Employers Maintaining Group Health Plans

A new study from TAG Employer Services, an administrative and employer services organization, finds most businesses with fewer than 50 employees expect to continue to offer health insurance of some kind in the next year. Under the Affordable Care Act (ACA), these smaller employers are not required to offer health care to full-time or full-time equivalent employees until 2016.

Among the company executives surveyed, only four percent of small- and mid-size firms said they would not continue to offer health insurance to their employees. More than two-thirds of survey participants (68 percent) said they strongly agreed they would keep offering health coverage, while another 28 percent said they likely would maintain coverage. There have been concerns raised in the past two years about whether employers might drop coverage to save money, but that does not appear to be happening based upon TAG’s research.

"For the great majority of organizations we surveyed, the Affordable Care Act is not an issue since they employ fewer than 50 workers and aren’t affected by the law’s [current] requirements," said Jack Biltis, chief executive officer at TAG. "Nevertheless, for most small employers, health care coverage isn’t expendable. At least four out of five mid-tier companies offer some type of coverage. Not only is it good business, health care coverage is also essential for companies to hold their own in the competition for talent."

Nevertheless, cost continues to be a concern for employers, as reflected in survey respondents’ ranking of worries for the year ahead. Seventy-seven cited keeping health care costs under control, while 10 percent mentioned helping employees make the best choice. Eight percent cited avoiding health care penalties (which are part of the ACA beginning in 2016).

State Exchange Limiting Options for Some Californians

A recent decision by Covered California, the Golden State’s public health insurance exchange, will limit the health care options for some residents in 2016. At its mid-January meeting, the board of directors rejected a bid from UnitedHealthcare to begin selling coverage statewide in 2016. Instead, the company can only sell newly licensed health insurance products in five under-served regions of the state. Those areas are primarily rural counties in Northern California, but they also include parts of Santa Barbara and San Luis Obispo counties.

UnitedHealthcare declined to join the state’s public health exchange when it launched in late 2013, choosing instead to exit California’s individual insurance marketplace and bypassing most exchanges nationwide. Covered California’s executive director Peter Lee said the nation’s largest health insurer should not be allowed now to enter the state and undercut its health care rivals who made significant investments and signed up more than a 1.2 million Californians during the first year of open enrollment.

California Insurance Commissioner Dave Jones criticized the state exchange’s action, saying Californians deserve better and competition would benefit all residents. Jones told the Los Angeles Times, "Covered California’s decision to substantially restrict where new health insurers can sell in 2016 protect the big health insurers’ market share and hurts consumers by denying them additional choices." He said he would prefer to see the exchange encouraging new insurers to enter the California market.

The four largest health plans in the Covered California exchange are Anthem Blue Cross, Blue Shield of California, Health Net, and Kaiser Permanente. Together they accounted for more than 90 percent of exchange customers in the first year of operation for the public exchange.

Healthiest Place Rankings Differ in New Reports

A new study by the financial analysis website NerdWallet has ranked the healthiest places in America. But, surprisingly, the findings differ from those of Sickweather, a Baltimore-based company that collects illness data from social networks.

The NerdWallet study looked at fitness and health care data for the 50 largest U.S. metropolitan areas. It measured fitness based on a variety of health metrics, including the percentage of residents at a healthy weight and the percentage of residents performing some kind of physical activity as reported by the U.S. Centers for Disease Control and Prevention.

The Sickweather report released in December used real-time illness data to map more than 23 different symptoms and illnesses, ranking the 10 sickest and 10 healthiest states based on the illness number per 1,000 residents. It looked at social media reports of allergies, flu, cough, colds, and fever through the first 10 months of 2014.

NerdWallet found the healthiest cities in America are: Boston-Cambridge-Quincy, Massachusetts; San Francisco-Oakland-Fremont, California; Portland-Vancouver-Hillsboro, Oregon and Washington; Seattle-Tacoma-Bellevue, Washington; Denver-Aurora-Broomfield, Colorado; Salt Lake City, Utah; San Jose-Sunnyvale-Santa Clara, California; Minneapolis-St. Paul-Bloomington, Minnesota; Hartford-West Hartford-East Hartford, Connecticut; and Washington, DC.-Arlington-Alexandria, Virginia.

In contrast, Sickweather ranked the healthiest states as Idaho, New York, Mississippi, Montana, Vermont, Washington, Maine, New Jersey, New Hampshire, and Utah. The least healthy states reported were Kansas, Nevada, Kentucky, Texas, West Virginia, Oregon, Indiana, Oklahoma, Massachusetts, and Nebraska.

