Company Health Programs On The Rise - Company Insurance Costs Dropping

Story first appeared in USA TODAY.
Companies nationwide are looking to trim their health insurance costs by combating chronic diseases — such as diabetes, obesity and depression — in their employees, corporate and government officials say.
The need for such steps was amplified again Tuesday as a new survey from the Kaiser Family Foundation showed that health insurance premiums for families of four increased 9% this year.
The upward trend in health care costs can't all be blamed on growing doctors' bills. So, employers have started to provide on-site medical visits, access to gyms, chronic-care plans, smoking-cessation programs and even discounts for those who buy a banana rather than a cookie.
For an employer, costs can be as much as 40% higher in one year for someone who is overweight because of all the issues associated with obesity, including diabetes, back problems, asthma, depression and heart disease, said Kenneth Thorpe, who co-directs Emory University's Center on Health Outcomes and Quality.
Between 8% and 20% of health care costs is due to the persistent rise in obesity.
As an example, he cited a study he published in the journal Health Affairs about an evidence-based program that reduced type 2 diabetes cases by 71% in Medicare beneficiaries older than 60. It could save Medicare $2.3 billion over the next 10 years if pre-diabetic beneficiaries were enrolled, Thorpe said.
The U.S. Department of Health and Human Services announced a further incentive on Wednesday: It asked businesses to participate in a project to show what happens when private insurers coordinate with primary-care physicians to address health issues. This means personalized care plans, electronic records and preventive care, as well as partnerships with large firms that can offer incentives to their employees.
Tire-manufacturing giant Michelin North America began providing preventive care to all its employees three years ago, as well as chronic-care management for five diseases. Before the program started, only 7% of employees received basic care for diabetes. Now, nearly 100% do. That cut health care costs for those patients by about $700 a year.
Michelin now has primary-care facilities at all of its major workplaces for use by both employees and their families. Patients there can expect a 25-minute visit with a doctor instead of the national average of about seven minutes per visit.
They've seen a 30% reduction in employees classified as high-risk for chronic conditions, as well as an increase in people who work out.
At health insurer WellPoint, employees who receive comprehensive primary care from a company doctor have helped cut health care costs by 14%, said Sam Nussbaum, its executive vice president.

More Small Businesses to offer Health Insurance

The Wall Street Journal

The number of small businesses offering health insurance to workers is projected to increase sharply this year, recent data show, a shift that researchers attribute to a tax credit in the health law. Many small businesses, however, remain opposed to the law.

Some small businesses are benefiting from portions of the law, which includes a tax credit beginning this year that covers as much as 35% of a company's insurance premiums.

According to a report by Bernstein Research in New York, the percentage of employers with between three and nine workers and which are offering insurance has increased to 59% this year, up from 46% last year. The report relies on data from a September survey by the nonprofit Kaiser Family Foundation.

A full tax credit is available to employers with 10 or fewer full-time workers and average annual wages of less than $25,000. The credit phases out gradually and has a cap at employers with 25 workers and average annual wages of $50,000. The White House estimates that 4 million employers will qualify for the credit.

Small-business employers have been among the hardest-hit by double-digit premium increases, which health insurers blame in part on the cost of complying with new coverage mandates in the law, like allowing children to stay on a parent's plan until their 26th birthday.

They also are facing extra tax paperwork under the law, and the National Federation of Independent Business has joined 20 states that have sued to overturn the law.

The opposition by small businesses to the health law is a frustrating development for Democrats who had hoped to translate their signature legislative achievement into gains in this week's midterm elections.

Ken Weinstein, a Philadelphia owner of two eateries and a real-estate company, plans to begin offering health insurance to his five real-estate office workers—and possibly to his outside contractors—since he qualifies for the tax credit. Until now, Mr. Weinstein has subsidized individual insurance policies for his office workers but not the contractors.

While he said he was happy with that benefit, he was disappointed that his restaurant operation has too many employees to qualify for the credit, and said the health overhaul doesn't do enough to contain sharply rising insurance premiums.

"Costs keep going up and I don't think any parts of the legislation have yet addressed that," said Mr. Weinstein, owner of the city's Trolley Car Diner and Trolley Car Cafe.

Small business lobbyists say the Obama administration is overestimating the reach of the tax credit and failing to factor in a slate of new taxes in the health law that will fall on small business, such as a tax on insurers. NFIB, the small business lobby, estimates that fewer than two million employers will end up getting the credit.

"Most of them tell us they can't qualify for the credit, or it's just too low an incentive to be helpful," said Brad Close, vice president of public policy for NFIB.

John Stein, co-owner of Harbour Coffee in Williamsburg, Va., decided to drop the health insurance plan that covers his wife and their 7-year-old child after his carrier notified him in September that his $450 monthly premium for a high-deductible plan was going to increase more than 20%. He switched this week to a cheaper plan with comparable coverage.

Mr. Stein has no plans to try to tap the tax credit for his coffee-roasting business. "The government in general doesn't have the faintest idea what helps small businesses," Mr. Stein said. "It costs a fortune just to get the plan going, and I get nothing out of it."

Karen Mills, chief of the U.S. Small Business Administration, says insurers already were imposing premium increases before the law took effect. But factoring in the tax credit, she said "the cost of health-insurance to small businesses is going to be, overall, going down."

The Obama administration also is considering making it easier for employers to retain their grandfathered status for health plans, an administration official said. That would exclude them for the time being from some new coverage mandates, such as the requirement to cover certain preventive care.

The move could make it easier for small companies to skirt premium increases, the official said. The administration is weighing whether to allow employers that rely on an outside carrier to absorb their risk and pay insurance claims to shop between carriers without losing grandfathered status.

In Treating Cancer, Insurer Tries New Way to Pay Docs

The Wall Street Journal

In the latest experiment aimed at curbing health-care costs, UnitedHealth Group Inc. is altering the way cancer specialists are paid.

The program, which the insurer plans to announce Wednesday, attempts to address potential overuse of expensive cancer drugs by eliminating any incentive for doctors to choose a drug based on profit. As a result, oncologists will be reimbursed at cost for whatever drugs they prescribe and receive a separate payment covering their services.

Typically, doctors are paid by insurance companies for seeing patients and performing procedures or administering drugs and tests. Critics have said this "fee-for-service approach" gives doctors an incentive to provide more—but not necessarily better—care, which can drive up drug usage and other costs.

To start addressing the problem, the new federal health law calls for Medicare pilot programs that pay doctors based on the quality rather than the quantity of their services.

Private efforts are also cropping up in the wake of the law. Cigna Corp., for example, is testing a payment scheme that shares savings with doctors if costs come in under targets.

UnitedHealth says cancer care poses a particularly thorny problem. Spending on cancer treatment is rising at 15% to 18% a year, a rate that is almost double that of health-care costs generally, the insurer says, citing industry-wide trends. And it says that cancer drugs account for 35% to 40% of its spending on cancer treatment.

Many cancer drugs are infused by doctors in their offices, and historically doctors have purchased the drugs and billed insurers for their cost, plus a profit margin of around 15%, says Lee Newcomer, UnitedHealth's vice president of oncology. "They've become drug dealers."

UnitedHealth estimates that drugs account for 65% of an oncologist's income. In particular, the insurer says, there is concern that toward the end of a cancer patient's life, doctors continue giving drugs as a way to keep being paid for the patient's care. The evidence is anecdotal, Dr. Newcomer notes, but a goal of the pilot program is to reduce any overuse in metastatic cancer patients while still paying doctors to care for patients.

UnitedHealth's new payment program, being tested at five clinics, requires doctors to decide in advance what treatments they would like to use for three types of cancer: breast, colon and lung.

