Dis-Kynected

As we reported last month, newly-elected Blue Grass State Governor Matt Bevin announced that he'd be pulling the plug on its legally-questionable  health insurance exchange, Kynect. And so he has:

"Gov. Matt Bevin has notified federal authorities he plans to dismantle kynect ... goal is to eliminate "the redundancy" of Kentucky's online health exchange."

As we noted in December, all the panty-twisters' protestations are, in fact, meritless, since the program itself was simply an exercise in phone-and-penmanship by former Governor Bashear. And there's this: "most Kentuckians are paying for the service through the 1 percent surcharge for a service that only a fraction of Kentuckians use." I thought O'Care supporters were all in for "fairness."

Guess that depends on the definition of "fair."

The MVNHS© Strikes Back

Emphasis on "strikes:"

"Tens of thousands of junior doctors, a term that covers medical professionals with as much as a decade of experience, were believed to have refused to work, providing only emergency coverage because of a dispute over pay and working conditions"

This is the oft-overlooked truth about nationalized health care schemes: the providers become employees of the state ("who pays the piper calls the tune"), and are thus subject to said government's whims. In this case, some 4,000 elective procedures, including hip and knee replacements, were put off; one wonders how many patients' symptoms are now even worse.

And I certainly didn't know this, despite being a long-time student of the Much Vaunted National Health Service©:

"[D]octors are officially required to work a 48-hour week"

So let's see: the government tells doc's how much they must work (and that's a pretty heavy load), and how much they'll be paid. Seems like there should be a term for that.

But, hey: Free health care.

Major Blue Snafu

Courtesy of FoIB Jeff M:

"Blue Cross and Blue Shield customers in North Carolina will be getting refunds ... they could not confirm whether they were insured ...  about 25,000 customers were accidentally put into the wrong health plans."

Three very serious problems, and it's not really clear how much they overlap (ie how many were overcharged vs how many couldn't confirm vs how many put in wrong plans). The good news is that the BX folks are working to resolve these issues.

And of course, it could be worse:

Obamacare CO-OPs - the NeverEnding Story?

News came last September of the collapse of Health Republic New York, the nation’s biggest nonprofit CO-OP health insurer created by the Affordable Care Act.  It was “ordered to shut down as is reels toward insolvency, disrupting coverage for more than 200,000 New York State residents.”  But the disruption in coverage is only part of the story.  Health Republic’s collapse has also created financial domino effects across the state, for hospitals and doctors - and for other insurers.

“Hospitals and doctors told New York Senators Wednesday [January 6th] they’ve got $200 million or more in unpaid bills because of last year’s financial failure of insurance cooperative Health Republic,  and they want the state to step in.”

"UnitedHealth Group Inc., the largest U.S. health insurer, said its rates for Obamacare plans in NewYork may be too low because the failure of a competing insurer last year might lead to shortfalls in payments designed to stabilize Obamacare markets – payments they counted on when setting their 2016 premiums. "

Additional serious losses in NY in 2016 increases the likelihood that United will pull out of the State Exchange for 2017. Of course United's participation in all other Exchanges for 2017 is in doubt and the doubt just got bigger.  United’s CEO Stephen Hemsley now says that participating in the Obamacare individual Insurance Exchanges “was for us a bad decision”

Most NY insurers, not just United, say that the New York State rate-review process failed.  The New York State Insurance Department disagrees.

UnitedHealth requested a 22 percent rate increase for individual Obamacare plans. Instead, state regulators allowed the company to boost rates by 1.65 percent. The company also sells business under the Oxford brand, which requested a 5.32 percent rate increase,and was forced instead to cut rates by 12.25 percent.

But Health Republic was able to lock in rates much lower than its competitors, NY's Depatment of Financial Services health insurance honcho Troy Oechsner claims that “we did the right thing at the time, given the uncertainty of the market.”

Was this simple regulatory failure?  Or could it have been deliberate political maneuvering of rate approvals to show that Obamacare really reduced medical insurance premiums?  And to help Health Republic capture significant membership so this leading Obamacare CO-OP would be hailed as a “success?”

