The New York Times: Health Care Law Will Raise Some Premiums, Study Says

March 28, 2013

WASHINGTON — A study commissioned by the State of California says that the new federal health care law will drive up individual insurance premiums, but that subsidies will offset most of the increase for low-income people.

The study, issued Thursday in the midst of a growing national debate over the impact of the law, is significant because California is far ahead of most states in setting up a competitive marketplace, or exchange, where people can buy insurance this fall.

Premiums could increase by an average of 30 percent for higher-income people in California who are now insured and do not qualify for federal insurance subsidies, the study said.

However, it said, people in this group will benefit from new limits on their out-of-pocket medical expenses, so their total cost of care will increase by 20 percent, on average.

The report for the state insurance exchange, known as Covered California, cited several factors contributing to higher premiums: an influx of less healthy people into the individual insurance market, and a requirement for health insurance plans to offer richer benefits and to cover more of the cost of care than is now typical for individual insurance policies.

Another factor, it said, is that federal and state government agencies are imposing new taxes and fees on insurers, which are likely to pass on some of the costs to consumers.

“Health insurance will become relatively less expensive for people with chronic conditions and relatively more expensive for healthier people,” said Robert G. Cosway, an actuary at Milliman, a large consulting firm that prepared the report.

Some people, especially those in good health, may drop their insurance because of the premium increases, Mr. Cosway said.

However, the study said that low-income people would see significant reductions in their premiums and out-of-pocket costs, in part because of income tax credits and other subsidies. The total cost of care, it said, will fall by an average of 76 percent for people who are currently insured and have incomes less than 250 percent of the poverty level (meaning less than $28,725 a year for an individual).

The report was prepared to help state officials evaluate proposals from insurers and develop marketing messages to reach consumers.

“There are 5.3 million Californians who will qualify to purchase insurance through the exchange,” said Peter V. Lee, the executive director of the California exchange. “Insights gained from this research confirm that most people will experience a positive impact.”

The California report follows a study by the Society of Actuaries, a professional organization, suggesting that the new law would contribute to higher insurance costs in the next three years.

Asked about such estimates, Kathleen Sebelius, the secretary of health and human services, acknowledged that costs could rise in the individual insurance market, particularly for men and for younger people. She noted that the law prohibits insurers from charging women more than men and limits their ability to charge higher premiums based on age. “Women are going to see some lower costs, some men are going to see some higher costs,” she said Tuesday at a White House briefing. “So it’s sort of a one-to-one shift.”

Republicans said the Society of Actuaries report validated their concerns. Senator Lamar Alexander, Republican of Tennessee, said, “This nonpartisan report offers more evidence that what I told the president in 2010 is true: individual insurance premiums will rise under his plan.”

Under the law, insurers cannot deny coverage or charge higher premiums to people because of pre-existing medical conditions.

As a result, Milliman said in the California study, “we expect the average currently insured to experience premium increases because they will be part of a new risk pool” including sicker people who have been excluded from the market in the past.

The White House says the fears of “rate shock” are overblown. Consumers can move from expensive health plans to more efficient, lower-cost plans, the administration says. Officials also predict that people gaining insurance will, on average, be younger and healthier than those who already have it.

