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The Insurance Value of Medical Innovation

March 26, 2015 Comments off

The Insurance Value of Medical Innovation (PDF)
Source: National Bureau of Economic Research (via University of Chicago)

Economists think of medical innovation as a valuable but risky good, producing health benefits but increasing financial risk. This perspective overlooks how innovation can lower physical risks borne by healthy patients facing the prospect of future disease. We present an alternative framework that accounts for all these aspects of value and links them to the value of health insurance. We show that any innovation worth buying reduces overall risk, thereby generating positive insurance value on its own. We conduct two empirical exercises to assess the significance of our insights. First, we calculate that conventional methods underestimate the value of historical health gains by 30-80%. Second, we examine a large set of medical technologies and calculate that insurance value on average adds 100% to the conventional valuation of those treatments. Moreover, we find that the physical risk-reduction value of these technologies is ten times greater than the financial risk they pose and the corresponding value of health insurance that insures this financial risk. Our analysis also suggests standard methods disproportionately undervalue treatments for the most severe illnesses, where physical risk to consumers is most costly.

CRS — Health Insurance Premium Credits in the Patient Protection and Affordable Care Act (ACA) in 2015 (March 18, 2015)

March 25, 2015 Comments off

Health Insurance Premium Credits in the Patient Protection and Affordable Care Act (ACA) in 2015 (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

New federal tax credits, authorized under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended), first became available in 2014 to help certain individuals pay for health insurance. The tax credits apply toward premiums for private health plans offered through exchanges (also referred to as health insurance marketplaces). The ACA also established subsidies to reduce cost-sharing expenses.

Health insurance exchanges operate in every state and the District of Columbia (DC), per the ACA statute. Exchanges may be established and administered by states, the federal government, or a combination of both. Exchanges are not insurers, but they provide eligible individuals and small businesses with access to private health insurance plans. Generally, plans offered through the exchanges provide a comprehensive set of health services and meet all of the ACA’s insurance market reforms, as applicable.

The new premium credits established under the ACA are advanceable and refundable, meaning tax filers need not wait until the end of the tax year to benefit from the credit and may claim the full credit amount even if they have little or no federal income tax liability.

New Hepatitis C Treatments: Considerations and Potential Strategies for States

March 24, 2015 Comments off

New Hepatitis C Treatments: Considerations and Potential Strategies for States
Source: National Governors Association

The National Governors Association Center for Best Practices (NGA Center) convened an expert roundtable to discuss the opportunities and challenges presented by new hepatitis C virus (HCV) treatments and other pharmaceutical therapies known as high-impact drugs. Such drug treatments share the common characteristics of being more effective than prevailing drug therapies, often resulting in a change in clinical practice that includes treating many more people and being much more expensive. Experts participating in the roundtable included state health care leaders, scientists, national health care experts, subject-matter experts from insurance and pharmaceutical companies, Medicaid and corrections legal experts, and senior staff from the U.S. Department of Health and Human Services (HHS) and the U.S. Department of Veterans Affairs (VA). This paper summarizes the expert roundtable discussion supplemented by NGA Center research to flesh out the background information and strategies discussed.

Small Area Health Insurance Estimates: 2013

March 17, 2015 Comments off

Small Area Health Insurance Estimates: 2013
Source: U.S. Census Bureau

The estimates show the number of people with and without health insurance coverage for all states and each of the nation’s roughly 3,140 counties. The statistics are provided by selected age groups, sex, race and Hispanic origin (state only), and at income-to-poverty levels that reflect the federal poverty thresholds for state and federal assistance programs. The Small Area Health Insurance Estimates program is the only source of single-year health insurance estimates for every county in the U.S.

Changes in Emergency Department Use Among Young Adults After the Patient Protection and Affordable Care Act’s Dependent Coverage Provision

March 12, 2015 Comments off

Changes in Emergency Department Use Among Young Adults After the Patient Protection and Affordable Care Act’s Dependent Coverage Provision (PDF)
Source: Annals of Emergency Medicine

Study objective
Since September 2010, the Patient Protection and Affordable Care Act has allowed young adults to remain as dependents on their parents’ private health plans until age 26 years. This insurance expansion could improve the efficiency of medical care delivery by reducing unnecessary emergency department (ED) use. We evaluated the effect of this provision on ED use among young adults.

