RESTLING THE OCTOP
acare: A Sea Change
Bernard J. Wolfson
Orange County Register
(714) 796-2440 (newsroom)
(562) 290-7210 (cell)
The Affordable Care Act, aka Obamacare
Two Principal Characteristics
--Touches nearly every facet of health care system
--Chock full of nuances, exceptions, technicalities
--Regulations still being written and rewritten
--Maddeningly confusing to ordinary consumers
--Doctors, hospital execs, insurance agents struggle to understand it
--Even confusing to officials with its implementation
--Goal posts are constantly shifting, deadlines in constant flux
--Too positive, you piss off the conservatives
--Too negative, piss of the pro-Obamacare camp tasked
-- Right down the middle, you piss off both
-- Get ready for some very entertaining hate mail
• Very Good for Journalists Who Cover It
--Readers (and editors) need and appreciate clear explanations
--You’re likely the only one at your paper who can explain it
--News is constantly breaking – you’ll be in the paper a lot
--It’s a hot topic – your stories will get good play
--Hence, job security (for the time being)
• Very Bad for Journalists Who Cover It
--Too wide-ranging to do all the stories you would like
--Complexity, nuance incompatible with tight space requirements
--If the people implementing don’t even get it, you think you will?
--Everyone, even colleagues, will treat you like an insurance broker
Affordable Care Act for Dummies (Like Me)
• Expanded Health Coverage
--State and Federal Exchanges with Subsidies
--Employers W/Over 50 FTEs Must Play or Pay
Paying For It
--Wide Range of Taxes On Industry Players
--Cuts In Medicare/DSH Payments
--Penalties on non-Compliant Individuals, Employers
--Tax Surcharges on High-Income Individuals
--40% “Cadillac” Tax On High Cost Health Plans (2018)
• The Big Tradeoff
--No more exclusion or discrimination for pre-existing conditions
--No Gender Discrimination (Women Use More Health Care)
--Most people required to buy insurance or pay tax penalty
• Other Provisions Benefiting Consumers
--Dependents can stay on parents’ plans to age of 26
--Ten “Essential Benefits” Must be Included in All Plans
--Health Plans Must Cover a Minimum 60% of Medical Costs
--Annual limits on Out of Pocket Costs Paid by Insuree
--No Annual or Lifetime Cap On What Insurer Pays Out
--No Copay For Annual Checkup, Certain Preventive Tests
--Financial Assistance for Low and Middle Income People
--Shrinks Cost of Drugs For Seniors Under Medicare Part D
• Downsides For Some Consumers
--New Plan Standards Means Higher Premiums For Many
--High Out Of Pocket Costs For Lower-Premium Plans
--High Co-Insurance For Specialty Drugs, MRIs, Scans, Lab Tests
--Young Pay More To Subsidize Older and Sicker People
--Many People Have Lost or Will Lose Health Plans They Like
--Narrower Doctor, Hospital Networks Restrict Choice
• Changes In Health Care Delivery, Payment
--Shift To Paying For Medical Outcomes, Not Volume of Services
--Great Focus on Coordination of Care Among All Providers
--Carrots and Sticks for Saving Money, Meeting Quality Targets
--ACOs: Doctors, Hospitals Coordinate Care, Share In Savings
--Medicare Penalties/Bonused For Hospitals’ Quality Performance
--1% Medicare Cut For Hospitals With High Infection Rates
--1%-3% Medicare Cut for Excessive Hospital Readmissions
--Bundled Payments For “Episodes” Of Care
• An Alternate ACA Universe in California
--National Obamacare News Often Seems Irrelevant Here
--Covered California A Relatively Well Developed Exchange
--Rollout Smoother Than Federal, Many State Exchanges
--22% of All U.S. Enrollments In California (10% of Population)
--Enrollments Exceeding Targets For Full 6-Month Period
--Robust Advertising and Marketing – Increasingly Well Known
• But Still No Shortage Of Glitches
--Super Long Wait Times If You Can Get Through At All
--Website Often Sputters, Kicks You Off, Displays Error Messages
--Online Enrollment Portal Offline All of Last Week, Weekend Too
--Doctors’ Directory Riddled With Errors, Offline Indefinitely
--Small Business Exchange Portal Taken Offline
--Backlogs in Processing Enrollments
--Didn’t Have Spanish Language Application For Months
--Poor Vetting Of Some Enrollment Counselors (Criminal Records)
--Logistical Issues Maybe Over-Reported But Worth Following
--New Signup Ahead Of Mar. 31 Deadline – Will System Cope?