San Francisco Chronicle: Medi-Cal Expansion Will Test Capacity

A million more people on rolls may tighten access to providers

Emily Bazar, CHCF Center for Health Reporting
March 2, 2013

In less than one year, the Affordable Care Act’s promise to bring health care to perhaps 1 million more California residents will be tested. On Jan. 1, 2014, Medi-Cal, the publicly funded health program for low-income and disabled residents, launches a huge statewide expansion.
But making a promise is one thing, and delivering is another.
In some places, it’s already difficult for many poor California residents to find a doctor who is able – or willing – to see them. Many medical providers who see these patients say they are overwhelmed, a situation that could worsen when those newly covered by Medi-Cal arrive for care.
“We’re not even talking about 2014. Good luck finding a doctor who takes Medi-Cal now,” said Carmen Burgos of the nonprofit Greater Bakersfield Legal Assistance program. Burgos helps low-income Kern County residents find health care and dental services.
More than 7 million Californians are covered under Medi-Cal, and expanding the program is a major piece of President Obama’s signature health law.
Between 2014 and 2019, another 1 million to 1.4 million Californians will enroll in Medi-Cal, according to UCLA and UC Berkeley estimates.
The Medi-Cal expansion will allow applicants with higher incomes and those who were previously ineligible, such as childless adults, to get coverage. State officials say there’s sufficient access to Medi-Cal services and they are constantly monitoring to ensure recipients can get care.
“We do believe that the Medi-Cal provider network provides adequate access in California now,” said Norman Williams, spokesman for the state Department of Health Care Services, which administers Medi-Cal. The state also is “adequately preparing for 2014 and the expansion.”
But doctors and health care experts disagree.
“We’re experiencing provider shortages right now,” said Alex Briscoe, director of the Health Care Services Agency in Alameda County. “Patients often wait months to get access to care,” he said.
Participation lags
Medi-Cal is California’s version of the federal Medicaid program, and the Golden State ranks poorly in doctor participation compared with other states.
Two studies, including one published in the journal Health Affairs in August, show that 57 percent of California doctors accept new Medi-Cal patients. That’s the second-lowest rate in the nation after New Jersey.
California’s neighbors, Nevada and Oregon, accept 75 percent and 80 percent, respectively. The primary reason doctors don’t participate is financial, doctors themselves say.
Here, too, California scores badly, with one of the nation’s lowest reimbursement rates, ranking 47th of 50.
Eye surgeon and ophthalmologist Andrew Calman is an associate clinical professor at UCSF. He also has a practice in San Francisco’s Mission District, and about 10 percent of his patients are on Medi-Cal, he said.
Calman said he wants to help as many patients as possible, but because he loses money on Medi-Cal patients, he must limit the number he accepts. Calman said Medi-Cal pays him $22 for a regular visit; Medicare and private insurance reimburses between $60 and $100.
“We’re performing an important service, but there is a limit to how much of that we can do and still have a viable practice. We have to pay our rent, we have to pay our salaries to our staff. We have to pay insurance. If it costs me on average $60 to see a patient, there are only so many I can see at $20 before I close my doors.”
In theory, Calman said, the Affordable Care Act is supposed to improve access by covering those who have been previously uninsured. In practice, however, he said it will be hard for many of the newly insured to find doctors willing to see them.
Reimbursements rise
Low Medi-Cal payments are being addressed – temporarily at least – by the Affordable Care Act.
Starting this past January and lasting through 2014, reimbursement rates for many primary care services in Medi-Cal are rising to Medicare levels, funded by the federal government.
In California, the change is dramatic. On average, payments will increase by 136 percent, according to the Kaiser Commission on Medicaid and the Uninsured.
“The payment increase is a significant incentive that we anticipate will help attract new primary care physicians to the Medi-Cal provider network,” said Williams of the Department of Health Care Services.
But improving access to care will involve more than convincing more doctors to participate, said Linette Scott, the department’s chief medical information officer.
It will be about changing the way care is delivered, she said. As the state moves more Medi-Cal recipients into managed care, she said, models of treatment will rely more on teams of health professionals to care for patients, not just individual doctors.
Plus, health plans must ensure there are enough doctors and other medical providers in their networks to provide that care, Williams said.
Clinic capacity stretched
In some communities, many Medi-Cal patients have no other choice than clinics, said Debbie Wood, coordinator of school health for the Bakersfield City School District, where nearly 90 percent of students live at or below the poverty level.
“They go to the clinics and they sit there for six, seven, eight hours. They may have an appointment at 8 a.m. and not be seen until 4 in the afternoon,” she said. While patients ultimately receive care at the clinics, they pay for the crowded conditions in other ways, Wood said. “Many of our families are in agricultural work,” she said. “If they miss a day they don’t get paid. So they go to the emergency room.”
Louise McCarthy, president of the Community Clinic Association of Los Angeles County, said clinics are working double-time to hire more doctors and increase capacity, but no one is sure whether their efforts will be enough.
“At a certain point, the clinics are going to need to say, ‘I need to cap enrollment or cap my patient load,’ ” she said. “It’s critical we take on new patients in a sustainable manner.”

Los Angeles Times: Coordinated healthcare could save California $110 billion, group says,0,6769820.story

February 26, 2013

California could cut $110 billion in healthcare spending over the next decade, saving the average household $800 a year, by quickly moving away from conventional fee-for-service medicine and embracing more coordinated care, a new report says.
These findings released Tuesday come from the Berkeley Forum, a new group of healthcare executives, state officials and academics that studied California’s healthcare market for the last year in hopes of finding ways to make care better and more affordable. The main recommendations are not entirely new, and these shifts are already underway in response to the federal healthcare law and pressure from employers to tame runaway medical costs.
But the group’s report does quantify how much work remains to be done and the potential savings if major changes are made in how doctors and hospitals are paid. Health-policy experts at UC Berkeley convened this group, which included high-ranking executives from Kaiser Permanente, Anthem Blue Cross, Cedars-Sinai Medical Center and other industry players.
“This could be a game changer in the state,” said Stephen Shortell, dean of the School of Public Health at UC Berkeley and a coauthor of the report. “These are the CEOs of big insurers, big health systems and large medical groups saying it’s time for a change, and these are the people who can get things done.”
The Berkeley Forum calls for a major shift toward “global budgets,” in which physicians and hospitals provide care under preset amounts that are adjusted to reflect the health of their patients. These payments would also be tied to providers’ performance on several quality measures.
This is similar to the “capitated” payments managed-care companies and HMOs have used for years in California. HMOs already cover 44% of California’s population, which is about double the nationwide rate.
Despite that high penetration, the report’s authors found that 78% of the state’s healthcare costs, or about $245 billion annually, are still paid through fee-for-service arrangements, which can encourage medical providers to perform unnecessary tests and procedures. The report calls for reducing the share of fee-for-service payments to 50% by 2022.
The Berkeley Forum also says California should double the share of the state’s population receiving integrated care from medical providers to 60% within the next decade. The most visible example of integrated care in California is Kaiser Permanente, the Oakland nonprofit that coordinates care across its hospitals and physician groups.
Other health insurers, hospitals and doctors are collaborating in similar ways through accountable-care organizations, medical homes and other initiatives that have strong backing from Medicare. Shortell acknowledged that there are “legitimate concerns” about this integration leading to higher prices as hospitals, clinics and physician groups rapidly consolidate.
The $110 billion in healthcare savings targeted by the group would amount to 2.5% of overall spending of $4.4 trillion over 10 years in California, according to the report. Those savings would mean an extra $800 annually for every California household.
Overall, the report found that 53% of the state’s healthcare dollars are spent on just 5% of the population, illustrating the high cost of treating certain chronically ill patients.
Pam Kehaly, president of Anthem Blue Cross in California, said this industrywide collaboration “puts us on a path to improving the ailing California healthcare system.”