Health Insurance Info for Colorado

news & commentary on health insurance and benefits

The Death of HSA’s

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It should not come as a surprise that the current Administration would eventually take steps to abolish or otherwise destroy Health Savings Accounts, which were legalized as part of a deal made with Democrats to get Medicare Part D passed in 2003. Democrats universally loathe the idea that you could be allowed to buy a higher deductible plan and then contribute to your own “medical IRA” to pay for out-of-pockets expenses; they’d prefer you give the whole amount to an insurer (and the government) so they can re-distribute it properly. They’ve been gunning for HSA’s for at least a decade.

Health Savings Accounts represent one of the fastest, if not the fastest, growth segment in health insurance, and this has not gone un-noticed by the one-size-fits-all redistributive Left. I originally thought HSA’s would be eliminated via executive fiat in 2012; lo and behold, the gov needed the flexibility of HSA’s to keep Obamacare from foundering on the rocks. Those days are long gone; since the ACA has weathered all of the legal arguments thrown against it, regulators at CMS feel confident that they can now move against HSA’s, at least as far as the exchanges are concerned (and this will have repercussions in the private, individual market as well, I’m sure).

For 2017, it is highly unlikely that HSA’s of any kind will be legal or allowable on any exchange, federally-facilitated or state-run. The reason for this has to do with the ever-increasing deductibles required by the ACA, as well as new requirements, laid out in a brand-new, 500+ page rule, that mandate that some services other than preventive care must now be covered under the deductible. Since, under HSA plans, services other than preventive can’t be covered until the deductible is met, this means that, in CMS’ convoluted reasoning, that HSA’s are simply not relevant to their ever-higher deductibles and ever-expanding “first-dollar” coverage requirements. Its – yes – death by executive fiat, via a thousand cuts.

What is of course not talked about yet is the idea that, as soon as the new benefit plan design become mandated, old plans will bo longer be ACA-qualified: in essence, the elimination of ALL HSA-qualified plans in own fell swoop, and also the elimination of ANY HSA deductions into your HSA account.

Based on this, HSA’s as a valid health coverage will disappear by 2018. Who are you voting for in 2016?

Here’s an article that explains it more fully – go here.


Obamacare Premium Increases Coming

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Insurers have a new year of data and the numbers don’t look good. It will be very interesting to see what Colorado rate increases will look like. As usual, for those on subsidized policies, this news will be met with a shrug, since the “I got mine” mentality is in full swing. For everyone else, the rates increases, be they at the low end (say, 10%)) or the high end (say, upwards of 30%) will be particularly savage, and, as individual rates continue to resemble small group rates in all states, it will be increasingly difficult to absorb rate increases coupled with assessment fees to Connect For Health Colorado (on ALL health policies sold in Colorado), along with high deductible and out-of-pocket costs. The reaction I get from people with families looking for individual plans run the gamut, with “HOW MUCH??” and simply stunned silence the most common refrains.

More Health Insurers Seek Double Digit Premium Increases

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 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.


No HSA plans in Health Insurance Exchanges due to MLR rules

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“When I say ‘If you have your plan and you like it,… or you have a doctor and you like your doctor, that you don’t have to change plans..”

“What I’m saying is the government is not going to make you change plans under health reform.”

(Editors note: unless you have an HSA!)

These are well-known comments from POTUS Obama in the time leading up to the passage of The Affordable Care Act, and afterwards as he flew around ginning up support for an incredibly bad piece of legislation. We now know that these comments aren’t accurate, or even, strictly, truthful. And they directly impact so-called Bronze plans, of which HSAs should be a component. Only, they won’t be.

It should come as no surprise that Democrats despise Health Savings Accounts (HSA for short). Their leading left-wing think tanks routinely lambast them. It’s been somewhat hard to understand why the Administration hasn’t been dissing them openly since the passage of Obamacare; now we know why. They are simply going to eliminate them without a shot being fired, due to a complex series of rules and regs that could only be interpreted as willful, and involve the actuarial percentage of benefits paid in each Gold, Silver, and Bronze plan, and the confusing effects from a price control enacted for political purposes.

The Medical Loss Ratio (MLR) Rule is the culprit. HSAs, under this regulation, cannot qualify.

The MLR Rule requires insurers to spend no more that 20% of premium on administration in the small group and individual markets and 15% in the large-employer market. This spells trouble for high-deductible health plans in exchanges, since only 5% of those with an HSA qualified health plan in a year have any claims paid by their insurance.

