Some reflections on the "Pool" [UPDATED]

[Please scroll down for update]

I've been giving more thought to the whole process of the new Ohio ObamaPool©, and have come to two conclusions (thus far):

There are some rather stringent requirements put on me as an agent (see below), a relatively meager "finders fee" associated with steering folks to the Pool, and the likelihood that this will be a fairly labor-intensive process. So, I've decided to charge a non-refundable $50 retainer, upfront, before I will answer any questions about the Pool or help folks through the process of accessing it. As this is a "non-commissionable" product, I feel justified in doing so.

And what's so "labor intensive" about it? Well, consider that, in order to "sell" one of these, I need to complete and submit a special Broker Verification Form with each "application," and that this will require some fairly heavy pre-screening on my own part. And there's this rather daunting verbiage to which I am required to attest:

"I certify that I understand the eligibility, enrollment and anti-dumping requirements required by Section 1101 of [ObamaCare©] and I have explained these requirements to the applicant ... and that the enclosed application is complete and meets these requirements."

Okay, that seems pretty straightforward, but, as FoIB Rick B wondered:

"[O]ut of curiosity, as an agent, if a pregnant woman came to you and knew the high-risk pool would allow her to get immediate coverage. Assume she already has coverage, but her plan excludes maternity, how would you advise her?"

Under "normal" circumstances, it's up to the applicant/insured to prove prior coverage (via a Certificate of Creditable Coverage). It seems to me, then, that the carrier acknowledges that it has no way to independently verify prior cover. So, if someone comes to the new Pool, and is otherwise eligible (denied or waivered, pregnant, etc), how would Medical Mutual (MMO) prove that this individual had previous coverage (assuming it wasn't with MMO)?

For example: Sally is insured with Humana under an individual plan with no maternity coverage. She's now 3 months pregnant. Why not submit an app for the Pool, mark "no" for prior insurance, and have immediate cover for the pregnancy? Marking "no" means that MMO would have to prove a negative; i.e. how would they be able to prove she DID have coverage? And if I was not her agent for the Humana plan, how would I be any the wiser?

One answer might be for MMO or HHS Secretary Shecantbeserious to contact Sally's doctor. But if she's preggers, especially early on, why not just switch doc's? At $5000 or $6000 (or more!) for the claim, there's a pretty powerful incentive to be "creative."

Comments?

UPDATE [8-19-10]: A colleague with whom I was discussing this pointed out - correctly, I think - that in this instance Sally isn't really lying when she answers "no" to prior coverage. After all, her Humana plan does not cover her for maternity; therefore she is, technically, uninsured.

That's what "is" means, right?

Into the Pool!

My friend and co-blogger Bob Vineyard tipped me to this story in a local Columbus (Ohio) paper:

“S.B. (Ohio Senate Bill) 272 would create a formal state corporation named the Ohio Health Insurance Risk Pool...The pool would offer a health insurance plan, providing up to $1-million in lifetime benefits. Health insurance premiums charged by the pool would be at least 125 percent but not more than 150 percent of the premium charged for "standard individual rates in the state," according to legislative documents.”

Now, we’ve discussed High Risk Pools before (here and here), and concluded that they did show promise. Our primary concern was whether one could be designed in such a way as to be meaningfully comprehensive, yet reasonably affordable. In other words, offer decent coverage, especially for pre-existing conditions, at a price that wouldn’t totally wipe out the family budget.

As written, SB 272 seems to address both of these concerns. Eligible folks (essentially those who have severe and/or chronic conditions which make them “unattractive” on the individual market) would be able to access a plan through the OHIRP. In reading through the bill and the analysis, the Pool would offer a product that looks a lot like the current HIPAA guaranteed issue plan, but with a somewhat lower premium cap.

The other thing that the bill does is to simplify the process. That is, it does away with the required “open enrollment” seasons, and essentially makes the whole year open enrollment. This is a good thing.

Why, you ask?

The current system is front-loaded. That is, carriers are required to offer a specific number of “slots” each year to “the uninsurable.” As Bob has pointed out, this represents a much smaller population than the punditry would have us believe. Still, some carriers seem to “fill up” earlier than others, leaving fewer and fewer choices. In theory, the Department of Insurance is supposed to track availability, but they’re not always up-to-date.

One good sign is that at least one of the plans will eschew all those state-mandated benefits that help to drive up cost while limiting choice. The result could be a more affordable alternative. It will be interesting to see if such plans make it through the vetting process.

I’m concerned, though, about the make-up of the board of directors of this new corporation, which include:

“two from insurers, one from the Ohio Association of Health Underwriters, one member of the general public, one representative of healthcare providers, one each from large and small business, and one state representative and one state senator.” [ibid]

I’d like to see at least one professional, independent agent on that board. We are on the front lines of this very public debate, and can offer a unique perspective: because we represent carriers, and work for our clients, we have a “birds-eye” view of the process.

“But Henry," you may interject, "the board includes a representative of the Health Underwriters. Surely that puts to rest your objection.”

No, it does not (and please don't call me Shirley). Although I co-founded our local chapter, and have had experience with the state, I am no fan of the AHU (nor its life insurance cousin). These organizations are run by -- and primarily for the benefit of -- the carriers, not the agent or the public. The interests of the Association and of agents do not often coincide. Including an agent who is not beholden to the special interests of an Association would solve this dilemna.

And stay tuned for Part 2, as well!

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.

Better late...

[Welcome Kaiser Network readers!]

