Seeing 2014 Through the Fog: Anticipating the Impact of Personal Incentives Under Obamacare

---Terri Bernacchi, PharmD, MBA,  Senior Partner, Valiant Health

So what is it?  Will premiums go up by double digits or will they go down?  Is it possible that for a small group of people in some states, premiums will go down, but for a larger group of people on some exchanges or in some states, the premiums may be fairly criticized as “sky-rocketing”? 

It’s really hard to understand if any side in the health care debate is completely lying when the news headlines on what is coming are so completely polar opposites.  Is it possible that recent media “spin” on Obamacare’s health exchanges are fairly characterized as “lies, deceit and untruth”?  The political stakes are high, to be sure, but as people ask you for advice on what to do in their own personal situation, it would certainly be nice to be able to go somewhere and actually “see through the fog” on their behalf.   My premise is this:  people will do what is in their best interest, assuming they can see it. 

On Friday, Senator Harry Reid admitted to a PBS audience in Nevada, that the Accountable Care Act was always just a step toward a public system, getting there by pushing private health care insurers out of business.   At least now, the truth seems to be coming out as some portions of the new law (widely panned by experts and consultants on all sides of the political spectrum as a failure in process.)

An article by CNN Money noted that under the health care reform act, insurers must offer a package of essential benefits -- including maternity, mental health and medications -- and they must cover all who apply. The imposition of these richer benefits will cause price hikes in some states where a lower cost, bare bones policy may have been sufficient for coverage for young, healthy people in the past. Isn’t it logical then, for a primitive student of human behavior, to predict that some young, healthy people won’t want to take on the increased cost because they don’t “need” the additional benefit or the additional cost?  They’ll pay the $95 per year or 1% of their income to avoid a cost that may be $3,000 per year or more. 

• “Our analysis found that 21-year-old men will pay a lot more for an exchange plan, but 42-year-old women and 62-year-old men will shell out less for a silver-level plan that comes with a $2,500 deductible and a roughly $25 co-pay for office visits.”

It may be that part of what must happen as this mess unravels is that we must better understand what happens in terms of individual incentives.  If a premium increase is unaffordable and if the individual has other alternatives (including doing nothing), then young, healthy people can be expected to forego coverage, and older/unhealthy people will sign up for lower cost coverage.  Predictably, then the exchanges will fail under the weight of insufficient premium to cover incalculable risk.  And people will be begging for something to be done. 

Is this, therefore, given Harry Reid’s recent comments, an unintended consequence of a well-meaning public policy or is it the success that was anticipated all along, leading the country to a federally controlled, single-payer system?  

Link:  http://finance.yahoo.com/news/where-obamacare-premiums-soar-095700316.html?CFID=24988291&CFTOKEN=70696857&jsessionid=2e302825861375967192417   

http://www.forbes.com/sites/theapothecary/2013/08/10/sen-harry-reid-obamacare-absolutely-a-step-toward-a-single-payer-system/

Terri is a Senior Partner at Valiant Health, LLC, and founder of Cambria Health Advisory Professionals.  The thoughts put forth on these postings are not necessarily reflective of the views of her employers, clients nor other Valiant Health colleagues. Terri has had a varied career in health related settings including: 9 years in a clinical hospital pharmacy setting, 3 years as a pharmaceutical sales rep serving government, wholesaler, managed markets and traditional physician sales, 3 years working for the executive team of an integrated health system working with physician practices, 4 years as the director of pharmacy for a large BCBS plan, 12 years of experience as founder and primary servant of a health technology company which was sold to IMS Health in late 2007.  She has both a BS and a PharmD in Pharmacy and an MBA. 

(UN)-Intended Consequences in Health Plan Consolidation

---Lowell T .Davies, Economist & Commentator

I should first acknowledge that I predicted a wave of consolidation in the health care industry as a response to the passing of the Affordable Care Act a few years ago. The fact that I predicted this shouldn’t illustrate any intelligence on my part; rather it shows the obvious true nature of Obamacare. In my opinion, one I share with many commentators, creating tumult in the insurance industry was an intended consequence of the legislation.

Consolidation, indeed, is just gaining momentum.  For example, in a recent article in Managed Health Care Executive, author James Burns outlines 5 potential issues raised by the potential merger of Wellpoint and Amerigroup, both large insurers. He explains that the Antitrust Division has made a second request for information on the merger, possibly inferring that they may not allow the deal. He goes on to say, however, that if the merger is allowed, the companies may encounter hurdles at the state level if politicians and regulators fear anticompetitive behavior. The article is informative on the subject, but what I took away from it is something of a wholly different nature. (See this excellent author’s work:  http://www.dickinson-wright.com/bdsfiles/News/d2f4dc06-6d34-4858-9f67-06c31bdb6656/Presentation/NewsAttachment/bc6d294b-54f3-4b81-8fe8-2f2019ea2439/MHEBurnsArticle.pdf)

This merger is likely to go through, as will others. It is my contention that the regulators behind enforcement of Obamacare would rather deal with a few behemoth insurers than a slew of smaller ones. 

