Anthem charges the same premiums regardless of whether a policy is new or has been in force for several years.  A 40 year old, healthy, non-smoking male who purchases a policy this month will be paying the same premiums as a 40 year old healthy non-smoking male who has had an Anthem policy for ten years, assuming they both live in the same zip code and have the same type of policy.  Because of this, it’s relatively easy to compare Anthem’s rates – even after rate increases go into effect – with those of other carriers in Colorado.  The rates being offered to new Anthem clients include the rate increases that went into effect in January.

To get an idea of how Anthem’s prices compare with other carriers, I got quotes for a family of three, living in the Denver metro area, for a high deductible, HSA-qualified policy with 100% coverage after the deductible.  These plans are relatively easy to compare, as they tend to be quite similar from one company to another.  I looked for policies with a $5000 or $6000 family deductible (most companies offer one or the other, but not usually both), or something in the middle of that range if neither exact number was available.

Here’s what I found, from several of the top carriers in the Colorado individual market:

• Cigna = $325 (for a $6000 deductible)
• Anthem Blue Cross = $377 (for a $5000 deductible)
• Humana = $402 (for a $5000 deductible
• Kaiser = $441 (for a $6000 deductible)
• Assurant/Time = $449 (for a $5700 deductible)
• United HealthOne (Golden Rule) = $461 (for a $5800 deductible
• Aetna = $481 (for a $6000 deductible)

Obviously this isn’t comprehensive data.  I only got quotes for one family, using a single zipcode.  Factors like pre-existing conditions, tobacco use, zipcode, and plan design all have an influence on premiums.  But these numbers would seem to indicate that while Anthem’s rate increase may have been large, it seems to be in line with what other carriers are charging in Colorado.  For the little test I conducted, Anthem’s premium was the second-lowest I found, and the only one with a lower premium had an additional thousand dollars in out of pocket exposure.

I’ll be curious to see what the Division of Insurance comes up with when they re-evaluate Anthem’s 2010 rates.  My guess would be that they will approve the rates.  If they don’t, it would stand to reason that they will have to also re-evaluate the most recent rate increases for all of the other carriers in Colorado too.

In an interview last week, Caldara noted

“It’s amazing that the federal government doesn’t force me to buy home insurance, doesn’t force me to buy life insurance or catastrophic insurance or an umbrella policy.  Yet of my own wisdom I purchase these things.”

While it’s nice to see that Mr. Caldara is so responsible with his own finances, not everyone is.  And health insurance is quite a bit different from things like home insurance and life insurance.  Mortgage companies require home owners to have hazard insurance on their properties, so all of us who don’t own our homes outright are required to carry home insurance.  For those who have paid off their mortgages, home insurance is optional, but most people carry it anyway (and it’s worth noting that the policies are quite a bit less expensive than health insurance – our family pays about $600/year for insurance on our home, as opposed to about $4000 for health insurance, so affordability isn’t as much of an obstacle when it comes to home insurance).  For those who choose to go without home insurance, the worst case scenario in terms of loss of property is pretty easy to estimate – a total loss such as a fire would set one back by the value of the home.

This is not the case with health insurance.  Since none of us know what the future holds in terms of our health, it’s hard to estimate what our potential medical expenses might be.  My father was very healthy for the first 54 years of his life, and then was stricken with an autoimmune disease that destroyed his kidneys.  He has since racked up more than a million dollars in medical expenses.  A serious car crash can easily turn into a six or seven figure medical bill – and that can happen to the healthiest person on the planet.

Denver Health Medical Center treats a large number of uninsured patients in the metro area, and the costs for the hospital are staggering.  All of the rest of us are paying those costs via higher taxes and higher health insurance premiums – there is no such thing as free health care.  So while people who choose to not have life insurance might be putting their own family’s financial security at risk, people who choose to not have health insurance are putting everyone’s financial security at risk by driving up the cost of health care for people who do have health insurance.

The provisions in the health care reform bills that make health insurance mandatory are very much tied to income – people who have very low incomes would qualify for Medicaid (currently only available to select groups of low income people, such as pregnant women and children), and those with slightly higher incomes would qualify for subsidized health insurance premiums.  The provisions are not intended to make health insurance an insurmountable financial obstacle, but rather to truly spread the cost of care across the entire population.  And this is fair, since none of us really know when we might be in need of significant medical care.

In a medical emergency, EMTs aren’t checking health insurance benefits.  They transport victims to the nearest hospital where significant expenses can be incurred long before a person’s insurance status is known.  And if it turns out that the person is uninsured, the burden of cost is likely to be passed on to taxpayers and insured patients.  This is far different from situations that require claims on home insurance, life insurance, and umbrella policies.  If a person doesn’t have home insurance and his house burns down, nobody else is likely to go in and start rebuilding his home without knowing whether he has the means to pay them.

