Future of Risk Pools

Most folks assumed state run risk pools and the federal PCIP would go the way of the dinosaur when Obamacare rules prevail on 1/1/2014.

But perhaps not  . . .

More than 300,000 people are now covered through special plans for people with pre-existing conditions — about 100,000 in pools created by the health law and more than 200,000 in older, state-run pools.

The federal plan was designed from the start to be temporary and to shut down as soon as the exchanges open.

But many states had planned on moving their high-risk pool populations into the exchanges slowly to mitigate the shock to the individual market. But now, the state high-risk pools may offload as many people as they can onto the exchanges as soon as they open in 2014 or risk losing a piece of that $20 billion pie.

Politico

Well isn't this exactly why Obamacare was conceived? To prevent big bad health insurance companies from DISCRIMINATING against those with pre-existing conditions?

Did the folks who wrote this law (but never bothered to read it) not anticipate an influx of people with serious medical conditions? Did they fail to realize young people would pay the tax penalty rather than purchase coverage?

Some actuaries say it won’t make much of a difference as millions of people start getting covered; other studies see this population boosting premiums significantly in the individual market. One Indiana study projected premiums would rise by up to 45 percent.

HHS says the reinsurance program will keep premiums on the individual market 10 percent to 15 percent lower than they would be without it. But even some supporters of the law believe the impact will be significant

.
And HHS has never been wrong about anything, right?

ObamaMath and ObamaPools

Where can you purchase a $200 item for $100?

In ObamaWorld.

HHS Sebelius has released some guidelines for the new medical risk pools that will hit the streets in 90 days. We already addressed some of the potential problems in an earlier post.

Now it seems others are catching on as well.

The N Y Times makes these observations.

State high-risk pools, all of which operate at a loss, paid a total of $1.9 billion in claims in 2008, according to a recent report by the Government Accountability Office, an investigative arm of Congress. The average claims per person totaled $9,437 in that year. Premiums paid by beneficiaries accounted for 54 percent of the money used to operate the existing high-risk pools. Assessments collected from insurance companies accounted for 23 percent of the total, while state general revenues and other taxes accounted for most of the remainder.

Currently risk pools charge 125 - 200% of standard rates, but the ObamaPool has a different math book.

Premiums in the new program will be set at “standard rates,” based on the average premiums charged by private insurers for similar coverage in the individual market.

“If I have cancer, my rate cannot vary based on my having cancer,” said Jeanne M. Lambrew, director of the Office of Health Reform at the Department of Health and Human Services.

For those of you playing along at home, see if you follow this.

Rates currently charged by risk pools are higher than the ObamaPool and those premiums are insufficient to cover the claims. But the ObamaPool uses new math to come up with better benefits and lower premiums.

Must be magic.

Or ObamaMath (like those 57 states he visited and the 3000% premium reductions that were promised).

Dr. Lambrew said the new program would “build on what works.”

I guess you need to define the word "works".

A plan that covers really sick people but does not charge enough to cover their claims would only work in Obamaworld. In the real world, that would be a plan that doesn't work.

So using ObamaMath to set up an ObamaPool in ObamaWorld makes perfect sense.

Unlucky 7

Lucky 7. 7 seas. 7 brides for 7 brothers. 7 hills of Rome. 7 hills of Constantinople. 7 Wonders of the World.

Throughout history 7 has been an almost magical number, even termed "lucky 7".

Maybe 7's luck just ran out.

Especially if your name is Barack Obama.

The folks at Heritage offer this recap and assessment of Obamacare.

In the 2 years since the passage of Obamacrap, there have been 7 failures directly tied to this law.

• The disappearance of child-only policies. Obamacare requires insurers who sell child-only plans to accept all applicants regardless of health condition. This allows parents to wait until their children are sick to enroll them in health plans. Two years later, one survey found that “17 states indicated that no insurers were selling child-only policies to new enrollees, and 39 states responded that at least one insurer exited the child-only market since the new law took effect.”
• “Free” preventive services cost Americans. Obamacare requires coverage of certain preventive services with no cost-sharing for the individual. Two years later, the list includes abortion-inducing drugs, sterilization, and other contraceptives as mandated coverage—even for many religious organizations. Heritage analysts report, “This created an outcry from members of many faiths who feel this decision is an attack on religious freedom and their ability to serve communities across the country.”

An addendum to the "no child health insurance left behind" comment, there are a few states (such as Georgia) where child only health insurance can be sold. The problem, the policies are not true major medical.

Parents can buy a child only health insurance plan in Georgia as long as they are willing to either buy a limited benefit basic health insurance plan, or a short term medical plan that is only good for 6 months.

Either of these options is fine as long as your child does not become seriously ill or has a major accident.

• A failing small business tax credit. Obamacare provides a temporary tax credit to small employers as an incentive for them to offer health insurance to their employees. Two years later, the IRS reports that only 7 percent of the originally estimated 4.4 million eligible small businesses have claimed the credit.
• A broke program for early retirees. Obamacare established a temporary reinsurance program from May 2010 to January 2014 to pay a portion of companies’ costs to insure early retirees between the ages of 55 and 65. Two years later, the program ran out of money almost three years early and is no longer accepting additional applications. As Heritage analysts explain, the program “clearly shifts the costs of paying for unsustainable promises made to public and private employees to federal taxpayers and further underscores how the true cost of implementing the health care law exceeds original estimates.”

These items get very little play in the media since they directly affect employers and only indirectly impact individuals and families. Still, this is just another example of what some may believe was good intentions gone awry.

Seems to me this is yet another case of government interference.

