Health Care Roundtable: Entrepreneurs not embracing ACA's SHOP program

With the arrival of the employer mandate at the start of this calendar year, it’s safe to say the Affordable Care Act is now in full swing. Almost five years after its passage, the ACA remains controversial, with continuing legislative efforts that challenge provisions related to the so-called Cadillac tax, the medical device tax, the definition of part-time work, and other parts of the law.

And there’s another serious court challenge well underway, this one related to who qualifies for federal subsidies provided under the law — everyone or only those who purchase insurance through exchanges “established by the state.” The Supreme Court is now hearing that case, known as King v. Burwell.

Under the law, the government has set up the Small Business Health Options Program (SHOP), which is the exchange that connects small businesses with health insurers. In this industry roundtable on health care, we take a look at how small employers are reacting so far.

Our Panelists:

Dr. Stewart Watson, CEO, Dean Clinic
Dr. Geoff Priest, CMO, Meriter-UnityPoint Health
John Healy, partner and senior account representative, M3 Insurance
Josephine Musser, CEO, Wisconsin Health Information Organization
Bill Smith, state director, National Federation of Independent Business

VANDEN PLAS: I’d like to know the extent to which small businesses with three or four employees, which don’t have to provide insurance under the ACA but still want to, are using the Small Business Health Options Program, and to what extent are they sticking with traditional group health plans?

“We’re finding that the number of small employers that report offering any kind of employer-sponsored health insurance is down about 6%.”
 — Bill Smith, state director, National Federation of Independent Business

HEALY: We as an agency have not seen many people using the SHOP. One of the main features of the SHOP that’s not available yet is premium aggregation, which would allow employees to choose a carrier. Each employee could choose a different carrier, and until they get that part of the technology figured out, all employees have to choose the insurance company that the employer decides upon. If the employer says, ‘I want a Dean health plan,’ the employees can choose plans within Dean but they have to choose only Dean. Originally, the law was supposed to be that one employee could choose Dean, one could choose Meriter-UW, one could choose Group Health Cooperative. They could choose whatever they wanted. That’s not available yet.

SMITH: We do this three-year research project, and we just released the second year, where we’re studying 900 employers and the impact of the ACA on small business. So we’re collecting data yearly, and, basically, the SHOP option is not in the mix just yet. That’s smaller employers with fewer than 20 employees. We’re finding that the number of small employers that report offering any kind of employer-sponsored health insurance is down about 6%, so we’re continuing to see fewer employer-sponsored plans in the marketplace.

VANDEN PLAS: And the reason?

SMITH: It’s cost. Some of them had less expensive plans pre-Affordable Health Care Act, and now they have to switch over and have more generous plans. We’re seeing some actuarial impact as a result of community rating and as a result of all the mandated benefits that are required in these plans. So that’s lifting the cost of health insurance overall for smaller employers.

And we’re finding in our longitudinal studies that there’s quite a distinct change between larger employers, 50-plus, and those under 20. Those under 20 are still really, really struggling with all of the requirements under the Affordable Care Act. Even though they’re not subject to some of the same penalties, they are subject to the cost of health insurance out there, and they’re not finding very effective tools to control that cost.
Our study showed that very few states actually even launched a SHOP in 2014. Only 12,000 employers and 76,000 individuals purchased insurance through a SHOP. Eighteen states have already delayed any additional language relating to establishing a SHOP. There’s so much about the Affordable Care Act on delay or uncertain, and the SHOP is typical of that.

PRIEST: On our level, it’s difficult for us to tell about the impact on the smaller employers. We have to deal with our own employee base, which is about 3,000 people. So I certainly appreciate the problems this creates for small employers. I hear about that all the time from friends and neighbors.

VANDEN PLAS: How is it affecting the employers you tend to serve?

PRIEST: For a lot of reasons, we’ve changed our benefit structure substantially, trying to narrow the network [as a cost-saving measure] and also trying to have the employees share more of the cost, which is not a happy place for them, either. We have a great employer base for group-sponsored health insurance, so we certainly have a number of smaller employers who have got employees coming to Meriter for care of one sort or another, just like other parts of the community. We don’t tend to hear about it as much from them because they’re probably not as well organized as the larger employers. We do know that our self-pay has actually gone down a little bit. It was not that large to begin with, so it seems like employees are still finding some kind of coverage.

VANDEN PLAS: Is there a resigned acceptance to the cost shifting?

PRIEST: Yes, I would say there’s a resigned acceptance. People recognize they have more skin in the game, which may drive different consumer behavior toward being more cost sensitive, being sure that the care they’re getting is really necessary. Meriter has not had a lot of experience with high-deductible plans, however. We just don’t see a lot of that in the community.