The drugs can include anything from standard chemotherapy with generic drugs to costlier branded treatments, such as Herceptin or Avastin. The insurer will pay the doctors for each drug they actually end up using, but without the traditional markup, and data on the doctors' choices will be shared among the clinics to identify what works best.

To make the doctors whole, the insurer will give them a set fee that includes the profit they would have made from the drugs they selected, plus costs for managing patient care. If doctors use drugs outside of their original treatment plan, the plan will cover the drug but won't adjust the separate payment.

For example, UnitedHealth tallied up one clinic's drug profits for treating a patient with a type of breast cancer that responds to Herceptin. The practice would have made $15,344 in profits for one year of Indianapolis cancer treatment involving Herceptin plus two other drugs.

To devise the new bundled payment, UnitedHealth added to that number a case-management fee and a hospital-care fee, for a payment of $15,575 to manage the patient's care regardless of the drugs the doctors chose.

The acquisition costs for the drugs—about $70,000 to $80,000—
were covered separately.

Eric Winer, the chief scientific adviser to Susan G. Komen for the Cure, a research and educational organization, says he applauds efforts to pay doctors for the time they spend caring for patients instead of for administering drugs as long as those efforts don't create incentives to limit drug use. "The [UnitedHealth] program is banking on the assumption that if we uncouple paying for drugs with paying for care that doctors will do what they do best, which is doctor. It remains to be proven if that will really be the case."

Changing how payments are determined can be controversial. In the 1990s, a model called "capitation" became popular. It set fixed payments for a group of patients in the hope that providers would be able to manage care more efficiently within a set budget. But the approach fell out of favor as patients incurred higher costs than the payment covered. It was also criticized for providing an incentive for doctors to cut back on care so they could save money and pocket the difference.

The UnitedHealth program could run up against similar criticism. "We want patients to get the right treatment for them, and we are worried that [UnitedHealth's approach] could incentivize physicians to undertreat," says Kent Lieginger, senior vice president of managed care at Roche Holding AG's Genetech, a biotech company that makes cancer medicines.

UnitedHealth's Dr. Newcomer responds that the insurer won't penalize doctors for deviating from the initial treatment regimen and will pay all drug costs regardless of which medicines are used.

Doctors in the program say the new system could work, but some of them question how easily it can be scaled up nationally or can be extended to other cancers. "It's something quite novel," says Marcus Neubauer, a medical oncologist at Kansas City Cancer Center who is participating in the pilot.

Doctors who aren't in the program question whether UnitedHealth's payments would cover all of the costs of running a practice. Therese Mulvey, physician-in-chief at Southcoast Center for Cancer Care in New Bedford, Mass., says that technology, imaging and supportive services all stretch clinics and that those costs often aren't covered even by the historically fat drug margins.

"Payments need to be driven by the full cost of care," she says, "not just by the profit margins of the drugs."

Number of Uninsured Americans Rises to 50.7 Million

USA Today

 

A record rise in the number of people without health insurance across the nation is fueling renewed debate over a health care law that could work better at boosting coverage than at controlling costs.

More than 50 million people were uninsured last year, almost one in six U.S. residents, the Census Bureau reported Thursday. The percentage with private insurance was the lowest since the government began keeping data in 1987.

The reasons for the rise to 50.7 million, or 16.7%, from 46.3 million uninsured, or 15.4%, were many: workers losing their jobs in the recession, companies dropping employee health insurance benefits, families going without coverage to cut costs. Driving much of the increase, however, was the rising cost of medical care; a Kaiser Family Foundation report shows workers now pay 47% more than they did in 2005 for family health coverage, while employers pay 20% more.

Although the health care law signed by President Obama in March is designed to insure an additional 32 million people in public and private programs, it doesn't fully kick in until 2014. For the next few years, experts say, the problem could get worse. The average cost to insure a family of four is already about $14,000.

"Eventually, more people will be covered if everything goes the way it should starting in 2014," says Helen Darling, president of the National Business Group on Health, which represents large employers. "But that's four years away, and there's going to be a lot of financial pain and economic burden before 2014."

The increase in the uninsured population had been expected as employers continue to shed jobs. Those in low-income households were three times as likely to be uninsured as those with incomes above $75,000. Workers ages 18-64 were the primary losers, as public programs such as Medicare, Medicaid and the Children's Health Insurance Program protected the young and aged.

President Obama picked up on that glimmer of hope in his response to the Census report. He said the new health care law, which is designed to insure more poor and middle-income Americans, "will build on that success by expanding health insurance coverage to more families."

Proponents of the law say the sharp rise in the number of uninsured in 2009 only makes their case stronger.

Opponents say the Census report exposes the fallacy of the new law — its reliance on government insurance programs to shield low-income families from soaring medical costs. The government's health care actuary projected last week that overall health care spending would rise slightly over the next decade.

"If ever one needed an affirmation about how essential the Affordable Care Act is, this is that affirmation," says Ron Pollack, executive director of the health consumers group Families USA. "The clear message for people now is that help will be on the way."

Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities, says the decline in employer-provided insurance shows the need for state health insurance exchanges, to be created under the law. Insurers would compete in the exchanges for consumers' business.

"There needs to be some other mechanism for people ... to have a way to get coverage, other than through employers," Greenstein says.

Since its passage, the law has struggled to win public support. The latest USA TODAY/Gallup Poll found Americans disapprove of the new law 56% to 39%, though the Kaiser Family Foundation has found that many individual provisions are more popular.

"The White House and its allies won the legislative debate. They lost the debate in the court of public opinion," says Robert Moffit, director of the Center for Health Policy Studies at the conservative Heritage Foundation.

Obama is likely to address the law next week as its earliest provisions — including one allowing children to remain on their parents' policies until they turn 26 — start taking effect.

At the same time, Republicans in Congress led by Rep. Steve King of Ohio are mounting an uphill drive to repeal the law. Others, such as Sen. Tom Coburn of Oklahoma, threaten to block funds needed to implement it.

Opponents in several states are challenging — in courts and legislatures and at the ballot box — the law's mandate that most people buy insurance. They say people should not be required to have health insurance and states should not be required to pay additional costs not covered by the federal government.

Workers Bear Larger Share of Health Care Premiums

USA Today

 

Workers are paying a larger portion of their health insurance costs as businesses shift more of the burden to their employees to help ride out the economic downturn, an annual study shows.

The average employee contribution toward premiums for family coverage climbed 14% this year to nearly $4,000, according to a report by the Kaiser Family Foundation and the Health Research and Educational Trust released Thursday. Contributions for single coverage grew 15%. But total premiums — the amount split by the employer and employee — rose a modest 3% for family coverage and 5% for single employees this year.

Companies that offer benefits still pay at least 70% of the total premium, on average, for their workers. But this year, companies passed most of the premium increases on to employees instead of absorbing them as they usually do, something researchers had not seen before, Kaiser CEO Drew Altman said.

"It just speaks to the depths of the recession and the pressure that employers have been under to hold the line on costs while, I think, trying as best they can to avoid layoffs," he said.

Instead of simply working rising coverage costs into their budgets, companies are finding new ways to push more of the financial burden on employees and trying to make them think more about what they're spending for care, said Paul Frontsin, director of the health research program for the nonprofit Employee Benefit Research Institute.

"There's lots of trade-offs employers can make to maintain health benefits when costs are going up," said Frontsin, who wasn't involved in the Kaiser study.

For instance, a growing number of workers are covered by health insurance that requires them to pay a deductible of $1,000 or more before most coverage starts. The Kaiser study found the most striking increase among small companies, where 46% of workers are enrolled in these high-deductible plans, up from 16% in 2006.

Some companies also are trying to steer employees toward preventive care, in an effort to cut long-term costs. They're reducing or eliminating the price workers pay for things like primary care visits, diabetes treatments or blood pressure testing that can ward off more expensive care down the road.