Sutter Health HMO to Expand Service Area

Sutter Health Plus, the in-house health maintenance organization (HMO) at Sutter Health has announced plans to expand into Sonoma County in mid- to late-2015. It is the first foray outside the northern California-based health system’s primary service area of Sacramento, San Joaquin, Stanislaus, Solano, and Yolo counties and parts of El Dorado, Placer, and Sutter counties.

As of January 1, Sutter Health Plus had 13,000 members after enrolling its first participants in late 2013. A plan spokesperson told the San Francisco Business Times’ Chris Rauber this month that Sutter’s third-quarter loss of $5.1 million, and its cumulative losses of $13.1 million through September 30 on revenue of $21.25 million, are not surprising.

"As with any new health plan, Sutter Health Plus needs a solid membership base before we can reach break-even," said Sy Neilson, marketing and communications manager at the HMO. "We’re seeing significant growth as employers in the greater Central Valley and Sacramento areas consider us a competitively priced way to access a high-quality network of providers."

Sutter Health Plus competes with four of the state’s biggest health plans – Anthem Blue Cross, Blue Shield of California, Health Net, and Kaiser Permanente – as well as national plans like Aetna, Cigna, and UnitedHealthcare and regional providers like Western Health Advantage.

The HMO’s parent company, Sutter Health, operates some of Northern California’s largest hospitals, including San Francisco’s California Pacific Medical Center, Berkley’s Alta Bates Summit Medical Center, and Burlingame’s Mills-Peninsula Medical Center.

Goal to Lose Weight Could Be in Conflict with Insurance

Michelle Andrews of Kaiser Health News reported this month – when many Americans are considering ways to shed a few pounds – that losing weight in 2015 may not be a match with your health insurance benefits. She points out that while the Food and Drug Administration (FDA) recently approved a fourth prescription drug in just over two years to fight obesity, many insurers do not cover weight-control or weight- reduction drugs.

The problem may be that the impact of the drugs is not immediate, according to one pharmacy benefit executive. "For things that are preventive in the long term, it makes plan sponsors think about their strategy," says Dr. Steve Miller, Chief Medical Officer at Express Scripts, which manages pharmacy benefits for thousands of companies nationwide.

According to Miller, about one-third of companies don’t cover anti-obesity drugs at all, another third cover all FDA-approved weight-loss drugs, and the remaining third cover obesity-related drugs but with limitations. Medicare specifically excludes anti-obesity drugs from its drug formulary.

The newer anti-obesity medications suppress the users’ appetites. Research shows they typically lose between five and 10 percent of their body weight when the drugs are used in combination with a change in diet and exercise. The drugs are most often recommended for those with a 30 or higher body mass index, the threshold for obesity.

Supreme Court Rejects New Challenge to ACA

The U.S. Supreme Court rejected last week another broad challenge to the Affordable Care Act (ACA). In an unsigned opinion released on January 12, 2015, the justices turned down the appeal filed by the Association of American Physicians and Surgeons and the Alliance for Natural Health USA.

The two groups had sought to challenge a number of provisions in the health reform law, including the so-called individual mandate that requires Americans to have health insurance or face a tax penalty.

The U.S. Court of Appeals for the District of Columbia ruled in March 2014 in favor of the Obama administration on the medical groups’ challenge. In 2012, a district court also ruled against the ACA challengers.

The Supreme Court will take up the case of King v. Burwell, which focuses on premium subsidies, in early March. The issue is whether the subsidies/tax credits authorized by the ACA apply to both state-run exchanges (in 16 states and the District of Columbia) and the U.S. Department of Health & Human Services exchange, which offers coverage to residents in all other states.

Oral arguments in the King challenge to the ACA are set for March 4, with a final ruling expected in late June or early July.

BCBS to Continue Battle Against Antitrust Class Action

The Blue Cross Blue Shield (BCBS) Association and participating plans nationwide will continue to battle a proposed national class-action antitrust lawsuit by health care providers and subscribers that alleges they conspire to use their market power to lower payments to providers and increase premiums to health plan members.

Originally filed in 2012, the class action is being consolidated with a second complaint filed by providers with the U.S. District Court for the Northern District of Alabama.

Joe Whatley Jr., co-lead counsel for the provider plaintiffs, told Best's News Service the Blues "reduce competition by agreeing not to compete with each other."