The decision to not carry health insurance (despite being able to afford it) is one that has ramifications for more than just the person who opts to be uninsured.  In addition, there is no way to keep health insurance premiums affordable unless a large number of healthy people are paying premiums to offset the cost of care for those who are not as healthy.  And if that seems unfair to the healthy folks, it’s wise to remember that even the healthiest among us never really knows when we might need significant medical care.

This is a great idea, and hopefully will one day become a reality.  Cost comparison for medical procedures is difficult at best, and sometimes impossible with our current system of proprietary rates.  People who have comprehensive health insurance that only requires a copay at the doctor’s office and a deductible for more comprehensive procedures, might not be aware of the vast differences in pricing from one hospital to another - even under the same health insurance policy.  People with high deductible, HSA qualified policies are probably more interested in the actual cost of care, but likely find it difficult and cumbersome to shop around in our current system, especially if they are already sick and in need of care.

A statewide database of prices would be a great step forward in terms of transparency.  If people could look at two hospitals in the Denver metro area and see that one is charging 50% more than another for the same procedure, it would at least be a good starting point for a discussion about value in health care.

It makes sense that a cost comparison database might have to focus on relatively straight-forward procedures that can be priced with a reliable degree of accuracy across a large number of patients.  But more complicated procedures (which presumably vary in price from one patient to another, based on potential complications) could also be included by looking at a hospital’s history of such procedures and average charges.  Or the procedures could be broken down into their components (for example, the anesthesiologist’s fees, the operating room charges, the inpatient medications, etc).  The way I see it, the more procedures, details, and hospitals that are included in the database, the better it will be.

It’s hard to have an effective dialog about costs and cost-control when the average person has no idea what the costs actually are, and no realistic way of finding out.  EOBs are great, but they only come after a person has received treatment, and thus aren’t particularly useful in terms of comparison shopping.  Kefalas’ bill would be a good step towards transparency in health care costs, and I hope it is well received.

Senator Bennet mentioned during his Chamber of Commerce meeting that he supports initiatives that would reward doctors based on performance, measured by patient outcomes.  He was asked what safeguards would be implemented to keep doctors from cherry-picking the healthiest patients under such a system, and replied that it was a good question that required more analysis.  I agree that patient outcomes should be a factor in determining physician reimbursement, as should medical errors and repeat hospitalizations.  But we have to take into account the patient’s health at the start of the physician/patient relationship, in addition to patient lifestyle factors.  The financial incentive has to be higher, and the outcome expectations a little lower, for doctors who take on sicker patients.  It doesn’t make sense to just set the bar at one level and expect doctors to get all of their patients to that level in order to get paid.  A 60-year-old obese smoker with heart disease isn’t going to have the same outcomes as a 25 year-old fitness instructor with a sprained ankle, no matter how careful and efficient the doctor is.

In order to truly provide quality care, a doctor is likely going to have to spend more time with sicker patients.  This should be reflected in how the doctor is compensated, along with the outcome-based incentives.  There are ways to implement an outcome-based incentive system for doctors while at the same time making sure that doctors aren’t encouraged to avoid the sickest patients.  I hope that this aspect of health care reform continues to be addressed and eventually makes its way into normal physician reimbursement arrangements.

All in all, this looks like a good deal for everyone involved.  The Take Care clinics will get widespread name recognition (already, these news reports are probably driving traffic to the clinics, in the form of people who might not have even been aware of their existance).  In addition, it’s likely that if people get good service at a Take Care clinic while unemployed, they may return again later as a paying customer.

For people who have lost their jobs and don’t have health insurance, any opportunity for free health care will help. And even if they have to visit the clinic as a paying patient in order to be eligible for free services, it’s noteworthy that the fee at the Take Care clinics normally starts at $59.  This is quite a bit less than a typical office visit charge for someone without health insurance negotiated rates.

For emergency rooms and urgent care clinics (where services are not free, but payment is often hard to collect), the free services at the Take Care clinics might help to alleviate some of the overcrowding and full waiting rooms.

The tactic of requiring that a patient have visited a Take Care clinic in the past in order to be eligible for the free health care program is a good marketing move.  It’s laudable that the clinics are offering free health care at all, and obviously they have to structure this in such a way that they don’t end up driving themselves out of business in the process.  By requiring that a patient (who might think that a job/health insurance loss is on the horizon) come in for a paid visit first, the clinics will likely boost their revenue in the early phase of this program.  Time will tell how much free health care gets handed out at the clinics over the rest of the year, but my guess is that it will be a considerable amount.

Take Care clinics operate in 32 metro areas across the country.  I went to their location finder web page and found 12 clinics in Colorado in the Denver/Boulder area, including one just around the corner from us here in Broomfield.

