As it stands now, your chances of fighting and winning against an medical insurance company to get a denied claim paid is slim. There are very few options for disputing a medical insurer's decision. The appeals process can be very time consuming. Most people cannot sue the medical insurer for damages that resulted from the denials and treatments that were delayed.
Beginning this fall, people will be able to challenge claim denials through a procedure that's conducted independently at the state level. This has previously been unavailable to employees of employers that cover their workers' medical claims directly.
As more than 50% of all covered employees are in a self funded plan, this change is huge. However, this new law is not applicable to grandfathered plans, which are the plans that were in place on March 23, 2010.
It will still be difficult for people to file a lawsuit for pain and suffering or punitive damages. The Employee Retirement Income Security Act of 1974 states that employees or their families that are covered by company medical plans can only sue for the cost of the benefit that's been denied.
With the current system, insurers must have a process of internal appeals. Usually, this process has multiple levels of appeals, but most times the original denial remains a denial.
Most of the states in the U.S. have a review of denials that's independent, but the new law will give that option to each state and to self-funded medical plans. These independent reviewers rule on the consumer's side half of the time but most people do not take advantage of these reviewers because they don't know that they exist, and they usually have to go through many layers of levels internally before they get to that point.
There are a few states that make consumers spend up to 50% of the cost of an independent review, and some states allow the medical insurer to stop coverage during the process of appeals. There are hopes that the new law will address some of these concerns.
Last week, administrators in California came to some early decisions regarding the costs and deductibles of the high risk medical insurance pool that will be established on September 1, 2010. The intention is to administer that federal program simultaneously with the CA high risk medical insurance pool that is already in existence.
There are differences in prices between the state pool that's already in existence and the federally subsidized high risk pool. For example, a woman who lives in San Francisco who is 50 years old would pay a monthly premium of $915 for the existing state pool coverage, and only $575 monthly for the federal plan.
It is estimated that the subsidy from the federal government will aid about 16,000-44,000 residents in California. These numbers will not be finalized until they see how sick these people are and the medical costs associated with caring for them.
It was also decided that there will be a $1500 annual deductible on the federal medical plan.
These high risk medical insurance pools are meant to bridge the time period between now and when insurers will no longer be able to decline applicants because of pre-existing conditions in 2014.
$5 billion has been put aside for these high risk insurance pools, with California receiving about $761 million. It is estimated that this money will help to cover about 200,000 for a period of 3 years. All of the states are stating that it is not enough to last, and not enough to help the many 50 million uninsured Americans.
California's existing high risk pool has a waiting list because it caps enrollment at 7,100 Californians. The new federal pool could have a waiting list as well.
The federal high risk pool is only for people that have not had any insurance for the past 6 months, and nobody knows if and when a waiting list will be formed.
Even though medical insurance reform laws passed in March, the U.S. could have a major crisis before many of the provisions of the law become law in 2014.
Many state governments that have been struggling because of the recession are considering more cuts in medical care help for the poor, even though more money is promised to these states by the federal government.
Meanwhile, there are millions of people in the U.S. that have been using assistance from the federal government as a way to hold onto their medical insurance that will be losing their coverage within the next few months since that assistance will be expiring. Those people that have jobs are facing more cost shifting to employees in regards to the medical insurance that their company has, or their company is considering dropping the coverage altogether.
Everyone is facing increasing medical care costs and rising medical insurance premiums. In some areas of the U.S., people's medical insurance premiums are increasing at double-digit rates in 2010.
The White House Office of Health Reform has acknowledged that medical insurance premiums will continue to rise, and some Americans will still lose their insurance coverage.
From now until 2014, it is a bridge period, until Americans receive medical coverage that's guaranteed and federal subsidies that amount to billions of dollars in 2014.
Since the law has been passed, the government has been offering new tax credits to small companies in order to sway them into offering medical coverage to their employees. The government has also been developing regulations that will oversee medical insurance companies and to stop huge rate increases from happening.
States have been working with the Department of Health and Human Services to establish high risk pools. These high risk pools will help people obtain coverage who have been declined coverage. However, preliminary research states that the $5 billion that's set aside for these new high-risk pools is not enough.
A survey that was conducted in March of this year showed that among 507 large companies, their premiums would increase by 6.5% on average this year. That is about 3 times faster than prices in the entire economy are rising.
Therefore, many large companies are having their employees pick up more of the share of cost of these medical insurance premiums. Small companies typically are not as likely to offer their workers medical insurance because of the costs, some of which are being increased by at least 20% in some areas of the U.S. Many of these companies are slashing benefits or laying off employees to help offset the increasing costs of medical care.