• Low enrollment in high-risk pools. Obamacare creates high-risk pools for individuals with pre-existing conditions who have been uninsured for at least six months to purchase insurance. Two years later, using the Administration’s own numbers, enrollment in the high-risk pools remains low: only 13 percent of initial estimates. Heritage analysts point out, “At the same time, medical-claims costs have been 2.5 times higher than initially projected, and the high-risk pools may still exhaust or exceed the available funding, even though they serve such a small portion of those they were intended to help.”
• A damaging medical loss ratio (MLR). Obamacare requires insurers to spend 80 percent (85 percent for large group plans) of premium revenue on medical claims or quality improvement. Two years later, Heritage analysts point out, “Seventeen states applied for the MLR waivers, arguing that the regulations would destabilize their markets.” The Administration has granted a full waiver to only one state; six received a partial waiver, and 10 requests were rejected. Some insurers have already left the market because of the requirement, and the strict medical loss ratio threatens the existence of health savings accounts, which are used by 11 million Americans.
• An unsustainable new entitlement. Obamacare created the CLASS Act, a government-run long-term care insurance program. Two years later, the Administration has declared the CLASS program unsustainable and halted its implementation. Heritage analysts report, “On February 1, 2012, the House of Representatives voted 267 (including 28 Democrats) to 159 to repeal the troubled CLASS program, and it now awaits consideration by the U.S. Senate.”

PCIP, the high risk pool substitute was actually a good idea. Had Obamacare created this plan and stopped there we would be much better off.

But Obama and company wanted something bigger. Something grand. Something regal.

The number 7 also has other associations.

The 7 dwarfs. 7 deadly sins.

Maybe Obamacare isn't such a BFD any more.

Perhaps 7 will now be known as an unlucky number.

At least if your name is Obama.

PCIP - Brother, Can You Spare a Dime?

The Obamacare Pre-existing Condition Insurance Plan (PCIP) is flat broke. Busted. Don't bother applying for PCIP because you won't get in.

Tens of thousands of Americans who cannot get health insurance because of pre-existing medical problems will be blocked from a program designed to help them because funding is running low.

Obama administration officials said Friday that the state-based “high-risk pools” set up under the 2010 health-care law will be closed to new applicants as soon as Saturday and no later than March 2, depending on the state.

But they stressed that coverage for about 100,000 people who are now enrolled in the high-risk pools will not be affected.

Washington Post

What happens now?

If your state does not have a high risk pool or carrier of last resort, you will have to wait until October to sign up for coverage to be effective January 1, 2014.

Initial fears that as many as 375,000 sick people would swamp the pools and bankrupt them by 2012 did not pan out. This is largely because, even though the pools must charge premiums comparable to those for healthy people, the plans sold through them are often expensive.

Congress miscalculated.

Not enough money to fund PCIP.

Not enough people signed up.

All things considered, the premiums are quite affordable. Makes you wonder how well Obamacare 2014 will work when current premiums for everyone, including healthy people, are 2x current rates.

Asked why the administration has not requested additional money from Congress to keep the program open — admittedly a tough sell in the current political and budgetary environment — Cohen said, “My responsibility is to work with the appropriation we have.”

So what happens if Congress fails to make funds available for the subsidies and Medicaid expansion?

Did it ever occur to these folks that running PCIP costs money?

Yes, but we were promised that Obamacare would "not add one dime to the deficit".

About 129 millionpeople nationwide have a medical condition or prior illness that would make it hard for them to buy their own insurance plan.

That's about a third of the population.

I find that figure hard to swallow.

So what happens next year when hardly anyone can afford Obamacare health insurance?

Among those stunned by Friday’s news was a 61-year-old Virginia woman who is battling stage-four breast cancer. The woman, who asked to be identified by her middle name, Joyce, because she wants to keep her illness private, is self-employed and had bought her own insurance for years.

Late in 2010, however, the insurer that Joyce was using pulled out of Virginia. She was healthy at the time. But when she applied to other companies, she was told that because she had been diagnosed with — and successfully treated for — an earlier breast cancer, she was ineligible for coverage.

Carriers pulling out of the health insurance market before 2014 is another concern the birdbrains in DC failed to consider. We have no idea how many people are like Joyce, that had coverage until the carrier bailed.

PCIP ran out of money. DC is running trillion dollar deficits every year.

Brother, can you spare a dime?

Risky Business, Part 1...

Some 30 states currently have High Risk Pools for those who are considered uninsurable for medical coverage.

And so, you ask?

Well, the Ohio Department of Insurance recently received a rather hefty grant to study whether or not such a plan should be implemented here. In this post, we’ll review how High Risk Pools work in other states, and in Part 2, we’ll look at the results of Ohio’s study.

According to the National Association of Health Underwriters, High Risk Health Pools (HRP’s) “provide an important safety net for people with catastrophic medical conditions who do not have access to employer-based group health insurance, such as early retirees, self-employed individuals, and employees of businesses that do not offer health insurance coverage. In addition, in most states, high-risk pools serve as the guaranteed-issue purchasing option for individuals who wish to exercise their federal group-to-individual health insurance portability rights as provided by the federal Health Insurance Portability and Accountability Act of 1996.”

Currently, if an Ohio resident is uninsurable, there are few choices. If one is a Federally Eligible Individual, or one has been declined for individual medical coverage, there is a state-mandated “Open Enrollment” (guaranteed issue) plan. This plan comes in two flavors: mediocre but expensive, and expensive but mediocre. Your choice. There are also some guaranteed issue/limited benefit plans, and some non-insurance alternatives. None of these are adequate substitutes for real, comprehensive major medical insurance.

An HRP seems like a good solution to this conundrum. For one thing, the plans available in HRP states offer coverages that are comparable to what’s available on the open market, and many offer PPO plans to help bring down the cost of care. Apparently, some also offer prescription drug and maternity benefits, which seem to me to be self-defeating, in that these would help drive that cost back up. Of course, those purchasing insurance through such a mechanism will pay more, but the amount of any surcharge is usually capped at something that approaches a reasonable amount.

