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Unpacking The Burr-Hatch-Upton Plan


March 24th, 2015

Anticipating the upcoming Supreme Court decision on King v. Burwell, which could halt health insurance subsidies available through the federal exchange, Republican Senators Richard Burr and Orrin Hatch joined with Representative Fred Upton to propose a comprehensive replacement for the Affordable Care Act (ACA). The Patient Choice, Affordability, Responsibility, and Empowerment Act, or Patient CARE Act, is modeled on a proposal of the same name offered last year by Senators Burr, Hatch, and Tom Coburn, who has retired from the Senate. The Burr-Hatch-Upton plan, like its predecessor, adopts consumer-based reforms of the insurance market, modernizes the Medicaid program, and makes other changes intended to lower cost and increase choices.

In an earlier post, we described in detail the provisions of the Burr-Coburn-Hatch bill. In this post, we discuss how the Burr-Hatch-Upton plan differs from the earlier proposal. We also discuss the impact of the new proposal on health insurance coverage, premiums, and the federal budget based on a new analysis from the Center for Health and Economy (H&E), a non-partisan think tank focused on producing informative analyses of trends in U.S. health care policy and reform ideas. We conclude by commenting on the direction Republicans are likely to take in reforming the health system in the aftermath of a Supreme Court decision in the King v. Burwell case.

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When It Comes To The Value Of Wellness, Ask About Fairness Not Just About Effectiveness


March 18th, 2015

After a short truce, the wellness wars are raging again on this blog, with some voices hailing workplace wellness programs as cost effective means to better public health and others questioning their value.

Our own data show that both have a point. We have found that program participation is associated with statistically significant improvements in biometric markers, like BMI, and health-related behavior, like smoking and exercise. But we also find that those changes are not large enough, and the relationship between health risks and spending too weak, to result in reduction of health care cost, let alone in return of investment.

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Implementing Health Reform: Supreme Court Remands Contraceptive Case; ACA Cost Estimates Go Lower


March 10th, 2015

On March 9, 2015, the Supreme Court waded once again into the waters of the Affordable Care Act, or at least got its toes wet.  The Supreme Court granted certiorari in Notre Dame v. Burwell, vacated the decision of the federal Court of Appeals for the Seventh Circuit, and remanded the case for reconsideration in light of Hobby Lobby v. Burwell.  Both Hobby Lobby and Notre Dame, of course, involve the regulations that require health plans and insurers to provide contraceptive services to female employees and students.

Also on March 9, 2015, the Congressional Budget Office issued its March, 2015 baseline report.  The CBO and the Joint Committee on Taxation (JCT) now project that the major insurance provisions of the ACA will cost $1.2 trillion over the period 2016-2025, $144 billion less than it projected in January, 2015.  Current projections for the years 2015-2019 are over $200 billion less than costs projected in 2010 when the law was adopted, while projected costs for 2019 are $56 billion, or 33 percent, lower.  The CBO also projects, however, that the ACA will reduce the number of uninsured by 25 million by 2025 rather than the 27 million it had projected in January.

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Go Slow On Reference Pricing: Not Ready For Prime Time


March 9th, 2015

Editor’s note: This post is part one of two on reference pricing. 

The use of reference pricing by health insurers and employee health benefit plans stands high on the policy and regulatory agenda because it is gaining popularity, particularly now that federal agencies have blessed its use by large group insurers and self-insured plans, while imposing only relatively lax requirements. The purpose of reference pricing is to enable patients to “shop” for care and to spur provider competition by creating a group of “designated” in-network providers that agree to abide by the reference price while others do not (“non-designated providers”).

Patients who select more expensive non-designated providers must pay extra, letting them decide whether the extra out-of-pocket cost is worth it. Providers compete, either by agreeing to the reference price or by lowering their prices to approach it. Prices are driven downward.

Reference pricing is superficially appealing because it invokes powers that consumers exercise every day, as they weigh cost and value for items ranging from cold cereal to new cars. But it also raises significant issues regarding quality and access to care and has the potential to discriminate against sick and vulnerable patients. The strategy may also prove costly in relation to the benefits it confers. We urge a go-slow approach and more careful regulation.

