Most of us know what a surplus is: When you have more of something than you need. And you’re probably wondering what that has to do with health care? According to a new report by the Consumer Union, seven out of 10 of Blue Cross Blue Shield’s nonprofit plans that were studied in a sample have been stockpiling a surplus of cash, all the while continuing to significantly increase premiums for many consumers in the private market.
When it comes to insurance plans, a surplus is essentially the amount of money an insurance company raises through premiums, minus what it pays out for medical and administrative costs. All health plans are required to have a certain amount of money in surplus to ensure that if they incur any unexpected costs, it won’t put the plan out of business.
However, according to the Consumers Union report, these plans have been maintaining surpluses that surpass the minimum amount required by law and the minimum amount required by the Blue Cross and Blue Shield Association. At first glance it might appear that’s a financially responsible thing to do, but consider this: while the surplus grew and grew, many consumers’ premiums were hiked—and by a lot.
In Arizona, Blue Cross Blue Shield,
…raised rates for its individual market customers between… 8.8% and 18.4% in 2009. From 2007 to 2009, the company grew surplus from $648.3 million to $717.1 million, an amount more than seven times the regulatory minimum.
And while every plan is required to maintain a minimum surplus, only a few states have set limits on just how much surplus a plan can set aside. This means that, for the most part, nonprofit plans can continue to build their surplus, while charging consumers more and more in premiums each year.
One out of every three consumers in the private individual market is insured through a Blue Cross Blue Shield plan, so regulating these companies’ premiums and surplus is very important.. Supposedly, nonprofit insurance plans differ from for-profit insurance plans in that they are designed so that the profits “must be used for the benefit of their members or the community-at-large.”
But with extravagant surpluses coupled with high rate hikes, it’s hard to believe that these plans are really trying to benefit their customers.
Many of you have sent in questions about how the new health care law will affect you and your family. We’ve compiled answers for select questions to our experts in a short series to help you navigate changes to the health care system. Here's the latest:
I have been unemployed since December 2008, and my husband works for a very small company with 5-6 employees that does not offer healthcare. Will health reform mandate all employers, regardless of size, to provide healthcare?
Health reform does not mandate that small employers offer coverage to their workers. However, it does make it easier for small employers to offer coverage. Health reform provides employers with up to 25 workers with tax credits to make coverage more affordable—increasing the likelihood that they will offer coverage. Starting this year, small employers can get tax credits for up to 35 percent of their share of the premiums for their workers’ health coverage. In 2014, they will be eligible for credits of up to 50 percent of the premiums they pay.
In addition, starting in 2014, small employers will have a new marketplace (also referred to as an “exchange”) in which they can shop for coverage for their workers. In the new health insurance exchanges, insurers will provide small employers with clear, comparable information on the costs and benefits of different health plans, which will help small employers find quality coverage that meets their workers’ needs.
If your husband’s employer decides not to offer coverage to his/her workers, you and your family will still be able to get coverage starting in 2014 through the new health insurance exchange. Moreover, many low- and middle-income workers will get significant help affording coverage through a new tax credit subsidy.
Small businesses are a vital component of the American economy: They drive both innovation and job creation. With nearly 4.8 million businesses across the country, you’re likely to know someone employed by one, someone who runs one, or be a part of one yourself.
It is clear that many small businesses are less financially able to provide health coverage for their workers than larger businesses. More than half of the uninsured in our nation are small business owners, employees, or their families.
Particularly for the smallest businesses, the cost of providing health insurance can be very expensive. Businesses with fewer than 10 workers paid on average $350 more per worker than firms with more than 50 workers—and the coverage they get for the extra $350 is often much less comprehensive and has higher out-of-pocket costs for the workers.
Small businesses pay more because they don’t have the economies of scale, or they aren’t large enough, to leverage better prices as large businesses can. Further, in a small business, if just one worker is sick, rates can go sky-high.
