Thursday, July 31, 2014

Medicaid Iceberg Ahead

One of the key provisions of Obamacare involves Medicaid expansion. But then SCOTUS
through a wrench in the works making expansion optional. The result, 24 states said "no" to expansion, gumming up the works.

And now this .........
Just six states and the District of Columbia will use their own money in 2015 to sustain the federal Medicaid pay raise to primary care doctors, which was a key provision of the Affordable Care Act (Obamacare) intended to make sure millions of low-income people enrolling in the expanding insurance program have access to a physician.
MedPage Today

What happens in the other states?
The other 42 states will let the Medicaid pay rates revert back to their 2012 levels.
Is that a bad thing?
Medicaid fees for primary care increased in 2013 and 2014 to the same amount paid under Medicare. While Medicaid fees vary by state, the change meant an average 73% pay increase nationally
When states go back to 2012 levels that translates into a 58% reduction in PCP fees paid by Medicaid.

A doc that received $100 for a Medicaid patient in 2012 saw that amount increase to $173 in 2014. Going back to 2012 levels is a 58% reduction in fees.
Physician groups, while pleased with the extra funding, have said for years that the 2-year cap would limit its impact on persuading more doctors to treat Medicaid patients. Still, they worry about what happens when the short-lived pay raise goes away in most states.
I suppose we will find out in 2015 if there will be a wholesale dumping of Medicaid patients or not.

Anecdotal evidence piling up

David Williams, a Massachusetts-based healthcare industry consultant (and FoIB) has a very interesting new post from the Land of RomneyCare:

"Obamacare caused one small businesses’s Blue Cross Blue Shield of Massachusetts premium to jump by 29 percent ... After that I heard from two other BCBS MA customers who were experiencing big premium hikes."

David reached out to Blue Cross for confirmation and elucidation, and (surprisngly) they offered a helpful explication. Click on through for the unexpected twist.

Too little, too late [UPDATED]

Sing it, Johnny:

Which is nice, but what difference, at this point, does it make?

UPDATE (HGS@7-31-14):

Adding insult to injury, we now learn that the site debacle cost  almost $1 Billion, and still needs work:

"The price tag for, the Obamacare website, is approaching $1 billion even as key features remain incomplete ... If the management doesn’t improve “significant risks remain that upcoming open enrollment periods could encounter challenges

Gotta love that last bit: "could encounter challenges."

Masters of understatement, these rocket surgeons.

When journalist/propogandist don't understand their subject, Is Medicare getting more efficent?

Not sure if I should refer to Vox as journalism; their attempt at understanding the per-capita Part A spending is more along the lines of humor.
But what's definitely clear — and what's driving this trend — is that Medicare is spending significantly less per person than they did two years ago. And this report expects that trend to continue for another two years going forward.

Ms Kliff has a number of guesses of why this is, including Obamacare of course. What she misses is the most obvious one: Medicare growth usually happens when someone turns 65. And 65 year-olds have lower claims cost then 80 year-olds. If you add 1.6 million people at the healthiest end of your spectrum, and the costliest end of your spectrum dies off, you would expect average claims to drop. When that growth is higher then usual, i.e. all the baby boomers, you would expect sustained reduction in per capita cost.

They had 3% growth to demographics in the most favorable spectrum possible. A 2% reduction in cost for that favorable of a 3% change in demographics is not impressive. Looking at CMS's website and their press release, it appears they don't understand the actuarial sciences either.

Wednesday, July 30, 2014

Liberals Must Hate Obamacare

A GOP lawsuit against the Obama administration on overstepping their constitutional authority in delaying the employer mandate in Obamacare has led to Democratic outcries and a platform to fundraise for their base. Liberals call the lawsuit frivolous and that an attempt to impeach the President will follow. They say it is a waste of money and a witch hunt designed to tear apart Obamacare. They also want GOP members of Congress to do their jobs and as the President said: "stop hating all the time."

While the GOP lawsuit focuses on the employer mandate, it should be noted that since it's inception Obamacare has had 42 changes made to it. 24 of them have been done by the administration with no input from Congress or the courts. These include: the individual mandate delay, the employer mandate delay, early closing the high risk pool (PCIP), canceled Medicare Advantage cuts, an extension of transitional (Grandmothered) plans, and doubling the allowable deductibles on small employer plans. All of these changes made by the Administration are detrimental to consumers.

I always assumed that liberals are in favor of the law. If this is true then why are they against a lawsuit that is designed to implement exactly what they want? Why do they want employers to be able to avoid penalties for not providing insurance to their employees? Why are they against measures that are designed to lower health care costs? Why are they against consumers having better benefits?

Truth is they aren't. Instead they have their heads buried in the sand, missing the point of a lawsuit that is brought forth by the side of the aisle they despise. And the DCCC hopes they continue to stay buried while hopefully collecting $19 from each one.

(Not so) Reassuring Re-insurance

One of the (many) problems with the ObamaTax that's been flying under the radar is the soon-to-be cancelled re-insurance program:

"Insurance companies will no longer have access to ACA’s “re-insurance” and “risk corridor” programs. The first item currently allows insurers to bill the government for the most expensive patients."

Basically, this re-insurance is a way to funnel taxpayer money directly from DC into insurance carriers' coffers, and was designed to bribe the industry into supporting the ObamaTax protect carriers from the inevitable adverse selection they were afraid of under the Guaranteed Issue provision of the law. It's available for a limited time only (well, at least until HHS Secretary Burntwell unilaterally extends it).

And just how much of your money are we talking about here?


"Aetna Inc. believes it should qualify for $50 million in federal reinsurance benefits, based on actual individual health insurance claims submitted during the first half of the year."

