hot issues in health care sponsored by rose community foundation
TRANSCRIPT
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HOT ISSUES IN HEALTH CARE
Sponsored by
Rose Community Foundation
<<!-- PICOTITLE= "Health Insurance Market in Colorado" --> <!-- PICODATESET mmddyyyy=08202001 -->
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HEALTH INSURANCE MARKET IN COLORADO
W. N. LindsayBenefit Management & Design,
Inc.1720 South Bellaire Street, Suite 250
Denver, CO 80222(303) 691-0335
www.bmadinc.com
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Setting the Stage
Urban and Rural Access Small Group Health
Insurance Challenges Significant and sustained
price inflation
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“But Colorado is Unique!”
…is it?
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National Trends?
Influenced by large employers
Health care prices vary by market
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Increases in health insurance premiums compared with other indicators, 1988-2002
12.7%*
11.%*
8.3%*
4.8%*
0.8%
8.5%
12%
0
2
4
6
8
10
12
14
1988 1993 1996 1999 2000 2001 2002
Health Insurance Premiums Medical Inflation Overall Inflation Workers' Earnings
*Estimate is statistically different form the previous year shown: 1996-1999, 1999-2000, 2000-2001, 2001-2002.
Note: Data on premium increases reflect the cost of health insurance premiums for a family of four.
SOURCE: KAISER FAMILY FOUNDATION AND HEALTH RESEARCH AND EDUCATIONAL TRUST, SEPTEMBER 5, 2002
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Can we afford it or are we willing to pay for it?
$90
$290
$490
$690
$890
$1,090
$1,290
$1,490
1999 2001 2003 2005 2007 2009
Employee Only Rate Family RateReden & Anders, Inc. 2000
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3.03.54.04.55.05.56.06.57.07.58.0
1999 2001 2003 2005 2007 2009
% of $50,000 Salary
Can we afford it or are we willing to pay for it?
Reden & Anders, Inc. 2000
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The Factors Driving Rising Costs in Healthcare (2001-2002)
(PricewaterhouseCoopers)
Increased Consumer Demand
15% Govt Mandates & Regulation
15%
Other5%
General Inflation (CPI)18%
Litigation & Risk Mgt7% Rising Provider
Expenses18%
Drugs, Medical Devices & Other
Medical Advances22%
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National Rx Drug Trends
Large EmployerPrescription Drug Cost Trend
17.8%18.3%16.9%13.8%
0%
5%
10%
15%
20%
1998 1999 2000 2001
Source: Mercer/Foster Higgins National Survey of Employer-Sponsored Health Plans 2001
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Total HMO enrollment and growth rate, July 1992 to July 2001
38.842.1
47.1
53.4
63.3
72.1
78.6 80.5 78.9 78
0.063
0.085
0.119 0.134
0.185
0.139
0.089
0.026
-0.02-0.011
0
10
20
30
40
50
60
70
80
90
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Years
En
roll
me
nt
in m
illi
on
s
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Gro
wth
ra
te
Enrollment Growth RateNote: Growth rates based on total enrollment, not the rounded-off numbers given in this chart
SOURCE: EBRI 5/30/02
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Health Plan Enrollments For Covered Workers, Selected Years 1996-2001
POS14%
Conventional27%
HMO31%
PPO28%
1996
POS24%
Conventional14%
HMO27%
PPO35%
1998
POS22%
Conventional8%
HMO29%
PPO41%
2000POS22%
Conventional7%
HMO23%
PPO48%
2001
Sources: Kaiser/Health Research and Educational Trust (HRET) Survey of Employer-Sponsored Health Benefits, 1999, 2000, 2001; and KPMG Survey of Employer-Sponsored Health Benefits, 1996, 1998.
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America’s Health Care Providers Won the Battle vs. Managed Care
Network adequacy rules Any willing provider requirements External appeals required Gag clauses removed Out-of-network providers included Prompt pay rules Non-contracted reimbursement rates Health plan liability
But they may have lost the war.
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Consider This!
Shift cost to employees
No reimbursement until a claim is processed
Collections on an individual employee basis
No assignment of benefits for non-contracted providers
Increased bad debt
Removal of copayments from plans
Higher deductibles & OOP limits
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“The leading cause of personal bankruptcy is health care costs.”
Source: Prosperity Institute Report 2/2002
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The States as Laboratories!!
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Colorado Has Been a Laboratory
1992 RWJ Planning Grant 1994 Business Group of One 1994 Small Group Health Reform 1994 Modified Community Rating 1994 Small Employer Health Care
Purchasing Cooperative 1996 Child Health Plan 1998 Child Health Plan Plus (SCHIP)
And…there have been a few explosions!
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Colorado HMO Enrollment
Total Penetration
39.4%
MSA Penetration
36.4%
Source: Interstudy Statistical Report 2000
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Colorado HMO Results
1999 2002
Number of HMO’s:
18 5+
Net Income $21 million $60 million(2000)
Source: Colorado Division of Insurance, May 2001
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Insured StatusSmall Employer Market
Source: Colorado Division of Insurance April 30, 2002
1999 Survey
2000 Survey
2001 Survey Change
Covered Lives 478,344 537,996 456,151 (81,845)
Covered Employer
s65,948 70,270 65,590 (4,680)
Small Group
Carriers44 33 33 (N/C)
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Employers’ Reactions to Rising Health Care Costs
Source: BMAD Employer Surveys
Pass on Cost Increase
Absorb Cost
Change Coverage
December 2000
26%
74%
38%
December 2001
72%
28%
52%
August 2002
88%
12%
52%
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Contrary Concepts:
Guarantee Issue all products (HIPAA) Open enrollment required (HIPAA) Limits on “pre-ex” (HIPAA) Maternity not pre-ex (HIPAA,
Pregnancy Discrimination Act) Mandated coverage (e.g., Mental
Health)
Public Policy
Insurance Principles
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Impacts of laws on Insurance
Rate regulation Rating restrictions Market conduct rules
Guaranteed availability
Limiting restrictions by insurers
Small employers only
State Laws
Federal HIPAA Law
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Challenges to Effective Competition
The size of the pool is shrinking! Number of uninsured growing
Number of small businesses not offering insurance is growing
More employees not electing coverage when offered it
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Challenges to Effective Competition
Different sets of rules!
Self-funded small employers8-10%+Individual insurance 3-
7%+Employee leasing companies 2-
5%+Others (METS, MEWAs, etc.) 3-5%+
Estimates
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Example of individual insuranceAge 25 $125.89Age 35 $150.13
Example of small employer group insuranceAge 25 $193.25Age 35 $206.41
$500 deductible, 90/60% PPO, $5,000 Coinsurance, $20 office copay, 10/30/50 Rx, 6/02 Denver rates
Fact Based Assessment
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Individual Insurance is CheaperNew Pre-exSubject to Medical UnderwritingPolicy limits, restrictionsNo state mandates*
Fact Based Assessment
“TINFL”
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Current Status? Humana—major off-anniversary rate
change Sloans Lake HMO is sold Denver Health HMO withdraws from
small group Aetna, Pacificare withdraw from Alliance Aetna withdrawal from HMO small group Alliance/CHIP fails
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Current Status?On-going challenges: Rate increases (ALL groups) Stop-loss market has hardened Small employer pool decreases Rural access to insurance options Over age 65 access to physicians
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What are we to do?
Re-entry penalty Gather data on insurance coverage Define “insurance” Provider cost data and quality
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Conclusion
"Picking a healthcare financing system is kind of like picking someone to
marry--you're picking a set of problems you are prepared to live
with.”Marc J. Roberts, Ph.D., Harvard School of Public
Health
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Thank You