One item which seems to be under the radar, but is vitally important to the success or failure of such a plan, is how pre-existing conditions are treated. If there’s no waiting period before such conditions are covered, we’re back to buying insurance in the back of the ambulance on the way to the hospital. But if there is some reasonable (there’s that word again!) period of time that one must be covered before such conditions are eligible, then the system at least has half a chance.

But at what ultimate cost?

According to Communicating for Agriculture, in the 32 states which have HRP’s in place: 181,411 people were enrolled in these plans. Total premiums of $793 million were paid in, while over $1.2 billion in claims were paid out.

Ouch!

It's estimated that the administrative costs of the plans totaled about $75 million, leaving a $540 million deficit. In short, each participant actually costs about $3,000 to insure; their premiums cover about 60%, which means the average monthly premium is about $150. Hmmmm. The remaining 40% shortfall is covered by the states "using various methods" (I.e. taxes or carrier assessments. Or both).

Does this mean that the idea lacks merit? No, I don’t think so. But the figures cited indicate that each state’s pool is (on average) only covering about 5,000 or so people. That doesn’t seem like a rousing success. While the concept of HRP seems valid, I’d be interested in seeing how this really makes a significant dent in the number of uninsureds, which is estimated at about 40 million nationally, or about 800,000 per state.

One other interesting factoid is that a number of HRP states have now expanded their plan options to include HSA’s. As we learned from the HSA/HRA series, this type of plan seems very attractive to those folks currently without coverage. Perhaps this is what’s necessary to make significant inroads.

In Part 2, we look at the results of the study.

Obamacare Doesn't Want You

Got a pre-existing medical condition? Having trouble paying your risk pool premiums?

Too bad.

Obamacare doesn't want you.

Phase I of Obamacare is slated to kick in by July of this year with a national risk pool for those who have been denied health insurance in the individual major medical market. Fulfilling a campaign pledge to make health insurance more affordable the national risk pool will offer premiums that are no greater than the standard premium charged to healthy people.

Ignore for now the fact that it the plan is doomed to fail financially. Yahoo News points out that many of those who want in the pool will not be allowed.

Suppose your cancer is in remission. You had to quit your job while you were having chemotherapy, and your employer coverage ran out. You can't find a private insurer who'll take you, but you're lucky to live in a state that has its own high-risk pool. Still, you have to struggle to pay the premiums, well above standard insurance because sicker people are in the group. Yet as the federal program is designed, you wouldn't be able to switch over and take advantage of significant savings.

The reason: You have to be uninsured to qualify for the new plan.

That means some 200,000 patients now enrolled in more than 30 state high-risk insurance pools will be stuck paying higher premiums. Many are on tight budgets, drawing down their savings and borrowing from family members.

The risk pool won't help those in high cost, guaranteed issue states like NY, ME and MA (home of Romneycare). But how about those who reside in the 34 states with risk pools that are paying up to 200% of the standard rate for risk pool coverage?

Like the Soup Nazi in Seinfeld, no Obamapool for you.

So by doing the responsible thing and paying high health insurance premiums through an existing risk pool, you will be denied access while those who stayed out of a risk pool will be accepted.

Kind of like those who pay their mortgage on time, even though it may be a stretch are penalized while those who stopped paying are offered taxpayer assistance by way of the federal government.

Presumably, many of those currently paying risk pool premiums are also paying federal taxes. I wonder how they feel about not only missing out on Obamapool but seeing their tax dollars used to provide lower cost plans to those who did not buy health insurance?

(Obamapool) will be temporary, a bridge to 2014, when denial of coverage for medical reasons will be against the law, and new insurance markets will offer taxpayer subsidized coverage for millions. Number crunchers at Medicare estimate that 375,000 people will sign up this year.

Crank those numbers through your logic calculator. Roughly 200,000 in a risk pool are paying premiums as high as 200% of standard rates for a program that loses money in every state where a risk pool exists. The Obamapool will charge even lower rates, by as much as half, and is expected to pick up almost double the number of people already in state risk pools.

Can you say train wreck?

Back in the Pool

Last fall, we took a look at the North Carolina high-risk insurance pool. And tomorrow, of course, heralds a new day in Washington, where health care delivery and financing will take on new urgency.

So it seems rather timely that the National Association of State High Risk Insurance Pools (NASCHIP) has released their comprehensive report on state high risk insurance pools, and how these mechanisms may play a vital role in both state and federal reform efforts.

The report itself is available here.

According to Noah Rouen, Vice President for Accounts, "(t)he paper is particularly timely as Congress and the Obama administration seek to add coverage for millions of Americans. You may recall that Sen. McCain had proposed expansion of state high risk insurance pools as a cornerstone of his reform proposal."

Of course, we had our own take on Senator McCain's dubious proposal.

Nevertheless, the NASHIP report makes compelling reading, and underscores how important it is to address the problems facing our health care system on a state-by-state basis before overhauling it on a national level.

Hat Trick

In the March 5 Register, state Sen. Jack Hatch began an important conversation about fixing our broken health-care system. However, he failed to identify the true reform that is needed in this state.


How so?

Health insurance provides support to individuals and families to cover health care. As we talk health-care reform, we must assure coverage is seamless, accessible and portable, that costs are equitably distributed and that risk pools do not discriminate against the sick or poor.

Health insurance, health care. At least someone got it right.

But what about the last comment? How does one assure that "risk pools do not discriminate against the sick or the poor"?

Risk pools are all about the sick. The only ones who use it are the sick. Can't say I have ever heard of a risk pool for the poor . . . other than taxpayer funded plans like Medicaid.

Health care is a basic human right, not a choice. It is important that we provide access to quality health care that is affordable and reliable for all Iowans.

A basic right. Is personal responsibility part of the equation?

And part II is here:

The way to fix our health-care system is to stop trying to make insurance the solution, and focus instead on getting people the health care they need.

Focus on health CARE. So far so good.