I bookmarked this a week or so ago, but just now had an opportunity to blog on it. The North Carolina Healthcare blog tells us that the Tar Heel State's high-risk health insurance pool is making a big splash. The pool actually opened its gates back on October 20th (an auspicious date, indeed). According to the NCH folks, "Inclusive Health, also known as the North Carolina Health Insurance Risk Pool (NCHIRP), provides affordable, individual health insurance coverage for North Carolinians who do not have access to an employer health plan and face higher premiums due to a pre-existing medical condition."

Indeed.

Now where have we heard about such plans before?

Coverage for folks who opt in will begin the first of next year. Rates are age, sex and tobacco-use based, and apparently offer several deductible choices. Frankly, the first two options look like rather generic co-pay plans, while the third could be an HSA plan, were it not for the deductible (too high to qualify). Indeed, they look remarkably like plans available from any number of insurance carriers, but with the benefit (?) of being guaranteed issue. The NCH blog folks assure us that, while it's not "part of the state government," it does operate "under the supervision and control of its Board."

And who makes up this "Board?" Well, we're told its Executive Director is a gentleman by the name of Michael Keough. According to the NC Insurance Department, Mr Keough comes "from the NCRx and North Carolina Senior Care programs, where he served as project director since 2002. In that position he managed the nation's fastest growing state pharmacy assistance program, serving more than 100,000 senior citizens and managing a budget in excess of $80 million."

The "fastest growing state pharmacy program?" I'm sure Mr Keough is a fine fellow, and well-qualified (although he's apparently a graduate of a lesser university), but that experience does not bode well for keeping costs down. And we know what happens when costs continue to rise.

And looking through the pre-enrollment screening process, we find some other items of interest. For example, in order to "buy in" to the plan, one must not be eligible for Medicare or Medicaid, must be a legal US resident (yay!), and "must not have access to group coverage as an employee or as a dependent of an employee."

That last is particularly telling: how many Tar Heel State group plans are about to go down in flames as employers dump their policies in favor of pushing their employees into the state's trough? And what happens to costs then? But Henry, you cry, that's not going to happen! Why don't you mention that one of the eligibility "triggers" is that I've been rejected or rated up for medical insurance?

True enough, and that will limit the pool a bit, but you've missed the one that pretty much negates all the others: "I currently have similar health insurance coverage but at a single rate higher than that offered through Inclusive Health."

Ooops.

"Unhealthy" (i.e. "highly rated) groups and individual plans are about to become history. And what happens when all these less than ideal applicants flood the state plan? Regular readers have already figured that one out.

Which is not to say that the plan is completely without merit. For one thing, the plan designs seem pretty reasonable (not too much fluff), and there's an interesting pre-ex limitation that appeals: "Inclusive Health will exclude charges or expenses incurred during the applicable waiting period following the effective date of coverage for any condition for which medical advice, care, or treatment was recommended or received during the 12 month period immediately preceding the effective date of coverage." That waiver goes for a full six months for folks who sign up right away, and for a year for those who play "wait and see." My guess is that the sickest will be the quickest (to join up). But the plan, in a nod to HIPAA, includes the standard 63 day window, which means folks who drop their existing plans for the Inclusive Health policy have immediate cover for pre-ex (which reinforces my prediction about what happens to exiting policies).

And what about those rates? Well, for the ubiquitous 35 year old male non-smoker (is there any other kind?), the rate for the lowest deductible plan is a hefty $358 a month. Add another $115 if the gentleman likes his Marlboros (that's a 25% rate-up which is pretty much in line with the industry). A non-smoking female at that age pays a whopping $502. But that's not even the most interesting part:

Look as I might, I could find nothing about maternity coverage, yay or nay, in the plan descriptions. Since this doesn't appear to be excluded, what's to stop a young, say 20-something, female who finds herself "in the family way" from jumping on board? If she's early on, and one of the plan's trailblazers, she'd be covered after six months (sooner, if she'd had recent prior coverage). And at less than $300 a month, she'd have full coverage at delivery.

Wonder what that will do to rates?

And yet. Of all the plans we've seen so far, this one seems to me closest to dealing in a realistic way with at least the delivery of a reasonable product. I am qute concerned about what will happen to rates when heavy users start inundating the system with claims, and of course the adverse effect it seems to pose to the commercial market. But it's also the one with the least amount of "moving parts," which makes it more attractive than any of the others we've seen thus far.

Time, of course, will tell.

Everybody outta the pool! [UPDATED]

FoIB Holly R sent along this story:

"Sheila Hokes thought she’d found a lifeline to keep her family from drowning in health insurance costs ... [Ohio] recently outlined its proposal for a federally backed pool for high-risk individuals with pre-existing conditions ... The pool to be run by Medical Mutual of Ohio is open only to those who have had no coverage for six months."

As Bob's pointed out, this is a "feature" of ObamaCare©, one of those things that we had to "pass it to know what's in it."

So what's the problem?

Well, it's not really with the new pool (although it may have its own issues), but with the story. As we saw with the nHealth kerfuffle, it pays not to believe everything one reads in the paper (or on the intertubes).

Let's start with this little doozy:

"The Delaware County resident understood when a surgery for her son’s lifelong digestive condition caused her premiums to shoot up by $700 a month."

