On Anecdotes & Data

So, about that 3000% rate decrease:

Working on a renewal (actually, one of several dozen at the moment, but this one's pretty representative); mom, dad, some ankle biters. Grandfathered HSA plan, $3,000 per person, $6,000 per family deductible, then 100%. As with all plans nowadays, first-dollar preventive care coverage (for mom and the kids only, of course, except for dad's colonoscopy every 5 or 10 years).

Current rate is $770 per month, heading north by 30% to a nice round $1,000. That's $12,000 in premiums before any meds or any major medical expense is covered, but after that, no worries. Plan is Grandfathered, so no coverage options (like a higher deductible to bring down that rate).

So, start shopping, and of course, the "best" alternative I can find is $1,140 per month, with a $6250 per person, $12,000 family deductible. So that's almost $1,700 a year in additional premium, plus thousands of dollars in potential additional out-of-pocket.

It does come with "free" birth control, though...

Oh, did I mention that Mom's 43 (and done)?

Sweet deal.

New Republic vs EPC

"The Equal Protection Clause of the 14th amendment of the U.S. Constitution prohibits states from denying any person within its jurisdiction the equal protection of the laws."

Reason I bring this up is because of the recent shuttering of the Empire State's New Republic (NR) CO-OP. Most of the time, there's a "cushion" between the time a plan is told to shut down and when folks actually lose coverage. This isn't the case with NR: coverage for its insureds ends on November 30th, period. This leaves them with a couple of challenges:

First, obtaining new coverage for December. The state has figured out a way to "auto-enroll" these folks in a new plan with intact carriers. One supposes that they could also choose a Short Term Medical plan (assuming those are still available in New York). And, of course, losing coverage in this manner is itself a Special Open Enrollment trigger (as regards December coverage).

The problem is that some (many? most?) of these folks will have met some or all of their 2015 deductibles (and, perhaps their entire maximum out-of-pockets). These are not going to be acknowledged by their new carrier; that is, they'll have an entire new annual out-of-pocket for December then again starting January 1st.

This is truly a bummer.

And it's also not legally correctable.

Here's why:

There is no way to compel the new carrier to credit expenses covered by a previous one, regardless of when they were incurred. So the fact that these poor folks are left high-and-dry for December is too bad, but there's nothing that can legally be done to resolve that. If the state (or the Feds, for that matter - CO-OPS are purely an invention of the ObamaTax) were to grant this kind of relief to victims previous NR insureds, they'd have to do that for everyone who's been in that situation.

And who would those folks be?

Well, anyone who lost employer coverage in, say July (or March, or a week ago) and had to obtain a new plan with another carrier. Or anyone else who's been recently eligible for a Special Open Enrollment and had (or chose) to switch carriers. If the NR folks are entitled, then everyone else in similar straits are, too.

Thanks, EPC!

Friday Spindle Clearing

In no particular order:

■ The Ohio Department of Insurance is touting its (not-so-new) lost insurance policy service, available to Buckeyes (and/or their beneficiaries) looking to see if Grams or Gramps had any unaccounted-for life insurance policies or annuities. It's a free service, but there's some paperwork involved.

■ The much-touted new Agent Hotline set up by the rocket surgeons in DC has turned out to be a big dud:

"A hotline set up ... to assist brokers with the public exchanges will only assist agents with user IDs, site registration and training questions — not client issues."

Which was to have been the whole point of the exercise in the first place.

Shocking, I know.

■ FoIB Jeff M tips us to this bolt from the blue:

"North Carolina consumers who buy their own health insurance are facing major price increases  ... it’s approved rates covering about 610,000 people that will be one-third to one-fifth higher in 2016"

Fortunately, that'll all be offset by the promised 3000% rate decreases any day now.

Right?

■ And now for something completely different:

The Pastry Artist's Adventure is a blog written (and updated frequently) by an aspiring pastry chef (and delightful young lady, to boot), currently in her 2nd year at the prestigious Sullivan University Culinary Arts program. It's fun to see the next generation of great bakers and chefs starting to spread their wings.

Ch-ch-changes: Adult "children"

The ObamaTax allows "adult children" to stay on their folks' insurance until age 26. Here in Ohio, the rocket surgeons in Columbus upped the ante, and let them stay on to age 28.

Now that's changing: as of January 1, 2016 the Buckeye State will fall into line with the other 57:

"I have my adult dependent child on my insurance coverage.  Will he/she still be able to stay on my health insurance? 

◦Dependent children can stay on their parent’s insurance until they turn 26."