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The Payment Reform Landscape: Everyone Has A Goal


March 6th, 2015

It seems these days everyone is setting ambitious goals for making changes to how we pay for health care, including my organization Catalyst for Payment Reform (CPR).

Initially, our goal at CPR was to ensure that 20 percent of health care payments be value-oriented (seeking to improve quality and reduce costs) by the year 2020. But to reflect our desire for greater assurance that good would come of it, we recently refined that goal.

It’s great that commercial health plans report a significant increase in value-oriented payments. But, to avoid wasting valuable time and resources, there needs to be quantifiable evidence that new payment methods actually lead to improved health care while containing costs. as we’ve emphasized in our posts here. The “proof is in the pudding” as they say.

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Health Affairs’ March Issue: The Benefits And Limitations Of Information


March 2nd, 2015

The March issue of Health Affairs contains papers focusing on the benefits—and the limitations—of information-gathering processes as a way to solve health system problems. Studies in this variety issue examine US hospital rating systems, disclaimers on dietary supplements, state prescription drug monitoring programs, the value of US versus Western European cancer care and other topics.

National hospital rating systems show little agreement — what’s a consumer to do?

Matt Austin of Johns Hopkins Medicine and coauthors compared four well-known national hospital rating systems designed for use by US consumers: U.S. News & World Report’s Best Hospitals; HealthGrades’ America’s 100 Best Hospitals; Leapfrog’s Hospital Safety Score; and Consumer Reports’ Health Safety Score. They analyzed ratings covering the time period from July 2012 to July 2013.

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Implementing Health Reform: Beginning The Cadillac Tax Regulatory Conversation And Other ACA News (Updated)


February 24th, 2015

The Cadillac high-cost health plan excise tax, which goes into effect in 2018, is one of the last-to-be-implemented provisions of the Affordable Care Act (ACA). It was one of the most controversial provisions of the ACA, which contributed to its delayed effective date. But 2018 is now getting closer, and the Internal Revenue Services (IRS) is beginning a discussion about implementation of the Cadillac plan tax.

The Cadillac plan provision of the ACA will impose a 40 percent excise tax on the cost of employer-sponsored health plans when that cost exceeds certain thresholds. It is projected to be one of the biggest sources of revenue under the ACA; the Congressional Budget Office (CBO) in its 2015 Budget and Economic Outlook Report estimated that it would account for $149 billion in revenue between 2018 and 2225. Of this, however, only one quarter will come from the tax itself, while three quarters will come from increases in taxes on income as employers shift compensation from health benefits to taxable wages.

While the tax will affect few plans initially, it is likely to affect many more plans over time as the cost of health care continues to grow faster than inflation generally. The tax is expected to reduce health care expenditures by individuals, as it will drive employers to increase employee cost sharing as they cut the cost of coverage, and employees are likely to spend less on health care if they have to purchase it out-of-pocket rather than drawing on insurance coverage.

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Implementing Health Reform: 2016 Benefit And Payment Final Rule, Insurance Provisions


February 22nd, 2015

On November 21, 2014, the Centers on Medicare and Medicaid Services of the Department of Health and Human Services released its final 2016 Benefit and Payment Parameter (BPP) Rule.  (Fact sheet here.)  My first post examined the provisions of this rule that relate to consumers and providers.  This post will analyze the parts of the rule that deal with the insurance market reforms; the reinsurance, risk adjustment, and risk corridor programs; health insurance rate review; and the individual and SHOP exchanges.

New Definitions Of ‘Plan’ And ‘State’

The regulation begins with a modified definition of the term “plan.”   The new definition defines a “plan” as the pairing of a set of health insurance benefits under a “product” with a particular cost-sharing structure, provider network, and service area.  A “product” is a set of plans sharing a network type (HMO, PPO, etc.), package of benefits, and service area.  Under this new definition, plans that differ in their cost-sharing structure (deductibles, copayments, or coinsurance) or provider networks are different plans, even if they are offered at the same metal tier.  Plan variations for different cost-sharing subsidy levels are not different plans under this definition.

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Engaging Health Care Consumers: The Lowe’s Experience


February 18th, 2015

Time will tell, but it appears that employers are not giving up on providing health insurance to their employees — even with the availability of health care exchanges. That’s at least what the results of a new study sponsored by the National Business Coalition on Health (NBCH) suggest.