Um, no, it didn't: by law, carriers can't single out individual insureds for rate increases, expensive surgeries notwithstanding. Perhaps Ms Hokes misunderstood how insurance works, and honestly believed that she (and/or her) son had been singled out for a rate hike. CORRECTION: After much searching, it appears that there is, in fact, no law against such practices. The relevant section of the Ohio Revised Code (3923) does not speak to this issue.

Unfortunately, that doesn't fly, either: Ms Hokes knew (or should have known) darn well what the relevant laws are, since She herself is an independent insurance agent and (as pointed out to us by FoIB Rick B), she's co-chair (or perhaps immediate past co-chair) of the Ohio Association of Health Underwriters' Political Action Committee, something Carrie Ghose should have pointed out. So Ms Hoke's no amateur.

And Rick noticed a few other "details" that call into question the veracity of this little drama. For example, the story says that Ms Hokes "canceled their policy with .... American Community Mutual Insurance Co."

But as we reported almost a month ago, United HealthCare's Golden Rule recently bought American Community book of business. This is not nit-picking: a professional (of all people!) should know that you don't cancel existing coverage until your new plan is in place. And since there was so much in flux during that time, why would you jeopardize coverage, especially with a dependent who may have insurability issues?

And that's another thing: if the Hokes' family premiums really had gone up that high that quickly, why wouldn't she simply have left her son on the existing plan and move the rest of the family to a new one (as she acknowledges she could have done)? As Rick points out, the son's "only medication is generic" and he apparently already underwent the corrective surgery (although we don't know this for sure due to the reporter's apparently sloppy fact-checking).

Regular readers know that we're hardly shills for ObamaCare©, but this reeks of opportunism. Once again, I call BS.

Where Is The Outrage? The Compassion? [UPDATED]

"For too long, Americans with pre-existing conditions have been locked out of our health insurance market. Today, the Pre-Existing Condition Insurance Plan gives them a new option -- the same insurance coverage as a healthy individual if they've been uninsured for at least six months because of a medical condition. This program will provide people the help they need as the nation transitions to a more competitive and fair marketplace in 2014."    - HHS Secretary Kathleen Sebelius in 2010

Yes Kathy, the biggest objective for The Patient Protection and Affordable Care Act was to provide access to cost effective health insurance. Back in 2010 we heard the President, HHS, and several members of Congress talk about the benefits uninsured with pre-existing conditions would receive by getting insurance through a high risk pool. This high risk pool would guarantee coverage at an affordable cost. This affordable insurance would become known as the Pre-existing Condition Insurance Plan (PCIP).

PCIP was projected to cover 350,000 people from August 1, 2010 through December 31, 2013. To do so the government set aside $5 billion to cover the projected claims.

Actual enrollment is 135,000 and effective March 2, 2013 HHS has officially "suspended" new enrollment in the program. According to Gary Cohen,  director of the Department of Health and Human Services’ Center for Consumer Information and Insurance Oversight, the program is being suspended due to lack of funds. Cohen said:

"We’re being very careful stewards of the money that has been appropriated to us and we wanted to balance our desire to maximize the number of people who can gain from this program while making sure people who are in the program have coverage...This was the most prudent step for us to take at this point in time.”

Prudent for who?

In addition to cutting off enrollment, those currently enrolled are also facing significant changes. On January 1, 2013 anyone covered under the Federal pool saw their out of pocket maximums increase from $4000 to $6250 per year. Starting in July most of the states who were running their own pools are migrating over to the Federal pool meaning that these folks will also be subject to an increase in the out of pocket maximum. Oh behalf of the many people I have helped enroll in this program I would like to ask the following:

1. Why in 2011 did HHS decrease premiums for a program that has blown through the projected funding?
2. Why hasn't HHS or the Obama Administration asked for funding?
3. Why did the Administration vow to veto a bill that was set to be put forth in the House of Representatives?

Secretary Sebelius and the Obama Administration, if  these are the very people you vowed to help and protect, then why aren't you doing anything about it?

UPDATE [HGS]: And adding insult to injury, FoIB Holly R sends us this:

"Nearly two-thirds of Americans who currently lack health insurance don't know yet if they will purchase that coverage by the Jan. 1 deadline set by the [ObamaTax]"

And worse yet, "less than half of those in the survey ... think they'll get better health care after Obamacare takes full effect. Nearly 50 percent believe the [ObamaTax] will make it more difficult for them to get tests and procedures done in a timely manner"

Sounds like they've been paying attention.

Thursday Afternoon LinkFest

■ First up, from the D'Uh! Department:

"Human resource firms say many businesses will hire more part-time workers, trim hours of full-time staff or hold off on hiring because of the new health care law."

This isn't news so much as confirmation of something we've been saying for quite some time. But it's nice to see that someone in the MSM is paying attention.

■ Next up, the clock continues to tick for HHS Secretary Shecantbeserious:

"Today is the day [Ms Shecantbeserious] tells states whether their plans for health insurance exchanges pass muster."

Inasmuch as she's as clueless as the 58 state departments of insurance, this should be fun.

■ And finally, speaking of Ms Shecantbeserious and her minions (aka the Centers for Medicare and Medicaid Services, or CMS), we're now officially in the rolling out stages of new ObamaTax rules and regs (and, of course, major tax increases). The list is extensive, but here's a sample:

"Single risk pool. Issuers are required to establish a single risk pool in each state where they offer coverage for each of their non-grandfathered individual (one pool) and small group markets (separate pool)."

As we've already seen, these sound great in theory, but in practice....

