New Health Exchanges Unlikely to End Insurance Monopolies in Some States

By Christine Vestal, Staff Writer | State Line,

A doctor examines a patient at a clinic in Florence, Ala. Alabama is one of about a dozen states in which a single health insurance company has a virtual monopoly, a situation that may persist when new health insurance exchanges are launched in October. (AP)

Part Two of Two Parts

In Alabama, if you get your health insurance through your employer and you lose your job, you quickly realize there aren’t a lot options for purchasing coverage on your own. Blue Cross and Blue Shield of Alabama has had a virtual monopoly in the state since the Great Depression, and today it covers a whopping 89 percent of Alabamians.

In part, Blue Cross and Blue Shield is dominant in Alabama simply because it has been there for so long—it sold its first policy in 1936—and potential newcomers have found it difficult to convince hospitals and doctors to give them favorable prices so they can compete with the entrenched carrier. But it also has to do with Alabamians themselves: On average, residents of the state are poorer and less healthy than other Americans, making them more expensive to cover and thus less attractive customers.

Top 10 states with the least competitive commercial health insurance markets
  1. Alabama
  2. Hawaii
  3. Michigan
  4. Delaware
  5. Alaska
  6. North Dakota
  7. South Carolina
  8. Rhode Island
  9. Wyoming
  10. Nebraska

Source: American Medical Association, 2012 market concentration analysis.

The lack of competition in nearly a dozen states could present problems when the insurance exchanges that are part of the Affordable Care Act launch in October. The exchanges are supposed to give Americans who do not get health insurance from their employers the opportunity to choose from an array of private insurance plans. The idea is to generate competition between insurers that will lead to lower premiums.

Individuals and businesses with up to 100 employees will be able to shop on the exchanges, and people who can’t afford coverage on their own will get government subsidies to help them pay their premiums. About 26 million low-income Americans are expected to receive subsidies to purchase health insurance through the exchanges.

But in states with a dominant insurance carrier, competition and lower prices may not arrive for quite some time.

A recent analysis by the American Medical Association found that a single insurance company held 50 percent or more of the market in nearly 70 percent of local markets nationwide. And in 30 states, a single insurance company covers more than half the people who purchase insurance individually, according to the Robert Wood Johnson Foundation.

The dominance by a single insurance company is particularly pronounced in Alabama, Hawaii, Michigan, Delaware, Alaska, North Dakota, South Carolina, Rhode Island, Wyoming and Nebraska.

In general, multiple insurance companies are eager to compete in states that have a large number of health care providers and a lot of people who can afford to pay premiums. A relatively young and healthy population is also an attraction. In states that don’t have those characteristics, competition can be sparse.

Alabama ranks 45th in the nation in overall health status, and 46th in median household income, according to the United Health Foundation and the U.S. Census Bureau, respectively. Over the decades, a few major insurance carriers have tried to dip their toes into Alabama, but most pulled out after just a few years.

In other states, there are different reasons for the lack of competition. In Wyoming, for example, the problem is that the state has relatively few health care providers and people have to travel long distances to get care.

Wyoming has only 18.7 physicians per 10,000 people, ranking it 47th in the U.S., according to the Kaiser Family Foundation. By comparison, New York has 34.8 physicians per 10,000 people, Maryland has 35.3 and Massachusetts has 39.7. The national average is 25.7.

Blue Cross Blue Shield of Wyoming dominates the market. Do Wyoming consumers want more choices? “Sure they do,” said Tom Hirsig, Wyoming’s insurance commissioner. But Hirsig said it’s a huge challenge for new carriers to develop provider networks in Wyoming. “My sense right now is that the individual market inside the exchange is not going to be stacked with lots of competition.”

A shortage of hospitals is the problem in Rhode Island, where there are just 11 hospitals owned by two companies. Health Insurance Commissioner Christopher Koller said Rhode Islanders would like other options, but he isn’t sure they’ll have them when the state’s exchange launches in October.


Big Changes

The vast majority of Americans get health insurance coverage through their employers. Millions of low-income Americans qualify for Medicaid, and seniors can sign up for Medicare. But for people outside of these groups, there are few good options when it comes to health insurance.

Many of these Americans pay high premiums if they are sick or middle-aged—if they can find coverage at all. They also run the risk of purchasing policies that don’t cover certain medical conditions or limit the total dollar amount of claims. That’s why so many of them go without insurance altogether.

The health insurance exchanges are designed to change that. The policies that are included on the menu will have a uniform set of benefits and pricing structures that will be easy for people to understand and compare.