If it turns out political maneuvering is even a little bit true, my guess is that there are political influence peddlers from Washington to New York (and insurance dept officials in New York, too) who should lawyer up and start worrying about significant prison time.

Note:  there are two other co-ops sharing the "HealthRepublic name" - in New Jersey and Oregon - but they're not affiliated with New York's version and aren't affected in this particular instance.

However: all three were set up by the Brooklyn-based Freelancers Union, about which we've written extensively - if not favorably - in the past.

Friday Term of Art: "Unsustainable"

That is, the whole flimsy house of cards upon which the ObamaTax was built relies substantially on enticing young (and presumably healthy) victims people to enroll. That's because, by and large, this cohort tends to have fewer (and less expensive) claims, so they represent essentially free money to "the system."

But what happens when you can't entice threaten cajole them into actually pulling the 404Care.gov trigger?

Well, you have lots of unhealthy folks (of all ages) signing up, causing major claims, which are then supposed to be backstopped by Uncle Sugar (how's that working out?).

Which brings us to this completely predictable news:

"26% of people who signed up for coverage as of Dec. 26 in the 38 states that use the federal exchange were ages 18 to 34 ... largely unchanged from a roughly comparable two-month period through Jan. 16, 2015."

So what does that mean?

In a nutshell: that which can't go on, won't . That is, as more and more younger (generally healthier) young people continue to opt out, claims will continue to rise with little or no corresponding increase in premium revenue.

But hey, they'll just make it up on volume.

[Hat Tip: FoIB Michael Cannon]

Obamacare and Small Business in 1000 Words

[click pic to embiggen]

If I like my plan I can keep it?

$2500 savings?

3000% rate reduction?

#Obamacarefail

Veddy Interestink

So we've been reporting on various carriers' unilateral decision to stop paying commissions, and wondered:

"Since it will no longer be paying commissions, will [carriers] now refund the portion of [their] clients' premiums that represent that cost?"

Blue Grass State honchos have weighed in, and the answer is (pleasantly) surprising:

"Kentucky has published an Advisory Opinion to clarify inquiries regarding the non-payment of commission payments to agents for certain products ... Failure to pay commissions in accordance with the rate filing will be considered a violation of the Insurance Code."

And this edict applies specifically to health insurers (both individual and group).

Now, it affects only carriers and agents in Kentucky (for now), but it will be interesting to see if other jurisdictions will hop on board.

So, some good news for a change.

Thursday Morning LinkFest

■ From the Everything Old is New Again Department:

Way back in Aught-Six, we reported on a groundbreaking plan called PACE, a self-funding option for small group:

"ACMG has developed a unique new product that brings the benefits of ERISA plans and the “stability” of fully insured plans to the small group market."

Almost a decade later (yesterday, to be precise), FoIB Jeff M alerted us to a "new" program called Level Funded Health:

"Level funded health plans appear like a hybrid between a traditional group health insurance plan along with a form of self-insurance."

LFH is available for groups with as few as 5 employees; being self-funded also means being able to duck some major ObamaTax requirements (which should help to keep the price down).

Methinks these types of plans will become more and more attractive as small group plans keep getting squeezed in the marketplace.

■ From the Annals of the MVNHS©:

"Tumors force 11-year-old boy to undergo mastectomy"

Turns out, this young lad apparently had several benign tumors in his chest, and recently became "the first child in the country to undergo a mastectomy."

He seems to be making a speedy recovery.

■ From the Medicinal Alcohol & Yogurt Department:

"A craft beer made with ingredients from kefir — a fermented milk drink that resembles yogurt— may sound a little gross. But drinking it could bring health benefits"

What benefits, you ask?

Well, reduced stomach inflammation and ulcers, for starters.

The bad news is that its effects have so far been tested only on rats, who apparently have no problem with the mixture.

Tastes great, less ulcers?

Win some, Lose more

As Bob noted this past November, "Ocare was supposed to eliminate medical bankruptcy. At least that was the campaign promised."

