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Tag: The ACA

The Next Shoe to Drop: Small Group Health Insurance Cancellations

• 24

By Robert Laszewski

Obamacare is impacting the small group insurance market in many of the same ways as the individual health insurance market. While employers with less than 50 workers don’t have to provide coverage, if they do they are required to comply with the same essential benefit mandates, age rating changes, and pre-existing condition reforms the individual market faces.

That means essentially all small group policies cannot continue as they are––they have to be discontinued.

What makes things a bit easier, if not any less expensive, is that small employers typically have health insurance brokers to run interference for them and help them through this change where individual consumers often get that dreaded cancellation letter telling them they will not have health insurance after a certain date if they do not act quickly in what is a confusing marketplace in the best of times.

The first small group renewals are now occurring––the January 1 renewals that typically have to be delivered during the month of November under state law.

Many employers are facing significant changes in order to comply with Obamacare and therefore price increases. One Maryland broker I spoke to this week has 90 small group accounts and he reports his smallest increase was 15%, his largest was 69%, and most are in the 30% – 40% range.

(By comparison, Mercer just announced the average large employer health care cost increase for 2014 will be 5.2%, meaning small groups could have reasonably expected an increase under 10% without Obamacare.) The biggest rate increases are generally going to those employers with the youngest groups the most impacted by the new “age compression” rules.

Does this mean these small employers’ coverage has been outright cancelled and they will now send their workers to the exchanges, as I have heard some commentators argue?

No, at least not anytime soon.

But that does not mean that lots of these small employers aren’t angry and confused.

What are these small employers doing?

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The Clock Is Ticking

• 9

By THCBist

There’s still time.  Much of the sensationalistic coverage since October has completely missed the point, argue defenders.  THCB reader Hiro Kawashima had this to say:

“What became clear is that President Obama’s most formidable enemy isn’t the Republican Party, angry insurers or antsy Congressional Democrats; it is time. The PPACA is running against the clock and what the PPACA needs most is time to work. Even before the bill was signed into law, it was clear that the true financial benefit of PPACA would not be realized for a decade. Each failure, each negative portrayal and each angry consumer shaves an additional second off the clock. The President’s proposed administrative fix will buy time for the White House to get the healthcare.gov website working and regain control of the narrative.

If none of the reasons above made any sense to you, here is an analogy from President Obama:

One way I described this to — I met with a group of senators when this issue first came up — and it’s not a perfect analogy — but we made a decision as a society that every car has to have a seatbelt or airbags.  And so you pass a regulation.  And there are some additional costs, particularly at the start of increasing the safety and protections, but we make a decision as a society that the costs are outweighed by the benefits of all the lives that are saved.  So what we’re saying now is if you’re buying a new car, you got to have a seatbelt.

Well, the problem with the grandfather clause that we put in place is it’s almost like we said to folks, you got to buy a new car, even if you can’t afford it right now.  And sooner or later, folks are going to start trading in their old cars.  But we don’t need — if their life circumstance is such where, for now at least, they want to keep the old car, even if the new car is better, we should be able to give them that option.  And that’s what we want to do.”

Better But Nowhere Near Good Enough

• 8

By Robert Laszewski

I can provide you with an Obamacare federal exchange rollout update from two decidedly different perspectives:

  1. The website is working much better with enrollment increasing at least three-fold over just a few weeks ago with backroom error rates considerably improved; or
  2. The enrollment, to give you a general sense of what’s happening, for a health plan that might have to sign-up 100,000 people in order to get their share of the 7 million Obama administration’s national enrollment objective, has grown from perhaps 10-15 enrollments a day a few weeks ago to 40-50 a day now. If this new higher trend continues, such a plan would sign up only another 12,000 people toward the 100,000 objective by March 31. Backroom error rates being committed by Healthcare.gov, when enrollment data are transmitted to the health plans, are still far too high to transition to high volume processing without serious customer service issues.

So, pick your perspective. Most importantly, Healthcare.gov is not ready for what could come in just two weeks when, between December 1 and December 15, everyone expects massive pressure on the federal Obamacare enrollment and administration site so people can get coverage by January 1.