And why is that?

Think of it this way: when you can't be turned down for health insurance - no matter how sick you are - any premium is a bargain compared to the cost of medical care. Add in ObamaTax subsidies, which further reduces your costs, and it's no wonder that a lot of seriously ill folks are signing up (or trying to, anyway).

Aetna, of course, sees the writing on the wall (and in their ledgers) and has its hand out to Uncle Sugar for some of that sweet, sweet reinsurance cash. And why not? They've earned it, right?

But of course, they're not the only carrier with its hand out:

"Big Government and Big Insurance have worked together to promote Obamacare.  They’ve also worked together to make sure taxpayers will help bail out insurance companies who lose money selling insurance under Obamacare."

And remember, Aetna's not even the biggest boy on the block; what happens when Blue Cross or UHC take their place in line? That's the price we pay for carriers' agreeing to shill for the ObamaTax after initially resisting it.

Quid pro quo: It's what's for dinner.

Tuesday, July 29, 2014

Speaking of monkeys and unicorns...

Bob's post yesterday on the travails of a couple trying to find affordable health insurance in an Obamaworld proved once again that there are no coincidences:

I have spent the past few days working with a couple of very long-term clients. They've trusted me with their health insurance needs for several years (at least 5 that I can recall off-hand). Both of them have HSA-compliant plans with moderately high family deductibles ($6,000 for one, $10,000 for the other), and both are insured with Medical Mutual (MMO). Both of them renew September 1st.

MMO has elected to participate in the Obamastration's offer to extend existing policies another year or so (so-called "grandmothering")..

"Don and Sharon" got a 28% rate increase from last year, when their rate was $442 a month (or $5,300 a year). Their plan has a $10,000 family deductible, then pays 100% of covered charges after that (most preventive care items are paid on a first-dollar basis, no deductible necessary). So their maximum non-preventive-care related out-of-pocket exposure was about $15,000.

Their new rate is about $560/month, or about $6,700 a year. Add that to the $10,000 deductible, and for most non-preventive health care they'll shell out almost $17,000 before any insurance payments are made on their behalf.

But as Igor says, "could be worse:"

In shopping alternate plans for them, all of which would be required to be fully ObamaTax-compliant, the "best" (least expensive) plan I could find for them had a $12,000 deductible (20% higher than their current plan) and a rate of $900 a month (almost $11,000 a year). That translates to $23,000 out-of-pocket before the insurance would kick in (again, for most non-preventive items).

"Ronnie and Laurie" also have an HSA plan with MMO, albeit with a slightly lower deductible ($6,000 for the family). They've also been "grandmothered" in, so could keep their plan, for which they currently pay $570 per month (or about $6,800 per year, for a total out of pocket exposure of about $12,800). They can keep it by agreeing to a 30% rate hike, which would increase their premiums to $740 per month ($8,000) per year. That would mean $14,000 out-of-pocket for non-preventive care before the plan would pay a red cent.

Shopping around for them, we find the following alternatives:

Company A, with a $12,000 family deductible and a monthly price tag of $872. That's $22,000 out of pocket before the plan kicks in.

Company H offered a plan a little closer to what they currently enjoy: a $7,300 family deductible at the bargain price of $1,020 per month. For those paying along at home, that's about $19,000 up-front.

Or they could stay with Medical Mutual and elect a fully-compliant ObamaTax plan, complete with $12,000 family deductible and low, low monthly payments of just $900. That's also $23,000 out the door.

Choices, choices.

Rideshare Tricks - An Update

So, just over 3 years ago, we posted on the opportunities - and dangers - of ride-sharing:

"Seeing a business opportunity in millions of cars that sit idle at office parking lots or on weekends, several start-up companies have introduced "peer-to-peer" car-sharing services"

We noted at the time that there were still a number of unanswered questions vis insurance coverage for folks who rented out their vehicles, and those who rented them.

Fast-forward 3 years, and the PIA (Independent Agents' association, primarily for P&C folks) has some new news, in the form of a handy flyer that details all the potential issues. Among them:

First, rideshare drivers aren’t currently subject to the regulations that taxi and livery services follow. That means drivers aren’t required to have city-regulated vehicle inspections or background checks, a public safety concern to many cities

Neither ridesharing nor vehicle sharing services are covered by traditional personal auto insurance policies. [ed: which we pointed out in our original post]

This caught my eye in a big way:

"A six-year-old girl was killed in a collision with a rideshare car in San Francisco. The driver said he was awaiting a fare at the time of the accident. Because the driver wasn’t transporting a passenger when the accident occurred, the rideshare company said he wasn’t covered by their policy – leaving the driver financially responsible"

Now, that one's still awaiting the court's decision, but it should be an eye-opener to folks thinking about either end of the transaction.

The more you know....

Download the flyer here.

Monday, July 28, 2014

Flying Monkey's and Unicorns

No bones about it. I don't like Obamacare. If you have the time, I can give you a long list of reasons. But let's start with an email I received from a lady in Georgia looking for "affordable" health insurance. Let's call the lady Dorothy, and her husband, Toto.

I am a self employed consultant and my husband is an independent sales rep. I need a health insurance plan for both of us. Can you help us weed through all this and find something?
Sure can, but I need to know if you have recently lost coverage. You can only buy coverage when the government says you can.

We were covered by a client that had me under contract and provided insurance. My last day with them was Friday so my insurance will terminate in August.
OK, that means the government will allow you to buy. Just need some details and I can send over a quote then we can talk on Monday.