Absent a national approach, states have begun experimenting with initiatives that encourage more employer coverage, require individuals to purchase private policies, and expand public programs. These initiatives cannot succeed because they are based on a failed model: the same insurance system that got us into trouble in the first place.

Here is where she jumps the track.

How did insurance "get us in to trouble"? How is a nationalized system going to cure what is wrong?

First, insurance is temporary. Whether for a home, a car, fine art, or "health," insurance contracts are written for a brief, defined period - a year or less

Really?

Guess some of the clients I have with the same plan for up to 10 years didn't know this.

If you have a private policy, and you cost your company too much or otherwise look undesirable at the end of that period, you'll either pay a lot more or you'll lose coverage altogether.

Where does this garbage come from? Carriers are prohibited from discriminating against one who has high claims. They cannot cancel for any reason other than non-payment of premium. You cannot be singled out for a rate increase.

Second, insurance is based on minimizing risk and maximizing profit - concepts incompatible with protecting the health of individuals and the public at large

More fantasy. This has been addressed before in this forum.

We have a model for this in the United States, and though it might be imperfect, it's a great start. It's called Medicare

Someone needs to inform this lady how poorly Medicare works.

And now for the third segment on health care vs. health insurance . . .

Our existing health-care system is on life support. It's too complicated and too expensive even for those who have health insurance

Too expensive for those with health insurance. Read on . . .

Half of all the bankruptcies in the United States are caused by medical debt. What is surprising is that in the majority of those medical-related bankruptcies, the individuals actually had health insurance.

The rest of the story . . .

The average amount of unpaid debt is . . . about $13,000.

Who goes bankrupt over $13,000?

Apparently quite a few. At least that was the case prior to the change in bankruptcy laws.

Many folks with health insurance have high deductibles and policy exclusions. This discourages them from getting the preventative care they need.

My auto insurance has a high deductible. This discourages me from regular oil changes, tires & brakes.

There is a model for this. It's called Medicare. It's one of the most effective and efficient government programs

Here we go again.

Nuff said.

And that completes the hat trick on health care vs. health insurance.

At least for today . . .

Bursting the Obamacare Balloon [UPDATED & BUMPED]

The WSJ commenting on health insurance and health care/insurance reform, get's it right. Here are some of their observations.

nine out of 10 people under 65 are covered by their employers, most of which cover all employees and charge everyone the same rate. President Obama's horror stories are about the individual insurance market, where some 15 million people buy coverage outside of the workplace.

Horror stories is a bit dramatic.

Individuals don't "buy" insurance in the workplace per se, but rather they rely on their employer to buy it for them. Coverage in the workplace isn't always "affordable", it depends on how much of the premium is subsidized by the employer.

On many occasions I help individuals and families find more affordable coverage that is tailored to their needs and do so for less money than they are paying through their paycheck.

The individual health insurance market isn't the morass many would have you believe. Something in the area of 10 - 15% of individuals have health problems so severe they are denied coverage. Many of those have conditions that only temporarily knock you out of the market.

Yesterday I had a woman who was 5 months pregnant call, looking for health insurance. In 4 more months she shouldn't have any problem buying health insurance. For others with conditions such as hypertension, it is simply a matter of taking medication on a regular basis to the point your blood pressure has stabilized.

If you develop an expensive condition such as cancer or heart disease, and then get fired or divorced or your employer goes out of business—then individual insurance is going to be very expensive if it's available.

This is true but it ignores COBRA, conversion and HIPAA laws which provide a transition to individually owned health insurance. There are 36 states that have risk pools for those with severe medical problems and most of the remaining states have other provisions such as open enrollment to accommodate high risk individuals.

Mr. Obama wants to wave away this reality with new regulations that prohibit "discrimination against the sick"—specifically, by forcing insurers to cover anyone at any time and at nearly uniform rates. But if insurers are forced to sell coverage to everyone at any time, many people will buy insurance only when they need medical care. This raises the cost of insurance for everyone else, in particular those who are responsible enough to buy insurance before they need it; they end up paying even higher premiums. And the more expensive the insurance, the less likely people will buy it before they need it.

Well duh!

Government mandates raise premiums.

If the government wants carriers to offer more coverage it is illogical to claim that bigger benefits will cost less. They claim their goal is to make health insurance affordable for everyone but all of their proposals run contrary to that campaign sound bite.

That's one reason that only five states—Maine, Massachusetts, New Jersey, New York and Vermont—have Mr. Obama's proposal for "guaranteed issue" on the books today. New Hampshire and Kentucky repealed such laws after finding that they soon had an even smaller individual insurance market as companies fled the state.

Another proposed reform known as "community rating" imposes uniform premiums regardless of health condition. This also blows up the individual insurance market, by making it far more expensive for young, healthy or low-risk consumers to join pools—if they join at all. And if the healthy don't join risk pools, then premiums go up for everyone and insurers have little choice but to reduce their risk by refusing to cover those who have a high chance of getting sick, such as people with a history of cancer.

Guarantee issue and community rating, both key provisions and talking points in HR 3200, are designed to REDUCE competition and RAISE premiums . . . for EVERYONE, not just those with health issues.

New York, New Jersey and Massachusetts have both community rating and guaranteed issue. And, no surprise, they have the three most expensive individual insurance markets among all 50 states, with premiums roughly two to three times higher than the rest of the country. In 2007, the average annual premium in New Jersey was $5,326 for singles and in New York $12,254 for a family, versus the national average of $2,613 and $5,799, respectively. ObamaCare would impose New York-type rates nationwide.

It doesn't take a rocket surgeon to figure out that community rating and guarantee issue results in rates that are double the national average.

It really makes you wonder if the folks in Obamington are doing their homework. We already know they don't bother to read the legislation they vote on. Apparently they never bother to even check how over-regulation impacts the cost of health insurance by looking at real life examples. No need to ask the CBO to run numbers, which they have not done, just look how rates are impacted in states that have their own version of Obamacare.