The result of these higher costs is that the smaller the business, the less likely it is to be able to offer coverage to its workers. For businesses with three to nine workers, less than half (46 percent) offer coverage to their workers. Among businesses with 10 to 24 workers, only 72 percent offer coverage. In comparison, 95 percent of businesses with 50 or more workers offer their employees health coverage.
Knowing this, legislators included many provisions within the new health care law to help small employers and their workers obtain high-quality, affordable coverage. One of these important provisions is a program that will provide tax credits to small employers that will help them purchase health insurance for their workers.
The new small business tax credit is targeted at businesses with fewer than 25 workers and average wages of less than $50,000. It covers up to 35 percent of the cost of providing coverage to workers now, and in 2014, the tax credit will increase to cover up to 50 percent of the cost. The tax credit amount is calculated on a sliding scale. The highest level of credit is targeted to the small businesses that need the most help – businesses with 10 or fewer workers and lower average wages (less than $25,000) get the full tax credit.
Families USA and Small Business Majority released a report, A Helping Hand for Small Businesses, which quantifies both the number of employers who will be eligible to receive help from this provision, as well as the number of employers who will be eligible for the maximum tax credit. The report also includes state-by-state data.
More than 4 million small businesses will be eligible to receive a tax credit for the purchase of employee health insurance in 2010.
Approximately 1,198,700 American small businesses will be eligible to receive the maximum tax credit in 2010.
The small business tax credit, along with many other important provisions in the Affordable Health Care Act will finally make the health care system more affordable and accessible to small business owners and their employees. Small businesses are essential to our country; it’s time we helped them.
Two men with the same resume apply for a job. The only difference between them is that one is white and the other is black. They should have the same chance of getting that job, right?
Recently, I heard Harvard professor David R. Williams speak at the launch of the W.K. Kellogg Foundation’s new America Healing Initiative. Professor Williams talked about a study that found that even with identical resumes, it was easier for a white male with a felony conviction to get a job than a black male whose record was clean.
This is a perfect example of structural racism, which the Kellogg Foundation defines as “a system in which the policies and practices of both government and private institutions continue to privilege some and disadvantage others based on physical characteristics.”
Professor Williams also talked about how racial discrimination in the workplace and in schools can lead to disparities in the health of minority populations. For example, communities of color are disproportionately represented among those living in poverty and also people of color graduate from college at much lower rates than their white counterparts. Many studies have shown a correlation between education and life expectancy—people with higher levels of education are more likely to live longer lives. Yet, even at the same education level, when you compare the life expectancy of a white college graduate to a black college graduate, there is still a four-year disparity in life expectancy. That’s how you know race still matters.
The America Healing initiative is a $75 million effort to take on structural racism and advance racial healing in America. The America Healing Initiative seeks to improve outcomes for vulnerable children by eliminating barriers to opportunities. Under the initiative, 119 organizations, representing 29 states and the District of Columbia, will receive grants specifically to support community-based organizations’ healing efforts among racial and ethnic groups that address historic burdens, disparities, and barriers to opportunity in education, health, and economic areas.
Although some schools, churches, neighborhoods, and workplaces seem to be fully integrated, this does not mean that all people, regardless of race, now have an equal opportunity to reach their full potential. I must admit that I am impressed by the Kellogg Foundation’s courage and willingness to tackle structural racism in America. It is not often that attention is focused on the historical or systemic causes of inequities between whites and people of color. School and residential segregation, redlining, and other actions have created and continue to create significant barriers to opportunity and success for non-white children and families. And, although we have made great progress moving beyond the blatant racial discrimination of earlier decades, today’s communities of color are still facing the subtle remnants of the past.
To view the webcast of the America Healing Initiative launch, click here.
Did you know that "there is no such thing as preventive medicine”? We didn't either. So when Rush Limbaugh made that seemingly outlandish claim last week, we did some research to figure out whether or not he was telling the truth. The diagnosis? Liar, liar pants on fire.
