As health care reforms begin, so do questions

Mike Moran
Business Times

The day came and went without a lot of fanfare, but the long-term effects could be great. Meanwhile, business people in the Grand Valley continue to sift through the long-term implications of the first health care reform measures that kicked in Sept. 23.

The changes include the allowance of dependent coverage for adult children up to age 26; the end of pre-existing condition exclusions for children, lifetime coverage limits and some types of benefits; as well as full coverage for certain preventive services. Many more changes are scheduled to take effect each year through 2014, while an excise tax on high-cost medical plans is set to begin in 2018.

In the meantime, Mesa County continues to draw national attention for a cooperative health care system noted for providing high quality at lower costs than in other parts of the nation.

The views of health care changes run the gamut locally, much as they do nationally. Proponents of reform cite what they see as the need to help ensure more people have access to quality health care at affordable prices. They see steps at the national level helping to expand a cooperative model in Mesa County. Many of those proponents met recently as part of a series of meetings primarily designed to address a shortage of primary care physicians in Mesa County.

Sally Schaefer
Sally Schaefer

Opponents of health care reforms signed into law by President Barack Obama earlier this year caution that expansion of benefits will cause higher insurance rates while at the same time prohibiting people from opting out of health care coverage. They also fear there could be further government takeover of the health care system, which accounts for more than 17 percent of the nation’s gross domestic product.

The Health Care Development Council is headed by Sally Schaefer, former chief executive officer of Hilltop Community Resources in Grand Junction and a current board member of the Colorado Health Foundation. The development council focuses primarily on the shortage of doctors in Mesa County and on improving access to health care. The state foundation funds health care efforts partly with the use of grant monies.

Schaefer discussed a national Beacon Community grant recently awarded to the Quality Health Network to expand a cooperative local health care model. The network enables doctors to share information about procedures and costs as doctors monitor costs to try to prevent excessive charges by peers. “This could eventually become the health care model for the country,” Schaefer said.

The expansion effort is under way, with inquires from health care organizations in nearby counties. They include hospitals in Delta and Gunnison, which anticipate adding staff to handle increased workloads. The local health care council estimates implementation of the seven-county effort will occur over the next 29 months. Part of the effort is funded through federal stimulus funds, and Schaefer anticipates some of those funds will continue to flow to Western Colorado “We’re going to make hay while the sun shines,” she said.

Schaefer also advised people attending the health care council meeting that a new round of grant applications must be submitted to the Colorado Health Foundation’s Philanthropy Committee by mid-October. “They’ve got more money than they know how to spend,” she said.

The local health care council includes representatives from Hilltop, St. Mary’s Hospital, Community Hospital, Family Health West, Mesa Developmental Services, the Independent Physicians Association, Rocky Mountain Health Plans and the Marillac Clinic.

The Grand Valley health care system was featured in the September issue of Health Affairs magazine and reportedly will be featured in an upcoming issue of the New England Journal of Medicine.  The Grand Valley health care system also has been the subject of international studies due to a unique cooperative agreement between the physicians association and Rocky Mountain Health Plans (RMHP). Under the arrangement, RMHP receives the bulk of the health care insurance business in the county. In exchange, RMHP works to compensate doctors who treat Medicare and Medicaid patients at higher rates than they might otherwise be compensated.

Jim Sjerven
Jim Sjerven

Other unique attributes of the Grand Valley health care model include primary physicians who are willing to work for less pay than doctors in other regions; the Marillac Clinic, which uses private donations and volunteer staff to provide health services to low-income residents; and a lifelong care system that begins with the B-4 Babies prenatal program and concludes with end-of-life services at Hospice and Palliative Care of Western Colorado.

While the cooperative effort receives national praise, private for-profit insurance companies warn that increased government involvement in health care could lead to higher costs for all and a potential slowdown in the speed at which such care is delivered.

“You cannot keep your health insurance plan the same as it was. You can’t,” said Jim Sjerven, an agent for Valley Financial Services.