The couple's ages are 58 and 54. Unfortunately they live in a part of Georgia where community rating factors are higher than all but 4 other places in the U.S.

Turns out a $12,000 deductible plan will run them $1100 month.

Last year a similar plan would have been around $400.

Of course President AWOL would call that plan substandard.
Is there any reason why we can take a plan for this year that doesn't meet minimum essential and then see what happens in 2015.
You can, but ..........

The only alternative is a short term medical (STM) that will cover you for up to 6 months. The plan does not meet government requirements and you will incur a penalty.

Plus the STM plans won't be allowed in 2015.

And rates for next year will be higher than 2014.
I am not paying those ($1100) premiums so we will have to find another option
Yeah, well good luck with that.

Finding affordable Obamacare health insurance is like looking for flying monkeys and unicorns. It just doesn't exist.

Obamacare Outrage

Has your health insurance coverage been cancelled? Are your rates under the "Affordable" Care Act unaffordable? 

Join the club at MyCancellation

Harry Reid would say this is all lies.

I say Harry Reid is a liar.

Saturday, July 26, 2014

A Grace-ful Benefit Revolution

Over at Benefit Revolution, Craig Gottwals has an in-depth look at the 90 day grace period conundrum (about which Bob first blogged here last year).  Briefly, folks who buy a plan on-Exchange (and who get a subsidy) have a unique opportunity to game the system in a big way.

Craig's post also features an interesting video of his (very) recent appearance on the A&G Radio show discussing the issue.

Nice job, Craig!

Friday, July 25, 2014

State Exchanges vs Subsidies

While we wait for the Halbig/King decisions to be resolved, and noting that they may not be as big a deal as so many folks believe,  here's video proof that it was no "drafting error" [ed: skip to just past the 31 minute mark for the money quote]:


In case you can't make it out, MIT economist Jonathan Gruber - a key player in designing The ObamaTax - clearly says "What’s important to remember politically about this is if you're a state and you don’t set up an exchange, that means your citizens don't get their tax credits."


[Hat Tip: Reason]

Thursday, July 24, 2014

I see fake people...

So here's the thing:

"Investigators ... created 12 fake health insurance test applicants and... have gotten qualified health plan (QHP) coverage for 11 through the [ site]."

So what's the big deal?

If someone hacks your Visa card, they can (potentially) rack up some major purchases. But who in their right mind wants to steal insurance?

Here's the problem(s):

As Bob points out, it underscores just how poorly the 404Care site was designed and implemented, and how it continues to be an embarrassment to all who've worked on it (assuming they had any shame to begin with). More importantly, though, folks who successfully game the system in this way:

"Get free (or almost free) insurance until such time as the Feds figure out that they never were entitled to it (again, assuming they're even caught at all). So after claims have been paid and the government (and the carriers) want their money back, the perp is long gone."

Nate offers another scenario:

"If I was an illegal alien undocumented guest with a serious medical condition, free insurance would be great. You don’t even have to really try to fake it; just provide a valid insurance ID and they will treat and gladly bill the carrier for you."

And Pat offers this:

"The bigger point is that HHS isn’t verifying jack squat. Income, identity, Social Security number, even residence may not be accurate. If 11 of 18 fraudulent attempts got through then how many of the “true enrollments” are not accurate?"

And that's truly scary: recall that thousands (perhaps tens or even hundreds of thousands) of folks experienced enrollment "glitches," so we have no way of knowing how many folks really enrolled, and how many of those that did were, in fact, fraudsters using someone else's ID.

Warm fuzzies, anyone?

Heroic Carrier Tricks: CNA edition

Back in the day, the Cincinnati Life Insurance Company sold Long Term Care insurance (LTCi), and a colleague (since retired) sold a number of these. Recently, a Cincinnati LTCi client called to complain about a claims problem, and I was happy to try to help out.

Note: I had understood (mistakenly, as it turned out), that Cincinnati had actually sold its block of business to another carrier. This is a not-infrequent occurrence in the LTCi biz, but was not the case here. Instead, they had turned over policy service to a Third Party Administrator, LTCG, which also services other carriers' policies, including CNA. Unfortunately, I hadn't known this.

I invited the client to come into the office so that we could call in to try to resolve the problem. This turned into a roughly 90 minute call, during which time I know that I heard the rep with whom we were speaking say "CNA." I made a note of that, and made the assumption that Cincinnati had sold their policies to them. Later, I figured out that she had simply misspoken.

We were unable to get resolution to the problem, and so I reached out to CNA's media relations folks to let them know that I would be posting an unflattering review of the situation. I was contacted almost immediately by the very nice, professional Jennifer, who offered to reach out to their claims folks to see what could be done.

I was also contacted by a gentleman named Terry, who works for LTCG (the policy administrators). He had done some research, and was convinced that this was not a CNA policy at all. Since my mind was already made up, and Jennifer had already taken ownership, I paid that little heed.

This was a mistake.

Behind the scenes, Jennifer connected with a supervisor in the CNA claims department, and they were able to ascertain not only that this was not a CNA policy, but in fact a Cincinnati one. And that would have been enough: they could have just stopped right there and told me to take it up with Cincinnati and LTCG.

But they did not:

Instead of simply shrugging it off and passing it back to me, they reached out to the Cincinnati folks on behalf of this client - not CNA's - and helped to resolve the issues. Late yesterday afternoon, I received a text from the client that Cincinnati (well, LTCG) had reached out to her, and that they had everything necessary to approve the claim.

I was, and am, stunned.

CNA was under zero obligation to do anything more than confirm that this wasn't their policyholder. And yet they went out of their way to help her get a claim issue resolved. That is world class service, and I am absolutely grateful to Jennifer at CNA and Terry at LTCG for their help, patience and perseverance in getting us to this point.

