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by Leila Morris
IN CALIFORNIA
• California Fails in Price Transparency
• Bills to Watch in California
• Covered California Offers Extension
• Defrauded Seniors Get Restitution
• San Francisco Health Plan Reaches 100,000 Member Milestone
• Navera Teams Up With Benefits Coordinators Corporation
HEALTHCARE
• Americans Expect Obamacare Fixes, Not Repeal
• Medicare Legislation Would Prevent Drastic Payment Cuts
• Bill Would Increase Access to Agents, Brokers
• Moving Toward A 21st Century Health Care System
• Health Exchange Webinar Tomorrow
• Out-of-Pocket Costs Affect Adherence to Specialty Meds
FINANCIAL PLANNING
• Target-Date Strategies to Dominates 401(k)s
• The Barriers to Financial Literacy
INDUSTRY OVERVIEW
• A Transformative Period for the Insurance Industry
NEW PRODUCTS
• Accelerated Death Benefits
IN CALIFORNIA
California Fails in Price Transparency
California gets an F when it comes to consumer’s ability to find information on health care costs. In fact, this information is almost completely unattainable to consumers, according to a report by the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute. Yet recent studies suggest consumers are asking for this information. The five main groups of consumers with a significant interest in price information are those with high-deductible plans, those in plans that promote participants to choose cost-conscious providers, those who are shopping for elective or non-emergency procedures and surgery or shoppable conditions, those who are seeking maternity care and/or routine procedures such as screenings, and those who are under 44.
For more information, visit http://www.catalyzepaymentreform.org/images/documents/2014Report.pdf.
Bills to Watch in California
California Health Underwriters outlines several bills to watch in the state legislature. CAHU supports the following bills:
• AB 369 would require a health plan to arrange for a nonparticipating provider to complete covered services. This applies to newly covered enrollees and insureds under an individual plan contract or policy whose prior coverage was withdrawn from the market from December 1, 2013 to March 31, 2014. Policyholders with certain conditions, such as such as cancer or pregnancy, could ask the new plan or policy to cover services from their existing provider.
• AB 1507 applies to individual or small employer health benefit plans that don’t qualify as grandfathered health plans. Plans that were in effect on October 1, 2013 could be renewed until October 1, 2014 and continue to be in force until December 31, 2014.
• AB 1829 would prohibit the California Health Benefit Exchange from hiring or contracting with or employing a person who has been convicted of specified crimes. It would apply if the person is involved in facilitating enrollment in qualified health plans or has access to the financial or medical information of Exchange enrollees or applicants.
• AB 1830 would require exchange contractors, subcontractors, vendors, volunteers, and employees to follow the ACA’s privacy requirements. Any individual or entity that knowingly and willfully misuses personal information would be hit with a $25,000 fine.
• AB 1831 applies to taxable years beginning January 1, 2014. It would allow a deduction for medical insurance and transportation for essential medical care from gross income under the Personal Income Tax Law.
• AB 2433 would extend access to catastrophic plans to anyone whose plan was cancelled from December 1, 2013 to March 1, 2014.
• SB 972 would add two members to the California Health Benefit exchange Board who have expertise in health insurance products, information technology systems, and consumer service.
• SB 1034 would require that new hire waiting periods contain a reference to the 90-day waiting period provision in the federal ACA. CAHU supports this bill if amended.
• SB 1052 would require the California Health Benefit exchange’s annual report to include the number of uninsured Californians as a percentage of the state population as well as an independent evaluation of the Exchange’s marketing and outreach and enrollment activities.
• SB 1100 would require a health care service plan to include a notice of the process to obtain continuity of care in every evidence of coverage issued after January 1, 2015. A plan would have to provide a written copy of this information to contracting providers and provider groups. I would also have to provide a written copy of this information to enrollees upon request.
• SB 1124 would permit the group contract holder to promptly e-mail to each subscriber a copy of any notice of plan cancellation.
CAHU opposes the following bills:
• AB 1877 proposes to a Vision Care Council exchange marketplace within the California Health Benefit exchange. CAHU says that no additional structures should be added until the existing exchange works as planned and promised.
• AB 1917 would prohibit insurers from charging prescription co-pays that are higher than 1/24th of the annual out-of-pocket maximum for enrollees in a silver level plan who do not make more than 400% of the poverty level. CAHU is concerned that this mandate would shift costs to other health care consumers.
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• AB 2347 applies to disability and life insurance policies. Under current law, people 65 and older have a 30-day period to return a disability or life insurance policy contract and get a refund on all premiums and membership fees. This bill would specify that those requirements apply to individual and group disability and group life insurance policies and certificates. The bill would require the notice to be in 12-point bold type. CAHU opposes the bill unless amended.