My independent survey of health plans also matches comments by CMS Deputy Chief Information Officer Henry Chao today at a House hearing that 30% to 40% of the IT systems needed to support Obamacare still must be built. He also said that, “We [CMS] still need to build the payments systems to make the [subsidy] payments [to the health plans].”

I have been hearing reports from plans that CMS has said that the enrollee subsidy information was going to be mailed to the plans but I frankly didn’t believe it. Chao went on to say that other backroom functions, including accounting systems, were not complete.

That would be like a bank starting business and attracting customers without finishing their ability to send their customers’ monthly statements.

Chao’s comments just underscore the risk for considerable backroom and therefore customer service issues when volume picks up.

Continue reading…

Think You’re Young and Invincible? You’re Young, Yes. Invincible? Maybe Not.

• 4

By Kathleen Reardon

Life was getting underway the day I found a suspicious lump. My first book had just been published and was being received well in my field. I was traveling and speaking about a new research project. The phone kept ringing and there was little time to think.

I figured that was the reason why my weight was falling. It was one of those good side benefits of a busy schedule. Why worry about a pea-sized lump? Lots of women have those and they turn out to be nothing. Coincidentally, that was exactly what my gynecologist said it was: nothing but a cyst.

Two more visits to that doctor resulted in him telling me that, at my age and with my family history, there was nothing to worry about and I should get on with life. He refused my request for a mammogram, suggesting that I should relax. I gave relaxation a try until a friend told me, “You look bad. If you don’t go see your GP for another opinion, I’m not going to talk to you.” There were dark lines under my eyes and I was becoming tired and downright skinny. I took her advice. It was cancer.

When I read about young people declining to sign up for health insurance, I remember back to that time. Sure, it’s great to be young. One of the best things is thinking you have a long time before you need to worry about your body giving you major problems. And isn’t life a gamble anyway?

I’m sure many young people reason this way and to some extent they’re right. Having spent a significant part of my career studying how people reason about health, it’s no surprise to me that weighing the odds causes a good many of us to take risks.

Yet, there is no such thing as a “young invincible,” the term currently bandied about to describe adults under the age of 35.

It’s not their fault if the system is unresponsive when they attempt to learn their insurance options. But it is their responsibility, to themselves and their families, to make sure that if something does go wrong — as it often does — their insurance will afford them the care that could save their lives.

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And Yes, The Affordable Care Act Really Does Make Care More Affordable. Here’s One Example ….

• 59

By Brian Klepper

Recently I was asked to intervene on behalf of a patient who, trapped by circumstance, was paying off an enormous bill for a lithotripsy procedure. What I uncovered wasn’t news, but it drove home how egregious the current system can be, why it so badly needs to be fixed, and how the Affordable Care Act (ACA) helps move us in the right direction.

The patient had health insurance through her husband’s job. But it was cancelled just after the hospital validated it, because the employer failed to pay the premium. The procedure was performed, and the patient was charged as “self-pay.”

If Medicare had been the payor in this case, the hospital’s total reimbursement would have been a little less than $2,000. But the lithotripsy and associated costs were billed at $33,160, or just under 17 times the Medicare rate. After the patient applied for financial assistance, a 30% contractual adjustment was applied, reducing her bill to just under 12 times the Medicare rate.

If the health system had asked her to pay 190 percent of Medicare – typically the upper end of commercial insurance rates – her bill would have been about $3,800. By the time I was contacted, the patient and her husband – responsible people trying to make good on their debt – had already paid the health system $5,700 or 285 percent of Medicare. The hospital insisted they owed an additional $16,000.

I laid this out in a letter to the CEO and, probably because he wanted to avoid a detailed description of this unpleasantness in the local paper, he relented, zeroing out the patient’s balance. No hospital executive wants to be publicly profiled as a financial predator.

But while that resolved that patient’s problem, it did nothing to change the broader practice. Most US health systems, both for-profit and not-for-profit, exploit self-pay patients in this way. Worse, not-for-profit health systems legally pillage their communities’ most financially vulnerable patients while getting millions of dollars in tax breaks each year for providing charity care.

