyles, such as smoking, physical inactivity and obesity.


Citing PricewaterhouseCoopers research from 2008, the report found that only three cents of every health care premium dollar is spent on health insurer profit.

According to the Institute’s report, newer medical technologies tend to increase costs because they are generally more expensive than the older technologies they replace. While the availability of more advanced, superior technologies can yield better results for some patients, these technologies and diagnostic tests may be used inappropriately in some situations where existing, older technologies are more effective and accurate.

To view a copy of the full report, click here.

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