The company helps clients choose health insurance and investment plans. It presented clients with a one-hour overview of the potential effects of health reform legislation.

Sjerven said opinions about health care reform are likely to depend on the eye of the beholder.

“If you have a child with a disease, coverage through age 26 (under the parents’ plan) is probably a good thing,” he said.

But plans that are rich in benefits are going to cost more than they otherwise would, he cautioned.

“Every time you put something on an insurance company, it’s going to raise rates,” he said.

And clients who understand their health policies are “grandfathered in” as long as the policies remain the same could be in for a rude awakening. The insurance industry estimates about 90 percent of businesses will lose their grandfathered status due to any of the following actions:

A change in insurance carriers.

A merger of the firm with another business.

A significant reduction in contributions to employ health coverage.

An increase in deductible rates for employee health plans.

Such elimination of grandfathered status is due to begin with health policies up for renewal Oct. 1.

When a company loses the status and begins from square one, it faces more federal mandates that can affect the level of health care coverage, who gets paid by whom and which family members qualify under an employee health program.

In addition to a requirement to expand coverage, insurance companies also face increased federal taxes in the coming years. Private companies will be taxed both on their income and on their profits,  Sjerven said. The combination will certainly lead to increased rates, he said.

“The administration is warning insurance companies not to raise rates due to health care changes,” he said. “But they’re gonna (raise rates).”

In the workplace, such costs are paid by employers, employees or a combination of the two groups. And the days when employers can give health coverage to a few high-level employees are numbered, said Sjerven. He said new requirements will dictate that 70 percent of employees benefit from an insurance plan, or 70 percent must be eligible and 80 percent must enroll.

Sjerven said the new rules amount to an insurance business plan that most businesses wouldn’t normally find acceptable.

“Think about your business,” he said. “They’re (government regulators) going to tell you how much you can charge, how much of your income can be used on administrative expenses; and, if you spend too much on administrative expenses, you owe your customers a refund.”

The refund is a reference to penalties a business can face if its health coverage is deemed unaffordable. Should the monthly premium exceed 9.8 percent of an employee’s pay, the employer faces an extra tax which would ostensibly be used to pay for insurance costs.

Employers will be prevented from firing an employee who falls under such a scenario. That would leave employers with two options in the above scenario: raise the employee’s pay or pay the fine for a premium deemed too high.

Requirements for businesses do not apply to businesses that employ fewer than 51 people.

There are four choices on how to approach the new health care plan, Sjerven said: Accept it as is, challenge it by lawsuit, repeal it or approve Amendment 63 on the November ballot. The Colorado proposal asks voters if they want to opt out of the national health care plan. Virginia and Louisiana have taken action to oppose mandatory purchase of health insurance. More than 20 states have combined to challenge the federal government’s authority to impose a national health care plan on states.

While the effects of the national legislation are under scrutiny, health care leaders in Mesa County continue to address the doctor shortage and other issues. Mesa State College has instituted new nursing programs and the first nurse practitioners are expected to graduate in early 2014.

“It will create a whole new dynamic for the region,” said Kristy Reuss, director of the Health Sciences department at the college.

David West
David West

Added Schaefer: “I don’t think anyone believes that nurses won’t be a part of health care (solutions).”

Local providers see nurses taking over some of the duties traditionally taken on by doctors, including writing prescriptions and conducting routine physicals.

Dr. David West, who formerly ran the physician residency program at St. Mary’s Hospital and is a candidate for a national health care panel, continues to see a shortage of primary care providers as a major issue. “The entire model of primary care is so broken that the future is bleak,” he said.

Yet, West and others continue to work toward such programs as an expanded University of Colorado residency program for St. Mary’s Hospital. Discussions between the hospital and the university were serious during the economic boom days two years ago, but state budget constraints have stalled the talks. State and federal budgets will likely have a big effect on what happens and how quickly changes might occur in the health care business.