HSAs, in summary, are high deductible plans that allow cash to be set aside in a fully tax-deductible savings plan to be used to pay for out-of-pocket expenses before the deductible is met. HSA-qualified health insurance policies are usually lower cost than many fully-featured health plans, and are especially well suited for many small business sole proprietors, or others who believe saving money to pay for their own out-of-pocket costs is better than giving it to an insurer, who is in essence subsidizing other health insurance claims with their dollars.

Here’s part of the problem: payments made by an insurer for health care expenses count towards meeting the MLR Rule; payments by individuals out of their health savings accounts do not. Taking into account the complex rules for “credibility adjustment” and “cost-sharing adjustment” for companies that sell high-deductible plans, HSA-qualified or not, it appears that, given the lower claims-paying of HSA  or other high deductible plans, it is mathematically impossible for any plan to meet the MLR of 80%. This would mean no Bronze plans in the Exchanges, since they cannot meet the complex and required Minimum Loss Ratio Rules.

Obviously, plans with higher deductibles are being intentionally disadvantaged by this arcane formula because they cannot count claims incurred below the deductible. Since Bronze plans under the PPACA cover 60% of the benefit costs of the plan, it seems unlikely that HSA plans will be eligible under this scenario, even though the original guidance showed HSA plans as being eligible based on their deductible range (See here). Further, the carrier must still process claims below the deductible to track deductible expenses, but no cost of that processing can be applied to the MLR’s.

I draw my final conclusions from this study prepared by the HSA Coalition:

“Clearly, the MLR adjustment factors for cost-sharing and credibility help companies offering high deductible plans but only if they have low enrollment. Most [insurance] companies will likely see little benefit because the adjustments end up being minimal and ultimately disappear because of the way the MLR formula is constructed. In the short-term, this could limit future growth of HSAs in the fully-insured markets (individual, small group, large group) and put extra pressure on premium pricing to minimize potential rebates. Insurance companies (especially the current market leaders) may be encouraged to sell more expensive plan designs with more first-dollar coverage (e.g., HMOs and traditional PPOs)because it will be easier to meet the MLR requirements. The result could be a future market dominated by more expensive plans, dramatically reducing affordability of coverage and adding significantly to the costs of income-based subsidies provided under the law, since the subsidies are based on the weighted average premiums for Silver plans in the “market area.”

The end result will be that the exchanges will likely be dominated by high-cost health plans with few lower cost options available, leaving people out of the market – until they desperately require health insurance coverage. This will quickly drive up the cost of coverage, expanding the subsidies needed to pay for it.

A summary of the problem is here. And, here is a detailed article on MLR’s Potential Effect of HRAs and HSAs.

UPDATE on 2/26/12 – Quote: “The obstacles Obamacare creates for consumer-driven health plans could lead to their extinction, even though they are an affordable form of coverage that is gaining in popularity.” See this link.




Health Reform = higher health insurance premiums

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We tried to tell ’em, but no one on that side of the aisle listens: health reform inevitably drives health insurance rates even higher due to mandates and required coverage benefits on every policy (in Colorado, this was made worse by action at the state, not federal, level, when the Democrat ‘super-majority’ passed mandatory maternity coverage for every individual health policy sold or renewed in the state). This year, the average premium nation-wide rose 9 percent, higher than the last two years combined.

Want the whole story? go here.

And, before you think this report is biased, read this: the Centers for Medicare and Medicaid Services (CMS) estimates the growth in health insurance costs will increase 10 extra percentage points in 2014 because of health reform – a 14 percent increase, versus 3.5 percent without the law.

DOI reverses on mandatory maternity in individual health plans

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In a bulletin issued March 15th, 2011, the Colorado Division of Insurance has “changed its interpretation” of their previous bulletin, issued in December of 2010, regarding maternity coverage for individual health policies issued in Colorado.

The controversy stems from a difference between the “applicability clause” in the enabling legislation, HB 10-1021, and the statute, as enacted. The applicability clause states that maternity coverage was to be provided for both issued and renewing policies, while the statute, as enacted, calls for maternity coverage to be provided only for “issued policies”. The Divisions’ initial guidance under the previous Bulletin did not require the coverage on renewal policies.

In it’s new bulletin, the Division, after “further statutory review”, finds that, in its opinion, the provisions of HB-10-1021 does indeed require coverage for maternity expenses for issued and renewing individual sickness and accident insurance policies and health care coverage contracts, reversing in toto it’s previous position, without showing any specific reason or legal basis for the change in its position.

