Health Insurance Reform: ACTUARIAL IMPACT ON MEDICARE

UPDATE: 7 September -  

Steep rate hikes on way for individual health insurance

Double-digit rate increases are hitting most individual health-insurance plans in Washington state, hurting jobless workers and worrying insurance regulators.

http://seattletimes.nwsource.com/html/localnews/2012827665_ratehikes07m.html

UPDATE: How Health Care Is Hampering Economic Recovery

by GoozNews ~ 27 Aug 2010 09:02am

Reed Abelson over at the New York Times' Prescription blog has an interesting reporton a new study questioning Detroit's strategy of relying on health care to bolster its lagging economy. I posted the following comment:
Detroit is merely a microcosm of the nation as a whole. Health care is the only sector that has added jobs throughout the Great Recession, just as it added jobs throughout the previous two decades (see my article in The Fiscal Times here).
What nobody wants to look at is how it continues to do so regardless of economic conditions. The answer is simple. There are no constraints on spending. Providers through insurers pass on rising costs to businesses and consumers in a marketplace where demand elasticity is very low because demand is dictated by the supply side (i.e., doctors/hospitals/input industries prescribe, patients obey).
It's like Keynesian stimulus with one vital exception, which turns it into its opposite. When the government engages in deficit spending to stimulate demand, it borrows from the future. When the health care sector engages in automatic demand-driven cost increases, it takes its cash in real time from every other sector of the economy, including the government. That may be acceptable when the rest of the economy is growing. During recessions, like now, it becomes a major drag that hampers economic recovery.

UPDATE: 25 August
Anthem Blue Cross allowed to move ahead with rate hikes

California insurance regulators cleared the way Wednesday for Anthem Blue Cross to implement scaled-back rate hikes after a previous rate increase was canceled amid an uproar over its size.
Anthem said it intends to put the new rates -- averaging 14% and as high as 20% -- into effect Oct. 1 for nearly 800,000 individual California policyholders.
The Woodland Hills company backed off its initial plan to increase premiums in March as much as 39% after consumers, regulators, lawmakers and even President Obama criticized it. Insurance regulators say the six-month delay saved policyholders $180 million. Anthem is the state's largest for-profit insurer.

from John Goodman's Health Policy Blog, 21 August
For the first time in Medicare history, the Medicare Chief Actuary has called the projections in a Medicare Trustees Report “unreasonable” and “implausible” and encouraged everyone to ignore them and view instead an “Illustrative Alternative” report. The alternative opens this way:
The Trustees Report is necessarily based on current law; as a result of questions regarding the operations of certain Medicare provisions, however, the projections shown in the report do not represent the “best estimate” of actual future Medicare expenditures.

and from the FDA

Slight Increase for Medicare Drug Premiums Next Year
Medicare beneficiaries enrolled in Part D will pay an average of $30 per month for their prescription drug benefit premiums in 2011, a $1 increase over what they paid this year, according to Centers for Medicare and Medicaid Services (CMS) officials.
Premiums stayed relatively stable because of a discount program in the the healthcare reform law, Jonathan Blum, deputy administrator of CMS' Center for Medicare, told reporters Wednesday.Cost will remain about steady, and so will benefits, said CMS Administrator Don Berwick, MD.
The low rates will "add stability" to the Medicare Part D program, which has an enrollment of about 27 million seniors, Berwick said.
When Part D first began, the program was projected to cost $634 billion for fiscal 2004 through 2013. Instead, it will cost $373 billion for those same years, Paul Spitalnic, of CMS' Office of the Actuary told reporters.
The main reason for the program coming in $261 billion under projected costs is that the rising costs of prescription drugs slowed in the early 2000s and more people switched to generics, explained Spitalnic.
In addition, Part D plans have been able to negotiate more drug rebates than anticipated, and fewer beneficiaries enrolled than the government originally predicted.

Posted in: health policy,John Goodman,Medicare,Medicare Advantage