Monday, March 02, 2015

Five Little Words: An Epiphany

"Exchange established by the State under 1311"

I've always believed the adage that "words mean things;" that is, words have meaning and one should be careful in how they're used. Sometimes, silence is golden: not speaking can communicate better than words.

In the original series opening of Star Trek, William Shatner speaks of the ship's "5 year mission." That always struck me as self-limiting: what if it had been picked up for a 6th season? Would Captain Kirk have become Captain Steubing?

Likewise, in The Next Generation, Patrick Stewart calls it an "on-going mission," an unnecessary redundancy. How much more sense it would have made to just say - in both shows - "its mission,"  no qualifier needed.

And so it is with the subsidies. The whole of Section 1311 refers to "each State" and "a State" over and over; if Congress had truly wanted subsidies available for everyone whose income justified it, why not just say so? It would have been simple enough: "... enrolled in through an Exchange established  under the Patient Protection and Affordable Care Act."

Easy peasy.

That they chose to specify Exchanges established by a "State"  means something. Words matter.

Friday, February 27, 2015

Rationing the MVNHS©

In response to yesterday's post on the apparent death-spiral of the Much Vaunted National Health System©, frequent (and valued) commenter John Fembup observed that this is not really news; in fact, Dr David Owens (former chief of the Service) noted the likely future 40 years ago:

"The National Health Service is a rationed service. There will never be a government or a country that has enough resources to meet all the demands any nation will make on a national health service."

That quote, by the way, comes from a report of the annual meeting of the National Academy of Sciences in DC in 1976.

It should come as no surprise to regular IB readers that what Dr Owens observed must, in fact, be the case. Almost 6 years ago, co-blogger Bob explained it in easily understandable economic terms:

"The economics of goods and services can be reduced to simple demand and supply. Health care is no different. It follows economic theory just like every other consumer good.At either extreme you have inelastic price curves and elastic curves. Most consumer items track a bell curve but some things are totally elastic or totally inelastic."

That is, health care is, in fact, a good and a service (depending on whether you're talking about a cast, or the orthopedist affixing it to your arm). Regardless, there is only so much of it at any given time (there's not an endless supply of cardiologists, for example). And folks who deliver health care expect to be paid for their services, as those who supply bandages and syringes expect to be paid for their products. How much we're willing to throw at a given patient then becomes an issue.

When the cost of health care is perceived to be free (as in a nationalized scheme), the demand is going to go up. But from where do the funds come to pay for unlimited services and supplies?

One could ask Venezuela about that, no?

Thursday, February 26, 2015

MVNHS© Circling the Drain?

While prognosticators opine breathlessly on the potential Halbig/King/Burwell fallout, it may be instructive to cast our eyes eastward to see how Britain's Much Vaunted National Health System© is faring:

"NHS may be forced to abandon free healthcare for all, says Britain's top doctor"

Wait, what?

That can't be good.

Surely he's overstating the case, right?

Not so much:

"If the NHS continues to function as it does now, it’s going to really struggle to cope because the model of delivery and service that we have at the moment is not fit for the future."

Turns out, if something's "free" it's likely to be much in demand, and you know the old saw: "You can have it fast. You can have it cheap. You can have it good. Pick two."

Under a nationalized health are scheme such as the MVNHS©, it's readily apparent that the folks in charge have long opted for the first two. Now, they're even failing at least one of those, which does not bode well for the average Brit.

Interestingly, the good doctor is calling for a more holistic delivery approach, with services more centrally located and delivered. Now, how - or even if - that can be accomplished becomes the next big challenge.

Health Wonk Review: Decade edition

The venerable Health Wonk Review celebrates its 10th anniversary, and I can think of no one more fitting to present it than David Williams. His own blog also turns 10 this weekend (we beat him by a month), so he's a natural to host this very special 'Review.

Wednesday, February 25, 2015


This just in ........
Massachusetts' governor has fired Obamacare architect Jonathan Gruber from a board that oversees the state's health insurance exchange, a source confirmed to the Washington Examiner.
Gruber ignited a controversy last December when a series of videos surfaced where the Massachusetts Institute of Technology professor discussed the “stupidity of the American voter” was vital to passing the 2010 Affordable Care Act. - Washington Examiner

I guess he feels really stupid now.