In addition, the new health law will make it illegal to deny coverage to people who have pre-existing conditions. It also will a mandate a minimum set of benefits; prohibit lifetime caps on claims; and require insurance companies participating in the exchanges to spend at least 85 percent of their revenue on health care.

The hope is that this new pool of previously uninsured people will attract insurers to enter new markets, creating competition where none exists now. Poor states across the South and West have the largest share of uninsured people, and thus hold the greatest potential for insurers to cash in on the $350 billion the federal government plans to spend over the next 10 years to help low-income people buy insurance.

Furthermore, the exchanges should allow smaller companies and non-profits to market their products more effectively, challenging entrenched incumbents. “When you go online, the Blue of Alabama won’t look so much bigger than the next plan,” said Andy Hyman of the Robert Wood Johnson Foundation. The exchange is meant to be an “equalizer,” Hyman said.

What’s Wrong With Monopolies?

Carriers that dominate a particular state often argue that they hold onto their position by keeping prices down. “There are lots of national carriers out there who would provide a product that is less expensive than what is in the market, if they could,” said Kim Holland, director of state affairs for the Blue Cross and Blue Shield Association. “We’re not so naïve as to think that if we don’t price our products correctly our customers won’t find another alternative.”

Some economists note that in some cases, a dominant carrier can use its heft to negotiate the best prices with hospitals and then pass along those savings to consumers. In some markets, dominant insurers are akin to utilities, explained Paul Ginsburg, director of the Center for Studying Health System Change. “You don’t necessarily need more than one,” he said.

Ginsburg said large carriers are likely to get better prices from hospitals and doctors, because providers can’t do without them. “I suspect that consumers have actually benefitted from high [market] concentration. It’s really a bigger problem for physicians,” he said.

Despite having the least competitive health insurance market in the country, Alabama’s individual premium prices compare favorably with neighboring states and are below average for the nation.

But the AMA, which represents doctors, disputes the idea that big insurers always secure the best prices for consumers. They point to national studies showing that when insurance companies merge and acquire smaller companies, their profits go up and so do their premiums.

Exchange Experience

Two states, Massachusetts and Vermont, already have exchanges, and offer a glimpse of what the future might hold.

When Massachusetts launched its exchange in 2007, new players did not immediately burst into the market. One new carrier, Centene Corporation, joined the exchange to offer a limited network of providers for Medicaid beneficiaries. But competition in the individual market remained relatively unchanged.

But Massachusetts already had a relatively competitive market, so existing carriers competed with each other to create new, lower-cost plans in response to market demand—and pressure from state officials to keep costs down. Despite the emergence of low-cost plans, however, average premium prices have continued to rise.

Earlier this month, Vermont became the first state in the nation to publish preliminary health insurance rates for its exchange. Not unexpectedly, the tiny state of only 626,000 residents did not attract any new insurance companies. And the price of the plans offered on the exchange? They cost about as much as what Vermonters were paying before.


Posted: Apr 24, 2013 11:31 AM EDT Updated: Apr 24, 2013 11:31 AM EDT

Posted By WSLS Staff

AP Political Writer

RICHMOND, Va. (AP) – Many adjunct instructors at Virginia’s 23 community colleges will see their hours cut starting this summer thanks to Virginia’s response to the new federal health reform law, a change that could cripple or kill livelihoods teachers like Ann Hubbard worked hard to build.

The onrushing 2010 Patient Protection and Affordable Care Act is forcing governments at all levels to scramble to accommodate changes – some intended, some not – to public- and private-sector jobs over the next year.

But the changes in store for about a quarter of Virginia’s 9,100 adjunct faculty members have less to do with health insurance – a benefit they don’t receive anyway – than with the opportunity to teach enough class hours to pay the bills. Hubbard, for example, learned a few days ago that she would see her annual 45 credit-hour load nearly halved.

As a 48-year-old single mother from Williamsburg with a daughter finishing her freshman year at Virginia Tech, the income from her heavy teaching schedule at two southeastern Virginia community colleges is vital. Asking her what she will do when she’s cut to no more than 27 credit hours a year is almost more than she can bear.

“You ask me that and I literally start shaking,” Hubbard said in a telephone interview last week.

Under the new federal law, employers are obliged to provide health benefits for any employee who works 30 hours or more. Republican Gov. Bob McDonnell responded in February by directing that all part-time state employees work 29 hours or less to avoid the 30-hour threshold.

Because community college adjunct professors are contractors, not state employees, they’re paid by the class load they carry; they don’t punch a clock. And, because they’re contractors, they are also ineligible for retirement benefits or unemployment compensation should they find themselves jobless.