It all began last week when Michelle Obama, Dr. Jill Biden, and Health and Human Services Secretary Kathleen Sebelius held a press conference to promote new preventive health care benefits that will be available starting September 23, thanks to health reform. Among other things, mammograms to detect breast cancer, screening for chronic conditions like diabetes, flu vaccinations, and standard immunizations will be provided in all new plans, free of charge.
This means that a woman who finds a lump in her breast will no longer have to delay going to the doctor because she can’t afford the co-pay. A recent graduate who notices symptoms that could be precursors to diabetes, but who doesn’t make enough money to afford care, will be able see a doctor free of charge instead of delaying care and potentially exacerbating his condition.
It doesn’t take an expert to realize that when a disease or chronic condition is caught early, it’s easier to treat and people live longer as a result. But since Limbaugh doesn’t seem to believe conventional wisdom, we decided to get a second opinion.
According the American Cancer Society, when breast cancer is diagnosed at a localized stage, the five-year survival rate is 98%. The more advanced the cancer, the more survival rates plummet. Furthermore,
… reductions in breast cancer death rates are possible by improving regular use of mammography screening and providing timely access to high-quality follow-up and treatment.
How about a third opinion? Defeat Diabetes, a nonprofit dedicated to early detection and diabetes management notes that,
There are 21 million Americans who are diabetic and almost half of them don't know it! The life expectancy of the diabetic is shortened by one third, however, the sooner diabetes is detected the sooner lifestyle changes can begin, increasing life expectancy to a large degree.
The science is simple. When a chronic condition, cancer, or illness is caught early, it’s far easier to treat. Screenings help doctors identify problems, immunizations prevent patients from getting sick in the first place, and access to affordable care ensures that the patient will be able to get their medical problem treated when they need it.
We’re not sure if Rush Limbaugh is playing politics by ignoring all the facts, or if he just doesn’t know any better. Regardless of his intention, his comments are misleading and even dangerous. Preventive medicine helps save lives and in the long run helps to decrease overall health care costs.
Many Americans today are not getting the check-ups that they need, and we know that focusing on early detection and prevention saves lives. So the White House, along with the Secretary of Health and Human Services, Kathleen Sebelius, are making an investment in preventive care.
This week, Michelle Obama, Jill Biden, and Kathleen Sebelius announced new regulations around prevention, which were made available as a result of health reform.
Under the Affordable Care Act, beginning on September 23, 2010, new private insurance plans are required to provide recommended preventive care without charging co-payments, deductibles, and other costs. The new rule covers a broad and deep array of services, but here are some of the highlights:
• Blood pressure screenings
• Diabetes tests
• Cholesterol tests
• Cancer screenings including mammograms and colonoscopies
• Routine vaccinations with grade of "A" or "B" by the U.S. Preventive Services Task Force
• Prenatal care
• Well-baby and well-child visits
• Tobacco cessation
• Women’s health screenings
According to a New York Times article, the administration estimates that 41 million people are expected to benefit from the new prevention rules just next year.
Early prevention and screenings are important to ensuring greater health care outcomes in the long run. Focusing on prevention is the first step to creating a healthier society. To find more information on the new preventions regulations, visit HealthCare.gov.
For a lot of women, being pregnant is an exciting time filled with anticipation, baby showers, and nursery decorations. But for lower-income women who don’t have access to affordable health care, pregnancy—and the health complications that sometimes come with it—can be downright scary.
According to a new report by Families USA, “many low-income women face barriers to getting the health care they need.” And shockingly,
Each year, approximately 70,000 women go without any form of prenatal care. These women are more than three and one-half times as likely to have a low birth weight baby—one of the leading causes of infant mortality—and nearly three times as likely to give birth prematurely as other pregnant women.
Although pregnant women with very low incomes (up to 133 percent of the federal poverty level) are eligible for Medicaid, low-income, uninsured pregnant women who make too much money to be eligible for Medicaid are often out of luck, even though their child will be eligible for Medicaid or CHIP after they are born.