Kudos, CNA!

Wednesday, July 23, 2014

Cavalcade of Risk #213: Don't Panic edition

Econ-blogger extraordinaire Jason Shafrin hosts this week's short but eclectic collection of risk-related posts, from life and health insurance to Worker's Comp, and plenty in-between.

Five Takeaways from Halbig and King

1. The decision on Halbig (D.C. Circuit) isn't taking subsidies away from people nor is the decision on King (4th Circuit) to allow everyone who qualifies to receive a subsidy. It is simply about the law and how it is interpreted. One might also ask how one court ruling said 36 states were federal exchanges while the other ruling said 34 states were federal exchange. This is what happens when a law is poorly written, rushed to a vote, and passes. We end up with a discombobulated mess. This isn't unique to Obamacare. Many other laws that were rushed through end up with unintended consequences too. Obamacare is still full steam ahead on rickety tracks and those who are on board still have ways to purchase heavily discounted tickets. Until further court rulings, these discounted tickets can still be purchased in every state.

2. Media loves a crisis even more than Rahm Emanuel. Coverage of both cases were headline news across the country. But as Bob pointed out yesterday, maybe this isn't such a BFD. The number of people this impacts is less than 2.5% of our population. While that number is projected to rise, CBO figures it will max out at 8% of our population.

3. We are more divided as a nation than ever. Six judges voted exactly along partisan lines for yesterday's rulings. Immediately following the release of Halbig the Twitter world lit up with liberals claiming Republican judges were guilty of Judicial Activism then followed it up - in the same article - with how the White House would request the entire D.C. Circuit Court hear the case and that the court leans 7-4 in favor of democrats. Evidently they don't see this side of it as Judicial Activism.

4. Lobbyists. The American Hospital Association, Association of Health Insurance Plans, and AARP were three of the organizations that filed amicus briefs on behalf of the government in the Halbig case. Obamacare is a gravy train for the people and the businesses they represent. There is no doubt that these groups have some legitimate business concerns surrounding these rulings. But they also see Obamacare as an opportunity. I would expect a very strong grassroots effort by these groups to begin extensive lobbying at the state level. Someone once said elections have consequences. 2014 will no doubt be about Obamacare once again. There are 33 senate seats, all house seats, and 36 governorships up for election this year.

5. Expect a huge push for states to establish their own exchanges over the next several months. Lobbyists and backers of Obamacare will inundate states who didn't set up exchanges. It will also push states that were looking to go from their state based exchange to the federal exchange. The only point agreed upon by all courts is that an exchange established by a state is eligible for federal subsidies. To make this mess go away the only avenue to take is for all 57 states to step up and create their own. For supporters of subsidies, waiting on John Roberts to decide the outcome would be like playing a game of Russian roulette.

Tuesday, July 22, 2014

Dumb Carrier tricks...Kaiser Edition

For the last month, I've been receiving emails from Kaiser about a change in policy:
As your business partner, we want to make you aware that Kaiser Permanente’s subscriber termination policy will be enforced effective August 1, 2014, for small groups only (not applicable for large groups). Small groups can no longer retroactively terminate subscribers or dependents prior to the month we receive the request. As a result, all subscriber terminations will be effective in the month we receive the request unless a future termination date is requested. 
For example, if you or one of your clients requests to terminate a member’s coverage beginning August 1, we must receive the request no later than August 31. A termination request received in August cannot be made effective retroactively to July 1 or June 1.
Assume, just for a moment, that you're a company with an ex-employee covered under Cobra.  You don't receive a premium payment from the employee.  The end of the month approaches.  What do you do?  

The short answer is "nothing."  The employee has a 30 day grace period to pay the late premium.  Payment is considered made on the date that it is sent to the plan.  There's no way to know by month-end whether or not the employee's coverage should be cancelled. 

Under the previous policy, you could notify Kaiser in the middle of the following month and cancel coverage back to the paid-to date.  Under the new one, you can't.  As far as I can tell, under the new policy, every time a small employer has an employee elect Cobra, they're going to be stuck paying for the last month's premium themselves. 

More on Halbig [UPDATED]

Continued from this morning.

Meanwhile, the Fourth Circuit Court of Appeals just ruled that the subsidies do, in fact, apply across all the Exchanges, putting it in direct conflict with Halbig.

One would think that this would mean a certain trip to the Supremes, but maybe not:

"One thing the Supreme Court takes into consideration when deciding to take cases is whether or not there's a split in how various circuits are treating an issue. Right now there's a split but if they go en banc at the DC circuit and the heavily Democratic full court overturns the panel's decision that eliminates the split and could give SCOTUS an out on taking this issue on."

Unfortunately, that sounds about right to me.

So, good news this morning, (likely) reality this afternoon.

UPDATE FROM BOB: I don't see this as big either way. If the subsidies go, no big deal.

Using admin numbers:

■ 8.5M applied, 85% got subsidies
That's about 7M
1.2M failed to pay their initial premium. Another 2.5M have lapsed (or will lapse) due to non-payment by the end of the year.
Net about 4M that got subsidies and some of those got them legally through state exchanges.
If the subsidies are clawed back (certainly possible) that leaves 4M pissed off voters.
As a raw number that is not a game changer.

Game Changer [UPDATED]

U.S. Court of appeals delivers body blow to Obamacare handouts. 