WATSON: We’ve been in a similar situation as a health care system, looking at roughly 10,000 insured employee lives. We’ve had to deal with some of the same cost issues. As the systems in Dane County would suggest, we are in a unique health care environment here with dominance in provider-based plans and narrow networks as a fundamental piece of the insurance market. So it’s continuing to be a challenge for all employers — whether you’re a health care system or a small-to-medium business — to make it affordable.

MUSSER: To Geoff’s point about high-deductible plans or consumers starting to get some skin in the game: That’s sort of where my organization comes in, trying to help folks understand that there is a difference in care and that they need to be an active participant in their care and in choosing their care. That goes for employers as well. There’s a long way to go in terms of getting that information out to the folks and getting them to use it, getting folks like M3 and others to use it to really help identify some of the high-value care.

Madison is a mecca for organized integrated care, but nobody is the best at everything, right? So each of the systems has opportunities for improvement. That is part of where our information goes — to help them identify where they might improve, but also for employers and individuals. There’s not a lot of information for folks to choose without an insurance agent or an employer HR department.



VANDEN PLAS: Without this piece, how do we really shape a system that’s consumer-centric?

MUSSER: Consumer-centric is an interesting philosophy. I happen to be of the philosophy that physicians and nurses and administrators are in the best position to make improvements in health care — faster than consumers. I would like to see consumers have the tools they need to make choices and make good use of their high-deductible spending, but the people at the front line are the people who can identify places where there can be improvements. There is, by all accounts, 30% to 60% waste in the health care system. Getting rid of the waste is what’s really going to impact costs, much more than consumerism, or at least much sooner than consumerism.

WATSON: It’s terrific to have the data and to drive the car with the headlights on. Is it fair to say that in some of the information I’ve read, Dane County already has somewhere in the neighborhood of 15%, 16% lower cost than the rest of the state because of the integrated, provider-based plans?

PRIEST: People take it for granted. When they get health care at other places in the country or the state, they recognize the difference between coordinated care and uncoordinated care.

“One of the main features of the SHOP that’s not available yet is premium aggregation, which would allow employees to choose a carrier.”
— John Healy, partner and senior account representative, M3 Insurance

MUSSER: Having had several different employers in the past several years, I’ve been treated in each one of these systems. It’s interesting and nice to be able to go sit in front of a doctor and say, ‘I had that CT scan in 2000,’ and she pulls it up and there it is. It was a different system, but the information is exchanged, it’s available. She doesn’t have to wonder whether she should redo that test. That’s a huge impact on cost — the elimination of test redundancies.

HEALY: One thing that should be mentioned about Madison is that in addition to the coordinated care, there’s a lot of competition amongst the health plans. As agents, our role is to help employers get the lowest-cost plan, the best plan that they can get, and when you have the ability to work with the different insurance companies, it has a tendency to keep the costs a little lower. If you’re getting a renewal from one insurance company over here and then you go to another one and ask for a proposal, you can sometimes get that rate reduced just by virtue of having another proposal that’s competitive. Those insurance companies don’t want to lose the membership that goes to the health system they’re associated with.

PRIEST: The idea of beneficial competition about price is useful, but the health systems in Wisconsin also have been competing in a positive way in quality and safety. They collaborate as much as they compete. So again, that competition to display your results, share them with everybody else, and ask them, ‘How did you get to a better place on that?’ They’re willing to share, and that’s unique as well.

WATSON: That’s a frequently overlooked aspect of care, because when you talk about the cost of health care, it’s more than just the absolute price. The quality factor must be considered.

SMITH: We’ve always had a fairly robust marketplace for small business in the state, with a lot of companies that will write small business group health insurance, compared to some states where they might have one or two insurance companies that do small business health insurance. The problem is ACA in Washington now wants to undercut that competitive environment by telling us what we have to buy and how much we’re going to spend on it. They’re telling us who we’re going to include in our groups.

We see trends now starting where smaller businesses are leaving the group insurance market, leaving family plans, and going to individual plans. In other words, they’re letting their employees go on the exchange or go wherever they can. So while we were doing pretty well here with a fairly low uninsured rate and prices that, even though premiums are always too high for small employers, at least we had more stability than some other states.

VANDEN PLAS: Onto the next question, primarily for the providers. In the transition to a quality-based, accountable-care business model, how would you assess the progress your organizations are making in terms of bending down the cost curve, which is eventually supposed to have a moderating effect on insurance premiums?

