Good news for the 49 million Americans who are enrolled in Medicare Part B: premiums and deductibles will be the same for 2015 as the last two years.

According to the U.S. Department of Health and Human Services, Part B monthly premiums will hold at $104.90 and the annual deductible at $147.00. Since 2007, Part B beneficiaries with higher incomes have paid higher monthly premiums. These income-related monthly premium rates, which affect less than 5 percent of people with Medicare, will also remain the same as they were in 2014.

Part B covers “physicians’ services, outpatient hospital services, certain home health services, durable medical equipment,” among other things.

HHS Secretary Sylvia Burwell attributed the stable premiums and deductibles to lower health care cost growth within Medicare since the passage of the Affordable Care Act. Medicare spending grew just 0.8 percent annually over the past four years, much lower than the 3.1 percent annual increase in per capita GDP over the same period.

“The Affordable Care Act is working to improve affordability and access to quality care for seniors and people with disabilities,” said Secretary Burwell.

Stable premiums and deductibles leave more money in the pockets of seniors, who may already be limited by fixed incomes and other financial constraints.

To read the entire press release, which includes tables detailing amounts that will be paid by beneficiaries based on income, click here.

Data recently released by the Obama administration predicts that the number of insurers providing plans on federal and state insurance exchanges will increase by 25 percent for the next open enrollment period, which begins November 15th, 2014. According to the administration, there were 252 insurers for the plan year 2014. The number will rise to 315 for the plan year 2015.

Economics 101 teaches that competition in a market is nearly always good for consumers. With just a few insurers in the game during the first open enrollment period – in some states such as New Hampshire and West Virginia, just one – insurers had great latitude with plan prices. The hope is that more players will drive down premiums and improve service.

There still may be unequal distribution of services between urban and rural areas in some states, which could mean the lower prices might not be available everywhere. But generally speaking, consumers will win when more insurers compete for their business.

For example, according to joint research done by Northwestern University and M.I.T., if all insurers in each state’s 2011 marketplace had participated in that state’s exchange in 2014, “premiums would have been 11 percent lower, saving $1.7 billion in federal premium subsidies.” And of course, consumers would also have benefitted directly from those lower prices.

More competition, more choices

An increase in the number of insurers participating on the exchanges will also give consumers more choices when it comes to plans. In 2014, United Healthcare, the largest insurer in the country, did not offer plans on the exchanges, adopting a wait-and-see attitude. United Healthcare will be participating on the exchanges for the 2015 OEP, with plans to expand to as many as two dozen states for next year.

For most insurers, the second time around for the open enrollment period is less of a gamble and more of a savvy move to capture new customers and greater market share.

How insurers compete matters

Of course, how insurers compete makes a difference. Most start by offering attractive plans at appealing prices. But often the key to winning in a market is to beat the competition by creating an “unfair” advantage over them. In the health care market, that could mean leveraging size and a large footprint to negotiate the best prices within provider networks. If an insurer is able to “lock in” the best prices with the most utilized networks in an area, that can neutralize the competition and opens to the door for the victor to charge premium prices or pocket the savings, though insurers are required under the ACA to spend either 80 or 85 percent of premium dollars on medical services.

Still, for consumers, the benefits of increased competition are almost always a no brainer. If they do their homework and choose wisely, they should be able to find a plan that meets their needs at a price they can afford.

Towers Watson has unveiled a new personalized decision support service that will help pre-Medicare retirees determine whether they are better off using a subsidy from their former employer or taking a tax credit from the federal government. Under the Patient Protection and Affordable Care Act, pre-Medicare retirees can use either a tax-advantaged employer subsidy or a federal tax credit to defray the cost of their health insurance premiums — but not both. The service is designed to help early retirees optimize their health insurance spending without “double dipping.”

Employer clients of Towers Watson’s OneExchange requested the service to make it easier for their early retirees to evaluate and enroll in health plans on the individual market. Retirees can take advantage of the service by phone through a OneExchange benefit advisor or go online and access a guided self-service tool at no charge.