ObamaCare would impose on all 50 states rules that have already proven to be failures in numerous states. Because these mandates would raise the cost of insurance, ObamaCare would then turn around and subsidize individuals to buy the insurance that the politicians made more expensive. Only in government could such irrationality be sold as "reform."

Smaller cars, bigger health insurance, Poppa Washington.

UPDATE [HGS]: For those right-brained folks who prefer visual proof, the Heritage Foundation has produced this handy graph, based on their analysis of the current proposal:

Speaking of Pools (ObamaPools©, that is)

Why, you might ask, are we spending so much time on the so-called "high risk pools" for folks who've had difficulty obtaining insurance on their own? The reason is quite simple: the pools are exemplars of how ObamaCare© will ultimately work (or not work). The premise was that there are millions upon millions of people who couldn't qualify for and/or afford health insurance on the open market because the evil, greedy, incompetent insurance companies were being difficult.

So what's the solution?

A government-instituted plan that is every bit as difficult to obtain, and likely even more expensive than that which it's ostensibly to replace. You may wonder, how can I say this with a straight face?

Easily.

This morning's email brought a missive from Medical Mutual of Ohio, the insurer tasked with implementing the Buckeye State's new ObamaPool©. Here are the requirements for eligibility:

■ Be a citizen or national of the U.S. or lawfully present in the U.S. (documentation will be required) [Really? Have we moved to Arizona now?]

■ Be uninsured for six months prior to application date. [Hence: folks who will now drop their current coverage in order to jump in the pool]

■ Be ineligible for coverage under the federal Medicare program, Medicaid program, [SCHIP] or an employer-sponsored group health plan, unless the individual is subject to a mandatory initial waiting period. [Essentially expanding the Medicaid rolls]

■ Have a qualifying pre-existing condition as evidenced by a denial of coverage by two insurers or by documentation from a health professional. [More hoops through which to jump]

I'll just pick on that last item: in order to qualify, one must now apply to, and be denied by, two separate carriers. Imagine now that hundreds, perhaps thousands of new applications begin flooding the carriers still in the Ohio market which are being sent in specifically to be denied. Carriers, already short-staffed, will have to give these the same attention as legitimate applications, thereby holding up coverage for folks who actually applied in good faith. How many of these will grow disgusted and throw in the towel? And would that be considered by ObamaCare© proponents as a bug or a feature?

Perhaps they'll go the alternate route, and now hundreds, perhaps thousands of new patients will be flooding doctor's offices specifically to determine whether or not hey have a qualifying medical condition. What kind of strain is that going to put on an already shrinking provider population? And who's going to pay for that?

This is a microcosm of how ill-conceived ObamaCare© really is. But remember, we had to "pass it to learn what's in it."

PCIP to The Future!

The $5,000,000,000 set aside for Obamacare's high risk pools has dried up. I know this is a shocker to learn that a government program would run out of money, but never in a million years did they think that enrollment in this program would end up being what it is. (yes, that was sarcasm) So effective February 16th the federal government shut down their pool and states who were running their own pools shut down on March 3rd. Most IB readers knew this was coming. It was just a matter of when.

Here in the Buckeye State PCIP has been an ongoing battle. We've had a long standing feud between our Department of Insurance and HHS. Before funding dried up we had to deal with eligibility and rating issues. Last week, Ohio Insurance Commissioner Mary Taylor provided testimony to the Energy and Commerce Health Committee on PCIP and the trials they've had with HHS. Ohio set up their own High Risk Pool through Medical Mutual of Ohio. It was funded by HHS but ODI was supposed to retain general authority over the pool including consumer appeals, rates, and eligibility. Ms. Taylor was very blunt in her testimony when she said:

"The ACA mandated high risk pool programs were often times just a heavy handed and bureaucratic extension of the federal government. The poor management of the program led to their unsustainability and, ultimately, the untimely decision to close enrollment in the program earlier this year."

So, what were the "heavy handed" things HHS did?

Back in 2011 the insurer, MMO, submitted rates with a 3% increase for the $2500 deductible plan and a 17% increase for the $1500 deductible plan. ODI reviewed and justified the rate increases. HHS refused to approve the rates and directed MMO to artifically reduce the rate increase on the $1500 plan and inflate the rates of the $2500 plan. Doing this can cause solvency issues and encourages adverse selection.

The second issue followed shortly thereafter and ended up in a lawsuit. This revolved around enrollment of individuals into PCIP who had previously been in limited benefit plans. Obamacare states that Mini-Meds are NOT creditable insurance plans, but for PCIP enrollment HHS considered these plans creditable. Once again HHS overstepped into what was supposed to be a state regulators authority and forced MMO's hand to determine these people ineligible. Even worse they forced people already enrolled out of PCIP.

With federal regulators overstepping their bounds at every turn its no wonder why states are refusing to set up exchanges. In the end the feds want total control. Exchanges and subsidies will be dictated by HHS and rationing and price fixing will dominate health care.

This would be so comical if it weren't so real.

Got cancer? You can wait. Trust me.

The government response to health care reform is . . . wait 6 months before coverage begins.

Or 2+ years if you want to go on Medicare under SSDI.

According to Fox, the Senate version of health care reform contains this wording.

The six-month wait is in the health care bill the Senate Finance Committee approved last month. To qualify for the pool, patients must be turned down for coverage because of a pre-existing condition and uninsured for at least six months.

Seems like the government is a bit tentative about taking on risk. It can't be a profit motive, so what is it?

Obama proposed the pool in his September health care speech to Congress. Intended to serve the most vulnerable as a temporary fail-safe, it would stay in place until 2013. That's when insurance companies would be banned from denying coverage because of medical problems.

Government subsidies to make coverage more affordable for millions of uninsured would also start that year.