"The coverage that employees get is looking less and less like the coverage that their parents used to get," Altman said.

Altman said premium growth may have slowed for this year's benefits, which would have been calculated in 2009, because of the recession and the possibility of health care reform. He said they've seen restrained premium hikes from insurers in the past when Congress has debated reform.

But it didn't slow for everyone. At the National World War I Museum in Kansas City, Mo., premiums for the 26 covered employees rose 18% last year and about 12% for the current benefits year, said Chief Financial Officer Jeff Walker.

He said museum supervisors were trying focus more on educating staff about the best use of health care, and they're considering offering gym memberships as part of a wellness program.

"I think we all know the cost for these insurance plans is going to continue to increase," he said. "This can't be a long-term solution for us."

The nonprofit Kaiser and the research trust surveyed more than 3,000 randomly selected companies from across the country earlier this year for its annual report.

Brokers' Roles may Shift under Health Care Reform

Richmond Times-Dispatch

Insurance broker Debbie Stocks spends much of her work day helping clients select health plans.

"People often shop online for health insurance. They don't necessarily buy insurance online, though," said Stocks, who is with Your Benefits Partner in Henrico County and also is president of the Central Virginia Association of Health Underwriters.

"Most find it very confusing when trying to compare the plans they see online," Stocks said.

Health-care reform will change the insurance landscape for consumers, but it also will change it for insurance brokers and agents who earn a living helping people choose plans.

The law requires states to set up health insurance exchanges that consumers can go to and shop for a health plan. It also requires that exchanges provide "navigators" that do outreach and help people understand options.

The role of these navigators and how brokers and agents will be paid have created uncertainty for agents.

"I would envision that exchanges should work the same way, in that people may shop or browse the available plans on the exchange but would still need an agent's help to find the right plan for themselves or their families," Stocks said.

California insurance brokers are taking their case to policymakers.

Last week, the National Association of Insurance Commissioners, a group advising federal officials on how exchanges should operate, adopted a resolution to "protect the ability of licensed insurance professionals to continue to service the public."

The National Association of Health Underwriters, which represents more than 100,000 insurance agents and brokers, praised the NAIC's action.

"Insurance is a complicated purchase, and you cannot boil it down to a simple one-page comparison," said Alan L. Jones of TPA Benefits in Henrico County.

Health plans in the state-run exchanges will offer plans that cover essential benefits at various levels of cost-sharing. Plans would be classified as bronze, silver, gold, platinum and catastrophic.

Jones said there is always the risk that people will choose a plan based on price of New York health insurance quotes and end up underprotected.

"People are attracted to the price but do not understand or forget the limitations of the policy," Jones said. "Then, when they need it and it does not cover what they thought it would cover, it is too late."

Stocks said about half her time is spent helping clients resolve plan issues.

Health Insurance Market Moves Ahead in California

The Wall Street Journal

California passed legislation creating a health-insurance marketplace, a move set to be echoed across the country as states take steps to implement federal law.

Millions of Americans around the U.S. are expected to eventually purchase their coverage through such exchanges, which will offer health plans to individuals and some small businesses.

The California legislature on Wednesday passed the second of two related bills to set up the exchange, putting the state at the forefront of efforts nationwide and creating a blueprint that will likely influence other states. Under the national health-care overhaul law passed in March, states are supposed to set up exchanges, or their residents will be offered a federal version.

California Gov. Arnold Schwarzenegger, who has said he supported implementing the federal law, is expected to sign the bills.

Many aspects of the exchange are mandated under the federal law, so many features of California's model will be included in those adopted by other states. The exchange is expected to offer insurance through a website that will provide standardized and detailed information about plans, so consumers can compare them. It will have a toll-free number, and will set up a program of live helpers, or navigators, to help explain plans to consumers.

The exchanges aren't required to be fully up and running until January 2014, when key provisions of the new federal health law kick in, although some exchange operations may start earlier. Following federal requirements, the California exchange will sell insurance in five categories, ranging from rich "platinum"-level benefits to a plan for young people offering catastrophic coverage.It will also link eligible Californians to federal subsidies that would help pay for their coverage, or to government programs such as Medicaid.

Rising insurance premiums in California and elsewhere helped generate the political momentum for a health overhaul. California's Department of Insurance said Wednesday it will allow premium rate hikes from WellPoint Inc.'s Anthem Blue Cross and nonprofit Blue Shield of California to go forward. Anthem will raise rates about 14% on average on its individual policy-holders. That's a sharp drop from an earlier proposed rate hike that made the company a lightning rod, and was withdrawn. Blue Shield's individual-market increase will average around 19%.

If it becomes law as expected, California's legislation would make it the first state to enact a full exchange since the national law passed. At least one state, Iowa, is crafting a new information-only marketplace, while Massachusetts and Utah had pre-existing exchanges.

The initiative will be "precedent-setting," said Jon Kingsdale, a consultant who headed the agency that runs the Massachusetts exchange.

California's exchange may be the largest one established by a single state. Researchers at the University of California, Berkeley projected that as many as 8.3 million people might be eligible for plans through the exchange, including individuals and 3.8 million through small employers.

The federal law says businesses with up to 100 employees can purchase coverage through the exchanges, and states can raise that cutoff in 2017. The availability through the exchange of subsidies for some people who are sole proprietors, and tax credits for certain small businesses, should be lures for those that qualify, said Scott Hauge, president of Small Business California, an advocacy group, and an insurance agent.

Still, said Marti Fisher, policy advocate for the California Chamber of Commerce, which opposed the exchange bills, the details of the exchange's plans, such as pricing, benefit design and access to care, will affect whether companies choose to purchase them. "We don't know how it will play out," she said.

At the national level, analysts have projected that under the overhaul some small businesses may ultimately drop their coverage if employees make little enough to qualify for government programs or subsidies.

The California exchange would be governed by a new board, which will be given robust authority, including the power to selectively contract with insurers giving California health insurance quotes to offer plans within the exchange. That provision drew opposition from some health insurers. "Health plans are concerned that an appointed board could decide to limit choice to the disadvantage of consumers," said Patrick Johnston, chief executive of the California Association of Health Plans.

Bill Monning, chairman of the California Assembly's health committee, said the selective contracting would enable the exchange to act as a "filter, or a fiduciary representative of all Californians," and ensure that health plans offered represent the best quality and value.

Nonprofit Blue Shield of California supported the bills, and a spokesman said it was "pleased" by the passage. A spokeswoman for WellPoint Inc., which had opposed the legislation, declined to comment.

Some Employers Footing the Bill for Domestic Medical Travel

USA Today

Anthony Reynolds, 50, of Greenwood, Del., went to Cleveland last month for heart surgery. Lowe's has an agreement with the Cleveland Clinic and waived his $5,000 in deductibles.

 

 

When John McNally needed a knee-replacement operation, his employer, Alpha Coal West, offered to pay his travel expenses if he would have the surgery in Fort Collins, Colo., a five-hour drive from his home near Gillette, Wyo.

The Colorado surgery center had data showing good results with such operations, and it charged far less than the hospital in Gillette. Despite feeling "every bump on the way back," McNally was so pleased with the outcome of the operation that he returned to Colorado a few months later to have his other knee done.

Forget about traveling to Thailand or India for low-cost surgery. More employers and insurers are offering financial incentives to encourage workers like McNally to consider "domestic medical travel." By steering workers to facilities with high-quality care and lower prices, employers say they can reduce their costs 20% to 40% — more than enough to cover the travel expenses.

A lot is at stake. Hospital care accounts for more than one-third of the nation's $2.5 trillion annual health spending tab. And spending on hospital care — which rose nearly 6% last year — is expected to accelerate, government data show, driven both by increased use and rising prices. Employers with domestic travel programs say they save money in part by negotiating a single rate, which includes fees for surgeons, anesthesiologists and all medical care up until the patient is discharged.