While the insurance industry needs to consolidate to survive the measures enacted in the ACA, this is not a good thing for the average consumer. If competition leads to lowered prices, then the opposite is true of consolidation. From the standpoint of the Federal government however, if there are fewer companies to monitor then law and regulatory enforcement becomes that much easier. Furthermore, from the standpoint of this cynic, it also becomes easier to sway corporate leadership to act on behalf of said government’s interests; they do, after all, hold the most enticing bargaining chip that exists: control of the budgets of the largest payer sources in health care.

This all sounds conspiratorial and I’ll admit that it’s not crystal clear yet, but the pathway is set forth if you’ve read the bill. I hate to end on such a sour note, but I honestly fear that the march toward single-payer has officially begun and that we will, beginning here with insurers, see one domino after another fall in line. 

SCOTUS Decision Lands with a Thud! Now what?

---Terri Bernacchi, PharmD, MBA,  Cambria Health Advisory Professionals 

Now that ACA has been upheld, most parties will be specifically focused on how CMS and other federal agencies will interpret and regulate the day-to-day facets of the law.

The devil is always in the details in these kinds of things (consider, for example, how complex the “Coverage Gap” operational roll out was over the course of late 2010 and 2011.)  Federal and state bureaucrats and those of us who are the workers in the system must now proceed toward implementation of the individual mandate in 2014 and the thousands of rules which are both specific and vague, as laid out in the law.  Reading the fine print will become part of our daily ritual as changes in regulations are developed. 

PriceWaterHouseCoopers has a summarized snapshot of the implications of the forward momentum of the ACA, available for download on the internet. 

In my opinion, it is a thoughtful summary of the impact of the bill on various key stakeholders, including hospitals and providers, payers, employers, and pharmaceutical/device manufacturers.  Unfortunately, the “unintended consequences” of this far-flung regulatory outline are still not going to be understood for some time.  And because of the massive unpopularity of the law, it may end up being repealed.  In any case, health care entities need to forge ahead and become better prepared because the “easy-out” has been removed.  Now the hard work begins.

http://pwchealth.com/cgi-local/hregister.cgi/reg/implications-of-the-US-Supreme-Court-ruling-on-healthcare.pdf

Terri is the founder of Cambria Health Advisory Professionals. Among her current clients: a large health sciences firm serving payers, pharmaceutical and device manufacturers and other stakeholders, a small special needs health plan as a 5 Star Consultant, and several other health related clients. The thoughts put forth on these postings are not necessarily reflective of the views of her employers or clients nor other Health Advisory Professional colleagues. Terri has had a varied career in health related settings including: 9 years in a clinical hospital pharmacy setting, 3 years as a pharmaceutical sales rep serving government, wholesaler, managed markets and traditional physician sales, 3 years working for the executive team of an integrated health system working with physician practices, 4 years as the director of pharmacy for a large BCBS plan, 12 years experience as founder and primary servant of a health technology company which was sold to her current employer three years ago. She has both a BS and a PharmD in Pharmacy and an MBA.

Obamacare Countdown to 2018—Inch by Inch, Rule by Rule

Terri Bernacchi, PharmD, MBA  Health Advisory Professionals 

It’s impossible to predict what the new Congress will do to amend or repeal all or portions of the health care law that we call Obamacare.  Just beholding the tremendous number of provisions of the Patient Protection and Affordable Care Act (PPACA) continues to astonish!  Though the details of the regulations required by each of the elements will unfold only gradually, the timeline has been laid out in an easy-to-use interactive calendar by Employee Benefit News.  (See the link here: http://ebn.benefitnews.com/health-care-reform/timeline.html?mstr_chnnl=ebn_health_care_reform)

Many of us are now several inches deep on specific components (for me, it’s the operational aspects of the Coverage Gap) but only an inch deep on others (for me, it’s almost everything else).  Thus, this 50,000 foot view of the timelines for each provision will continue to be a useful tool. 

Over the course of time, authors contributing to this blog will comment on some of the provisions, as they roll into effect or as they are clarified. 

One of the most insane provisions set to go into effect in 2011  is the one that disallows the use of FSAs, HSAs, or Archer MSAs for covering the cost of an over-the-counter medicine or drug (except insulin) unless a prescription is obtained. This new provision requires that the person must spend ADDITIONAL funds by getting to a physician in order to get the prescription, incurring additional cost for the person but also burdening the provider and payer parts of the system. 

The logic for this new provision? It appears to be tax revenues for the Government to cover the cost burden of Obamacare.