In 2009, Congress authorized about $2 billion to go towards medical benefits for about 2 million Americans that had been laid off. However, there is a lot of pressure to contain this spending. It is likely that Congress will stop the COBRA aid, which gave laid off employees a 65% subsidy to help them keep their Cobra coverage. Without this assistance, laid off workers will have to pay the entire cost of the premiums, which is prohibitively expensive for most.
Since the recession started, there has been an enormous increase in the enrollment in Medicaid programs. Democrats have been trying to give extra funding to states, but for a lot of states, that extra funding will not be enough.
In California, officials are intending to place revised limits on the amount of prescriptions and physician visits for Californians on its MediCal program. Officials in North Carolina have slashed payments to physicians and other medical providers and are considering ways to cut down the amount of people that are eligible for certain services, like home health care. State leaders in New Mexico, who have also cut payments to physicians and other medical providers, are now looking at methods to cut some prescriptions and long term care services.
A recent survey conducted by Kaiser found that medical insurance rate increases averaged 20% in the individual and non-group medical insurance markets
About three quarters of people without group coverage said that they had a rate increase with their current medical insurance company or with a previous insurance company they were insured with. Of those, about 16% changed insurance plans at the time of the rate increase and they bought either a less costly medical insurance plan or they switched medical insurance companies. After everything considered, these same people who had rate increases ended up dishing out 13% more money than previously.
The reason they're spending more now is because those people that changed to a less expensive medical insurance plan aren't getting as comprehensive of coverage compared to before. When people changed plans, they were 4 times more likely to state that their new medical insurance plan has worse benefits compared to their prior plan compared to people that said that their new medical insurance plan's benefits are increased.
There are roughly 14 million Americans that obtain their medical insurance through the individual market or non-group market. About 57% of these people with individual insurance said that their policies just cover themselves and nobody else. Their premiums that they pay average about $3,606 per year, which is less than what the average premium for group sponsored coverage is, which is $4,824. However, group insurance typically offers more comprehensive coverage. For people who insure their families on their plan, their medical insurance premium averages $7,102 for the year.
Premiums vary by age, and older Americans have reported paying much higher premiums compared to younger people.
About 26% of these people have a high deductible of $5,000 and more. About 6% have a deductible that's $10,000 and more. For a single person policy, the average deductible is $2,498, but on a company sponsored PPO plan, the average deductible is $634. People that have a family plan have to meet their individual deductible, which averages $2,959. But for people that have a family deductible, which is the deductible that is required to be met by any combination of family members before benefits kick in, their average family deductible is $5,149.
People who buy their own coverage worry about their ability to pay for medical care compared to people with company sponsored coverage. In fact, 40% of people who purchase their own medical insurance say that they're not too sure or not at all sure if they'll be able to keep up with their medical bills, which is twice the amount of people with company sponsored coverage that said the same thing. Just 17% of those who purchased their own medical insurance plan said that they're very confident that they can pay their medical bills, compared to more than double that amount (36%) with employer sponsored coverage that said the same thing.
Over the previous year, 22% said that they themselves or a member of their family covered by their medical insurance plan didn't receive the medical care that they needed because of the high cost involved. Similarly, 20% said that they did not fill a prescription because of the cost involved.
People with pre-existing conditions were two times as likely as people without pre-existing conditions to skip medical care that's needed because of the high cost or not getting a prescription filled because of the costs associated with it.
About 38% of people reported at least a single problem with having their medical insurance company pay a medical bill. This was because either the medical policy paid less than what they were expecting, or the policy wouldn't pay towards a bill that they believed was covered, or they met the limit of what the policy pays for a certain illness or injury.
Anthem Blue Cross, Blue Shield of California, Health Net and Aetna will now be subject to an additional review of their proposed rate increases by actuaries that are independent of these medical insurance companies.
These four medical insurance companies cover approximately 90% of the individual medical insurance market in California.
This is in response to Anthem Blue Cross's proposed rate increases of up to 39% this past March. The California Department of Insurance had sent the rate increase filing to an actuary outside of the insurer, and discovered errors in its filing. They found that Anthem Blue Cross had tried to bill customers 50% more than the state of California allows. Because of this, Anthem Blue Cross did not go through with the proposed rate increases.
Auto and homeowners insurance plans need to have approval by the state insurance department before adjusting its rates, yet in California, medical insurance companies have not been required to get approval. However, the law in CA requires that each insurer maintain a 70% loss ratio, which means that 70 cents of every dollar that is obtained through premiums is to be used on medical benefits.
