Health Insurance Info for Colorado

news & commentary on health insurance and benefits

Six Million? Really??

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Much ballyhooed numbers on Obamacare enrollment are released, with an estimated six million enrolling, but  Rep. Marsha Blackburn (R-Tenn.) expresses doubt. See the video and news story here.

Even in the face of such strong enrollment numbers, though, which have not yet been verified, the government has moved to extend the open-enrollment date for federal exchanges, even after a Centers for Medicare and Medicaid (CMS) spokesperson said “we don’t actually have the statutory authority to extend the open enrollment period in 2014.” And of course, she is correct, as reported here. The open enrollment period is specifically defined by statute, and isn’t open to interpretation. Forbes has an interesting article on it, go here.

What this means is that people who have recently fallen ill or are otherwise uncovered will be able to get health insurance beyond the open-enrollment date, something that troubles insurers, some of whom are predicting double digit rate increases for 2015.

UPDATE: Here are three little questions about those Obamacare enrollment numbers.

1 in 4 support O-Care

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“The Associated Press-GfK survey finds that [only] 26 percent of Americans support the Affordable Care Act.” Read the full story here.

Compare this to the Kaiser Health Tracking Poll from April 2013, found here. One quote from the piece shows slippage in support over the last year: “This month, 35 percent report a favorable view, 40 percent an unfavorable view…”


The Affordable Care Act Turns Four…

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The American Action Forum has published an eye-opening research paper on The Affordable Care Act, and comes to the conclusion that “regulatory costs exceed benefits by twofold”.

From the opening summary: “From a regulatory perspective, the law has imposed more than $27.2 billion in total private sector costs, $8 billion in unfunded state burdens, and more than 159 million paperwork hours on local governments and affected entities. What’s more troubling, the law has generated just $2.6 billion in annualized benefits, compared to $6.8 billion in annualized costs. In other words, the ACA has imposed 2.5 times more costs than it has produced in benefits.”

For the full report, including the employment impact and policy implications for small business, go here.

This New O-care Regulation Could Affect You

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From The Foundry at The Heritage Network, originally published in National Review Online: “One excepted benefit that  .. could serve as a lifeboat if the voyage of the SS Obamacare goes as badly as we have feared: indemnity insurance .. anything that constitutes an excepted benefit under HIPAA remains exempt from all of Obamacare’s new insurance regulations.”

Well, not anymore it seems, as Centers for Medicare and Medicaid Services (CMS) unilaterally decided to amend HIPAA to suit themselves. As usual, the government drops its bad news on Friday evenings when we are all exhausted from working to pay for our health insurance premiums (or not, if you’ve decided to pay the penalty). Go here for the full story.

And this quote is especially telling: “.. this latest proposed Obamacare regulation, like many before it, isn’t even a remotely plausible interpretation of the statutes that Congress actually passed. This latest “fix” is worth fighting — both to keep the lifeboats intact during this dangerous voyage and to keep a sound insurance option in place for the long haul.”

O-Care Premium Spikes Coming

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One of the most frequently cited ways that insurers used to reduce costs for the new ACA compliant plans was to engineer new provider networks, primarily HMOs, with lower fee-for-service reimbursements, referred to as  per-member-per-month arrangements. These networks were reviewed at the state level for adequacy. In fact, the new networks were substantially smaller, as many physicians opted out of them due to reduced reimbursement rates or capitation necessitated by the new rules carriers must operate under due to Obamacare.

The federal government decided that this won’t be acceptable for 2015.  In a draft letter from the Centers for Medicare & Medicaid Services (CMS), insurers will be required to include 30% of “essential community providers” (ESPs) in their network.

ESPs serve primarily “underserved” populations, including community health centers, HIV/AIDS clinics, family planning clinics and children’s hospitals. From Insurance Business: “In order to assure this is the case, CMS plans to establish its own process for certifying adequate provider networks, cutting out the role of state regulators.” See the full story here.

CMS, in 2013, stated that, for 2014, they would “rely on state analyses and recommendations when the state has the authority and means to assess issuer network adequacy.” See the full text of the earlier guidance here. For 2015, with CMS expanding the ESP requirement,this will likely increase premiums further, due to an increase in network providers mandated by CMS.

Other changes that will have a cost effect on premiums include changes to stand-alone dental plans, and a new requirement to pay for a 30-day supply of any new drug that a new customer had been taking—even if the drug would not have ordinarily been covered.  For the complete 2015 guidance, go here.

