Category Archives: Premiums

Are the Health Plans that Non-Profit Insurers Sell Less Expensive Than Those Offered by For-Profit Companies?

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Below, a guest-post by Kev Coleman, Head of Research and Data at HealthPocket.  His latest study comparing the costs of for-profit and non-profit plans can be found here .

Sometimes I groan after I complete a piece of research, knowing that the results may be seized and simplified by either end of the political spectrum .

Nevertheless, I went ahead and decided to compare premiums and out-of-pocket limits of nonprofit vs. for-profit health plans. This task is easier said than done. First, health plans vary with respect to their benefits and premium comparisons aren’t especially meaningful if there are significant disparities in covered medical services among plans. Consequently, I had to define a minimum set of benefits in order to get a decent representation of both nonprofit and for-profit plans that were similar to one another. Plans that didn’t meet the criteria weren’t included in the study.

 Another problematic issue for premium comparisons is that there is a relationship between deductible amounts and monthly premiums: higher premiums often mean lower deductibles.. Comparing premiums between plans with wildly different deductible amounts isn’t fair. This issue led me to establish deductible ranges; comparisons between the plan types were performed only within those ranges.

 Finally, there was the issue of location. Health insurance premiums are strongly influenced by region. This influence exerts itself on several fronts: state-specific insurance regulations that have to be satisfied;  local level of competition in the market; and the medical claim trend for people living in the region. Accordingly, the premium comparisons were performed inside selected metropolitan regions and never between differing regions. Six cities were chosen as regions for premium comparisons, two from the east coast, two from the west, and two from the center of the country.

                                              Results of the Study

 The results? I found that in 47% of the comparisons a city’s nonprofit plans had the lowest average premium within a particular deductible range. For-profit health plans had the lowest premium in 39% of comparisons with the remaining 14% classified as ties since the differences between the nonprofit and for-profit averages were less than 3%.

An examination of out-of-pocket limits for these nonprofit and for-profit plans yielded similar results: Nonprofits had the lowest average limits on out-of-pocket costs in 56% of the comparisons. For-profit plans had the lowest average limits in just 28% of the comparisons.

What should we conclude based on these results? If you have strong political convictions, I can see several ways the data could be spun,  particularly given the thorny issue of tax advantages that some nonprofit plans enjoy. For myself, I satisfy myself with a modest set of conclusions and let the politicos fight about the rest:

 1) Nonprofit health plans are more likely to offer a lower premium than for-profit health plans

2) Removing a profit incentive from health plans as a means to make premiums more affordable cannot be supported by my study’s results since in over half the comparisons nonprofit health plans did not have the lowest premium

3) Nonprofit plans are more likely to have superior out-of-pocket cost protections than for-profit plans

 It will be interesting to revisit the nonprofit/for-profit premium comparisons once the new Affordable Care Act plans are released. The Essential Health Benefits will effectively commoditize plans and health status will no longer be a factor in availability or price of coverage. As a result, so premium differences and provider networks could assume greater importance to consumers shopping for health insurance.

 One of the issues not addressed in this study is the question of health plan quality (e.g. clinical outcomes, customer satisfaction, adherence to best practices, etc.). Health plans are more than premiums and the lowest cost plan might not be the wisest consumer choice if quality scores are unacceptably low. I plan on analyzing the same plans used in this study from the perspective of their quality scores to shed some light on the relationship of quality to the premium differences discovered.

Note from MM: — I am glad that Coleman  ends by emphasizing that consumers need to consider quality as well as price. If insurance doesn’t protect you, it’s not worth the money, no matter how low the premiums.

As it happens, I began comparing the quality of non-profit vs. for-profit insurance plans a  couple of weeks ago, and will be publishing a post on the topic in a few days.  I’ll invite Coleman to come back and report on his results as well.

 

 

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Who is Douglas Holtz-Eakin and why is he saying such terrible things about health reform?

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Today, the House Energy and Commerce Committee’s Subcommittee on Health will hold a hearing entitled: Unaffordable: Impact of Obamacare on Americans’ Health Insurance.  (Always nice to know that our elected representatives are keeping an open mind.)

Prominent on the list of witnesses: “Douglas Holtz-Eakin.” Even before reading his testimony, I knew what Holtz-Eakin would say: young, health Americans should brace for “sticker shock.”  Conservatives like Holtz-Eakin tend to stay on script. However stale the rhetoric, they firmly believe that if you repeat a sound-bite often enough, people will believe it.                                     

                                        Who is Douglas Holtz-Eakin?

If you recognize the name, it’s probably because Holtz-Eakin has become a familiar figure in the mainstream media, quoted in the New York Times, writing Op-eds for Reuters and Politico.com, and appearing, not only on Fox Business News, but on CNN and the PBS’ Newshour.

Alternatively, “Holtz-Eakin” may ring a bell because he served as a member of George W. Bush’s Council of Economic Advisers (CEA), and as Director of Bush’s Congressional Budget Office (CBO.)

In a remarkably candid 2011 interview, Holtz Eakin recalled his tour in the Bush administration:

“Going into the summer of 2001, things were getting worse. . . When we first went in and talked to the President, Glenn [Hubbard] and Larry Lindsey said, ‘Mr. President . . . We’re probably not going to run a surplus on budget.  We’re going to run a deficit.”