It’s difficult to track down any other logical reason that such a grand idea would be part of PPACA or why this would be in the best interest of any of the players in health care:  new burdens on the doctor, a reduction in the value of the HSA or FSA for the employee, incurring new medical expenses for the health plan or employer by creating MORE reasons to see a doctor.  This stupid provision actually penalizes routine self-care-----patients must again go see a doctor for a prescription for a cough/cold product. 

This seems to simply be a means to reduce the eligible use of pre-tax dollars for health care purposes so that the IRS will have greater access to taxes from that individual. Our IRS lays out its new stipulations in a very matter-of-fact way, but does not offer any other explanation.  Read more about the IRS ruling at the URL:  http://www.irs.gov/pub/irs-drop/n-10-59.pdf.   They would love to hear your comments.

Terri currently works for a large health sciences firm serving payers, pharmaceutical and device manufacturers and other stakeholders in health care as a Senior Principal in Managed Markets.  The thoughts put forth on these postings are not necessarily reflective of the views of her employer nor other Health Thought Leader colleagues.   Terri has had a varied career in health related settings including:  9 years in a clinical hospital pharmacy setting, 3 years as a pharmaceutical sales rep serving government, wholesaler, managed markets and traditional physician sales, 3 years working for the executive team of an integrated health system working with physician practices, 4 years as the director of pharmacy for a large BCBS plan, 12 years experience as founder and primary servant of a health technology company which was sold to her current employer three years ago.   She has both a BS and a PharmD in Pharmacy and an MBA.

The Inaugural Blog for Health Thought Leaders – GENERAL

By----Terri Bernacchi, PharmD, MBA, Health Advisory Professionals

It’s my birthday tomorrow (10/11), and I’m 54 years old!!  It seems like only yesterday when I had my first really “hard” birthday (when I turned 30) and the thought of ever hitting 50 was absolutely terrifying. But as I mark this small milestone and look at what lies behind me, I find myself just being thankful.  I am healthy and in a good place, in general, in this tumultuous time.  While I don’t know what lies ahead, I see so much opportunity and so much talent around me that it is hard to stay pessimistic for long. 

Particularly in the business of health care, there is SO much promise.  For the last five decades, the strides made in US health care has made us live better and longer, and our expectations for progress have created a societal willingness to push ahead against the forces of “status quo”. 

I have been in health care since I was about 16 years old, starting as a clerk in a pharmacy and doing various other things along the way:  a housekeeper and then a nursing assistant in a skilled nursing home, a pharmacy intern and then a hospital pharmacist for almost nine years, a professional sales representative in a varied hospital, trade, government and managed care  territory for the manufacturer that launched Cipro, a hospital administrator in charge of “physician relations” providing support to vital medical practices, the director of pharmacy for a large Midwest Blues Plan, and the founder of a company that worked in the environment of drug and medical data processing and validation.  My company was acquired a few years ago and I remain with the company that acquired it.

I’ve seen a lot of things from a lot of vantage points, up and down the food chain that is the complex ecosystem of US health care.  Regardless of one's political perspective or the depth of one's understanding of economics, few could argue that we are sitting on the precipice of a financially disastrous future as we try to “fix” challenges in health care.  Even without the mistake that is “Obamacare”, we were headed for the catastrophic collision of an aging populace with limitless demand but a lack of enthusiasm to understand or deal with the actual cost burden of our choices. 

This blog is dedicated to the future of US health care and our hopeful return to the values that brought us here:  quality patient care, personal compassion, and abundant but personal choices.  My colleagues and I will discuss today’s issues, whether they center on the Patient, the Payer, the professional Provider, Pharma or Device Manufacturers, the Government, or the Technology that drives and connects them.   I can’t promise that we will steer clear of opinions that raise your eyebrows (or your blood pressure) but the views contained here are not those of our employers.  We certainly don’t agree with each other frequently, but always our dialogue bears fruit and the listening to the other guy helps us better understand ourselves and the patients and clients we support.   

Hopefully, by the time I turn 94, we will have learned a lot from each other!

Terri currently works for a large health sciences firm serving payers, pharmaceutical and device manufacturers and other stakeholders in health care as a Senior Principal in Managed Markets.  The thoughts put forth on these postings are not necessarily reflective of the views of her employer nor other Health Thought Leader colleagues.   Terri has had a varied career in health related settings including:  9 years in a clinical hospital pharmacy setting, 3 years as a pharmaceutical sales rep serving government, wholesaler, managed markets and traditional physician sales, 3 years working for the executive team of an integrated health system working with physician practices, 4 years as the director of pharmacy for a large BCBS plan, 12 years experience as founder and primary servant of a health technology company which was sold to her current employer three years ago.   She has both a BS and a PharmD in Pharmacy and an MBA.