Insurance carriers and drug makers are often demonized as unjust profiteers of the US healthcare system. In practice, 20 out of 23 Obamacare Co-ops have failed. This is due to a variety of factors, but certainly provides evidence that the free market operates somewhat efficiently. Recently, California SB SB852 provides a path to get the State of California into the generic drug manufacturing business. It will be interesting to see if the state is successful in taking over the means of production for generic drugs.
https://www.msn.com/en-us/health/medical/california-rx-state-may-dive-into-generic-drug-market/ar-BB18L3ue

​Due to Covid, many remote employees are choosing to relocate their home address to a different geographic area. In some instances, this will impact their access to healthcare. Here's a summary of important considerations:

1. PPO members can usually find an in-network provider at their new geographic location.

2. HMO members often have emergency-only coverage outside of their local HMO network. If the change is more than a few weeks, members should consider switching to a local HMO medical group at their new locale(if possible) or switching to a PPO plan.

3. Most insurance carriers have expanded Telehealth options, providing access to care for HMO members outside of their geographic area.

4. Employees who "permanently" change their home address to another state(even if they are not planning on being there forever) will likely have income and payroll tax implications. It's a great idea to consult your payroll vendor and CPA if this comes up at your business.

As expected due to Covid-related shutdowns and delay of standard care, Covered California insurance rates for 2021 will increase only an average of 0.6%. This is a solid early indicator for employers can expect in the broader group marketplace in California for 2021.
https://californiahealthline.org/news/covered-california-announces-record-low-rate-hike-for-2021/

Four executive orders were signed today to combat high Rx prices:
1. Directs federally qualified health centers to pass along massive discounts on insulin and epinephrine received from drug companies to certain low-income Americans.
2. Will allow State plans for safe importation of certain drugs, authorize the re-importation of insulin products made in the United States, and create a pathway for widespread use of personal importation waivers at authorized pharmacies in the United States.
3. Will prohibit secret deals between drug manufacturers and pharmacy benefit manager middlemen, ensuring patients directly benefit from available discounts at the pharmacy counter.
4. Ensures that the United States pays the lowest price available in economically comparable countries for Medicare Part B drugs.
https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-taking-action-lower-drug-costs-ensure-americans-access-life-saving-medications/

​US healthcare system provides the highest quality of care on the planet. Our system has fully harnessed the power of free market economics for innovation and efficiency, but is still subject to systemic barriers. San Diego in particularly has amazing systems including Scripps, UCSD, Sharp, and others. Access to care and cost are a separate issue. In my career working as an insurance broker since 2005, I am often asked what actions could be taken to improve access to care and cost.
Here are some good ideas and non-solutions, in my opinion.
6 GOOD IDEAS
1. Improve population health:

• Improve exercise and diet education in K-12 schooling.
• Mandate only healthy natural food choices for school breakfast/lunch programs for schools receiving federal funding.
• Consider increased sin taxes on tobacco, alcohol, junk food, sugary drinks.
• Create a legal framework for a lower-premium rating tier based on standard bio-metric benchmarks to incentive people to stay in shape.

2. Improve pricing transparency and billing efficiency:

• HSA plans were introduced in 2003 by President Bush were a good first step, but healthcare pricing is notoriously opaque.
• Government needs to mandate clear guidelines for pricing and billing transparency. New transparency guidelines issued by HHS in November 2019 are a step in the right direction, but sweeping legislation could revolutionize this broken portion of the marketplace.

3. Capping Rx pricing based on global benchmark data:

• US Rx pricing is substantially higher than anywhere else in the world.
• Rx drugs are developed and manufactured throughout the entire world, and largely monetized in the US due to lack of any price regulation.
• By capping US prices to no more than 120% of the global average price index for each drug, the US could effectively equalize the drug price disparity between US and the rest of the world without stifling innovation or creating a government bureaucracy. Higher prices would be pushed to other countries.

4. Scrutinize hospital consolidation/monopolization:

• Hospital consolidation may provide efficiencies from economies of scale in many cases, but excessive consolidation may cause hospital systems become monopolies in a geographic region. Current US antitrust legislation (starting with the Sherman Antitrust Act of 1890) is not setup to effectively regulate the regional nature of healthcare monopolization.
• Southern California patients generally have plenty of options. In Norcal, Sutter Health has drawn scrutiny for market monopolization. Rural areas are particularly susceptible to a monopolized health system if local health systems merge.

5. Improve mechanism to cover uninsured patients:

• President Ronald Reagan created our current de facto universal healthcare system via the COBRA act of 1985 which requires emergency room to accept all patients regardless of legal status or ability to pay.
• Private insurance ultimately subsidizes a large part of this inefficient mechanism, causing turbulence for both hospital systems who often must write off a large % of their emergency room cost and patients who must ultimately subsidize this inefficient mechanism via shockingly high ER care costs.
• Government programs to directly fund basic care clinics for all patients would help fix the issue that society is already paying for.

