Daily Insurance Report - July, 20 2023

Your summary of the Voluntary and Healthcare Industry’s most relevant and breaking news; brought to you by the Voluntary Benefits Association®

Comp a ‘profit engine’ for property/casualty: A.M. Best

By Louise Esola - Workers compensation insurers’ underwriting results continued to outpace the rest of the U.S. property/casualty commercial sector in 2022, as they benefited from the long-term decline in workplace accidents and a reduction in fraudulent claims, according to an A.M. Best industry segment report released Tuesday. Read Full Article…

VBA Article Summary

  1. Favorable prior-year loss reserve development: The insurance industry's reserve position was strengthened in 2022 due to continued favorable prior-year loss reserve development. This improvement can be attributed to the long-term declines in claims frequency, which have positively impacted the insurance sector.

  2. Improved combined ratio for workers comp: In 2022, workers comp exhibited a combined ratio of 87.8%, which was significantly lower than the overall property/casualty segment's ratio of 102.4%. This indicates that workers comp had a more favorable underwriting performance compared to the broader property/casualty insurance market.

  3. Rising payroll levels and premium growth: The report highlights that workers comp premiums, based on payroll, benefited from substantial wage growth in the United States, the highest in over 25 years, as well as robust job growth. These factors contributed to increasing the overall premium levels of workers comp insurance, reaching pre-pandemic levels. The higher payroll base also helped in managing the increase in claim severity, which was accompanied by rising medical and indemnity costs but remained within manageable limits.

Additional Insights:

  • Workers comp pricing trend: The report observes that workers comp pricing has generally declined since 2015, with the exception of the post-pandemic period from the second quarter of 2020 through 2021, when modest increases in pricing were observed.

  • Long-term implications and inflationary pressures: Despite the positive trends, the report emphasizes that the workers comp segment is still influenced by various factors with potential long-term implications on its operating performance. These include rising inflationary pressures that impact the sector. Higher wages, for example, have driven indemnity costs up, resulting in a modest increase in claims severity.

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How a 78-year-old legacy paved the way for healthcare disruptors

By Jakob Emerson - As consolidation in U.S. healthcare continues at an increasing rate, the nation's largest health systems and payers have evolved to look more like each other: diverse, health services giants that can deliver healthcare and coverage across a variety of settings. But for Robert Pearl, MD, the rise of healthcare giants such as UnitedHealth Group and CVS Health are more iterations of a payer-provider model that has been working successfully for 78 years: Kaiser Permanente. Read Full Article… 

VBA Article Summary

  1. Consolidation in the Hospital Industry: According to Dr. Pearl, the consolidation trend in the hospital industry has primarily resulted in increased prices rather than improved performance or reduced costs. Research supports the notion that consolidated hospital systems tend to drive up prices instead of delivering better outcomes. This raises concerns about the impact of consolidation on healthcare quality and costs.

  2. Entry of Retail Giants into Healthcare: Dr. Pearl highlights the entry of retail giants such as Amazon, CVS, Walmart, and UnitedHealth into the healthcare sector. These companies are engaging in massive acquisitions and expanding their reach across various healthcare domains, including pharmacies, care delivery, insurance, and home health services. Dr. Pearl suggests that these retail giants aim to replace the current healthcare system, potentially emulating the integrated care model of organizations like Kaiser Permanente.

  3. Disruption and Concerns for Hospitals: The emergence of integrated health services companies, along with the aggressive strategies employed by retail giants, poses challenges for hospitals and healthcare organizations that are not affiliated with these groups. Dr. Pearl expresses concern that these disruptors may divert patients away from traditional healthcare providers, potentially leading to the erosion of market share and financial viability. He advises hospitals and insurers to establish relationships with retail giants to adapt to the changing healthcare landscape and warns that the existing fee-for-service model and small-scale operations may become unsustainable.

Medicare proposes removing limit on PET scans used to help diagnose Alzheimer’s disease

By Spencer Kimball - Medicare plans to expand its coverage of PET scans that are used to help diagnose Alzheimer’s disease, a major shift in policy that could make it easier for patients to access new treatments that are entering the U.S. market. The proposal would abolish Medicare’s current nationwide policy. Right now, the program for seniors will only cover one PET scan per lifetime for patients participating in clinical trials. Read Full Article…

VBA Article Summary

  1. Medicare proposes expanding coverage of PET scans for Alzheimer's diagnosis: Medicare has put forward a proposal to broaden its coverage of PET scans, which are used as a diagnostic tool for Alzheimer's disease. This proposal aims to eliminate the existing nationwide policy that restricts PET scans to one per lifetime for individuals participating in clinical trials. PET scans are instrumental in detecting amyloid protein in the brain, a key marker associated with Alzheimer's.

