Health Insurance Info for Colorado

news & commentary on health insurance and benefits

Health Insurance Reform for Dummies

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Anyone who thinks that Obamacare was about heath care, let alone health insurance, reform, is either, at best, naive, or, at worst, completely ignorant of the law – and how it was passed, and the consequences of its various statutes, regulations, rulings, and case law.

Obamacare was about social engineering – much the same way that Common Core is about federal control of school curriculum, to advance certain, shall we say, dogmas that most of us would find puzzling, if not outright outrageous.

But I digress. I’ve often told those that will listen that I could have written a health insurance reform proposal that would have numbered a few hundred pages and would have been much, much more successful than the Affordable Care Act, assuming that its goal was the elimination of the chronically un-insured in these United States, probably around twenty million or so (it wasn’t, re-read paragraph two). And, it certainly would not have cost upwards of $2T plus that we see now (and that figure will continue to rise, even as deductibles rise, and out-of-pocket expenses rise, and so on). And I would agree that reform was needed, just not what we got.

James C. Capretta is one of a handful of experts who I respect wholeheartedly with regards health care reform policy. In this article he lays out the compelling reason why we need, not just to repeal, but replace Obamacare: because reform is just as needed now, as it was in 2009.

Here is the most interesting conclusion that Mr. Capretta advances: “The hard work of developing a credible alternative plan has already been mostly completed. What is needed now is a spirit of practical compromise among key Republican policymakers. It will not be possible to beat an incumbent program — the ACA — with abstractions, good intentions, and idealistic concepts. What’s needed is a workable, politically viable plan, one that voters can see for themselves would work better than the ACA.” 

As the article points out, the hard work for a viable replacement for the ACA has already been done. It will take Republicans to advocate for it in a forceful way. And, if SCOTUS disallows the payment of premium credits in the federal exchanges, as detailed in King v. Burwell, then Republicans won’t need to wait for control of the White House to replace Obamacare.

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.


Budget on Health Care: Still Expanding

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“Despite the current health care spending crisis, President Obama’s budget does little to significantly reform the existing entitlements (Medicare and Medicaid) and maintains the implementation of Obamacare—which creates two new entitlements and adds more than $1.8 trillion in new spending by 2023.” -Heritage Foundation, The Foundry

The biggest news in this article is the continued war on seniors which isn’t being discussed in any detail by the mainstream media. With newly-proposed drug “rebates” (a hidden tax paid by Medicare enrollees) and a new Part B surcharge equivalent to 15% of the average Medigap premium, seniors will be disproportionally impacted – just as the Obama administration is gutting the Medicare Advantage program, forcing many seniors back into Original Medicare. So much for choice!

Enter the Colorado Single-Payor Amendment


Senate Concurrent Resolution 13-002, a measure introduced by Sen. (Dr.) Irene Aguilar, D-Denver, will create a single-payer, government-run health care system in Colorado via the amendment process. Run by a health care “board”, the legislation, if allowed to become law as a constitutional amendment to the Colorado Constitution, would impose a capitated, single-payor health care system in Colorado. By capitated, we mean capping health care expenditures, and reducing, eliminating, or forgoing costs of care: in essence, rationing.

The measure builds on a bill, first proposed, and then shelved, by the Democrats in the run-up to Obamacare. The bill establishes a so-called non-governmental health care authority that on the surface is not part of the Colorado state government, but is in fact controlled by the political structure and funded by payroll tax dollars, estimated to cost around $16 billion yearly once the system is in effect.

The measure, 19 pages long, would provide the authority to seek waivers from the requirements of the Affordable Care Act and would replace it for all Colorado residents. According to a press release from Co-Operate Colorado, a single-issue advocacy group that appears to work closely with Sen. Aguilar on health care issues, the cooperative would “offer comprehensive and accessible health care, including dental, vision, and mental health services”.

The resolution prominently includes ACOs – Accountable Care Organizations – which are set up strictly as non-profit organizations and are viewed as a threat to the current system of reimbursement and private practice through independent physicians. The Obama Administration has aggressively pushed ACOs, even as reports mount that ACOs will be unable to provide the same quality of care as our current health care delivery system, or even deliver the savings they have promised.

For funding, the resolution imposes a 6 percent payroll tax increase on every business in the state; 3 percent payroll tax on every worker in the state;  9 percent payroll tax on every self-employed worker in the state. This would be on top of the $1 billion tax hike approved by the Democrat-controlled legislature but not yet approved by voters. [UPDATE: the tax hike was overwhelmingly defeated by Colorado voters in the fall of 2130 – ed.]

The article states that “nothing … prohibits private health insurers from conducting business in Colorado”. However, the tax burden imposed on Colorado residents, since it is a mandatory tax on payroll or self employment earnings, tilt the playing field so far in favor of the state cooperative that the private health insurance market would become unsustainable and economically impossible. Exit from the state insurance market would be swift.

The Colorado model appears to be based on the single-payor system enacted by Vermont, which had to quickly back-pedal in the face of rising costs and other issues. The fact remains that Colorado,  like Vermont, will face dozens of anti-market price controls and policy decisions which will impact the state, especially in the rural areas.

The resolution for the amendment to the Colorado State Constitution, known as the Health Care Cooperative, has been introduced in the Senate chamber, but has not yet been voted on.

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