Biting the Hand .......

In a recent campaign speech to participants of the Council on Aging the Arrogant One let his feelings be
known with regard to financial planners.
President Obama made only one reference to any insurance-related product today at an AARP event in Washington. He thanked AARP for helping the White House organize the aging conference, and then used the rest of the appearance to blast financial advisors who "receive backdoor payments or hidden fees for steering people into bad retirement investments that have high fees and low returns." - Life Health Pro
Either El Presidente is unaware that AARP would not exist if not for fee's and commissions paid by carriers in exchange for an endorsement, or he knows but fails to connect the dots.

Can you say backdoor payments to AARP?

Oh, and speaking of low return retirement investments, how is Social Security doing these days? Let's consider those that work until their 65th birthday and then drop dead the day after they retire.

What kind of ROI do they get?

No fees, please

Over at LifeHealthPro, Craig Gottwals has a very interesting take on the role of fees in the age of MLR (Medical Loss Ratio). Craig's an attorney specializing in health care law, so what he says has a lot of credibility.

In a nutshell, one of the challenges facing agents in the fully insured large group market (where most of the whole fee discussion takes place) is how employers and their agents deal with the annual rate increases. Traditionally, it's not been unusual for the employer to pay his agent a fee for procuring coverage, and the agent then negotiates with the carrier to deduct the cost of commissions from their premium calculations.

Alternately, the agent might agree to a simple commission reduction (although this might be classified as rebating, but that's another post).

Regardless, the goal is to find a way to lower premiums.

Craig asks a simple question: Will this strategy still work in the age of MLR?

The short is answer is "No," but I really recommend reading the whole thing. There's precious little insider lingo, and he does a great job of explaining why this arrangement is not only spinning wheels, it can actually put you in reverse.


Tuesday, February 24, 2015


If you liked Solyndra you are going to love the Obamacrack co-ops.
* Only one Obamacare co-op made money during the first three quarters of 2014.
* Taxpayers are set to lose more than $1 billion of the $2.4 billion loaned to the co-ops - nearly double the loss of Solyndra. - Insurance News Net
Reminds me of a line Gov. Romney used in one of the debates with Obama. It seems like Obama only picks losers.
According to S&P, almost a third of the co-ops received more than $20,000 in federal loans for each person covered in 2014:
*The Minuteman Health Inc. Co-op in Massachusetts got more than $156 million and covered only 1,822 people - nearly $86,000 per enrollee.
*The Land of Lincoln Mutual Health Insurance Co-op in Illinois got more than $160 million and covered only 3,428 people - nearly $47,000 per enrollee.
*Freelancers Co-op of Oregon (Health Republic of Oregon) got more than $60 million and covered only 1,279 people - more than $44,000 per enrollee.

The money would have been better spent on vouchers and let these people buy coverage from a real insurance carrier.

Where do I go to get my tax money back?

The Obamatax Man Cometh

Obamacrack buyers. Did you get a government bailout last year? You might have a surprise when you file
your taxes.
The majority (52 percent) of Obamacare enrollees receiving an advance premium tax credit to purchase Obamacare insurance is facing the prospect of paying back $530 of that tax credit to the IRS, according to a new study from H&R Block.  This clawback is reducing the refunds for these taxpayers by 17 percent this filing season. - ATR
Obama giveth to buy votes and the IRS taketh away.



According to the UK Daily Mail the 52% figure translates to roughly 4.5M tax filers.

Now isn't that special?

Thanks to Henry Stern for the update info.

Green Mountain State gets $Grubered

Monday, February 23, 2015

Pimping Medicare

Medicare fraud is back in the news and a carrier with a bulls eye on their back is Humana. A major player in
the Medicare Advantage business, Humana uniquely positions themselves in targeted markets to offer some of the most competitive plans in the area.