Has anyone bothered to question the reason for delaying major provisions of health insurance reform until 2013? You don't suppose it has anything to do with 2012 being an election year do you? Those running for re-election in 2012 can tell you to hold on, change is coming next year.

Both the House and the Senate Finance bills set aside $5 billion for the pools.

"It doesn't seem like it's near enough money," said Douglas Holtz-Eakin, who was a top domestic policy adviser for McCain. The McCain campaign ultimately concluded it could take as much as $20 billion a year to properly run risk pools, he said.

Of course this is all just a wag.

And when has the government EVER come in under projections? Even Cars for Clunkers exceeded the budgeted amount by a factor of 3. Why is there any reason to believe they are right here?

This reminds me of the new Windows 7 commercials with Mac and PC. You know the one.



So why is Obamacare better than private health insurance?

Trust me.

RepubliCare

We have Obamacare. The law no one bothered to read before voting on it (and many still haven't read it).

In spite of the fact it was never really embraced by the public and their disdain for the law continues to grow with each passing day, apparently we are stuck with this fiasco . . . at least for a while.

Comes now the Republican party that wants to replace Obamneycare with a monster of their own. For some reason, I doubt it will be a new, improved version.

The folks at The Hill wanted to let us know about this little gem.

Republicans have made good on their promise to try to repeal Obama’s healthcare law, but the “replace” part of their “repeal and replace” strategy has proved more difficult. Pitts said Republicans will be ready for the opening a Supreme Court ruling will provide — no matter what the justices decide.

If the court strikes down the law’s individual mandate, or the entire law, the GOP can present its plan as an alternative. If the court upholds the mandate, renewed attention to the issue could still give Republicans an election-season opening to argue that they have a concrete agenda on healthcare

.

It seems the Keystone Cops in the Republican party want to have SOMETHING to fill the void if the law is repealed even if that something is still flawed.

One positive thing (in my opinion) is the current practice of medically underwriting would be preserved under the Republican plan. Their solution is to allow "state based" risk pools where the sickest would go for insurance and have their premiums subsidized by taxpayers.

I don't have a problem with that per se, but about 40 states already have that in place in the form of risk pools or "guaranteed issue".

In other words, the "you can no longer be discriminated against by insurance carriers" under Obamneycrap was always a bit of a red herring any way. Most folks with pre-existing conditions have multiple options for securing health insurance if they really wanted it.

Along these lines, PCIP was one provision of Obamneycrap that I actually thought was a good idea, but one that was poorly implemented.

Georgia does not have a risk pool meaning some folks were disenfranchised from the system when they needed it more. We now have PCIP, federal edition, thanks to Obamneycrap.

All in all it isn't a bad plan and is priced right considering the benefit levels and "no underwriting" approach. However, it has not been well received because it isn't free.

Of course Obamneycrap isn't free either.

the committee will also send a bill to the floor this spring to repeal the Independent Payment Advisory Board, an expert panel tasked with cutting Medicare payments to doctors. Energy and Commerce could also renew its push to roll back a piece of the new law that prohibits states from cutting their Medicaid eligibility until 2014, when Medicaid is set to expand.

A hit and a miss here.

The IPAB, AKA "death panels" is a bad idea all around and should be eliminated. Why should we allow folks in DC to decide how our doctor should treat us?

Medicaid is already a massive hole in state budgets. Obamneycrap is only going to make it worse. States are attempting to salvage Medicaid by tightening the qualification rules.

I have no problem with that.

While I applaud the Republicans for doing something, the bottom line for me is, tell DC to keep their mitts off my health care. Washington does not have to micromanage every aspect of my life.

If I want to use 5 gallons every time I flush and burn 100 watt incandescent bulbs I will. It is my money and I will spend it the way I see fit.

Georgia's High Risk Pool

For starters, Georgia does not have a high risk health insurance pool. Not yet any way. But part of Obamacare includes a provision to establish or expand high risk pools at the state level.

Many states already have established risk pools, but some, like Florida and Maine have been closed to new entrants for some time due to lack of funding. Just this week, HHS Sebelius sent letters out to all 57 states informing them of risk pool funds and asking for feedback on their desire to participate.

I didn't realize this was an option.

The feds are using $5 billion of our money they don't have to seed this new program. I am sure the Chinese are happy we are putting their money to good use.

Individuals who are interested in participating in this newly created pool must meet the following requirements.

Be a citizen or national of the United States or lawfully present in the United States;

Not have been covered under creditable coverage (as defined in Section 2701(c)(1) of the Public Health Service Act) for the previous 6 months before applying for coverage; and

Have a pre-existing condition, as determined in a manner consistent with guidance issued by the Secretary.

Now that's interesting.

You must have a pre-existing condition that is consistent with the guidelines as determined by the HHS. Wonder what those guidelines are and if they will have to be amended once someone with an illness or condition not on the list complains?

Premiums Must:

Be established at a standard rate for a standard population (that is, not exceed 100 percent of the standard non-group rate); and

Not have age rating greater than 4 to 1.

This conflicts with information provided an an internal memo sent to at least one state Department of Insurance a few weeks ago. That aside, charging a rate that is "not greater than 100% of a standard non-group rate" is insufficient to cover the risk associated with those previously deemed "uninsurable".

In other words, this won't fly.

So expect to dig deeper to pay the taxman enough to float this baby.

The 100% of standard premium cap is less than the guideline used in any state that currently has a risk pool. Caps currently run from 125% to 200% with most states in the 150 - 200% range.

HHS Sebelius was former insurance commissioner of Kansas, then governor, before taking a position in the Obama cabinet. One would think that she would know the 150% rate cap for the Kansas risk pool was not adequate and would not promote a program that is doomed to fail.

Apparently that is not the case.

No word yet on what Georgia will do, but my guess is they will let the feds run it. Why gear up for a plan that will be abandoned by 2014?

Obamacare, for Those Keeping Score

It has been about 3 months since Obamacrap was signed into law and for those playing along at home, here is a look at how we are doing so far. The folks at ABC News provided this recap.