Aggressive collections procedures, including  home liens, are widespread.
Some states have strictly limited what hospitals can charge low income patients. In California, uninsured patients with incomes below 350 percent of the federal poverty level (FPL) – $82,425 in 2013 for a family of 4 – can be charged no more than Medicare rates. In New Jersey, patients within 500 percent of the FPL cannot be charged more than 115 percent of Medicare.

Section 9007 of the ACA took effect last year and prohibits excessive pricing for self-pay patients, and would revoke a charitable hospital’s tax-exempt status if it charges them more than it charges for insured patients. The language is ambiguous, conceivably allowing health systems to circumvent the law’s intent. But the spirit is clear. To keep their not-for-profit tax status and perks, health systems must stop taking advantage of self-pay patients.

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The Real Fix? The Exchanges Aren’t Working. Here’s Why …

• 6

By David Dranove & Craig Garthwaite

Last week President Obama announced that he will try to keep his oft repeated promise to Americans in the individual market that they can keep their plans if they like them … for a year. The media have done an excellent job explaining why President Obama’s temporary patch to the ACA may endanger its existence; in the process the American public has learned more than it ever wanted to about adverse selection, cream skimming, and most importantly crass politics.

Though the full costs of adverse selection will be muted in the first year by risk corridors and reinsurance, it is clear that the failing website, the bad press, and the recently announced delay are placing maximal stress on even those backup provisions of the bill.

Even if the ACA survives this additional insult against the economics that support its very existence, we have witnessed yet another missed opportunity for positive reform to President Obama’s signature legislative achievement. And this time we can’t just blame intransigent tea-party Republicans and their quixotic efforts at repeal; here the buck stops at 1600 Pennsylvania Ave, NW.

While many of the plans that are affected by the President’s temporary patch might actually be plans that don’t qualify as “insurance” (i.e. they have low lifetime caps on expenditures or don’t cover hospital services), numerous others actually offer quite good coverage that just don’t meet the exceptionally high standards of the newly developed minimum essential health benefit (EHB).

In many ways, the first dollar coverage for preventive care and the wide ranging number of services covered by the ACA aren’t truly insurance either. Instead, these features amount to a very generous pre-payment plan for medical services supported by the United States treasury.

These elements of the EHB are too costly and unnecessary. Perhaps even more concerning, they are just the ante. As time goes on, vested interests for everything not included in the EHB will work tirelessly to insure that their favorite benefits are included. If you want evidence of this eventuality, you need look no further than the remarkably long and growing list of benefits mandated by most states.

Keep in mind that as the EHB grows more generous the premiums and subsidies on the exchanges will also grow. And we know who will pay their “fair share” of those increases.

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Five Questions Journalists Should Be Asking About the Affordable Care Act

• 3

By Seth J. Chandler

I’m hearing a lot of the lazy “but what are the political implication” perpetual horse race questions from the media about recent developments surrounding the Affordable Care Act. That’s fun Inside-the-Beltway stuff, but in the mean time there are real people who are likely to be helped and hurt with matters as essential as their health.  So, what I am not hearing enough of yet, however, are tough, substantive questions that get to the heart of whether the Affordable Care Act is going to be stillborn.

Here are some questions that I think intelligent journalists and blogger ought to be asking in light of recent developments with the Affordable Care Act.  Getting answers in many cases may take persistent questioning and closer scrutiny of existing documents. In others, FOIA requests may be needed.

1. Actual v. Anticipated Age Distributions in the Exchanges

What is the age distribution by state and in the aggregate of persons who it is claimed have enrolled in Exchange-based plans under the Affordable Care Act? Once we have this data, we can compare it to (a) census data on the age distributions in the various states and (b) any prior estimates on what the age distribution of Exchange enrollees would be such as those described in this government document.

If there is a significant difference between the age distribution encountered thus far and the anticipated age distribution, that increases the probability of the ACA succumbing to an adverse selection death spiral.

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What Could Have Been and What Still Has To Happen

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By ROBERT LASZEWSKI

Covered California, the state-run Obamacare health insurance exchange, announced on Wednesday that 59,000 people have so far signed up for health insurance.

Given that California amounts to about 10% of the nation’s population, this would suggest a smooth running federal exchange might well have enabled the Obama administration to have met its national first month goal of 500,000 sign-ups.

