Friday Variety: Anthem Rate Hikes, Gene Patenting, & Arizona Medicaid Bill

Anthem Blue Cross To Raise Small Business Premiums
California Insurance Commissioner Dave Jones has intensified his campaign against rising health insurance rates by asking officials working with Covered California to bar Anthem Blue Cross from it's state health exchange. Jones stated that Anthem's intends to increase small business health insurance premiums (businesses with 50 or fewer workers) by 11%.  He called this rate hike "unreasonable" and accused the company of overstating its projected medical costs and improperly adding fees related to federal healthcare law.

Under state law, Jones can assess rate hikes and request to exclude them, but he lacks the authority to block Anthem's rate increase from taking effect this month (Terhune, Los Angeles Times, 6/13).

Anthem spokesman Daryl Lang says that Anthem's rate hikes are consistent with the economic reality of rising healthcare costs, and that its exclusion from the exchange would hinder competition.

Nonetheless, Anthem has actually imposed three rate hikes for small businesses over a seven-month period:

• 10.6% rate hike announced in January;
• 10.5% rate hike announced in March; and
• 7.6% rate hike scheduled to take place July 1 (Robertson, Sacramento Business Journal, 6/13)

(Read more: http://www.californiahealthline.org/articles/2013/6/14/jones-wants-anthem-excluded-from-small-business-exchange.aspx#ixzz2WCmqnuKy)

Meanwhile, Jones has praised UnitedHealth Group Inc. for cutting worker premiums for such small businesses.

Covered California will announce final health plans and rates for small businesses this August.

Supreme Court Rules Human Genes May Not Be Patented

The Supreme Court announced a unanimous ruling Thursday that naturally occurring human genes may not be patented. As a result, the costs of of getting gene tests are likely to drop as other companies can now compete with Utah-based Myriad Genetics, against whom the claims in this case were brought.

Synthetically produced genetic material, however, may still receive patent protection.

Arizona "Sweet Victory:" Medicaid Expansion Bill Passed

Thursday afternoon, the Arizona legislature approved a Medicaid expansion bill after a three-day special session.  This approval comes five months after Arizona Gov. Jan Brewer vowed to pass Medicaid expansion in her state. The bill, part of the state budget, must clear a final vote in each chamber before it goes to Brewer for her signature.

Their Loss Is Our Gain

Say what you will about the shortcomings of the ACA,  but the healthcare reform has already proven to lower costs. One catalyst for this cost savings has been the change to the medical loss ratio (MLR).

Consumers pay a monthly premium to health insurers, who then use those funds to pay for health care claims, administer coverage, market products, and earn profits for investors. Under the ACA, the new MLR provision requires insurance companies to spend 80-85% of premium dollars on actual medical care and quality improvement (up from the average 70-77% spent on on these prior to the new law). Therefore, no more than 15-20% of those premiums can go toward administrative costs.  This means that insurance companies have been forced to increase efficiency and give consumers more bang for their buck.

There are two ways that consumers have realized cost savings due to the MLR standard: (1) lower premiums, and (2) consumer rebates.  Insurers are required to set consumer premium rates at a level where they would be paying out the minimally acceptable share of premiums back as benefits.  This has already resulted in lower consumer premiums across the board.  If, however, insurers spend less than the required amount on health care and quality improvements (that is, less than the required 80-85%), insurance companies must issue consumers a rebate.  Last year, alone, over 13 million consumers received $1.1 billion in rebates (about $151 per consumer)!



Of course, the federal government made adjustments on a state-by-state basis if it was determined that the 80% MLR standard could destabilize the state's individual insurance market. Although these adjustments dipped as low as 65% in some states, all states are expected to reach 80% by 2014.

For more information, see the Kaiser Family Foundation Fact-Sheet explaining the MLR requirements.