Some deadlines have been met, while others have not. Nothing unusual from a government perspective. They are good at over-promising and under-delivering.

Some of the changes have already raised red flags. Small businesses have expressed concern about the "grandfather rule," designed to keep insurance plans that were in place by March 23 remain with minimal changes.

The new rule is designed to discourage companies from making major changes to their insurance plans, but small businesses often change their plans and doing so would jeopardize the "grandfather" status of their plan.

This follows the logic of, if you like your plan you can keep it, unless of course we (that would be the government) decide we don't like that plan. In that case, you are screwed.

The administration has to coordinate with states to establish the temporary high-risk pools that Americans can start enrolling in by July 1. But that deadline could slip as several states remain undecided about how they will proceed forward.

The states were invited to participate, not required. If they opted out the federal government would establish and run the plan. So where are the details of the national risk pool?

Do I hear the sound of crickets chirping?

June: Insurers announced they would no longer rescind coverage of patients who get sick.

That's nice.

Of course the health insurance companies still have the ability to rescind coverage in the event of fraud or misrepresentation. This is the way it was before Obamacrap, so no change here but it must sound good to those who follow the main stream media.

July: A tanning tax of 10 percent takes effect.

Gotta get those tax increases in. Fortunately it is summer so tanning salons probably don't have that much foot traffic right now. You gotta wonder if the dim lights in Congress stay up late trying to figure ways to create new taxes.

Aug.: Americans with pre-existing conditions can start enrolling in the high risk pools.

Who moved the goal posts? It was July.

Sept.: Health insurance companies will be prohibited from dropping children with preexisting conditions, adults with preexisting conditions and eliminate lifetime limit co-pays.

For those who have not been paying attention, and apparently there are quite a few of you, health insurance companies never could drop children or adults with pre-existing conditions. As for the lifetime co-pays that are going to be eliminated, I will need to go back to class. I am not sure what a lifetime co-pay is. Never seen it in a policy.

2011: Louisiana specifically will receive an expansion of $300 million in Medicare funding from the federal government.

Part of the Louisiana Purchase backroom deal to buy votes on Obamacrap. I don't recall Medicare funding being part of the deal. Could have sworn it was Medicaid.

2014: Employers would also be required to provide coverage to their workers, or pay a fine of $2,000 per worker.

You know the folks with arm bands and green eye-shades are already at work crunching numbers. Let's see, pay a fine of $2000 or continue to provide premium assistance for employees of $5000+ per year.

Well that's a no-brainer.

The folks in DC weren't sent their for their brain power, but then, some of you already knew that.

Is the Pool Half Full or Half Empty?

Of course, an engineer would advise that the pool is twice as large as it needs to be:

"The insurance exchanges for people with preexisting conditions aren't living up to expectations ... [ObamaCare©] set aside $5 billion to help those folks. But one year later, few people are taking that help."

Nice that the folks at the taxpayer-funded "news" organization finally noticed this; as Bob noted several months ago, " [t]he government sold 12,500 health insurance policies in 8 months and 700,000 cars in 6 weeks."

Bob pointed out several plausible, rational explanations for the underwhelming response. NPR, not so much:

"The high-risk pools enrolling the fastest are almost all in blue states."

So it's all about politics?

No, not really: the reason that so-called "blue states" are having so much "success" with these pools is that their population is already primed for the expansion of government into the health insurance biz. And, as Bob noted, it's not like folks have been beating down the door to sign up in any state.

This particular NPR piece, by the way, suffers from what we've come to call LRS (Lazy Reporter Syndrome). We've seen this before, of course, but NPR seems to have refined it to an art.

■ Example #1:

"Jose Cortes was a Spanish teacher at a college in North Carolina until strange things started happening ... By the time doctors figured out why he'd been acting so strangely, he'd been fired. Lost his benefits."

Really? What kind of college employs less than 20 people (the threshold for COBRA compliance)?

■ Example #2:

"[H]is wife, Anne ... says he had two options: Join her health plan at work, but that would take a year because of his preexisting condition."

Hello, HIPAA anyone? As long as there was continuous coverage (and the reporter never questions this), then there's no such wait.

These are such obvious, simple holes that I find it difficult to believe much else of what's being "reported" here. It's reminiscent, as well, of Bob's expose of the Baltimore Sun; that is, these are (or should be) routine parts of the fact-check process.

Or are "reporters" absolved of these?

[Hat Tip: FoIB Holly R]

High Risk Pools, a lousy idea...

So, as Congress talks about bringing back high-risk pools, I thought people should see what one looks like.  Here's a link to California's 2010 version...

http://www.health-ins.com/Carriers/MrMIP/2010_MrMIP_Brochure.pdf

Key Highlights:
  $75,000 Annual Max
  $750,000 Lifetime Maximum
  Limited number of spots for potential insureds, with substantial waiting lists

In 2010 in California, normal underwritten policies had no dollar benefit caps, could not be individually repriced because of adverse health events, could not be cancelled except for non-payment and were substantially cheaper.

Politely speaking, high-risk plans were better than nothing, but not by much.  You get seriously ill and they were pretty f'ing worthless. 

My suggestion?  Keep everything in place as-is, and add  Federally funded, taxpayer supported, reinsurance for big ($1M?) claims.  The risk pool idea was tried and failed.



 

Risky Business, Part 2...

In the first part of this series we learned about what High Risk Health Pools (HRP) are, what they do, and a little about how they work. The Ohio Department of Insurance commissioned a study [ed: your tax $ at work] to determine how such a plan might work here in the Buckeye State.

Conducted by Leif Associates, the study concluded (ALERT: Shocking Conclusions Follow]:

1. An HRP is a “viable option” for Ohio residents who are uninsurable
2. HRP’s charge high rates, “therefore a high-risk pool does not entirely solve the problem of affordability.”