WATSON: There are a number of investments that health care systems are making in our primary care infrastructure — if you look at the patient-centered medical home, embedding care management and care-coordination resources, the inclusion of mental health services, and social work services in the primary care environment, which is something that was not necessarily done in the past. We’re actually spending a fair amount of money right now on resources to provide better coordination of care.

We believe that that investment is going to eliminate unnecessary utilization and better prepare patients on wellness, the preventative side, chronic disease management, all those things that really need a lot of coordination. Those resources will help us lower the cost of care by not providing unnecessary care. There’s also a significant investment being made in palliative care, end-of-life care, so that we deliver the appropriate care to people. Those are upfront costs. It may take a number of years to actually see a significant bending of that cost curve, but we think it’s the right thing to do.

PRIEST: That’s the blueprint for the future, and integrated health systems are more likely to be able to deliver on that. The economic alignment, if you consider taking the premium dollar at the beginning and taking care of the patients in the end, it’s actually in your best interest to take care of them in such a way that you get the maximum value for the money spent, meaning preventive care, appropriate palliative care, and supportive care. Transitions in care, if done poorly, result in a lot of rework. If done well, they are in patients’ best interests. That means hospitals probably need to be a little smaller. We don’t need as many inpatient beds as we needed five and 10 years ago. We need more primary care focus, more patient-centered medical homes, and that’s the recipe for success.

WATSON: We’re leveraging, for example, home care. Patients want to be at home. They’re not interested in going to the hospital the way they used to. If they can stay at home, if they can get the right care delivered, at the right place, and it’s cost effective, both sides are better off.

MUSSER: I deal with just about every one of the health care systems in the state on a regular basis, and Wisconsin is out front. The investment in primary care, care redesign, and care coordination is going on across the state to one degree or another. To Dr. Watson’s point about behavioral health issues and mental health issues, that’s a huge cost in our system that’s basically not well defined or not well identified or not often talked about, but it contributes so much to the cost of any illness, whether it’s heart disease or diabetes or anything else. We looked at the Medicaid data, the amount of basic depression, not even major depression or bipolar, but just what depression adds to the cost of care, and it’s at least 15% to any particular chronic disease that we see.

WATSON: There’s plenty of evidence out there to show that patients who are depressed or have psychosocial needs are going to be noncompliant. They won’t take their medication. They won’t get the follow-up. They won’t do the preventive type of things that will be the right thing for them, number one. Number two, we must prevent unnecessary hospitalization or ER utilization, where cost of care is more expensive. Investments in those types of programs will definitely create more value for the patient.



VANDEN PLAS: When does this cost-saving get translated to more moderate insurance premiums?

HEALY: The trend is actually starting to come down. Like Dean health insurance’s trend, one component of actual costs, the insurance costs, is lower than it was a couple of years ago. I would say that’s in spite of ACA law. I’d say it’s happening for all the reasons that were just discussed, but have nothing to do with the ACA.

WATSON: That’s a critical point because savings that any system realizes through better care, coordinated care, those savings eventually need to be passed to the consumer. It has to go downstream. If you look at the provider-based plans or the integrated systems here, they recognize that some of those savings are going to have to be passed down to the consumer. The data would suggest that’s starting to happen, so we’re starting to trend in the right direction there.

“There is, by all accounts, 30% to 60% waste in the health care system. Getting rid of the waste is what’s really going to impact costs, much more than consumerism, or at least much sooner than consumerism.”
 — Josephine Musser, CEO, Wisconsin Health Information Organization

VANDEN PLAS: Is there one thing in particular that a business owner or individual can do to control costs?

MUSSER: Keeping people healthy, preventing those with chronic diseases from getting catastrophic illnesses — that’s where the cost savings are, and that is why these systems are investing the way they are.

WATSON: What’s driving the growth in health care costs, a significant piece, is around just healthy lifestyles. And this is where patients, consumers of health care, need some skin in the game. If you look at obesity and smoking, probably the two biggest factors we see, they’re leading to more health care expenditures. We have to find a way to engage patients to do the right thing, to take care of themselves.

SMITH: This has been a real challenge for smaller employers. I know there’s evidence that big business has been able to manage their costs with the assistance of effective wellness programs, lifestyle education, that sort of thing. In the smaller workplace, it’s just not cost effective to bring that education component to small businesses and their workers.

Now we do have a new law taking effect in Wisconsin that is targeting smaller businesses and is an incentive for them to create their own wellness programs. We’ll see how it works. There’s a tax credit involved as well, so it’s trying to address the economy of scale in terms of what it costs to have an effective wellness program and who’s going to bear those costs.