Are they smarter than their competitors or is something else afoot?
Humana, Inc. faces new scrutiny from the Justice Department over allegations it has overcharged the government by claiming some elderly patients enrolled in its popular Medicare plans are sicker than they actually are.
The privately run Medicare Advantage plans offer seniors an alternative to standard Medicare, which pays doctors for each service they render. By contrast, under Medicare Advantage, the health plans are paid a set fee monthly for each patient based on a complex formula known as a risk score. Essentially, the government pays higher rates for sicker patients and less for those in good health. - NPR

On the surface it may appear there is nothing wrong. The government taxpayer SHOULD pay more for sicker people.

But who defines "sicker" and how is that assessment made?

Therein lies the problem.
(Dr.) Olivia Graves alleges that a Humana medical center had diagnosed abnormally high numbers of patients with diseases such as diabetes with complications that boosted Medicare payments — diagnoses that "were not supported by medical records." Graves alleges that Humana knew about the overcharges but took no action to stop them. Humana has denied the allegations.
And in early February, a federal grand jury in West Palm Beach, Fl. indicted Dr. Isaac Kojo Anakwah Thompson on eight counts of health care fraud. He's accused of cheating Medicare out of about $2.1 million by inflating risk scores of some Humana-enrolled patients. 

Regardless of who you believe, ultimately it is the taxpayer that loses.

hat tip to Holly Robinson for this find.

Open Enrollment...yet again....

Like the Feds, Covered California has announced another special Open Enrollment period.  This one runs from today through April 30.  Eligible consumers must indicate on their application that they were unaware of the tax penalty for going without health insurance.  It doesn't appear to require that you were uninsured in 2014.  

Since the application also includes a statement about the accuracy of the submitted information, the applicant also certifies that he or she is a blithering idiot or doesn’t watch TV, listen to the radio or know how to read.

More Delays on HRAs

Technically, Health Reimbursement Arrangements (HRAs) aren't "insurance" at all, but a means to provide tax-advantaged financing of health care. Unlike Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs), HRAs are entirely employer-financed; they're like an employer-provided health care gift card.

Until the ObamaTax, HRAs were also quite flexible in how they were set up and for what they could be used. For example, pre-ACA, small employers could fund "standalone" HRAs that allowed employees to pay for privately purchased health insurance (among other things). This encouraged employees to buy the plan best suited to their needs, and employers could control costs because they weren't beholden to a group carrier's annual rate in creases.

Sadly, those days are gone.

One of the ways that these plans have been affected is increased taxation. Under the DC-enforced ObamaTax regulations, so-called "standalone" HRAs are subject to a pretty hefty excise tax. The good news (for certain values of "good") is that the IRS has graciously granted a (temporary) reprieve:

"The Treasury Department ... will delay enforcement of an Affordable Care Act prohibition relating to standalone health reimbursement arrangements until July 1"

Gee, how generous of them.

Oh, and that excise tax? $100 per employee per day (of non-compliance).


Naturally, I turned to our local Gurus of all things HRA (and FSA, and HSA), the folks at FlexBank, for their take:

"The deal is, the taxes are still coming, it’s just been delayed."

Pay me now, or pay me later. So sayeth DC.

Friday, February 20, 2015

Three Strikes...

Pamela Weldon played by the rules, and for her efforts, she's outta luck:

"[CoOpportunity]'s liquidation marked the third time she would lose her health insurance under Obamacare, the third time she would head to to shop for coverage, and the third time she would have to purchase a brand new plan."

On the bright side, she now has an extra coupla months to sign up (maybe), but woe unto her if she has any claims in the meantime. She believed the lie that if she liked her plan, she could keep it; suffering from carpal tunnel syndrome for over a dozen years, she was satisfied with her Humana plan, but was forced to find a new ObamaPlan when her plan was cancelled.

No problem, thought she, and headed to the site, where she attempted - for two months! - to obtain coverage. She finally got coverage from CoOpportunity, and we all know how that turned out.