Medical insurers state that the premiums that they charge are in direct correlation with the increasing cost of medical care. Research organizations in California that are non-partisan have said that there is a huge market power of hospitals which are driving the costs up.
New laws were issued recently that will allow Americans to keep their medical insurance plans
and allow them to enjoy protections and control regarding their medical care. This was promised by President Obama in his push for medical reform, and it is being delivered.
The Affordable Care Act says that all medical plans must include important benefits to Americans, and any medical insurance policies that were in effect on March 23, 2010 are exempt from some of the newly passed required benefits. This is called the "grandfathered plans". This will allow medical insurance companies and companies to make changes routinely while not losing their grandfathered status.
Some of the acceptable changes that businesses will be allowed to make will be to make small changes to co-pays, and contributions from the employer for their workers' premiums. Also, they can have adjustments made to cost to keep up with medical inflation. They can also add new benefits and make small adjustments to current benefits. These grandfathered plans can accept the new protections as set forth in the new law or they can make the necessary changes in order to comply with their State law, or with Federal laws.
All medical insurance plans, grandfathered or not grandfathered, will have to have specific benefits starting on September 23, 2010 and after. This includes the elimination of lifetime limits, the prohibition of medical insurance companies being able to cancel a policy whenever someone gets ill and they've previously erred on their medical insurance application unintentionally, and allowing young adults up to the age of 26 to remain on their parents' plans.
For people that receive their medical insurance through their employer, there are more benefits that'll be offered for grandfathered and not grandfathered plans. This includes prohibiting insurers from excluding children with medical pre-existing conditions and the elimination of restricted annual limits. In the future, there will be standards on limits and insurers cannot set a limit below that annual dollar figure.
If insurance companies or companies decide to get rid of significant benefits or raise consumers' out-of-pocket costs, then these plans will no longer be considered grandfathered. If a medical plan is no longer grandfathered, then the people that have these medical plans will get more new benefits, such as 100% coverage for recommended preventative care and access to obstetricians and gynecologist without having to obtain a referral from a primary care physician.
In addition, grandfathered plans cannot increase a plan's co-insurance or they will lose their grandfathered status. Co-pays cannot be increased by no more than either $5 or by a percentage that's equivalent to 15 percentage points plus medical inflation. Also, they cannot increase deductibles by a large amount. The largest that they can be increased to is equivalent to 15 percentage points plus medical inflation. Grandfathered plans are not allowed to decrease the contributions that are paid by an employer significantly. Employers are not able to decrease the amount that they pay towards employees' premiums by more than 5%. Grandfathered plans also are unable to constrict any dollar limit that's in place for annual benefits paid, and plans that don't have a dollar limit on annual benefits are not able to add a new limit, unless they're replacing it with a dollar limit annual amount that's equivalent to or higher than the lifetime limit. Plans can also lose their grandfathered status if a company makes a decision to purchase medical insurance for its employees from an alternative insurance company. However, employers are able to change their plan administrator without losing their grandfathered status.
With these new grandfather laws, insurers must disclose to its members each time it gives out materials whether it's considered to be a grandfathered plan and not required to include some of the benefits of the Affordable Care Act. This will enable Americans to comprehend the benefits of remaining with a grandfathered plan or changing to a new medical plan. Also, plans can lose their grandfathered status if the insurer encourages or makes people change to a different grandfathered plan that has less medical benefits or higher out of pocket costs. In addition, a grandfathered plan will lose its status if it's purchased by another plan, or combines with another medical plan for the purpose of avoiding the new laws.
With the passage of medical insurance reform, many groups are worried that America could see a severe shortage of doctors. In 2014, there will be 30 million new potential patients coming into a system that already has emergency rooms at full capacity and physicians waiting rooms full.
By 2025, there could be a loss of up to 125,000 physicians, according to the Association of American Medical Colleges. According to a federal agency that mostly improves medical care for the uninsured, they think that there will be a shortage in 2020, when America will be short of 65,560 doctors. Likewise, a shortage of 149,000 is projected by the American Family of Physicians in 2020.
The various groups concerned are warning that there could be much lengthier waiting times, and much longer distances to travel to see a doctor, shorter visits, elevated costs, and in some areas where the shortage will be extreme, there will be no physicians at all.
Most medical providers agree that there will be a shortage of primary care physicians at some point. In addition, there will be more neonatal doctors than what is needed, and very few general surgeons. Baby boomers will be getting to the age where more medical care will be required, and doctors' assistants and nurses will have a shortage.