In a case with potential to scramble the Affordable Care Act, the U.S. Court of Appeals ruled that federal subsidies for health insurance were not properly designed.
If upheld by the Supreme Court, the ruling could limit subsidies on the federal exchange currently used by 36 states. (Click link to see ruling)
Washington Examiner

From HGS: This is, in fact, VERY big, and we'll have more on this as the day progresses

CAVEAT: While this is, indeed, good news, it's not a "done deal:" this was a small panel of  three judges on the DC District Cout of Appeals, and the Obamastration has already indicated that it will "seek en banc review by the full D.C. Circuit." That court is made up of many Obama appointees, so don't hold your breath for a positive outcome.

More later....

Later ............
The government will immediately seek review of the court’s decision and in the meantime nothing has changed for people getting premium tax credits, Justice Department spokeswoman Emily Pierce said. A White House official said the U.S. will seek a review by the full appeals court, where seven of the 11 judges were nominated by Democratic presidents, including four by Obama. 
Where 7 of the 11 were Dimocrat appointees. 
Of course never assume there is any kind of political motivation .............
But then there is this.
President Obama’s old Harvard Law professor, Laurence Tribe, said that he “wouldn’t bet the family farm” on Obamacare’s surviving the legal challenges to an IRS rule about who is eligible for subsidies that are currently working their way through the federal courts.
National Review
Farmer Obama may still lose the family jewels if Prof. Tribe is correct.

Monday, July 21, 2014

Stupid Anthem Tricks: One Week Later

For those following along at home, it's now been a week since we reached out to Anthem for the answer to a very simple question:

"Does one receive deductible credit from a "legacy" plan when one transitions to an ACA one or not?"

[ed: I had initially reached out to Anthem last Monday, but gave them a few days to respond before posting that]

I just emailed my contact to see if she'd gotten a definitive answer yet, and she's replied "I have not. Still waiting."

Since this seems to be dragging on, I've suggested to my client that we file a formal complaint with the Ohio Department of Insurance. I'll let you know if she's up for doing so.

Friday, July 18, 2014

Navigator Two-fers

So those unlicensed, unvetted Navigators, which (at last count) cost over $67 million, have racked up some pretty impressive numbers.

For certain values of "impressive:"

"If you do the math, 28,000 individuals assisting 10.6 million people over 210 days breaks down to 1.8 people per day per service representative."

Bob broke these numbers down a little differently, but the point remains the same: a colossal failure. Part of the problem was baked into the cake: because of the complexity of the subsidy calculations and the sheer number of available plans, coupled with folks with no prior insurance experience or knowledge, Navigators were spending upwards of two hours per "prospect." Not exactly cost-efficient.

But then, this is the gummint, not exactly known for it's spendthrift ways.

Cavalcade of Risk #213: Call for submissions

Jason Shafrin hosts next week's Cav. Entries are due by Monday (the 21st).

To submit your risk-related post, just click here to email it.

You'll need to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

Thursday, July 17, 2014

And now for something completely different... [BUMPED and UPDATED]

Tom Ireland published his first paper (which took First Place in a Big 8 competition) while in college, and never looked back. As an Air Force officer, and then in private industry, he developed and honed his unique and successful leadership style, and now you, too, can benefit from his many years of successful experience.

For the next two days (today and tomorrow), you can download - Gratis! [ed: Peruvian for Free] - his newest effort: Information Technology Strategic Leadership. All he asks in return is that you give it a positive comment on Amazon if you like it.

Tom says he's making this generous offer because he "feels strongly about the subject of IT leadership. Frankly, as an outside consultant and as an executive staff member, I have watched too many people promoted to the leadership ranks based on their great technical knowledge rather than their leadership ability. This is never a good decision for the enterprise."

Just click here to download your copy.

Frustrating Carrier Tricks

So apparently, Anthem has hired Nancy Pelosi:

"We cannot tell if the accums have been moved from facets until there is an actual claim on the new ACA policy/system."

[Translation: "she must have new expenses for us to learn whether her previous ones count"]


Allow me to explain:

One of my clients has had an Anthem HSA-compatible health plan for a number of years. Effective July 1, her plan was "mapped" (transitioned) to a new, similarly-configured ACA-compliant plan with a slightly higher deductible.

A few weeks before the "new" plan took effect, she had an injury. The cost of treatment satisfied her deductible, and we wanted to know if these expenses would apply to her new plan, or whether she has had a brand new deductible as of July 1.

Look, this is not complicated: Does one receive deductible credit from a "legacy" plan when one transitions to an ACA one or not?

Since I couldn't get a straight answer from my regular sources, I reached out to the media relations folks (a practice with which I have had previous success) for help. I had already written the bulk of this post, castigating Anthem for its lack of transparency and forthrightness, and included several quotes from it.

I was soon contacted by a very nice young lady who asked for a copy of the proposed post, which I gladly provided. She promised to look into it. This was Monday. It is now Thursday, and the fact that we still have no definitive answer (despite also providing my client's name and policy number) tells me all that I need to know.

The rocket surgeons at Anthem will not give us a straight answer to a very simple question. It seems to me that there can be only two reasons for this:

One, they truly don't know, in which case they are so incompetent as to have no business issuing "insurance" contracts that they don't even understand themselves, or they are deliberately obfuscating (for what purpose I have no idea).

Right now I'm leaning towards the former. In which case, one would do well to avoid having anything to do with Anthem's "insurance" policies.

Health Wonk Review: It's a Dry Heat edition

Jennifer Salopek hosts this week's terrific round-up of wonky posts, including David Williams' cool v-logs and Julie Ferguson's update on a lab tragedy that cost a young woman her life.

Wednesday, July 16, 2014

80% Closing Ratio

According to the folks at Kaiser Health News, "navigators and assisters" helped 10.6 million people navigate the Obamacare nightmare. 

