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article on ACA costs in 2 states
Old 12-26-2015, 07:52 AM   #1
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article on ACA costs in 2 states

I do not want this to become a discussion of politics in these states.

This article discusses why ACA in one state is not doing well, while ACA in another state is doing reasonably well. The approaches in the two states have apparently made a huge difference. For example, "active purchaser", "keeping existing plans vs not allowing people the choice of keeping those plans in 2013" etc

Schnurman: Texas loses on Obamacare while California embraces it | Dallas Morning News
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Old 12-26-2015, 08:25 AM   #2
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Interesting, thanks for posting.


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Old 12-26-2015, 09:39 AM   #3
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CoveredCA claims that one of the big drivers in keeping costs down in SoCal (only 1.8% increase in premiums) was increased competition amongst providers. Not sure what the situation is like in Texas, but this may be another issue leading to differences.
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Old 12-26-2015, 10:01 AM   #4
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In much of Texas (including my zip code), BCBS TX has been the **only** player on the marketplace since its inception. We have seen annual 25-30% rate increases and, this year, the loss of all PPO plans on the exchange.

I think what's happening in California versus Texas in terms of costs is similar to what is happening in the USA versus the rest of the world in drug costs. In most of the world laws allow negotiation with drugmakers, or even caps on what they will pay, usually resulting in cost shifting to the US market, which has no such cost controls built into the law. Similarly it could be that the active negotiations California engaged in (in addition to being a huge market the insurers didn't want to leave) has resulted in cost shifting to the states where there is very little insurance regulation, such as Texas.

When a provider is in multiple markets, and some markets cap the price and the profits and others don't, in order to "hit your numbers" you may have to charge the latter more for the same product.
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Old 12-26-2015, 10:12 AM   #5
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photoguy, given that Texas has a very big population one would think there would be a lot of competition. But I don't know if that is reality.

-

"Itís still early days for the Affordable Care Act, and about two-thirds of insurers lost money in 2014."

Given that American corporations in general have short term thinking, that's not good. United Healthcare is a good example where they want to provide service only if they can get the huge profit margins they have gotten used to.
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Old 12-26-2015, 10:29 AM   #6
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Originally Posted by DEC-1982 View Post
photoguy, given that Texas has a very big population one would think there would be a lot of competition. But I don't know if that is reality.
I know in my zip code, there has never been more than one player in the marketplace. There are other offerings but only one that insurer that has played in the space where tax credits and cost sharing can come into play.
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Old 12-26-2015, 11:08 AM   #7
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Just my observation. Kaiser Permanente - the largest player in CA's health insurance market, is a not-for-profit. It's been run in cost savings mode for decades... and puts pressure on the other insurers to reduce their costs.

An example of their cost savings model - I recently saw a nurse practitioner (vs a doctor) at their breast health clinic. She can handle most non-surgical activities. I have a small nodule that needs to be removed (and will be on Thursday). Since it's a very simple outpatient procedure, they're using a PA to do it. I'm fine with all of this because it's appropriate and these are well trained professionals.

Pre - ACA (as of Jan 2013) - Kaiser had 40% of the overall Healthcare Market in CA. They are the third largest exchange provider with 21% of the exchange (as of Jan 2015).

It's a different model than other insurers - but I've experienced great service from them.
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Old 12-26-2015, 11:13 AM   #8
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(Re; Kaiser)

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Originally Posted by rodi View Post
It's a different model than other insurers - but I've experienced great service from them.
Yeah, from what I remember when I lived in California (in and around San Jose, until 2003), people either loved Kaiser or they hated Kaiser. There didn't seem to be much middle ground on it in terms of what people thought of it as a healthcare model. For what it's worth, I had Kaiser pretty much exclusively from when I was a little kid to the day we left California. And when I was insured under my own Megacorp employment, I did have other options. I guess it helped that I grew up under the Kaiser model, so to me that's just how health care was delivered.
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Old 12-26-2015, 11:52 AM   #9
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California has an elected insurance commissioner and strongly pro-consumer (aka anti-business) laws. Insurance Commissioner is a jumping off point for bigger political jobs and tight control of insurance prices is important for future career ambition. Plus, California never blinks when insurance companies try to play chicken as it is such a wealthy and populous state that insurance companies can't afford to leave -- it's an economy the size of Brazil. Texas has an appointed commissioner and an overall less consumer-friendly ethos.
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Old 12-26-2015, 12:24 PM   #10
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California has an elected insurance commissioner and strongly pro-consumer...
Ah, yes, I'd forgotten about that. Proposition 103.
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Old 12-26-2015, 01:05 PM   #11
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Originally Posted by DEC-1982 View Post
photoguy, given that Texas has a very big population one would think there would be a lot of competition. But I don't know if that is reality.
That makes sense but also should apply to Norcal (which saw much larger premium increases). Here's CoveredCA's actual statement:

Quote:
Provider competition (or area provider monopolies) is a primary driver of the difference in premiums between northern and southern California. Close to 70 percent of the 25 largest general acute care hospitals are in the southern region of the state compared to the north. When a region has fewer hospitals and is dominated by a few large integrated hospital systems and medical groups, there is much less negotiating leverage for the health insurance companies to secure lower contracted rates for health services. In California, this regional variation in cost is apparent between the northern and southern California counties where premiums can be up to 30 percent higher, for example, comparing the San Francisco region to the Los Angeles region. This regional variance is not unique to Covered California and is also evident with other large purchasers of health care, such as CalPERS.
from https://www.coveredca.com/PDFs/7-27-...tes-prelim.pdf

I don't have any independent confirmation that what CoveredCA claims is true, but I'm inclined to believe them.
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Old 12-26-2015, 01:56 PM   #12
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I guess the best of both worlds would be to live in Texas and have acces to the Kaiser healthcare plan in California.

