Archive for December, 2020

Trump Rule Gives Small Companies a New Tool to Help Workers Buy Health Coverage

Until October, Andrea LaRew was paying $950 a month for health insurance through her job at the Northwest Douglas County Chamber & Economic Development Corp. in the metro Denver area.

Her company didn’t contribute anything toward the premium. Plus, LaRew and her husband had a steep $13,000 deductible for the plan. But the coverage and the premium cost were in line with other plans available to the company since options for such a small work group — just LaRew and another employee wanted to enroll — weren’t plentiful.

Now they’re trying a new approach. Instead of a traditional plan, the chamber established an “individual coverage health reimbursement arrangement” (sometimes referred to as ICHRA) to which it allocates $100 a month per employee that they must put toward comprehensive coverage on the individual insurance market. These employer contributions may be used to pay for expenses such as premiums or cost sharing.

The reimbursements don’t count as taxable income to workers.

Proponents of the plans say they’re a good option for companies that may not feel they can afford to offer a traditional plan to workers but want to give them something to help with health care expenses. But consumer advocates are concerned they may shortchange some workers.

These small businesses can’t afford to offer health care coverage as the premium prices rise, said Garry Manchulenko, a principal at GMBA Advisors Group in the Denver metro area, who suggested the arrangement to the chamber. “They want to help their employees, but they can’t sustain these increases, particularly at the small-group level.”

Manchulenko said he’s suggesting the new setup for some of his clients, noting that in certain places premiums on the individual market are lower than those for group plans.

LaRew, 48, bought a plan similar to the group plan, but with a monthly price tag of $730 after she factors in the company’s contribution, a savings of more than $2,600 a year.

“It’s still super expensive for two healthy people,” said LaRew, who oversees many of the chamber’s administrative functions. But she appreciates that her premiums are deducted from her pretax income, just as when she was on the group plan.

She also liked having her pick of several plans. “I could choose my own individual plan that suits my family best, and not be tied to a group plan that works great for a co-worker but not for me.”

The new coverage option was established through a rule issued by the Trump administration last year. It could be helpful for workers like LaRew whose income is too high to qualify for the Affordable Care Act’s tax credits that help pay for policies sold on the individual market. It may also be attractive to part-time or seasonal workers who don’t qualify for their employer’s coverage, according to insurance brokers and policy experts familiar with the new option.

But consumer advocates warned that it could encourage employers who had offered a traditional insurance plan to switch to the new arrangement because of the cost savings. That might leave their workers with a more cumbersome enrollment process and less generous coverage.

“I do think there are pitfalls for employees,” said Jason Levitis, a nonresident fellow at the USC-Brookings Schaeffer Initiative for Health Policy. “There’s confusion about the ICHRAs themselves.”

“And even if you know you need an ACA-compliant plan, how do you find one?” he asked, noting the prevalence of deceptive marketing of plans that don’t meet ACA standards.

In addition, because of a quirk in how the new rules work, lower-income workers who bought ACA marketplace plans because their employer didn’t offer coverage could lose the federal subsidies for their marketplace plans if their company puts an ICHRA in place.

Here’s how that could come into play. Only people earning 400% of the federal poverty level or less (about $51,000 for one person) are eligible for premium subsidies. In addition, in order to qualify the coverage offered by an employer must be considered unaffordable to the worker. If an employer offers an individual coverage health reimbursement arrangement, that means workers who would otherwise meet the poverty threshold would also have to contribute more than 9.78% of their income to buy the lowest-cost individual silver plan on the exchange. That amount would be based on the plan’s cost after factoring in the contribution from an employer.

If the worker’s contribution is lower than that standard, then the only assistance they are eligible for is through the ICHRA contribution. Federal rules don’t allow workers to accept both ICHRA contributions and premium tax credits.

“My concern is for people who are out there with a premium tax credit” who might lose that subsidy if they don’t meet the federal standard, said Peter Newell, director of the Health Insurance Project for the United Hospital Fund in New York, who authored an analysis of the new coverage option in October.