Covered California Enrollment by Age Thru Jan. 31
Less Than 18
18 to 25
26 to 34
35 to 44
45 to 54
55 to 64
65 and Older
Race/Ethnicity Of Enrollees Through Jan. 31
African American: 2.7%
Mixed Race: 6.2%
*-Up from 18.7% as of December 1
Source: Covered California Monthly Enrollment Report
• Who Is Enrolling and Is It the Right Mix?
--Not Enough Latinos Or Young People So Far
--Some Momentum Among Latinos, Could Help With Young Because Of Big
--Ideal Percentage of 18-34 Year Olds In Exchange Is at Least 36%
--Death Spiral Theory: High-Cost Patients, Premiums Rise, Young Stay Away
--Three Moderating Factors To Help Contain Premiums:
Risk Adjustment: Health plans with lowest cost enrollees compensate those with the
highest cost enrollees (individual and small group plans, inside and outside exchange).
Risk Corridors: Insurers get payments from government to balance out unexpected losses;
must pay government back for unexpected gains. Exchange plans only. Ends after 2016.
Reinsurance: $20 Billion Tax on Insurers to Compensate Those with Very High Cost
Enrollees. Program Ends 2016.
--So There is Some Breathing Room If Not Enough Young, Healthy Sign Up Right
--Skeptics Say Difficult To Increase % Of Young Substantially More
--Tax Penalty Not Enough? $95 or 1% in 2014; $695 or 2.5% By 2016
--Peter Lee Expresses Optimism That % of Young Will Rise Over Time
--Some Studies Show Minimal Impact On Premiums 1st Years if Below Target
Nothing New If Premiums Rise
They’ve tripled since 1999
• Is ACA Enrolling Uninsured People?
--Some Surveys Say No, But No Real Data So Far
--Disastrous Exchange Rollout, Rejection of Medicaid Expansion
--CBO Cut Forecast of Newly Insured to 25m from Over 30m
--Ca:Latinos The Largest Group of Uninsured – Enrollment Lagging
--No Clear Data On Actual Medi-Cal Signups; Only Whose Eligible
--Up To 4 Million Californians Still Uninsured in 2019
--1 Million of them Because They Are Undocumented Immigrants
--Many Uninsured Hard to Reach: Internet Access, Language
--Many Uninsured May Lack Bank Accounts (How Pay Premiums?)
Exchange Story Ideas
Enrolling Young People, Latinos, Other Ethnic Groups
--Great human interest, multi-cultural stories: Get out in the community, spend a day
at enrollment centers, follow a person or people over time as they make their
decisions. Get to know their health concerns and attitudes towards health.
How Many Newly Uninsured, How Many Just Switching
--Hard to get at except anecdotally: talk to insurance companies, individuals,
enrollment counselors, insurance agents, read polls on uninsured
Readiness of Exchange as Mar. 31 Deadline Nears
--Stories about glitches, bottlenecks, delays – or that everything is working better
than in December. Licensed insurance agents will be great sources here. And your
own eyes and ears (log onto the website and phone the call-in center frequently).
Will Premiums Rise in 2015 Because Of High-Cost Patients?
--This is for later in the year. Consult rate filings with DMHC and CDI. Insurance
agents a great source here too.
Did Risk Adjustment Work? Which Insurers Won, Lost?
--A state agency will calculate costs for all insurers. Are data reliable?
Consumer Experiences With New Plans
High Cost of Specialty Drugs, MRIs, Lab Tests
--How is it affecting people with chronic or life-threatening diseases who needs lots of tests or
drugs that cost $100k a year? Good sources include: Consumer advocacy groups, diseasespecific foundations, insurance agents, pharmaceutical data crunchers such as Avalere or IMS
Narrow Provider Networks: People Scrambling To Get Access
--Lots of confusion out there. Conflicting information on which doctors and hospitals are in and
out of networks. Negotiations ongoing, so networks constantly changing. Case study of Hollie
Young, breast cancer patient who spent weeks looking for a new oncologist and medical team.
Sources: insurance agents, consumer groups, disease-specific foundations, medical groups,
hospitals, insurance companies.