"This is one of our ways of trying to bend the cost curve," says Bob Ihrie, senior vice president in charge of employee programs at Lowe's. The national home-improvement retailer has a three-year deal with the Cleveland Clinic to send willing employees and their dependents there who need treatments such as open-heart surgeries, valve repairs and pacemakers. Lowe's, which like most large employers is self-insured, may add orthopedic surgeries to its travel program, Ihrie says. Four other large employers — including an airline and a bank — are in a coalition with Lowe's that may soon announce similar agreements with medical providers, he says.

Lower costs, better care

If domestic medical travel catches on, particularly among large employers, it could help drive down costs and improve the quality of care, Ihrie says.

It could shake up the hospital industry by fostering "a truly national competition," says consultant Jim Unland of the Health Capital Group in Chicago.

The move by Lowe's — along with growing interest in domestic medical travel by other employers — comes amid scrutiny of the role hospital prices and their market clout play in rising health insurance premiums, along with wider awareness that medical costs and quality can vary dramatically between hospitals and across regions.

Employers and insurers have long sent patients to "centers of excellence" for organ transplants and other complex procedures. But domestic travel is moving beyond that to offer more types of medical care, including back and cardiac-bypass surgeries, and even relatively minor treatments, such as repairs to knee cartilage. Some companies are even providing financial incentives to workers.

Among the firms promoting domestic travel:

•Alpha Coal West, McNally's employer, says its medical costs have remained flat — even as spending nationwide has risen — since its 2001 decision to offer medical travel to its Wyoming workers and their families. A division of Alpha Natural Resources, the nation's third largest coal-mining firm, Alpha Coal offers travel to Fort Collins; Billings, Mont.; Rochester, Minn.; and Houston for medical care related to orthopedic problems, cancer and other difficult diseases.

•BridgeHealth Medical, based in Greenwood Village, Colo., began offering domestic travel programs to small and midsize employers last year. The firm links workers to a network of about 20 hospitals and surgical centers in the U.S., where it has negotiated prices for orthopedic, cardiac and other types of surgery.

•The Health Services Coalition, a group of 24 employers and unions in Las Vegas, warned in May that its member organizations might send some of their 260,000-plus employees and dependents to hospitals in Utah or California unless local hospitals provide plans to improve quality of care and reduce costs.

Still, the domestic travel movement faces challenges. It could backfire, Unland says, if employers and insurers focus solely on cost, rather than quality. While most programs are voluntary, large financial incentives can blur the line between choice and necessity. Medical providers have balked at making their discounts public. And it isn't clear how many workers are willing to travel long distances, particularly those with young children.

"Never mind sending them to India, they don't even want to go to Oklahoma," says Rick Baker, president and CEO of North American Surgery, a Vancouver, Canada-based firm that negotiates discounted surgeries in the USA for individuals who don't have health insurance. While uninsured people are willing to travel, workers with insurance are less likely to hop on an airplane, he says.

Some insurers not on board

Insurers also can be reluctant to encourage domestic travel. Lowe's Ihrie says he asked the insurers who administer benefits for his firm's 125,000 employees to develop ways for workers to determine the best hospitals for cost and quality. Years went by without the insurers taking action. "So we went out and did it ourselves."

So did Alpha Coal. It hired retired surgeon David Crowder to research options outside its local area for some types of care, says Michael Peelish, executive vice president at Alpha Natural Resources. Using data from Health Grades, a publicly traded hospital-ratings firm, and other sources, Crowder looked into the quality of care at facilities around the country.

"It was really about looking for the best in breed," Crowder says.

Alpha negotiated rates for specific treatments with medical centers on Crowder's list, including Orthopaedic & Spine Center of the Rockies in Fort Collins, where McNally went.

Alpha Coal's insurance program reduces co-insurance payments from 20% to 10% for workers willing to travel. It also covers hotel and travel costs for employees and their spouses or partners.

"I would have probably been in a wheelchair by now if I hadn't done the surgeries," says McNally, a welder who returned to work for two years after his surgeries in 2007. He is now retired and has no problem with his company saving money on his care.

Savings result not only from lower prices but from fewer complications with procedures done at high-quality centers, Crowder says. Some follow-up care, including physical therapy, is provided in Gillette.

In fact, all the travel-for-surgery programs offer emergency follow-up care for patients. If any worker who travels for surgery has a complication or other urgent problem after returning home, that treatment is provided at the local hospital and covered under the company's regular insurance plan, the companies say.

In Lowe's case, the company negotiated flat-rate fees with the Cleveland Clinic for complex cardiac procedures. Lowe's is not charged extra if a patient is re-admitted to the clinic for care resulting from the surgery. But Lowe's agreed to make additional payments for patients whose medical needs are so complex that they exceed normal ranges, such as a patient who might have multiple problems. Even those cases show savings, Ihrie says.

Already, one Lowe's employee had three complex heart procedures while hospitalized under the new program, Ihrie says. Lowe's asked benefit firm Mercer to calculate the cost of those procedures if they were done under the company's standard insurance plan. Mercer estimated $531,000. Under the agreement with the Cleveland Clinic, Lowe's paid $469,000, Ihrie said.

Less costly for employees, too

To encourage workers to use the program, Lowe's waives deductibles and covers their travel and hotel costs.

Those savings made the decision a no-brainer for Tony Reynolds, an eight-year employee based in Dover, Del., who needed mitral-valve surgery.

Reynolds, 50, knew the company would waive $5,000 in deductibles and he'd save in other out-of-pocket costs if he went to Cleveland, and that Lowe's would cover travel costs for him and his wife. Reynolds, who had his surgery last week, has been discharged from the hospital, is staying at a local hotel, and is scheduled to fly home Thursday.

Simpler treatments are also covered under some work-based travel programs.

Barry Yontz, 58, a sales manager in Rockton, Ill., flew to Southern California for outpatient arthroscopic surgery to repair cartilage in his knee. BridgeHealth arranged the trip. Even after paying for travel and hotel costs for him and his wife, the insurance company "saved almost $3,000" compared with a similar surgery he had the previous year near home, Yontz says. This is completely independent from in-state California health insurance quotes.

Nationwide, it's hard to quantify how many employers are embracing domestic medical travel — or how much money they're saving, says Paul Keckley, executive director of the Deloitte Center for Health Solutions, who has studied medical travel extensively.

Employers who are going to send patients "hundreds or thousands of miles" for care need to evaluate whether "the outcomes are truly, dramatically better," says consultant Peter Hayes with Health Care Solutions in Scarborough, Maine, whose clients include employers, drug companies and other industry players.

Most major metropolitan areas have an "outstanding hospital" nearby, says Victor Lazzaro, CEO of BridgeHealth. "Their outcomes are fabulous, and they have excess capacity."

Domestic travel is "slowly catching on," says Hayes, whose last job was heading employee benefits for supermarket chain Hannaford Bros. in Scarborough. Three years ago, the company began offering its 27,000 workers the option of going overseas for some expensive surgeries. No one went because local hospitals lowered their prices in response.

Still, insurers are reluctant to offer travel incentives because "it really angers the (local) provider community" to send patients elsewhere for care, Hayes says.

James Caillouette, co-owner and surgeon at the Newport Orthopedic Institute in Newport Beach, Calif., says doctors and hospitals had better get over their anger and embrace the new model. Two years ago, the center began signing flat-rate prices with domestic travel companies.

"That's where health care is heading," Caillouette says. "We're no longer going to be paid piecemeal."

Aetna of California Withdraws Proposed Insurance Rate Increase

California health insurance provider Aetna has withdrawn a proposed rate increase after an independent review found mistakes in the company's calculations to justify boosting the rates on 65,000 policyholders' plans by an average of 19 percent.

