August 2013

August 26, 2013

Springfield Republican Headline: Basic costs of Massachusetts health plans show small increases as Obamacare goes into effect"

Yesterday, a story by Shira Schoenberg in the Springfield Republican  covered the just-approved health insurance rates for next year:

The basic cost of a health care plan for an individual or small business in Massachusetts will increase, on average, by only a small amount in the beginning of 2014, according to rates recently approved by the state Division of Insurance.

State officials point to the new rates as an example of Massachusetts' success in curbing the growth in health care spending.

“I think it means we’re continuing to make progress in holding down health care costs,” said Barbara Anthony, undersecretary of the Massachusetts Office of Consumer Affairs and Business Regulation. “It is one of the lower quarters that we’ve seen if you look over the past three years.”

The Republican put together this chart that clearly shows the downward trend in premium growth:

Chart of base premium increases - 2011-2014

The chart demonstrates the remarkable progress the state has made in controlling health care cost growth in the past few years.
-Brian Rosman

August 22, 2013
MassHealth reached out to Health Care For All and asked us to share the following information regarding their renewal for their 1115 Waiver request. The 1115 Waiver allows states to expand health care coverage to populations that aren't traditionally covered and get federal dollars for doing so. The draft renewal request has been posted online for a 30-day public comment period. The comment period will be open until 5pm on September 19.

You can find all the relevant documents here. There will be two public hearings/stakeholder meetings. Here is the information for the hearings:

Stakeholder Meeting #1 (in conjunction with a meeting of the MassHealth Medical Care Advisory Committee and the MassHealth Payment Policy Advisory Board):
Date: Tuesday, August 27
Time: 10:00am-12:00pm
Location: Transportation Building
10 Park Plaza
Boston, MA

Stakeholder Meeting #2:
Date: Thursday, August 29

Time: 10:00am-12:00pm
Location: Worcester Public Library
3 Salem Square
Worcester, MA

-Kate Bicego

August 21, 2013

There’s an amazing conversation happening on Reddit (an enormous social news site / message board) right now about health care around the world. It started with one Redditor asking the question: “Redditors who live in a country with universal healthcare, what is it really like?” The responses are fascinating.

Especially noteworthy is the cultural exchange where Americans simply cannot believe that in the UK, emergency room visits are free – and the Europeans simply cannot believe the American experience.

Here’s just one conversation that is truly telling (we censored curse words. Please note: not all language is safe for work):

Reddit thread

It's a truly worldwide thread. Even Slovenians are getting in on the action. Meanwhile Americans point to instances when the have health insurance but are still in massive debt. Redditor “breadcamesliced” explains that, even with insurance, he still has $10,000 worth of debt that cannot be paid off.

A word of explanation for those unfamiliar with Reddit's format: Reddit is a social news site / message board where users submit content and others vote them "up" or "down." The number of upvotes determines the position of the comment, which is why it is not linear.

As we work to implement the Affordable Care Act, a truly American mix of private and public programs, it’s worth remembering just how crazy our system looks to folks around the world.

-Ari Fertig

August 19, 2013

Remember that dire report commissioned by the Mass Association of Health Plans from July (it's here (pdf))?

Never mind.

The report was an attempt to forecast the impact of the ACA on small group and individual premiums in Massachusetts. The ominous Globe headline was "National health care overhaul apt to push up costs." The story said:

The analysis, by Wakely Consulting Group, projects President Obama’s health care law — supported by the Patrick administration — will tack an average of 3.7 percent on to premiums.

That would be on top of typical base rate increases, driven by hospital and doctor’ fees and demand for medical care, which have ranged from 2 to 4 percent in recent years.

Combined, the cost of insurance would almost certainly exceed the state’s benchmark for increases. The goal of a cost-containment law enacted last year was to cap overall increases at 3.6 percent — the rate of economic growth projected in 2014.

[Aside: Now the Globe story was wrong about the state's benchmark for Chapter 224, which sets the 3.6% growth limit as a goal for total medical expenses (including out of pocket costs), not premiums. But still, having just the ACA push up rates 3.7% would be worrisome.]