The ratio of doctors to the overall population has been increasing since 1930. However, that ratio has started to decline for the first time in 80 years. Between the years of 2000 and 2030, the amount of people over the age of 65 will double. Couple that with the fact that the medical care that they will require will be 200% or 300% higher than other adults.
In addition to the baby boomer generation, it is estimated that the U.S. population is expected to increase from 300 million people to 350 million in 2025.
What is needed is a 30% increase in enrollment in medical school by the year 2015.
There may also be a shortage of doctors in specific areas of medicine, such as child psychiatry, and other types of subspecialties of pediatrics. Money also plays a big factor in what medical care is performed. A 30 minute visit in a doctors' office would provide a doctor with $103.42 from Medicare, and a colonoscopy which takes 30 minutes would provide a doctor with $449.44 from Medicare.
Likewise, an opthalmologist makes twice the income treating an adult compared to a child. A newly enrolled medical student who decides to major in primary care instead of cardiology will lose $3.5 million over the course of their career.
Since the passage of medical insurance reform, employees at the Department of Health and Human Services and at the Labor Department have been putting in more hours of work than in recent memory. The task at hand is to put provisions in place that reflect the 2000 pages of reform.
On Mondays and Thursdays, the director of the White House Office of Health Reform meets with officials to make decisions regarding the translations of the law's mandates, and prep the wording before going into fine print.
On the table this year is the task of mailing checks in the amount of $250 to seniors. This is meant to cover the gap in Medicare's drug benefit. Another provision to accomplish this year is giving tax breaks to small businesses that insure their workers. Also, legislation must be placed this year that will prevent medical insurance companies from declining children due to medical pre-existing conditions. Another stipulation is that medical insurance companies will be required to allow parents keep their adult dependents on their policies up to the age of 26. That's a lot of work to get done in just 6 months left of the year.
Every 7 to 10 days, the Obama Administration is publishing a positive thing about the medical insurance reform legislation, with the intention of making it favorable to a certain constituency. The administration's involvement shows the reform law's potential impression on President Obama's presidential term. In addition, it also shows how much the reform law allows important decisions to be left to the administration.
Medical insurance reform law has to make sure that insurers spend most of the money that's collected from premiums on medical bills or improving someone's well-being. However, what kinds of activities will be suitable? Another question that needs to be addressed is to determine what an "unreasonable" rate increase is.
The terminology of this language can severely impact medical care reform. The people that have been chosen to regulate the laws have had run-ins with insurance companies in the past, so medical insurance companies are nervous.
Since 1945, the medical insurance industry has been exempt from the anti-trust laws that were passed. Anti-trust laws are applicable to almost every single industry. On February 24, 2010, the Health Insurance Industry Fair Competition Act was voted on, and the results were 406-19, which made the act pass that will expose medical insurers to the anti-trust laws.
Medical insurance companies say that the law is not needed for their industry. But an incident that happened in New York shows that it is absolutely needed. The incident involved the terminology found in many medical insurance plans: "usual and customary". Basically, this means that the insurer will pay a fee that is typically charged by a particular physician for a particular procedure, OR the fee that is usual for a particular procedure which is charged by the majority of doctors with similar training and experience within the same geographic area, whichever is LESS.
The Attorney General in New York looked into who was behind the figures that made up "usual and customary". It turns out that the figures came from a database called Ingenix, which is one of UnitedHealth UNH's subsidiaries. This database purposely skewed the rates down via data collection that was faulty, bad pooling processes, and with the absence of audits. Medical insurers would then use this faulty low rates for their reimbursements.
As expected, medical costs are expected to go up by 9% in 2011. According to PricewaterhouseCoopers LLP, this percentage is .5% less than the 2010 rate of growth.
The report by PricewaterhouseCoopers LLP also stated that 41% of businesses intend to raise cost sharing, which may mean increases in employee's co pays or deductibles. This would make most of the employees in America have a medical insurance deductible higher than $400. Employers are hoping that if their employees have to spend more out of their own pockets, then this will diminish the over usage of services and prescription medications.
About 700 companies from 30 different industries were surveyed for this report, as well as medical plan actuaries and other owners or executives whose companies offer medical insurance for 47 million American employees and their dependents.
According to the report, just 26% of businesses intend to raise prescription cost-sharing in 2011. Medical insurers are reaping the benefits from more people that are using generic prescriptions. In 2011, brand name prescriptions are going to go off patent, which represents about $26 billion in sales annually. In addition, 1/3 of companies with 5,000 employees or more contribute towards their before 65 retiree medical coverage. This is less than in 2009, where you had 47% contribute towards before 65 retiree medical coverage. Just 22% of companies that have more than 5,000 workers contribute towards after 65 retiree medical coverage, which is less than in 2009 when it was 37% of companies that contributed to after 65 retiree medical coverage.
