Businesses face the biggest changes to health insurance since Medicare

| FROM THE PRINT EDITION |
 
 

Kathryn is in her early 50s and lives on the shore of Lake Washington with her husband, Bill, in an elegant contemporary home filled with sunlight and exquisite art. Bill and Kathryn, not their real names, are too young for Medicare, but they felt well protected because they had bought one of the best health insurance plans on the market. Bill, a successful entrepreneur, retired in his mid-50s. The couple assumed the Affordable Care Act was a good thing for other people who needed help. As politicians argued about the merits and costs of “Obamacare,” Kathryn was aware of the debate raging in Congress, but thought neither she nor Bill would ever need it. She was wrong.

Bill developed a rare and aggressive form of cancer. With surgery, multiple rounds of chemotherapy and radiation as well as numerous hospital visits, Bill’s medical expenses totaled more than $1 million in less than 12 months. The costs surpassed both the annual cap for expenditures and the lifetime cap in his policy. His health insurance was canceled. It was impossible to obtain new insurance. Not eligible for Medicare or Medicaid, Bill and Kathryn were on the brink of bankruptcy.

In a very personal way, Kathryn gets it now: Without the Affordable Care Act, preexisting conditions mean no access to health insurance—for some of the people who need it most. And Bill and Kathryn’s situation can happen to anyone.

From prominent executives with company-paid medical plans loaded with benefits to employees who lose their insurance, along with their jobs, health care reform affects everyone—or will at some point in life. Ditto for seniors, children, adults with preexisting conditions, people with serious illnesses, working moms and young adults. Some of its most important provisions, such as expanded coverage for children and young adults, are already in place, while the most significant changes are coming, beginning this fall with open enrollment in a state-run health insurance exchange and implementation in January of the “individual mandate” requiring everyone who can afford it to have health care insurance.

While other states hesitate to embrace change, Washington is a leader in national reform efforts and has been experimenting with new approaches to health care for years, even before passage of the Affordable Care Act, making this state better prepared than most to meet the challenges of implementing health care reform. Virginia Mason Medical Center, for example, is recognized internationally for its creation more than 10 years ago of the Virginia Mason Production System to eliminate waste, improve quality and patient safety, and lower the cost of care. Chairman and CEO Gary Kaplan, M.D., has testified before Congress and was ranked number 41 on Modern Healthcare magazine’s 2012 list of the 100 most influential people in health care. The Virginia Mason Institute was established in 2001 to teach other hospitals and health organizations from around the world how to implement the principles in their own organizations.

Other local health care executives, such as Group Health Cooperative President and CEO Scott Armstrong and The Everett Clinic CEO Rick Cooper, feature prominently in the national discourse on health care reform with their efforts to address challenges in primary care. And under the leadership of Executive Director/CEO Lloyd David, The Polyclinic, Seattle’s largest multispecialty physician practice, became the state’s first Medicare-approved Accountable Care Organization in July 2012. Accountable care ties provider reimbursements to quality metrics and reductions in the total cost of care for an assigned population of patients. The Polyclinic has experimented with accountable care models with industry leaders such as Premera Blue Cross for several years.

Washington even “developed its own state-based health insurance marketplace to better meet the unique needs of the uninsured in our state,” says Richard Onizuka, CEO of the Washington Health Benefit Exchange, which will implement the Washington Healthplanfinder on September to help individuals and business owners compare and enroll in health insurance coverage.

Major changes already implemented since passage of the Affordable Care Act in 2010 include protection from the insurance industry’s worst abuses, the introduction of preventive care and access to health insurance for vulnerable groups.

Health insurance companies can no longer cancel coverage if someone becomes seriously ill. Lifetime medical limits are now illegal. Annual insurance reimbursement caps were increased and will be phased out entirely next year. If insurance companies spend more than 80 percent of the premiums collected on administrative overhead, they are required to issue rebates. All health plans must now use standardized disclosure forms to summarize benefits and project out-of-pocket costs.

Annual checkups and some preventive care, such as immunization, certain cancer screenings and well-woman visits, are no longer subject to co-payments or deductibles. Changes to Medicare give seniors better discounts on prescription drugs and free annual checkups. The Everett Clinic’s Cooper says that ongoing preventive care “will not only lead to better outcomes, [but also] it can make care more affordable by reducing the need for expensive care such as emergency room visits or in-patient hospital care.”

Children under the age of 19 with preexisting conditions can no longer be denied coverage. In addition, young adults can remain on their parents’ policies until they turn 26, whether they live at home, are married, attend school or are employed. As a result of these changes, the U.S. Department of Health and Human Services estimates that more than 2.4 million Washington state residents no longer worry about lifetime limits on health benefits, more than 62,000 young adults gained insurance coverage through their parents’ health plans and people on Medicare saved more than $94 million on prescription drugs.

