Archive for January, 2017

Transparency in healthcare is like the weather in the Mid-West. People talk about it all of the time but no one ever does anything about it.

January 26, 2017

To have any success at lowering healthcare costs and reducing premiums, we need Transparency in every facet of healthcare delivery so let’s do more than talk about it!

Sorry to trample on an ages old saying but don’t you agree that we need transparency in every facet of healthcare delivery. Today let’s address two areas: carriers and providers.

First, let’s review definitions of transparency because sometimes what us common folks think something means is different in Washington DC or in an insurer’s board room. To be thorough let’s look at Transparent & Transparency as either Noun or Adjective.
In other words, let’s cover our bases.

Adjective: Transparent

  • allowing light to pass through so that objects behind can be distinctly seen as in “transparent blue water”

Synonyms:  obvious, evident, self-evident, unconcealed, crystal-clear

Noun: Transparency

  • the condition of being transparent, “the transparency of ice”

synonyms: openness, accountability, straightforwardness, candor,
“the new government aims for better transparency”

Okay okay, stopping smirking. We all know that there is very little transparency in our current healthcare delivery system and even less in Washington D.C. but at least that is thoroughly “transparent” for all to see. Sorry!

Let’s point out just a few of the many benefits transparency would provide:

  • Everyone would be better shoppers for healthcare because they could see prices.
  • Costs for healthcare services would be reduced due to competition
  • Premiums would be lower or at least honestly competitive.
  • Plans could be built to accommodate our individual needs.
  • There are many more but I’ll stop there!

The actions suggested below may sound somewhat simple but rest assured that these two industries, Providers and Insurers, will fight any measures to divulge information to the public. As we said above, people will talk about transparency and its many benefits but no one wants to be the first or the only part of the healthcare delivery system to put it information out for the public.

We’re going to address insurers and providers first.To be fair, these two groups include commercial organizations trying to hire and employ fellow citizens therefore they must be profitable to exist. Profitability is part of the US economic system that creates goods and services by employing millions of people. So any actions that might harm the business must be explored carefully even if it might be for the benefit of many.

Let’s start with what Insurers and health plans can share without the loss of proprietary information that they believe gives them market appeal.

  • Loss ratio on each employer group plan. (regardless of group size)
  • Loss ratio by health plan by state.
  • Cost of care by Service code for every provider in its PPO.
  • Variance of Insurer’s PPO cost compared to Medicare allowance.

Now let’s look at providers. The internet is full of information about transparency in healthcare. Most of it is thoughtful well intended data that if implemented would make a difference. I won’t even begin to list all of the suggested actions.
Let’s identify a few items that providers and facilities can share:

  • Cash price of any service for specific service codes ex: hip replacement.
  • Medicare allowed price for specific service codes
  • Number of each specific service provided in previous 2 years, ex: hip replacements.
  • Outcome statistics by services performed.
  • List PPOs accepted
  • List HMOs accepted
  • That’s just a couple

There are some highly regarded healthcare organizations around the country that advertise the price of their services. As a result, I’ve read countless stories of members traveling, for example, to Arkansas for Orthopedic services at greatly reduced costs. Because of those stories, there are just as many patients not needing to travel for their surgical care when their local provider discovered that the patient was willing to travel for savings.

These provider organizations are making their prices available for the purpose of attracting business while delivering quality care and being profitable. If we could integrate insurer info with provider info with incentives for members to make wise decisions the outcome is predictable. We could see competition on an entirely new level that would bring cost down while delivering high quality care. Should we try it?

The topic of transparency is tricky because every business thinks it has secrets that give it an advantage in its market place. But small non-intrusive steps would get it started.

Thanks for the emails this past week. We are getting some great feedback and need it to keep it going.
Remember, we are all in this together.

Mark Reynolds, RHU

The supporters of the Affordable Care Act would have a better argument against “repeal” if not for the astronomical premium increases. So, let’s talk about how to bring down premiums.

January 19, 2017

 So far, selling health plans across state lines and GI with 12/6 Pre-ex have started to get feedback. Thanks to all of you who emailed or commented back.

This post will address the severe impact on pricing caused by the ACA and how health plan premiums can be more effectively priced.

