S&P Healthcare Economic Indices take some time to develop, meaning the figures for the 12-month period ending October 31, 2010, have just been released. The indices show that health care costs have risen 6.70% for that period, down from 7.32% for the 12-month period ending August 31, 2010.

Standard & Poor’s publishes an approximately 30-page introduction to their Healthcare Economic Indices. This introduction is available as a PDF by clicking here.

An article titled “Seniors and Their Caregivers Should Know Their Medicare Options” outlines considerably more specifics about what is and is not covered by Medicare. It becomes apparent that Long-Term Care insurance is really the way to go in supplementing the supplements so both short-term and long-term needs are met.

The deeper issue is that people do make assumptions about their insurance coverage without actually understanding what it entails. They hear stories or rumors about various plans and, believing what they hear, they think they know what they’re getting into. The only way to understand what any coverage is all about is to speak with an agent or broker who is more interested in educating people than in only making a sales commission. These agents do exist, and it’s important to find one.

During recent contract negotiations involving city workers, a small city in southern Michigan (population about 1,500) was asked to pay the workers an additional $5,000 per year if the employees elected not to enroll in the offered group health insurance plan. This was declined by city negotiators when it was determined the city’s contribution to the plan was no where near the requested $5,000.

The question becomes this: If the tax breaks for employer-sponsored group health insurance are indeed repealed, would it then be more cost-effective for this particular city to drop the employees’ insurance plan and boost their salaries by the requested amount? This is something the Mayor and City Administrator will have to consider.

During this 2011 Medicare Open Enrollment period in the latter part of 2010, most Medicare Part D reports are containing anywhere from 30 – 35 plans for the client to look through and review. This can be quite a daunting task as there is a considerable amount of information to digest. It’s simple to look at the reports, order them by the monthly amount of the plan’s premium and select the least-expensive plan. However, there’s much more to the actual annual cost than just the monthly premium.

Here’s what needs to be considered:

• Deductibles and Co-Payments
  If a plan with a given monthly premium has a high deductible and a fairly low co-pay, it may actually end up costing more than a plan with a higher monthly premium having a lower deductible and no co-pay. It’s the annual cost of these three factors that’s really the key to determining which plan is least expensive.
• Generics vs. Brand Name Drugs
  While a lot of plans cover the generic versions of a given prescription, it’s possible to have an adverse reaction to the generic to the point where the brand name is required. In these situations it’s important to make sure the brand name drug is available under a given plan and how much that brand name medication will cost per month.
• Pharmacy Restrictions
  Some Medicare Part D prescription plans will restrict purchase of medications to particular pharmacies or chains of pharmacies. Which pharmacies are available and where they’re located are factors in whether or not a given plan will be cost-effective for the member.
• The “Donut Hole”
  For the 2011 period the “donut hole” occurs once the individual’s and plan’s combined costs total $2,840. The individual is then responsible for all costs until the beginning of what’s known as “catastrophic coverage”, which is when costs exceed $6,448 and plans cover 95% of costs. During the donut hole there’s a 7% discount on generics and a 50% discount on brand-name drugs. Evaluating how this works for a given list of prescriptions will help in determining the actual cost of a plan.
• Other Information
  Receiving complete and objective information about a given plan can be difficult for a given client’s set of circumstances, necessary prescriptions, ongoing and intermittent treatments and many other factors. It’s important to talk with someone who is interested in the individual client’s needs and who can look at the requirements and options with an open mind.

Click here for complete information on the 2011 Medicare premium changes.

Insurance agents will be able to offer access to these state-run health insurance exchanges through their agencies. One of the more important aspects of going through an agency to purchase insurance from a health insurance exchange is the level of information available from a trained and seasoned agent. An agent will allow the consumer or employer a broader set of choices than looking only at a health insurance exchange. While not likely, it’s still possible a standalone or group policy may actually still be less expensive or have broader benefits than a health insurance exchange can offer. This depends on the needs of the individual or group. There will never be a “one size fits all” insurance plan or exchange. The more choices a consumer or group has, the better their insurance will be.