Now, it’s no secret that this Bill was controversial, rammed through a Democrat-controlled legislature without any input from either the industry or the minority, and signed by the Governor post-haste. While touted as a “reproductive services” bill that ensured fairness, in actuality there is no fairness in requiring males of any age, children, and females of non-child bearing years to pay for this expansion of maternity coverage. Certainly, purchasing individual health insurance with maternity coverage was available in Colorado – so, what was the point of the legislation?

Colorado’s Democrat legislators have been attempting to recast the individual health insurance market as the mirror image of the small group market for years, and this legislation is one result of that thinking. The downside to this, and the biggest problem, is the cost to such a policy. Anyone who looks at group coverage, as compared to individual coverage, is aghast at the price, a point most Democrats seemingly ignore, and which has contributed to the decline in Colorado’s small group insurance pool, especially since the repeal of risk-based premium provisions in the small group market.

A quick analysis of the rates now being charged for individual health policies shows that the legislation has, indeed, made individual health insurance policies more expensive, and will have a negative effect on new policy issuance in Colorado. One wonders if that was the intent of the legislation – after all, with higher premiums, a certain segment of the population is locked out of the market, just simply based on price. If one can only buy Cadillacs, rather than something cheaper, does one simply not buy? This has the effect of increasing the pool of un-insureds in Colorado,  rather than expanding the pool of covered individuals, regardless of what the PR coming from Democrats would suggest.

Let’s not forget that Colorado residents lost a strong carrier when Aetna withdrew from the Colorado market due to this legislation. Will we have others withdraw, as well? One only needs to look at the disastrous outcome of the Kentucky health insurance market (and others, notably New Jersey) to see what will transpire as more and more carriers flee the state because of their inability to expand the risk pool because of high premiums, mandated benefits, and hostile regulatory and legislative actions.

Of course, Democrats have us covered there, too: their real solution is to get rid of all carriers and saddle the residents with a single-payor system. I shudder to think what that will cost in higher taxes and job loss.

Lastly, to add insult to injury, the Division, in its decision requiring maternity coverage in all policies renewing after January 1st, 2011, has authorized carriers to retroactively charge additional premium for the coverage, assuming the carrier has filed and has approved such premium. Even if the carrier has not filed for rates relative to renewal maternity coverage, the Division will allow such retroactive charges, once rates are approved, to the policyholder.

I’ll research and comment on the average rate increases this latest exercise in “fairness” will cost the average Colorado health insurance consumer in another post, assuming that such information is even available.

Out, once again: Aetna

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This should really not come as any surprise to anyone who has followed Aetna and it’s on-again/off-again history in Colorado:

Aetna retrenches in Colorado” – read, exit, stage left, once again.

Perhaps a quick look at the not-too-distant past is in order. Aetna, in a snit to this observers’ mind, left the Colorado market with the first whiff of “reform” that passed through Colorado in about 1995; this was the same period, more or less, marked by Roy Romers’ threat to put all of Colorado on a single-payor system unless the legislature enacted health insurance reform. And a bunch of recalcitrant, big name insurers (and a non-profit, if memory serves) had to be dragged, kicking and screaming, into the small group market, which they had avoided like the plague for eons. Exit number one for Aetna.

Then, in 1997, Aetna decided to come back into the state with the purchase of Frontier Community Health Plans, Inc., a small and fragile managed care company based here in Colorado. Known back then as Aetna U.S. Healthcare, they made quite a thing of being able to offer a variety of HMO-based products in Colorado – just before the crash-and-burn of HMOs and “managed care”.

And now, we have exit number two. Unless they buy someone (again), Aetna will be barred from re-entering the Colorado market for five years.  (By that time, individual plans will look, and cost as much, as small group plans do now. Care to guess how many people will be forced to drop their coverage?)

To its credit, Aetna grew its individual business here, eventually becoming the sixth largest provider of individual health plans. With its decision late last year, in the wake of health care reform, which mandates a minimum loss ratio for small and large group carriers, to leave the  small group market, Aetna set the stage for the abandonment of the Colorado insurance market once again, just as it did in the mid-nineties.

Now, don’t get me wrong – I have no problem with any private sector corporation doing what it needs to do to survive in a bad economy. But from this agents’ perspective, Aetna always seemed more interested in protecting their bottom line the easy way, rather than stay and slug it out in a “competitive” environment, like some others have – Anthem, United Healthcare, and Assurant Health, to name three. Even some that aren’t particularly competitive in terms of product or premium make up for those weaknesses with superior service and other products – or they remain as admitted carriers who aren’t actively in the market, as any veteran of the health insurance biz in Colorado will attest to.

