Ilovebenefits’s Blog

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Labor Force Participation Rates: The Population Age 55 and Older, 2008

Editor’s note: the story goes on (if you go to the link) to talk about the impact health care costs are having in keeping people in the workforce longer.


According to findings from the 2009 EBRI/MGA Consumer Engagement in Health Care Survey, the labor-force participation rate is increasing for those age 55 and older. The percentage of civilian non-institutionalized Americans age 55 or older who were in the labor force declined from 34.6 percent 1975 to 29.4 percent in 1993. However, since 1993, the labor-force participation rate has steadily increased, reaching 39.4 percent in 2008—the highest level over the 1975–2008 period. For those ages 55–64 (the near elderly), this is being driven almost exclusively by the increase of women in the work force; the male participation rate is flat to declining. However, among those age 65 and older (the elderly), labor-force participation is increasing for both males and females. Education is a strong factor in an individual’s participation in the labor force at older ages: Individuals with higher levels of education are significantly more likely to be in the labor force than those with lower levels of education.

Source: EBRI Notes, February 2010 • Vol. 31, No. 2.

March 16, 2010 Posted by | Cost, healthcare, insurance | , , , | Leave a comment

What Does Competition in Health Care Mean

With Washington placing insurers in their cross-hairs and proclaiming that there isn’t enough competition among insurers, I wonder if the public has thought about what more competition among health insurers might mean.

First, a few facts. The portion of the premium that is devoted to care (otherwise known as MLR or Medical Loss Ratio) runs between 78 and 82% of premium. You can find these numbers in the quarterly financial reports of the public insurers. These claims payments are a result of contracted reimbursement rates between the insurer and providers (doctors, hospitals, labs, etc.)

Back to the original question. Will more competition drive premium costs downward. If market power in terms of volume allows you to negotiate a better rate then on at least 78% of the bill the costs may go up instead of down with new entrants into the market. The insurers will not be able to negotiate the same favorable terms with providers as they are now. Unless you think they are keeping reimbursements artificially high … I doubt you could find a physician or a hospital that would agree with that.

Therefore the government must be counting on the reduction of the remaining 18-22% to not only be reduced, but to overcome any loss of market power on the contracting with providers. Since the insurers will be smaller, they will have less market power with all of their other providers of products and services as well — from phones, to facilities, and on an on.

Perhaps in this context competition isn’t such a good idea if your goal is to reduce costs.

Then again, perhaps what they are talking about at the Federal level is all of the costly mandates that the states put on insurance providers. Requirements for coverage types, lengths of stay and so on. So maybe the issue isn’t with private enterprise, but rather with government regulation.

What do you think a couple of thousand page health care bill is going to do to the volume of regulation?

March 16, 2010 Posted by | Cost, healthcare, insurance | , , , , , | 1 Comment

All Stakeholders Have a Part to Play in the Cost of Healthcare

AHIP: Insurance is just a small part of health care costs
AHIP launched a TV ad campaign Tuesday showing that health insurance only accounts for 4% of health care spending, while physicians, hospitals, diagnostics and drugs are larger cost factors. The ad said Washington needs to “look at the whole health care pie” if it wants to curb health spending. The Hartford Courant (Conn.) (3/10)

March 10, 2010 Posted by | Cost, healthcare, insurance | , , | Leave a comment

Self Insurance, Reinsurance and More

Editor’s note: How do you deal with the issues of self insurance? The Health Benefits Network may be able to help.


While we all start to sit down, our broker tries to put us at ease by cracking a few jokes. No matter how funny the humor, it doesn’t overshadow reinsurance renewal time for our self-insured plan.

The process starts with an overview of how many self-insured claimants hit specific level, came close, or how near we were to our aggregate attachment point.

March 9, 2010 Posted by | healthcare, insurance | , | Leave a comment

From Fee for Service to Fee for Care

Support grows for move to bundled payments
Many health policy experts say it is time to dump fee-for-service physician reimbursement and move to a bundled payment model that could save money without reducing quality of care. Pilot programs have shown that the model can offer high-quality care, greater patient satisfaction and lower costs. The Washington Post (3/9)

Group appointments are a growing trend
Health care providers say patients like group appointments because they cut down on wait times, give them more face time with physicians and allow them to share experiences with other patients. The Future of Family Medicine Project named group visits one of 10 trends to be taken seriously. The Washington Post (3/9)

March 9, 2010 Posted by | healthcare, quality, Reimbursement | , , , , | Leave a comment

