Midweek update

The FEHBlog could not find any news reports yet on the IRS public hearing held yesterday about the complex reporting obligation that new IRC § 6055 (added by the ACA) imposes on health insurers. As noted in Monday’s, the news coming out of Monday’s related hearing was not encouraging. The FEHBlog will keep poking around for a news report.

The actuarial consulting firm Mercer released its 2013 employer survey on health care costs. The survey revealed that the health benefit costs for “very large” employer (>5000 employees) rose 3.7%. That percentage is the average premium increase in the FEHBP for 2014.  The 2013 trend is just one component of the premium which suggests that the FEHBP trend is lower than average.

The Mercer press release explains that

Many employers anticipate spending more to cover more employees in 2014. The ACA mandate requiring all individuals to obtain coverage or face a tax penalty goes into effect in 2014. Currently, 22% of an employer’s eligible employees, on average, waive coverage for themselves, either because they are covered under another plan or because they choose to go without.  Among employees who do enroll, on average 53% elect dependent coverage. But next year, because of the individual mandate, it is likely that fewer employees will waive coverage for themselves and more will elect dependent coverage – although the extent of the change is difficult to predict.

The 22% declination figure is similar to the percentage that the FEHBlog has heard about the FEHBP. It will be interesting to see whether FEHBP enrollment jumps in 2014. Many of the federal employees who decline FEHBP coverage are covered under their spouse’s plan. However, the Mercer report indicates that “Some [employers] already impose a surcharge on premium contributions for spouses who have other coverage available (9% of large employers) or even make them ineligible for coverage (7% of large employers); it seems likely that these provisions will become more common next year.”

The Mercer survey also discloses that “Nationally, enrollment in [consumer driven health plans] CDHPs rose from 16% of covered employees in 2012 to 18% in 2013 (Fig. 6). This is the same portion that enrolled in HMOs. In the Midwest, CDHP enrollment is now more than double that of HMOs (27% compared to 10%).’  About 18% of the FEHBP enrollment is in HMOs. However, participation in  FEHBP CDHPs while significant does not mirror the national average which is skewed by the fact that a growing number of employers only offer CDHPs or HMOs.

Modern Healthcare reports that transparency tools and apps that compare prices against provider quality measures may overcome patient prejudice against using low priced providers. Fierce Health Payer reports that a blunter approach to achieving the same goal — reference pricing — is gaining steam with health plans.

Reference pricing, a relatively new model in the American healthcare industry, establishes a standard price for a drug, procedure, service or bundle service, and usually requires health plan members pay any charges beyond the set amount. Panelist shared information, first-hand knowledge and studies that showed reference pricing for routine procedures and prescriptions expanded the transparency of medical prices without reducing the quality of care. It also gives purchasers and members the opportunity to make choices that reduce costs, they said.

A family tragedy occurred in Virginia this week — a young man attacked his father and then killed himself. The first news reports indicated that the young man was mentally ill but no inpatient care was available for him. Today the Washington Post reports that three hospitals within two hours of the home where the tragedy occurred had beds available to care for the young man. The case was fumbled. The courts will figure out who is to blame. The point is that greater coordination of care is required.