Thursday, July 11, 2013

Government Cannot Do Without Private Health Plan Management

Obamacare and Health Exchanges
An intermediate agent or agency: A go-between or mediator.
Intermediary definition

Health plans – HMOs, PPOs, HSAs, and variants – routinely  serve as intermediaries between employers (commercial market) and government (Medicare, Medicaid,  Federal Employees Health Benefit, and Medicare Supplement markets) and patients.
Health plans are powerful  and indispensable intermediaries in national health reform and their participation in the health exchange sign-up process may dictate the success of these exchanges.   The total revenues of America’s health plans are in the neighborhood of $500 billion. This compares to federal expenditures of over $1 trillion for Medicare, Medicaid, and other federal health progmra.    If not enough  health plans choose not to participate in the exchanges,  it will severely limit patient choice, one of the cardinal Obamacare promises.
That health plans may be reluctant exchange players should surprise no one.   Obamacare has cut health plan  profits by covering everyone with pre-existent illnesses,   all children,  young adults up to age 16 under their parents plans,  requiring rebates if plans spend too much on nonclinical functions ($500 million this year),  intervening or investigating premium increases of over 10% in any given year, not to mention paperwork and manpower needed to meet government regulations.
Health plans are easy entities to hate, for government, who has so far been unable to control costs, health plans  serve as an easy political  target when premiums rise,  for patients who must pay the premium piper, when premiums double or triple in individual or small group markets, and for physicians , who must deal with the restrictions of what can and cannot be done, who must accept health plan fees, and who must hire extra staff to deal with gaining permission for procedures and tests and delaying payments.
The government angst is understandable.   But the reality is that Medicare, Medicaid, and other government programs could not function without private health plans,  and private health plans could not prosper and grow without managing government programs.
The percent of health plan revenues from government sources include:
·         Managed Medicare, including Medicare Advantage Plans,    22.3%

·         Managed Medicaid,   16.0%

·         Federal Employee Health Benefit Plans,  7.4%

·         Medicare Supplement Plans,   1.9%
Add these figures, and the total comes to 47.6% of private plan revenues.   What’s important about his total? It exceeds the 47.0%  health plans now garner from “commercial policies” that cover over 158 million Americans.   There is a rapid shift from traditional private plans to plans covering those in government programs.  This shift will escalate as 10,000 baby boomers become Medicare eligible and 30 million more Americans become Medicaid and subsidy-eligible in 2014 if Obamacare survives, which is not a sure thing.
As you read these figures, keep in mind many of the major health have already chosen not to participate in the health exchanges. To date,  the number of plans opting to be in the exchanges have varied from 1 (in New Hampshire) to 13 California.

Tweet:  Health plans are a $500 billion industry, half their revenues come from managing Medicare,  Medicaid,  FEHBP,  and Medicare Supplement plans.

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