All states and the District of Columbia have received grants for the development of their exchanges. Click here to see the individual grants and what each state plans to do with the funds.

These reports entail asking for an update of the list of prescriptions for the client and running the appropriate reports for what that particular client desires, be it a Medicare Supplement, a prescription plan or an Advantage plan. Allchoice will then send those reports to the client either by mail or email. One of the requirements of Medicare is that the client sign what’s called a Scope of Sales Appointment Confirmation Form prior to an agent discussing any plan with the client whatsoever. This is sent with the Medicare reports and needs to be received back in Allchoice’s office before any discussion can proceed.

Without being specific about plans it’s important to note that some plans are undergoing changes, with new ones being added to the list of availability and others no longer being available. Clients will likely need to check with their doctors, pharmacies and other service providers to ensure continued coverage if they do decide to change their Medicare plans for 2011.

Some of the more interesting information in this report is this:

“Medicare payment rates for physician services as determined by the Sustainable Growth Rate (SGR) system are scheduled to be reduced by roughly 30 percent over the next 3 years … Other Medicare services such as ambulance, ambulatory surgical centers, laboratory services, certain durable medical equipment, and prosthetics have their payments updated annually by the increase in the Consumer Price Index (CPI). The Affordable Care Act specifies that all of these payment updates will be reduced by the percentage increase in the 10-year moving average of private non-farm business multifactor productivity beginning as early as 2011.”

Even more devastating to Medicare recipients is a chart titled “Simulated comparison of relative Medicare, Medicaid, and private health insurance prices under current law” at the top of page 6 in the report. The chart shows that while private health insurance pricing will remain at 100% and Medicaid at 75%, Medicare pricing will drop significantly over time resulting in “… increasingly severe problems with access to care.”

Download the full report to see the rest of the information as presented.

These radio ads also include the voices of some Allchoice clients. These seniors talk about their experiences with Allchoice Insurance in entirely unscripted testimonials over the years and how they’ve recommended the company to their family and friends. They also discuss the quality of customer serve at Allchoice and how all of their questions have been answered in a friendly and timely manner.

Be sure to tune into Ave Maria Radio on AM 990 in southeast Michigan from Monroe to Bad Axe to Brighton or listen online to hear the new Allchoice radio ads.

Please note that in addition to health care reform changes, coverage for children only may no longer be available in your state.

At this point, this agency has also received similar statements from Consumers Life/Medical Mutual, Golden Rule/UnitedHealthOne, HAP and Humana. It’s more than likely other companies will follow this trend in the very near future.

What’s happened is, again, the following portion of the Patient Protection And Affordable Care Act:

• No discrimination against children with pre-existing conditions – Prohibits all employer plans and new plans in the individual market from denying coverage to children with pre‐existing conditions.

Source: Key Provisions That Take Effect Immediately, U.S. House of Representatives. ["Effective six months after enactment. Beginning in 2014, this prohibition would apply to all persons."; from other sources.]

This particular area of the Act is troublesome for insurance companies in that it becomes cost-prohibitive to cover children such as the young man with acondroplasia I wrote about in our last blog post. This action by the insurance companies, to not issue child-only policies whatsoever, was quite predictable and should have been taken care of correctly in the Bill before it was signed into law as the Act. Unfortunately, there’s nothing which can be done about it at this point, and insurers are not left with any choice but to not write policies for children only.

Lots of people may wonder, why would a child-only policy be needed? My father worked for GM and we were always covered, so I had this same question. With smaller group policies it’s actually not uncommon for employers only to cover their employees. Some may offer insurance for spouses and children as well, but with possibly higher premiums, lower deductibles, and other caveats. Child-only policies then become a necessity for these families.

What are these families to do? That’s the real question. There’s not yet an answer, either.