[Hat Tip for first two items: FoIB Holly R; and UHC for the CMS info]

Gullible to the Actuaries SWAG

Media outlets and health policy "experts" have been spewing over reports this week about the initial 2015 rate increases that have been submitted in Washington and Virginia. Headlines such as Six Reasons Obamacare Premiums are Going Up Next Year  and Big Obamacare Insurers Signal Big Premium Hikes have been the norm. These articles are coming from the left and the right with very different takes on whether or not Obamacare is increasing premiums. Want to know who is right?

None. Of. Them.

I'm going to let you in on a little secret - initial rate filings mean absolutely nothing. Especially filings for Obamacare compliant rates. Here are five (of many) reasons why we have no idea of what rates will look like.

1. The make up of the market isn't determined. While HHS issued a report on demographics by shopping cart they don't know who has paid, who will quit paying, or how many of the shopping carts were duplicates.

2. Insurance company rate submissions are based on little claims data and a short time frame (experience, trend); so whatever the rates end up they will not be credible. Setting the rates is like predicting the Cleveland Browns will win the Super Bowl in 30 years.

3. States will vary. Insurance markets had different variables for underwriting pre-Obamacare. This will lead to some having lower increases than others. Some states will also have a different make-up of enrollments. A state with a higher population of younger people might have a lower increase than one with an older population. Unhealthy states may see higher increases simply because the underlying risk is greater.

4. Speaking of pre-Obamacare, rates that were set last year assumed that nobody could keep the plan that they liked. By unilaterally changing his own law, President Obama actually distorted his risk pool. People in good plans that are healthy will stay in those plans where allowed. Because of community rating the medically underwritten plans that have good risk will be priced lower than the Obamacare mandated pool that must be equal regardless of health status. Why go into the peed in baby pool when you can stay in the less peed in pool?

5. The blanket figures in these studies use an aggregate number. This tells us little about how the rates will look for different metal tiers. 8% doesn't mean the increase is equal for Bronze, Silver, Gold, and Platinum tiered plans. Bronze plans might be 3% and Gold plans might be 15%. One carrier might also have a larger market share today and decide to eliminate Platinum plans because the risk in these products is very high. By simply eliminating a plan it could have adverse impact on their Gold plans or on their overall market share.

Rate watching is important. But before the MSM start throwing stones at each other remember, because of these and many other reasons actuaries are using SWAG as their calculation method.

In other words they are making a Systematic Wild Ass Guess.

Interesting LTCi Idea

So, have a client interested in Long Term Care insurance (LTCi), with some provisos. First, they are very concerned about potential rate increases. Second, they want to deal with only top-rated carriers, and third, they really don't care about Partnership compliance. So we ran our usual pre-screen process (which vets financial suitability and medical history) and went to town.

Here's what we came up with, and I thought it might be of interest to our readers:

We start with a monthly benefit of $6,000 (client's request), a three year benefit period and a 3% inflation guard. Both plans include the "shared care" benefit.

Company A offers a "traditional," pay-as-you-go product, and the initial annual premium for this is $5,400, which yields a total pool of $430,000 for their long term care needs.

Company B is what we call "one-and-done;" that is, they make an initial, one-time deposit ($150,000 in this case), which yields a total pool of $610,000 (about 30% higher than Company A).

Flash forward 10 years, and Company A's received $54,000, and the pool has grown to $590,000. But, if my clients quit or die, they get back exactly $0. And that assumes that there've been no rate increases.

Company B has received nothing past the initial $150,000, and its pool has grown to over $700,000. But here's the thing: if they quit, they get back almost all the money they'd deposited, and if they die, they (well, their beneficiaries) get back twice as much as they'd put in (and tax-free, to boot).

Plus, they have the peace of mind that comes from knowing that they will never see a rate increase.

Pretty cool.

[Thanks to FoIB Randy G!]

Jumping into the pool...

Currently, some 35 states have some form of "high risk pool" for folks with significant and/or chronic health problems. They are expensive to "join," expensive to maintain, and continue to fail to address underlying issues.

But mostly, they're expensive.

And that's at the state level, where there's more direct electoral accountability.

One ObamaCare provision set to go into effect relatively quickly is a national high-risk pool. We'll have more on this and other provisions in the weeks and months ahead, but for now, here's your afternoon chuckle:

"Unlike some existing state high-risk pool programs, which can be expensive, the new program is supposed to keep rates closer to standard premiums paid by healthy people."

Uh-hunh....

Jump in the Pool, Make $50

Medical Mutual of Ohio is the official carrier for Ohio's new ObamaPool©, and starting today, the pool is open for business:

"Medical Mutual will begin accepting applications for the Ohio High Risk Pool program, with coverage to be effective for the first enrollees on September 1, 2010."

What's interesting is that they're offering a finder's fee for agents to steer folks into the pool. As an agent, I'm pleased that any efforts I make to encourage folks to take advantage of the program will be rewarded in some way (unlike, say, Cigna). On the other hand, there are a lot of hoops through which to jump, which make the $50 "reward" somewhat questionable; for example, I'll have to confirm an individual's eligibility and help them complete and submit the paperwork (including some onerous documentation). I'll also need to collect and submit my new client's check, as well as my own "Broker Verification" form.

Those seeking to purchase coverage through the ObamaPool© have some hoops of their own, which include (among others):

" ■ Be a citizen or national of the United States or lawfully present in the United States;
■ Be uninsured for six months prior to the date the person applies for coverage;
■ Have a qualifying pre-existing condition as evidenced by a denial of coverage by two insurers, or by documentation from a healthcare provider."