6. Referenced-based pricing:

• Customarily, a health insurance plan often pays a % of the total cost for a given procedure. With an 80% coinsurance plan, a patient will pay 20% of the cost for any surgery whether it cost $10,000 or $100,000. The patient has limited incentive to scrutinize cost particularly if they hit their out of pocket maximum.
• In a reference-based pricing plan, patients receive a flat dollar amount for a specific procedure. For a specific surgery, they may get a flat $20,000. If they can find a provider who will do the surgery for $20,000 all in, the surgery will cost them nothing. If they want to utilize the most qualified provider in town who charges $30,000 for the surgery, they will need to pay $10,000 out of pocket.
• Patients on plans with reference-based pricing retain a high level of choice in the care they receive.
• These programs are common on self-insured plans, but generally unavailable on most consumer plans.

5 NON-SOLUTIONS
1. State-by-state limiting Rx copays:

• Colorado, Illinois, and other states have introduced legislation to limit Rx copay costs to $100 per month. While this may help consumers initially, costs will be pushed to all insured plans members without the root cause of the high costs being addressed.

2. Government-set Rx pricing:

• One proposed solution is to have government set prices like most countries do. This would have a short-term impact at reducing cost. However, the long term impact to Rx innovation could be immense. The life saving therapies of 2040 and beyond may never be funded and developed.
• High Rx prices in the US effectively subsidize Rx R&D for the entire planet, so it is a fine line.

3. Association health plans:

• These provide lower costs for some, and higher costs for others. Certain industries with a lower risk characteristic are able to cherry pick their members out of the general risk pool and offer lower rates. This is a great value to association members, but raises rates to the broader risk pool. The next benefit to society is neutral. California has done away with AHPs for the small group market for this reason.

4. Short-term medical plans:

• These plans may serve a place in the market, but by nature are not a solution to high health insurance prices.
• Short-term medical plans are less regulated with limited benefits and often leave the insureds on the hook for substantial additional out of pocket expenses.

5. Out-of-state plans:

• Unless medical services are rendered in another geographic region, these plans have zero net value at reducing cost.
• For example: if a Californian was to purchase a lower cost medical plan from an Ohio insurer who offers lower rates which correspond to the lower cost of medical care in Ohio, they would need to travel to Ohio to get their care.

The CA Department of Fair Employment and Housing has released a free training tool to help companies comply with SB1343. For companies with 5 or more employees, the training is due by January 1, 2021.
​https://www.dfeh.ca.gov/wp-content/uploads/sites/32/2018/12/SB_1343_EmployerFAQ.pdf

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.

Source:
https://www.texmed.org/uploadedFiles/Current/2016_About_TMA/TMA_Publications/Texas_Medicine/Krause%20Table%205.pdf

​https://www.texmed.org/June16Journal/

​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.

https://www.calhealthplans.org/wp-content/uploads/2020/02/infographic-ca-health-care-dollar-02-05-20.pdf

COVID-19 Helpful Links(click image to download):

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.
​https://www.calhealthplans.org/wp-content/uploads/2020/04/fact-sheet-cahp-plans-to-respond-to-coronavirus-04-18-20.pdf

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"

https://khn.org/news/health-insurers-prosper-as-covid-19-deflates-demand-for-elective-treatments/

​Infographic on how Covid-19 affects the lungs and why it is so dangerous:

Mammoth/ThinkHR has made their COVID-19 Crisis Response Center available:
https://www.thinkhr.com/covid19/

The CDC just released tips to help Americans decrease the spread of the coronavirus:
​https://www.cdc.gov/coronavirus/2019-ncov/downloads/workplace-school-and-home-guidance.pdf

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:
https://www.calhealthplans.org/wp-content/uploads/2019/09/fact-sheet-mandates-05-07-19.pdf​

​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.
https://www.jdsupra.com/legalnews/cadillac-tax-repealed-pcori-fee-extended-83680/

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.
https://calmatters.org/economy/2019/09/whos-in-whos-out-of-ab-5/

For new hires, USCIS has released a new I-9 form that employers must start using by April 30, 2020:
https://www.uscis.gov/i-9-central/whats-new/whats-new

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:
​https://www.shrm.org/ResourcesAndTools/hr-topics/benefits/Pages/2019-HSA-Contribution-Limits-Rise-IRS-Says.aspx

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.
khn.org/news/hospital-known-for-glamorous-patients-opens-new-doors-to-its-neediest/

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.

https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201920200AB731

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:
https://dmhc.ca.gov/Portals/0/Docs/OPL/APL19-024%20(OLS)%20-%20Association%20Health%20Plans%20(12_9_2019).pdf?ver=2019-12-09-114825-903

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.
https://www.aamc.org/news-insights/hospitals-shaky-ground-meeting-challenge-seismic-safety