Brian Klepper, CEO of the NBCH, speculated in his recent Health Affairs Blog post: “…there is an alternative view of what is possible in health care, and that self-funding and a willingness to continue trying to control the health care value monster remains alive and vibrant.”

As self-funded employers strive for a value-based health care marketplace, they’re looking at ways to drive value at an individual level — through strategies to engage employees as better consumers and managers of their own health care.

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Implementing Health Reform: Excepted Benefits, Employer Mandate, And Cost-Sharing Reduction Payments


February 15th, 2015

Three developments in the second week in February, 2015, remind us that implementation of the Affordable Care Act is a multi-department effort.

Supplemental Excepted Benefits

The first of these is a new guidance on “excepted benefits.”  The Affordable Care Act does not regulate excepted benefits — various categories of health-related benefits that are not traditional medical coverage.  Excepted benefits were excepted from the requirements of the 1996 Health Insurance Portability and Accountability under ERISA, the Internal Revenue Code, and the Public Health Services Act and continue to be excepted from the requirements of the Affordable Care Act.  The agencies that administer these laws, however, must define the scope of excepted benefits to clarify the benefits not subject to the ACA.  To that extent, therefore, they regulate those benefits.

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The Payment Reform Landscape: Price Transparency Tools Better But Not Good Enough


February 6th, 2015

Catalyst for Payment Reform (CPR) will spend significant time in 2015 looking at the features payment reform programs must have to be workable for purchasers and sustainable for providers. We look forward to sharing in this space what we learn, as we have done each month for over a year. But this month, we’ll take a slight detour to devote some “ink” to an issue near and dear to our heart—price transparency, a critical building block for payment reform.

Across the board, price transparency tools from vendors and plans are improving, but are the price estimates tools give consumers accurate? Unfortunately, the answer is often no. In general, as we discovered in work with our colleagues from HCI3, many price transparency tools suffer from one or more common methodological flaws. Below, we examine these flaws and their remedies.

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Implementing Health Reform: President Obama’s FY 2016 Budget And The ACA


February 2nd, 2015

On February 2, 2015, President Obama released his FY 2016 budget, which includes funding for the Affordable Care Act.  The President’s budget, of course, is only on opening bid in negotiations that will proceed over the coming months until the government is finally funded for FY 2016.  Given the hostility of Congress to the Affordable Care Act, those negotiations will not be easy.  The budget does provide, however, some perspective on the funding that the administration believes will be necessary to fund continued ACA operation.

The President’s budget proposes a number of new health care initiatives, including funding for extending the CHIP program through 2019, expanding access to home and community-based services in Medicaid, reducing growth in payments for certain Medicare providers, raising the cost of Medicare coverage for higher-income  enrollees, authorizing HHS to negotiate drug prices for biologics and high-cost drugs in the Medicare Part D program,  speeding up the closing of the Part D doughnut hole, and continuing to move Medicare payments away from fee-for-service toward value-based payment.  For the core ACA health insurance access and affordability programs, the budget simply seeks full funding of the status quo.

ACA funding is divided among several agencies.  Funding for the premium tax credits and cost-sharing reduction payments is found in the Department of the Treasury, Internal Revenue Service budget.  The FY 2016 budget projects premium assistance tax credits to cost $39.164 billion and cost-sharing reduction payments to cost $6.215 billion.  This is classified as mandatory spending and thus does not require a separate appropriation.  Funding for enforcing the employer and individual responsibility provisions is not separately budgeted and is presumably found in the IRS general enforcement and operations support budgets.

Most categories of ACA insurance reform and affordability expenditures are covered, however, by the budget of the Centers for Medicare and Medicaid Services (CMS) within the Department of Health and Human Services (HHS).

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Beyond Wellness ROI Part II: The Case Study Of A Major Self-Funded Employer


January 30th, 2015

In a recent post, we agreed with Goetzel et al. about the advisability of moving away from a preoccupation with the return-on-investment (ROI) of wellness programs and toward the more systemic, iterative view required to make progress toward workplace “cultures of health.”

