Fwd: qotd: Swiss lessons on cost sharing

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-------- Original Message --------
Subject: qotd: Swiss lessons on cost sharing
Date: Wed, 5 Sep 2012 11:09:15 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Preventive Medicine
In press - Draft published online August 23, 2010
High prevalence of forgoing healthcare for economic reasons in
Switzerland: A population-based study in a region with universal health
insurance coverage
By I. Guessous, J.M. Gaspoz, J.M. Theler, H. Wolff

Health insurance is compulsory for all citizens in Switzerland and
insurance premiums are paid independently of income. Health insurance
covers the costs of medical treatment and hospitalization for the
insured. The insured person pays part of the cost of treatment: an
annual flat deductible, called the franchise, chosen by the insured
person (with premiums adjusted accordingly) and a 10% co-pay of the
costs up to a stop-loss annual amount of CHF 700 (1CHF≈1$). Between 1099
and 2010, health insurance premiums increased by 77%, coupled with
increasing out-of-pocket payments. Increasing out-of-pocket spending
may, at least in some settings, reduce the use of clinically important
services and drugs to prevent the onset and progression of chronic
disease (Paez et al., 2009).

We aimed to determine the characteristics of participants who report
forging healthcare and to describe the past 4-year trend for forgoing
healthcare for economic reasons.

Abstract

Objective

To investigate the determinants and the 4-year evolution of the forgoing
of healthcare for economic reasons in Switzerland.

Method

Population-based survey (2007–2010) of a representative sample aged
35–74 years in the Canton of Geneva, Switzerland. Healthcare forgone,
socioeconomic and insurance status, marital status, and presence of
dependent children were assessed using standardized methods.

Results

A total of 2601 subjects were included in the analyses. Of the subjects,
13.8% (358/2601) reported having forgone healthcare for economic
reasons, with the percentage varying from 3.7% in the group with a
monthly income ≥ 13,000CHF (1CHF ≈ 1$) to 30.9% in the group with a
monthly income < 3000CHF. In subjects with a monthly income < 3000CHF,
the percentage who had forgone healthcare increased from 22.5% in 2007/8
to 34.7% in 2010 (P trend = 0.2). Forgoing healthcare for economic
reasons was associated with lower income, female gender, smoking status,
lower job position, having dependent children, being divorced and
single, paying a higher deductible, and receiving a premium subsidy.

Conclusion

In a Swiss region with universal health insurance coverage, the reported
prevalence of forgoing healthcare for economic reasons was high and
greatly dependent on socioeconomic factors. Our data suggested an
increasing trend among participants with the lowest income.

Highlights

► Forgoing healthcare for economic reasons is frequent in a region of
Switzerland.

► This prevalence varies with reported monthly household income category
from 3.7% to 30.9%.

► Data suggest an increasing 2007–2010 trend among participants with the
lowest income.

► Risk factors include gender, smoking, occupation, children, being
divorced, and insurance status.

► Forgoing healthcare is associated with worse self-rated health status.

http://www.sciencedirect.com/science/article/pii/S0091743512003787


Comment: Conservatives in the United States often praise the Swiss
health care financing system largely because it is composed of a choice
of private health plans (although they may not like the facts that it is
compulsory, that it is heavily regulated, and that it is one of the most
expensive financing systems in the world). So what is the policy lesson
from this study of the Swiss system?

The out-of-pocket deductibles and coinsurance result in a high
prevalence of forgoing health care for economic reasons. The prevalence
is inversely related to household income, but even at the highest income
levels, some do forgo health care for economic reasons. Forgoing health
care is associated with worse self-rated health status, and reduces the
use of clinically important services and drugs.

Other nations have shown that you do not have to have deductibles,
co-payments, and coinsurance to control health care spending. Since
these cost sharing measures do have the detrimental effect of reducing
the use of clinically important services and drugs, they should be
rejected as bad policy. The other measures inherent in a well designed
single payer system obviate the necessity of patient cost sharing.

qotd: Covering part time and seasonal employees

Health Affairs Blog
August 31, 2012
Implementing Health Reform: A Summer Lull
By Timothy Jost

Employment Status And Waiting Periods

On August 31, 2012, the IRS released Notice 2012-58 addressing the
question of how full-time employment status is to be determined for
deciding whether an employer owes a tax penalty for under section 4980H
for failing to provide health insurance (or adequate or affordable
health insurance) to full-time employees who consequently receive
premium tax credits. On the same day, the IRS, Department of Labor, and
Department of Health and Human Services jointly released notice 2012-59
addressing the question of how the ninety-day waiting period limit for
employment-based health insurance enacted by the Affordable Care Act as
section 2708 of the Public Health Services Act would be applied.