Aetna's shares fell over 2 percent after substantial mathematical errors were discovered by a California regulator. The proposal was incorrectly multiplied when converting the monthly premium into an annual one. The No. 3 U.S. health insurance provider attributed the error to a "simple human error".

According to the California Department of Insurance, Aetna's California health insurance proposal would have increased insurance rates by an average of 19 percent. The mathematical mistakes were a result of inflated rate hikes, however it remains a question as to how far off the rates were because the company withdrew the proposed increase before the review was completed.

The review that prevented Aetna Inc.'s hike was part of a broader regulatory initiative by California Insurance Commissioner Steve Poizner. Earlier this month Poizner ordered reviews of all rate increases for individual health insurance plans at California's four biggest insurers.

The four major insurers dominate 90 percent of the market for California individual health insurance policies regulated by Department of Insurance.

In April, WellPoint's Anthem division withdrew its proposed filing to hike rates by an average of 25 percent in California. Democrats had strongly disapproved the insurer's relentless proposal as they rallied to enact the health reform law.

President Barack Obama targeted Anthem's rate increase as a primary example of a failing health care system. He emphasized to health insurance executives that they should discontinue massive rate hikes. Executives counter claimed that many rises were unavoidable because the new health law requires them to offer more attractive insurance benefits.

"I have decided to take the exceptional step to post future filings on the Department of Insurance's website," California Insurance Commissioner Steve Poizner claimed. "Given that two of the four major health insurers have provided rate filings containing math errors, I believe an additional level of transparency is warranted," Poizner added.

In the state of California, insurers are required to spend 70 cents of every dollar collected in health insurance premiums on medical benefits.

PrecewaterhouseCoopers: Health Care Costs to Rise 9% in 2011

Phoenix Business Journal

Health care cost growth is expected to slow in 2011, though costs are still expected to rise 9 percent, according to PricewaterhouseCoopers Health Research Institute.

The accounting firm surveyed more than 700 employers and interviewed health plan actuaries and California healh insurance quotes to determine the expected rate of increase for 2011.

The survey showed health care costs are expected to grow 9 percent in 2011, down from the 9.5 percent growth rate in the 2010 report. At the same time, the majority of health insurance deductibles will be $400 or more for the first time.

Factors that are driving costs are the shifting of Medicare costs on insured patients, implementation of electronic medical records and consolidation among medical providers to those with national and Michigan health insurance plans.

The federal government continues to cut reimbursement rates for Medicare services, forcing health care providers to raise costs for insured patients to make up for the payment gaps.

While electronic medical records are intended to reduce costs, the upfront installation and implementation costs are likely to boost health care costs in the short run.

And consolidation among hospitals and physician groups is boosting their bargaining power, giving them better reimbursement rates from New York health insurance providers and providers accross the U.S.. Such higher reimbursements result in larger premiums.

A separate report indicates that health care costs are higher in Arizona than they are nationally.

CA Ready to take First Steps on Health Care Reform

Mercury News

 

SACRAMENTO — The debate over national health care reform has moved to the California Legislature, which this week will begin taking the initial steps to implement the complex series of overhauls prescribed by the federal government.

More than 20 bills have been introduced and as many as a dozen might be voted on this week as lawmakers face a deadline to pass bills out of their house of origin.

Because of California's sheer size, its implementation of the new law could serve as a model for other states. The state has 8.2 million uninsured residents, nearly equivalent to the population of New Jersey. The number has ballooned in recent years as Californians lost jobs and health insurance due to the recession.

The bills seek to enact reforms signed into law by President Barack Obama in March. Among other changes, they would prohibit health insurers from denying coverage because of pre-existing conditions and create an exchange through which individuals could buy insurance.

A separate bill would take state reforms further than federal requirements by making insurance companies obtain state approval before raising their fees.

The bills are considered works in progress that will change over the course of the legislative session, as the state learns more from the federal government about specific requirements in the law.

Republican lawmakers say the flurry of legislative activity is premature because upcoming elections could shift the balance of power in Congress and result in a repeal of the federal reforms. They also say the exchange, a marketplace through which individuals and small-business owners can buy health insurance at affordable rates, could lead to higher insurance rates because fees will be imposed on insurers to recoup its operational costs.

Despite resistance from members of his own party, Gov. Arnold Schwarzenegger has made health care reform a priority. He introduced his own plan in 2007, but it failed, in part because of concerns about runaway costs to the state in future years.

The Republican governor threw his support behind the national reform plan in April, and his office has been meeting with lawmakers to work through the details.

One of the first steps is to establish an exchange. The idea is to create a consumer-friendly website that could be used to compare California health insurance quotes and buy health insurance plans, similar to the packages offered by employers. It also would serve as a place to screen whether an individual is eligible for Medi-Cal, the state's health insurance program for the poor, or other state services. The state would use federal money to run the exchange. It would create a new entity to operate it or work with a nonprofit organization, said Jennifer Kent, Schwarzenegger's deputy legislative secretary.

City of Maywood California Loses Insurance Coverage

LA Times

 

Citing the city's failure to hire a new city manager as well as recent officer-involved shootings, Maywood's California health insurance agency has terminated coverage because it views the municipality as too high a risk, according to city officials.

In a notice delivered to the city last week, the California Joint Powers Insurance Authority said it would end all general liability and workers' compensation coverage effective July 1, according to Interim City Manager Angela Spaccia.

"This termination potentially puts the city in the position where it cannot continue to operate its police department and provide other city services," a statement on the city's website announced.

The history of the Maywood-Cudahy Police Department has made it difficult for the city to obtain insurance coverage, officials say. Last year the state attorney general's office found widespread overuse of force and other gross misconduct. The department has reorganized in an effort to address those issues.

Since 2006, liability claims have gone down from $12 million to $266,000, Spaccia said. "The chief has made huge progress."

There have been at least two officer-involved shootings since the start of the year, according to the department. In April, officers shot and killed a knife-wielding man who was stabbing a woman, authorities said. In May officers shot and wounded a man, but the circumstances surrounding that shooting were not released. The Los Angeles County Sheriff's Department is investigating the shootings.

In the workers' compensation case, an officer was hospitalized May 1 after a drunk driver crashed into her police cruiser, according to authorities.

The city has also been without a permanent city manager for more than a year. Officials say that some candidates have turned down job offers, while others have failed to meet qualifications for the position.

Calls made to the California Joint Powers Insurance Authority for comment were not returned Friday.

Maywood officials in recent months have been considering a plan to create a joint law enforcement agency with the city of Bell. The loss of insurance coverage added new impetus to those discussions, Spaccia said, as Maywood might find it easier to receive new California health insurance quotes and regain its coverage through such a partnership.

Insurance Rate Hikes Hitting CA Small Businesses Could Hurt State's Recovery

LA Times

Small firms say they are curtailing plans for hiring and expansion amid rising insurance bills.

 

 

Small businesses in California are being hit this year with double-digit hikes in health insurance costs that could hurt the state's economic recovery as companies curtail plans for hiring and expansion to pay their insurance bills.

Five major insurers in California's small-business market are raising rates 12% to 23% for firms with fewer than 50 employees, according to a survey by The Times.

Similar increases are being felt by many small businesses across the nation, including those in Texas, Ohio and Florida — mainly the result of escalating costs for medical care and pharmaceuticals, insurers say.

In California, some small businesses say they are stunned by their latest insurance bills. Longtime customers of Blue Shield of California, for instance, are facing rate hikes as high as 76% after the insurer lost money on a handful of plans.

"We don't have that money," said Ann Terranova, a San Francisco financial planner who is dropping Blue Shield for herself and two employees after learning that their annual premium would jump to more than $19,000 a year from $11,000.

