Health Plans

Medical Cost Trend Has Been Flat but May Increase to 6% in 2020, PwC Projects

July 5, 2019

The medical cost trend is projected to be 6% in 2020 and to outpace general economic inflation, according to a recent report from PwC’s Health Research Institute. Faster-growing drug spending is one of the key factors expected to drive medical cost trend, as the report projects that starting in 2020, retail prescription drug spending growth for private health insurance will hit between 3% and 6% annually through 2027.

by Jinghong Chen

The medical cost trend is projected to be 6% in 2020 and to outpace general economic inflation, according to a recent report from PwC’s Health Research Institute. Faster-growing drug spending is one of the key factors expected to drive medical cost trend, as the report projects that starting in 2020, retail prescription drug spending growth for private health insurance will hit between 3% and 6% annually through 2027. Complex chronic diseases will continue to inflate cost trend. The average annual spending between 2014 and 2016 for an obese individual with employer-based insurance was 1.3 times higher than a normal weight individual. In addition, employees and their families will take advantage of greater access to mental health services offered by their employers, leading to increased utilization and spending in 2020.

NOTE: In the “Share of Individuals Covered by Employers” graphic, “Other” includes the percent of the population that was underweight or overweight in 2005 and 2016.

SOURCE: PwC’s Health Research Institute, Medical Cost Trend: Behind the Numbers 2020. Visit https://pwc.to/2pJ7TNI.

Datapoint: Sanford Health, UnityPoint Explore Merger

July 3, 2019

Two Midwest-based health systems, Sanford Health and UnityPoint Health, have signed a letter of intent to merge, the companies announced last week. The joint entity would own more than 70 hospitals in 26 states. Sanford also operates Sanford Health Plan, a health insurer with 186,584 members in Iowa, Minnesota, North Dakota and South Dakota. More than half (51.4%) of its members are enrolled in group risk plans.

Two Midwest-based health systems, Sanford Health and UnityPoint Health, have signed a letter of intent to merge, the companies announced last week. The joint entity would own more than 70 hospitals in 26 states. Sanford also operates Sanford Health Plan, a health insurer with 186,584 members in Iowa, Minnesota, North Dakota and South Dakota. More than half (51.4%) of its members are enrolled in group risk plans.

Source: AIS’s Directory of Health Plans

Lawmakers Make Efforts to End Surprise Medical Bills, Ultimate Impact Remains Unknown

July 3, 2019

The Senate Health, Education, Labor and Pensions (HELP) Committee on June 26 advanced wide-ranging bipartisan legislation aimed at lowering health care costs by protecting patients against surprise medical bills and targeting drug prices by clamping down on PBMs.

“This [Senate] bill seems to have strong momentum and will keep moving before the election,” says Caroline Pearson, a senior fellow at NORC at the University of Chicago. Still, “it’s impossible to know whether it will actually pass,” Pearson tells AIS Health.

By Jane Anderson

The Senate Health, Education, Labor and Pensions (HELP) Committee on June 26 advanced wide-ranging bipartisan legislation aimed at lowering health care costs by protecting patients against surprise medical bills and targeting drug prices by clamping down on PBMs.

“This [Senate] bill seems to have strong momentum and will keep moving before the election,” says Caroline Pearson, a senior fellow at NORC at the University of Chicago. Still, “it’s impossible to know whether it will actually pass,” Pearson tells AIS Health.

“The debate over surprise bills continues to be complicated, as health plans and providers do not agree on what the payment should be for out-of-network charges,” Pearson explains. “As the bill has progressed, providers and payers remain split on appropriate reimbursement.”

Generally speaking, providers favor an arbitration model to resolve the payment question, Pearson says, noting, “providers are concerned that any other fixed payment amount constitutes rate-setting.” Meanwhile, “for health plans, individual arbitration with many different providers has the potential to be very burdensome. These payers would prefer a fixed reimbursement benchmark.”

Overall, America’s Health Insurance Plans President and CEO Matt Eyles said in a statement that the bill would hinder competitive negotiations by stripping insurers and PBMs of leverage to lower costs “without addressing the root cause: high drug prices set and controlled by manufacturers who enjoy government-granted monopolies through the patent system.”

