I haven’t seen any new data released recently comparing the population with health insurance in 2007 versus 2009, but my guess is that there are a lot more uninsured Americans now than there were a few years ago.

As Joe pointed out, higher deductibles and copays also play a role.  Two years ago, before the recession had really taken hold, researchers had already found out that people with high deductible health insurance policies were two to three times more likely (compared with people covered by traditional health insurance plans) to stop taking medications to control chronic conditions.  For people who opt for a HDHP but then don’t set up and fund an HSA, paying for health care can indeed be a major hurdle.  And if people with high deductible health plans were skipping their meds back in 2008, it makes sense that after two years of a recession, health care costs have taken even more of a backseat for families struggling to make ends meet.

Copays and deductibles have risen for most families over the last few years, even those who don’t have policies that qualify as high deductible.  And at the same time, economic stability has decreased for most families.  This isn’t a good combination, and Joe’s right about the fact that when people skip necessary routine medical care, it will likely lead to increased medical costs (and declining health) in the future.

Joe’s article was included in the Health Wonk Review this week, hosted by InsureBlog.

Applying to the program is an obvious step for a business that would like to continue to provide health insurance for early retirees.  But the question remains as to whether the $5 billion designated for the ERRP will hold out until 2014 when all of the provisions of the PPACA become effective.  But between now and then, having the option to remain on a previous employer’s group health insurance plan does take a lot of pressure off of early retirees, especially those with health problems who may have difficulty securing individual coverage.

Whether the money will last or not remains to be seen.  But for now it looks like a good option for employers who are looking for a helping hand in providing health insurance for their early retirees.  For people in Colorado who retire before age 65 and don’t have employer-provided early retiree health insurance benefits, there are lots of options available in the individual market, although those do require that the applicant be reasonably healthy in order to qualify.  For those who don’t qualify medically, there are two guaranteed issue programs available in Colorado now:  Cover Colorado and GettingUsCovered.  They aren’t cheap, but they are guaranteed issue for people with medical conditions that preclude medically underwritten individual policies.

But Maggie points out that this isn’t likely to be the case (instead, we’d just end up with continuing unchecked price increases for health care services, and correlated increases in health insurance premiums).  She makes a couple of very good points:  first, Medicare doesn’t cover everything (proponents of a single payer system often talk about “Medicare for everyone”).  In the case of a hospital stay that lasts several months, an insured with Medicare coverage who doesn’t have a supplemental policy would be facing a very large medical bill.  My father has kidney failure and was hospitalized for several months in 2004.  Medicare paid 80% of the cost, but if my father had not been covered by a supplemental private policy, my parents would have been on the hook for tens of thousands of dollars for the other 20% (even with the dramatic price reduction that goes along with the Medicare negotiated reimbursement rates).  Even a less catastrophic medical situation can get expensive for someone who doesn’t have a supplemental medigap policy.  20% starts to add up quickly.  Although Medicare is a great safety net for older Americans, it doesn’t provide as much coverage as the typical employer-sponsored group health insurance policy.  And it’s not free.  Enrollees pay premiums for Medicare itself in addition to private supplemental coverage if they choose to have it.  Once they tack on a supplemental policy, many enjoy health insurance coverage that is similar to what they received from their employers prior to retiring – but basic Medicare by itself is not as generous as the policies that most Americans get from their employers.

The other excellent point that Maggie made is that most Americans who have private employer sponsored health insurance like their coverage.  And they definitely like the fact that the employer pays a good chunk of the premiums.  If we were to switch to a single payer system, someone will have to pay for the coverage that employers are now providing, and it’s not likely that employers would continue to contribute as much to a single payer pool as they do to their own employees’ coverage now.  Basically, we’d end up with a single payer health insurance policy that would require more enrollee cost-sharing than current group plans, and with fewer benefits.

Here in Colorado, 56.6% of the population had employer sponsored health insurance as of 2008, which is higher than the national average of 52.3%.  I have no doubt that when the numbers come out for 2009 and 2010, there will be a drop in both of those numbers due to the recession.  But  most non-elderly Americans still get their health insurance through their employers.  And in general, as long as people are somewhat satisfied with the status quo, most of us tend to be a bit resistant to change.  Obviously, people who are currently uninsured are likely to support sweeping changes in the health care system.  But most Americans do have health insurance, and those who have generous policies – that are at least partially funded by their employers – might find themselves with less coverage if we moved to a single payer plan.

Maggie’s article was included in the Health Wonk Review this week, hosted by Joe Paduda of Managed Care Matters.

The only way an insurance policy will be able to avoid some of the changes implemented by the new law is to retain grandfathered status, basically by keeping the policy mostly unchanged from the way it was on March 23, 2010, when the law was passed.  But it turns out that the benefits of grandfathering a policy aren’t really worth the restrictions involved, for most US companies.  Ninety percent of employers expect to lose their grandfathered status before 2014, mainly because they want to be able to make significant changes to their plan design or adjust the amount that they contribute to employees’ premiums.