States had an array of options to expand coverage to these women in the past, but they were administratively cumbersome and did not always cover the full spectrum of health care services that these women need. The Children’s Health Insurance Program Reauthorization Act (CHIPRA) provides states with a new option to provide comprehensive health coverage through CHIP to low-income pregnant women who are uninsured but earn too much money to be eligible for Medicaid.
Providing CHIP coverage to low-income pregnant women could solve an important problem for families that earn too much for Medicaid but who are unable to afford private insurance that includes maternity coverage. While health reform will help address this issue as well, the new coverage that was included in the health reform law will not be in place in most states until 2014. The CHIPRA provision that expands coverage for pregnant women gives states an option that they can implement now.
The CHIPRA option is not only easier to administer than the previous system, it provides women with more comprehensive prenatal and postnatal coverage. And studies show that providing health coverage to pregnant women increases their access to prenatal care, which improves women’s health, helps families deliver healthier babies, and reduces future health care costs that are associated with poor prenatal care. By covering mothers during their pregnancy and for a period of time after giving birth, the new option will reduce the cost of medical care for newborns enrolled in Medicaid and CHIP, and it will save states money.
Healthier moms, newborns, and state budgets… What more could we ask for?
Everyone is feeling the pinch of the recession, but none more so than the states facing severe budget deficits. Many states are heading into the fiscal year, which started July 1, with strained budgets:
States are expected to have faced $296.6 billion in shortfalls between the 2009 and 2012 budget years, and the National Association of State Budget Officers report found that the new budget year will be just as challenging, despite the expectation of modest increases in tax collections.
Unfortunately, without federal help, many state legislators are looking to slash programs—including those having to do with education, law enforcement, and roads, and even social services like Medicaid. Now is not the right time to reduce state spending: A reduction in state spending will subsequently cut jobs and slow economic growth in the state. Further, demand for many of the state social services that help families get through tough times—when facing job lay-offs or reduced income—is on the rise.
Medicaid is one of these important “safety net” programs. During this prolonged recession, there has been an increased demand for the health coverage that Medicaid provides. The weak economy has affected people from all walks of life, and Medicaid enrollment is growing as more and more people find themselves eligible.
[S]elf-employed construction workers, who have lost business during the housing bust, are turning to Medicaid and its companion program for children ... Hotel workers are seeking coverage through the program after losing their jobs because of a decline in tourism.
Because of the increase in demand for Medicaid and the parallel decrease in state tax revenues, states are struggling to keep their Medicaid programs and other vital state-funded services afloat. Many states were banking on a six-month extension of the federal aid they have been receiving from the stimulus package.
Congress has tried to pass a measure to extend this enhanced funding to states, but they have continually met opposition. Right before the state fiscal year began on July 1, Congress failed once again to extend important parts of the stimulus program through 2011, including $16 billion worth of funding for Medicaid to the states.
It’s hopeful that the Senate may revisit the issue as a stand-alone package later in the summer. But while Congress hashes it out, state budgets remain in limbo.
At the end of June, the Administration issued a series of regulations under the Affordable Care Act to implement a new Patients’ Bill of Rights. The goal of these new regulations is to form stronger consumer protections in the private insurance market and to finally put American consumers back in charge of their health coverage. One of the most egregious insurance practices that will be prohibited is the unfair rescission of insurance coverage after a person has been paying premiums. Rescission is the insurer practice of retroactively canceling a customer’s coverage when they are sick or in need of care, claiming that the customer intentionally omitted information on their application for coverage.
Although insurance companies claim rescissions are very rare, the problem is they typically occur among a more vulnerable population: those with coverage through the private market. Because these individuals are on separate plans, they tend to pay much higher rates and do not have the same kind of leverage as someone in group insurance. Further, the numbers seem to be telling a different story.
There were more than 27,000 rescissions in the U.S. over a five-year period that ended in 2008, according to a December 2009 study by the National Association of Insurance Commissioners. That's an average 3.7 rescissions per 1,000 policies written.