The 65% Cobra medical insurance subsidy that the government had been contributing for ex-employees' medical insurance premiums expired on May 31st, and Congress is not wanting to renew it, even though the President is pushing for it. About 1/3 of workers that were eligible had enrolled in the coverage that was subsidized.
Democrats have been divided on adding billions of dollars of costs to the growing federal deficit in a mid-term election year. Two Democrats, from Pennsylania and Ohio, have recently written a measure that costs $7 billion that would extend the program for people that lose their jobs through November 30th. This measure would extend unemployment and make numerous alterations in federal programs. Lawmakers are voting this week.
Again, two of the largest medical insurance companies in Massachusetts are looking for rate increases that are in the double digit for individual and small business medical insurance plans. These new rate increases, if approved, would go into effect on July 1st.
Just this past March, the Massachusetts Division of Insurance declined 235 proposals for rate increases that would have gone into effect on April 1st. The medical insurance companies were then forced to charge customers 2009 premiums.
Blue Cross Blue Shield of Massachusetts is seeking rate increases that average 12%; while Harvard Pilgrim Health Care is seeking rate increases of 8.8% to 11.9%. Both insurers state that their new rate increases will be sufficient to insure the costs of the medical benefits that their customers will receive.
The rate increases could not come at a worse time, when officials of the state have been trying to control medical care costs, and medical insurance companies have had not choice but to sell plans at a loss.
If the state commissioner discovers that the rates are unreasonable or too much and not actuarially sound, then those proposed rate increases will be disapproved.
The rates proposed reflect medical insurance companies' claims history, and what they're contractually obligated to pay providers. If the medical insurance companies cannot obtain the higher premiums that is necessary, then they will continue to have a loss that keeps getting larger. In May, the top 4 medical insurance companies in Massachusetts had an operating loss of more than $150 million.
Hearings have been conducted within the Insurance Division, because medical insurance companies have opposed the rate increase denial a few months ago.
For now, medical insurance companies have been quoting 2009 rates for their new customers, and will continue to do so since they expect the latest round of proposed rate increases to be rejected.
Both medical providers and small businesses are getting very concerned about the riff between insurers and state officials, because they feel that it will have an impact on their operating costs, plus their capability to retain workers and hire new employees.
With about 1/3 of hospital and medical insurance companies contract being renegotiated in 2010, there is a worry that medical insurance companies will attempt to scale back their payments to hospitals that are financially sound, and hospitals that are financially in trouble. Right now, hospitals' margins are running so thin that they can do little to negotiate on their rates. If there were lower rates, then they would be forced to lay off employees. Employees account for about 2/3 of hospitals' expenses.
Congress has recently been taking steps backwards away from sending more financial aid to economically battered states, which puts billions of dollars that California and other states were depending on to balance their budgets.
California was looking forward to receiving nearly $2 billion in federal aid, which was allocated to help bring California out of the red.
All together, the federal government was to set aside $24 billion to go towards helping states balance their budgets. Most of that money would have been applied to cover medical care. Now, Democratic leads in the House of Representatives have taken that money out of legislation because of election-season jitters.
It appears that Washington is now being driven by the deficit. A bigger problem lies in the fact that the economy could slip back into a recession because of financial cuts to states and local economies.
In California, the welfare program is being considered to be eliminated, and state-subsidized day care would be cut for hundreds of thousands of low-income children. School spending would be froze, and numerous other cuts would follow, to help close the $19.1 billion budget gap. If California does not get the federal assistance, these cuts plus more drastic proposals would be on table.
Nearly every single governor in the country is trying to persuade the Senate to provide the assistance. However, the Democrats, who have the majority in Congress, are facing resistance to more spending from their own more conservative members of their party because of upcoming challenging re-elections. Meanwhile, in this year's mid-term election campaigns, the Republicans are noting that the federal budget deficit could reach $1.5 trillion.
There are 30 states that are counting on additional Medicaid funding for their budgets. This funding was originally provided in last year's economic stimulus bill, but only through the end of 2010. While unemployment is still very high, governors from both the Democratic and Republican parties have been seeking to extend the funding through the middle of next year.
Proposition 103 has passed the state Assembly, advancing it to the California Senate. Proposition 103 seeks to have medical insurance companies justify overhead costs and proposed medical insurance rate increases before increasing medical insurance premiums, co-payments or deductibles.
The restrictions would mostly apply to Blue Cross Blue Shield plans, and health maintenance organizations. Now, they are regulated by the Department of Managed Health Care and the Department of Insurance.