Methods
We used a nationally representative ED visit database of more than 17 million visits from 2007 to 2011. Our analysis compared young adults aged 19 to 25 years (the age group targeted by the law) with slightly older adults aged 27 to 29 years (control group), before and after the implementation of the law.

Results
The quarterly ED-visit rate decreased by 1.6 per 1,000 population (95% confidence interval 1.2 to 2.1) among targeted young adults after the implementation of the provision, relative to a comparison group. The decrease was concentrated among women, weekday visits, nonurgent conditions, and conditions that can be treated in other settings. We found no effect among weekend visits or visits due to injuries or urgent conditions. The provision also changed the health insurance composition of ED visits; the fraction of privately insured young adults increased, whereas the fraction of those insured through Medicaid and those uninsured decreased.

Conclusion
The Patient Protection and Affordable Care Act dependent coverage expansion was associated with a statistically significant yet modest decrease in ED use, concentrated in the types of ED visits that were likely to be responsive to changes to insurance status. In response to the law, young adults appeared to have altered their visit pattern to reflect a more efficient use of medical care.

Consumer Assets and Patient Cost Sharing

March 12, 2015 Comments off

Consumer Assets and Patient Cost Sharing
Source: Kaiser Family Foundation

Higher cost sharing in private insurance has been credited with helping to slow the growth of health care costs in recent years. Plans with higher deductibles and other point of service costs provide health plan enrollees with incentives to make more cost conscious health care choices. For families with limited resources, however, high cost sharing can be a potential barrier to care and may lead these families to significant financial difficulties. Many current policies expose individual enrollees to thousands of dollars in cost sharing expenses and family expenses can easily top ten thousand dollars when someone becomes seriously ill.

While concerns about cost sharing are not new, the recent coverage expansions under the ACA put a new focus on what it means for coverage to be affordable. The goal of the law was to cover more of the uninsured, many of whom have limited means. The law requires most people to have health insurance, if they can afford to pay the premium, or to pay a penalty. The issue for some families, however, is that the policies with affordable premiums may have cost sharing requirements that would be difficult for them to meet when they access services. Many of the policies in the state and federal marketplaces have significant cost sharing, as do many policies provided to people at work [here]. The ACA provides cost-sharing assistance to some, primarily to those with incomes below 200 percent of poverty purchasing through a state or the federal marketplace (see sidebar). Others potentially face much higher out-of-pocket expenses.

We use information from the 2013 Survey of Consumer Finances to look at how household resources match up against potential cost-sharing requirements. We assume that households pay premiums out of current income, but that they may need to use savings or other assets if they become seriously ill in order to meet the deductible or the out-of-pocket limit under their health insurance policies. We show that many households, in particular those with lower incomes or where someone lacks insurance, have low levels of resources that would make it difficult for them to meet health insurance cost sharing demands.

See also: The Cost of Care with Marketplace Coverage

Premium rate filing implications of King v. Burwell

March 10, 2015 Comments off

Premium rate filing implications of King v. Burwell (PDF)
Source: American Academy of Actuaries (Letter to Sylvia Mathews Burwell, Secretary of the U.S. Department of Health and Human Services)

On behalf of the American Academy of Actuaries’ Health Practice Council, I would like to urge you to consider implementing measures to counter the potential adverse consequences on health insurance premium rate filings in the event the Supreme Court rules for the petitioners in King v. Burwell . If no action is taken to allow enrollees access to premium subsidies in states participating in the federally facilitated marketplace (FF M ) , there will be fewer individual market enrollees and higher average healt h care costs in those states . As a result, premiums for 2015, which are already in place, and premiums for 2016, which need to be submitted prior to the court’s ruling, would likely be inadequate to cover claims . The U.S. Department of Health and Human Services ( HHS ) and state authorities should consider allowing contingent premium rate submissions and/or revised submissions to help mitigate the potential for inadequate 2016 premiums in FFM states .

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