In our zip code in Texas, ACA folks only have Blue Cross Blue Shield as an option. DD is feeling the pain having only that as a choice.
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Old 12-26-2015, 02:09 PM   #13
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Photoguy -
The discrepancy between Northern and Southern CA has gone on for years - I observed it at megacorp's healthcare rollouts.

I observed the same thing when I worked in the Philly metro area - NJ was more than double the PA side of the Delaware river. I had coworkers who worked in PA but lived in Voorhees - and boy did they hate the price difference. But - they could buy booze for cheaper than the PA state stores. LOL.
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Old 12-26-2015, 02:26 PM   #14
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If health insurance companies are making huge profits on ACA policies, wouldn't it seem likely that more companies would want to be in that market? To me, the fact that there are few companies wanting to participate in the market indicates that they do not feel they can make money.

A similar thing happened in Texas in the late 1980's when the governor at the time, Ann Richards, decided to start attacking the insurance companies that wrote workers compensation insurance and assessing them for losses in the state pool. Many companies stopped writing workers comp to avoid the assessments which made workers comp unprofitable. It was a nightmare until she left office, the next governor came in, fixed the problem and now Texas has one of the better, lower-cost workers comp markets in the country, very stable and profitable. Companies are coming into the state to write the business.

I wonder what will happen to the cost of these plans and the participation rate when the federal government stops picking up the cost of the new enrollees in Medicaid in the states that expanded medicaid eligibility?
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Old 12-26-2015, 02:33 PM   #15
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A similar thing happened in Texas in the late 1980's when the governor at the time, Ann Richards, decided to start attacking the insurance companies that wrote workers compensation insurance and assessing them for losses in the state pool. Many companies stopped writing workers comp to avoid the assessments which made workers comp unprofitable. It was a nightmare until she left office, the next governor came in, fixed the problem and now Texas has one of the better, lower-cost workers comp markets in the country, very stable and profitable. Companies are coming into the state to write the business.
Which is why it's often important to push personal ideology aside. California seems to be doing something right here, as Texas did elsewhere. In OTHER aspects of attracting business, Texas has done things right and California seemingly hasn't. No ideology, no party, has a monopoly on good ideas or bad ideas. Hope we can keep this thread open while keeping that in mind. Clearly, IMO, there's something not going right in Texas, at least in the noncompetitive markets which have seen 25-30% increases for the last two years and the loss of PPO options in the marketplace.
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Old 12-26-2015, 03:08 PM   #16
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I wish I knew more about the health insurance market health these days. I would think that Humana, BC/BS, Aetna, Scott & White, CIGNA, et al would be pretty good at cost control, provider contracts and such and know what they are doing. I also would like to know what is driving the costs and keeping players out of the market in Texas.
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Old 12-26-2015, 03:18 PM   #17
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This type of analysis needs data and there is none. We only have statements from the insurers, and they have clear and vested interest in the outcome.

Profit levels for insurers are regulated, so competition is not the clear answer. Florida insurers have increased price just as much as Texas, premiums are very high, yet that market is one of the most competitive in the country. Health insurers do not originate price, they pass along the prices from health care providers. While the industry of health insurance is regulated the businesses themselves, and especially the individual insurance marketplace, have seen little scrutiny in some states. The claim that BCBS Texas is losing large quantities of money has not yet scrutinized or confirmed by any third party.

It is safe to say that the State of California has worked more closely with insurers to build a more seamless network of coverage than the state of Texas. This includes Medicaid expansion, which may have the effect of moving off the ACA individual network a larger group of lower income people needing health care. Texas also has the highest percentage of uninsured population in the US, so it is possible that more sick people have individual policies in Texas than elsewhere, and healthy individuals take their chances.
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Old 12-27-2015, 09:48 AM   #18
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Originally Posted by rodi View Post
The discrepancy between Northern and Southern CA has gone on for years - I observed it at megacorp's healthcare rollouts.
That's interesting to know. I certainly hadn't suspected such a big difference between Norcal and Socal. If the difference is sustainable, this could be a significant factor in our long term planning (we have flexibility to move).
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Old 12-27-2015, 10:43 AM   #19
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This type of analysis needs data and there is none. We only have statements from the insurers, and they have clear and vested interest in the outcome.

Profit levels for insurers are regulated, so competition is not the clear answer. Florida insurers have increased price just as much as Texas, premiums are very high, yet that market is one of the most competitive in the country. Health insurers do not originate price, they pass along the prices from health care providers. While the industry of health insurance is regulated the businesses themselves, and especially the individual insurance marketplace, have seen little scrutiny in some states. The claim that BCBS Texas is losing large quantities of money has not yet scrutinized or confirmed by any third party.

It is safe to say that the State of California has worked more closely with insurers to build a more seamless network of coverage than the state of Texas. This includes Medicaid expansion, which may have the effect of moving off the ACA individual network a larger group of lower income people needing health care. Texas also has the highest percentage of uninsured population in the US, so it is possible that more sick people have individual policies in Texas than elsewhere, and healthy individuals take their chances.

Additional, maybe its possible quite a few of the insured individuals are still on their grandfathered plans? Nothing like a segregated pool of unhealthy individuals distorting premium costs while the healthy ones stay on low cost plans.


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Old 12-27-2015, 10:56 AM   #20
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That's interesting to know. I certainly hadn't suspected such a big difference between Norcal and Socal. If the difference is sustainable, this could be a significant factor in our long term planning (we have flexibility to move).

We moved from NorCal to SoCal in mid-2014 and saw quite a drop in rates for our bronze plan.


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