Covered California Offers Extension
At times, Covered California’s website has buckled under the pressure of the number of people trying to enroll at the last minute. So Covered California is allowing them to work with a certified delegate to finish their application by April 15. Consumers who were unable to create an online account or start their online application because of technical difficulties can contact Covered California Service Center representatives, Covered California Certified enrollment counselors, Covered California certified insurance agents, certified plan-based enrollers, and county eligibility workers to explain that they attempted to get through on March 31 and experienced difficulties. Those consumers will have until 11:59 p.m., April 15 to work with the assister to complete their application and choose a plan. Covered California executive director Peter V. Lee said, “We have always said that if high website traffic impedes the ability of consumers to apply online for coverage by the deadline, we will help those people cross the finish line, “We were prepared for a last-minute surge of people coming to our website, but sometimes there’s only so much you can do operationally. While we had hoped people would start the enrollment process earlier, we can’t in good conscience turn people away who simply couldn’t get onto the website on the last day.” Enrollment has surged passed 1.2 million.
Defrauded Seniors Get Restitution
Michael Woodward’s property and other assets were seized and sold to provide at least partial restitution to the seniors and families he ripped off, according to the California Dept. of Insurance. For nearly a decade, Michael and Melissa Woodward sold phony insurance premiums to the elderly for a prepaid annual fee. They promised a services agreement that supposedly included unlimited non-medical services, such as cooking, cleaning, bathing, dressing, laundry and shopping. Despite the Woodwards’ attempts to get more and more money from the seniors they preyed on, these services were not delivered. Michael Woodward, 50, plead guilty to multiple felony counts including residential burglary, theft from an elder, and other charges for their roles in scamming more than 230 San Diego area senior citizens out of $1.9 million. He also got an 11-year sentence in state prison. Melissa Woodward, 47, pled guilty to failure to file a tax return. Assets have been liquidated and the funds are in the process of being distributed to victims.
San Francisco Health Plan Reaches 100,000 Member Milestone
San Francisco Health Plan (SFHP) has surpassed 100,000 members. SFHP provides health coverage in the Medi-Cal, Healthy Workers, and Healthy Kids programs. Combined with individuals served in Healthy San Francisco, the plan provides services to over 140,000 residents of San Francisco. That’s over 17% of the entire population of San Francisco, which is one out of every six residents. SFHP has received the California Department of Health Care Services Gold Award each of the last six years. For more information, visit www.sfhp.org,
Navera Teams up with Benefits Coordinators Corporation
Navera has finalized a re-seller agreement with Benefit Coordinators Corporation (BCC). Navera provides cloud-based education and decision support products to help people make well-informed decisions about their benefits and insurance options. BCC will incorporate Navera’s interactive animated education and decision support into its BenXcel benefit administration system. BCC has nearly 1,000 employer clients across the U.S. For more information, visit www.navera.com.
HEALTHCARE
Americans Expect Obamacare Fixes, Not Repeal
An Associated Press-GfK survey finds that only 26% of Americans support the Affordable Care Act. But only 13% expect it be repealed. Fifty-nine percent of those who said they or someone in their household tried signing up for coverage said there were problems. Seventy percent of Americans believe the law will be implemented with changes. Forty-two percent think those changes will be minor, and 30% say they think major changes are in store. Combining the 42% who see minor changes coming and 12% who say they think the law will be implemented as passed, a narrow majority of 54% see tweaks in store, or no changes at all. Soon after the law passed in April of 2010, 50% of Americans were opposed to it while 39% were in favor. Ten percent were on the fence. Now, just 26% are in favor, a drop of 13%. Forty-three percent say they are opposed, a 7% drop compared to four years ago. But the number who neither support nor oppose the law has tripled to 30%.
Medicare Legislation Would Prevent Drastic Payment Cuts
President Barack Obama signed into law the Protecting Access to Medicare Act (H.R. 4302). The bill will halt a 24% reimbursement cut to Medicare providers. It will also eliminate the $2,000 deductible cap on small group health plans. Janet Trautwein, CEO of NAHU explains that many carriers have pulled out of Medicare, leaving thousands of beneficiaries in limbo. Addressing the physician payment will avert a similar crisis by ensuring continued access to physician services. The bill also includes bipartisan legislation to repeal the Affordable Care Act’s statutory cap on deductibles for health plans in the small group market; a provision that Trautwein says the ACA’s inflexible deductible caps would force a majority of small group plans to put employees through significant and often higher premium plan re-design, including raising premiums, increasing copays, or stripping benefits to comply with the cap. She said that H.R. 4302 ensures stable and affordable private insurance coverage options and generates significant taxpayer savings.