More Procedures = Higher Premiums and Higher Costs

Hospital Discharge Survey: Hip and Knee Joint Replacement Procedures

  • From 1996 to 2006, the hospital discharge rate for total hip replacement increased by one-third, and the discharge rate for knee replacement increased by 70%.
  • In 2006, total hip replacement rates were similar among men (18.1 discharges per 10,000 population) and women (20.5) . Discharges for partial hip procedures were about twice as common among women
    (23.9 per 10,000 for age 45 years and over) as men (13.0 per 10,000). Partial hip procedures, which are often used to treat fractures, were also more common among older persons.
  • In 2006, knee replacement discharges were more common among women 45 years of age and over (54.0 per 10,000) than men (34.9). As with hip replacement procedures, knee replacement discharges were more than three times as high for those 65 years of age and over (84.1), compared with those 45–64 years of age (25.7).

Source: CDC/NCHS, National Hospital Discharge Survey.
Publication: Health, United States, 2009.

March 8, 2010 Posted by | Cost, healthcare, hospitals, insurance, Medicare, Reimbursement | , , , , | Leave a comment

Averages in Health Care

Editor’s note: If you are interested in learning more about those ‘average’ premium increases and what it is all about read this article.

In 2007, the average temperature in the U.S. in was 54.2 degrees. The average household spent $1,300 for energy. The average increase for health insurance premiums between 2007 and 2008 was 5%, according to the 2009 Employer Health Benefits Survey from Kaiser and the Health Research & Educational Trust.

What do these numbers have in common? Well, for one thing, they’re averages, which means they represent lots of numbers that can be significantly different from the average.

Further, the separate numbers that are averaged together each can have very different factors that contribute to their individual values – such as the weather in Alaska vs. Texas, electricity costs in San Francisco vs. Des Moines, or health care cost increases for a unionized manufacturing company in Baton Rouge vs. a software company in Cleveland.

Averages create a blur, a number that in many cases is overly general and not well-defined. Even when some facts are known about a statistical average, it often has little real-world value. For example, it’s highly doubtful that residents of southern Florida would make clothing choices based on the average U.S. annual temperature.

Now, keep reading, it is about to get very interesting.

March 4, 2010 Posted by | Cost, healthcare, insurance | , , | Leave a comment

The Feds Propose to Oversee State Insurance Rates

This from Greg Scandlen — a little clarity, thank you. Anyone for the expansion, once again, of the Commerce Clause?

Federal Rate Review?

This ignorance  is underscored by Obama’s sudden interest in having federal oversight of health insurance premiums. Once again, these people do not have the slightest idea of what they are doing. One company (WellPoint) issues rates that Obama thinks are too high. But his reaction is based on nothing. He has no idea if the rates are too high, too low, or just right. It is a political temper tantrum — period.

So he wants federal oversight and looks for excuses to justify his position. One reason cited by Kaiser Health News is that, “more than half the states allow insurers to implement rate increases without first obtaining state approval.”  Well, yes they do. But that doesn’t mean there is no oversight. There are two approaches to rate regulation. One is “Prior Approval,” whereby the regulator has to approve the new rate ahead of time. The other is “File and Use,” whereby the rate goes into effect UNLESS it is denied by the regulator. In either case the regulator has the power to deny a rate increase. The only difference is what happens if the regulator takes no action. In one case it defaults to denial and in the other case it defaults to approval.

As I said, this is public policy driven solely by crass politics. The Kaiser story says, “In the past two weeks, Obama administration officials have tried to build public outrage over recent insurance rate hikes in the individual health insurance market, especially a 39 percent increase sought by Anthem Blue Cross of California, the largest for-profit health insurer in that state.” They have no interest in why these rates went up 39%, they just want to use it to inflame public opinion.

The New York Times reports, “Mr. Obama is seizing on outrage over recent premium increases of up to 39 percent.” So, Kaiser says Obama has “tried to build public outrage,” and then the NY Times says he is “seizing” on the outrage he has built.  The Times goes on to explain, “The president’s bill would grant the federal health and human services secretary new authority to review, and to block, premium increases by private insurers, potentially superseding state insurance regulators. Officials said they envisioned the provision taking effect immediately after the health care bill is signed into law.”

Also in the New York Times, WellPoint CEO Angela Braly explains that “higher premiums were justified by soaring medical costs and added that health care providers were charging more to the private sector, “including our members,” because payments from Medicare and Medicaid did not fully cover providers’ costs.” She also explained that many younger and healthier enrollees have dropped their coverage because of the recession. They have higher priorities when finances are tight.