In 2014, the focus shifts to making health care available to all, regardless of health history or the ability to pay. As of January 1, most Americans will be required to have health insurance. Individuals who can afford to pay for insurance and don’t comply will be subject to a penalty in 2014 of $95 per adult, up to $285 for a family or 1 percent of income, whichever is greater, with penalties increasing during the next two years. Other big reforms include the elimination of preexisting condition denials for adults and the creation of an online insurance exchange with plans required to include a defined set of essential benefits, including preventive, pediatric and maternity care. Medicaid will be expanded—in states selecting this option—to assist low-income residents and their families in gaining access to insurance. At press time, the state Legislature appeared likely to adopt the expansion in Washington state.

Expansion of Medicaid is expected to provide insurance coverage for the most economically stressed. “In King County, good health is out of reach for an estimated 280,000 people who do not have health insurance and access to preventive care,” says Chad Horner, board chair for HealthPoint, which operates 17 medical and dental clinics in King County.

Those who already have insurance they like don’t need to make any major changes in 2014 and will have noticed their insurance companies already modifying plans to comply with federal requirements like preventive care. According to the Washington State Office of the Insurance Commissioner, companies with more than 50 employees will be required to provide affordable health insurance, but those with fewer than 50 employees will not. People who don’t have insurance will have new options for purchasing insurance through the Washington Healthplanfinder (wahbexchange.org), “which will allow hundreds of thousands of residents statewide to easily find, compare and enroll in quality health care plans they never have had access to before,” Onizuka says.

For people with moderate or limited incomes, cost is a big concern. Those not covered through their employers who buy through the state exchange may be eligible for help with insurance costs, depending on family size and income levels. A family of four with an annual income of less than $94,200 will be eligible for a tax credit to offset the cost of insurance premiums.

What shouldn’t get lost in the conversation about coverage is how reforms will affect the health care experience. With the probable expansion of Medicaid and hundreds of thousands of residents insured for the first time through exchanges, some think a shortage of primary care providers could derail certain hoped-for results. The Washington State Office of Financial Management forecasts that 11 urban areas, including King, Snohomish and Pierce counties, will be able to accept the increase in new Medicaid patients with the current primary care capacity, but that rural counties will face challenges.

Providers around the region are already shifting the way care is delivered. “We need new models for primary care,” says Armstrong, whose organization redefined its primary care with the introduction of the medical home model, a patient-centered approach using teams (doctors, nurses, physician assistants, pharmacists, etc.) to care for patients, adding electronic medical records for efficient access to patient information, introducing doctor-patient email communication and redesigning some of its facilities to provide all the services a patient needs to gain access in one location. These changes have resulted in happier and healthier patients—and lower overall health system costs for Group Health.

New patients need to take the initiative, especially in selecting a primary care physician. The Everett Clinic’s Cooper emphasizes the importance of coordinated care where the primary care physician takes the lead in planning and managing a patient’s care with specialists, hospitals, pharmacists and even nursing facilities. “This type of care management will be especially important as patients come into the market for the first time or after a long absence,” Cooper says. “Many will have chronic conditions such as diabetes, asthma, heart disease and hypertension.” Comprehensive and coordinated care will assure better health at lower costs, he adds.

“In an ideal world, this legislation would increase access to care, improve quality and make health care more affordable,” Cooper says. “Much will depend on how the law is implemented in 2014. Then we will know if the national effort to improve health care qualifies as true reform.”

One-Stop Shopping

Washington was one of the first states to receive conditional approval of its health benefit exchange by the U.S. Department of Health and Human Services. By May of this year, 24 health and dental insurance carriers had notified the state of their intent to participate in the exchange. Many currently offering plans in Washington for groups and individuals will continue to after the exchange opens. But the plans offered specifically for the exchange will be available only during open enrollment this fall, with an effective date for coverage of January 1, 2014. Richard Onizuka, CEO of the Washington Health Benefit Exchange and its consumer marketplace known as Washington Healthplanfinder, says the exchange will be “a one-stop shop allowing consumers to make apples-to-apples comparisons between plans, determine eligibility for tax credits or less expensive co-pays and deductibles, and receive personal assistance in finding, selecting and enrolling in the right health plan.” Some dates to remember:
September 2013: Washington Healthplanfinder (wahbexchange.org) call center opens, providing detailed information about state exchanges to individuals, families and small businesses.
October 1, 2013: Open enrollment begins for coverage starting January 1, 2014.
March 31, 2014: Enrollment period for 2014 closes.
October 15, 2014: Open enrollment period for 2015 begins. 

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