The Grease Fire Spreads [UPDATED]

First HHS "suspended" enrollment into PCIP because of insufficient funding. Now comes word that HHS will be cutting payments to providers who treat those in PCIP. From the New York Times:

Under a new policy issued by Kathleen Sebelius, the secretary of health and human services, “health care facilities and providers will get paid less” for providing the same services to patients in the federal program, known as the Pre-Existing Condition Insurance Plan.

The article further stated:

Federal health officials said the alternatives were worse. If the program runs out of money, they said, some sick people will lose access to health care, and others will be unable to pay for the treatments they receive, forcing doctors and hospitals to write off large amounts of “uncompensated care.”  

In a regulation to be published Wednesday in the Federal Register, the administration says that doctors and hospitals must accept the amounts set by the government as “payment in full” for services in the high-risk pool administered by the federal government. 

On a related note, Ms. Shecantbeserious was busy touting the law in Europe. She "characterized the Affordable Care Act as part of a global movement toward better health through government-led reform."

Based on her words, one would guess that Government will need to seek additional funds (taxes?) while also cutting payments for health services (rationing?) Yep. This is our future under Obamacare.

UPDATE [HGS]: And some breaking news this afternoon on the PCIP front:

"Eighteen states have decided to turn their state Pre-existing Condition Insurance Plan (PCIP) programs over to [HHS Secretary Shecantbeserious]."

As Patrick notes above, the reduced payment scheme is going to really hurt prospective providers, and hence any patients that might want to be treated. But let it never be said that Madame Secretary's minions lack a sense of humor:

"These actions will help ensure the program's smooth transition to 2014"

Droll.

On the Oregon ObamaTrail

Well, some good news for Beaver State residents who may be shopping for health insurance this fall. Unlike so many other states, carriers seem to be supportive of Oregon's Exchange:

"The Oregon Insurance Division has posted individual and small-group rate proposals for 2014 ... rate proposals from a total of 16 conventional carriers and two new CO-OP plans for the exchange and non-exchange markets."

Oregon is one of the minority of states that has chosen to implement its own Exchange, rather than rely on Ms Shecantbeserious and her minions to do so on its behalf. Noticeably absent from the list of participating carriers are Blue Cross and United Healthcare, two rather large elephants in the room. They've chosen to cast their lot with the non-Exchange market, instead.

Interesting developments.

Just 12 Easy Payments

Need Obamacare insurance? No problem. Click or call the exchange in your state using your Obama-phone. Complete the 20+ page Obama-application for financial assistance. Once approved you pick an Obama-plan and then in just 12 easy payments you will be the proud owner of your new Obamacare health insurance plan.

But wait.

Paying for it (even after financial assistance) may be a challenge for some.

For ordinary Americans deemed unbankable, those who don’t have a traditional checking or savings account, it can be hard to simply pay bills. And that is about to become a big problem for those who also lack health coverage -- and for the health insurance companies trying to sell them coverage. After all, how do you sell a product to a customer who has no way to pay you?

KHN

Money order? 

This is a problem for about 20% of the population. Wonder if the folks at HHS thought about this?

Nah.

The new federal health law which requires most Americans to carry health insurance starting in January presents a particular problem for those households, since most health plans accept a credit card for the first month’s premium payment and then require customers to pay monthly with a check or an electronic funds transfer from a checking account.

The solution is simple.

REQUIRE everyone to have a credit card and a bank account.

Or REQUIRE the insurance carriers to accept EBT cards.

Buy here. Pay here.

No problem.

Unexpected Insurance Headlines

Offered without comment:

MetLife removes alien status from captive

Help Wanted

We've already noted that carriers seem to be actively avoiding the Exchanges due to go online in the next few months. Of course, that's for the individual market - the small group market must be doing gangbusters, though, right?

Right?

Turns out, maybe not:

"The California Health Benefit Exchange has put out a call for general agents ...  to recruit, train, supervise and support the retail agents that help the small employers that sign up for the state's Small Business Health Options Program (SHOP) exchange plans."

But why should they?

All along, agents have been told, at least implicitly, that their services aren't necessary (cf: Navigators). Agents must undergo fairly extensive scrutiny and training, and must continually update their professional education. All of which comes at a cost, in time and in money. Of course, the folks in Sacramento understand the value of the agent in the process, and are willing to pay for the very best.