Bill Would Increase Access to Agents, Brokers
The National Association of Health Underwriters (NAHU) applauds Senator Mary Landrieu (D-LA) for introducing two bipartisan proposals calling on HHS to increase consumers’ access to professionally licensed insurance agents and brokers through the federal exchange. The following is a summary of a statement by Janet Trautwein, CEO of NAHU:
The Enhancing Access for Agents and Brokers Act calls for a dedicated hotline for broker enrollment and policy questions, a listing of all certified agents on healthcare.gov and a fix to the agent identification issue that has plagued the system since day-one of open enrollment. The bill would also require HHS to inform the agent community of all policy changes relative to qualified health plans and exchange enrollment within five business days, including specific information about how agents can best help their clients take advantage of any policy or regulatory changes in a timely manner. The CHOICE Act will make improvements to the direct enrollment process for independent agents, including making improvements that will allow independent agents better access to web-based entities.
Moving Toward a 21st Century Health Care System
Speaking to at the Care Innovation Summit on February 27, HHS secretary Kathleen Sebelius highlighted significant progress toward a 21st century health care system while acknowledging that there is much more to be done. Archived video of Sebelius’s presentation and other key sessions from the Summit are newly available at http://www.advisory.com/care-innovation-summit-2014/recording. “We have moved an entire health system into a technological age,” she noted, referring to the fact that over 50% of U.S. hospitals have electronic health records. She also stressed that recent HHS initiatives have shown that “when you remove the barriers to innovation, you can actually hold down costs while lifting entrepreneurs up and getting better health results.” Patrick Conway, MD, director of the Center for Medicare and Medicaid Innovation said that one program to reduce hospital readmissions helped decrease Medicare readmission rates from 20% in January 2012 to 17.5% in January 2013. That translates to more than 130,000 avoided readmissions. Dr. Conway said, “We are on the right path but need to increase the pace.” Peter Orszag, vice chairman of Corporate and Investment Banking at Citigroup, says that health care spending is slowing because providers are projecting a significant change in how they are paid. Half of facility revenue is projected to be value-based in the next three to five years. Chet Burrell, CEO of CareFirst BlueCross BlueShield cited his company’s success in establishing patient-centered medical homes with providers. Dr. Conway compared it to Bellin-Thedacare Healthcare Partners’s ACO, which lost money because other payers were not willing to align payment models. Dr. Conway said, “We need to align incentives so that … this becomes financially sustainable because we’ve aligned the private payer, the Medicaid, and the Medicare market.” Visit www.advisory.com to see a summary of several summit sessions.
Health Exchange Webinar Tomorrow
Connecture is hosting an interactive webinar on private exchanges on April 3 at 10:00 a.m. To register, visit https://www2.gotomeeting.com/register/886171234
Out-of-Pocket Costs Affect Adherence to Specialty Meds
Pharmacy plan members who face specialty drug out-of-pocket costs of less than $250 are more likely to take their medication, according to a study by Prime Therapeutics. Eleven percent of members with MS therapy had more than $1,000 in out-of-pocket costs for their first prescription. The same was true with and 10% of members prescribed new biologic anti-inflammatory therapy. Only about two thirds had less than $100 in out-of-pocket costs. As costs rise, members are more likely to abandon their new prescriptions. Abandonment rates were significantly higher when out-of-pocket reached $250. Additionally, when out-of-pocket reached $2,000 or more, the number of members abandoning their new MS prescription was nearly 24 times higher compared to members with less than $100 in out-of-pocket costs. Similarly, the number abandoning a biologic anti-inflammatory prescription was more than 19 times higher. For more information, visit www.primetherapeutics.com.
FINANCIAL PLANNING
Target-Date Strategies to Dominates 401(k)s
Cerulli Associates predicts that target-date strategies will capture 63% of 401(k) contributions in 2018. Plan sponsors, consultants, and advisors have increased focus on target-date decisions along with an increase in plan assets allocated to target-date funds, says Bing Waldert, director at Cerulli. The leaders among target-date providers have not changed during the past three years, but below the top tier, some asset managers have demonstrated the ability to grow their target-date assets.
Target-date managers that remain in the market must demonstrate risk management expertise, Waldert explains. The majority of target-date managers believe that asset allocation and risk management capability will be the primary drivers of growth over the next three years. Managers should consider tying the assumptions underlying asset allocations to the needs of a given situation, Waldert continues. Cerulli warns that asset managers must have a strategy to grow market share of target-date assets; otherwise they risk irrelevance in the defined contribution space.