She also believed the lie that "if you like your doctor, you can keep your doctor:" as with all the ObamaTax promises, this one had an expiration date. Turns out, her regular physician wasn't in her new plan's network. Luckily for the 58 year old Ms Weldin, though, her plan did cover birth control convenience items.

It actually just goes from bad to worse: her plan of choice was no longer offered, then the carrier itself assumed room temp. She eventually found a plan that included her preferred doc, but at a much steeper rate.

But hey, that's the new paradigm, no?

You have GOT to be kidding me

Really? They're going to do this?

"The Obama administration will hold a second enrollment period for ObamaCare this year ... The enrollment period will run from March 15 to April 30."

They're just trolling us now.

Here's my question: why arbitrarily cut it off in April? Why not just open it year 'round? That way no one will have to pay any penalty fine tax. Better yet, it means that you can just wait to buy your insurance in the ambulance.

Makes sense to me.

Obamacrack Tax Headache

If you are one of the 11 million or so Obamacrack addicts that got subsidy money, you might want to delay your 2014 income tax filing.

If you have already filed, consider filing a corrected return.
The Obama administration says it sent about 800,000 customers the wrong tax information, and officials are asking those consumers to delay filing their 2014 taxes.
The tax error disclosed Friday is a self-inflicted injury that comes on the heels of what President Barack Obama had touted as a successful enrollment season, with about 11.4 million people signed up. - CNBC

Reportedly 89% of the 11+ million are on Medicaid.

That leaves roughly 2.5M that bought Obamacrack with subsidy money and presumably have or will file taxes. In round numbers, about a third of you got bad information from the government.

Co-Ops circling the drain?

Was Hawkeye state-based CoOpportunity Health's rapid growth - and even more rapid decline -  a harbinger of things to come? We've wondered about the Co-Op model for a while:

"The Freelancers Union, which provides health insurance to 25,000 of its members in New York State, is ending an experiment in providing low-cost insurance to independent workers"

That little "experiment" cost thee and me over $340 million. So, what does the future hold for these insurance company wannabe's?

Over at Forbes, Dr Scott Gottlieb posits that it's not likely to be very bright, and worrisome:

"The co-ops aren’t dying only because they were hastily constructed, or poorly managed. Their disaster is far more willful and deliberate. They meant to lose money."

Interesting take. But what possible motivation could there be to purposefully back a loser?

Well, if your actual end goal is single-payer (as we've maintained all along), then it begins to make sense.

A lot of sense.

Co-blogger Patrick adds:

This post from UPenn's Institute of Health Economics adds some financial perspective on the scope of the problem:

"The “combined ratio,” across all plans, is 116.8%, which corresponds to an underwriting loss of about $17 per $100 of premiums"

Hard to stay afloat when you're hemorrhaging cash. Or put another way:

Falling Dominoes

Have you ever watched someone stack dominoes then tap one and watch the rest fall? Some of these set ups are quite elaborate and took a long time to build only to collapse and fail in a matter of minutes.

This is what is happening to health insurance, and to an extent, health care as well, in the U.S. as a result of Obamacrack.

Assurant is a 100+ year old carrier that is losing money in the health insurance sector and will probably leave the market very soon. If not for the taxpayer funded "bail out money" (some might call it blood money) Assurant would have been gone long ago, or possibly never even entered the Obamacrack game.

The carrier lost $37M last quarter and losses would have been even greater if not for the government payola.
The health unit lost money even though it cut spending on expenses other than claims sharply, executives said.
Colberg said the biggest problem was last-minute moves the Obama administration made to let consumers hang on to "grandmothered policies," or policies purchased between the time PPACA became law and Jan. 1, 2014.
Health insurers had priced 2014 major medical coverage based on the assumption that most people who had coverage purchased before major new PPACA commercial health insurance requirements took effect in 2014 would have to replace the coverage.
The decision to allow grandmothering "dramatically altered the risk pool in 2014 and made the market much sicker than expected," Colberg said. - Life Health Pro

Political maneuvering and manipulation of the law led, at least in part, to unanticipated losses.

They must not have been paying attention when he said "If you like your plan you can keep your plan".

Looks like Assurant got Gruberized.