So how's that working out?

Oh:

[click pic to embiggen]

According to the folks at the Kaiser Family Foundation, folks who had employer sponsored health plans (ESI) fared even worse than those who were uninsured.

And as an aside, 5+ years in, and there are still uninsured? Thought that was the whole point of the ObamaTax. Hunh.

And also note that it doesn't seem to matter what type of plan design either (high vs low deductible). Of course, the deductible is only part of the story: the total out-of-pocket will also include co-insurance and premiums.

Talk about #ObamaCareFail.

[Hat Tip: Larry Levitt]

ObamaTax D'unh!

So The Grey lady has finally figured out what we've known pretty much all along:

"Many See I.R.S. Penalties as More Affordable Than Insurance"

No kidding.

As we've long noted, most recently this past October:

"If you're not getting a subsidy, there's no plan at any age that's going to be [as low as the penalty tax fine]."

We already know that the first wave of the most recent Open Enrollment season was an unmitigated disaster, with far fewer victims enrollees than either predicted nor necessary for sustainability. This of course has a major dampening effect on insurers, who need the influx of the mostly healthy folks that wisely opt out to help offset huge claims losses.

Sucks to be them.

[H/T Gabe Malor]

The (ACA) Year in Review

IRS Codes for Dummies

If you understood the post from yesterday congratulations! You are officially certified now as OCD - Obamacare Compliance Designation. If not, never fear, your favorite bloggers are here. For those with a more visual approach be sure to check out the bottom.

For individuals who purchase insurance through the Marketplaces you might use/receive the following regulations and forms:

Regulation 5000A - The rule that everyone must have minimum essential health care coverage. This also provides a listing of types of coverage that qualify under the ACA.

Section 1401 (which creates Section 36B of the Internal Revenue Code) - This authorizes tax credits for the purchase of qualifying health insurance in an exchange “established by the State under Section 1311″ of the Act. It was a vital part of the King vs. Burwell case. In final regulations under Code 36B, the Treasury Department and the IRS read the rules broadly, such that subsidized coverage are available irrespective of whether an exchange is state-based or Federally-facilitated.

1095-A - This is called the Marketplace Statement. It is provided by the Marketplace to confirm an individual has insurance that meets minimum coverage and allows that person to receive a premium tax credit. It shows what the 2nd lowest cost Silver Plan is for the state the person resides in along with the amount an individual received in advanced premium tax credits.

Form 8962 - The new tax form you complete that will provide a way to figure your tax credit and then reconciles with your advanced premium tax credit. You must submit this form to the IRS with your taxes if you qualify and receive a subsidy through the purchase of individual insurance through a marketplace.

Form 8965 - You must complete this form if you are claiming an exemption to the individual mandate. Important to note, you must have received an exemption from the Marketplace beforehand. You will provide the exemption certificate number you received on this tax form.

For insurers, Applicable Large Employers, and individuals who receive insurance through their employer you will use the following regulations and forms:

IRS Code 6055 - Provides that every fully insured and self funded plan must offer minimum essential coverage and will report this information by filing a return to the IRS and also by furnishing a statement to individuals who are offered insurance under the plan. The IRS uses this to show compliance with the individual mandate (5000A). In fully insured cases insurers are the ones providing documentation to the IRS and individuals who are covered under a group plan.

IRS Code 6056 - Only applies to Applicable Large Employers (50 or more FTE's). This section requires the employers to complete tax filing documents to the IRS and all of their employees. The IRS uses these tax forms to determine if an employer meets the Employer Mandate requirements and also determine if an employee is eligible for a premium tax credit or not.

IRS Form 1094-C - This form is generated by ALE's under IRS Code 6056 to show a summary of information for the employer who sponsors a health insurance plan. It covers eligibility methods, monthly enrollments, and minimum coverage requirements. It also asks for the total number of 1095-C forms the plan sponsor has sent.