But the California enrollment also points to the real challenge Obamacare faces.

In the first month, 84% of the enrollees did not qualify for a subsidy. It has been widely estimated that about half of all potential enrollees will eventually qualify for a subsidy. As Covered California’s chief executive said, “Those are individuals who have been waiting a lifetime for health coverage.”

Covered California is not scheduled to release any age data until next week, but the health plans already know what they are getting. The President of the California health insurance trade association also said yesterday, “It is important for the exchange to achieve a balance in enrollment between the old and the young and the sick and the healthy to allow costs to be spread among all people.”

These Healthcare.gov problems have been a sideshow for Obamacare. The main event will be about whether more than just those who have been “waiting all of their lives” to get guarantee issue health insurance they are sure to make money on will eventually sign-up in adequate numbers.
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What the “Doc Fix” Should Tell You About the “Grandfather Fix”

• 11

By Matt Barry

With his announcement on Nov. 14 of a plan to offer a temporary reprieve to people facing cancellation of their health-care policies, President Barack Obama may have created his own version of the much-maligned, often yearly, Medicare “doc fix”.

The doc fix, a recurring effort by Congress to override statutory formulas that limit the growth in Medicare payments to doctors, often sparks political theatrics as lawmakers work to assuage the concerns of physician groups and Medicare recipients. Many members of Congress want to repeal and replace the underlying program — the sustainable growth rate formula for reimbursing physicians — but agreement has proved elusive, in part because of deficit concerns and the high cost of repealing the formula.

The president may have set himself up for another situation similar to the doc fix with his proposal to administratively tweak the health law. Obama said he will temporarily allow health insurance companies and state insurance commissioners to continue offering insurance plans “that would otherwise be terminated or canceled” for failing to meet the requirements of the Affordable Care Act (ACA).

Has President Obama created his own version of the annual “doc fix” by continuing insurance plans that would have otherwise been canceled?

While this change will help some health-insurance consumers, it is a serious complication for health insurers who in a few weeks will have to readjust their plans. In the 24 hours since the announcement, the initial reaction from insurers and state health insurance commissioners has been mixed. Some insurers have already voiced concerns that any short-term fix will deprive their ACA-compliant exchange plans of the healthier customers needed to keep rates down for everyone, including older, sicker customers.

Fast-forward 11 months to late October, 2014, with the midterm elections imminent and the president’s “transitional policy” about to expire. Will Democrats want the issue of whether people can “keep their health plan if they like it” raising its ugly head again, just as voters are about to cast their ballots?

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My Wife Has Cancer. I Need to Know: Will She Have Insurance On January 1st?

• 12

By TONY JEWELL

On February 16 of last year, I was in a New Orleans hotel room preparing for a meeting when my wife Becky called and said simply, “I have cancer.”

We knew it was possible, but that didn’t in any way lessen the impact of those three words.

I have cancer.

Everything that was right and comfortable was in that instant washed away by a million questions with no answers. At a time when we needed nothing more than certainty and clarity, there was only confusion and doubt.

Upon landing in Philadelphia hours later, I called to see how she was doing with her newly diagnosed breast cancer. Feeling numb, I managed to make one other call soon after landing. Not to friends. Not to family. Instead, it was to our insurance company.

That’s right: Other than my wife, the one person I most wanted to speak to in the world was a Cigna call center operator.

We hadn’t even had a chance to meet with her oncologist to discuss potential courses of treatment, but we had questions because we had recently changed our plan to carry higher out-of-pocket costs and lower deductibles. We needed answers to those questions so we could go about worrying about more important things.

What procedures are covered? Are the doctors at the cancer center in plan? What is the maximum out of pocket? What other limits should we know about?

A 15-minute conversation later, we were comfortable that insurance wouldn’t be an issue and had a decent understanding of what our share of the costs would be. At a time of absolute fear and confusion, our insurer provided a moment of comfort and clarity.

That is the kind of financial and emotional stress that millions of people face every day in the United States. That is also the kind of financial and emotional security the Affordable Care Act was supposed to provide — especially to those who currently lack health insurance. Continue reading…