Wednesday, July 27, 2016

Thank You Sir, May I Have Another?

In the movie Animal House a young actor (Kevin Bacon) played the part of Delta House pledge Chip Diller. As part of the initiation ritual, pledges had to subject themselves to humiliation by assuming the position and being whacked in the butt with a paddle. 


Most of the main characters in Obamacare either decided not to pledge or have flunked out.

While most of the carriers have lost money by the buckets, a few have thrived in the Obamacare market and are coming back for more.

Centene has learned how to make money in the Medicaid market. A combination of lean plans and even leaner networks seems to be a winning combination when serving up health insurance on the dollar menu. That same approach works well in the Obamacare market.

At the same time, carriers like United Health Care, Assurant, Humana and others were losing money by offering prime rib to the bologna crowd.

You can count Health Net in the loser bunch.

Then along comes Centene who gobbles up the Arizona and California business written by Health Net. That move created financial indigestion for the otherwise profitable Centene.
Centene's ACA exchange profits remain “at the high end of our targeted range,” but acquiring Health Net dragged the company down 
Specifically, the losses were tied to “unfavorable performance” in Health Net's Arizona and California individual markets. That included a lack of risk-corridor funding and detrimental effects from the “grandmothering” of older, pre-ACA plans, which means they only had to comply with some of the ACA's standards. Health Net also has PPO plans with broader networks of hospitals and doctors, which often appeal to sicker people who are willing to pay higher premiums if it means their providers are in-network. Conversely, Centene offers more high-deductible, narrow-network plans with cheaper premiums, plans that attract price-sensitive consumers. - Modern Healthcare
But not to worry. Centene will correct the problems caused by the stupidity of Health Net when 2017 rolls around.

Come 2017, Health Net won't be playing in the Obamacare market while Centene will only offer plans in a few markets. Residents can say goodbye to rich plans with broad networks. They will be replaced by a much leaner fare.

So while Health Net bails, Centene says "Thank you sir, may I have another?".


How Important is Medical Underwriting?

Recently I moved a small employer from the fully insured Obamacare plan that was written in 2014 into the Anthem MEWA here in Ohio. As a start up in 2014 the company knew they had to provide insurance benefits to attract the quality employees to make the business successful.

Unfortunately as a new company entering the world of employee benefits, they were forced into the high priced community rated pool created under Obamacare. At the time the idea of using alternative funding arrangements was just beginning to enter the equation and for many insurers they were still a work in progress. Many products were still being developed and few were approved by the Department of Insurance. 

My client did what they had to do and bit the bullet paying a steep price. All the while knowing that I would be coming back this year with high expectations that we would have a few extra arrows in the quiver. Which is exactly what we brought.

I have to say, there was pain in the process. Employees had to complete an online data collection program. FormFire is an encrypted portal for employees that streamlines them through a questionnaire enabling their personal and health information to be integrated into almost any health insurer's application. While time consuming and tedious it's become the only way to effectively receive underwritten rates from insurance companies.

In the end it's the results that matter. A couple of month's worth of headache has resulted in this healthy small employer finding savings. And, they can confirm that there is a significant cost for Obamacare.

In case you want to know how much savings... 

$55,475 to be exact. More than enough to help this growing start up hire an additional employee.

Tuesday, July 26, 2016

Risk Adjustment: It's only money

Almost two months ago, we noted that the "risk adjustment program was designed to dissuade insurers from targeting only healthy people ... The problem is that measuring metrics often encourage companies to optimize their score"

The point being: even when it works (for certain values of "works") it's a giant time bomb ticking away.

And now we learn, thanks to FoIB Allison Bell, that it's about to go off:

"For Congress, putting a health insurance risk-adjustment program in the legislation that created the Patient Protection and Affordable Care Act of 2010 was a no-brainer."

Which is quite apt, don't you think?

The result of mindless tinkering is that "[w]hen insurers are dealing with the ACA risk-adjustment program, the amount of cash they get may ultimately depend on whether competitors make good on risk-adjustment obligations."

That is, they're trusting ion the old adage about honor among thieves, and relying on not just the willingness, but the ability of other carriers to pony up their share. Which, given the current state of the market, is, well, problematic. For example, Meritus Health Partners, Arizona's Co-OP, owes almost $50 million.

The problem?

"Reminder: Meritus has been placed under supervision by the Arizona Department of Insurance."

And that's just the 10th place finisher. Top billing [ed: ISWYDT] goes to Molina Healthcare of Florida, with an estimated tab of almost $219 million. That's a substantial hit, no matter how big you are.

All told, those Top 10 account for some $5.6 billion in risk adjustment fees.

"Bending the cost curve down," indeed.

How About a Refund?

Jonathon Gruber, the MIT smart-ass that designed Obamacare, the bill that became law due to "the stupidity of the American voter", has decided to dine on crow.