During the Affordable Care Act’s first open enrollment period, about 10.6 million people received personal help from navigators and other enrollment assisters, according to an online survey of the programs released Tuesday by the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)
Kaiser Health News

And 8 million bought coverage.

Damn good closing ratio.
Almost 90 percent of assister programs surveyed reported that most or nearly all of the people they helped were uninsured. More than 40 percent said that most and or nearly all of the people they helped did not have Internet access.
They can't use their Obamaphones?
“How can you explain coverage options to someone who doesn’t know what a deductible is?” asks Pollitz. “It’s just a much longer conversation,” which might help explain why most of the programs reported that assistance required one to two hours per client. “
I wonder how many assisters knew what a deductible is.

How many checked provider networks and drug formularies before suggesting a plan?

Stupid Governor Tricks

One of the problems with the ObamaTax (and they are legion) is that so many states have opted in to the Medicaid expansion scam scheme. Among those, to my regret, is my own home state:

"Enrollment in Medicaid under Ohio Governor John Kasich’s Obamacare expansion has rocketed to 285,553 in just six months"

But that's just the tip of the iceberg:

"Gov. Kasich, a Republican, projected that 366,000 Ohioans would enroll in Medicaid under Obamacare by July 2015."

Why is this such a problem?


"Nearly all of those covered by Kasich’s Obamacare expansion are able-bodied childless adults."

It's bad enough that so many folks qualify for subsidies (a euphemism for income redistribution); at least some of those folks are paying something in the form of premiums. But Medicaid is essentially a free ride, and the fact that so many folks are opting in means gargantuan tax increases on the rest of us once Uncle Sugar pulls the plug in a few short years.

Now, another way to look at this - and this isn't exactly great news, either - is that it means that a lot of Buckeyes who could work just aren't able to make ends meet because they can't find jobs in this listless economy. Of course, these are not mutually exclusive phenomena.

Regardless, this expansion is not sustainable in the long run, and one wonders what will happen when the Federal funds run out, and taxpayers can't handle the burden.

Tuesday, July 15, 2014

Sticky Economics

Years ago, Bob wrote a fascinating post on price"elasticity:"

"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."

In this case, "elastic" means that the price of something will almost directly influence the demand for it. Take, for example, sugar. As Bob explained:

"Sugar has price elasticity. As the price of sugar rises, demand decreases since there are substitutes for sugar. If sugar suddenly rose to $10 per pound sales would drop to almost zero."

As long as there's an acceptable substitute for a particular good or service, the price will reflect the demand.

But healthcare's different: short of just living (or dying) with the pain, one will seek help:

"Consumers want to be healthy and the way most of us deal with it is through medical services."

And so we come to the challenge of how to pay for that care, which we call health insurance. When someone else is footing most (if not all) of the bill, then demand for health care is going to remain high, even as the number of providers of it remain stable (or subside).

And this is the fallacy of the ObamaTax. When folks who were previously uninsured needed care, they sought it only for the most serious of conditons (or through the most expensive provider: the ER). But with so many newly-minted insureds, it's like opening the door to the newest all-you-can-eat buffet:

"Researchers in Michigan compared the prevalence of surgery in Massachusetts, New Jersey and New York both before and after Massachusetts went to universal insurance in 2007. They found that expanding coverage was associated with a more than 9 percent increase in discretionary operations and a 4.5 percent increase in nondiscretionary ones. They estimated, based on their results, that the A.C.A. could lead to more than 465,000 additional discretionary surgical procedures within a few years."

This makes sense, of course, when one stops and considers Bob's point about elasticity. And it also poses a parallel problem, which we addressed last week:

"Sick enrollees may be more likely to stick with their QHPs, even if prices rise, because they are in the middle of courses of treatment and need to keep their doctors and hospitals"

Now, we fisked this point on its merits, but the larger issue is that, once these people have insurance, and especially subsidized policies, it doesn't really matter to the system whether they're with (for example) Anthem or Aetna or UHC or, well, you get the picture. The demand for services is going to continue, unabated, regardless of which carrier is actually paying the bills at the moment.

So how does this "bend the price curve" down?

You tell me.

Monday, July 14, 2014

The Continuing Rise of Medicare Advantage

Last week, the economist Austin Frakt said in the NY Times that “Today, 30 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan, more than at any time in history. In some states, like Hawaii and Minnesota, about half of Medicare beneficiaries are in such plans. This is despite the fact that government payments to plans were cut by the Affordable Care Act. They’re down eight percentage points from their peak in 2009, as measured relative to the cost of traditional Medicare coverage.”

None of this is news.  Back in January the Aetna CEO said the same thing and we commented on it:

CMS pays private insurers to take over the risk for each senior who enrolls for Medicare Advantage.  At one time, the average CMS payment was 114% of the cost for traditional Medicare enrollees. These higher payments were partly because of risk-adjusters in the CMS payment formula – and partly because Medicare Advantage provides better coverage than traditional Medicare.  However – and this is important information – Bertolini said the average government payment to Medicare Advantage insurers is now down to 106%, and is “headed to zero.”  

In other words, private Medicare Advantage insurers believe they have figured out how to provide better benefits and better service than traditional Medicare, for the SAME cost. That's big.