It would be accurate and easy to say that the ACA actually did and does push premiums higher without even addressing the lower benefits or less access to care. But the truth is that many provisions actually do force rates higher without any means for insurers to make a difference.
Let’s identify a few.

*Minimum Loss Ratios – MLRs forced carrier rates higher
*3:1 pricing ratio – Top rate can’t be more than 3x the lowest rate
*Taxes – at least 18 various taxes
*Exchanges – every rate had fees baked in to fund exchanges
*Pcori – Patient Centered Outcome Research Institute (Seriously?)
*TRF Fee – Charged to every premium payer to offset carrier losses.
*Mandated benefits – too many to list but clearly drive premiums up
*Metallic levels – Actuarial Value but not “real value” of plans

So, how can plans get their premiums lower?
Just a few ideas:

*Eliminate the costs associated with the list above.
*Let insurers build plans appealing to the public
*Let carriers price based on experienced actuarial principles.
*Allow a Risk Adjustment Corridor of Plus or Minus 10%.

Finally, but not the last factor, would be to prevent state legislatures or DOIs from implementing artificial pricing controls such as they have done on re-insurance stop loss plan premiums in many states such as California and others. These arbitrary restrictions eliminate an entire market alternative for employers with fewer than 100 employees.

It would be wise to set a reasonable minimum plan benefit level of essential health benefits but from there let insurers price their plans as they decide and let them compete. Insurers and more critically reinsurers do not want to underprice their plans but they do know how to get competitive. Let’s give them a chance to compete!

The actuarial process of pricing plans is far more intricate than most realize. But, it also involves assumptions with business decisions based on experience. These business decisions create the free market competition we all desire.
Let me know what you think.

Let’s discuss transparency next time.
And remember, we are all in this together.

Mark Reynolds, RHU

Why is there opposition against insurers and health plans selling across state lines?

January 12, 2017

It’s easy to do plus it can improve quality and pricing while maintaining compliance.

From our last post, the idea of GI with a common sense approach to Pre-ex periods sparked some interesting emails. Newer brokers in the business for 5 years or so thought it was confusing. Experienced brokers in the business longer and certainly those prior to 1992 understand the logic and agreed with the idea for the most part.

In fact, many believe that if the Bush administration would have introduced GI with Limited Pre-ex at the same time that HSAs and HRAs were codified back in 2002 that we might never have heard of the Affordable Care Act. It wouldn’t have been needed!

Moving on, today let’s discuss the selling of health insurance across state lines. Many experienced insurance folks believe that this might be the toughest of all issues to address. It may sound easy to the non-insurance person but dealing with various state DOIs is never easy.

First obstacle many will say is that there is no proof that plans sold across state lines for example, from Iowa to California, will be any more competitive or appealing. But an even bigger obstacle is the political nature of multi-state DOIs “territorial-stay off my turf” attitudes that may feel obligated or find it opportunistic to interfere.

Some DOIs may argue that multi-state plans will not be consumer friendly or they will be wrought with trouble because of various issues such as specific state mandates and other regulatory rules.
To that attitude I say baloney.

Health plans can easily be sold across state lines in an internet connected shop-for-anything and buy-anything by smart phone world . Here’s why:

  • Brokers will still be the delivery system to insure quality and appeal
  • Individual states can still regulate brokers and carrier solvency
  • ERISA guidelines can be modified to overcome DOI objections
  • Plus ERISA (DOL) is quite capable of regulating compliance.
  • Just ask any TPA!
  • Plans would be built to serve the public not the political bureaucracy
  • It would all be GI so if a plan is not appealing it can be replaced
  • Eliminate wasteful mandates (last count there were over 1500)
  • Competition between insurers would increase driving premiums down
  • That’s just a short list and I know there are a few more details

The opposition may come from those determined to see a single-payer system. However, it is clear to see that the ACA is failing and did so mainly because it tried to takeover healthcare rather than just improve affordability and access to healthcare.

We need new ideas injected from people with real world experience like TPAs, brokers, consultants and smaller insurers. Make no mistake those opposed to fixing the ACA will object to selling plans across state lines and even some in favor of repeal may be opposed.