Insurers are rightfully concerned about the new requirements, with America’s Health Insurance Plans (AHIP) already expressing its disapproval in comments filed on the proposed changes. Insurers have just weeks to present their changes, with some deadlines beginning in April of 2014.

Obamacare: premiums “to double”

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Health industry officials say Obamacare premiums will likely double, and in some cases triple, in certain parts of the country next year, in part because of the flawed launch of the new exchange marketplaces mandated under The Affordable Care Act. Announcements of rate hikes could come within months, with the most significant cause of rate increases related to projections about the number of young healthy individuals and families who would enroll, which have proved to be way off the mark.

The projection of double or triple-rate increases fly in the face of remarks by HHS Secretary Kathleen Sebelius, who said that “the [rate] increases are far less significant than what they were prior to the Affordable Care Act,” in testimony before the House Ways and Means Committee last week. This runs contrary to the way health insurance industry officials view rates in the coming year.

We’ve all been hearing about how younger people aren’t signing up in anywhere near the numbers needed or projected. So, why are young people important? In a phrase: adverse selection, which means, far more older, sicker people than younger, healthier ones in the pool, which creates – wait for it – higher claims costs that are almost certainly not supportable by current premiums.

In an article entitled Young Invincibles Are Killing Obamacare, Megan McArdle writes for Bloomberg View: “Young healthy people, and a lot of them, are needed to keep the market stable and premiums low. As we head into the final few weeks, we have a pretty good idea of how many young healthy people there will be, and the answer is: a whole lot fewer than the healthcare wonks were expecting.” Unfortunately, her dismissive analysis of the coming “death spiral” of Obamacare was flawed, even if she herself says that reaching anywhere near projections for young enrollees is “not likely”. Surprisingly, she concludes: “… it is now probably impossible to achieve the demographic mix that the government has been forecasting. And keeping it from happening may well prove very expensive for the federal government”.

How expensive? In his blog ACA Death Spiral, Seth Chandler, a law professor at the University of Houston Law Center, writes a thoughtful analysis on the Kaiser Family Foundation study of early, low enrollment of younger participants in Obamacare, cited by Ms. McArdle in her column. His analysis and conclusion is posted as “The Kaiser analysis of ACA enrollment has problems”, and is a good, if somewhat dense, analysis of how difficult it is to make an accurate projection, and why the projected deficit in insurer profits isn’t 2.4%, as projected by KFF, but “rather a  [deficit] projection of 4.5%”.

This is not good news for premiums, or for costs related to Obamacare that the federal government will be required to pay for. With rates for 2015 likely being filed this summer for approval prior to 2014 open enrollment, it increasingly looks like Obamacare will be the election year issue of 2014.

Obamacare: premiums up!

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Americans buying health insurance outside the new health insurance exchanges are paying premiums up to 56 percent higher than before the health law took effect. Insurers have jumped the cost to cover all the new, added features of Obamacare.

According to a cost report from eHealthInsurance, a nationwide private insurance exchange, families are paying an average of $663 a month and singles $274 a month, which is much more than before Obamacare went into effect. Most buyers are choosing the lowest level of coverage, called Bronze plans, which have higher deductibles and higher out-of-pocket costs, because they are the cheapest plans available under the new mandated benefits plans, which must contain “minimum essential health benefits” determined by the government.

While exchange coverage’s may be subsidy or cost-sharing eligible, which lowers the cost of health insurance premiums or out-of-pocket costs, many Coloradoans aren’t eligible for either, since they fall outside the 400% of federal poverty level maximum income level for eligibility. Even those who qualify, but at the higher levels of income, will see little if any subsidy.

From The Washington Times: “The shocking surge in prices show what Americans not in Obamacare or covered by their employer are paying as they seek lower premiums. Typically, they are not eligible for the subsidies Obamacare offers those with low incomes.” Go here for more.

And while Colorado is probably one of the states that is enjoying lower percentage increases on exchange than others, according to some published reports, the reality is that we in this practice have seen no “reasonable” increase for anyone (and that is certainly not anecdotal!). Most clients have seen substantial increases, if they are keeping plans, and are seeing increases even in plans that have higher deductibles and higher out-of-pocket expenses. Frustrating, to say the least.