It’s too soon to tell how the bill’s provisions might affect consumers, Pearson says. “Efforts to increase transparency about which providers are in-network are helpful for consumers, but only if that information is easy to use,” she says. “The real consumer impact will depend on the final details of the bill and how it is implemented through regulation.”

Employers Appreciate Increased Flexibility in New HRA Rule

July 2, 2019

The Trump administration touts its recent release of final regulations expanding employers’ flexibility in offering health reimbursement arrangements (HRAs) to their employees as promoting more consumer choice and likely to cover more uninsured workers.

Under the regulations, starting on Jan. 1, 2020, employers will be able to offer stand-alone HRAs to help certain employees buy individual health insurance policies. Or they may offer “excepted-benefit” HRAs to reimburse employees for certain medical expenses with annual employer contributions of up to $1,800.

By Judy Packer-Tursman

The Trump administration touts its recent release of final regulations expanding employers’ flexibility in offering health reimbursement arrangements (HRAs) to their employees as promoting more consumer choice and likely to cover more uninsured workers.

Under the regulations, starting on Jan. 1, 2020, employers will be able to offer stand-alone HRAs to help certain employees buy individual health insurance policies. Or they may offer “excepted-benefit” HRAs to reimburse employees for certain medical expenses with annual employer contributions of up to $1,800.

“Philosophically, it’s a big change, giving employees flexibility to go out on the [individual] market and find coverage,” says Nicole Tapay, principal at Avalere Health. “I think in the near term you’ll see most likely the small employers will be giving it a closer look, [deciding] whether they want to use this flexibility to give them more predictability on costs.” Insurers offering coverage in the individual market “may see it as an opportunity,” she says, while those offering group plans may want to tweak their offerings over time to anticipate employer shifts.

The HRA regulations come with guardrails to protect the individual market. “Opponents will say [these regulations] will cause employers to dump their older and sicker workers onto the individual market,” says Dorian Smith, national practice leader for Mercer’s law and policy group, “while proponents will say there are guardrails.”

Smith notes Mercer’s clients generally are larger employers, most of whom have already decided on their 2020 offerings and would need to provide 90-day notice of changes for calendar year plans.

But for mid-2020 or calendar year 2021, “they might consider [HRAs] for certain employees, like part-time workers not eligible for the group health plan….It still provides a way to offer something different from the employer across the street.”

Datapoint: Blue Shield of California Launches New Digital Wellness Platform

July 1, 2019

Blue Shield of California last week revealed its revamped Wellvolution platform, created in partnership with Solera Health. Members can use online apps and in-person lifestyle programs to address issues that can vastly improve overall health and prevent disease, such as sleep quality, exercise, diet and tobacco cessation. Blue Shield of California is currently the third-largest insurer in California, with 3,371,824 members. Just over half of its members (51.3%) are enrolled in group risk plans.

Blue Shield of California last week revealed its revamped Wellvolution platform, created in partnership with Solera Health. Members can use online apps and in-person lifestyle programs to address issues that can vastly improve overall health and prevent disease, such as sleep quality, exercise, diet and tobacco cessation. Blue Shield of California is currently the third-largest insurer in California, with 3,371,824 members. Just over half of its members (51.3%) are enrolled in group risk plans.

Source: AIS’s Directory of Health Plans

UnitedHealthcare Enrolls 73% of All I-SNP Members

June 28, 2019

The top 10 Institutional Special Needs Plans (I-SNPs) enroll 93.7% of all I-SNP lives, with UnitedHealthcare dominating the national market, enrolling more than 60,000 members. Just 27 insurers currently offer I-SNP plans, with many of the smaller, localized plans sponsored or co-sponsored by long-term care facilities, according to the latest update to AIS’s Directory of Health Plans. See the entire top 10 with their current enrollment below.

by Carina Belles
The top 10 Institutional Special Needs Plans (I-SNPs) enroll 93.7% of all I-SNP lives, with UnitedHealthcare dominating the national market, enrolling more than 60,000 members. Just 27 insurers currently offer I-SNP plans, with many of the smaller, localized plans sponsored or co-sponsored by long-term care facilities, according to the latest update to AIS’s Directory of Health Plans. See the entire top 10 with their current enrollment below.


SOURCE: DHP, AIS’s Directory of Health Plans, as of May 2019.