But if the goal is to deliver a real solution to our current high-price, low-quality, no-transparency healthcare system then we need to be guided by principles that deliver lower cost, better benefits and guarantee access.
We need to allow for the selling of health plans across state lines.

I am interested to hear your feedback on this idea because it’s complicated and controversial plus there are many details to work out. Let me know.

Next post will be either transparency or pricing ideas. Please stand by.
Remember, you have a new email at which to reach me.

Also remember, we are all in this together.

Mark Reynolds, RHU



New Era for Healthcare Solutions

January 6, 2017


She’s not exactly Employer Driven but certainly adorable.

January, 3rd 2017

We have seen Healthcare Reform, now we must fix the Reformed

Today, we start a new ERA in the life of this Blog. The intent has always been to help brokers and employers understand the changing healthcare market but now we have a renewed sense of excitement, direction and energy.
BTW, you have a new email at which to reach me-

We know that with a new administration there will be changes to healthcare and we all remember how confusing and unsettling the years 2010-2014 were for everyone. Over the coming months we will address dozens of issues and ideas related to fixing healthcare and its financing. Since we know the ACA is in for some modification, if not repeal, then the discussion will center on its replacement.

In the coming weeks we will discuss replacement issues such as:

  • Plan designs
  • Premiums & pricing
  • Pay or Play mandates
  • Taxes & fees
  • Exchanges
  • PPOs
  • Transparency
  • Cross state plans
  • Pre-ex conditions
  • Group plans
  • GI for Individual Plans “IFPs
  • and much more

Today let’s address a topic that will be used or rather misused by some to make headlines, scare the public, and complicate any changes. It is the topic of “Guarantee Issue (GI) and pre-existing conditions” for IFPs (Individual & Family Plans). The ACA provided for GI but relied on the mandate for enrollment.

The mandate for citizens to get covered was supposed to push everyone into healthcare coverage which would theoretically make it easier for insurers to price and profit from their plans.  As you know, not only did premiums increase astronomically to the average person on IFPs, (and small employers too) but plans were built with “skinny” PPOs and benefit designs that left members with a lot of out of pocket.
Resulting in the opinion – “why pay for insurance that doesn’t pay anything?”

Plus, reports show that 20-25 million citizens still don’t buy health insurance. So, the individual mandate did little to help.

So, let’s agree that GI is absolutely required for IFPs. That means there are two ways to address affordability:

  1. Make the penalty for not being covered substantial such as $3000/yr or 9.5% of gross annual income. Would that be sufficient to drive citizens to buy a health plan?
  2.  Allow a common sense and reasonable Pre-ex condition. We can look back 25 years to see a model that can accommodate this goal. It’s simple and it’s defendable. Here it is:
  • Make all IFPs be GI, but with a reasonable pre-ex period for late enrollees.
  • First to clarify, if a citizen has coverage but changes to another plan there is no pre-ex period. As long as coverage has no gap longer than 60 days – No Pre-ex.
  • But for late enrollees, a one year pre-ex period which will allow insurers to stabilize premiums yet guarantee access to anyone wanting to buy a plan. Call it a 12/6 pre-ex.
  • If a citizen does not buy their own plan when first eligible s/he could still get GI at a later time but with a one year Pre-ex for illness treated during the previous 6 months. The illnesses would be defined so no carrier shenanigans can occur.
  • This is the way it was addressed before HCR in the 1990s. If those IFPs had been GI then the issue of access would never have been brought up.
  • This would address the human nature tendency to “buy insurance after your house is on fire”. It would also allow insurers to develop competitive pricing.
  • Last and maybe most important. It’s a defendable common sense approach. All Americans could support this approach as fair, especially when premiums are reduced and stabilized! Americans would get behind a policy that had teeth in it for to penalize those trying to slide by. It would also be a good talking point on TV News.

As we discuss these issues in the coming weeks I look forward to your feedback and your ideas. Please send me your ideas! We can’t trust Republicans to get it right any more than we trusted the Democrats in 2009 and 2010. Let’s make sure that the wisdom and working knowledge of brokers and employers is heard.

I look forward to starting up our discussions again.
And remember, we are all in this together.

Mark Reynolds, RHU                                                                                                                                                        559-250-2000