IRS Form 1095-C - This form is given to all full-time employees and also provided to the IRS by all ALE's who offer fully insured and self funded plans. What sections to complete depend on whether an employer offers a fully insured or self funded plan. Regardless this is the most cumbersome portion of the reporting requirements for an employer. This data is used by the IRS to determine if an employer owes a penalty or if an employee is eligible for a tax credit. It also is used by the IRS to determine if someone is responsible for the individual mandate tax for not having insurance.

IRS Form 1094-B - This form is only required if an employer meets the following two requirements: 1. they offer minimum essential coverage and 2. the plan they offer is self-funded. If you don't meet these requirements then you will not have to deal with this form.

IRS Form 1095-B - This form is sent by insurers to all members who are covered under a fully insured medical plan. This includes: individual off exchange, small and large group fully insureds. Small group self funded accounts are also responsible for sending these to employees.

Oy Canada! (Part 2,739)

Two years ago, we noted that "Canada's Supreme Court has ruled that under the "law of the land" in Ontario, a government board, not the family or doctors, has the ultimate power to pull the plug on a patient."

On the one hand, this is pretty scary; after all, it's what will happen under the IPAB. On the other, at least one knows the score, and can (try to) plan accordingly.

On the gripping hand:

"Canadian Medical Association considering allowing doctors to LIE about patients death to cover up euthanasia."

Wait, what?!

Oh, it gets worse:

The Quebec Medical College is already doing this:

"The physician must write as the immediate cause of death the disease or morbid condition which justified [the medical aid in dying] and caused the death. It is not a question of the manner of death (cardiac arrest), but of the disease, accident or complication that led to the death."

So if one has cancer, or some other fatal disease, and one is euthanized (perhaps under government orders) the cause of death won't be listed as the lethal injection, but the cancer itself.

"The deceased died of a sudden and severe influx of electrons."

Sure, go with that.

[Hat Tip: The Political Hat]

Understanding Another Obamacare Extension

Employers and insurers have been gearing up for a crazy month of January where they must comply with new IRS reporting requirements. Confusion and time constraints will make this month a nightmare for human resource and accounting departments.

But never fear, the IRS is here!


In guidance released yesterday the IRS is providing an extension to these reporting requirements. The reporting requirements pertain to sections 6055 and 6056 and directly impact the time allowed to submit forms 1095-B, 1095-C, 1094-B, and 1094-C. They also give more time to employers so that they won't be subject to fines under codes 6722 and 6721 for failing to file these forms in a timely fashion.

These forms are then used by the IRS to help individuals who have new requirements under section 36B and 5000A. Don't mistake these above mentioned forms with form 1095-A which could also include form 8962 or 8965.

All of these forms are necessary in finalizing your 1040 or 1040EZ except for this year where it might not be possible that you have received your 1095-B or 1095-C in time for tax filing. There is no need to worry as the IRS has indicated that they will not require anyone to file an amended return should they not have their form 1095-B or 1095-C submitted with their 1040 or 1040EZ.

(COMING SOON! UNDERSTANDING THE POST ABOVE)

Suspend. Delay. Postpone. Repeat

The cost of Obamacare just got bigger and since history is a strong indicator we should be prepared for huge deficits to cut into the President's signature disaster. The vote by Congress to pass the annual spending bill contained three items of interest tied to the revenues that were supposed to be coming in to pay for a large part of the Not So Affordable Care Act.

By postponing the Cadillac Tax from 2018 to 2020, pausing the Medical Device Tax for 2017 and 2018, and also pausing the Health Insurance Tax for 2017 the federal government is reducing revenues to fund Obamacare by $32.1 Billion. Some are saying so what, in government world that's pennies. This is correct in the short term, but given the track record of Congress pushing things off, the long term of not letting these expire or removing them altogether will be financially irresponsible.

How financially irresponsible? In reviewing the 10 year Obamacare costs based on the December 2nd release from the Office of Management and Budget regarding H.R. 3762 and the CBO's Budget and Economic outlook for 2015 we found a significant potential for lost revenue based on these three taxes being eliminated.

The smallest of the three is the Medical Devices Tax. The two year pause that has already passed will cost $4.1 billion. Should Congress repeal this tax - which has bipartisan support - would reduce revenues by $23.9 billion over ten years.