Some of the new rules will apply to all policies, even if they retain grandfathered status.  The ban on rescission except for causes of fraud, the ability for people to remain on their parents’ policy until age 26, and the removal of lifetime coverage maximums will apply to all policies, grandfathered or not.  In addition, employer sponsored group plans will have to provide coverage for children regardless of pre-existing conditions, even if the plan is grandfathered.

Most large employer-based plans already offer many of the protections that are included in the Affordable Care Act, which likely explains why employers would rather choose flexibility over grandfathered status.  They won’t have to make significant changes in order to conform with the law, and they want to retain the option to decrease benefits or lower their contribution rates in order to keep their health insurance costs in check.

Small employers and people with individual health insurance are more likely than large groups to make significant plan changes or switch to a new carrier in any given year, so it’s reasonable to expect that most people with small group or individual coverage will not be on grandfathered plans by 2014 either.

The text of the bill is relatively clear on some of the specifics:   It states that all group and individual health insurance policies…

“…shall insure against the expense of normal pregnancy and childbirth or provide coverage for maternity care therefor and provide coverage for contraception in the same manner as any other sickness, injury, disease, or condition is otherwise covered under the policy or contract.”

I would take that to mean that the policy out-of-pocket costs in terms of deductible, coinsurance, hospital and doctor copays, etc. would have to be met by the patient, and the rest of the costs would be covered by the insurance carrier.

The bill also states that individual policies (but not group policies) are still allowed to exclude pregnancy as a pre-existing condition:

“Individual sickness and accident insurance policies or contracts may exclude coverage for pregnancy and delivery expenses on the grounds that pregnancy was a preexisting condition.  The exclusion for the pregnancy as a preexisting condition under the policy or contract shall not apply for any subsequent pregnancies.”

But does that mean that the insurance carriers have to accept pregnant women and just exclude the pregnancy and delivery from the coverage?  Currently, no individual health insurance carrier in Colorado (or most other states) will accept any expectant parent (mother or father) at all until after the baby is born.  The pregnancy is considered a pre-existing condition, and because new babies can be added to either parent’s existing policy in the month following birth with no underwriting, health insurance carriers have all opted to deem pregnancy as an automatic decline.  As of 2014, this will no longer be the case, but I have heard nothing indicating that there will be any changes to the universal underwriting guideline that states that an expectant parent cannot get a new individual health insurance policy.

In terms of what policies will be affected, the bill states that the new requirements wills apply to policies “issued or renewed on or after the effective date of this act.”  (January 1, 2011).  My interpretation of that would be that new policies issued beginning January 1, 2011 will include maternity coverage, and that as existing policies renew throughout the year, maternity will be added to them.  So for example, the policy that Jay and I have for our family renews each year on November 1.  So I would assume that for the first 10 months of 2011 we will continue to not have maternity coverage, but then as of our renewal date in 2011, maternity will be added to our plan.

Of course my guesses in terms of how this will all work are just that – guesses.  And I have not been able to find anyone who has more concrete details at this point.  We still have several months left in 2009 for regulators and insurance companies to work out the details, and I’m sure we’ll know more by the end of the year.  When you combine this with the new Colorado law banning gender rating on health insurance policies, and the myriad of reforms coming from the federal government, I’d say that health insurance regulators in Denver are going to have their hands full for a while.

It’s important to note that the Early Retiree Reinsurance Program is not designed to be used directly by early retirees themselves.  The application has to be completed by the health plan sponsor (not the retiree), and the idea behind the program is to encourage employers to provide retiree health benefits, as the number who do so has fallen sharply over the last couple decades.

One concern about the program is that the money designated for it may not be enough to last until 2014 when the program is scheduled to end.  This was a concern raised about the program to expand high risk pool coverage too, and is likely to be an issue with many of the aspects of health care reform.  But for now, in the first month of the Early Retiree Reinsurance Program, there should be lots of incentive for employers to get their applications submitted to HHS.

There are an estimated 62,700 people in Colorado who retired before they were eligible for Medicare and are receiving retiree health care benefits from their former employers.  Their employers can now apply for financial assistance to help cover the cost of health care for their early retirees, and the financial assistance can be passed along to the retirees in the form of lower health care costs.

First is the reason employers offer group health insurance benefits in the first place.  Benefits are a way to attract and retain talented employees.  If company A and company B both pay the same salary to their employees, but company A also provides a generous 401k match and a comprehensive health/dental/disability/life insurance package, potential employees are likely to choose company A, and are more likely to continue to work there than they would be without the benefits.  Retaining employees (and thus not having to continually train replacements) is a cost effective way for businesses to operate, and for many employers it justifies the money spent on group health insurance plans.