Small steps.

[Hat Tip: Medical Mutual of Ohio]

MVNHS© Taking on Water

Last time we checked in with Britain's Much Vaunted National Health System©, we learned that new mums with breast cancer don't fare very well, healthcare-wise. Turns out, that was just a harbinger of things to come.

To wit:

"UK now has one of the worst healthcare systems in the developed world, according to OECD report"

Now what in the wide wide world of sports would prompt that pronouncement?

Oh:

"Hospitals are now so short-staffed and underequipped ... Staff are too rushed to improve levels of care ... obesity levels are “dire”

In other words: Thursday.

Here's the best part, though: all those folks bemoaning how we spend so much money on health care with poor results, and point to schemes like the MVNHS© as models to follow?

Guess what:

"Mr Pearson said the UK was spending “considerably less” than many OECD countries and that “you get what you pay for” in healthcare."

So if spending more doesn't help, and spending less doesn't, either, then maybe (just maybe) there are other factors to consider?

Wonder what those could be...

And the winner (loser?) is...

LifeHealthPro has just released the results of its survey of consumers' rankings of various health insurers.

Coming in dead last is United Healthcare, with just 62% of respondents willing to recommend it.

Interestingly, Aetna and Coventry are in 11th and 12th place (respectively); I don't really "get" this, since they're joined at the hip corporately. Perhaps the survey was conducted prior to Aetna's Coventry acquisition?

Our old friend Anthem is solidly in the middle, holding down 8th place.

Leading the pack, though, is Horizon Blue Cross/Shield of New Jersey, with a solid 85% of those surveyed willing to recommend it.

Two observations:

First, over half of the list is made up of various Blue Cross/Shield affiliates; this makes sense when you consider market share.

Second, and more discomfiting, is that it's not clear whether this reflects group plans or individual ones, nor on- or off-Exchange purchases. I think this is a major oversight, and would like to see it addressed in any future versions.

Health Wonk Review @ HBB

Health Business Blog's David Williams hosts this week's interesting, healthful collection of health care punditry and wonkery. Good info, helpful summaries, what's not to love?

Piling on: A physician's perspective

Right about the time that Kelley posted on the very real challenges that she's seeing at her practice (as well as her colleagues'), I received this in email from a physician:

"I've had issues with the way insurance is moving with caring for patients.  Many patients on high deductible plans want me to go over ALL their medical problems/concerns during their preventative visit then code it as preventative since that has to be covered 100%.  That just seems like fraud to me, and when I tell them I can go over their back pain and their side effects from their blood pressure medications but it's not preventative so there may be some charges, multiple patients have gotten very angry at me."

I of course pointed out that it is, in fact, fraud, and that it was wise to have declined the request. The rest seems to confirm what we learned from Kelley, and is likely to get worse.

I actually received a follow-up email this morning (in direct response to Kelley's post):

"I was seeing a patient for blood pressure and adjusting their medication because her blood pressure was still high.  She hadn't paid her bills yet, but I was still happy to see her for a follow up (we can set up a payment plan if a patient has difficulty paying their bills).  She asked my secretary if there would be an additional charge for that visit that day.  When my secretary said that, yes, a charge for that day's visit would be sent to the insurance company, the patient had a break down.  She started screaming that it's a follow up and should be covered under the same charge as her first visit.  She then said that if she dies it's our fault, refused to be seen if the visit wasn't guaranteed to be free, and stormed out of the office."

That'll teach that awful doc.

Right?

It seems to me that there are actually a number of different issues at play here:

First, it'd be interesting to know how many of these folks are newly-insured, and thus unfamiliar with how office visit co-pays have worked for a very long time. After all, the idea that co-pays apply to each discrete visit isn't new. And even on plans without co-pays (such as HSAs) it's always been the case that each visit generates its own charge.

I'd also be interested to see if this trend holds, and whether it drives more physicians to DPC or Concierge models.

Oh brave new world, indeed.

Obamacare's Three R's - And Then Some

Nope, its not reading, writing, and arithmetic. We all should know that when it comes to Obamacare the people who wrote it didn't comprehend it, nobody who voted for or against it had read it, and the arithmetic, well let's just say it's wrong.

So what are the Three R's of Obamacare? It's Reinsurance, Risk Adjustment, and Risk Corridors. All are mechanisms designed to help insurers stay in business when the pool of sick people cannonballed into the Exchanges last year. The confusion begins because most folks don't understand that each works through a different channel with different funding mechanisms and payouts.