The application of both the penalty and waiting period is quite
straightforward for employees hired on a full-time basis. An employer
that offers health insurance must cover a new full-time employee no
later than 90 days after employment. A large employer (with more than
50 full-time-equivalent employees) must offer adequate and affordable
coverage to employees hired as full-time employees or risk owing a tax
penalty if an employee goes to the exchange to obtain a premium tax credit.

The problem is how to handle employees who work variable hours and
seasonal employees. Full-time employment is defined as 30 hours a week
(or 130 hours a month), but many employees work 20 hours one week and 45
hours the next, or may work 40 hours a week but only for two months a
year during the growing or holiday seasons. The notices address how
this situation should be handled.

Notice 2012-58 defines three time periods— measurement periods,
stability periods, and administrative periods. New employees who are
not expected to work full time (variable hour or seasonal employees) can
be employed without health insurance for an "initial measurement period"
of between 3 and 12 months, as determined by the employer, during which
the employees hours are tracked. If at the end of that period it
becomes clear that the employee has been working an average of 30 hours
a week or more, the employer must offer health insurance to the employee
for a "stability period" of at least 6 months or for the length of the
initial measurement period, whichever is longer.

Alternatively, if the employee worked on average less than 30 hours a
week, the employer can treat the employee as a part-time employee for a
subsequent stability period and not offer insurance. The employer can
take up to 90 days for an "administrative period" before the stability
period begins during which the employer can determine eligibility and
add the employee to its health insurance program. In no event, however,
can the combined measurement period and administrative period extend
beyond the last day of the first calendar month beginning on or after
the one-year anniversary of the employee's start date.

Ongoing employees with variable hours can also be made subject to
measurement periods and stability periods, with the measurement periods
lasting 3 to 12 months and the stability periods lasting for the same
period of time but in no event less than 6 months. If an ongoing
employee is determined to be part-time during any measurement period,
the employer can deny coverage to that employee without risking a
penalty for the next stability period. If the employee is determined to
be full-time during the measurement period, the employer must insure the
employee for the following stability period or risk paying a tax penalty.

In sum, variable-hour employees may be insured one year, not insured the
next, depending on their hours of work during the prior "measurement
period." An employer can take up to 90 days following the measurement
period for an administrative period before coverage begins, but if an
employee is already covered under a stability period, the employer must
make the continuing eligibility determination before the stability
period ends to avoid gaps in coverage.

Under notice 2012-59, new employees reasonably expected to work
full-time cannot be required to wait more than 90 days to be enrolled in
coverage offered by an employer. An employer may, however, impose a
measurement period on variable-hour employees of up to 12 months,
consistent with the scheme described in Notice 2012-58, before
determining that an employee is in fact a full-time employee. An
employer may also impose other conditions before enrolling the employee,
such as requiring an employee to complete enrollment forms or work a
reasonable number of hours (not exceeding 1200) before coverage begins,
as long as the condition is not designed to avoid compliance with the 90
day waiting period.

Finally, Notice 2012-58 continues the expressed IRS policy of allowing
an employer to avoid penalties as long as the employee's contribution
for premiums does not exceed 9.5 percent of the employee's W-2 wages,
regardless of the employee's actual household income. The Notice does
not address the important question, currently open, of whether
affordability is to be calculated based on the employee's premium share
for self-only or family coverage. Employers can rely on the safe
harbors provided by both notices through 2014.

Some method is necessary for determining when employees who are hired
without an expectation that they will be full-time employees in fact
become full-time employees. But giving employers more than a year to
figure out whether an employee is working full-time seems excessive.
Under previous proposed guidance, a maximum of 6 months was allowed
for this determination. This approach will end up increasing the number
of the uninsured, or at least those insured through the exchanges
without employer assistance, and is to that extent a disappointment to
consumers.

http://healthaffairs.org/blog/2012/08/31/implementing-health-reform-a-summer-lull/


Comment: The administrative nightmare created by the Affordable Care
Act not only adds to the expensive public and private bureaucratic waste
that characterizes our health care system, it also fails to adequately
address fundamental issues such as equity and universality. This brief
summary of the rules establishing whether or not an employer must
provide coverage for employees based on a variable number of hours
worked and on seasonal variations in employment, and how soon the
coverage must be offered, demonstrates not only the complexity of just
this one issue, but also demonstrates how easy it is for an individual
to fall through the cracks.

Under a single payer system, everyone is covered. There would be no need
to be concerned about part time and seasonal work in determinations of
eligibility. And there would be no need for all of the rest of the
administrative complexity that this law creates - complexity that shoves
patients in and out of different programs and will leave 30 million with
no coverage at all. Insane.