Another factor that might encourage small businesses to retain their group health insurance plans is the tax credits to help pay the premiums for small group coverage for employers with fewer than 25 employees.  The credits start at up to 35% of the cost of the premiums this year, and rise to up to 50% of the premiums by 2014.  Combined with the desire that employers have to provide health insurance as a tool to attract and retain quality employees, the tax credit could be a powerful motivator for small businesses to offer group health insurance coverage for their employees.

The final issue that comes to mind is the pricing of health insurance.  Currently, individual health insurance is less expensive than group health insurance, primarily because of medical underwriting.  Most of the individual health insurance carriers we work with in Colorado are not able to accept applicants with serious pre-existing conditions.  For less serious conditions, the premium is often increased or a specific exclusion is written into the policy regarding the pre-existing condition.  But group health insurance is different.  All eligible employees who enroll have to be covered, regardless of medical history.  Exclusions can only be added to the policies if the person has not had continuous coverage, and such exclusions are temporary.  Basically, insurers are taking on more risk in the group market, and the premiums are higher as a result.  In 2014, when individual health insurance is guaranteed issue, it makes sense that we should start to see prices for group and individual health insurance policies start to equalize a bit.  The primary factor that explains the current pricing difference – underwriting – will cease to be an issue.  So it makes sense to think that there won’t be as much motivation for healthy people to switch from group coverage to individual coverage.

It remains to be seen how health care reform will actually impact the breakdown of individual versus group health insurance.  Currently, there are far more people with group coverage than individual policies.  The balance might shift a bit as health care reform takes effect, but I doubt that there will be a mass exodus away from group plans in favor of individual coverage.

Since access to Medicare for people with disabilities is dependent upon remaining disabled for at least two years, and then continuing to receive SSDI, there is little motivation for people with disabilities to return to the workforce, especially if they were working at a low paying job, or one that did not provide health insurance benefits.  It will be interesting to see what effect the Patient Protection and Affordable Care Act has on the number of people receiving SSDI and Medicare coverage.  Starting in 2014, health insurance will be guaranteed issue, with no exclusions or denials for pre-existing conditions.  Currently, a person who qualifies for SSDI is very unlikely to qualify for an individual health insurance policy, simply because whatever condition is causing the disability is likely to also result in a decline from insurance underwriters.  And if the person is unable to work because of a disability, employer sponsored health insurance is also unlikely to be available, unless the person has coverage through a spouse’s policy.  So a sick or injured person currently has a lot of incentive to remain disabled and eventually qualify for Medicare.  This is not to say that the disabilities are not genuine, but simply to note that there are few health insurance options for people with disabilities in our current system, and the promise of Medicare after two years is probably appealing to both the person with the disability and also to their family members and care givers.

The National Bureau of Economic Research recommendation that we increase access to public health insurance (which would include existing programs like Medicare and Medicaid) is an interesting proposal. Being in the workforce provides a general sense of wellbeing and productivity that is not replicated by simply receiving a check from the SSDI program.  Would the number of people receiving SSDI decrease (and thus save money for the Social Security Administration) if sick and injured people were allowed to purchase subsidized access to Medicare and Medicaid?  Will guaranteed issue health insurance – and subsidies to help pay for it – starting in 2014 also help to decrease the number of people receiving SSDI?  If people had a way to obtain affordable health insurance without having to qualify as disabled, it stands to reason that there would be more incentive for people to return to work after a serious illness or injury.

Nancy’s article was included in the Cavalcade of Risk this week.

For students who are graduating in May and June, this will be a huge help.  Technically, under the new law, graduating students in a lot of states could still have been dropped from their parents’ policies upon graduation, and would have had to find their own health insurance or go uninsured until September.

The health insurance companies are still collecting premiums for these young adults, via their parents’ policies.  But for families with group health insurance who have more than one child, the premiums are likely the same regardless of how many children are on the policy.  So a family with younger children who continues to keep an older child on their policy until age 26 is essentially getting “free” health insurance for that older child, since they would be paying the family premiums anyway, in order to insure their younger children.  In addition, continuation of family coverage is an excellent option for young adults with pre-existing conditions.  If they are not able to secure jobs that offer group health insurance benefits, they would have to apply for individual health insurance, and the pre-existing conditions would continue to be an issue until 2014.

Wellpoint, which operates Anthem Blue Cross Blue Shield here in Colorado, Humana, and United Healthcare are three of our most popular health insurance carriers, and we’re glad to see them stepping up and going beyond the letter of the law.  Hopefully other health insurance carriers will follow suit and as many young adults as possible will be able to remain covered on their parents’ policies this summer.

“The term ‘full-time equivalent employees’ means a number of employees equal to the number determined by dividing

the total number of hours of service for which wages were paid by the employer to employees during the taxable year,

by 2,080.“