No, I didn't think you'd fall for it:

"Exchange managers want general agents to keep estimates for total costs under $3 million"

Really, and just how many groups do they think will sign up?

Small Businesses are Exempt from PPACA?

A couple of weeks ago The Hill reported that 48% of small business owners believe that PPACA will hurt their business. In the article there is a quote from President Obama about the impact this will have on small business. He said: "Some small businesses are being told their costs are going to go up, even though they're exempted from the law" or stand to benefit from it.

I am a small business owner working within a large insurance agency. I have two employees and I provide benefits including medical insurance. Under our arrangement I currently pay 100% of the premiums. I have been able to do so because we are a healthy low risk and because my employees understand the value of the benefit and know that it is part of the overall compensation package.

I strongly object to the notion that I am exempted from the law. It is true I can drop coverage and not pay a penalty. But that would put my employees into exchanges where every dollar they have to spend in premiums is more than what they currently pay. My key employee, based on family income, wouldn't qualify for a subsidy. She (52) and her spouse (53/smoker) would be looking at a $15,000 pay cut. For this key employee I currently pay around $8,700 a year. Even if I gave her a raise by that amount it still costs her a ton of money out of pocket.

We will also see our premiums go up. Our insurance company has informed us that because of community rating we are looking at an increase of 50% or more. On top of this factor we also will pay a PCORI fee, a reinsurance fee, a risk adjustment fee, and a market share fee. In total these fees will represent roughly a 3% increase. Add to that we now must provide an array of additional benefits without limitations that we don't use nor need. Last, they will also charge us more because our industry code is a low risk one.  In total my guess is the costs will rise by close to 75%.

My premium increases are going to make it unaffordable to remain in business and dropping coverage simply shifts an enormous burden onto the people who help the business be successful. So, my question to President Obama and HHS is please explain how my business stands to benefit from PPACA?

Dumber and Dumberer

As the Exchange Countdown Clock slowly - inexorably - winds down, our attention turns to the eternal question: "what's next?"

Ostensibly, folks who plan on buying their new health insurance from one of the public Exchanges will turn to one of those new-fangled "Navigators" for help. After all, these folks are new to the insurance purchasing process, and need highly trained folks brimming with integrity and advanced insurance knowledge.

Or maybe not:

"At a private briefing with federal officials last month, committee aides say they were told there would be no criminal background checks for navigators or requirements that they hold a high-school diploma"

Contrast this to actual licensed insurance agents. Here in Ohio (and I imagine these requirements are fairly universal across the other 57 states) one must have (at least) a high school diploma (or equivalent), take 40 hours of pre-licensing training, pass a rigorous licensing exam with a minimum of 70% correct answer, and complete over 20 hours of Continuing Education every two years.

Now who would you trust with your financial and personal information, let alone to help guide you to an informed purchasing decision?

Yeah, thought so.

PCIP Could Save the World

or at least the US Private Insurance system. It is an old rule of thumb that 20% of your population accounts for 80% of your claims. Hospitals account for 50% of all spending and most of the excessive cost and profit.

PCIP found this out when they blew through their allotted 5 billion to quickly. Being from the Government and always looking to help they had a very effective solution;

http://www.lifehealthpro.com/2013/05/17/feds-post-pcip-regs

"The federal PCIP program run by the U.S. Department of Health and Human Services (HHS) will set most reimbursement levels at just 100 percent of the Medicare reimbursement rates, officials said"

For doctors this might be a slight haircut but for large hospitals, the ones racking up large bills, used to getting 300-400% of Medicare, or more, this will be noticeable.

If the Government was truly interested in being useful they would provide catastrophic insurance to reign in hospital spending and leave all the day to day care and the other 80% of the population alone. This would immediately make insurance affordable for the majority of the country which would likewise drop the percentage uninsured. It would also do so without all the other intrusive programs and requirements of the ACA.    

The ObamaTax Dodge

As employers quickly realize that the ObamaTax will not, in fact, be lowering premiums by 3000%, they (and their agents) have begun looking for ways to minimize the impact.

