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Study asserts insurance marketplaces are healthy


For Kaiser Health News

Despite dire warnings from Republicans and some large insurers about the stability of the Affordable Care Act exchanges, an Obama administration report released Aug. 11 indicated that the individual health insurance market has steadily added healthier and lower-risk consumers.

Medical costs per enrollee in the exchanges in 2015 were unchanged compared with 2014, according to the Centers for Medicare & Medicaid Services. In contrast, per-member health costs rose between 3 percent and 6 percent in the broader U.S. insurance market, which includes 154 million people who get coverage through their employer and the 55 million people on Medicare, the report said.

Aviva Aron-Dine, senior counselor to U.S. Health and Human Services Secretary Sylvia Burwell, said the data was encouraging when many insurers have announced double-digit rate increases for 2017 and others have pulled back in some states to curtail financial losses.

“What we take from this is that the marketplace is on sound footing,” she said in a phone briefing with reporters. She also said the sharp 2017 rate increases could be intended to help insurers compensate for underpricing their premiums in 2014 and 2015 and not the first in a series of large annual rate hikes. Next year’s phase-out of the Affordable Care Act’s reinsurance programs — which helped insurers cover losses on higher-cost enrollees the past two years — is another reason why some insurers want higher rates for 2017.

Nearly 13 million Americans bought coverage for 2016 on the Obamacare marketplaces. More than 80 percent received federal subsidies that help them afford policies and insulate them from effects of premium increases.

Several insurers, including UnitedHealth Group and Humana, have said they will not sell 2017 individual plans on many state exchanges because they absorbed heavier-than-expected losses in part due to higher medical claims.

Aron-Dine said the administration always expected that rising enrollments would attract younger and healthier enrollees to balance the risk of insuring the older and sicker people who signed up initially. In 10 states with the highest enrollment growth from 2014 to 2015, the government reported, per-member per-month claims costs fell by an average of 5 percent.

Its study was based on claims data collected by CMS to administer the health law’s reinsurance and risk adjustment programs. Insurers submitted their 2015 data earlier this year.

What explains insurers’ losses from Obamacare if health costs have held steady?

Sabrina Corlette, research professor at the Center on Health Insurance Reforms at Georgetown University’s Health Policy Institute, said some insurers priced their coverage too low in 2014 and 2015 — in part to grab market share — and are now trying to make up for it. She said insurers have based most of their 2017 rate increases on their 2015 results.

“This should reassure people that despite the narrative that these markets are going down the toilet, in fact the report shows the opposite … that these markets are generally performing pretty well,” Corlette said.

Cynthia Cox, associate director for the Kaiser Family Foundation Program for the Study of Health Reform and Private Insurance, said the CMS report is good news for consumers. “This suggests the premium increases that we are seeing going into 2017 is likely to be a one-time adjustment … for pricing too low in the first few years,” she said. (Kaiser Health News is an editorially independent program of the foundation.)

Zooming in on Millennial patients



Kaiser Health News


Lacee Badgley, the mother of a 7-year-old, works full time as an insurance adjuster. Like most working parents, she finds making time for doctor’s appointments a challenge.

“I don’t have the time or energy to drive around town and then wait,” she said.

That’s why Badgley, 36, switched from her previous doctors to Zoom+, a medical provider and health insurer that aims to give patients more control and transparency. She can make same-day appointments through a mobile app, and she’s usually in and out within 30 minutes.

“It’s one-stop shopping,” she said. “I am a big fan of getting everything quickly … I get my medication, my tests, everything in one visit.”

Zoom, which serves patients in Portland, Seattle and Vancouver, Wash.,  is trying to buck the traditional healthcare system by offering what it bills as convenient, affordable care in a hip and user-friendly environment. The retail clinics, painted a vibrant turquoise, are stylish and simple. The prices are posted on the walls.

Zoom was created by physicians Dave Sanders and Albert DiPiero to address problems that have plagued medical care for decades: rising costs, poor service and low quality, Sanders said. “We fundamentally wanted to change the system,” he said.

The company targets Millennials, who have been at the forefront of change in other industries. Zoom is designed for an imaginary patient named Sarah, who is in her early thirties and wants to get her health care the same way she gets other services in her life — quickly and efficiently.

The waiting rooms clearly illustrate that dynamic: There are no magazines because patients don’t typically wait long enough to read.

Zoom started as a single clinic in Portland 10 years ago and now has more than 30 locations. Last year, the company expanded in Portland and now offers dental care, mental-health services and chronic-disease management, as well as appointments with cardiologists, dermatologists and other specialists.

It also opened a “performance studio” to help people reach their fitness goals and a clinic that treats emergencies such as broken bones and concussions.

This year, Zoom began selling insurance through the Oregon health exchange. Sanders said that by having insurance members of its own, Zoom will be able to better assess its success at controlling expenses and improving care.

Only about 2,500 have signed up for Zoom’s insurance, Sanders said. He hopes to expand the insurance arm over time and believes the overall model could be replicated in other cities.