In translating the governor’s directive into terms applicable for higher education, Virginia Community College System Chancellor Glenn DuBois limited adjunct teachers to seven credit hours in the summer and no more than 10 each in the fall and spring semesters.

The bottom line is that no Virginia adjunct professor at a community college can earn more than $17,000 a year before taxes when the changes take effect in a few weeks, said J. Gabriel Scala, an adjunct English professor at J. Sargeant Reynolds Community College, which serves the Richmond area.

“I love teaching. I wouldn’t do anything else. I’ve never anticipated getting rich off being a teacher. But the rent has to be paid and I have to eat and gas has to be put in the car, and $17,000 a year isn’t going to do it,” she said.

She organized a Facebook group of Virginia community college faculty concerned about the change. Through it, adjuncts and their allies can find out how to write to DuBois, McDonnell or even President Barack Obama appealing for an exemption that would allow them to teach full loads without forcing the state to add them to its health plan.

“No one is too upset about not being offered health benefits. What’s upsetting – and dangerous – is all the hours being cut,” said Scala, a 41-year-old with a master’s degree in creative writing, a doctorate in English and an opportunity to teach full time this fall at a university.

“Many adjuncts work at more than one community college. Some teach up to eight classes a semester,” she said.

Many adjuncts hope that because the Internal Revenue Service has yet to finalize regulations on part-time employment, the IRS might create an exemption that remedies the dilemma administratively.

Virginia Education Secretary Laura Fornash said limiting the adjuncts’ credit hours wasn’t what McDonnell’s administration wanted, either. Adjunct instructors teach at least two-thirds of the classes for the statewide enrollment of nearly 289,000 students.

“This is a tremendous challenge for the commonwealth since the IRS has yet to issue guidance for us,” she said. “The governor had to act and take responsibility and make sure the parameters were clear as we understand the requirements of the law.”

Heavy course loads like Hubbard’s, Fornash said, are the exception, not the rule. Three-fourths of community college adjuncts teach fewer than 27 credit hours a year anyway, many of them augmenting full-time jobs in other fields.

“You might have an accountant by day who teaches a section or two of accounting at night,” she said.

None of which comforts Hubbard, who worked her way through undergraduate and graduate school and her unfinished doctoral program tending bar and waiting tables, all so she could one day teach history. These days, arthritic hands rule out a moonlight job bartending, she said.

“As you know, finding work is difficult. If I can find something full-time, then I’d have to give up teaching and I really don’t want to do that,” Hubbard said.

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Racing to Spread Word About New Health Plans


Published: April 23, 2013

EAST LANSING, Mich. — President Obama and the Democrats passed the 2010 health care law to make medical insurance available to more than 30 million people who do not have it. But with recent studies showing that as many as three-fourths of those people are unaware of their new options, health care providers are joining community organizers and insurance companies in an ambitious effort to spread the word in the six months remaining before the health plans become available.

Here in Michigan, a small army of doctors and nurses, hospital employees, insurance agents and advocates for low-income people is mobilizing for the next phase of this revolution in domestic social policy: finding people who are eligible for health insurance and getting them enrolled.

It will not be an easy task.

The simmering political debate over Mr. Obama’s health care law — which includes an expansion of Medicaid, the government program for low-income people, and the creation of “exchanges” to market subsidized private insurance — makes the work of these foot soldiers more difficult, but also more important.

Michigan is, in many ways, a microcosm of what is going on around the country as people race toward the start of “open enrollment” on Oct. 1.

“Confusion, total confusion,” said Jan M. Hudson, a consumer advocate, describing state efforts to help more than a million Michigan residents get insurance under the law.

Ms. Hudson, a founder of Michigan Consumers for Healthcare, a coalition of consumer groups, led a recent conference of more than 200 experts and advocates who banded together here on the campus of Michigan State University to try to identify and enroll everyone in the state who might be eligible for coverage.

Amy L. Allen, the director of health care reform at the Michigan Department of Community Health, said that delays and resistance by the State Legislature meant that more of the work must be done by community groups and the private sector. The Republican-controlled Legislature declined to set up a state insurance exchange, and Gov. Rick Snyder, a Republican, has met opposition within his own party to his proposal to expand Medicaid.

Nevertheless, in Michigan, as in many states, advocates for poor people, blacks, Hispanics and people with disabilities are joining health care providers and insurers in a campaign to find the uninsured wherever they live, work, play or pray.

