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What Direction for Healthcare Insurance?
As much as we like to gaze into the future regarding costs and changes in employee healthcare insurance, this year we have to admit that the crystal ball is "temporarily out of order!"
The Patient Protection and Affordable Care Act signed into law in 2010 was intended to help lower healthcare costs, expand access to insurance, and improve health services to patients. But since the signing by President Obama, the law has been more closely scrutinized and nearly two thirds of the American public wants it repealed and replaced with something better and less costly. The House of Representatives appealed it, but the Senate did not, so now the House is trying to "starve" the funding of the most egregious parts of it. One of the worst aspects, the expanded 1099 information reporting requirements, has been repealed by the Senate as the President suggested in his State of the Union address.
Currently it is difficult to know how successful the House will be in defunding the Act and what aspects will be left in place or replaced. Arguments are strong on both sides, but likely replacements or portions kept include:
1. Portability...where an employee who has health insurance coverage will be able to keep his or her policy upon moving from one job to another;
2. The pre-existing conditions rules currently in the Act will probably stay;
3. Insurance companies won't be able to drop coverage for anyone, except for nonpayment of premiums;
4. There will probably be no limits on the dollar coverage;
5. Preventive care as in the current law will most likely remain;
6. Medical liability reform is a must as it would save some $100 billion each year in defensive medicine.
Although it is tough to know just what changes will come, this we do know; the cost of healthcare will continue to go up! A Wall Street Journal survey shows that large employers believe healthcare costs will rise about nine percent in 2011. Click here for article. Many employers plan to share the increased cost with employees via higher premiums and higher out-of pocket limits.
So what's driving these increasing costs when the new Act was supposed to reduce costs over the year? Some of the cost drivers include:
-the cost of medical malpractice insurance for doctors;
-patients getting expensive MRIs when they are often not needed which is part of the general "over treating syndrome";
-increased hospitalization and outpatient procedure costs;
-administering new laws currently in place (i.e. adding children up to age 26 on to employee policies.)
Beyond that, the number one cost driver is prescription drug costs, which are the highest in the world in the U.S. The pharmaceutical industry is and has been the most profitable of businesses in the U.S. Although the manufacturing of drugs is relatively low, the cost of inventing and improving drugs is high. And, although drug companies are criticized for the high costs, there are estimates that drug research will save more than $750 billion in treatment costs for five major illnesses over the next 25 years. Companies say they need the money to develop the drugs, but critics say much of that money is used for marketing and administration
So the argument rages on as to whether or not to regulate "big pharma" to keep insurance costs lower. Meanwhile it continues to add to the escalating costs of employee insurance.
Some businesses are offering financial incentives to embrace high-deductible insurance plans, which, in turn, would help lower premiums. Some plans help keep their premium charges lower by tacking on extra fees if patients go to certain pricier hospitals or outpatient clinics that are not in the plan. Companies are pushing wellness programs for employees as well
We at Riviera Insurance are monitoring the situation closely to find ways of keeping the cost of employee health care premiums down while assuring the best possible product for each business.
Meanwhile, all businesses need to stay in touch with their state and federal legislators regarding healthcare reforms, especially as it has to do with medical malpractice reform, over treating of patients and prescription drug costs. We need to keep in mind that the recent health care laws were written by a few for the many. If we want to see changes, we need to be our own advocates.
Hopefully things will become clearer over the coming months and the crystal ball will be back in order.
Legislator Contact Information:
U.S. House of Representatives Lois Capps (D-CA) - http://capps.house.gov/
Senator Barbara Boxer (D-CA) - http://boxer.senate.gov/
Senator Diane Feinstein (D- CA) - http://feinstein.senate.gov/public/
Other U.S. Representatives - http://www.house.gov/
California Legislator Finder: - http://www.leginfo.ca.gov/yourleg.html
Articles of Interest:
Research Reports - Click Here
Research Reports - Click Here
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