My biggest issue is with the second: why six months? Why not 2 months? Or a year? This is arbitrariness for its own sake. In fact, it seems to me that the shorter the better for those who are uninsured. And isn't that one of the stated goals of ObamaCare©: to insure the uninsured?

Or am I missing something obvious?

I'm also having trouble with one of the alternate qualification requirements:

"Written certification by a licensed physician or nurse practitioner, issued within the past six months, certifying that the individual has a history of or suffers from a qualifying medical or health condition."

On the one hand, the site lists almost 100 different qualifying conditions, from Addison's Disease to Wolff-Parkinson-White Syndrome (no word on Zuska's Disease). And you'll need to bring that list with you to the doc. Which of course begs the question: who pays for that doc visit if you're uninsured?

I think we already know the answer to that.

So you have a very serious illness and need insurance. You've been uninsured for at least half a year, and now you can purchase insurance that can take effect in as little as two weeks' time. But what can you buy, and how much will it cost?

There are two plans available, one with a $1500 annual deductible, the other at $2500. Once that deductible's been met, there's an additional $3000 or $4950 in co-insurance, depending on which deductible you choose. The plans themselves appear to be based on the company's "Elite" plan configuration.

Both options include a $30 co-pay benefit for office visits ($50 for specialists), and a $40 urgent care co-pay. Nice. There's also first-dollar preventive benefits for things like mammograms and immunizations. Hospitalized? No problem, the plan takes care of 80% of your covered expenses after the deductible's met; unless it's an ER visit, for which you'll be dinged a reasonable $200 (which they'll forego if you end up admitted to the hospital).

There's even a prescription drug card benefit, including a break if you choose mail-order (home delivery). Heck it even covers "The Pill." All in all, a very nice plan (although I'll remind readers that, around here, we call that "Phantom Insurance").

And since this is part of ObamaCare©'s effort to reduce the number of uninsured, I'm sure it's a bargain.

Fortunately, the site includes handy rate charts, as well. Let's see how the numbers stack up:

Let's take a typical Columbus area resident, say a 27 year old non-smoker (interestingly, the rates are unisex). Should you opt for the $1500 plan, the monthly premium would be $150 (there's a 25% surcharge for smokers). The $2500 plan would save you $14 a month (or $168/year). Frankly, that's not even close to enough of a rate differential to encourage folks to opt for the higher deductible plan.

But let's compare that rate to those for a "healthy" 27 year old, using MMO's own plan design and rates. In that case, Joe would pay just $96 and Jane $133. But that's not the most interesting part: a 37 year old healthy Joe pays just $130 for the $1500 version, versus over $200 for his very sick twin brother. But a healthy 37 year old Jane pays about $190 a month, while her sickly twin pays just $16 more.

Which is actually a much bigger problem than one might think: according to the benefits recap, "Maternity Services" are covered. "Healthy" Jane would pay an additional $456 per month for this (optional) coverage, and have to wait 9 months for it to become effective. Not so for "sick and pregnant" Jane, whose coverage could be in effect in as little as a fortnight. In fact, "pregnancy (current)" is one of the automatic qualifiers for coverage.

And then it gets interesting:

The website offers a helpful FAQ section, under which we find the following: "What happens to my first payment if I am placed on the waiting list?" Ironically, this section is the first, last and only one to even mention the term "Waiting List." So I called up the helpful folks at MMO, where I confirmed what I'd already inferred: remember that the budget for the whole Ohio version of ObamaPool© is $150 million? You guessed it: when that initial funding is gone, then whoever's left behind has to wait for the next round (if and/or when). How many childbirths are going to chip away at that $150 mil before it's gone?

Your guess is as good as mine.

[Hat Tip: FoIB Beth D]

Sorry, Pool's Closed

As promised, the gates to the ObamaTax High Risk Health Insurance Pool are quickly closing.

Via email from Medical Mutual:

"[HHS Secretary Shecantbeserious] directed us to suspend enrollment for new applicants into the Ohio High Risk Pool as of the end of the day March 2, 2013 ... We will accept applications until Saturday, March 2."

Now, this (ostensibly) doesn't affect folks already on the plan, which is slated to sunset at the end of this year, when the power of the fully functioning ObamaTax goes into effect.

Oh, goody.

Rate Reviews…

[This post is a joint effort of Bob Vineyard, CLU & Henry Stern, LUTCF]

As mentioned a few weeks ago, one of the key elements of Senator Wyden’s Healthy Americans Act is the implementation of community rating (CR) on a national basis.

There has been a lot of buzz in the medblogosphere about our, shall we say, less than enthusiastic support for this idea. A lot of folks whom we respect and admire have had favorable things to say about CR, but it’s clear that even the brightest among us don’t completely understand the dynamics of health insurance, and especially community rating (CR). Several debates, including some on this site, have focused on the merits of CR, which just goes to show how critical it is to the success (or lack of such) of the HAA.

Proponents of CR claim that it is a way to make health insurance affordable. To an extent this is true, but for whom is it more affordable? A true community-rated product is delivered without regard to the individual’s sex, age or health (or behaviors, for that matter). This means quite simply that everyone in the pool is charged the same rate.

Such an approach is favorable towards those who are older than the average age of the pool, or less healthy. Keep in mind that CR (as it exists now) does not mean that EVERYONE is offered a policy and admitted to the pool. Some with severe pre-ex conditions can still be excluded from coverage, which allows for some selection by the carrier to exist.