  2. Policy shift to facilitate patient access to new treatments: The proposed policy change by Medicare represents a significant shift that could potentially make it easier for patients to obtain access to innovative treatments like Leqembi. By allowing regional organizations known as Medicare Administrative Contractors to determine coverage for this diagnostic tool, the decision would be based on the assessment of whether the service is "reasonable and necessary" for diagnosing the illness.

  3. Positive response from Alzheimer's community: The Alzheimer's Association, an advocacy group for individuals affected by the disease, has welcomed Medicare's proposal, citing its potential to eliminate unnecessary barriers for patients. The association's chief scientific officer, Maria Carrillo, views this decision as a "major step forward." This shift in policy aligns with Medicare's commitment to expand coverage for the diagnostic test and could have a significant impact on patients' ability to access not only PET scans but also future antibody treatments for Alzheimer's, pending FDA approval.

Eastbridge study shows largest carriers capture growing share of voluntary market

By Eastbridge Consulting Group - The top 15 voluntary benefits companies outpaced the industry's overall sales growth rate last year and increased their dominance in the worksite market, according to Eastbridge Consulting Group's most recent research. Read Full Article… 

VBA Article Summary

  1. Strong Sales Growth: According to Eastbridge's "Voluntary/Worksite Marketing Industry Snapshot and Competitor Profiles" SpotlightTM Report, the 15 largest carriers in the industry experienced an average sales growth of 6.3% in 2022. This figure exceeded the industry average of 5.4%, indicating a positive trend in the market.

  2. Recovery from the Pandemic: The report highlights that more than half of the largest carriers saw double-digit sales increases in 2022, demonstrating a strong year-over-year performance. Only two carriers experienced sales decreases compared to the previous year. This robust performance has contributed to the industry's continued recovery, bringing it close to pre-pandemic levels.

  3. Group Products and Benefit Brokers Dominate: The report reveals that group platforms accounted for a significant majority of voluntary sales, representing 78% of total sales in 2022. In contrast, individual products constituted only 22% of sales. Moreover, benefit brokers, who primarily focus on employee benefits and offer voluntary products as an additional line, continued to dominate the distribution of voluntary products, accounting for over two-thirds of all sales.

Overall, the report showcases positive growth and recovery in the voluntary/worksite marketing industry, with strong sales performance, a focus on group products, and the influential role of benefit brokers in the market.

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How the role of the broker has evolved

By Kim Buckey - Benefits broker: A professional who provides benefits advice, services and products to employers and employees. While the definition of the role has remained consistent over the years, the nature of that advice — and the form those products and services take — is continually evolving in response to economic trends, a diversifying workforce and changing consumer needs and expectations. Read Full Article…

VBA Article Summary

  1. Increasing Role as Strategic Consultants: Today's brokers are no longer just intermediaries between employers and insurance carriers. They have evolved into strategic consultants who advise employers on various aspects of their benefits programs. Brokers help employers contain healthcare costs, meet employee demands, and remain competitive in a tight job market. They assist in crafting competitive benefits packages that align with employers' budgets and support employees year-round by developing communication strategies and offering voluntary benefits.

  2. Combatting Rising Healthcare Costs: Brokers play a crucial role in helping employers control healthcare costs, which have consistently outpaced inflation. With the advent of new and more expensive medications, employees skipping preventive services, and increased utilization of behavioral healthcare, healthcare costs continue to rise. Brokers assist employers in managing these costs by implementing cost containment strategies, promoting health plan transparency, and providing clinical advocacy services. By educating employees on plan selection and usage, brokers help both employers and employees save on healthcare expenses.

  3. Effective Employee Communication: Brokers are meeting the growing demand from employees for better understanding of their healthcare plans and control over their healthcare costs. Employers rely on brokers to provide communication support to their workforce. Brokers have shifted from traditional group meetings to utilizing various channels such as virtual presentations, materials, in-person support, and year-round communication campaigns. They focus on educating employees about healthcare terminologies, plan selection, and shopping for healthcare services. Brokers also incorporate digital tools and one-on-one virtual meetings to engage remote and hybrid workforces. By enhancing employee education and engagement, brokers facilitate effective benefits utilization and decision-making.

  4. Voluntary Benefits and Employee Wellbeing: Brokers have witnessed a rise in demand for voluntary benefits, which allow employees to customize their benefits packages based on their needs. These benefits include accident insurance, critical illness coverage, hospital indemnity, disability insurance, and life insurance. The popularity of voluntary benefits has increased as employees seek financial security and overall wellbeing support from their employers. By offering voluntary benefits, employers demonstrate their care for employees' wellbeing, contributing to higher employee satisfaction and retention. Brokers help employers understand the evolving needs of the workforce, including the preferences of Generation Z, who are expected to make up a significant portion of the global workforce by 2025.