There are two components to premiums for 2014. First is the one-time impact of the rules changes made by the ACA. That's what the 3.7% finding in the study was about - the ACA market impact. Second is the annual regular increase (called "medical trend"), due to the increased cost of medical care, more use of services and so on.

The ACA market forecast was based on new mental health benefits being added to plans, a tax on health plans that funds the ACA being passed on, and the addition of the less-healthy CommCare population into the commercial market. This was supposed to add up to a one-time 3.7% hike in premiums. Add to this medical inflation and more utilization, and we might see total increases of 5%-7% or more.

We were more sanguine about the forecast. After all, the report was a guess about a guess. The task was to predict what insurers would predict about the impact of changes to the market next year due to the ACA. So of course it was speculative, with a margin of error.

Well, on Friday we learned the true impact of the ACA on premiums in Massachusetts, when the Division of Insurance released its approved rates (the table of approved rates is on the WBUR CommonHealth blog). On average, it appears the Massachusetts ACA market impact will result in a reduction in premiums, not an increase.

The weighted average increase is just 1.8%, not 5%-7%, for small group and individual premiums for the year starting in 2014. This is less than medical trend. Even if it was all market factors it is still comfortably less than some had feared.

The MAHP report also looked at the impact of the phase out of some of our "rating factors" - the individual characteristics of firms or individuals that let insurers either provide extra discounts or tack on extra surcharges to arrive at final rates. This has also engendered much hand-wringing, as some business groups continue to press for "relief."

But with relief would come grief.  That's because the impact of the change in rating factors is completely cost-neutral across the market. Every increase in rates due to someone losing a discount is matched by a decrease in rates for someone not having to pay an added surcharge. While the process of adopting to the new system will be painful for some, the result will be a more even, fairer system of insurance rates.

We have lots to do in Massachusetts to get health costs and premium prices under control. Let's get back to work.
 -Brian Rosman

August 9, 2013

Under both Massachusetts law and the ACA, insurers must spend a minimum percentage of health care premium revenue on medical benefits for the people they cover. This is called the "Medical Loss Ratio" (MLR) in insurance argot. If insurers don't spend enough of their revenue on medical care, and too much on administrative and other costs, they must pay a rebate of the excess to their customers.  The Massachusetts requirement for last year was that at least 90% of all premiums for individuals and small groups must go for medical care, and no more than 10% can be used for administrative, marketing, profit or other non-medical costs. This is in addition to the federal ACA requirement that large group plans devote 85% of their revenue to medical care.

In Massachusetts, four insurers are returning a total of $57.5 million to customers this summer because of this provision.

Our national partner, Community Catalyst's Health Policy Hub blog recently spoke with Liz McCarthy of Waltham about the $749 rebate she received from her insurer. We reprint their interview with permission:

Community Catalyst: I heard you recently received a check in the mail from your insurance company. How much was it for? How did it make you feel when you opened the envelope?

Liz McCarthy of Waltham Liz McCarthy of Waltham is please that she received a rebate check from her insurer due to the state and federal Medical Loss Ratio rules

Liz: The check was for $749.00. I felt very excited! I think this was the first time I’ve gotten money back from the insurance company, which was great. It was a very gratifying experience, a great example to share. I posted it on my Facebook page – I have some friends who are anti-ACA, and told my dad who is not so on board with Obamacare. It is great to have a concrete example rather than just seeing things in the press. This is me, I got the money — and yay!

Community Catalyst: Were you expecting the check?

Liz: We’d been informed by my employer that we would be getting a rebate because of the ACA, and President Obama and his wonderful planning, but I was surprised at how much it was. But because I work for a small employer, fewer than 20 employees, 90 percent [of premiums] now have to [go to] medical care and 10 percent to administration. We didn’t use as much in medical care as we paid, so we got it back.

Community Catalyst: Who is your insurer, where are they based?

Liz: Tufts HMO, an in-state insurance company.

Community Catalyst: What kind of information did your insurance company include with the check to explain why you were receiving it?

Liz: I got the check from my employer, but the insurance company sent out a letter last week outlining the ACA and why we had received the funds. The language was pretty formal, “because of the ACA, we are required to keep our administrative costs at 10 percent for companies with fewer than ‘x’ employees.” It included only what the law required and why they were doing it.