Here's a little explainer that I hope will provide insight into the trouble insurers are getting into because they have relied on these three mechanisms.

We will start with the two "temporary" programs, Transitional Reinsurance and the Risk Corridor.

TRANSITIONAL REINSURANCE

Transitional Reinsurance began in 2014 and is scheduled to end in 2016. This mechanism is designed to pay plans that insure higher cost individuals. All health insurance issuers and all self-funded plans pay into this fund (yes, everyone who has insurance pays this). However, only individual market plans with high cost enrollees receive funds.

In 2014 the reinsurance fund received $63 per covered person per year. If you have a family of five the insurer pays $315 to the reinsurance fund. For 2015 the fund is receiving $44 per covered person. The last year of the program is scheduled to be $27 but has not yet been finalized.

Originally the Transitional Reinsurance fund was scheduled to pay high claims in the individual market. The insurer would receive 80% reimbursement of a claim from $60,000 up to $250,000. For example, if a covered member with insurer A had a $160,000 claim the insurer would pay $60,000 plus 20% of the remaining $100,000 for a total of $80,000. The Reinsurance fund would pay the other $80,000.

Because the enrollment in individual plans was so low and everyone still paid in, the the geniuses in DC decided to change how they were paying out the Reinsurance. They lowered the threshold down to $45,000 and increased the coinsurance to 100%. So in the scenario above the actual payment would have been $45,000 for the insurer and $115,000 paid by the Reinsurance fund.

RISK CORRIDOR

The Risk Corridor program is one that is currently getting all of the attention. This three year program was set to transfer money from profitable insurers to insurers who suffered losses in Exchanges. It only applies to insurers who offer Qualified Health Plans (QHP). In this case any insurer who participated and had less than 97% of target amounts of claims pays into the funds and any insurer who had more than 103% of target amounts receives the funds. It was supposed to work in conjunction with the Minimum Loss Ratio provisions of Obamacare. In this program payments do not have to be net to zero. In other words, if there is money left over the government keeps it. Or, if there isn't enough money then insurers could get hammered with losses.

The goal of this program was to push insurers not to set their rates too high by promising to pay those who undercut their premiums with money from insurers who set their rates too high. In many cases insurers, especially the new non-profit insurance Cooperatives, assumed they would be receiving money from this mechanism.

Last year 86% of all insurers either recorded a receivable (30%) or no receivable or payable (56%) meaning that they all were either counting on funds or didn't plan to have to pay any funds. Initially HHS estimated that $2.9 billion dollars would be available for those insurers who were losing money. What is actually paying out is around $362 million. Yes, that is 13% of the original target.

The outcomes have been brutal, especially for those insurers who were just starting up or are regional or local carriers that weren't flush with capital to begin with. As of this post it appears that 11 of the 23 Obamacare financed Insurance Cooperatives have announced they are shuttering their plans. In almost every case the main culprit is the extreme reduction of Risk Corridor funds they were counting on to keep them afloat.

RISK ADJUSTMENT

The Risk Adjustment program is the only permanent program under Obamacare's reinsurance vehicles. This is designed to transfer funds from insurers who have lower insured risk profiles to insurers with higher risk profiles. The program has a net to zero payment system meaning that there should always be funding for it. This could mean more payments for profitable insurers and more receivables for insurers who suffer heavy losses.

This program includes all insurance plans in the individual and small group markets that are not grandfathered regardless of whether or not they are in the Exchange. It has been hard to determine how much this fee will cost insurers as the volatility in the marketplace is pretty intense. Until there is credible claims data, insurers will have to hope their actuaries have excellent crystal balls.

CONCLUSION OR JUST THE BEGINNING?

While these three items appear to be getting all the attention it's important to note this is just the beginning, and in most cases, a very small sliver of the new costs insurers are facing due to Obamacare.

If you really want to see how your costs are impacted we must also include the PCORI fee that indexes annually but sunsets in 2019, the annual Health Insurance Industry Fee that according to most insurance carriers will account for 3%-4% of your premiums annually, the Health Insurance Marketplace fee that HHS has set at 3.5% in states using the Federal Exchange, and finally, the soon-to-come Cadillac Tax on premiums in excess of a set amount. The Cadillac tax will be a 40% excise tax on insurance companies who have plans with premiums that are considered "too high".

THE REAL CONCLUSION

We all have been hoodwinked and Democrats keep telling us that Obamacare is working. They are right: it's working for the government.