“Getting all these people enrolled will not necessarily be an easy task, but it’s a great opportunity,” said Anita M. Fete, who was one of the speakers at the conference and is the director of state assistance at Enroll America, a national nonprofit group set up to maximize enrollment.

The Census Bureau estimates that 1.2 million people in Michigan are uninsured. Most will qualify for subsidized private insurance, or for Medicaid if the state chooses to expand the program.

Nationally, the Congressional Budget Office predicts that 14 million uninsured people will get coverage next year. But that goal is ambitious.

Studies for Enroll America and the Kaiser Family Foundation indicate that three-fourths of uninsured adults are unaware that they will have new insurance options.

Among the people expected to sign up for coverage in the new online markets known as insurance exchanges, one in four speak a language other than English at home, and three out of four have a high school diploma or less.

Citing those statistics, Christine P. Barber, a senior policy analyst at Community Catalyst, a consumer organization, said: “There is no time for turf battles. We need to come together to make this work.”

In California, the health insurance exchange faces an even more daunting task. It is trying to reach five million people who speak 13 different languages and are spread across 163,000 square miles. Nearly half of those in the state who are eligible for insurance subsidies are Hispanic.

The fact that so many people are unaware of their new options has the potential to undermine the entire purpose of the health care law. Congress provided hundreds of billions of dollars for expanded coverage, but it did not fully account for the difficulty or expense of getting people to sign up. Also, Democrats did not anticipate the effects of continued Republican hostility to the law.

“Opponents’ attacks seem to have taken a toll on the public’s expectations, and Americans are now more likely to think the law will make things worse rather than better for their own families,” the Kaiser Family Foundation said last month in a summary of its latest poll. “Americans’ awareness of key elements of the law has declined somewhat since passage, when media attention was at its height.”

Community organizations, health care providers and insurers, which stand to gain millions of new customers and hundreds of billions of dollars in new revenue, said they were determined to move beyond the bickering of politicians in Washington and in Michigan.

“There are so many moral and pragmatic reasons why hospitals should be engaged in outreach and education,” including to reduce the burden of bad debt and charity care, said Tina Weatherwax Grant, a vice president of Trinity Health, a large Catholic health care system based in Livonia, Mich.

Ms. Grant said that Trinity would have counselors to help people apply for Medicaid and subsidized private insurance at most of its 47 hospitals. Some sites will also have enrollment kiosks with computers.

Trinity hospitals in the Muskegon area already employ community health workers who knock on doors and buttonhole neighbors at football games and laundromats, offering to help them get insurance. Other health care providers and health plans want to replicate that model.

“It’s a lot like political organizing,” Ms. Grant said.

The most notable feature of the conference here was the collaboration of diverse groups. They included Blue Cross Blue Shield of Michigan, Easter Seals, the Little River Band of Ottawa Indians, the Grand Rapids African American Health Institute, the state chapter of the American Academy of Pediatrics, Jewish Family Service, and Access, a nonprofit organization that provides health care in Arab and Chaldean communities in the Dearborn area.

Mr. Snyder wanted to establish a health insurance exchange, but the Legislature refused to spend money made available for that purpose by Congress and the Obama administration.

The federal government will run the exchange here, but the precise division of labor between federal officials and state insurance regulators is not clear.

Mr. Snyder has also proposed expanding eligibility for Medicaid, as envisioned in the health care law. But he is meeting resistance from conservative Republicans in the Legislature.

“We have major hurdles in front of us,” Ms. Allen, the Michigan Department of Community Health official, said. “It’s quite a heavy lift to get spending authority from the State Legislature for anything related to health care reform. But people will still need assistance, still need to know if they are eligible for tax credits and premium subsidies.”

Phillip J. Bergquist of the Michigan Primary Care Association said his members, who run community health centers for low-income people, would help patients sign up for coverage when they called to schedule appointments. Many clinics will also take the initiative and call their uninsured patients.

About 100,000 patients of community health centers in Michigan are uninsured and would be eligible for Medicaid if the state expanded the program, Mr. Bergquist said. An additional 40,000 to 50,000 will be eligible for income tax credits to help them pay premiums for private insurance, he added.

Jo Murphy, the director of a free counseling service for Medicare beneficiaries in Michigan, has helped thousands of older Americans choose prescription drug plans. But, she said, counseling the uninsured on their options may be a bigger challenge.

“Many of these families have never had coverage,” Ms. Murphy said. “In many cases, you will be speaking a foreign language. You have to teach them the language before you can explain the options.”

A version of this article appeared in print on April 24, 2013, on page A15 of the New York edition with the headline: Racing to Spread Word About New Health Plans.
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