Last year, we found that very few individual health insurance policies in Colorado would meet CSU’s waiver requirements for grad students.  When we started looking into alternative options for Metro State students, we found only one policy met the requirements.  Although Metro State has overall a more lenient waiver requirement list than other schools, they do require more extensive mental health coverage than market driven individual health insurance policies include.  The only option that meets their requirements is the Smart Sense policy from Anthem Blue Cross Blue Shield.

We do understand the logic behind requiring college students to have health insurance.  College students tend to be young adults, in the demographic that is more likely to forgo health insurance if left to their own devices.  And a major illness or injury can derail not only their academic plans, but their whole financial future.  So we support the system that most colleges have chosen to use, with automatic enrollment in a health insurance policy unless the student can show proof of alternate coverage.

One Metro State student said:

I will say that Metro should offer more options than one type of insurance plan. The students at Metro don’t fit into one age bracket. So where one ins. plan my be acceptable for some, it cannot fit the needs of such a diverse age group! I hope that Metro will change this ruling with their health insurance plan soon.  I know I have spent more time on the phone looking for a comparable ins. plan than anyone should have to!   There are better things to do with my time…. like STUDY for my classes so I will be able to get a better job that has fantastic insurance benefits.

Perhaps the school could add a higher deductible plan for students who understand the definition of insurance.

We contacted Martha Eaton, the head of Metro State’s Student health insurance office, to get her take on the waiver requirements:

The College waiver standards, which include minimum requirements for mental health coverage, have been established based on the demographic needs of our population over the years and the associated expenses for mental health services. Colleges throughout the country establish their own set of minimum waiver requirements for their particular institution, many of which are much more restrictive than Metro State’s minimum standards. As health care cost continue to escalate in the United States, it is more likely that colleges will raise their minimum standards, rather than lowering them. The importance of adequate mental health benefits cannot be underestimated, however, many individual insurance plans attempt to shortchange the consumer by inadequately providing either little or no mental health benefits. Individual insurance plans would be prudent to cover mental health care as they do all other medical conditions.

Ms. Eaton makes some good points, and we do recognize that not only is Metro State’s student health insurance policy better than many other student health insurance plans in Colorado, the overall requirements for a waiver are indeed lenient.  But because of the mental health benefit requirement, nearly all of the individual health insurance policy options in Colorado are eliminated as options for students at Metro State.   Ms. Eaton makes a valid point about mental health deserving as much consideration under health insurance policies as any other medical conditions. But as finance professor at CSU, Vickie Bajtelsmit, points out in her article “Don’t Insure The Small Stuff“:

A general rule of thumb for insurance is that you should never insure against losses you can easily budget for.

Individual health insurance policies in Colorado do not cover mental health as extensively as the Metro State policy for a reason.  Mental health isn’t something that typically turns catastrophic.  The reason for insurance is to protect yourself from catastrophic events.

The problem with the Metro State logic for the $10,000 minimum mental health coverage requirement is that they are saying they think $10,000 worth of mental health expenses is too much for students to handle.  Yet for conditions that pose a catastrophic risk, the Metro State health insurance policy appears to have a $10,000 out-of-pocket maximum (based on “Out of Pocket Limit” on Page 8 of the MSCD Brochure).  The following conditions seem to require the student to pay 20% after the $300 deductible until the student reaches their $10,000 Out-of-Pocket Limit:

• - Inpatient Room & Board and Hospital Miscellaneous Benefit
• - Inpatient Surgery
• - Outpatient Surgery
• - Physiotherapy (Physical Therapy)
• - Dental Treatment for an Accidental Injury
• - Durable Medical Equipment
• - Medical Emergency Room Services
• - Home Health Care
• - TMJ
  

Another risk to the students is because the Metro State health insurance policy is set up for students, the coverage will end once a student is no longer enrolled in classes.  If a student suffers a serious illness or injury while enrolled in the Metro State health insurance policy, he or she will likely have to seek guaranteed issue health insurance coverage once the student health insurance policy is no longer in force.  This would mean being limited to more expensive health insurance coverage through an employer-sponsored group plan, or Cover Colorado.

In addition, some students would prefer to choose a less expensive policy.  While the Metro State policy does provide a good value for students who can afford it, there are people who would rather buy an HSA qualified high deductible health plan, with good catastrophic coverage, but no bells and whistles. What would happen if I were to decide to obtain an additional degree at this point in my life?  I currently have an HSA qualified plan that perfectly meets my family’s needs, but does not have as much mental health coverage as Metro State requires (nor does it have the maternity coverage that CSU requires).  I would have to cancel my coverage and enroll in the Metro State plan or the Anthem Smart Sense plan.  This would be frustrating to say the least, and I would feel as if I were being treated like a child.