So even with community rating, some are able to obtain insurance, others are not. It’s one of the pieces of HAA which is most puzzling: if there is to be true community-based rating, and the coverage is to be mandatory and universal, then how could there be any kind of limitation on coverage, or exclusion of conditions? And if there are no such controls, why would its proponents believe that it will lead to lower costs?

As with almost anything having to do with health care and health insurance, there are exceptions (which often prove the rule). In this case, it’s that CR sometimes works in the small group market. It’s really not hard to see why: it’s the middle ground between the individual and the large group (generally self-insured) markets.

Let’s look at how well CR works in our current system. Currently, 4 states (NY, NH, VT and ME) mandate community rating; in those states, a carrier is prohibited from offering a policy based on age or health condition. If one looks at the insurance market in those states, one finds something else they have in common: few companies (less market choice) and higher than average rates.

There’s a very sound reason for this:

Community rated insurance premiums makes as much sense as community rated loans. That is, in a world of community rated lenders, everyone would pay the same rate when borrowing money. Those who are most credit worthy are lumped in with deadbeats who never pay their bills, and everyone is charged the same interest rate for the same kind of loan. One can easily imagine what those interest rates would be. Why anyone would envision this as fair is beyond our ken, but for some odd reason some believe charging everyone the same rate for health insurance, regardless of health or age, is a more equitable system than the one used in the other 46 states.

As we’ve discussed here at IB many times, risk (it’s assessment and management) is the underlying principle, the raison d’etre (literally: Deter’s raisin) of insurance. Take away that key component, and what we’re talking about is no longer insurance, but a shuffling of dollars from here to there and back again. We won’t argue the merits of such a scheme, but will argue that it is most emphatically not insurance, but rather (and at the risk of invoking Godwin’s Law) simply socialism.

(Pause for raspberries)

Okay, now that everyone’s thrown up their hands in disgust and/or pity, let’s examine why this is not merely name-calling, but sound economic and political reasoning:

Community rating is a method for pricing insurance. It simply says that everyone in a specific demographic cohort (i.e. geographic area, socio-economic class, race or sex) must be charged the same rate for insurance, regardless of health, habits or age. The term “community” simply acknowledges the commonality of that cohort. In the case of the HAA, that “community” becomes the population of the United States (or subsets of it). Fair enough; if that’s what the people really want, then that’s fine. But by prohibiting insurers from taking into account the fact that different people have different physical characteristics, health histories, and behaviors, the plan drastically devalues the element of risk. It is simply transferring money around, which is not insurance. By definition, socialism (whether as an economic or political system) is the forced redistribution of resources (in this case, money) without regard to merit.

In short, community rating encourages adverse selection more than the current system. The result is, the carrier gets more of the unhealthy risks and fewer of the healthy risks. (For a more detailed explication, see here and here)

Why does this matter?

Quite simply, because everywhere CR has been implemented, it has led almost immediately to increased insurance rates and decreased insurance availability. Why would this result not obtain if it is implemented on a (far) larger scale? The principle and the goal is the same, regardless of whether we’re talking one state or 50. It’s fashionable to discuss health insurance in terms of “fairness,” but it is silly to do so. A prevalent (though erroneous) school of thought conflates health insurance with health care; such folks have decided that it makes sense to look at health insurance not as a risk management vehicle, but some fundamental right, akin to voting and peaceful assembly.

It is not.

It is a mechanism for spreading risk. But if we remove (or substantially decrease) the risk, then it’s no longer insurance. Fine, let’s recast the debate, but let's at least be intellectually honest about it: it’s a national health plan, coupled with a nationalized health care system (can’t have one without the other). How about an honest discussion about that?

Mandated Missteps

[Welcome Kaiser Blog Watch readers!]

One of the problems with requiring everyone to buy health insurance is that, absent sufficient "teeth" to enforce such a rule, healthy (read: young) folks just aren't that interested in complying. That is, unless the gummint makes it more painful to not buy coverage than to do so, people are more likely to ignore any such requirement.

We saw this in Massachusetts, where folks who failed to play along lost an exemption worth about $200. Compared to potentially thousands of dollars for insurance premiums, who can blame them? Young, healthy people aren't stupid: if you don't hurt them in the wallet, a lot of them are just going to say "the heck with it."

And if, at the same time, the system causes the cost of health insurance to increase, you're going to get even less compliance.

Don't believe me?

"The coverage guarantee is not a new concept. But it has had a troubled history in several states that tried it for people seeking coverage through the insurance market. Some states, such as Kentucky and South Dakota, eventually dropped the guarantee after insurers left. In the few states where guaranteed coverage continues, monthly premiums generally are much higher for younger, healthier people than in nearby states."

But what does that mean?

"[Young people are] very price sensitive. They're healthy. They think they're invincible and getting them to buy coverage is a challenge. If it's expensive, they'll walk away," said Mary Lehnhard, a senior vice president at Blue Cross and Blue Shield Association."

One way to do that, of course, is to punish these "invincibles" who choose to opt out. But of course, these "shirkers" are mobile, as well, so there's every reason to believe that they'll vote with their feet, to a more economically-friendly clime.

But even in those states where this experiment has been tried, the result has been less than, well, optimal:

"South Dakota enacted the guarantee mandate in 1995. By 2001, claims exceeded the premiums collected by $2 million. By 2003, the state was down to only three major insurers; one, American Family Insurance Group, notified state officials that it was about to leave, too."

Ooops.