There are affordability caps in the ACA for regular employer-sponsored coverage, too, but those caps are generally lower than the caps for ICHRAs. As employers move to offer ICHRAs instead of traditional coverage, some workers will lose their premium tax credits because of the higher affordability threshold, Newell’s analysis found.

If this sounds complicated, it’s because it is, and brokers and advocates agree that many workers will need assistance figuring out what to do. In addition to running the numbers, people may need to work through where to buy a comprehensive plan that complies with the ACA. Such plans can be purchased on and off the exchange, but if workers want the company to deduct their premium costs from their salary, as LaRew did, they must purchase a plan outside of the exchange.

“There are so many paths to take and so many points of confusion, it’s super, super important that employees have some support going through this,” said Cat Perez, co-founder and chief product officer at Health Sherpa, whose technology platform helps people enroll in marketplace plans. It has incorporated information about ICHRAs.

Colorado is working with the broker community to drum up interest in the new product, said Kevin Patterson, chief executive officer of Connect for Health Colorado, the state’s insurance exchange.

“If we can get more people into the individual marketplace that makes it stronger,” Patterson said.

In theory that makes sense, but some analysts worry that the adoption of these new arrangements could drive up marketplace premiums by encouraging employers with sick workers to shift them into the individual market.

“This is a way to offer a lower premium option to some employers, but with the consequence of increasing premiums in the individual market and costs for the federal government via higher premium tax credits,” said Matthew Fiedler, a fellow in economic studies at USC-Brookings, who co-authored an analysis of the new offerings.

Still, larger employers aren’t currently very interested in embracing these new arrangements, said Jay Savan, a partner at human resources consultant Mercer.

The federal rules don’t allow employers to offer an employee both a traditional plan and an ICHRA simultaneously, and most large employers aren’t ready to replace their traditional plans.

“As long as it’s black-or-white, there are precious few employers of size that are willing to take that leap,” he said. COPY HTML

Top 82 U.S. Non-Profit Hospitals-Quantifying Government Payments and Financial Assets


In households across America, healthcare costs are crushing the American dream. The average family now pays nearly
$20,000 annually between insurance premiums, deductibles,
and out-of-pockets costs.
In 1970, healthcare amounted to seven-percent of gross
domestic product (GDP). Today, estimates suggest the soaring
cost of healthcare will consume 20-percent of our GDP.
Our OpenTheBooks Oversight Report – Top 82 U.S. Non-Prof-it
Hospitals, Quantifying Government Payments & Financial
Assets studied the largest charitable healthcare providers. Last
year, patients spent roughly 1 out of every 7 U.S. healthcare
dollars within these healthcare networks. Many are household
names: Mayo Clinic, Cleveland Clinic, Kaiser Foundation, Dignity Health, and Partners HealthCare.
These powerful institutions are organized as public charities –
not as for-profit corporations. Their mission is to deliver the
latest in medical technologies and affordable healthcare to
their communities. Any “profits” must be re-invested into their
charitable mission.
However, these 82 non-profit medical providers are making
big money. Last year, their combined net assets increased from
$164.2 billion to $203.1 billion – that’s 23.6-percent growth.*
Meanwhile, their executives are highly compensated. The Banner Health Chief Executive Officer and President earned $21.6
million and their Executive Vice President and CAO made $12
million last year. Top executives at Memorial Hermann Health
System, Kaiser Health, Ascension, Advocate Health Care, and
Northwestern Memorial made between $10 million and $18

For comparison, our analysis also includes the five largest publicly traded for-profit U.S. hospitals. These five corporations
had $96 billion in revenues last year with net asset growth of
$600 million: an increase in assets from $40.1 billion to $40.7
billion year-over-year (1.5% increase).
Taxpayers deserve to know whether our non-profit healthcare
providers, which use our laws to structure themselves as charities, are truly working for patients. After all, these non-profits
pay no income taxes, or property taxes, and raised over $5
billion last year in tax-deductible contributions from donors.