It's big because it would bring good news all around: CMS will shed even more traditional Medicare risk – and cost – thus reducing its financial strain; private insurers will pick up even more Medicare Advantage enrollment on a profitable basis even when paid the same as the cost of traditional Medicare; the taxpayers will benefit if there is reduced need for higher taxes to support traditional Medicare; and seniors who prefer Medicare Advantage over traditional Medicare will still have that highly popular option available to them.
Frakt continues, “One answer is that baby boomers, who are just entering Medicare-eligibility age, are more accustomed to the types of insurance Medicare Advantage offers, such as H.M.O.s
Bertolini also said that back in January.   Today's employees are increasingly willing to sign up for Medicare Advantage when they reach age 65, because they have had years in which to become familiar with managed care.  I think that means enrollment growth in Medicare Advantage is likely to accelerate over the next few years; an accelerating trend would of course be compounded as more “boomers” retire.
Frakt continues “Another answer is that prior generations of retirees may have been more likely to have had coverage from former employers that wrap around traditional Medicare, filling in its gaps. This coverage has become less common as employer-sponsored retirement benefits have eroded generally.”

Frakt is correct about the withering of employer-based retiree coverage but I disagree that is a reason more of us are specifically choosing Medicare Advantage. 

I'm enrolled in a Medicare Advantage policy.  I did not enroll because my former employer ended retiree coverage; I enrolled in it because Medicare Advantage is a better deal for me then traditional Medicare.  Even today, without employer-sponsored coverage, retirees can purchase government-approved Medicare Supplement policies that fill in the traditional Medicare "gaps."  Yet retirees increasingly prefer Medicare Advantage over traditional Medicare with Supplements.  Frakt does not explain this preference. 

I think the answer is: because Medicare Advantage offers much better coverage; is a simpler arrangement; is easier to use; is thus a better value; and thus a smarter buy.

Besides, Frakt’s use of the term “gaps” glosses over the size and seriousness of the very real inadequacies in original Medicare.  Those inadequacies have been called "gaps" for a long time; Frakt is not the first to use the term, nor will he be the last.  But calling these inadequacies "gaps" is akin to calling the Obamacare Exchange systems debacle "glitches." The term makes Medicare's inadequacies sound small, even trivial. Truth is, the inadequacies are serious, not small.

Calling them "gaps" amounts to deception by vocabulary.  

So it seems to me if the decline of employer-sponsored supplemental plans is any factor at all in the growth of Medicare Advantage, it's only because such decline has for the first time exposed the serious inadequacies in original Medicare to a significant number of retirees.   Those inadequacies are the issue.  And we retirees are noticing.

FWIW. there’s an additional factor:  more and more people – not just retirees - are also noticing the federales have done little or nothing to improve the traditional Medicare product.  Medicare has not chosen to respond to its Medicare Advantage competition by improving its own product. Instead, Medicare chose to respond to its competition by using its power to kill its competitor, rather than compete with it.  That illustrates pretty well how governments tend to "compete" and we all need to keep this in mind when the "public option" idea again surfaces.

HSA's - Good news edition

As regular readers know, we're big fans of Health Savings Accounts, which have found new life under the ObamaTax. And, as FoIB Holly R tips us, they seem to be doing quite well:

" ... overall enrollment in health savings accounts linked to high-deductible health plans increased almost 12% to nearly 17.4 million this year"

Remarkably, HSA enrollments in large employer plans are up by more than a third over last year. On the other hand, small group and individual enrollments remained flat, but that's not necessarily bad news: for one thing, not losing ground is a net positive for this market segment. And for another, we don't really know, since there's so much confusion in the individual market as to whether or not folks have any insurance in-force.

Anecdotally, I know that I've seen an increased interest in these plans, and my HSA clients who've had to transition to ObamaTax-complaint plans have all requested to stay under the HSA umbrella.

Time will tell, of course.

Friday, July 11, 2014

I don't get it...

On the one hand, I was extremely flattered and honored to be the 2012 National Underwriter Elite Award Winner for Industry Awareness. I was the 2nd such recipient, and the first agent to be so honored.

And it looks like I'm still the only agent to be so honored:

2011: Insurance Industry Charitable foundation which, while funded by the industry, is not made up of agents.

2012: [Moi]

2013: Daniel C. Steenerson. President and CEO of Disability Insurance Services. Mr Steenerson has done admirable work in the disability field, but appears never to have been an actual, you know, agent.

2014: Jesse Slome, executive director of the American Association for Long-Term Care Insurance. Again, a truly admirable person, but there's nothing in his bio to suggest that he's ever actually sold an insurance policy.

I just don't understand this: it appears that none of the other recipients have ever sat down at a kitchen table with a husband and wife, or across the desk from a small (or large) business owner and explained how insurance works, and how it can provide peace of mind in troubled times.

Is this really the best we can do to raise "industry awareness?"

Good news (kinda/sorta)

"Superior HealthPlan confirmed ... that the insurance company will cover Savannah's surgery at Texas Children's "for continuity reasons."

The reason for the "kinda/sorta" is twofold:

First, the plan is an HMO model, which typically doesn't cover out-of-network claims. It's not clear to me whether or not the Snodgrass family had chosen this kind of coverage intentionally, in which case I think the carrier was wrong to fold, or whether they just didn't understand (which is also possible - lots of folks just pull the trigger on lowest price).

The other reason is that ObamaTax "skinny networks:" are going to mirror a lot of this issue, with folks finding out last-minute that they may be digging deeper into their own pockets.

And there's this: how come no one is asking the provider why the surgery was cancelled for lack of coverage? Why is this all on the insurance company?

LTCi Trends

The kind folks at MassMutual recently emailed with some interesting information about what they see as major trends in Long Term care insurance. A couple stood out:

■ There continues to be a move away - industry-wide, really - from lifetime benefits. This is likely due to two interrelated factors: fewer companies even offer it, and it's hellaciously expensive (cf: chicken, egg). In fact, lifetime benefit sales dropped from 33% in 2004 to roughly 13% in 2011.