Contrary to popular belief, new ObamaTax plans don't actually have to be all that benefits-rich. In fact, the Feds themselves agree that a plan which covers basically just the Minimum Essential Benefits "would appear to qualify as acceptable minimum coverage under the law, and let most employers avoid an across-the-workforce $2,000-per-worker penalty for firms that offer nothing."

That is, an employer could drop his existing full-coverage (or Catastrophic, for that matter) plan in favor of one of these "bare bones" configurations (Bob, you were way ahead of your time!). Coupled with a supplemental plan to cover some days in the hospital and the like, and the landscape suddenly changes.

This may prove especially attractive for employers with low-wage employees, who want to avoid the ObamaTax employer mandate penalty but can't afford to offer full-blown coverage. And if the premiums are low enough, perhaps those subsidies will cover the lion's share of their premiums.

Interesting concept.

JeffLinks Tuesday

FoIB Jeff M sends along two very helpful ObamaTax items.

First, courtesy of the Kaiser Foundation, a helpful (and free!) ObamaSubsidy calculator. This will no doubt help take some of the edge off those massive premiums hikes looming on the horizon.

But probably not.

Second, if you're a business owner, heads' up. Ms Shecantbeserious has released  a handy little FAQ sheet with timely (right) info on the SHOP (Small Business Health Options Program).

'Course, that presupposes that these things will ever actually get off the ground.

You can download the FAQ here.

Stupid Carrier Trick - Logging edition

Recently, I sold and delivered a policy to a client who, when applying, chose the monthly draft ("check-o-matic") premium payment option. This is a convenient way to budget premiums and, at least with this company, the second least expensive way to do so (typically, carriers impose a surcharge depending on how often premiums are paid - monthly, quarterly, etc). When the policy was approved and we had set an appointment for delivery, he indicated that he'd decided to change to annual pay.

Not a major issue - I notified our general agent (GA) for that carrier, and an amendment form was included with the policy. So far, no big deal. When I delivered the policy, I had the client sign that form (along with approximately 273 others) and sent it back in the handy, pre-paid envelope.

So far, so good.

You can imagine my surprise, then, to receive an email from the GA that "the new, re-issued policy" was on the way.

What new, re-issued policy?

Turns out, this carrier - even though we had signed and returned the amendment form - has decided that it needs to re-issue the entire policy, and over the weekend I received another half pound of paper (really!). Sent to me for a mere $2.50 of USPS postage.

I am far from a "tree-hugger," but even I find this offensive. Nothing substantive changed in the policy - why wouldn't the carrier simply print up and send out a little "certificate" noting the change?

Sheesh!

Rate Kaboom!

We've been warning about this for quite some time: if you think health insurance rates are bad now, just wait until the ObamaTax is in full swing.

But what do we know, anyway? Remember our Dear Leader promised rates would plummet by 3000%.

Turns out, not so much:

"Internal cost estimates from 17 of the nation's largest insurance companies indicate that health insurance premiums will grow an average of 100 percent under Obamacare, and that some will soar more than 400 percent"

Math sure is hard.

[Hat Tip: FoIB Jeff M]

HSA's still on life support

At the risk of mangling metaphors, the water's still murky and the jury's still out on the fate of Health Savings Accounts [ed: "mangled?!" How 'bout strangled?]. I've contended for a while (most recently here) that, due to the "cost-sharing reduction" requirements which essentially outlaw true High Deductible Health Plans, HSA's are DOA.

In fairness, Bob disagrees (agreeably, of course); he's "becoming more convinced there is a viable market for major med (and ancillary lines) outside the exchange. Yes, the products will still need to provide EHB's and adhere to MLR ... but they will also have more flexibility."