Unfortunately, we have less and less competition in the group or the individual market in Colorado than ever before, and much of the blame for that can be laid directly at the feet of the legislators who feel that doing everything they can to make things “fairer” is the answer to controlling costs (hint: it isn’t). One only has to look at the cloistered relationship between legislation/regulation and admitted carriers to understand that, to a degree, existing carriers in Colorado don’t really want more competition, and legislators, at least on the Democrat side, are all the more interested in making it harder to compete here in any event, thereby strengthening the hand of the existing carriers at the expense of any other carrier who wants to do business here but can’t or won’t risk insolvency for the privilege of serving Colorado and its shrinking small business and other health insurance base. Certainly, mandating “reproductive services” (mandatory contraceptive and maternity coverage) for all new individual policies sold in the state, in the name of equality and fairness, won’t attract any new carriers, and likely played a hand in Aetnas’ exit, as well.

Hint: That individual policy you have, right now? It just became a whole lot more valuable.

On one hand, I wish Aetna had stayed – we need the competition. By the same token, leaving when things get , well, tough, isn’t endearing, either. Maybe Aetna just needs to admit that it can’t live on the paper-thin profits of the health insurance industry – after all, when was the last time Wall Street was bullish on health insurance? Especially with the individual mandate, the dubious gift hailed by John McCain, Mrs. Clinton, and by POTUS Obama, all but dead and gone for now, skewered on the sword of a Federal Judge who understands the constitutional mandate of limited federal power. Too bad that no one thought of that before they passed the bill – so that we could read what was in it, of course.

DOI advises on change in statute interpretation

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In May 2010, the Colorado Legislature passed HB 10-1021, which amended the Colorado Revised Statutes to “expand the state’s mandatory maternity coverage to individual [health insurance] policies”. This change in the law is effective January 1, 2011.

On December 3, 2010, the Colorado Division of Insurance has issued a new bulletin, B-4.36 “Statutory Interpretation of Possible Conflicting Provisions in HB 10-1021”, which advises carriers of the Division’s position and interpretation of the statute’s language in Section 10-16-104(3). According to the DOI, “bulletins are the DOI’s interpretation of existing insurance law or general statements of Division policy”.

In issuing their bulletin, the Division has found conflicting provisions in the law between the statute and the applicability clause in HB 10-1021. In part, the bulletin reads “based on the Division’s reading of the statute… the clear intent… was to expand coverage only to policies issued (and not renewed) on or after January 1, 2011…”.

The statute is in conflict with the applicability clause in HB 10-1021, which uses the term “issued or renewed”,  whereas the statute language simply uses the word “issued”.  The Division takes the position that “the language to the contrary in the applicability clause was an inadvertent mistake”. The Division cites discussions with the bill sponsor and Legislative Legal Services in making this interpretation of the statute.

Therefore, while insurers are encouraged to offer maternity and contraceptive coverage to renewing policies, they are not required to do so, and the change in law only applies to individual and group sickness and accident policies issued after January 1, 2011.


UPDATED: This interpretation of statute has been overruled – see my new post, dated March 15th, 2011.

Update: mandatory maternity forces insurer to withdraw policies Jan. 1

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United HealthOne/Golden Rule, in an email release today, announced a temporary exit from the Colorado individual insurance market due to House Bill 10-1021, CONCERNING REQUIRED COVERAGES FOR REPRODUCTIVE SERVICES FOR HEALTH INSURANCE POLICIES.

Beginning January 1st, 2011, all individual policies sold in Colorado must provide for maternity and reproductive services, same as any illness, except in cases of pre-existing condition.

“Following recent passage of legislation mandating unisex rating and maternity coverage, Golden Rule was required to file new plan designs with the Colorado Division of Insurance (DOI). In early 2011, we will again offer consumers in Colorado a wide range of affordable health plan choices.

As of December 31, 2010, the only UnitedHealthOne plan that will remain available in Colorado is personal Dental.”

The new law, codified under 10-16-104 (3) (a) (I), Colorado Revised Statutes, doesn’t specifically address whether in-force individual plans will be required to provide this coverage on 1 January, or if individual plans will be allowed to update their coverage requirements at time of policy renewal.

Calls to other carriers operating in Colorado elicit little if any additional information on the benefits required under the law, or how these new mandates will affect premiums, or if other carriers may be forced to follow suit with “temporary” disruptions of individual health insurance availability on 1 January.


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