Community Catalyst: The ACA requires insurance companies to spend consumer money responsibly or return it to consumers. As a customer, does this affect your perception of your insurance company?

Liz: It makes me feel good that they are following the law, which of course they have to do. I just feel that they are doing the right thing – communicating with customers, being responsible, and implementing the Affordable Care Act. So yes, it made me feel better about them, and about the value of care I am paying for through my premiums.

Community Catalyst: Do you link the checks with changes mandated by Obamacare?

Liz: Yes. Our employer and insurance company provided information about the rebate and its relation to Obamacare.

Community Catalyst: What does this check mean to you personally, or to your family?

Liz: My husband and I, and our two little boys , are going to take a long weekend at a resort in Maine in August. The kids are very excited. We decided between resorts in New Hampshire and Maine, they were very involved in the decision.

Community Catalyst: Next year, if your insurance company complies by federal rules, you will not receive a check. However, your savings will be reflected in lower premiums. How do you feel about this?

Liz: Well it’s sort of the same thing as when you get an income tax refund. It is always exciting to get that big refund, but what that means is that you weren’t able to do a very good job budgeting your money throughout the year. I would much rather have the lower premiums and be able better to spend or invest my funds than to get a rebate at the end of the year. It’s not like I would ever argue with a $700 check , but I would hope that it doesn’t occur and that it would be a smaller amount next July. With MLR rebates, this is real earned money and it is from the insurance company by virtue of them needing to work smarter and better to decrease the overall cost of health care, which is obviously a national travesty as we spend way more for our care than any other country but rank poorly on quality of care.
Sarah Gordon, Community Catalyst

August 1, 2013

Today Massachusetts increased its tobacco taxes, on both cigarettes and other forms of tobacco.

Back when the legislature was debating tobacco taxes in the 1990s, one legislator called it a win-win policy, and another responded that it was a win-win-win proposal. Then Senator Mark Montigny proclaimed it was "win-win-win-win."

We agree. How many wins do you want?

  1. Reduce smoking, particularly by youth: Higher prices decrease smoking initiation by teens, and encourage people (particularly low income people, Blacks and Hispanics) to quit. The $1 cigarette tax increase will prevent around 27,000 youth from starting to smoke, and lead 25,000 adults (mostly young adults) to quit smoking.
  2. Improve our health. Decreased smoking and use of other tobacco products will have immediate impacts on health, and even greater long-term health benefits. Smoking harms nearly every organ of the body. The CDC says that one of three cancer deaths is caused by smoking. Smoking increases the risk of death by coronary heart disease, stroke, chronic obstructive lung diseases, and many other diseases. Less smoking means healthier babies, too.
  3. Reduced health care spending. A healthier population costs less to take care of. This Massachusetts tax increase will save the state nearly $1 billion in long-term health care costs. The savings will be felt particularly for MassHealth and other subsidized insurance programs, saving costs for state taxpayers.
  4. More revenue for Massachusetts. Even as smoking declines, revenues still increase. This has happened for every previous tax increase in Massachusetts, and in every other state that increased its tobacco tax. This morning, WBUR quoted someone from a hard-right anti-tax group in Michigan worrying about smuggling decreasing revenue. Yet even in New York City, the capital of cigarette smuggling, increased tobacco taxes led to more revenue.  Non-partisan DOR analysts confirmed the revenue assumptions for the bill.

We're particularly pleased that the new law finally equalizes taxes on smokeless tobacco, little cigars and other non-cigarette products. Their tax rate had fallen way behind the cigarette levy, leading to an explosion in use of these products by teens.

The tax increase provides a sterling opportunity to leverage an investment in resources to help people quit tobacco use. Spending on the state's tobacco control program has fallen dramatically  - see the inflation-adjusted chart below from the Mass Budget and Policy Center's budget browser:

Chart showing steep drop in appropriations for tobacco control line itemCongratulations to our partners at Tobacco Free Mass, American Cancer Society, and the American Heart/Stroke Association for this win. And this win. And this win. And this win....
-Brian Rosman