Biden Administration Releases Revised Guidance For Medicare Drug Price Negotiation Amid Industry Lawsuits

By Vandana Singh - The Centers for Medicare and Medicaid Services released revised guidance on using its authority with pharmaceutical manufacturers in the Medicare Drug Negotiation Program to expand benefits, lower drug costs, keep prescription drug premiums stable, and improve the strength of the Medicare program. Read Full Article… 

VBA Article Summary

  1. Medicare's Direct Negotiation with Drug Manufacturers: Starting this year, Medicare will initiate direct negotiations with drug manufacturers in an effort to reduce the prices of high-cost prescription drugs covered by the program. This marks a significant policy shift aimed at addressing the rising costs of medications and making them more affordable for Medicare beneficiaries.

  2. Selection and Timing of Negotiations: By September 1, the Centers for Medicare and Medicaid Services (CMS) will announce the first ten drugs that have been chosen for negotiation. The initial round of negotiations will take place between 2023 and 2024, with the negotiated prices becoming effective from 2026 onwards. During the negotiations, CMS will consider various factors, including the drug's clinical benefits, its impact on Medicare beneficiaries, and whether it addresses unmet medical needs.

  3. Transparency and Public Explanation: Before March 1, 2025, CMS will provide a public explanation of the maximum fair prices resulting from the negotiations. In this explanation, CMS will outline the negotiation process and provide a narrative explanation of the agreed-upon prices. Furthermore, if a drug company voluntarily discloses information about the negotiation process, CMS may decide to make early disclosures as well. This commitment to transparency aims to ensure accountability and provide clarity regarding the pricing decisions made through the negotiation process.

Bonus: Cap on Insulin Costs: The article also mentions an additional development related to Medicare Part B and Medicare Advantage. As of July 1, 2023, President Biden's cap on insulin costs at $35 per month will go into effect for individuals who receive their insulin through Medicare Part B and Medicare Advantage using a traditional pump. This measure is designed to alleviate the financial burden of insulin expenses for eligible Medicare beneficiaries.

Let's ensure Medicaid covers only the truly eligible

By Sally Pipes - State Medicaid programs are in the midst of removing millions of people from their rolls. According to new data , more than 1.5 million in 27 states have found themselves jettisoned from the program since the end of March. Many Democrats have alleged that this Medicaid purge is unfair and unjust. In reality, it's essential to the program's long-term viability. Read Full Article… 

VBA Article Summary

  1. The resumption of Medicaid eligibility verification: As part of a federal budget deal, states gained the ability to verify whether Medicaid enrollees were actually eligible for the program starting in April. This verification process had been suspended during the COVID-19 public health emergency, leading to significant growth in Medicaid enrollment.

  2. Unsustainable Medicaid spending: Medicaid spending reached $734 billion in 2021, accounting for one in every six healthcare dollars spent in the country. The Centers for Medicare and Medicaid Services project that spending will exceed $1 trillion within the next five years. The inflated enrollment caused by the pandemic has contributed to this financial strain.

  3. Cutting costs and improving Medicaid's mission: With approximately 100 million people covered by Medicaid before the eligibility verification resumed, nearly one in three Americans were enrolled in the program, extending beyond its original purpose of assisting the poor and disabled. Removing ineligible individuals from the program's rolls is necessary to reduce costs and ensure Medicaid can better serve those who are eligible. It is argued that ineligible individuals could seek employer-based health benefits or subsidized coverage through Obamacare exchanges instead.

America’s oldest and best disability benefit system

By Will Raderman - As Americans prepare to celebrate the declaration of our nation’s independence, we should commemorate the disability benefits established in response. Although the Social Security Act of 1935 established the first substantive federal benefits available to the general public, there is an extensive history of U.S. policymakers approving monetary support for war veterans who suffered injuries during their service, starting with the American Revolution. The seamless establishment of these military benefits has led them to look quite different from the cash assistance eventually provided to disabled civilians. Read Full Article… 

VBA Article Summary

  1. The veterans' disability benefits program stands out for its strength and simplicity. Veterans with service-related injuries receive disability ratings on a 0-to-100 scale, which determines the size of their benefits. This contrasts with civilian disability benefit programs like SSI and SSDI, which only pay for total disability and provide significantly lower average benefits.

  2. Unlike civilian disability programs, veterans' benefits do not impose financial limitations on beneficiaries. Disabled veterans can pursue post-service financial opportunities without fear of losing their benefits. In contrast, SSI and SSDI have financial criteria that inhibit work and savings, creating precarious situations for recipients.

  3. The development of veterans' benefits spanned a century and a half, with early assistance being small in size and scope before scaling up during the Civil War period. The program faced challenges such as fraud and criticism of the approval process, leading to separate benefit systems for different wars. However, veterans' service-connected benefits have remained the gold standard, providing smooth and durable support compared to civilian disability benefits.