The solution?

"Within months, the South Dakota Legislature passed a bill that relieved the private insurers of their most costly customers. Those people are still insured, but as part of a high-risk pool. The state pays expenses that are over and above the premiums collected."

Several states use the risk-pool model, where the government acts as a sort of reinsurer for the costliest claims. Of course, the very phrase "the state pays expenses," is a lie: the "state" has no money. Rather, it collects what it needs from its citizens (this is known as a "tax"). So these folks face a double-whammy: higher insurance costs and higher taxes.

Ooops, redux.

On the other hand, and somewhat counter-intuitively, I'm actually in favor of this sort of mechanism. Although it doesn't actually address the real, underlying problem -- increasing health care costs -- it does seem to me to be a more equitable resolution to the challenge of covering more people. If one were to simultaneously shed some of the expensive mandated benefits that abound, one might actually bring health insurance costs down a bit, too.

[Hat Tip: Elizabeth A. Terrell]

Gimme a Break (a tax break, that is)

Actually, Missouri governor Matt Blunt plans to do just that: in order to encourage employers to offer group health plans, those that do will see their state franchise tax waived.

And that's just one of his six principles for reducing the number of uninsured folks. He's also proposing a health insurance purchasing pool for individuals without health coverage (more than 30 states have some form of risk pool). He also favors allowing employers and employees to pay health insurance premiums with tax-free dollars (although that one's a puzzler: most group plans are set up to do just that, and Section 125 "POP" plans are pretty inexpensive options for those that don't).

On the Medicaid front, the governor proposes expanding wellness and disease management services, and performance-based compensation for providers. Not bad.

Governor Blunt also favors making long term care insurance premiums 100% deductible.

By far the most ambitious aspect of this is his showcase plan, MO HealthNet, which would replace the current Medicaid program. The goal would be "improving health care for low income Missourians by giving participants meaningful choices...[and] empower participants by providing opportunities for prevention and wellness." A lofty goal, but perhaps attainable. After all, he's willing to put up $20 million of taxpayer funds to see these changes implemented.

I'm actually rather pleased to see this: as mentioned before, I'm a proponent of state-based health care and health insurance initiatives. This pilot program should add valuable data as we see what types of changes work, and which ones fall short.

Speak Softly and Carry a Big Stick

Elimination. This is what government is about when it comes to dealing with competition. The latest example comes via a new rule for Obamacare. If government speaks quietly enough you won't notice when they try and slip a fast one by you. If you do notice, they have that big stick ready to go so when competition doesn't fall in line they can smack the crap out of the competition with it.

That is what HHS did today when they issued a proposed new rule on short term medical insurance plans. The rule revises the definition of a short-term plan and will limit these plans to only three months and not be renewable.

On the surface this isn't a big deal to consumers. Primarily because short-term medical plans were never actually renewable. They are medically underwritten and don't meet the criteria of being Obamacare compliant. So when the policy ends it must be medically underwritten again before being issued. And, because they aren't Obamacare compliant people who purchase these plans are also subject to the individual mandate tax.

Therein lies the government's problem. Because these plans aren't compliant and include medical underwriting they are much less expensive than the Obamacare plans one is being coerced to buy through the marketplace. In some cases they are so much cheaper that a healthy person can pay the premiums plus the tax and it's still financially better for them than buying an Obamacare plan.

This leads us to the real reason government wants these plans gone. They see the death spiral of the individual market accelerating. Costs of insurance are exploding - including those cheap high deductible Bronze plans. Logically the only way government knows how to try and reverse this course is to force the healthy into the pool. By eliminating short-term plans and forcing consumers to the marketplace they believe they will strengthen the Obamacare risk pool.

Obamacare is a crap sandwich. Right now there are other sandwiches out there. Among them are limited benefit plan sandwiches, Christian Ministry sandwiches, and short-term medical sandwiches. One by one the government will eliminate your choices of sandwiches. Pretty soon all you will have left is the crap sandwich - and once you take a bite you'll find that it will leave a bad taste in your mouth.

Throwing a Keystone into the Pool

Like Ohio, Pennsylvania's now opened up their High Risk ObamaPool©. Called the PA Fair Care Plan, it's also built on what looks like an off-the-shelf PPO plan, with a few "tweaks." For example, only generic meds are covered (unless none's available). And, of course:

"Maternity and Newborn Care (31 days): 80% after deductible"

That is, "same as any illness." As we've mentioned before, this is a terribly expensive benefit (and completely inappropriate as an insured expense), and often (generally?) not available in the "regular" individual market without great cost and additional waiting periods. And, of course, pregnancy is one of the eligibility "triggers." As in Ohio, one must be uninsured for the prior 6 months (or longer); unlike Ohio's plan, coverage is not effective almost immediately:

"On average, it takes four to six weeks for an application to be processed after we receive your 1st monthly premium payment."

That's helpful to the extent that Pennsylvania's $160 million ObamaPool© funding may not run out quite as quickly as Ohio's. And speaking of funding, it's interesting to note that the premium is "about $283.00" per month. So is that a good deal, or a bad one? Depends on one's perspective, doesn't it?

One must provide either proof that one has been denied coverage (or offered coverage with one or more exclusions) or a letter from one's physician "stating that [one has] an existing medical condition that may result in denial of creditable coverage by a health insurance company." The Pennsylvania list of acceptable medical conditions is actually two-and-a-half times as long as Ohio's.