Financial pressures are also squeezing Tessier Cabinet Co., a 59-year-old family business in Montclair. Its president is reluctant to hire because of weak demand for his goods amid a 14% rate hike from Kaiser Permanente. "I'm ready to hang it up," Dan Tessier said.

Economists and small-business advocates worry that insurance costs — on top of taxes and rising wages —- will hamper the ability of small firms to expand and scare away new small companies. Analysts point out that small businesses are responsible for creating most new jobs in California and are key to its economic recovery.

"If healthcare costs and other costs go up, it's going to make it more difficult for small businesses to hire, and that lack of employment growth is going to be a drag on the economy," said Dennis Tootelian, director of the Center for Small Business at Cal State Sacramento. "Hiring is one of the most critical factors for getting the economy back on track."

Other experts believe higher costs could trigger an exodus of small firms.

"If they have the option, they will probably think of doing business somewhere else," said Esmael Adibi, an economist at Chapman University in Orange.

Small firms nationwide are struggling with the problem as they worry about what the effect of the new national healthcare law. It will impose billions of dollars in taxes on insurance companies and require mid-sized firms to provide insurance for workers or pay fines.

"They are very concerned that their costs aren't going to go down. They're just going to go up," said Stephanie Cathcart, a spokeswoman for the National Federation of Independent Business in Washington. "They're going to be paying new taxes, new fees. It's kind of a double whammy on them."

California insurers defend their rate hikes as sound and fair, saying they struggle to balance affordable rates with the need to remain competitive and turn a modest profit.

Blue Shield, for example, said hospital charges rose nearly 20% last year, while physician costs and pharmaceutical fees increased almost as much. Anthem Blue Cross also cited the cost of medical care in explaining its average rate hikes of 13% this year.

"We understand that one group that has been most hard hit by the economic downturn of the past few years is the state's more than 3 million small businesses, who we all rely on to be major contributors to our local economy," Anthem spokeswoman Peggy Hinz said.

"We want to be competitive in the marketplace, but we also want to take care of our members," Hinz added. "We work each day to do both."

The high cost of insurance has become an urgent concern nationwide as businesses and individual policyholders struggle with fast-rising rates. After a public uproar earlier this year, Anthem, California's largest for-profit insurer, canceled increases of as much as 39% on individual policies.

As in the individual insurance market, small businesses have little leverage to negotiate for lower rates or more comprehensive benefits, often electing skimpier coverage to counter rising costs.

Overall premiums for small firms in California rose 180% cumulatively over the last decade, according to the California Employer Health Benefits Survey. Larger firms' rates increased 146%.

Small businesses say 2010 is shaping up to be their most expensive year yet, leaving them with few good choices. They say they can pass charges along to employees, reduce benefits, cancel insurance programs or raise the price of goods — an option few are willing to entertain because of competitive pressures.

"They just don't have the profit margins to pay this cost," said insurance broker Scott Hauge, who heads Small Business California, an advocacy group. "It goes right to their bottom line. It's a killer."

About half of the estimated 6 million Californians working in small businesses get insurance through their jobs.

Among the major insurers who serve the small-group market, Aetna and Blue Shield are each increasing premiums 18% on average this year, although some Aetna customers who renew policies this summer will see increases of as much as 23%, the company said.

Kaiser, the state's largest HMO, is raising rates 12% on average. Health Net Inc. said its customers would see "low double-digit rate increases." UnitedHealthcare declined to release its rates.

Not all the rising costs are related to inflation. In some cases, insurers lost money because they priced plans too low and, as a result, are now introducing higher rates.

Blue Shield, for example, miscalculated the cost for three plans that pay all medical expenses once customers meet thresholds for out-of-pocket expenses. The San Francisco insurer is now raising premiums on California health insurance quotes as much as 76% for some small businesses.

"It turns out that people used a lot more medical care than we had anticipated," said Tom Epstein, Blue Shield's vice president of public affairs. "We need to increase the rates to cover the medical costs. We can't lose money on these products."

Many small firms say they feel a duty to provide health insurance, or see it as a necessary cost to attract qualified job candidates. Either way, they predict that a continued rise in their healthcare bills will dampen their prospects for recovery.

"Our margins will dwindle to nothing," said Bill Thomas, chief executive of U.S. Technical, an engineering firm in Fullerton. "It's the beginning of the end."

Health Care Reform may One Day Help New Yorkers, Meanwhile Rates are Soaring

NY Daily News

Health care reform is a done deal, but there's one heart-stopping trend that no law has yet to fix for New Yorkers: Skyrocketing health insurance premiums.

Consider these stats: Since 2000, health care premiums in New York have risen an average of 97%, or six times faster than incomes, state Insurance Department data show.

Empire State families now pay upwards of $24,000 per year for insurance on the open market - the highest in the U.S. - with little sign of relief.

"New Yorkers have done the math," said Elisabeth Benjamin, vice president for health initiatives at the Community Service Society. "And they're starting to ask how come there's a disconnect between what's in my pocketbook and what I am paying for health insurance?"

It's a gap that Gov. Paterson actually hopes to close a bit with new legislation - vehemently opposed by the powerful insurance lobby - that would require insurers to submit proposed premium hikes to the state for prior approval.

The federal health overhaul encourages states to follow a similar path, but offers little immediate relief. New insurance exchanges envisioned by President Obama as a way to create competition and drive down costs aren't expected until 2014.

New York had a similar "prior approval" law in the early '90s, and nearly a quarter of proposed rate increases were rejected by the state as too high.

But since 2000, insurers have effectively set their own rates - often resulting in annual, double-digit increases - provided they can attest to devoting 75% to 80% of their premium dollars to health care, state officials say.

Paterson would push that ratio into the 80%-to-85% range, a benchmark that also takes effect next year under the federal law.

Paterson also would require insurers to once again seek "prior approval" for rate hikes and open their now-closed books for state review. Not only that, he included the measure in his budget, a maneuver clearly designed to ensure action.

Critically, the push is now backed by Senate Majority Leader John Sampson, whose support has been a matter of significant speculation.

Not lost on legislators is that in years when many health care companies were pushing through big rate hikes - including Aetna, Empire Healthcare and Oxford - they were also posting big profits.

"We are not out to hurt insurers," said Sen. Neil Breslin (D-Albany), chairman of the Senate Insurance Committee and a leader on the issue. "But at the same time, they have been making tremendous sums of money over the last decade."

The industry says that's misleading. They argue that insurance company profits come from many different sources, not just premium payers, and they insist that Albany's push will do nothing to control the biggest pressures on their bottom lines, which are rising taxes and medical costs.

"Reinstating prior approval would simply be government price-fixing, and it still won't get at the underlying factors," said Leslie Moran, a spokeswoman for the Health Plan Association, a trade association for New York's top health insurers.

For many New Yorkers struggling with New York health insurance quotes, however, almost anything is worth a shot.

Jim Shea, 62, a one-time computer analyst who is HIV-positive, has been covered by Oxford since 1998. In that time, he has watched his individual premium rise from $350 to $1,160 a month.

"They don't have to answer to anyone" under the current system, Shea said of the state's insurers. And he believes help can't arrive soon enough.

"I am at the point now," he said of his finances, "where there is just about nothing left to cut."

Think Your Health Insurance Travels when You Do? Think Again

Associated Press

 

 

CHICAGO — Plane tickets, check. Passport, check. Medical evacuation insurance? It's probably not something most people think about when packing for a vacation.

But Louise Robbins says she'd probably be bankrupt without it. The University of Wisconsin library educator and her husband, Robby, were in southwest China last summer when Robby slipped and fell backward on a hotel walkway made of the region's famed red marble.