Importantly, she noted that premiums in New York are double what they are in California because of New York’s guaranteed issue and community rating requirements – which Congress wants to apply to the entire country.

And John Graham of the Pacific Research Institute notes that while some people in California are getting a 39% premium increase others are getting a 20% cut. It is curious how we hear about one but not the other.

Look, folks, this is all about as dumb as can be. The fact is that insurance companies set rates based on what they pay out. There is no other way to do it. Sure administrative costs may be too high and that is part of the reason to support HSAs – it is far more efficient to minimize the amount of services that go through an insurance mechanism. But even if admin costs could somehow be slashed to zero, the rate increases from underlying costs would still be substantial.

Adding federal oversight is nothing but a political stunt. How is the Secretary of HHS supposed to know anything at all about local market conditions in San Bernardino, California? If she denies a rate increase and the company goes out of business as a result, who will suffer? Not her. It will be the policyholders.

When you add in the McCarran-Ferguson repeal, things get really wacky. Currently the states have very elaborate and time-tested ways to deal with insolvent insurance companies. They go onto receivorship and the state guaranty fund kicks in to cushion the blow for policyholders. If we have federal regulation of insurance companies an insolvent company will be able to file for bankruptcy in federal court (they cannot do that currently.) That means the policyholders will get no relief whatsoever.

The gross incompetence coming out of Washington these days is simply stunning.


Kaiser Health News
New York Times
Braley in NY Times
John Graham

March 4, 2010 Posted by | Federal Government, healthcare, insurance | , , | Leave a comment

Repealing McCarran-Ferguson?

This from Greg Scandlen:

Repealing McCarran-Ferguson?

It’s all enough to make you wonder if these jokers have any idea what they are doing but then they pass another bill and remove all doubt. The most recent is the so-called antitrust bill against health insurers. The House passed HR 4626 on February 24 to exempt health insurers from the McCarran-Ferguson Act. For a while it looked like they were going to repeal McCarran-Ferguson altogether, but the P&C industry informed them that it, too, was subject to Mc-F.

OH! Well we’re not mad at the P&C industry. We just hate those eeeeevil health insurers.

A notice from the National Association of Insurance and Financial Advisors (NAIFA), expresses concern that forbidding the pooling of historical claims data would disadvantage smaller carriers and decrease competition, and that “health insurance was not defined by the bill. The upshot of that could be that LTC, DI, medical provisions in auto insurance and even some aspects of life insurance could be construed by courts to be “health” insurance.” NAIFA believes the latter concern was fixed but not the former one. It is not at all clear that there is support in the Senate for this legislation.


McCarran-Ferguson  is poorly understood even by otherwise bright people. On the MSNBC show Morning Joe, Joe Scarborough said it allows price fixing between insurers. No, it doesn’t — as explained by National Underwriter, which writes, “the current antitrust exemption gives (insurers) no ability to join together to set prices or use acquisitions to build monopolies.” Insurers have always been subject to most federal antitrust provisions, including bans on price fixing, divvying up markets, and tying arrangements. They are also completely subject to state antitrust laws. As NAIFA points out, the only thing that will be affected here is the ability of carriers to pool claims data for actuarial purposes. The result will be that small carriers won’t have enough historical information to project future costs. So they will not be able to determine how to price their products. So they will go out of business. So there will be less, not more, competition in the health insurance market.

These people seriously don’t know what they are doing.

National Underwriter

March 4, 2010 Posted by | Federal Government, healthcare, insurance | , , | Leave a comment

Where are the Health Care Dollars Going


While the high cost of private health insurance has drawn plenty of attention in the health reform debate, an underlying driver of higher insurance premiums–the growing market power of hospitals and physicians to negotiate higher payment rates–has gone largely unexamined, according to a Center for Studying Health System Change (HSC) study published online Feb. 25 by Health Affairs.

Funded by the California HealthCare Foundation, the study examines the growing market power of many California hospitals and physicians, finding that providers are using various strategies, such as tighter alignment of hospitals and physician groups, to negotiate significantly higher payment rates from private insurers. The authors point out that California offers a cautionary tale for reform proposals that encourage hospitals and physicians to form tighter relationships through accountable care organizations.

“Health insurers have been squarely in the crosshairs and blamed for the high cost of private insurance, while the role of growing hospital and physician market power has escaped scrutiny,” said HSC Senior Consulting Researcher Robert A. Berenson of the Urban Institute, a coauthor of the study with HSC President Paul B. Ginsburg and Nicole Kemper, a former HSC research analyst.

March 1, 2010 Posted by | healthcare, hospitals, insurance, physicians | , , , , | Leave a comment