In some ways, Zoom is similar to Kaiser Permanente, which also provides medical care and insurance.

But Kaiser is a closed system: It only accepts Kaiser members. Zoom is more of a hybrid, treating not only Zoom insurance members but people with other health plans and self-paying patients as well. As a result, the company is both a partner and a competitor to some other insurers.

Of course, Kaiser is also a healthcare giant {not connected with Kaiser Health News} that operates in multiple states, while Zoom is much smaller and regionally contained.

People covered by Zoom insurance can get care at Zoom medical facilities or with Zoom partners, including Oregon Health & Science University hospitals.

In recent years, more health care providers have been offering insurance, but the vast majority of them are hospital systems, said Katherine Hempstead, director of coverage for the Robert Wood Johnson Foundation.

It’s unique for a network of retail clinics to add an insurance arm, and Zoom’s model is distinct because it is selling a branded experience to a specific population, Hempstead said. One Zoom poster says the complete health system is “designed to make you happier, healthier, smarter, faster, sexier, creativer.”

Hempstead said Zoom seems to be betting on the idea that young people are brand-loyal and view health much more broadly. As a result, they may be coming to Zoom not only to see a doctor but also to work with a fitness coach, get therapy or take cooking classes.

“It’s a totally new-school approach,” she said. “A company like this is saying, ‘We will be the destination of everything you think of when you want to stay healthy.’ The question is: Will the economics work out?”

That could be a challenge given how saturated the Portland insurance market is, said Sabrina Corlette, a research professor at Georgetown University’s Health Policy Institute. And some insurers on the exchange are much more established.

In addition, Millennials aren’t typically heavy users of the healthcare system, though many come for regular checkups, she said. Zoom’s success as an insurer depends in part on convincing young people that insurance “is a valuable thing for them to get and maintain,” Corlette said. Attracting young, healthy consumers also helps balance out any older, sicker members.

Other health care companies are marketing to millennials also, including New York-based insurer Oscar, which attracts younger consumers with its user-friendly technology. Oscar started selling coverage through Covered California this year. Harken Health, a subsidiary of UnitedHealthcare, assigns members in Chicago and Atlanta to a personal health coach, and — like Zoom — it also offers classes in cooking and yoga.

Darcy Hoyt, a veterinarian, said she signed up for Zoom insurance after regularly using the clinics for the past few years. The monthly premiums to cover her and her two children are lower than what her previous insurer charged, and she appreciates knowing in advance how much everything will cost.

“So far, so good,” Hoyt said. “For the relatively young, healthy families with kids falling off bikes and getting common colds, it’s very streamlined.”

The model appeals to people who want a different approach to medicine that doesn’t have the “vestigial appendices of a health care system that has been around for 50 years,” said John McConnell, director of Oregon Health & Science University’s Center for Health Systems Effectiveness.

“It’s like the iPhone,” McConnell said. “Zoom changed the paradigm … The whole way of delivering care is very different.”

Zoom is selective about its patient population. While it sees privately insured patients and uninsured ones with the ability to pay, it doesn’t accept people who are on Medicaid or Medicare.

By limiting whom they serve, McConnell said, the company’s providers may be cherry-picking the least costly patients and leaving other medical groups and hospitals to deal with medically needier people.

Sanders countered that one company can’t be all things to all people and Zoom has decided to invest its resources in serving a population that was ignored by the health system before the Affordable Care Act came along.

Zoom keeps costs low by providing care in neighborhood clinics and avoiding unnecessary tests and procedures. It relies heavily on nurse practitioners and physician assistants, and maintains small staffs. It also has its own electronic health record system.

“The whole process has been stripped,” Sanders said. “We took out a lot of the people, we took out all the paper, we took out the whole Taj Mahal.”

To advance its mission, Zoom has taken on regulators and state policymakers. It successfully lobbied for laws in Oregon allowing nurse practitioners to dispense medication and insurers to reimburse for more telemedicine.

The emergency clinic is one place where doctors said they are able to avoid overhead and pass savings along to patients. For patients paying out of pocket, a visit costs under $300.

Badgley, who has private insurance, came in to the clinic recently because she had been in bed for days with what she thought was the flu but still felt horrible after returning to work. She only had to explain once why she was there.

In the exam room, Dr. Aviva Zigman pulled out a pen and wrote Badgley’s symptoms on an oversized white board, along with the tests she might need and how long the appointment would take. Soon afterward, Zigman quickly determined that Badgley had an ear infection and gave her some antibiotics.

Zigman said that as a provider, the Zoom model is much more efficient than a typical emergency room for routine ailments and her patients can get what they need quickly.

Another Zoom patient, Amy Cannon, 45, goes to the company’s new primary care clinic for management of her high cholesterol, prediabetes and high blood pressure. The clinic, which has a kitchen in the lobby, offers cooking and yoga classes on site. Cannon said it feels more like a private club than a doctor’s office, and the assistant greets her with a hug.

“It’s ‘Cheers’ for health care,” Cannon said. “Everybody knows your name.”


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