The Barriers to Financial Literacy
Three out of five adults see a correlation between financial literacy and retirement readiness, so why do only 46% of Americans seek financial knowledge? The answer lies in the complexity of financial products, according to 45% of adults surveyed by Genworth. Other roadblocks include a lack of time (37%) and uncertainty about how to get started (18%).
Psychologist and money coach, Dr. Barbara Nusbaum explains that Americans are overwhelmed by the complexity of financial products, the time it takes to improve their financial knowledge, and a disconnect between financial needs and personal needs. Women are much less likely to seek financial knowledge. Sixty-one percent of men and 34% of women say they seek to deepen their understanding of financial matters. Forty-eight percent of women and 39% of men say that the complexity of financial products is the biggest roadblock to learning more about financial matters. Men and women say that having a one-on-one meeting with a financial advisor is the way they would most like learn about financial matters and products. Forty-three percent of those surveyed would turn to an advisor first for financial education. Suly Salazar-Layton, Genworth’s director of Practice Management said, “It’s a good idea to look for a financial professional who starts by asking questions and really listens. Instead of starting by discussing products, it’s important that they ask consumers about their needs and concerns. Once the consumer’s priorities are clearly understood, together, they can identify appropriate solutions.”
Dr. Nusbaum also offers a few easy tips to become more financially prepared:
Make financial literacy personal. List the now, later, and much-later hopes for yourself and your family.
Speak to a financial professional to help you attain these goals. Find a financial professional through friends, colleagues, and family.
When speaking to your financial professional, focus on the financial services and products that can help you reach your specific goals.
If you don’t understand a financial service or product, ask your financial professional to explain it until you do. Don’t be embarrassed. They want to help.
If it’s hard to find time, start with small, easy steps like educating yourself through financial websites.
Genworth offers the following resources:
Tips for initiating family conversations about retirement and planning: www.genworth.com/lets-talk.html
Genworth’s Facebook page with financial tips, polls, and discussions: www.facebook.com/pages/Genworth/165752860178415
A cost of long-term care map: www.genworth.com/corporate/about-genworth/industry-expertise/cost-of-care.html
Annuity planning tools and an educational video: www.genworth.com/products/annuity.html#tab1-tab
An explanation of different types of life insurance with calculators to determine how much life insurance you may need: www.genworth.com/products/life-insurance.html#tab1-tab.
INDUSTRY OVERVIEW
A Transformative Period for the Insurance Industry
The insurance industry is facing rapid demographic and technological change, according to a report by PwC US. Insurers can adapt and thrive, especially if they take advantage of emerging technologies to improve their operations and serve customers, according to Jamie Yoder, insurance advisory practice leader for PwC US. Insurers will need more sophisticated financial reporting, risk management, and analysis to address complex measurement and disclosures, regulatory requirements, and market expectations.
Over the past few decades, the life market share has significantly declined even though there is still a clear need for protection in a time of economic uncertainty. At the same time, many property and casualty insurers have struggled to overcome the commoditization of much of their product lines. Improvements in customer and market data have created new distribution and communication channels, which are changing business and relationship management. Successful carriers will address a household’s holistic long-term and even multi-generational needs.
Anand Rao, insurance advisory practice principal, PwC US said, “It’s crucial for insurers to address generations X and Y and other typically underserved groups…Younger customers demand simplicity, transparency, and the ability to engage with insurers when and where they prefer. Insurance providers who don’t recognize and address these changes will miss an opportunity with people they must successfully target in order to grow and survive.” The insurance industry is entering an era in which carriers can change their policy administration, claims and billing systems with less risk and more control as a result of aging legacy platforms, complicated market demands, and maturing vendor landscape. Focusing on speed to market, operational efficiency, and IT improvements will help some insurers beat out competitors. An overarching goal for insurers in 2014 should be to create a system that provides a consistent customer experience and gives agents the most vital information. Also key is to improve data analytics and meet goals for IT spending and underwriting. For more information, visit www.pwc.com/us/insurancetopissues.
NEW PRODUCTS
Accelerated Death Benefits
AIG launched Elite Index II. The cost-effective universal life insurance policy comes with simplified guarantees, an optional chronic illness accelerated benefit rider, and increased cap rates (now at 13%). Higher participation rates (now at 70%) provide more opportunity for growth in a well-performing market. Elite Index II is offered with the Accelerated Access Solution. In the event of a chronic illness, policyholders have the option to accelerate the death benefit, income-tax free (based on current tax laws). For more information, visit www.RetireStronger.com.