A government which now has assembled a 3.5% fee on your premiums for Exchange operations, a 4% tax on insurance premiums that insurers must pay, a $2.08 PCORI fee that each insured person must pay, a $63 (now $44) per insured person fee for reinsurance, an unknown amount that profitable insurers must pay to insurers who incur losses through risk adjustment, and lastly an overwhelmingly underfunded risk corridor program that is causing insurers to consider closing their doors because they can't financially stay in business.

So much for the promise of $2500 savings in our insurance premiums. With the government piling on layer after layer there's no way your insurance premiums won't keep going up.

Wolverine CO-OP flailing

Looks like we can add Consumers Mutual Insurance of Michigan to the growing list of CO-OPs headed down the tubes:

"While Eich said he could not disclose the options, he said one is “winding down” the company, which has 28,000 members, including about 6,000 on the exchange"

This, after blowing through an initial $72 million of tax-payer dollars just to get started, and another $150,000 from various Michigan counties. The good news is that all of these funds will be paid back...wait, what?

"It is not clear who would be responsible for paying back any of the loans, after all the claims are paid by Consumers."

Oh.

[Hat Tip: Co-blogger Bob V]

Musings on ACA Open Enrollment Day

“I’ve paid you enough”

This is an actual sentence uttered to me by a patient who was resisting coming back in for an appointment to see the physician regarding treatment of a severe infection. The physician wanted to monitor her during her run of medications, but due to her high co-pay and astronomical deductible, she “felt” that she had already paid enough.

” I need to cancel this test for now.  My insurance will not pay because it will go straight to the deductible which is $5500 and my family has not even met it yet.  I CAN NOT AFFORD A LARGE MEDICAL BILL. I will just have to wait until next year, maybe August 2016 before i can have the test.”

This is a message another patient left on the portal, canceling a rather important test due to her high deductible.

Then from my medical practice list serve was this quote regarding patients paying their co-payment and out of pocket expenses:

“We are looking to strengthen the policy about collection of deductibles but sometimes the amounts are just too darn high that folks don't come in because they are not able to pay for them.

Classic example:  The patient's deductible is literally $5.000.00 who is not coming in the door with this kind of money even with enough balance on their credit limit to pay for it even if having one.  Meaning that if we verify coverage before they come in it's still not helping.”

Now, correct me if I am wrong, but wasn’t the ACA supposed to LOWER medical costs to encourage patients to INCREASE their visits to the physicians? What I and my colleagues across the country are experiencing is that patients are not coming in for their visits, citing costs as the most common reason for cancelling their appointment or putting off treatment.

I noted several years ago that more patients had plans with high deductibles and that our bad debt by patients was rising, I instituted a payment plan to help my patients pay their large medical bills. I became more proactive in contacting the patients regarding high out-of-pocket expenses and then setting them up on a payment plan, anywhere from two to six monthly payments, to handle their expenses.  For some patients, even payment plans do not work because they do not have any extra money. It is becoming more difficult to collect monies owed by patients and I do not see it becoming any easier in the near future.

So, as Americans go to the Marketplace today and in the next few weeks and are enticed to buy a bronze plan because the premiums are lower, please remember to look at the deductible and calculate if you can “afford” to have such “inexpensive” health insurance.

Medicaid vs Insurance

So, over on Twitter (among other places), folks have been crowing that Medicaid expansion has contributed mightily in bringing down the number of uninsured. I politely pointed out that Medicaid ≠ insurance, which then set off a storm of protests:

"CHIP has the word insurance in the title."

 Abraham Lincoln had an answer for that one.

I also pointed out that (obviously) insurance = risk + premium, while Medicaid = income redistribution.

They didn't like that either:

Sigh.

It's really a very simple thing, so I challenged my detractors to "name an insurance company that sells Medicaid policies."

FoIB Allison Bell gamely offered "Anthem, UnitedHealth, Aetna, Centene" as examples. This refers to carriers which have entered into agreements with states seeking to "privatize" Medicaid.

Unfortunately, this answer also doesn't fly, for the simple reason that these carriers don't "sell" Medicaid policies, they administer Medicaid for participating states. They are paid by taxpayers as a whole, not individual policyholders.

Nice try, though!

The salient point here is that Medicaid beneficiaries [ed: hey - that's another clue!], unlike those who purchase insurance, have no skin in the game. Now, one could make the case that neither do folks who "buy" fully subsidized ObamaPlans, but that's another post. 

I see, er, insure, Dead People

Actually, this is a great idea:

"An audit by the State Comptroller’s Office has revealed that hundreds of dead people were enrolled in New York’s health exchange, with nearly two dozen of them enrolling after death."