The vote was 43-28, and the only party that voted in favor of the bill was the Democrats. A similar bill was previously introduced twice, but never passed. With the passage of medical care reform, it gave this legislation more support than it had ever had. Plus, with Anthem Blue Cross's recent rate hikes of up to 39%, this bill had more of a reason than ever to pass.
The medical reform law has set aside $250 million to states to assist in rate reviews.
Medical insurance companies are insisting that the medical reform bill does not address the core issue of higher rates, which is the increasing cost of medical care.
A new medical insurance reform provision states that medical insurance will be extended to adult children up to age 26 under their parents' policies effective January 1, 2011. However, a survey conducted by Hewitt Associates shows that approximately 950,000 employees will be offered the option to cover their dependents much earlier than what the provision requires.
Hewitt had surveyed more than 500 large American employers, which represents almost 7 million employees with coverage. The results showed that about 1 in 5, or roughly 19 percent, of large employers plan on extending medical insurance to dependents up to age 26 earlier than what is required. Of all of those companies, 10% will offer medical insurance coverage earlier for all eligible dependents, and 9% will extend coverage for students that are graduating that are already insured under the medical insurance plan.
Approximately seventy-seven percent of employers are intending on waiting on extending coverage to eligible dependents until next year, when they will be required to extend coverage, which is the plan year that begins on January 1, 2011. 4% of large employers still don't know if they will offer coverage earlier or not.
The reason why a large percentage of large employers are extending coverage earlier is to boost employee morale and to earn goodwill from employees. This is especially helpful since a good percentage of adult children cannot find employment or lost their jobs during the recession. However, most companies are waiting to offer extended coverage because of the money it would cost and the paperwork that is involved.
About 57% of employers have already budgeted the cost of extending coverage to eligible dependents up to age 26. Of those, 18% are expecting to see less than a 1% increase in yearly medical care costs between the years of 2011 and 2014. 26% of companies estimate a 1%-2% increase, and 11% estimate a 2%-5% increase.
With this new provision, Hewitt predicted that an employer may cover 5%-10% additional adult children than they do today.
The Obama administration had quoted a relatively unknown research group in Dartmouth College, which claimed that it could cut billions of dollars in wasteful medical care spending and make Americans healthier at the same time.
They claimed that the $700 billion a year that is spent on unnecessary testing and procedures does nothing to improve patient's health and can actually be harmful.
In this study, maps were shown that highlighted the waste in the medical system....with beige representing medical facilities and regions that offered good and efficient care, and chocolate representing bad and inefficient care. These maps made reform look easy to so many in Congress that Congress suggested simply trimming the funds Medicare gives to hospitals and regions that were in the chocolate zones.
While this research was interpreted to show the country's best and worst medical care, in interviews, the Dartmouth researchers acknowledged that the charts mainly show the varying cost of care in the government Medicare program. Yet measures of quality of care were not part of the formula. Nobody knows if patients are dying in larger numbers in the beige regions than in hospitals in the chocolate ones.
The research that pointed to which hospitals and regions are the cheapest may be questionable. The main point behind the research is that medical doctors in the upper Midwest give better and cheaper care than their counterparts in the south and in the big cities, and they cited that if Southern and urban medical doctors would be less money hungry and behave like medical doctors in Minnesota, then America would be richer and healthier.
The actual difference in costs between these regions may result largely from how patients live. For example, people living in Houston, TX may be sicker and poorer than those people living in Bismark, N.D. Also, nurses in Houston are paid higher than nurses in North Dakota because the higher cost of living in Houston. In the study, patients' health is not considered, nor is the difference in salaries or medical prices.
More and more medical policy researchers are learning that overhauling America's medical insurance system will be a lot more difficult and more painful than the Dartmouth research has suggested. In fact, the cuts that are made, if not made carefully, could result in losses of life.
One of the main focuses of Dartmouth's research is the comparison between hospitals in regard to spending. The way that they determined spending is by looking at data which shows how much hospitals had billed Medicare for patients with a chronic illness, who only had 6 months or two years left to live.
The research did didn't account for the care that extends life or helps lives. For example, if a medical facility uses a lot of money on 5 patients and keeps 4 alive, while another medical facility uses less money on each patient, and all 5 die, then the medical facility that saved 4 of the patients will rate below the higher spending medical facility because the study only compared how much it spends before a death.
It is true that some medical facilities are spending more, but they're actually getting better results. The Dartmouth research does not give any credit to these hospitals. What's alarming is that this research done by Dartmouth is very influential in America's capital. It has been called the most important research of its kind in the last 25 years, according to Dr. Donald Berwick, who was nominated by Obama to run Medicare.