From Prisoner to Customer to Sophisticated Consumer (Continued)

Hopefully you’ve had time to get your medical house in order. You’ve done the research on your family’s medical history. You’ve found the appropriate internal medicine physicians that specialize in whatever chronic issues your family members face. You are now engaged in your medical care.

The topic on the table today continues to be pricing transparency. The debate continues to rage on by skeptics that argue patients have little incentive to “shop” for medical care because insurance insulates them from medical costs. They also point to studies showing few patients use current pricing transparency tools to shop for medical care.

We can be as skeptical as the next person but a recent event bolstered our belief that pricing transparency in a simple, well-constructed form has an important place in health care. Recently, a company we’ve mentioned before, GoodRx, had a public stock offering for over $1 billion and placed the value of the company at $12.6 billion. Simply stated, GoodRx is a pricing transparency company in the pharmaceutical area. The company provides a simple to use and effective way for consumers to obtain significant discounts on prescription drugs. So given Wall Street’s reaction, we believe there is a place for pricing transparency in health care.

Here’s the catch-twenty two. The health care industry doesn’t. There’s seemingly consensus from both providers and insurers that somehow pricing transparency will cause massive damage to their economic interests and not be helpful to patients. From our media scanning, employers can expect estimated increases for 2021 health insurance premiums to be around 5%. Health benefit consultants are continuing to provide solutions to mitigate these increases. Surprisingly, pricing transparency “tools” are now starting to emerge as consultant recommendations as a means of minimizing the impact of these increases.

We recently surveyed a metropolitan area with an aggressive pricing transparency provider that provides a sophisticated website pricing tool. Our thinking was that with a “bell cow” in the market others would be inclined to follow in some reasonable fashion. Our thinking was wrong. There was little to no discernible impact on others’ to provide some means of pricing transparency. What we weren’t able to determine was the “spillover” impact on other organizations’ pricing for similar services.

Our research is providing us with some undeniable facts. The external business environment is moving rapidly further and further away from the business practices of healthcare. Some of this gap is being created by outdated government legislation and some of it is being created by the industry’s resistance to ongoing technology developments. We accidentally stumbled on to an example of how over 20 year old legislation is having what now might be an unintended negative consequence on private contracting between a physician and patient. The Balanced Budget Act of 1997 prevents an Original Medicare Beneficiary from entering into a private contract with a physician. At the time, the thinking was this legislation was providing the patient with “protection”  from inflated prices. In today’s environment, the legislation prevents patients from gaining access to physicians and from negotiating prices. This finding reinforces our belief that neither the government nor significant industry leadership is going to result in a successful pricing transparency movement.

Unleashing market place competitive forces on health care will lower prices despite what skeptics say. Will there be unintended consequences? Sure. There are examples, like reference pricing that have proven successful in lowering prices. This practice has largely been utilized by large organizations with large workforces. So the benefits have been constrained without creating any type of “spillover” impact.

We are now entering a new era in health care. The “Pandemic” has created wide-spread changes in every day life practices. In health care, we’ve seen a tremdous surge in telemedicine which prior to Covid was being strongly resisted by the health care industry. We’ve seen significant changes in how hospitals protect both their employees and patients from infectious disease. We’re now going to see how the country deals with a significant number of people  having lost employment based health care insurance coverage. This is going to unleash huge numbers of people searching for better deals in health care.

We are now asking for your help in creating a health care marketplace where there is transparency in pricing, quality and access. We have relied upon market forces in almost every aspect of our lives. Health care has been “special” and exempted from these forces. We believe the implementation of pricing transparency legislation will be a first step to pulling back the curtain. As consumers we’re critical in this transformation. We need your insights and experiences to share with others. We’re creating a section on our website where patients and consumers can be a community of health care activists. Share your experiences!

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