Point 1: Dead people Metabolically-challenged citizens (MCCs) have historically filed the fewest claims of any demographic.

Point 2: Is it their fault that they (presumably) died while waiting for the 404Care.gov site to let them proceed?

Point 3: MCCs are also the least likely to complain about bare-bones (sorry!) policies and skinny networks.

All-in-all, win-win.

Gaba, Gaba Do!

Meanwhile, on Twitter: One of the folks I follow is Charles Gaba, with whom I rarely agree, but who does offer rational, generally well-researched conversation. He's also a blogger, and has published a really extensive and well-done post with Six Seven pieces of ACA/Open Enrollment advice.

I do have a major problem with #6:

"The tax penalty for *not* being covered is $695 or 2.5% of your taxable income this year."

It's not that the information is inaccurate - it's not. My problem with it is that the fine penalty tax is both a good deal, and toothless.

We had quite the little conversation (at 140 characters per), but it really boiled down to this: the minimum fine for 2016 is $695 per person, which translates to $58 per month. If you're not getting a subsidy, there's no plan at any age that's going to be that low. Then add in the $6,000+ out-of-pocket for the Bronze plan (cheapest metallic level), and the fine begins to look like a real bargain.

Are there downsides to this?

Of course: there's always the risk that you'll need care. But that's what EMTALA is for, no? Now, I'm not (necessarily) advocating this strategy for folks in general, but I do think it's important to recognize its plausibility for healthy folks who make too much to be subsidy-eligible.

Related: Fellow insurance pro and blogger Louise Norris has a new (free!) ebook out, and it's quite timely: The Insider's Guide to Obamacare's Open Enrollment. Available now (for free!) at Amazon.

Training Day - Epilogue

So, the other day I finished up my 2016 Federal Marketplace (Exchange) training. As I noted previously, this is mostly a re-hash of previous years, but there was one significant change that I took note of, and which I think is a (very) good thing:

 

[click to embiggen]

"1. Online. The individual can log in ... then report a life change"

Previously, all status changes (moves, marriages, divorces, income adjustment, etc) had to be reported to the Marketplace by telephone. On the one hand, it's a toll-free number, but the problem I've always had with that was the lack of a "paper" trail (pixels would be fine, as well). Well, now that objection is resolved, and I feel better about the process going forward.

Beating the horse

FoIB Holly R tips us to this (unsurprising) news vicious lie:

"ObamaCare Rates Revealed; Lowest-Cost Plans Jump 13%"

To which I can only reply:

La plus ca change, HHS-style

So, this past summer we noted that during last year's Open Enrollment season, the Government Accounting Office (GAO) had successfully registered almost a dozen fake Exchange accounts, complete with subsidies and insurance policy purchases.

We're happy to report that all of these problems have now been fixed, and...

Wait, what?

/sigh

"[F]ederal watchdog office did set up 10 phony insurance coverage accounts with no pushback from those overseeing the applications."

They set up the "sting" to see if last year's experiences had borne fruit, in the form of "plugging up" the obvious HIX holes. And of course, the rocket surgeons running it are still failing.

[Hat Tip: Co-Blogger Patrick]

Ooops, you trusted us!

Talk about bait-and-switch:

"The Obama administration said many consumers will see noticeable premium increases when buying health coverage ... the price of the second-lowest-cost midrange “silver plan” ... will increase by 7.5% on average"

Hunh.

And yet:



How to square that circle?

[Hat Tip: FoIB Holly R]

So sorry, that's not covered

Regular readers already know that struggling South Carolina CO-OP Consumers’ Choice Health has hit the skids, and that Wyoming's WINHealth was in serious trouble.

Turns out, WIN has really lost:

"The Wyoming Department of Insurance said it is going to court to try to put [the] struggling health insurer ... into receivership."

Small wonder: they lost some two-and-a-half million dollars in the first half of this year alone, and of course got stiffed on the risk corridor cash it was counting on. Gee, might be a lesson there....

Oh, some 8,000 Cowboy State residents set to lose the insurance they (presumably) liked.

It's almost like they were lied to.

Easy come, easy go

So this happened:

"[T]he GAO report found that ... at least $1.6 billion [is] unaccounted for."

That's out of over $5 billion in "loans" sent to states, most of which went for state-based Exchanges (which, per SCOTUS, don't actually exist).

And there's this little gem:

"Even though states were supposed to set up their marketplaces by the end of last year, they are not yet legally required to return unused funds."

Hunh. Wonder what "yet" means.

Anyone? Bueller?