Their regular health insurance covered many expenses, but not flying him home on a jet specially equipped for transporting critically ill patients and medical equipment. The cost exceeded $100,000.

"We would have been lost" if not for the medical evacuation insurance, Louise Robbins said.

With summer vacation season approaching, experts say there are several ways international travelers can protect themselves against medical emergencies — from registering in advance with the State Department, which can help locate doctors abroad and arrange emergency medical flights, to buying supplemental insurance or stand-alone medical evacuation policies.

Thousands of American travelers each year are flown home with medical assistance because of health emergencies. Car accidents and heart attacks are among the most common reasons.

"Americans have the concept that when they travel, their health insurance travels with them," said Dan McGinnity, vice president for North America for Travel Guard, which sells travel insurance.

But most regular health insurance plans don't cover costly evacuations. And finding that out after an emergency can be catastrophic.

A 21-year-old California woman died last year after her insurance company initially said its California health insurance quotes for emergency coverage wouldn't pay to fly her home from China when she developed a blood disorder, according to her family's lawsuit. The suit, claiming wrongful death and breach of contract, says the company relented too late. Anthem Blue Cross, the insurer, disputes the claims.

Travelers should check their policies to see what kind of expenses are covered, said Susan Pisano of America's Health Insurance Plans, a trade association. Most will pay for emergency care outside the United States — but for leisure travelers that often doesn't include medical evacuation.

"Just make sure you know very clearly" what your policy says, she advised.

The federal Centers for Disease Control and Prevention recommends considering supplemental health insurance, including medical evacuation, if your existing policy is lacking.

According to the U.S. Travel Insurance Association, another trade group, Americans increasingly have been buying travel insurance; more than $1 billion was spent in 2008. Most covered things like unexpected trip cancellations — disruptions caused by the erupting Iceland volcano have prompted a flurry of recent business. But growth also has been strong in policies covering medical emergencies and evacuation, the group says.

Short-term policies typically cost about 4 percent to 8 percent of the total per-person trip price. At Stevens Point, Wis.-based Travel Guard, coverage for a $2,000 trip would be about $120.

The travel insurance trade group has a list of member companies on its website, where it also offers tips. The State Department's website also has a link to medical evacuation companies.

Louise and Robby Robbins, longtime travelers, had paid about $250 for a supplemental insurance policy before their China trip.

Robby, a 79-year-old retired college professor, slipped on the rain-slicked marble tile in China on July 21. His head hit the ground, but he got up and seemed OK, so they boarded a tour bus heading into the mountains. Robby quickly became ill, vomiting and complaining of sinus-like pain. No one knew yet that his brain was bleeding.

The nightmare that followed included a trip down the mountain in a makeshift van-ambulance to a hospital where no one spoke English. Doctors drilled holes into Robby's skull and removed a huge blood clot. He was flown by air ambulance to Hong Kong for more surgery; then back to the United States.

The supplemental insurance ended up covering Robby's multi-leg trip home, including arranging for several flights with medical experts on board. Robby never recovered, however, and died Dec. 9.

Lynda Bruner's medical emergency last summer almost ended the same way. The sales executive from Bel Air, Md., fell ill with what she thought was heat exhaustion on the last day of a Dominican Republic vacation with friends to celebrate milestone birthdays, including her 60th.

Soon she developed breathing problems and went into cardiac arrest. Doctors revived her, but she remained in a coma for three days. Bruner awoke at a hospital in Florida, where she had arrived via a medical flight arranged by Medex, the same company that handled Robby Robbins' flights. The company arranged for Bruner's flight with a nurse to Maryland and helped her husband, who doesn't speak Spanish, deal with Dominican doctors.

The expenses totaled more than $15,000, but were covered by health insurance her employer provides — a benefit she didn't know about in advance. Bruner had also bought extra travelers' insurance.

U.S. doctors found and removed a tongue cyst they thought might have contributed to the breathing problems, and Bruner is doing fine.

"Once they saw my experience, everybody says they will not go out of the U.S. again without" traveler's health insurance, Bruner said. Even if you never need it, she said, "just that sense of security" is worth it.

WellPoint Math Error Ricochets

The Wall Street Journal

Obama Administration Urges States to Recheck Health Insurer's Rates After California Flub

The Obama administration's top health official is urging state regulators and lawmakers to investigate whether WellPoint Inc. made mathematical errors in justifying sharp rate increases around the country.

In a letter being sent to state insurance commissioners and governors late Tuesday, Health and Human Services Secretary Kathleen Sebelius calls for a national inquiry into the data underpinning rising health-insurance costs. Ms. Sebelius is seizing on WellPoint's decision last week to withdraw a request for up to a 39% price increases on individual plans in California after an actuary hired by the state found several mistakes in the filing.

"In light of this recent finding, I urge that, to the extent you have authority to do so, you re-examine any WellPoint rate increases in your state," Ms. Sebelius wrote. "Even small errors can mean unaffordable premiums for policyholders."

WellPoint has become a lightening rod for criticism over rising premiums. Chief Executive Angela Braly was called before Congress in February to defend its California rate increases. At that hearing, Ms. Braly pointed to mushrooming charges by hospitals, doctors and drug companies that are passed through to consumers in their insurance bills.

Other insurance executives were hauled into the White House in March to explain their prices, but WellPoint has borne the brunt of criticism in part because it is the biggest seller of plans to individuals and small businesses, and because of the size of its California rate boost.

In investigating the California rate filing, that state's Department of Insurance found mathematical mistakes, such as overestimating future medical costs and double-counting the effect of its policyholders aging, according to insurance commissioner Steve Poizner, a Republican candidate for governor.

A WellPoint spokeswoman, Kristin Binns, said she couldn't comment on Ms. Sebelius's letter since she has not seen a copy. WellPoint plans to refile the rates this month to correct "inadvertent miscalculations" in estimating future medical costs, and to reflect a standard in the health overhaul that insurers spend 80% of premiums on medical expenses, ahead of required implementation of the standard next year.

"The miscalculation was unique to the individual business rate filing in California," said Ms. Binns, who pointed out that many states have conducted rate reviews in which the company's actuarial conclusions were upheld.

Insurers have warned that the new health law will do little to contain rapidly rising prices and say they will keep raising rates to cover costs. Ms. Sebelius's request is an indication that the administration is looking to state regulators to make sure a central promise of its health overhaul—reducing the burden of health-care costs on consumers—doesn't go unfulfilled.

Ms. Sebelius's letter urges states to tighten their review processes, noting that new health law makes available $250 million to states for that purpose. Some state officials have already started acting in the wake of WellPoint's admission last week.

Connecticut Attorney General Richard Blumenthal said he will ask his state's insurance regulator Wednesday to comb through a local WellPoint unit's request to raise individuals' rates by 24% on average last year. Connecticut's insurance department had granted increases of up to 20%, said a spokeswoman for Mr. Blumenthal.

"If there were any similar errors the rates should be reduced," said Mr. Blumenthal, a Democrat who is running for a U.S. Senate seat in Connecticut.

In New York, where a WellPoint unit raised individuals' premiums by about 17% last year, actuaries are pulling out the company's filings and discussing the merits of the increases, said John Powell, assistant deputy superintendent for health at the state's insurance department. "We're going to see if any alarms go off for us," said Mr. Powell.

WellPoint said both New York and Connecticut have rate oversight processes in place to double-check the actuarial assumptions in companies' filings.

The issue extends beyond WellPoint, which is hardly the only insurer to request big rate increases and push California health insurance quotes.

"We're considering additional action on other companies' rate increases as well," Mr. Blumenthal said.

In Iowa, the insurance division recently asked an outside actuary to review the roughly 18% price increases proposed by Wellmark Blue Cross & Blue Shield, a local insurer. The review found no errors and the rates went into effect May 1, but the insurance division is now asking for independent reviews of all new rate filings.