I suspect most people saw that one coming. According to the report, “many states have adopted discount programs to assist low-income participants.” Isn’t that just a fancy way of saying “raised taxes on everyone to help uninsurable folks buy insurance?”

Will it work? That is to say, will it dramatically reduce the number of uninsureds? Well, according to the report, there are about 1.3 million Ohians currently without health insurance. Some of these folks will be eligible for coverage under an HRP plan, and some of those will be able to afford said coverage. Okay, then, how many people are we talking about here? Well, Leif estimates than less than 3,000 folks will purchase coverage through the HRP in the first year (that’s 2 tenths of 1%, for those of you keeping score at home), growing to almost 13,000 in the fifth year (ooooh, 1% of the estimated total number of uninsured).

The report goes on to claim that as many as 15,000 people could potentially be covered (no real definition of “potentially;” could be in 6 years, or 60). And there’s this:

“All high-risk pools lose money,” says the report, which adds “(a)dditional funding from some source is therefore required.” Didn’t we cover that in the 3rd paragraph? Boiled down, the report posits that these “additional sources” are increased taxes, and assessments on insurers. Although the report doesn’t explicitly say so. these assessments would then be passed along in the form of rate increases.

So, how much does all this cost? Leif estimates that individual premiums will come in around $476 per month. Claims and admin costs are projected to be about $976 per, which leaves the state holding the bag on about $500 a month, or $6,000 a year – per participant. Ouch. But there’s good news: by the 5th year, the premium’s expected to rise to about $800 a month, and the shortfall to almost $11,000 a year.-In all, the HRP plan is expected to cost $20 million it’s first year. To cover maybe 3,000 people. That’s over $6,000 per participant. Seems like a pretty hefty price tag for such a small group of people. On the other hand, the report notes that no HRP has yet become unsolvent, and claims that adequate oversight is the key. I’m not so sure I agree with that conclusion, but the report goes on to acknowledge that “the impact of future increasing costs could be minimized by limiting enrollment…reducing benefits…or increasing cost-sharing [premiums].”

For those who want to read the whole thing for themselves, the report is available (in pdf form) here. Be forewarned, though: it runs 67 pages.

My real dilemna here is that I really do like the idea of an HRP, and I really don’t have a better alternative to suggest for covering the uninsurable. I see the potential high costs of the HRP idea, but I also see the here-and-now costs of the current system.

What do y’all think?

Covering Florida (Part 2)

[Welcome Kaiser Network readers!]

In Part 1, we learned about new legislation that looks to help reduce the number of uninsured Floridians. Our guest blogger now looks at the potential downside, and offers some food for thought:

■ The bad

Along with the good provisions of this policy, there are also some challenges. There are challenges for those interested in purchasing the policies, the carriers offering the policies, and the State of Florida.

The biggest issue I see with this offering is the potential for under-insuring. Health care is very complicated and it takes some investment by the individual to become an informed consumer. There is potential for someone who chases the lowest premium to wind up in much the same position they would be in if they were uninsured. This also applies to those that don’t understand pre-existing exclusions, and pursue a course of treatment during their exclusionary period.

While many mandates are based on rare, elective or unproven treatments; others are based on inadequacies of current offerings. Things such as certain transplant benefits, cancer drugs and postnatal care. By removing all mandates, there is further potential for a subscriber to realize a catastrophic loss.

Questions remain as to what the offerings will look like to hit the $150 price point. Carriers that improperly estimate their actuarial exposure could take a loss that would affect their ability to offer competitive products to their other segments. Carriers could also realize a loss based on the fact that many first time insureds or those coming off a period of being uninsured tend to over utilize the first couple of years. This could start the product out with either a bad risk profile or a loss during those first years. There is also the risk associated with brand perception if the under-insuring item does become an issue.

The State of Florida has taken an aggressive action to address the health care concerns in today’s market. There is potential for significant political ramifications if they cannot deliver on this initiative. They have made many promises in this legislation that they will have to rely on outside partners to fulfill. They also walk the line of alienating brokers with the advent of the Florida Health Choices Corporation. The success or failure of this program has already become a point of discussion in the upcoming presidential election. There are many in the universal coverage camp with a vested interest in the failure of this initiative.

■ The unanswered

With any new program, there are always many questions. This initiative is no exception. The basic rules have been laid out, a framework has been envisioned, now we have to look to the market and see what types of offerings will be available. We must also look to the role of the brokerage community in marketing these plans. The final piece that has not been addressed is the medical providers.

Will there be multiple carriers allowed to offer plans within the guidelines ala Medicare Choice? Or will there be a bid process to control and manage the block like some of the state risk pools? It may also be possible to set up a separate subsidy program similar to the “three share” programs being proposed in Texas. Can the benefits hit the price point? Is that price point firm? What are the obligations of the carrier as far as assessing the risk offsets and renewals? Will there be a risk based scale or a COLA adjustment or a combination of the two? Can there be HSA options?

There are also questions from the broker community. Will the state actions push some producers out of the individual market and 2-50 market by establishing direct marketing entities and operating as the broker between proposed plans and the insured? What is the exact role of the Florida Health Choices Corporation? Can the agents help to market these plans and receive compensation?

The question that has only been touched on in the statistics is the medical community. There are provisions to enhance the role of community health providers in the outreach to the uninsured. This is to keep uninsured out of the ER and into community health clinics. The question that comes up is: If they are not paying currently and going to the ER, what is the driver that would encourage them to pay premiums and use the lower cost clinics?

The last question and one that I have yet to see addressed in any commentary or policy paper: Since Health Flex plans were a bust, has Florida learned from their previous mistake?

There is a lot to consider, but it is nice to see a market based solution being proposed. Now it is the market’s turn to see if they can rise to the challenge.

Thank You! We truly appreciate all the effort that went into these posts, and we'll keep our readers updated on how the program fares.