"Each Blue is able to reduce payments to health care providers below market prices because of the protection from competition," said Whatley of the Whatley Kallas law firm in emailed comments. "Through the Blue Card Program, the Blues fix the price paid to each health care provider and all of them pay the same below market price."

In the lawsuit, Whatley’s firm argues on behalf of the health care providers that the insurers’ allocation of the marketplace is a horizontal restraint in violation of Section 1 of the Sherman Act. In response, the association claims the suit has no merit and says it will be vigorously defended.

The Blues health plans across the country provide health insurance coverage for about 100 million people. According to the association's own estimates, more than 91% of professional providers and more than 96% of hospitals in the United States contract directly with Blue Cross and Blue Shield.

ACA May Be Pushing Firms to Cut Hours and Staff

USA Today reported last month that some low-wage industries have responded to the Affordable Care Act (ACA) mandate for health insurance by reducing hours for full-time employees and hiring more part-timers. The story contradicts some earlier reporting by other media regarding the ACA’s impact on employment.

Under the ACA, beginning this year businesses that employ at least 100 full-time employees – or full-time equivalent employees, which includes part-time workers – must offer health benefits to at least 70 percent of those working at least 30 hours a week. This “safe harbor” rule increases to 95 percent of full-time workers in 2016, when it will also apply to firms with 50-99 employees. (There is an effort in the Republican-controlled Congress to change the definition of “full time” to 40 or more hours per week, but it’s not known if there’s sufficient support to get the ACA change approved if it’s vetoed by President Obama, as is expected.)

Employers in low-wage sectors, such as food service, retail, and warehousing, often oppose the ACA because they say health insurance represents a big cost they do not want to bear. The New York Times reported this month on a study by George Mason University’s Mercatus Center, which receives considerable funding from business groups, that suggests as many as four million Americans could have their work hours cut below 30 by employers who want to avoid the health coverage mandate.

Currently more than 90 percent of businesses with at least 100 workers – and 55 percent of all firms – provide health benefits to at least some employees, according to information from the Kaiser Family Foundation and the Health Research and Educational Trust.

House Acts to Undercut ACA and Encourage Vet Hiring

On its opening day in the new legislative session, which began January 6, 2015, the U.S. House of Representatives took action against the Affordable Care Act (ACA), while simultaneously encouraging employers to hire more veterans.

The “Hire More Heroes Act of 2015,” which was sponsored by Rep. Rodney David (R-Ill.) and was approved 412-0, makes it easier for smaller companies to avoid providing health care coverage if their new hires are former members of the armed services.

The ACA is phasing in a requirement that employers must provide medical coverage for their full-time workers. In 2015, the health insurance mandate applies to those businesses with at least 100 employees, but the threshold drops to 50 employees in 2016. The new bill would exempt from that threshold veterans who receive health care from the U.S. Department of Veterans Affairs or the military.

Those supporting the measure say it will help smaller employers and motivate more businesses to hire veterans. Figures released by the government show unemployment among Iraq and Afghanistan veterans was nearly 10 percent in 2013, although it has declined by more than 40 percent in the past year.

Sen. Roy Blunt (R-Mo.) has introduced the same legislation in the U.S. Senate. The White House has said it supports “commonsense improvements” in the health care law.

New Poll Finds Support to Fix, Not Repeal, ACA

A poll released last month by Rasmussen shows more support for “fixing” the Affordable Care Act (ACA) rather than repealing it. According to the survey of 1,000 U.S. adults, 52 percent of respondents believe Congress and White House need to work together to “go through the law piece by piece to improve it.”

On the other side of the issue, 30 percent support scrapping the law and repealing it in its entirety. Thirteen percent would like to see the law stay as it is now. The Rasmussen results run in sharp contrast to some other 2014 surveys that found the health care reform law widely unpopular.

Public Opinion Research, LLC says it used the same automated polling methods utilized by Gallup, Harris, and Roper for their ACA surveys. Phone calls were made to randomly selected numbers using a process designed to yield a geographic representation from a diverse demographic panel, as reported by Employee Benefit Adviser. The margin of error for the Rasmussen poll was plus or minus three percentage points.

While there is some support in Congress for a total repeal of the ACA, it appears unlikely it could be achieved. Republicans now control both the U.S. House of Representatives and the U.S. Senate, but they do not have the 60 votes needed to break a Democratic filibuster, nor do they have the two-thirds majority required to override a presidential veto.