The reality is that published analysis, such as this, reported in The Denver Post, is misleading: exchange based coverage simply doesn’t compare to policies issued in the pre-Obamacare days. Without getting into the fraudulent “inferior policies” gambit, the simple truth is that insurers, including all who operate in Colorado, drastically scaled back provider and facility networks, and re-filed plans as HMOs, which require substantial gatekeeper provisions to reduce specialist access, in order to keep premium costs from mushrooming in the face of all of the new (and some would say unnecessary, and possibly unwanted) “minimum essential health benefits” that the new ACA-compliant plans require. In addition, some states were forced to move to many new federal design and benefit changes, especially in the regulatory and compliance areas, such as community rating, which Colorado has had, and in it’s most restrictive form, for several years. Since Colorado already had adopted many of the policy changes and benefits requirments embedded in the federal legislation in years past, the impact of the new changes had less of an impact on Colorado premiums than in other states.

Make no mistake, though: your premiums did not go “down $2,500 a year” under Obamacare. They really did go up.


Another Obamacare delay?

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Kaiser Health News is reporting that the Obama administration is preparing to implement yet another rule change in the rollout of Obamacare that would relax the enforcement of the medical loss ratio (MLR) provision for health insurers.

To review:  The MLR provision, which took effect in 2012, requires all insurers in the individual and small-group  health insurance market to spend 80% of every insurance premium dollar (85% for insurers in the large-group market) on medical care and expenses for customers, according to specific guidelines developed by the government. Only the remaining percentage of 15-20% can be used for administrative costs and profits. If an insurer does not meet its minimum-loss ratio, it must issue a rebate to its customers.

From “In the Federal Register, the Department of Health and Human Services signaled it may give insurers a temporary break on the ratio requirements, citing “the special circumstances” of the disastrous launch of Obamacare’s federal exchange website ( The administration also made other last-minute political changes during open enrollment, which ends on March 31.”

The minimum-loss provisions have been roundly criticized in this and other forums, as insurers would have little reason to manage claims costs below the MLR, since they will be penalized for doing so. It essentially sets the allowable limit for profit, regardless of how efficient or how successful a carrier is. In other words, health insurance carriers are regulated as utilities (a concept I first ran across in a well-known industry publication more than fifteen years ago).

The issue appears to be that insurer costs relating to the botched launch of Obamacare will make it difficult if not impossible to meet the MLR. Of course, at that point, if losses due to claims and other costs exceed revenue (likely, in my opinion), then the next big crisis will be “risk corridors”, which will compensate health insurance carriers for unanticipated losses. An understanding of this can be found here. And yes, it is a bailout, since the government agreed to compensate insurance carriers, who are required to meet claims and loss guidelines mandated by the government, for losses under The Affordable Care Act.

That it is considered to be a bailout by conservatives and not-a-bailout by progressives is a given. The reality is that the taxpayer is on the hook for outflows from companies who agreed to participate in the health insurance exchanges, if inflows don’t meet requirements for claims and costs (very likely, given that much lower numbers of previously-uninsured applicants, as well as applicants who are in the younger ages that the plan requires, have actually enrolled in Obamacare). In fact, many in the media get it completely wrong, as detailed here.

It is puzzling to me why some Republicans are quick to introduce legislation forbidding insurer compensation (known as the risk-corridor provisions) for losses incurred in meeting the requirements of Obamacare. They’d be better off simply allowing the Act to come apart on its own, which is what will happen, given the amount of panicked fiddling that is occurring with its implementation, and replacing it with something that will work, minus all of the social re-engineering. Eliminating the risk corridor provisions of Obamacare will simply bankrupt most carriers who agreed to participate in the exchanges, since they will be unable to sustain the losses that will occur given the conditions as they exist “in real-ville”. It’s been obvious for some time that the estimated number of uninsured, by most left-of-center pundits and think tanks, including FamiliesUSA, was optimistic; those numbers were used to justify and support all of the projections needed to make Obamacare work. That it isn’t working shouldn’t now be a surprise, and bankrupting insurers will simply provide Democrats with the end game they’ve always wanted: the death of the private health insurance market. Republicans should brandish the “no bailouts!” banner with great trepidation.

Obamacare individual mandate: slip-slidin’ away!

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Today, The Wall Street Journal reports on  Obamacare’s secret mandate exemption. An amazing read!

A few choice quotes below:

“last week the Administration quietly excused millions of people from the requirement to purchase health insurance ..”

“the mandate suspension was buried in an unrelated rule that was meant to preserve some health plans that don’t comply ..”

“shifting legal benchmarks offer an exemption to everyone who conceivably wants one.”

The article concludes: “The larger point is that there have been so many unilateral executive waivers and delays that ObamaCare must be unrecognizable to its drafters, to the extent they ever knew what the law contained.” Indeed.


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