But we're both speaking in generalities here; that is, about the marketplace as a whole. LifeHealthPro's Allison Bell has an interesting article today on a specific segment of the market: those who may be eligible for tax subsidies:

"Low-income people will still be able to use health savings accounts (HSAs) after Jan. 1, 2014 ... For low-income people who want to use HSAs, the problem is that getting help with paying deductibles could make it impossible for a "qualified health plan" ... An individual who would not be eligible for the tax advantages of an HSA because the plan variation to which he or she would be assigned does not qualify as a [high-deductible health plan] may purchase the plan without cost-sharing reductions," officials said"

Well how nice for them. But what about those of us in the middle class, who aren't going to be eligible for subsidies? I asked Allison if this proclamation applied to us, as well, and she kindly replied:

"I think the guidance here is just about low/moderate income people who are getting cost-sharing subsidies that would make having an HSA and getting exchange coverage mathematically impossible. I think regular folks could still have an HSA and a non-subsidized, non-cost-sharing-subsidized plan, because the deductible could still be high enough that the plan would be compatible with the HSA rules."

Can't fault her for honest reporting, but I'm still unconvinced. After all, the whole "skin in the game" nature of HSA plans is in direct - and stark - contrast to plans that have to include all manner of pre-defined benefits payable at 100% (such as birth control convenience items).

If the story is accurate (and I have no reason to doubt that it is), then folks who haven't traditionally been prospects for HSA-type plans will suddenly become the only ones who actually qualify for them. But the very characteristics which made them less than ideal prospects (eg "what's my co-pay?") haven't changed, and won't change in the "new" environment.

'Tis a shame, really.

Underwhelming

As Bob noted last month, that seems to be the response of carriers to the upcoming Exchanges. Recall, though, that these are for individual policies; employers interested in group plan rates and products will access the "wholesale" version, SHOP (Small Business Health Options Program).

And shouldn't that actually be SB-HOP?

And as in the case of the aforementioned Exchanges, the reception by carriers has been - at best - lukewarm.

Case in point: Washington (the state, not Capital City).

"The board of the Washington Health Benefit Exchange is thinking about pushing the start date for the state's Small Business Health Options Program (SHOP) exchange to Oct. 1, 2014."

But, aren't those supposed to be online much sooner? As in, October of 2013?

Maybe, but you can't sell what you don't have, and thus far, a rousing one (1) carrier has expressed interest in participating. And that carrier, Kaiser Permanente, offers plans in only a limited area, not statewide.

There's a word for this....

Oh, yeah.

I think I'm going to be sick

"The Internal Revenue Service official in charge of the tax-exempt organizations at the time when the unit targeted tea party groups now runs the IRS office responsible for the [ObamaTax]."

Words. Fail.

Chickens. Home. Roost.

From the "I told you so" files:

Back in January, we observed that, even though the ObamaTax had heavy union backing, there was some concern that these efforts might backfire:

"Union leaders say many of the law's requirements will drive up the costs for their health-care plans and make unionized workers less competitive"

Fast forward to April, and we see the wall start to crumble:

"A labor union representing roofers is reversing course and calling for repeal of the [ObamaTax], citing concerns the law will raise its cost for insuring members."

And now to complete the trifecta:

"Deep in the list of taxes that the [ObamaTax] will hit Americans with is a 40 percent excise tax on health plans typical union members have ... This tax will most directly affect union families and early retirees"

Schadenfreude - it's what's for dinner.

What could *possibly* go wrong - Part XXVII

A perfectly pleasant day, ruined:

"The [IRS] has requested funding for 1,954 full-time equivalent employees for its Affordable Care Act office in 2014 ... these bureaucrats will write and enforce tax regulations for parts of the economy in which they have no core competence."

Well, how is that any different than the way things stand now?

Oh, right:

"To monitor compliance with [the ObamaTax], the IRS and HHS are now building the largest personal information database the government has ever attempted ... The data hub will be used as the verification system for ObamaCare's complex subsidy formula. All insurers, self-insured businesses and government health programs must submit reports to the IRS about the individuals they cover, which the IRS will cross-check against tax returns."

So one wonders:

Will tax cheats be denied health care?

What if you accidentally underpay?

Who, exactly, is building this database? Is it at least an American company?

Given previous security breaches, it's not entirely certain that your data won't be misused or disseminated (ask the recent victims of the IRS non-profit certification process). And given that the Feds' reliability in matters data are, at best, spotty, one is also not reassured.

Sleep tight.

Kentucky Progress: The Gov self-destructs

Several weeks ago, we introduced readers to the efforts of one Bluegrass State patriot, David Adams, fighting against Frankfort's seemingly illegal efforts to install an ObamaTax insurance Exchange.

