Most healthcare providers accept both Medicare and private insurance, and some also accept Medicaid/Medi-Cal. Private insurance provides the most lucrative reimbursements to doctors, hospitals, and Rx providers thus keeping the system afloat(profitable) and driving innovation. Here's a breakdown of the rates different insurance providers pay from one TX study:
For Every $1 Paid by Medicare:
Private Insurance: pays 115%-200% of the Medicare rate.
Medicaid: pays 61%-81% of Medicare rate.
Ever wonder where your insurance premiums go? Health insurer profit account for just 3.4% of your premium. Insurance companies have extremely high levels of transparency and regulation. Information can be found via
publicly available small group rates, 5500 filings for large groups, State Department of Insurance Filings, and ACA MLR reporting.
Conversely, the 88% of premium spent on medical cost has very limited transparency and regulation: Rx costs, pharmacy benefit manager rebates, hospital costs, etc.
CA health insurance carriers have done their part in the Covid-19 crisis by waiving testing costs, advancing claims payments, enhancing telehealth, and relaxing Rx/pre-authorization protocols.
Follow up to my post from 3 weeks ago regarding the direction of health insurance rates. Suspension of elective care procedures will outweigh COVID-related care and will drive low increases or even rate reductions in the near term in most areas:
"Earlier this month, UnitedHealth Group CEO David Wichmann told analysts that cost reductions so far are outstripping expenses for COVID-19 and that revenue is up compared with the previous year"
Mammoth/ThinkHR has made their COVID-19 Crisis Response Center available:
The CDC just released tips to help Americans decrease the spread of the coronavirus:
Government-mandated benefits expand what health plans cover and also drive up premiums for consumers. For example: the ACA requires health plans to cover pediatric dental and preventative health services. Here's a good rundown of proposed mandates and their estimated costs to Californians:
A leading trend in employee benefits over the past decade has been to offer employees multiple plan choices to increase efficiency and eliminate over insurance. Each employee can select a plan that best fits their needs.
At the 33:00 mark, author Neil Howe talks about the paradox of choice and how millennials may be more likely to view a plethora of choices as a bad thing. Very interesting contrarian perspective:
Two important tax updates:
1. The long delayed Cadillac Tax is now officially repealed.
2. PCORI Fees, originally set to expire in 2019, have been extended.
AB 5 was signed into law to force gig economy workers at companies like Uber and DoorDash from 1099 into W-2 status. The effect on the entire economy has been widespread. Here's a good article on industries exempted, assuming they meet other 1099 eligibility criteria. There's a strong likelihood that this measure may be challenged by a ballot initiative in November 2020.
For new hires, USCIS has released a new I-9 form that employers must start using by April 30, 2020:
Were you enrolled in an HSA-eligible high deductible plan in 2019? Reminder: you have until tax day April 15th to max out your pre-tax HSA contribution for the 2019 tax year:
All San Diego hospitals do a great job discounting rates for low income patients. Some have a standard policy based on FPL, some do it on a case-by-case basis.
AB 731 will require large group health insurance(100+ employee) renewals to be released 120 days prior to renewal date, up from the current 60 days requirement.
Certainly good from a strategic planning standpoint. Opponents argue that the rate review procedures included will increase costs for the entire market by adding a layer of bureaucracy to achieve a result best served by a competitive marketplace, while proponents say the added layer of regulatory scrutiny will reduce costs for Californians.
Official ruling released yesterday from the CA Department of Managed Health Care: Association Health Plans(trust plans) to be completely phased out by July 1, 2021.
Official release here:
Recommended Rx dosages are often the same for a 110lb woman and a 250lb man. As medical professionals work to improve and customize recommended Rx dosages, this is a good fact for consumers to be aware of:
Seismic mandate upgrades will cost California hospitals between $34 billion and $143 billion by 2030 when the next round of requirements go into effect. This is both an important infrastructure investment and a key driver of healthcare cost increases.
Reminder to employers with CA residents, The State of California has instituted an individual mandate for all citizens to have health coverage starting Jan. 1, 2020 to counteract the repeal of the PPACA individual mandate. Great time to start a group benefits plan if your company does not have one in place.
Regional medical system consolidation can cause both system-wide efficiencies that drive down costs and market monopolies which drive up costs. NorCal's Sutter Health is facing a jury trial for utilizing alleged anti-competitive tactics. The result could set a legal precedent for more cases like this through the country:
A good % of Californians are from somewhere else. If you're looking to find a quality hospital in your area, CalHospitalCompare is a great comparison tool:
In addition to making the user look really uncool, clinical data is mounting that e-cigarettes are not a safe alternative to smoking:
Industry-specific Association Health Plans(AHP) are probably on their way out in California due to new State regulations.
The "Cadillac Tax", a tax on high cost health plans originally enacted to fund components of the 2010 healthcare reforms has already been delayed until 2022. Now, it may be formally repealed. With the US annual deficit approaching $1T and historically low interest rates, why not?