The state healthcare exchanges that will be created as part of the Patient Protection and Affordable Care Act are intended to bring buyers and sellers together in a single marketplace for qualified health insurance. While the idea of a single marketplace is relatively straightforward, there are numerous underlying complexities, including plan cost, affordability, access, group size, participant age, marketing and education, eligibility, plan qualification, and risk adjustment. States that plan to establish exchanges should be well aware of these issues and should determine the best course of action depending on their specific circumstances. A new briefing paper examines these dynamics.
A new bill before the Connecticut governor allows municipalities to pool health benefits. Alan Desmarais pens an article in the Connecticut Mirror explaining the cost control potential of such pooling. Here is an excerpt:
A new bill passed by the General Assembly and now before Gov. M. Jodi Rell for signature could offer fiscal relief as municipalities all over Connecticut stare down a current budget crisis that will become even more daunting in fiscal year 2011- 2012 and beyond. House Bill 5424 allows towns and boards of education a no-strings-attached option to pool their healthcare benefits-and thereby better control soaring benefit costs. This bill confirms that the previous legislative action, which allowed municipalities to “jointly perform any function that each municipality may perform separately,” specifically applies to the financing of employee healthcare benefits. Many towns now understand that this law opens up a necessary cost-control opportunity, and none too soon.
This is not the first time such pooling arrangements have been green-lighted in New England. The Governmental Health Group of Rhode Island was created to 2005 and now includes cities, towns and school districts that have joined together on a voluntary basis. Among the keys to the success of the Rhode Island program-which are also essential to this latest effort in Connecticut-are that member groups define the pool’s concepts, organizational structure, and financial framework.
Read the full article here.
Senator Kent Conrad recently introduced what he characterized as a compromise on the contentious issue of having a public plan under healthcare reform: a healthcare co-op. This interview with Milliman principal Jim O’Connor analyzes the co-op concept in more detail.
Q: What is a co-op and how does it differ from a public option?
A: A cooperative health plan, or co-op, is member-controlled rather than government-controlled, and is typically not a for-profit corporation. A co-op must negotiate its payment or reimbursement rates for hospitals and physicians in the market, and cannot dictate them through legislation and regulation like the government could under a public plan. With a co-op, the roles of government regulator and health plan providing coverage are kept separate. The co-op concept is oriented around member decision-making and control, distinguishing it from for-profit insurance carriers. Because it would compete against for-profit and other heath carriers, however, a co-op must offer products that are attractive to the public in a marketplace with choices and must employ prudent rating and enrollment practices if it is to be successful. Determining any requirements or restrictions on those practices, as they apply to all health plans, is one of the many important questions under reform.
We’ve looked at health care dynamics in other countries before. A recent article from Time offers some perspective on electronic health records in Denmark:
Denmark boasts several advantages that have helped in the early adoption of electronic health records. It is small (population: 5 million) with a tech-savvy citizenry and a public sector-run health system. Trust in the government is high. Most crucially, when the health service established a National Patient Registry in 1977 — a system that required doctors to file patient visit details in order to be reimbursed for their work — the country unknowingly laid the groundwork for electronic health records by putting in place centralized record-keeping.
Can early-adopters like Denmark help inform the U.S., which is just now figuring out a more comprehensive approach to EHR?
The recent outbreak of H1N11 virus seized worldwide attention and raised concerns about a potential pandemic.
We spoke with Eduardo Lara di Lauro, principal and managing director of Milliman’s consulting practice in Mexico, about the situation and about some of the implications for the insurance industry in that country and elsewhere.
Q: At this point, how much do we know about the progress of the H1N1 strain of the influenza A virus in Mexico?
Eduardo Lara di Lauro: This is very much an evolving situation and we still don’t have the answers to many questions. One of the questions in the air is, “Why Mexico? Why did this flu have more deadly presence in Mexico?” I think that the way the public sector is recording the cases could well be critical. What first brought the outbreak to attention was when physicians began to notice a higher rate than normal of pneumonia in young adults. Every year almost 10,000 Mexicans die from the effects of seasonal flu that complicate producing pneumonia. Usually they are the elderly and the very young, people whose immune systems are not robust enough to fight off the virus. As actuaries, we know how important it can be to determine the best sources of information that provide the greatest amount of detail, in order to accurately determine origins and first causes. We had been having some fatal cases of pneumonia in Mexico previously, but we didn’t know the first causes of those cases until now. Now the physicians are making additional tests in order to determine what the cause of the pneumonia in each case may have been. This flu may actually have been going on for awhile.