Bush’s reply: “We’re not going to run a deficit. If you come in here with a deficit, you’re both fired. Go fix it.’”

“We ended up running a budget surplus of one billion dollars,” Holtz-Eakin confided, “driven by gimmicks of remarkable proportions.”
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Why Is It That the Truth Never Goes Viral?–A Campaign of Misinformation Unites Conservative Activists and Insurers

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The Post below originally appeared on Healthinsurance.org (mm)

Wild rumors, such as the one claiming Obamacare premiums will start at $20,000 a year for a family of five, are much jucier than the truth.

About a week ago, Investor Daily’s website published a “Fact-Check” post that illustrates how misinformation spreads.

In the post, Jed Graham explains that when the IRS published a final rule about penalties under the Affordable Care Act (ACA), it included a few hypotheticals. For example, the IRS wrote, “The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000′ in 2016.”

The $20,000 figure was just an example, Graham explains. “The IRS always uses hypothetical numerical examples in its regulations to illustrate how the rules will work in practice and this was no different.”

Nevertheless, before long, the “conservative news site CNSNews.com began to blare out this shocking headline: ‘IRS: Cheapest Obama Care Plan Will Be $20,000 Per Family.’”

From there, “the ‘fact’ got picked up by countless media outlets and pundits” Graham reports, “most of them on the right,” including:

 •Betsy McCaughey writing for the New York Post;

•Rush Limbaugh;

•Breitbart

•On the left, even Naked Capitalism (a well-researched blog,) reported the news bulletin from CNSNews.com.

This is the problem: Once a faux-fact gets out there, even reporters who have no axe to grind continue to repeat it. If you see the number often enough, you assume it must be true.

How could a reporter tell that $20,000 wasn’t an IRS estimate?

It should have been clear that this was a hypothetical, Graham points out, if you just looked at other hypotheticals in the IRS ruling. “For example: ‘the annual national average bronze plan premium for a family of 4 (1 adult, 3 children) is $18,000.’

“Both examples can’t be true,” he observes, “unless an adult’s premium is $2,000 and a child’s is $5,333.”
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Under the ACA, will YOUR Insurance Premiums Rise or Fall?

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Today, many Americans are asking: will my premiums go up in 2014?

There is no simple answer.

According to Families USA ,the Affordable Care Act (ACA) will have a positive effect on the typical family’s budget. Using an economic model that can factor in all provisions of the Act (ACA), Family’s USA estimates that by 2019, when the law is fully implemented, “the average household will be $1,571 better off.”

Even high-income families will save: thanks to rules that limit co-pays, and reward providers for becoming more efficient, “those earning $100,000 to $250,000” will spend $779 less on medical care.” But these are “averages.” They don’t tell you whether your health care costs will rise or fall.

The answer will depend on: your income, your age, your gender, who you work for, what state you live in, whether a past illness or injury has been labeled a “pre-existing condition,”  and what type of insurance you have now: 

If you work for a large company:

–  The ACA will have a “negligible” effect on your premiums says the Congressional Budget Office(CB0). This doesn’t mean that your costs won’t climb at all in 2014. As  long as medical product-makers and providers continue to raise prices, premiums will edge up each year.

But in 2012 average premiums for employer-based insurance rose by just 3% for single coverage and 4% for families, a “modest increase” when compared to 8% to 12% jumps in past years. And on average, employee co-pays and deductibles remained flat.

Granted, a 3% to 4% increase still outpaces growth in workers’ wages (1.7% percent) and general inflation (2.3%) percent).But as reform reins in spending annual increases for large groups could fall to 2%–or less. 

If you work for a small company with more than 50 employees:

Your boss will be more likely to offer affordable benefits, in part because, if he doesn’t, he will have to pay a penalty

Moreover, he will find insurance less expensive. Today, small businesses pay 18% more than large companies because the administrative costs of hand-selling plans to small groups are sky-high. But starting in 2014  businesses with fewer than 100 employees will begin buying insurance in “Exchanges” where they will become part of a large group, and eligible for lower rates.

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Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

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Health reform’s critics are sounding the alarm: in 2014, they say, health insurance premiums will climb, both for small businesses and for individuals who purchase their own coverage. “Hold onto your hat,” writes  Bob Laszewski, editor of Health Care Policy and Market Place Review. “There Will Be Sticker Shock!” 

Laszweski’s piece has been cross-posted on popular blogs, and his forecasts have been popping up in mainstream newspapers, including  USA Today.  Such wide circulation makes Laszewski’s warnings worthy of attention, and compels me to ask an important, if impertinent, question: Is what he says true?

Cherry-picking a CBO report

The Congressional Budget Office expects  that the ACA will have a “negligible” effect on the premiums that large employers pay for insurance, and most experts agree. But in the individual market, Laszewski claims that CBO projections show “10% to 13% premium increases.”

Here is what the CBO actually said:

“About 57 percent of people buying [their own] insurance would receive subsidies  via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium.

“Thus, the amount that subsidized enrollees would pay would be roughly 56 percent to 59 percent lower, on average, than the premiums charged under current law.”

Wait a minute: “56 to 59 percent lower?” Where does Laszweski get “10 percent to 13 percent higher?

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