Medical Mutual is the insurer of choice for Ohio's Pool; Pennsylvania has selected its Blue Cross carrier, Highmark. One wonders who lost that particular bet.

In the event, all of these plans are due to "sunset" at the end of 2013; the so-called "Exchanges" are due to come on-line the first of January, 2014. We all await with bated breath.

[Hat Tip: FoIB Bob D]

It's Not a Risk When Using Other People's Money

Obamacare's Transitional Reinsurance Program screwed you and helped pad insurance company pockets. I know it's hard to believe that a government program that promised to hammer insurance companies would actually do the exact opposite. But. It. Does.

First, a little background. The Transitional Reinsurance Program is one of three mechanisms in Obamacare created to protect insurance companies from the risks associated with entering into the new marketplaces. This temporary program was designed to help insurers recoup large claims. The goal was for these funds to pay 80% of a high claimant in excess of $45,000 up to $250,000. In other words, the government had you pay to fund insurance claims that insurance companies normally would have paid - but only for those who purchased individual insurance plans through qualified health plans.

In order to receive reinsurance funds insurance companies had to offer Obamacare compliant plans. The funds they receive can only be used to fund claims for the people who enrolled in these plans. According to acasignups.net, they estimated that in 2014 there were approximately 16,347,250 people (on and off exchange) that had purchased individual qualified health plans.

Even though only 16 million people were in the eligible risk pool, funding for this program came from every single person who has private insurance. In 2014 the fee for each person was $63. CMS reported that they received a total of $8.7 billion into this program. Based on these figures there were 138,095,238 people who paid the fee.

In the June 30th CMS summary report we learned that the government has paid out $7.9 billion to insurance companies. Since reinsurance contributions exceeded the requests for reinsurance payments CMS decided to increase the coinsurance rate to 100 percent.

For those keeping score allow me to recap:

1. 138,095,238 people paid a total of $8,700,000,000 to a reinsurance fund.
2. Only 16,347,250 people were in the risk pool that this money was set aside to fund claims.
3. The money in this fund was supposed to reimburse insurance companies 80% of the large claims.
4. Instead the government paid the insurance companies 100% of the large claims.
5. The total paid out was $7,900,000,000.

So the government collected more money from you than they needed, gave more money to insurance companies than the original agreement, and kept $800 million of your money for insurance companies in the future. Yet for 91% of those who paid in, it didn't help whatsoever.

Once again we have another Obamacare success!

John Kerry on How to Kill Medicare

Medicare has always been a failure measured by what it was supposed to accomplish: protect Grandma from losing the shirt off her back, and cost. But it was a very popular failure. Conservatives have wondered for years how to rid the nation of this albatross. Thankfully John Kerry has struck the first blow for freedom:

"Meanwhile, John Kerry found another way to raid the health care system. The Senator from Massachusetts did what diligent Senators do; he added a provision to the Affordable Care Act to allow his state’s hospitals to increase their Medicare reimbursements by a factor of ten:

Here’s how Massachusetts gets extra money: Hospitals in urban areas have to be paid at least the same amount as rural hospitals. Massachusetts only has one rural hospital—a 19-bed facility on Nantucket island. So, the Nantucket Cottage Hospital sets the floor for every hospital in the state.
But because Nantucket is so wealthy, its cost of living is high—and thus so are its Medicare payments. That drives up the payments for every other hospital in the state. And under Kerry’s provision in the Affordable Care Act, hospital payments come from a nationwide pool.

If the provision remains in place, Massachusetts’s payments will rise over the next decade from $367 million to about $3.5 billion. The pool operates on a zero-sum basis, so all the money the Bay State gets will be funded by cutbacks from other states."

MA is a small State, it took some chutzpah to pull this off. Other states and hospitals are obviously not going to stand for this. Luckily for the taxpayers we are broke, so they can't just give every hospital a 10-fold pay raise. The more states fight over the small pot of blood money and more games like this the politicians play the sooner the public will see this for the failure it is and get rid of it.

California Here I Come...I Mean, Go!

[Welcome Industry Radar readers!]

At the risk of scooping our west coast co-blogger, I bring you news of Massachusetts-West:

"The state Assembly on Monday approved a massive health care reform plan that will expand coverage to nearly 70 percent of the state's uninsured and require most Californians to buy health insurance."

The brilliant Golden State legislators, egged on by The Governator, have passed a bill that (unbelievably) surpasses even the Bay State's ginormous sinkhole [ed: okay, enough already with the hyperbole]. As passed, implementing the bill is anticipated to cost some $14 billion (yes, with a b). Of course, this is really just the floor.

My favorite line comes from Assembly Speaker (and bill author) Fabian Nunez:

"Fundamentally, health care is a right and not a privilege."

Perhaps the California constitution contains such language; that of the United States, of course, does not. And again, we see the conflation of health care and health insurance, two completely different animals.

So, who pays for this largesse?

Well, smokers for starters. I'm still convinced that the only way that that will work is simultaneous legislation requiring non-smokers to begin lighting up. But that's not all:

"The bill would require all employers to spend a minimum amount on employees' health care or contribute to a state-run insurance pool."

These contributions are set up on a sliding scale, requiring employers to fork over up to 6.5% of payroll if they don't offer coverage. Depending on the group, this may well represent a significant savings; a particularly unhealthy group may be better off jettisoning their group cover and jumping into the new state pool.

A more cynical person might presume that this is exactly the intent of the bill's sponsors.

Ya think?

[h/t: Junk Yard Blog]