For employers offering subsidies, Towers Watson will create and manage health reimbursement arrangements (HRAs) for their early retirees. Early retirees accepting employers’ funding have the option of buying individual plans directly from insurers or from public exchanges. Early retirees who accept a tax credit must choose plans from the public exchanges.

For more information about the new service, click here for the full release.

Towers Watson projects that total spending on health care by employers that participate in Towers Watson’s OneExchange for full-time active employees will grow just 1.8% from 2014 to 2015. That number includes both employer funding for coverage and employee contributions and out-of-pocket costs.

HealthCare-Spending-Gra

A growth rate of 1.8% is very close to the Consumer Price Index (CPI), which was 1.5% in 2013, and is significantly lower than both historical and projected market averages for health benefit cost increases. Keeping growth levels at or near the CPI is a must if employers are to avoid the PPACA’s excise tax on high-value health plans, also known as the “Cadillac tax,” which goes into effect in 2018.

By contrast, a 4% increase is expected in 2015 for midsize to large employers not using a private exchange but who are making some plan design changes. If employers make no plan changes, the projected increase is a 5.2%. Aon Hewitt recently announced a 5.3% projected cost increase in 2015 for employers using its private exchange.

For more on how OneExchange kept health spending growth low, click here for the full release.

We are happy to report that we’ll be serving the Ohio Public Employees Retirement System (OPERS) in 2016. For more details about OPERS and the transition, click here for the full press release.

Towers Watson released survey results showing that nearly one in four employers believe that private insurance exchanges could provide a viable alternative for their full-time, active employees as soon as 2016. So far, 28 percent have “extensively evaluated” the viability of private exchanges.

These results are from the 2014 Towers Watson Health Care Changes Ahead Survey, which was completed in July 2014 by 379 employee benefit professionals of midsize to large companies across a variety of industries.

Results from the survey also revealed the three primary reasons employers would adopt a private exchange: 1) if it was a better value than current self-managed model, 2) if other large companies in their industry adopted one, and 3) if the employer’s company was unable to get under the ACA’s excise tax ceiling coming in 2018.

Though employers are starting to consider the viability of private exchanges, they are not inclined to send active employees and their families to the public exchanges. Of the employers surveyed, 99.5 percent said they have no plan to exit health benefits for their active employees and send them to public exchanges.

This position is not likely to shift soon – 77 percent of employers were not confident the public exchanges would be a viable alternative for actives in either 2015 or 2016.

For additional details on these topics and others, click here.

Preventative care costs employers significantly less than treatment: think about the relative cost of helping employees lose weight compared to managing a chronic illness such as type 2 diabetes. As a result, an increasing number of employers are implementing wellness programs that engage employees and get results.

However, creating a successful wellness program often entails a trial-and-error process to find the optimal combination of programs and services, which takes time. And getting employees to participate in the programs and track their progress can be challenging.

Of the options employers have, “outcome-based incentives,” or rewarding employees based on specific benchmarks or goals, have been generally well received by employees. In contrast, penalties such as higher insurance premiums for not meeting fitness goals or continuing a risk-factor behavior such as smoking, have not. Simply put, while employees seem to like carrots, they don’t like sticks.

It’s no surprise then, that by 2017 as many as 76 percent of employers could have outcome-based incentives programs in place, according to the 2014 Towers Watson Health Care Changes Ahead Survey of 379 midsize to large U.S. employers. Today, 18 percent of respondents already have them in place, ten percent plan to implement them in 2015, and 48 percent are considering them for either 2016 or 2017.

Still, even though wellness programs are becoming more widespread and more sophisticated, they still have a long way to go.

According to the 2013/2014 Towers Watson Staying@Work Survey, less than half of employers surveyed describe any specific aspect of their health and productivity programs as successful. Employers report little success in achieving goals such as lower cost, fewer employee sick days, and reduced chronic disease and lifestyle-related risks in employee and dependent populations.

One obstacle to quantifying the success of wellness programs is that it takes a long time for a change in behavior to pay off in the form of an employee’s improved health and wellness.

Also, some people are simply healthier than others, meaning the most successful wellness program in the world won’t necessarily help an employee who for example, is genetically predisposed to have heart disease or arthritis.