As a way to gain support for the health legislation, the Obama administration made a promise this past March. They said they would ask the Institute of Medicine, which is an advisory group that is not government related, to find ways of putting the Dartmouth research findings into a plan of action by setting payment schedules that would reward efficient hospitals, and punish the inefficient ones.
If that proposed system punishes big city hospitals, such as UCLA or NYU Langone Medical Center, because they look like big spenders, but may rank much higher by other quality measures, then there is a huge question over the validity of the Dartmouth research.
For medical insurance reform to succeed, the insurance industry and government must work together. For years, the two have been on opposing sides of the debate regarding how to provide affordable quality medical care. Now, they are finding that both of their futures hinge on them getting along and agreeing.
The financial future of the medical insurance industry lies within the hands of the government. With regulations that will be imposed on the medical insurance industry written by the government, and hundreds of billions of dollars in government subsidies being given to the insurance companies in order to cover low and middle income people, the medical insurance industry is at the government's mercy.
Likewise, Obama's political future and his Congressional Democrats political futures depend on their ability to come through on their promise to voters, by controlling medical costs and making affordable medical insurance available to everyone. However, for medical reform to succeed, they need the cooperation of the medical insurance companies.
If medical insurance companies cannot offer medical insurance to Americans at an affordable price, many Democrats will once again push for a government-run medical plan, or public option, to battle against private medical insurance companies.
Yet, if medical insurance premiums continue to climb, the Obama administration could blame the medical insurance industry. However, Republicans could then very well claim vindication of their belief that ObamaCare is deeply flawed, and does not solve the core issue, which is the rising cost of medical care.
Meanwhile, medical insurance companies are starting to implement a new business model. Like a public utility, they will be highly regulated. In 2014, they will no longer be allowed to decline applicants due to their medical history, and must approve all applicants for medical insurance coverage.
What's ironic is that for the past few years, the Obama administration has beat up the medical insurance industry, conveying their distrust in the industry. Yet in just a few short years, they are telling everyone that they have to buy insurance from this same industry that they vehemently distrust.
The medical insurance companies have quite a challenge ahead of them...the expectation of them is to provide additional medical benefits while not significantly increasing premiums. Some immediate additional benefits that they have to provide this year is to offer coverage to kids under the age of 19 with pre-existing medical conditions, and to allow kids up to the age of 26 to remain on their parents' polices. Also, lifetime limits and unreasonable yearly limits on certain medical benefits will be abolished.
Why are medical insurance costs and medical treatment costs going up so much?
Well, according to the California Healthcare Foundation, inflation accounts for 51% of the growth in health care spending. The Foundation has also noted that American doctors earn two to three times as much as doctors in other industrialized countries. With more and more physicians becoming specialized, physicians are able to charge up to twice as much as primary care physicians. In fact, between 1997 and 2006, Dermatologists' compensation increased by a whopping 97%! Following that trend were Gastroenterologists, which benefited from a 78% increase in compensation in that same time period, and Radiologists who saw a 65% increase in their income in that same time frame. Another big factor in medical treatment costs is the types of treatments Americans are seeking. While technology may improve care, its contribution to medical care spending growth ranges from 38% to 65%.
While more and more people turn to prescription drugs, their cost grows exponentially. In the U.S., half of all adults take at least one drug a day, and 7% of all adults take at least 5 drugs a day. Between 1997 and 2007, prices for prescription drugs grew at an average rate of two and a half times inflation. It sure is costly...a new cancer drug can cost $100,000 or more per treatment regimen.
Lifestyle factors also contribute heavily to the cost of medical care. Did you know that chronic medical conditions accounts for about 75% of the more than $2 trillion spent on medical care yearly in America? Then, consider that 80% of seniors have at least one chronic condition, and 50% of seniors have at least two chronic conditions. Chronic medical conditions are growing at an alarming rate in this country. In 1996, 7% of Americans had more than three chronic conditions. Just 9 short years later, that percentage rose to 13%. For ages 80 and older, it went from 38% to 54%.
It is estimated that 10% of all medical costs are directly attributed to obesity, and 10% are directly attributed to tobacco use. 60% of Americans lead a sedentary lifestyle and don't exercise, and 60% of Americans have a BMI (body mass index) that exceeds the recommended BMI. If Americans adopted a healthier lifestyle, you can see how medical costs could diminish over time.
To go up, or not to go up: That is the question. At least, that has been the question as of late regarding the potential impact that health care reform will have on Anthem Blue Cross medical insurance rates as well as the other insurers.