Kind of.

Gruber claims Obamacare hit its' mark of 20 million people as of 2015 but also admits that maybe they, the architect brain trust, might have missed it by this much . . . .
The rise in the Medicaid rolls has been much higher than expected. In May, 2013, CBO projected that Medicaid would grow by 12 million by 2015 and stay more or less at that level in 2016. In fact, Medicaid had grown by about 15 million by the beginning of 2016 - Poltico
For those with short attention span, all the hoopla and borrowed money spent to throw the health insurance baby out with the bath water resulted in only 15 million people on Medicaid who (presumably) could not access health care that way before.

How much has Obamacare cost?

According to the UK Daily Mail, about $50,000 for every American that gets coverage through Obamacare.

Put another way,
It will take $1.993 trillion, a number that looks like $1,993,000,000,000, to provide insurance subsidies to poor and middle-class Americans, and to pay for a massive expansion of Medicaid and CHIP (Children's Health Insurance Program) costs.
The $50,000 per person figure is a bargain compared to the figure presidential candidate Jeb Bush spent on his failed bid to be known as President Bush III. The Washington Post claims Bush the Lesser spent $53 MILLION per delegate in his run for the rose garden

Meanwhile, back in D.C. the current president has or will spend close to $2 TRILLION dollars on his failed health care plan but will only collect $643 billion in new taxes and fees creating a $1.4 TRILLION dollar loss.

This was the plan that would not add one dime to the deficit.

Not only should we demand that Gruber return his $2.5 million in architect fees but the American voter should demand a recount on all those Obama votes cast in 2008 and 2012.

#ObamacareFail


Monday, July 25, 2016

Are the LTC shoes starting to drop?


The Office of Personnel Management announced last week that premium rates for the Federal Long Term Care Insurance Program will increase by an average 83% effective November 1.   John Hancock is the present insurer, and was the only bidder for the new contract beginning November 1.   

Officials representing Federal Employees expressed shock and anger at the news.  The anger is understandable - the shock is much less understandable.  There has been plenty of information about national, rapid increases to LTC costs. And specific to the federal LTC program, last August OPM made a sudden, unprecedented decision to levy substantial premium increases for new enrollees.  It was then unmistakable – or should have been unmistakable – that the federal LTC house was on fire.  However, the officials who are shocked today, seem not to have thought it important enough last August to prepare their constituents.   As this most recent news confirms – the LTC house is still on fire.

Where the Federal program goes from here is anyone’s guess. In fact, where LTC Insurance in general goes from here is anyone’s guess.  Financial advisor Ric Edelman announced this week on his national radio program that his company now advises people under age 50 to forgo LTC insurance entirely; put whatever you would have spent on LTC premiums into your savings instead. He also advises people over 50 to investigate what he called “hybrid” forms of LTC insurance – policies that may accumulate a cash value and typically pay a death benefit; Edelman believes their premiums are often less than for traditional LTC policies.

Health Tip of the Day


#HealthTipOfTheDay

Friday, July 22, 2016

ICYMI: MergerMania under the scope [UPDATED]

[Scroll down for update]

FoIB Holly R has the latest on the proposed mergers of Cigna with Anthem and Humana with Aetna:

"The Department of Justice announced Thursday that it would file lawsuits against the proposed merger[s] ... there are [currently] five major health insurers in the United States — and if these mergers went through, that would drop to three."

And the numbers are staggering: if both deals go through those three mega-carriers would account for something like half the under-65 population.

On the other hand, FoIB Brian D wonders:

"How can you pass restrictions and rules that push health insurers to the brink of bankruptcy then block insurers to merge to save costs? Could it be you look forward to government take over?"

I replied that this has been the plan all along.


And by the way, Aetna and Humana have announced their plan to fight this decision tooth-and-nail.

Fighting city hall? Hunh.

UPDATE [Related]: Co-blogger Bob also chimes in with this tip:

"[Humana] says it will sell individual health coverage in no more than 156 counties in 11 states in 2017, down from 1,351 counties in 19 states this year. That will reduce the number of counties in which it sells individual exchange plans by at least about 88 percent."

And, taking a nod from United Healthcare, it's not selling any off-Exchange plans next year.

But hey, if you like your plan...

Thursday, July 21, 2016

Obamacare's New High Risk Pool

Anticipation of huge premium increases in the small employer market has been building since 2013. New rules were to take effect on January 1, 2014 that would eliminate medical underwriting and reduce the number of criteria insurers could use in developing premiums. Insurance professionals, insurers, and organizations such as the U.S. Chamber of Commerce were preparing businesses with less than 50 employees for significant increases to their medical insurance premiums and the potential of losing their plans.