■ Inflation protection (whereby the benefit increases automatically every year to keep pace) has always been an attractive rider (and is, of course, required for Partnership Compliance). Most carriers offer both 3% and 5% options, but the sales of the latter seem to be dropping off, most likely due to cost.

As always, Herman Brun's primer on why you might want to consider LTCi is a must-read.

Thursday, July 10, 2014

This Sceptered Isle – Part CCXLIX

A leading Dutch supporter of euthanasia has changed his mind, and speaks out against it, on the occasion of a similar law now being proposed in the British Parliament.  Don’t make our mistake.”

InsureBlog has commented previously on this issue here and here. 

Legalized, state-administered euthanasia seems more popular but not less controversial now, than 10 years ago. 

The questions that still face America:  are we prepared to follow in the steps of the Netherlands and (potentially) the U.K., and if so does ACA already provide the legal framework in which to do it?


There's a lot of talk about women's and children's health, and that's fine. But something that seems to have gone unremarked is men's health issues. Here's what I mean:

All ACA-compliant plans must include a laundry list of Essential Health Benefits, including very specific preventive care coverage. In fact, the list of services that must be covered with no out-of-pocket (deductible, co-pay or co-insurance) includes well over 60 such items, and specifically 22 for "[c]omprehensive coverage for women’s preventive care," and over two dozen more for "children’s preventive health services."

Notice the missing category?

So for all this talk about covering birth control convenience items and mammograms (to name but two), there is no corresponding requirement to cover, say, prostate exams or even STD screening for XY'ers. Adding insult to injury, there is no provision for charging us different (lower)  rates, even though there are specific benefits which we cannot access (eg Cervical Cancer screening).

Where's the hue and cry?

Wednesday, July 09, 2014

History Lesson: Consumer Operated and Oriented Plans - CO-OP's (Part 1)

Alternative to Public Option?

Consumer Operated and Oriented Plans (CO-OP's) were included in Obamacare as an alternative to private health plans that are being offered to individuals and employer sponsored plans. These are start up insurance companies funded with taxpayer money that was set aside in the law. Each state was to have at least one or two of these not-for profit operations that would keep "profit mongering" private health insurance companies from paying extreme salaries to executives and huge dividends to wealthy investors. (Never mind MLR, although that's a completely different post)

Originally $10 billion was to be included for CO-OP's and it was going to be in the form of grants. That was in early 2009. By the time the law passed funding was cut to $6 billion and was now in the form of very low interest loans. These loans have very tight repayment measures and strict requirements on what CO-OP's can use the money for.

White House Intervention

In April of 2011 during budget negotiations - and amid concerns around Solyndra type loans - the White House caved on CO-OP funding and it was cut again by a little over $2 billion. Even more worrisome was a report from HHS in July of 2011 stating that roughly $1.4 billion of the remaining loan money would not be paid back. The last straw for funding was "The Fiscal Cliff" deal. To come to an agreement the White House agreed to eliminate all of the remaining funding for CO-OP's with the exception of a small contingency fund. They also agreed that they wouldn't take funding from any other sources to continue CO-OPs.

The results

In total Obamacare was able to distribute close to $2 billion dollars in loans before remaining funding was eliminated. The money was able to fund 24 CO-OP's in 23 states but around 40 additional applications were scrapped.

One CO-OP never got off the ground (Vermont went belly up at a cost to taxpayers of $4.5 million) and several others were either so far behind in the approval process that they weren't able to meet deadlines to sell plans in 2014 or are considered to be in financial trouble.

What is the current status of CO-OP's and how are they accommodating to the ever changing rules of Obamacare? In part 2 I'll share one CO-OP's response and initial game plan they have to enter the Ohio insurance market.

Cavalcade of Risk #212: Skynet edition

RJ Weiss presents this week's round-up of risk-related posts, with a heavy emphasis on risk, from cyber liability to under-reserving.

Great stuff, great hosting job.

Rx Conundrum

In the wake of the Hobby Lobby decision, there's been a lot of discussion about whether or not employers (and their health insurance providers) should be forced to provide "free" birth control convenience items coverage to their employees/insureds.

[I put the scare-quotes around "free" because of course they're not: someone is paying an insurance premium. Or did Ms Shecantbeserious think that Big Pharma was giving it away?]

It's also important to remember that this is a purely administrative issue - BC is nowhere to be found in the ObamaTax law itself.

With that in mind, consider this:

"It has always struck me as rather strange that that is the one prescription that the administration wants to insist should be provided at no cast to insured employees. Think of all the possible medicines that they could have chosen to be provided for free - prescriptions for heart problems, cancer, diabetes, asthma, HIV, or psychiatric treatments. But none of those were considered worthy of mandating that they be provided free of cost. Only contraceptives."

I'm embarrassed to admit that this rather obvious - and critical - point had gone completely under my radar. But it rings true, doesn't it? Why this one particular medication, and no other?

Thanks to increased transparency, it's not really difficult to find the average cost of medicines. A few minutes online yielded this information:

Average cost of BC: $15 to $50 per month (or $180 to $600 a year). That's about the cost of maybe a dozen latte's a month, max.

Average cost of chemo: up to $15 thousand a month.

Or how about HIV treatment? This averages $2,000 to $5,000 a month.

And yet the two life-saving regimens are subject to deductibles and co-payments, while the convenience items must be "free?" If it's truly about "women's health," are we to assume that no females get cancer or HIV?

Reality says otherwise.

[Hat Tip: Ace of Spades]