For ordinary American consumers, the question is a pertinent one. On average, the annual premium in the United States for a person was $2,985; and for a family, $6,328. While this cost varies depending on several factors, including location, one can easily see how paying for medical insurance can be a burden. This possibility is why many Anthem customers are wondering if Anthem Blue Cross medical insurance rates will increase or decrease with the new health care reform.
Are Anthem Blue Cross Medical Insurance Rates Going Up?
In February 2010, Anthem Blue Cross surprised its customers, the government, and many in the industry by announcing that its premiums were going to be increased by up to 39% across the board. After a lively public debate over the increase, Anthem Blue Cross reexamined its data with an independent actuary and withdrew the rate increase proposal.
Anthem has yet to formally file a new proposal - so will rates go up, stay the same, or decrease? It is unlikely that rates will go down for the average consumer. The Patient Protection and Affordable Care Act (PPACA), signed into law in March 2010, contains many provisions that could result in an increase in premiums for insurers; which means that Anthem Blue Cross medical insurance rates will likely rise.
What Higher Rates Mean For Consumers
Although those who are currently affected by Anthem Blue Cross medical insurance rates will likely be subjected to rate increases, they may benefit under the new law as well. For example, insurers under PPACA will not be allowed to reject potential subscribers for pre-existing conditions or charge higher rates - and will not be permitted to charge higher rates for current illnesses. Also, Anthem Blue Cross medical insurance rates will be held down by the use of accountable care organizations (ACOs), founded on research that shows that as much as 30 percent of health care spending can be eliminated without sacrificing quality of care. Anthem, California's largest insurer, is establishing an ACO to reduce costs and moderate rates for its customers.
In short, even if Anthem Blue Cross medical insurance rates increase, the average consumer will likely be spared the full brunt of rising costs through healthcare reform.
According to Anthem Blue Cross, 87 cents of every medical insurance premium dollar they receive from their members goes towards covering medical care and services that members receive, like doctor visits, hospital costs, prescription drugs, and more. When costs for these services go up, Anthem's medical insurance premiums must go up (current Anthem Blue Cross medical insurance rates). 10 cents of every premium dollar goes towards services they provide for their members, such as claims processing, enrollment and billing services, provider credentialing and complying with government regulations.
The 3 cents of the premium dollar that is left is profit.
3 cents of every dollar! To put that into perspective, if you combine the annual profits of the top 10 medical insurance providers in America, that would be equal to just 2 days worth of national medical care expenditures!
Why are medical care expenditures and medical insurance premiums so high? Technology is the key force behind medical care spending, accounting for an estimated 2/3 of spending growth. After that comes inflation. What we spend for the same medical services we had received years ago is a lot more expensive today, driving 51% of the growth in medical care spending. Next comes cost shifting. Cost shifting is what happens when government programs like Medicaid and Medicare underpay for medical services that patients receive. Medical insurance companies have to pay for this shortfall. In 2008, an independent medical research firm estimated that the total annual cost shift from Medicare and Medicaid to private medical insurance companies is more than $88 billion! To break it down even further, for a typical family of four, that represents an additional $1,788 in annual medical care costs due to cost shifting. Next is government compliance. Medical insurance companies spend over $339.2 billion in order to comply with government medical regulations. More than half of that money is spent on filing and reporting requirements.
The last, and perhaps the most avoidable reason why medical costs and medical insurance premiums are increasing is because of American's lifestyles. There is an increasing number of patients who are obese, conduct a sedentary lifestyle, and have poor nutrition...all of which contribute to chronic diseases, which account for 75% of the money spent on medical care in the U.S. each year. Did you know that the percentage of obese adults now exceeds the percentage of healthy weight adults? Also, almost 1/3 of adults do not get enough regular exercise, and 1/6 of adults have high cholesterol.
America's usage of medical services is staggering. One half of all adults in the U.S. take at least one drug a day, while 7% of all adults in the U.S. take at least 5 drugs a day. 2/3 of people who go into a doctor's office come out with a prescription. Between 1997 and 2007, prices for prescriptions grew 2.5 times faster than inflation. And Americans have been receiving tests and treatments at an alarming rate...sometimes receiving tests that they already have had, other times undergoing a treatment that hasn't proven to work, and other times staying in the hospital unnecessarily. On average, 1/3 or more of all medical procedures performed in America appears to be inappropriate, or offers questionable benefits, according to a RAND study.
Last but not least is medical care fraud. Medical care fraud is conservatively estimated to be at about 3% of all medical care spending, which translates to more than $180 million per day!
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