Mr. Poizner in California said he plans to send the findings of the independent actuary to insurance commissioners in other states this week.

The National Association of Insurance Commissioners also expects its members to take a second look at filings of all insurers in the wake of WellPoint's errors in California, including an impact on New York health insurance quotes.

"We're being super cautious to make sure every increase is justified," said Sandy Praeger, the Kansas insurance commissioner and head of NAIC's health-insurance and managed-care committee.

Whether or not the companies can succeed in raising prices is critical on Wall Street. In an earnings report last week, WellPoint told analysts that it lost money on the individual business in California in March.

UCLA Study: 1 in 4 Californians Lack Health Insurance

LA Times

The jump in 2009 to 8.2 million adults and children from 6.4 million in 2007 stems largely from job cuts and the loss of employer-sponsored coverage amid the recession.

Nearly 1 in 4 Californians under age 65 had no health insurance last year, according to a new report, as soaring unemployment propelled vast numbers of once-covered workers into the ranks of the uninsured.

The state's uninsured population jumped to 8.2 million in 2009, up from 6.4 million in 2007, marking the highest number over the last decade, investigators from UCLA's Center for Health Policy Research said.

People who were uninsured for part or all of 2009 accounted for 24.3% of California's population under age 65 -- a dramatic increase from 2007 driven largely by Californians who lost employer-sponsored health insurance, particularly over the last year.

Among those over age 18, nearly 1 in 3 had no insurance for all or part of 2009, the UCLA researchers found. The ranks of uninsured children also grew. The study was based on phone interviews from 2007, updated with current insurance enrollment data.

Adults over age 65, who are covered by the federal Medicare insurance program, were not included.

As a result of the insurance gap, many already strapped Californians have put off needed medical care and usually wound up crowding emergency rooms, receiving costly care on the run. Hospitals and insurance companies often pass on those expenses to customers with insurance, increasing the cost of healthcare and driving up rates for those who have coverage.

The new UCLA estimates arrive as President Obama and congressional Democrats scramble this week to finalize an agreement on healthcare reform. Democrats who are pressing the overhaul say it would expand health insurance to tens of millions of uninsured people across the country.

Yet even as leaders in Washington seek to expand coverage, California officials are wrestling with budget proposals by Gov. Arnold Schwarzenegger to cut or eliminate publicly funded insurance programs that critics say cover more than 2.5 million low-income children and their parents -- some of whom lost coverage because of layoffs.

California has one of the highest uninsured rates in the country, alongside Texas and other states with high unemployment. Because California's population is so large, however, it has more uninsured people than any other state.

The number of uninsured has swelled in tandem with California's unemployment rate, which rose to 12.3% in December from 5.7% two years earlier, and as employers shifted more healthcare costs to employees.

Bruce Kuhlmann of Santa Rosa was laid off in December 2008 from his job as a technology sales executive in Northern California. He has depleted much of his retirement savings to pay for care since he was diagnosed with cancer last month.

The father of three, including two college-age children, has found it difficult to buy insurance on the individual market.

 Kuhlmann, 58, worries about affording an operation that he believes will cost about $30,000.

"I've spent a fortune of my own money," Kuhlmann said in a phone interview as he prepared to undergo a medical procedure at Santa Rosa Memorial Hospital. "I have a house mortgage. It's hard to get a job because I don't feel so good. Everything is negative."

UCLA researchers said they were surprised by the big jump in the uninsured population from 2007 to 2009. The director of the health policy center, E. Richard Brown, said the state's 8.2 million people without coverage was the highest number he had seen in nearly three decades of studying the issue.

"California's situation is pretty dire with respect to healthcare coverage," Brown said.

The numbers of uninsured and California Bluecross health insurance quotes are likely to climb as the state's jobless rate is expected to remain in the double digits well into next year.

"The shocking increase in people losing insurance spotlights the problem that . . . coverage may not be there for us when we need it," said Anthony Wright, executive director of Health Access California, a Sacramento consumer group. "This adds more urgency to the debate over the pending health reform proposals, which directly address the insecurity Californians are facing."

Researchers said federal subsidies for laid-off workers helped some people who lost jobs and coverage. Yet even so the loss of insurance affected young and old alike.

The percentage of uninsured children grew to 13.4% in 2009 from 10.2% in 2007. The increase would have been greater if not for insurance programs paid for by the state and federal governments. The number of uninsured children rose from 1.1 million to 1.5 million over the two years.

The study's lead author said that adults who lack the safety net face the most daunting prospects for California health insurance quotes.

"Being uninsured has real human consequences. . . . It is costly for all of us," said Shana Alex Lavarreda, director of health insurance studies at the UCLA research center. "It makes reforms of the system absolutely essential."

California Panel wants a Say on Insurance Rate Hikes

A Times

Assembly committee passes a bill requiring companies to justify increases. The measure faces an uncertain future in the full Legislature amid an industry lobbying effort.

Reporting from Sacramento — California lawmakers who want to go further than the newly signed federal healthcare overhaul scored a victory Tuesday when a proposal to make insurance companies justify rate hikes sailed through the Assembly's Health Committee.

The bill would put health insurers and health maintenance organizations under the same strict regulation that has covered automobile and other types of property insurance for the last two decades. It would require approval of some rate hikes by state agencies.

"Now that Congress has mandated that every American must show proof of owning a health insurance policy or face fines, California must ensure that the prices that insurers charge for coverage are fair," said Jerry Flanagan, healthcare policy director for Consumer Watchdog.

The bill, AB 2578, is similar to one the Assembly passed in 2007, only to see it die in the Senate by one vote. But this time, the bill's supporters hope that public outrage will help get the bill passed.

They believe momentum is on their side, not only because of the overhaul package President Obama signed into law Tuesday, but also because of the recent decision by Anthem Blue Cross to hike premiums as much as 39% on some individual policies.

The bill passed in the committee 11 to 3. But it faces an uncertain future as it moves further through the Legislature, where the influential insurance lobby is arguing against creating a new bureaucracy. Gov. Arnold Schwarzenegger, who would have final say if the bill gets to his desk, has not taken a position on the bill.

The measure is supported by AARP, consumer groups and labor unions, and opposed by insurance companies, the California Medical Assn. and groups that push for lower taxes.

The bill by Assemblyman Dave Jones (D-Sacramento) would force insurers to get approval for rate hikes exceeding 7% a year.

Health insurance companies and most preferred provider organizations would have to get approval from the Department of Insurance, while HMOs would have to get an OK from the Department of Managed Health Care.

The state agencies would be charged with determining that premium increases are "not excessive, inadequate or unfairly discriminatory," according to the bill.

Such oversight is needed, Jones said, because health insurance rates have been rising at a much faster pace than medical costs, which have been averaging a 4% increase annually in recent years.

Steep profits are not the reason that rates have skyrocketed, contended lobbyists for health insurance companies, who successfully opposed similar bills by Jones in 2007 and 2009.

The main cost drivers of California health insurance quotes, said Anne Eowan of the Assn. of California Life and Health Insurance Cos., are hospitals, doctors and pharmaceutical companies.

"The bill is premature, and we should wait and see" what happens at the federal level, said Eowan, the group's vice president of government affairs.

Another industry representative, Bill Wehrle of nonprofit Kaiser Permanente, said that creation of new bureaucracies could be expensive for taxpayers and slow innovations in treatment and the handling of claims.

But Laurel Kaufer, a Woodland Hills mother, complained that her biggest problem was a recent 34% rate increase to $1,100 a month from her insurer, Anthem Blue Cross.

"I am required to seek prior approval before I can expect to receive coverage from my insurance company," she said. "There is no good reason why Blue Cross should be allowed to raise my rates without prior approval."