WATSON: I would also encourage small businesses, when they partner with any provider system, to look for practices that will offer those types of wellness services at the individual level, in the medical home. The providers need to be well aware of that, but it’s something that business must be aware of, too.

SMITH: The other thing that comes into the smaller workplace is HIPAA [Health Insurance Portability and Accountability Act]. When you’re talking about four or five employees instead of 400 or 500, you’ve got some privacy concerns as to what you can actually implement in that workplace among your employees. So the whole system for years has been skewed against smaller businesses and their ability to purchase affordable, quality health care.

HEALY: Insurance companies release aggregated data on wellness programs to larger employers, they do not release it to smaller employers because, as Bill mentioned, it’s easier to pinpoint one particular individual or individuals that could be driving your cost. I’m not saying it would happen in Wisconsin, but some employers make decisions on keeping people on staff based on their health.



Obamacare Critique: A mix of good and bad

Perhaps the debate over the Affordable Care Act will eventually end, but the law still hasn’t gained public acceptance the way Social Security, Medicare, and Medicaid have. So we asked our roundtable panelists the following question: Knowing what you know today about how the health care reform effort has unfolded, what changes, if any, would you make to the Affordable Care Act? Most conceded that while the law is a mixture of good and bad, it should not be repealed, just improved upon. Here is a sampling of their comments:

Dr. Geoff Priest, Meriter-UnityPoint Health: It’s helped reduce the number of uninsureds, so more people get access to care. On the other hand, I understand some of the odious features that the business community sees in it. But it’s a first step, and it’s going to be tweaked and tweaked, just like when Medicare was introduced. It’s not going away, it’s just going to change.

Josephine Musser, Wisconsin Health Information Organization: It’s a big, complex social policy, and it’s not all bad and not all good. It was designed to address problems we largely didn’t have in Wisconsin [such as competition of insurance], without the flexibility to opt out or ‘Wisconsinize’ the law.

Dr. Stewart Watson, Dean Clinic: From a provider perspective … it has increased the number of covered lives by about 8 million. There are also a significant number of people who may not be insured or employed that have been able to procure health insurance with federal tax credits based on income and affordability. The issue around the elimination of preexisting conditions [as a consideration for denial of coverage], which was a huge barrier for people, was a very positive thing.

John Healy, M3 Insurance: Statistics show that roughly 80% of those who have signed up through are getting a subsidy. This issue is coming to the Supreme Court. If there were to be no subsidies through the state plan or through the federal exchange in a state, that would be significant.

Bill Smith, National Federation of Independent Business: The 30-hour work requirement under ACA is a disaster. When they talk about incentives in this law to restrain economic activity, to restrain job growth, that’s one of them. Clearly, employers have an incentive to not hire or to keep more employees on a part-time status than full time, and that isn’t the way you grow economies.

Data Driven

Electronic Medical Records Are Improving Care, Reducing Costs, and Engaging Consumers

Electronic medical records and medical informatics are part of controlling health care costs while driving quality, but how is Wisconsin doing when it comes to using data to make hospital quality ratings transparent, drive value, and encourage consumers to be more engaged in their care?

Better on all three counts.

Nearly 30 years ago, the state established the Office of Health Care Information, which required all hospitals to report their discharge data. In 2003, the Wisconsin Collaborative for Health Care Quality came along, and it has been collecting information on a number of conditions and publicly reporting them. The Wisconsin Health Information Organization also plays a role, serving 40 organizations and 200 end-users, mostly health plan providers.

“The idea is that folks can dig into the information, find opportunities for quality improvement, and peel back layers of the onion,” noted Josephine Musser, CEO of the Wisconsin Health Information Organization. “It’s not just a score that’s reported, and that’s really important.”

Meanwhile, health system implementation of electronic medical records is helping to drive better clinical quality and business performance, according to Dr. Geoff Priest, CMO for Meriter-UnityPoint Health. Within three months of its implementation of the Epic EMR system, Meriter’s ordering of lab tests and X-rays had both dropped 15% due to previous redundancies and lack of connectivity.

Dr. Stewart Watson, CEO of Dean Clinic, says the key advantage of any electronic health record is the dashboard, where physicians, nurses, and care managers can see what tests you’ve had and what care is still needed. “Physicians are really starting to accept the electronic health record because they know it’s not going away, and they do value the functionality,” Watson added.

The thing that still must be accomplished on a broader scale is for consumers to do their part and use data and technology for their own benefit. One element that promises to change the patient experience, Watson noted, is the connectivity they have to their own information through technology like Epic’s MyChart.

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