Throughout the battle to pass health reform, many consumer stories had a common thread—coverage was taken away, many times when the consumer needed it most. For example, a woman in Los Angles was told by her insurance company in the midst of chemo-therapy that they were cancelling her policy because they insisted her cancer existed before she signed up for coverage.
And although many of the stories involved heartbreaking tales of consumers whose coverage was yanked away in the midst of an illness, there are just as many families who have experienced a cancellation during times of relative health, leaving them uninsured and vulnerable if someone in their family were to get sick in the future.
Take for instance the story of Nora Kenny, who at the age of eight had an overbite that contributed to her need for braces. When Nora was 15, her parents’ insurance company found out about it, they rescinded her health coverage claiming her parents had intentionally omitted information regarding her health status. In truth, the Kennys never deliberately omitted anything because there were never asked about their daughter’s dental health or even asked for references to her dentist or orthodontist.
Because of the insurance company’s decision, Nora was left without insurance, and her family was left to fight an uphill battle.
Lucky for Nora and her family, she did not become seriously ill during her time without insurance, but not everyone who has been hurt by insurance companies has been so lucky. With the passing of the Affordable Care Act and now the implementation of the Patients’ Bill of Rights we are one step closer to making sure all Americans can feel secure in their health coverage.
Dr. Donald Berwick was sworn in today as the new Administrator of the Centers for Medicare and Medicaid Services (CMS). Without a leader since 2006, the appointment of Dr. Berwick is a long-awaited addition to the federal agency. Dr. Berwick is widely known as a pioneer in the field of health care quality. The American Medical Association announced its support for Berwick weeks ago, stating,
He is widely known and well-respected for his visionary leadership efforts that focus on optimizing the quality and safety of patient care in hospitals and across health-care settings.
His work is respected across disciplines and his innovative take on the health care system will be especially important given the role that CMS will play in implementing the health reform law. As a practicing pediatrician at Boston’s Children’s Hospital, a consultant in pediatrics at Massachusetts General Hospital, a professor of pediatrics and health policy at Harvard, and as president and CEO of the Institute of Healthcare Improvement, Dr. Berwick has a variety of experiences with our health care system that will help inform his decisions at CMS.
Now, given Dr. Berwick’s impressive resume and endorsements from most major medical societies and former heads of CMS (including two that served under Presidents George Bush and George W. Bush), it’s difficult to understand why his nomination has been stalled since last April. Republicans have chosen to use this nomination as a tool to rehash some of the most negative and divisive rhetoric that became so familiar throughout the course of the health reform fight. In the words of Thomas Scully, Administrator of CMS under the last administration,
He’s universally regarded as a thoughtful guy who is not partisan. I think it’s more about … the health care bill. You could nominate Ghandi to be head of CMS and that would be controversial right now.
Instead of having a rational discussion about Dr. Berwick’s merits, Senate Republicans have been unwilling to even schedule confirmation hearings and have instead used the past few months to take Dr. Berwick’s words out of context in order to raise doubts about his intentions to improve American health care. CMS has been without an Administrator since 2006, and with the implementation of health reform in full swing, it is unconscionable for Republicans to continue to delay and postpone Dr. Berwick’s confirmation in the hopes of scoring political points. Left with few options, President Obama decided to bypass Republican obstructionism and appoint Dr. Berwick during Congress’s July recess. The President’s decision to use a recess appointment illustrates his commitment to putting the public’s best interests above politics.
For Republicans to say that Dr. Berwick advocates for rationing of care and a complete abandonment of our health care system for a government-run system like the British National Health Service is not only flat wrong, it’s a waste of our time. Implementing the new health care law will be a challenging process over the next few years. We need someone leading CMS with the tools to meet those challenges, and we need our public leaders to put that goal above political games and partisanship. Dr. Berwick can be that leader.
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Category: Affordability,Health Care Costs,Insurance Industry