Now David has video of Gov Beshear apparently admitting as much:



Bravo, David!

Buying and selling HIPAA

HIPAA privacy rules regarding PHI (Personal Health Information) are pretty stringent. As an agent, I have to be careful about disclosing PHI even to clients' own family members.

Pause.

Buy-sell agreements (and other business uses of life insurance) are great risk management tools. If a partner or key employee dies, the business may suffer immediate financial losses which can be mitigated by the infusion of cash from a life insurance policy.

Pause.

Life insurance policies are contracts, and are required to adhere to certain standards and rules, one of which is that the application is part of the policy, and must be attached to (or enclosed within) it. The application forms the basis for the whole transaction, and includes not just name and date of birth, but pertinent health and financial information, as well.

Now, let's tie this all together:

Fred and Barney own Bedrock Widgets, and enter into a buy-sell agreement. They call me to purchase life insurance policies on each other to fund it. I take their applications and submit them to the Prehistoric Life Insurance Company, where they're underwritten and the policies issued. We meet, and I deliver the policies: Fred's to Barney, and Barney's to Fred.

See the problem?

Barney now has all of Fred's health info, and vice versa.

This could be....uncomfortable.

But is it against HIPAA regs?

Standard industry practice says no: the application is (by law) part of the application and by law a copy must be included in the policy. So carriers have - thus far - avoided having to address this seeming contradiction.

Thus far.

[Hat Tip: FoIB Brian D]

9 Terrifying Words

Who knew how prescient our 40th president would turn out to be?

The IRS - the folks tasked with enforcing the ObamaTax - are making the news (again) in a particularly disturbing way:

"The Internal Revenue Service is now facing a class action lawsuit over allegations that it improperly accessed and stole the health records of some 10 million Americans ...  some 60 million medical records from 10 million patients were stolen by 15 IRS agents. The personal health information seized on March 11, 2011, included psychological counseling, gynecological counseling, sexual/drug treatment and other medical treatment data."

But we're supposed to trust them with our vital (and private) health information?

Oy.

ObamaTax chow down

Whether it's movie theaters, theme parks or fast food joints, the ObamaTax is certainly taking a bite out of the employment market. As the Wall Street Journal notes:

"Some restaurant operators are scaling back expansion plans because of uncertainty about the expense of insuring employees under the [ObamaTax] ...  East Coast Wings & Grill, a 26-unit chain in North Carolina and Texas, in March imposed a three- to five-unit limit, for the time being, on the number of restaurants that franchisees can own, because of worries about health-care costs."

Ooopsies.

It's really a double-whammy: the costs themselves, plus the uncertainty of how they'll shake out. So businesses refrain from expanding, which in turn means fewer jobs are created, which in turn adds more drag to an already anemic economy.

And it's only going to get worse.

Over at Reason, there's a letter from an employer to his 23 employees laying out what they can expect in terms of changing health care policies and costs, and why. But here's the money quote:

"The higher cost for [the employer] would reduce our ability to hire, give raises, etc."

These are very real, very immediate concerns, but have been given short shrift in the legacy media. The letter is amazing for it's comprehensive but totally understandable explanation of where they've come, and where they're headed, by an employer who really "gets it." Read the whole thing.

See and Say and the ObamaTax

In addition to all the other wonderful ObamaTax news to which we've been treated lately, add this (Hat Tip: Assurant Employee Benefits):

Did you know that, come January, your ObamaTax-compliant "health" plan will also include "pediatric services including oral and vision care?"

Well, small group and individual plans will have to cover those, and you'll have the privilege of paying for those "benefits" (whether you want to or not).

These little "goodies" can have no annual or lifetime limits, must cover up to $700 per child (maximum of $1,400 per family - yay), and meet MLR requirements.

Click here to access the whole FAQ.

Cavalcade of Risk Number 183: Shaky Isles edition

Russell Hutchinson hosts this week's roundup of risk-related posts from New Zealand, and includes some interesting items from around the globe.

Do check it out.

Can you see it now, Kathleen?

"[H]enceforth insurers shall be forbidden by law to charge smokers higher rates than non-smokers. Smoking, as it turns out, “is a preexisting medical condition”