I think it’s also important to note that the number of cases so far appears to be relatively small—as of May 6, some 1,112 positive cases, with 42 deaths out of a population of 110 million. The rate is pretty low. Obviously we are still attempting to determine the overall timeframe of the progress of this outbreak, and that will be key to helping us understand where we are. We don’t know yet if this outbreak is just starting, or at the middle, or nearing the end. The number of deaths seems to be stabilizing, perhaps indicating that the first wave of this influenza has peaked. It takes from one to five days from a person getting the virus until the symptoms begin to present, and then tests must be run to determine exactly what it is, which also take time. There are a lot of things we really don’t know yet. The government may have overreacted in terms of the measures taken, telling everyone to stay at home, closing schools, no public events, and so on until May 6. But I would say it’s better to do whatever is necessary to stop the spread of this virus first. As people in Mexico now get back to resuming their normal economic activities it is likely we will see new moderated flu outbreaks in some areas. In order to say the illness is contained we need to have at least 15 days without new cases, according to Mexico’s health authorities.
The Honorable Erik Shinseki, Veterans Affairs Secretary, testified today before Congress on the VA’s appropriations process, specifically citing Milliman’s role in this process. As you might expect, a relatively accurate advanced budgeting capability is crucial to the mission of an organization like the VA, which has so many patients and such a large and sophisticated organization.
Here is an excerpt from the Secretary’s testimony:
Implementing an advance funding mechanism is not without challenges and careful planning is needed to ensure timely funding without unintended consequences. Budget projections are rarely right on the mark, and the further out they are made, the farther off the mark they are likely to be. For an advance appropriations mechanism to function effectively, it must be linked to a forecasting model that is both reliable and accurate, to the extent possible. Today I will concentrate on VA’s principal forecasting model — the Enrollee Health-Care Projection Model.
The Enrollee Health-Care Projection Model, or VA Model, is a comprehensive enrollment, utilization, and expenditure projection model. It was originally developed in 1998 in partnership with Milliman, Inc., the largest actuarial firm in the country. Through the past 11 years of periodic updates and continuous refinement, VA and Milliman have developed a strong partnership that has resulted in a powerful modeling tool. VA guides the overall development of the VA Model and ensures that it meets the needs of stakeholders. VA program staff provide expertise on the unique needs of Veterans, patterns of practice in the VA health-care system, and how the system is expected to evolve over the next 20 years. Milliman brings specialized expertise, access to extensive amounts of health-care utilization data VA, and excellent research to the overall modeling effort.
The head of the White House Office of Healthcare Reform stoked some controversy this week by suggesting that a Medicare-like model is not the only way to go when it comes to a public healthcare option:
There are different breeds of public plans that could be part of this.”
The response from many organizations has been negative. Still, there are certainly other models. Before the Medicare-like public plan idea gained steam, an FEHBP-type plan was often mentioned. Then there is the Healthy American Act.
Not to mention ideas from overseas. The Dutch system has drawn a lot of attention; see the interview below for more information on that.
A wholesale change seems less likely than something incremental, but perhaps there are things to learn from other countries. Either way, it is simply too early to handicap this race.
For profit, for everyone: Exploring the Dutch healthcare system
The Dutch healthcare system is the world’s only private system of basic healthcare insurance operated by insurance companies for profit. We asked Dutch healthcare actuaries Roeleke Uildriks and Ji Kwen Ng to explain.
President Obama today announced an effort to computerize the medical records of all military personnel and better integrate records between the Defense Department and the Department of Veterans Affairs. This is a complicated issue, as was made apparent during tonight’s PBS coverage of the announcement:
The proposal builds off of an existing infrastructure. The VA has a robust electronic health record system in place already, as Gail Graham discussed at the EHR Town Hall in December:
Some are framing these developments as part of the larger healthcare reform debate and even suggesting the tax could help reduce other healthcare costs. Do the cost claims hold up? Hard to say, though employer-sponsored smoking cessation programs pay for themselves, one of the few examples of wellness initiatives with a clear return on investment.
Milliman experts and their research are increasingly a part of Congressional discussions of healthcare reform. On Tuesday, AHIP President and CEO Karen Ignagni cited research by Will Fox and John Pickering in her testimony before the Senate Health, Education, Labor and Pensions Committee:
A December 2008 study by Milliman, Inc. projects that this cost shifting essentially imposes a surtax of $88.8 billion annually on privately insured patients, increasing their hospital and physician costs by 15 percent. This study concluded that annual health care spending for an average family of four is $1,788 higher than it would be if all payers paid equivalent rates to hospitals and physicians. The transfer of these costs to those with private coverage cannot be sustained and is critical to addressing concerns over affordability.