At the same time, we acknowledged Lewis et al. and others for helping to usher in a new and needed scrutiny of the fairness and effectiveness of employment-based wellness programs. But, we also cited peer-reviewed evidence that counters Lewis et al.’s conclusion that there are no conditions under which employer wellness programs, and by extension employer efforts to manage their core health-related value/sustainability challenge, can achieve a return-on-investment (ROI) ratio of better than 1-to-1 savings to cost.

Lewis et al. have added their voice to the scrutiny increasingly applied to employer use of outcome-triggered incentives or penalties to promote employee behavior change in the context of health-contingent programs under financial provisions in the Affordable Care Act. The momentum fueling these developments could soon extend far beyond wellness programs.

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Moving Beyond Wellness ROI Toward Employment-Based Cultures Of Health: Part I


January 26th, 2015

With their recent post declaring that employment-based wellness initiatives “increase rather than decrease employer spending on health care with no net health benefit,” Al Lewis and coauthors are continuing to exert a clarifying presence in a field with a history of unsubstantiated claims and suspect methods. This conclusion is not supported by the work with which we and others have been associated and is thus not one with which we agree.

Nevertheless, Lewis et al. are to be acknowledged for fueling the need for a sharper focus on the core challenge at hand for employers: how best to improve the value of their health care investment—that is, how to manage health care costs while improving employee health and productivity—in ways that are sustainable. Incremental, inconsistent and, at times, maddeningly slow progress has been made. Employment-based wellness has been at the forefront, even as the need for quality improvement continues.

Moreover leading employers with well-developed management and measurement approaches have moved well beyond calculating the return on investment of individual wellness efforts and are demonstrating the more comprehensive value of building “cultures of health.”

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The Payment Reform Landscape: Drilling Down


January 15th, 2015

Catalyst for Payment Reform’s 2014 National Scorecard on Payment Reform revealed a dramatic jump in the percent of commercial health care payments that is value-oriented, meaning the payments are tied to the quality of care in some way. In last year’s Scorecard, commercial health plans reported 40 percent of payments were value-oriented, up from just 11 percent in 2013. So on the face of it, as the “health care payment reform arms race” continues among commercial health plans, we’re well on our way to a reformed approach to payment.

But we can’t jump for joy or shout from the rooftops just yet. As I shared in my December blog, we’ve learned not all payment reform models are created equal, and a lot of the jump can be explained by an increase in pay-for-performance — not the most ambitious model when it comes to reining in costs. Meanwhile, there was a very sluggish uptick in the use of models that place providers at financial risk (such as shared risk payment arrangements for ACOs). Moreover, while the National Scorecard tells us how plans are paying for care, it cannot answer other lingering questions: Which models should purchasers adopt if they want the best savings and improvements in care? Which models are spreadable and scalable so a broader swath of the population can reap their benefits?

Since Catalyst for Payment Reform (CPR) works on behalf of large employers and other big health care purchasers, we field these kinds of questions frequently. Unfortunately, there are no easy answers. And we often find ourselves stuck at a crossroads. Purchasers say they want payment reform, and they attempt to spell out what they want and need. Health plans work to build it, but often the purchasers don’t come, saying it’s not what they asked for, or citing concerns about return on investment and scalability. Plan leaders, who think they understood the “specs” and tried to deliver, become frustrated. Over time they can become reluctant to get creative. Purchasers can become jaded and start to wonder if the plans just don’t understand their needs.

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CMS Spending Report Leads Health Affairs 2014 Top-Ten List


January 13th, 2015

A report on 2012 health spending by analysts at the Centers for Medicare and Medicaid Services Office of the Actuary was the most-read Health Affairs article in 2014. To celebrate the New Year, Health Affairs is making this piece and all the articles on the journal’s 2014 top-ten list freely available to all readers for two weeks.

Health Affairs publishes annual retrospective analyses of National Health Expenditures by the CMS analysts, as well as their health spending projections for the coming decade. In the latest installment in this series — which also made our 2014 top ten — the analysts reported on 2013 health spending and discussed their findings at a Washington DC briefing. The two reports documented continued slow growth in health spending; the 2013 report featured the slowest rate of health spending growth since CMS began tracking NHE in 1960.

Next on the 2014 Health Affairs most-read list was an article on PepsiCo’s workplace wellnesss program. John Caloyeras and coauthors at RAND and PepsiCo found that the diseases management component of the program saved money, but the lifestyle management component did not. This was followed by two Narrative Matters essays by Charlotte Yeh and Diane Meier; another Narrative Matters piece, by Janice Lynn Schuster, rounded out the list at number ten.