Realizing the potential catastrophe of fully implementing this rule, President Obama had his leaders at HHS issue a letter to state insurance commissioners offering to extend plans that existed prior to October 1, 2013 through 2014. Less than four months later HHS followed up their prior letter with an additional extension lasting through 2017.

The delay has benefited employers and bought insurers time. This has resulted in a series of new plan designs featuring alternative funding arrangements that will help small employers avoid the costly rules associated with ACA compliant plans.

These products include self-funding with lower stop loss deductibles, level funded plans, and Multiple Employer Welfare Arrangements (MEWA). Most of these arrangements aren't new. They have simply been modified or adjusted to meet the needs and budgets that small employers need to retain a solid benefits offering at an affordable cost.

The biggest difference between ACA compliant fully insured plans and all of these options is medical underwriting. Under Obamacare, all fully insured plans for small employers must use adjusted community rating on their policies. The rules of adjusted community rating only allow for insurers to offer different rates for age, location, and tobacco use. Essentially taking the greatest risk factor - medical history - out of the process. The result is ACA regulated plans will increase the cost to employers with healthy employees while limiting the costs to employers with unhealthy employees.

On the other hand, alternative funding arrangements can continue to use medical underwriting to develop rates for employers allowing those with healthy employees to reap the benefits of a lower premium.

With Obamacare's rules on guaranteed issue and no pre-existing conditions, small employers will be able to shift from one arrangement to another based on their employees health risk. This will result in a separation of good and bad. Alternative funding arrangements will be filled with healthy risk and ACA fully insured plans will become a dumping ground full of bad health risk creating a costly high risk pool.

From an employer perspective this gives them the best of both worlds. At least until insurers pull out of the high risk market.

Cleveland-sized Health Wonk Review

Steve Anderson presents this month's round-up of fantastic health policy related posts, with almost Trumpian flair.

Not to be missed.

Wednesday, July 20, 2016

Midweek Spindle Clearing

As we noted last month, it looks like the Feds are getting serious about cutting Short Term Medical plans off at the knees. Thanks to a tip from Insurance Services of America, we have some new details:
The U.S. Department of Health and Human Services (HHS) has proposed major changes to short-term, limited duration insurance plans:
• Short-term health policies could be written for no longer than three months, instead of up to a year as is now allowed.
• Consumers would not be able to rewrite the policies.
Just more proof that the ACA was never about insuring people, just controlling them.

Consumers (and of course, agents) can comment on the new regs until early August.

Co-blogger Bob tips us that Palmetto State officials "warn the Obamacare health insurance marketplace is on the verge of collapse." Currently, most South Carolina counties have exactly one choice of insurers: Blue Cross. And it looks like they may be the only one left standing statewide for 2017.

Direct Primary Care continues to make inroads. In Cleveland, a local hospital network is offering their own take. Via co-blogger Patrick:

"On Wednesday, [MetroHealth] rolled out a program aimed in part at catering to people unhappy with the cost and complexities of their Obamacare plans. The program, called Select Direct, will allow patients to get primary care services by paying a fixed monthly fee ... You pay the amount and we'll take care of all of your preventive and health maintenance needs"

Which sounds great, since plans are available for as little as $40 a month. It's intended to supplement high deductible plans, or even as an ObamaPlan substitute. It's not clear from the article, but one presumes that it qualifies as an excepted benefit, and thus able to dodge the tax penalty fine.

As with all of these plans, of course, how one pays the oncologist and cardiac unit remains the big question.

Monday, July 18, 2016

Ted Cruz Lies

The lie:


The truth:



BusTED.

[Hat Tip: FoIB Holly R]

Interesting Industry Trend

Our friend Joe L at Issue Insurance tells us that (at least) 3 life insurers have introduced accelerated underwriting programs that promise to cut both the time it takes to get a policy issues and save wear-and-tear on clients' veins.

For example, Banner Life offers AppAssist, which is available for face amounts up to half a million dollars. It does away with medical exams, labs and doctor's notes. The carrier promises that qualifying applicants "can be approved by the next business day, or even faster."

I must admit, this feature has me scratching my head:

"One inch automatically added to client’s height to potentially boost the rate class"

I mean, I get where that could be helpful in assigning a rate, I just don't get how they accomplish the feat: elevator shoes?

So, what makes one a "qualifying applicant?" Well, that will vary from carrier to carrier, but generally speaking: ages 18 to 50, and the carrier will do a 'script check' (for various medications) and run an MVR (for major traffic violations, such as DUI). Assuming the client is on few (or no) meds and has a clean driving record, he or she should be good to go - quickly.

SBLI and Lincoln Financial offer similar programs, all with the goal of streamlining the underwriting process.

I think this is a good trend: for one thing, faster (but careful!) underwriting means less hassle for the client. Be interesting to see how far this spreads.