New Policy Cancellations To Hit In 2015, During Election Year
Small Employers Renewed Will Face Big Premium Hikes in 2015
On The Bright Side: Many Are Able To Buy Insurance For First Time
--Talk to advocacy groups (Health Access, Young Invincibles), enrollment counselors, agents
Covered California Websites
The consumer website for Covered
California. Contains the (defect-riddled) portal for enrolling online, links to
insurance agents and enrollment “entities”, the shop and compare calculator
for viewing health plan options and benefit details and determining eligibility
for federal subsidies. Also contains press contact information and all press
releases issued by Covered California.
• www.hbex.ca.gov: The exchange’s administrative/regulatory
website, which contains all minutes and documents from board meetings,
regulations affecting coverage, proposals and information on Covered
California contractors. Also has link to forecast assumptions Covered
California uses in setting marketing strategy and measuring enrollment
progress. Well worth digging in on occasion and seeing what gems you turn
Employers with 50 or more FTEs must offer insurance to 95%
If not, $2,000 penalty for each employee minus first 30
Insurance must be affordable and meet Obamacare standards
If not, penalty of $3,000 for each employee w/exchange subsidy
Employer mandate delayed once from 2014 start to 2015
Recently delayed again: employers with 50-99 reprieve to 2016
Companies 100 or more must offer only to 70% in first year
Obamacare building on employer coverage when it is declining
Percentage of All Firms Offering Health
SOURCE: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2013.
EMPLOYER STORY FODDER
How Will Mandate Affect Bottom Lines?
--Big costs for employers offering for first time; Extra costs for employers
who offer coverage but may need to cover more people, or make it more
affordable or upgrade benefits to comply with Obamacare.
Some Firms May Drop Coverage, Send Workers to Exchanges
--Move could be better for employees who qualify for subsidies. Those
without subsidies probably would be worse off.
Which Companies Will Cut Hours To Minimize Number Who Qualify?
--Some school districts and public agencies have done this
Many Workers, Getting Employer Coverage For First Time, Better Off
Employer Wellness Programs Incentivized Under Obamacare
Private Exchanges In Which Employers Give Employees Fixed Sum
HOSPITALS UNDER THE ACA
Hospitals Already Under Pressure Before ACA
--Declining Reimbursement, Medicare Cuts, Federal Sequester
--Trend Towards Consolidation, difficult for smaller hospitals
--Increasing concentration of doctors with fewer hospitals
ACA Likely To Reinforce The Trend Towards Consolidation
--More Medicare Cuts To Help Pay for Health Coverage Expansion
--Declining Inpatient Revenue As Readmissions Discouraged and Focus of
Care Shifts To Outpatient, Post-Discharge Care
--Pay for Outcomes Rather Than Volume of Services Reduces Payments
--Medicare Penalties For Readmissions, Infections Takes a Bite
--Focus on Coordinated Care Reinforces Need for Affiliations With Medical
Groups, Nursing Homes, Home Health Care Agencies
--Harder For Smaller Hospitals To Compete In This Environment
Fodder For Hospital Stories
Which Are The Strong and Weak Hospitals In Your Area?
--You could analyze the financial situations of local hospitals. OSHPD data very
useful here. You can talk to hospital executive, hospital analysts, doctors who
practice in hospitals and are willing to talk.
State Attorney General Investigating Hospitals-Doctors Deals
--Which local hospitals have “affiliated” with lots of medical groups, and what does
this mean for the market, competition?
ACO’S: Hospitals, Doctors Partnering Under Obamacare
--If there are ACOs in your area, are they achieving savings and quality goals? Day in
the life of a patient under the care of an ACO.
How Are Your Hospitals Facing the Future Of Health Care?
--Beefing up outpatient services? Hiring case managers to help meet quality targets?
Partnering with nursing homes, home health agencies?
Medicare Readmissions Penalties
Inpatient Payments Cut For Excess 30-Day Readmissions
Maximum Cuts Were 1% Last Year, 2% This Year, 3% Next
Readmissions Counted For Heart Attack, Heart Failure, Pneumonia
Next Year Hip and Joint Replacement To Be Added To the Mix
Opponents Say Unfair: Too Much Outside Of Hospital’s Control
Proponents Say It Is Fostering Better Provider Cooperation, Care
Case Study: Orange County’s Hospitals