And finally, wellness programs that target some behaviors work better than others. For example, studies have shown that participants in programs targeting exercise frequency or smoking cessation saw marked improvement, but participants in programs that focus on managing cholesterol levels did not.

So while pinning down ROI for wellness programs is tough in the short term, the potential for long-term health benefits is worth the time investment. For best results, employers are advised to select wellness programs that target behaviors where such programs have proven effective – and implement them with care and patience in equal measure.

Numerous news reports on the high cost of medical services and variations in price from region to region are bringing price transparency to the forefront – especially with more consumers empowered to select their own health plans – both on public exchanges and for employee-consumers via private exchanges. Savvy health care consumers are increasingly leery of trusting the first price they’re offered for a treatment or procedure – and they should be.

A recent article by KQED, a public radio station for Northern California, explains a new program that it has organized to bring clarity to the often-cloudy world of health care pricing by crowdsourcing pricing data. Listeners are invited to submit prices they paid for various procedures to an online tool called PriceCheck and compare those prices against those submitted by other listeners to get a sense of how much price variation to expect in the area.

PriceCheck data indicates the procedures that appear to be the worst offenders in price variation are:

  • Mammograms, reported to cost between $134 and $1,200
  • Back MRIs, which ranged from $255 to $3,700

PriceCheck is a voluntary, opt-in tool, so it doesn’t give comprehensive price comparisons. However, since such a tool does not yet exist for San Francisco Bay Area residents, the KQED PriceCheck tool is a helpful resource.

Consumers are increasingly advocating for price transparency nationwide, in some cases, sparking bidding wars for certain procedures. While PriceCheck prices are representative of cost differences only in the San Francisco Bay Area, such a tool could be useful in many local markets, since there are price variations everywhere.

This year’s annual report of the Trustees for Medicare and Social Security revealed that the Medicare trust fund will not run out until 2030 — four years later than last year’s estimate.

The extension was attributed, among other things, to reduced hospital admissions and to Part D payments declining 4% from 2013 estimates due to the use of generics.

In an article on the report in USA Today, Bryce Williams, managing director of Towers Watson’s Exchange Solutions, offered the opinion that future savings could be in store beyond what is being projected, considering that the ACA now covers many people who were previously uninsured. This could result in more people reaching the Medicare eligibility age of 65 without a lifetime of chronic health issues going untreated or unmanaged, putting less strain on Medicare coffers.

Said Williams, “[The ACA is] a stealth benefit that’s going to further extend the life of Medicare, perhaps substantially, without having to round up new funding.”

Keep an eye on the headlines for more Medicare cost-saving measures, such as changing the way doctors are paid and the creation and use of more quality metrics to improve care and weed out excessive fees.

Officially established under the Affordable Care Act in 2011, Accountable Care Organizations (ACOs) are becoming more popular with employers as a way to provide coordinated care for employees with chronic conditions while limiting unnecessary spending.

A recent article on ACOs in Employee Benefit News (EBN) reported that a growing number of large companies are “on board” with the notion that better coordination will lead to improved care for employees and lower costs for employers.

According to the 19th Annual Towers Watson/National Business Group on Health (NBGH) Employer Survey on Purchasing Value in Health Care, more than one in four employers expect growth in a variety of new methods providing quality care while mitigating costs, including ACOs. In fact, 28 percent of employers surveyed said it was likely that (employer-sponsored) care will be delivered through highly coordinated provider models such as ACOs or Patient Centered Medical Homes (PCMHs) over the next five years.

The EBN article noted, however, that some warn it’s too early to tell if ACOs will live up to their promise. Still, while use of ACOs is still in its early stages, more employers are considering ACOs as a valid method for evaluating vendors.

From the Towers Watson/NBGH survey, 81 percent of responding employers said, “Availability of ACOs and/or PCMHs with incentives and penalties to providers based on quality, efficiency and outcome” was an important or somewhat important factor in selecting a health plan vendor.

For previous posts on ACOs from the OneExchange Blog, see below:

Eighty-nine New ACOs Announced; Total Of 154 Now Serve Over 2.4 Million People

Nine Pioneer ACOs May Leave The Medicare Program

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