Thursday, December 6, 2012

Rising Health Care Costs and Insurance Premiums

Now that the Affordable Care Act (ObamaCare) is here to stay a lot of us continue to wonder how our current care and costs will be affected. The health care industry is a $2.8 trillion business.  Health Care  in the U.S. accounts for almost 20% of the Gross Domestic Product and nearly 25% of the Federal budget. 

As for your personal care, the vast majority of us will not see any significant changes in how we're treated, which providers we can see, or what these services will cost out of pocket. If anything, there will be even more choices available in coverage and care. However, with these additional opportunities there may be a slight initial increase in our premiums.

Anthem Blue Cross of California recently stated it will seek to raise individual policy holder's premiums by an average of 18%.  http://www.latimes.com/business/la-fi-insurance-rate-hikes-20121128,0,1885711.story
That's a pretty hefty increase, but before you get too concerned about it you should now any rate changes are subject to an intense government study and approval; which is one of the more important mandates under the Affordable Care Act.  http://www.healthcare.gov/law/resources/reports/rate-review09112012a.html 

In November of 2014 California will have a chance to vote on whether or not the State's Insurance Commissioner can overturn any premium increases deemed "too excessive" and will be able to order Insurance Companies to refund this money to its subscribers. Plan on other states to follow suit as the government continues to regulate the Health Insurance industry and favor the patient. 

You can also contact your State's Insurance Office now if you feel your premiums are being raised without cause or merit. Do not let private-for-profit corporations just roll over you. As a subscriber, you have more rights and choices than you think. Increased regulation is here to stay.   Controlling the cost of health care is a challenging endeavor. Providers, insurance companies and subscribers each have an interest in a more cost effective and efficient health care delivery system. 

Subscribers should take the time to become more educated about all the options soon to be available. An estimated 30 million more Americans will finally be able to purchase health insurance through the Affordable Health Care Exchanges. That's a lot of new participants in a system that's already plenty complicated and diverse.  See our previous blog entry on Health Care Exchanges for more information:
http://thepatientsadvocate.blogspot.com/2012/11/health-care-exchanges-and-affordable.html

One step in simplifying the maze of insurance land would be for insurance companies to develop and publish a standardized ratings criteria on the various providers they cover so patients can make objective choices based on their specific needs and requirements. Many customer service based industries like hotels, already implement ratings systems for their properties. One of the goals of the Affordable Care Act is to make the Health Insurance industry more transparent and publicly challenged.

Provider reimbursement is yet another area where reform is necessary.  Insurance companies can start by changing the current "fee for service" system which only encourages more services instead of efficiency and  improved care. In other words, no incentive is given to treat a patient effectively and timely because providers automatically earn more, the more services they perform.

Cost of care is generally a combination of price and use of services.  Insurers and Providers can easily control price. Providers have a mind set of "the more I do, the more I get paid."  One idea suggested by Blue Cross and Blue Shield of Massachusetts is a "global payment" approach, an alternative to the traditional fee for service system. Providers, including hospitals and physician groups, are placed on a fixed budget for reimbursement.  Their end financial payout is performance based upon whether or not they meet the initial target budget. HMO's tried a similar payout method years ago with capitation reimbursement.

Under the target budget approach providers are free to perform any services they deem "medically necessary."  The insurer will not interfere with the medical decisions made by the provider.  If the provider group comes in under budget, they are then rewarded with a share of the savings.  If they come in over budget, they agree to absorb part of the losses. To prevent providers from providing too little service and coming in under budget at the expense of providing need care, the insurer has put in place bonuses tied to achieving quality of care measures.  Such measures would include a certain percentage of patients who have high blood pressure under control or who have maintained appropriate cholesterol levels.

Another feature of the Affordable Care Act meant to reduce health care costs is the 80/20 rule.  Under this rule insurers must spend at least 80% of premium dollars on health care benefits. If they fail to maintain this percentage they must provide refunds to subscribers.  The rule provides an incentive for insurance companies to manage their administrative expenses and maximize premium dollars toward benefits, yet another protection for subscribers.

Insurance companies can complain all they want now about their rising costs or percentage of dwindling billion dollar profits, but by the time ObamaCare is in full effect in 2014, there will still be plenty of money to be made on their behalf.  However, the single biggest beneficiary of the new nationwide system is clearly you and me.  Don't let the insurance companies and special interest groups manipulate the truth with claims of "Socialized Medicine" and "Death Squads." In the long term, patients will clearly be better off with more affordable and quality health care because of the reform set by the Affordable Care Act. When it comes to health care in this country, the U.S. government has our backs now, more than ever.

Stay informed. Stay positive. Stay healthy.
- The Patient's Advocate
   medicalclaimsfilingexpert@gmail.com



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