I can absolutely understand the position that colleges take when they require students to have health insurance.  And I would fully support requirements that students provide proof of some sort of “real” health insurance (as opposed to discount plans, accident supplements, cancer policies, etc.)  For students who don’t care one way or the other and are happy to have the college take care of their health insurance, the student health insurance plan is a good option.  But some students have done their own research and found an individual health insurance policy that better fits their needs and/or budget, and they would prefer to be given the option of keeping that policy instead.  For those students, we feel that colleges should reconsider their waiver requirements and treat their students as adults who are capable of making their own decisions.

Don’t get me wrong – I’m very much in support of organizations that focus on finding cures for medical conditions.  I’m thrilled that Obama is allowing federal funding for stem cell research, and I am glad that there are doctors and scientists who devote their lives to curing disease.  My own family hopes every day for an eventual cure for kidney failure that doesn’t involve a lifetime of immune-suppressing drugs, so that my father could be healthy again.  But when it comes to the lives of individual people who are battling illnesses, there are plenty of needs that are not met by the big disease advocacy organizations.

Cowboys Against Cancer, one of Jay’s parents’ favorite organizations, is an example of a group that is working to address immediate needs of cancer patients.  They are based in a small town, and raise money for local cancer patients to pay for expenses associated with travel to larger cities for cancer treatment.  I am impressed by the local focus and the organization’s efforts to tackle a pressing and immediate challenge facing cancer patients.

I think that the big disease advocacy groups that are focused on finding cures do provide an important service.  Raising money to find a cure is important in and of itself, and there’s also the camaraderie and support that organizations like this provide.  I participated in one of those walk/run events a few years ago in Denver, and it was obvious that it was a huge morale booster for the women (and men) who participated, especially those who were still going through treatment.  But Duncan’s article serves as a reminder that just donating money to a disease advocacy organization isn’t all that is needed.  And there are plenty of smaller, lesser-known organizations that are working to address other, more tangible needs that sick people face.

And while we’re on the topic of immediate needs, check out this article by Ill and Uninsured, about a 15 hour wait in a hospital emergency room.  The description of what it’s like to be in serious pain without health insurance is gut-wrenching.  The article raises so many issues:  under-staffing in emergency rooms, people who go to the ER with a sore throat because they don’t know where else to go, a lack of viable health care options for people without health insurance, and the patient perspective of what it’s like to be sick and try to navigate the health care system without health insurance.  Definitely worth a read.

I found these articles in this week’s Grand Rounds, hosted at Code Blog.

Ritter and Colorado lawmakers have been working on HB 1293 (the Colorado Healthcare Affordability Act) since mid 2008.  Although it’s rarely possible to please everyone with any new legislation, it does appear that HB 1293 has at least a measure of support from many sides, including most hospitals, the Colorado Association of Health Plans, and health insurers Anthem Blue Cross Blue Shield, Cigna, and United Healthcare.

The plan would involve charging a fee to Colorado hospitals which would generate about $600 million in revenue for the program.  That would then be matched by $600 million in federal funds.  The $1.2 billion generated will be used to expand Medicaid, the Colorado Indigent Care Program, and Children’s Health Plan Plus (CHP+), allowing more people to qualify for and enroll in the programs.

I like the approach of expanding current programs, rather than trying to re-invent the wheel.  All of the administrative systems are already in place for programs like Medicaid and CHP+.  Increasing the income limits and enrolling more people doesn’t require additional infrastructure or administrative changes.  Working within our current framework, but with expanded enrollment, seems to be an efficient way of going about this process.  It’s also probably the quickest way to actually get health insurance coverage to Colorado residents who need it.

There are currently 800,000 uninsured people in Colorado, so obviously this bill won’t solve all of our problems.  But it will be a start.  And hospitals like Denver Health, where a huge number of uninsured patients are treated, should find it a bit easier to stay afloat.

Check out the Grand Rounds at the Huffington Post HERE.

For anyone who thinks that our system will be fixed once we get health insurance for those who are currently uninsured, Dr. Rich’s article should be thought provoking.  Yes, being without health insurance in the US is a scary situation, and the sheer volume of people who are uninsured is a problem.  On an individual level, each person and family without health insurance is taking a significant risk – one that I’m sure most of them would rather avoid given feasible options.  But from a large perspective of the whole health care system, just providing health insurance to the uninsured would still leave us with a pretty big mess (not to mention the bill for that health insurance coverage).  We don’t have enough primary care docs, our drugs are too expensive, our hospitals are too focused on turning a profit, we spent more than any other country on our healthcare, and yet our results are mediocre at best.

Many thanks to Alvaro Fernandez at Sharp Brains, who hosted Grand Rounds this week, where I found Dr. Rich’s article.  The Colorado Health Insurance Insider article about the cost of treating the uninsured at Denver Health was included this week.  There’s lots of good medical reading, so head over and check it out.  And here’s hoping that Dr. Rich gets to spend Christmas dinner inside, at the table (although he might have to settle for the kids’ table unless he’s on his best behavior).