Fwd: qotd: Future of large-employer health benefit programs

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-------- Original Message --------
Subject: qotd: Future of large-employer health benefit programs
Date: Fri, 31 Aug 2012 11:32:03 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Towers Watson
2012
17th Annual Towers Watson/National Business Group on Health
Employer Survey on Purchasing Value in Health Care

Performance in an Era of Uncertainty

** Affordability issues are a growing challenge

Trends remain double the rate of inflation. Employees' share of premium
costs increased 9.3% between 2011 and 2012, with the dollar burden
rising from $2,529 to $2,764. In fact, employees contribute nearly 40%
more for health care than they did five years ago, compared with 34% for
employers. Likewise, out-of-pocket expenses increased over the last year
from 16% to 18%. That increase is partly due to subsidy shifts for
dependents, as nearly half of companies increased employee contributions
in tiers with dependent coverage. About a quarter of companies (24%) are
using spousal surcharges, with another 13% planning to do so next year.
• The total employee cost share, including premiums and out-of-pocket
costs, has climbed from 33.2% in 2011 to 34.4% in 2012.
** Employers confirm their commitment to providing health care benefits
for active employees, but long-term confidence declines sharply

Many employers are steadfast in their commitment to their active health
care benefits as a central component of their employee value
proposition. Through 2015, most employers will remain focused on
optimally managing the design and delivery of their programs, with a
select number tailoring their designs to facilitate the availability of
federal subsidies in the Exchanges for a portion of their workforce.
Looking to the end of the coming decade, employers are much less
confident that health care benefits will be offered at their organization.
• Only 3% of employers are somewhat or very likely to discontinue health
care plans for active employees with no financial subsidy in 2014 or 2015.
• 45% are somewhat to very likely to offer an employer-sponsored health
plan to only a portion of their population and direct ineligible
employees to the Exchanges.
• Today, 23% of companies are very confident that they will continue to
offer health care benefits for the next 10 years, down from a peak of
73% in 2007.
** Use of ABHPs is surging but must be part of a broader strategy to be
effective

Account-based health plans (health savings accounts and health
reimbursement arrangements) can be an important element in an
organization's health benefit management if the right incentives and
employee education are attached. Today, 59% of companies have an ABHP in
place, with another 11% expecting to add one by 2013. But ABHPs will not
necessarily result in lower costs without significant enrollment. Our
results show that employers that take a comprehensive approach to ABHPs
(e.g., increasing employee and provider accountability while at the same
time helping to cultivate smarter health care consumers) are the ones
that have gained the greatest advantage. Using a health savings account
(HSA) can also effectively align with an employer's retirement strategy
by providing employees with a tax-advantaged vehicle to pay for current
costs while accumulating wealth for retirement.
• Total replacement ABHPs are also on the rise, representing nearly 12%
of companies with an ABHP — up from to 7.6% in 2010.
• ABHP enrollment has nearly doubled in the last two years — surging
from 15% in 2010 to 27% in 2012, and the move toward total replacement
ABHPs is continuing.
• About 10% of respondents say employees and dependents enrolled in an
ABHP are better at reducing lifestyle risks than those enrolled in
non-ABHPs.
• Nearly four out of 10 companies currently consider their HSA for
actives part of their retiree medical strategy, and another 20% are
planning or considering such a strategy over the next three years.

Regardless of the future of health care reform, providing a
cost-effective health benefit plan will remain a differentiator for many
companies when it comes to attracting and retaining top talent.

http://www.healthreformgps.org/wp-content/uploads/Towers-Watson-NBGH-2012.pdf


Comment: Health benefit programs of large employers have been the
mainstay of health care coverage for working families. The Affordable
Care Act relies heavily on the stability of these programs. However,
only 23 percent of these employers are very confident that they will
continue to offer health care benefits ten years from now.

Although this report discusses many observations and strategies for the
future, one trend that is of concern is the greater reliance on
high-deductible health plans with health savings accounts or health
reimbursement arrangements (aka account-based health plans or ABHPs).
Although these plans seem to be satisfactory for the healthy workforce
and their young healthy families who really don't need much care, there
remains the serious concern that such accounts deter patients with
significant needs from receiving the care that they should have.

Quoting from this report, "An important question is whether ABHPs are
having a positive or negative effect on employees' utilization of health
care services and ultimately on improving health outcomes. There are
significant information gaps about health behaviors and outcomes for
employees and dependents enrolled in an ABHP, compared with non-ABHPs."

The prevailing attitude seems to be that conditions in health care
financing are so bad that we have to do something, no matter what. It
doesn't seem to matter whether or not the changes are known to be
beneficial, just so long as we don't enact a single payer system.

Everyone understands that a single payer system would work, but it's
just not feasible. Not feasible? That's nonsense. We know that single
payer would be highly beneficial, creating much greater value in health
care spending. Enacting single payer is the only feasible approach we have.