The full top-ten list is below. And check out the 2014 most-read Health Affairs Blog posts and GrantWatch Blog posts.

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Medicaid Expansion Post Leads Health Affairs Blog 2014 Top-Fifteen List


January 8th, 2015

As we begin 2015, we present the fifteen most-read Health Affairs Blog posts from 2014. Topping the list is “Opting Out Of Medicaid Expansion: The Health And Financial Impacts,” by Sam Dickman, David Himmelstein, Danny McCormick, and Steffie Woolhander. “Low-income adults in states that have opted out of Medicaid expansion will forego gains in access to care, financial well-being, physical and mental health, and longevity that would be expected with expanded Medicaid coverage,” the authors write, and they offer a state-by-state projection of these consequences.

Next on the list is Susan DeVore‘s overview of health care trends to watch in 2014, followed by David Muhlestein‘s look at the likely growth of accountable care and an examination of declining inpatient hospital utilization by Robert York, Kenneth Kaufman, and Mark Grube. The list also includes two posts from Tim Jost’s comprehensive series on implementing the Affordable Care Act, on waiting periods for employer-sponsored health insurance and Medicaid asset rules.

Stay tuned for the 2014 most-read lists for Health Affairs journal and GrantWatch Blog.

The full top-fifteen list is below:

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Arkansas Payment Improvement Initiative: Self-Insured Participation


January 7th, 2015

Editor’s note: This post is part of a periodic Health Affairs Blog series, which will run over the next year, looking at payment and delivery reforms in Arkansas and Oregon. The posts will be based on evaluations of these reforms performed with the support of the Robert Wood Johnson Foundation. The authors of this post are part of the team evaluating the Arkansas model.

Designed and launched by the state’s Medicaid program and some of its largest private insurers, including Arkansas Blue Cross Blue Shield (BCBS) and QualChoice, the Arkansas Payment Improvement Initiative (APII) has been a multi-payer effort since its inception in 2011. As the APII has developed, participation from some of the state’s largest self-insured employers has increased its scope and impact.

While we’ve referenced self-insured participation in our previous blog posts, we provide more detail in the following blog post on its ongoing development and explore what it takes for self-insured plans to adapt to the Arkansas Payment Improvement Initiative’s payment model. What has been the response from Arkansas employers and plans? What is the effect on existing contractual relationships? What are the hurdles?

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Rethinking The Gruber Controversy: Americans Aren’t Stupid, But They’re Often Ignorant — And Why


December 29th, 2014

M.I.T. economist Jonathan Gruber, whom his colleagues in the profession hold in very high esteem for his prowess in economic analysis, recently appeared before the House Committee on Oversight and Government Reform. Gruber was called to explain several caustic remarks he had offered on tortured language and provisions in the Affordable Care Act (the ACA) that allegedly were designed to fool American voters into accepting the ACA.

Many of these linguistic contortions, however, were designed not so much to fool voters, but to force the Congressional Budget Office into scoring taxes as something else. But Gruber did call the American public “stupid” enough to be misled by such linguistic tricks and by other measures in the ACA — for example, taxing health insurers knowing full well that insurers would pass the tax on to the insured.

During the hearing, Gruber apologized profusely and on multiple occasions for his remarks. Although at least some economists apparently see no warrant for such an apology, I believe it was appropriate, as in hindsight Gruber does as well. “Stupid” is entirely the wrong word in this context; Gruber should have said “ignorant” instead.

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Sovaldi, Harvoni Payment Issues Lead Health Affairs Blog November Most-Read List


December 24th, 2014

A piece by Laura Fegraus and Murray Ross on the challenges of paying for lifesaving but high-priced drugs like Sovaldi and Harvoni from was the most-read Health Affairs Blog post for November. This was followed by a critical analysis of workplace wellness programs from Al Lewis, Vik Khanna, and Shana Montrose.

Next came a post on the 2016 Notice of Benefit and Payment Parameters Proposed Rule from Tim Jost, and then a look at health care policy after the mid-term elections from James Capretta.

The full top-ten list for November is below.

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