The Cadillac Tax is the one receiving the most attention. This tax will hit more employers over time and the primary revenue generator is new tax dollars on employee compensation. The CBO can only score on the garbage in, garbage out rules. Because Congress is full of garbage, they assumed that as the tax kicked in employers would reduce benefits and therefore lower premiums. In turn they assumed that employers would replace this lower premium with a dollar for dollar match in compensation. The end result is higher income tax revenue on taxpayers. The cost of delaying this for two years is $13 billion. Many in Congress want this tax fully repealed. Doing so would reduce Obamacare revenues by $149 billion over ten years.

The sneaky one is the Health Insurance Tax - or as we refer to it - The HIT. This tax bill is sent to health insurers based on their market share. It has flown under the radar because it was sold as a tax on insurance companies. Nobody likes insurance companies so taxing them would seem to be a good thing. But if you look at your insurance bill you will see that this tax is built in to your premium. This tax being paused for a year will lower revenues by an additional $13 billion. Continuing the delay for ten years will cost $159 billion - even more than the Cadillac Tax.

The total cost over ten years of eliminating these three taxes will decrease Obamacare revenues by $331,900,000,000. This makes up more than half of the revenues Obamacare is supposed to generate over that same time period.

We already knew that Obamacare was financially unsustainable. Adding these reductions in revenue to the fold will accelerate it's death. And that might be a good thing.

How sick is this?

This strikes me as perverse:

"In theory, if the system works, it could make insuring a patient with diabetes more attractive than insuring a similar patient without diabetes. Covering a patient who has diabetes and has had terrible medical care may look even better, because an insurer could collect extra risk adjustment cash for that patient while using good care management to reduce the patient's medical bills."

As FoIB Allison Bell notes, an immediate problem is that the implied mechanism here looks like the health care version of a credit score, and "[c]onsumers may not be thrilled to learn that insurers are assigning them risk scores."

I'd agree, if they ever even learned of its existence. But this has been kept so well under the radar that I doubt whether many non-industry folks know about it (heck, I wonder how many industry folks know!).

It actually gets worse, though:

"CMS recently began offering health insurers HHS-RADV training. The agency wants insurers to send it HHS-RADV data reports by April 30, 2016."

That's the agency's Risk Adjustment Data Validation program, which seeks to collect health care usage data from carriers. And how is this data then used? Well, carriers have an incentive to make their own insureds look as sick as possible in order to hold onto (or get more of) that sweet, sweet risk corridor cash (and BTW, rotsa ruck with that).

On the gripping hand, it's hard to feel much sympathy for carriers (thanks, AHIP!).

Major O'Care Disappointment

Now that the (disastrous) first phase of the 2016 Open Enrollment season is behind us, lets' take a look at what a huge disappointment it was. Even with the DC Rocket Surgeons© (illegally) extending the deadline a few days, they missed their mark by substantial margins::

"About 6 million people have signed up for health coverage that will take effect on Jan. 1 in the states that use the [404Care].gov enrollment."

Yikes!

That's a far, far cry from the 21 million people the Congressional Budget Office expected to enroll.

But Henry, you may object, Charles specifically cited that number as total 2016 sign-ups, and you're only counting Phase 1.

Reality check: who really thinks they're going to make up that 15 million person deficit in the next two months?

What I thought, too.

But why aren't more folks getting on the ObamaTax wagon?

Remember this?



You might want to sit down for this...

"State by state data show bigger 2016 exchange premium, deductible jumps"

Seems like maybe there's a clue....

Turing Bus Crashes

Last time we looked, Turing Pharmaceutical honcho Martin Shkreli was busy reneging on his company's promise to drastically reduce the cost of its flagship med Daraprim.

But that was then, and this is now:

"Martin Shkreli, the former hedge fund manager vilified in nearly every corner of America for buying a pharmaceutical company and jacking up the price of a life-saving drug more than fiftyfold, was arrested Thursday on securities fraud charges unrelated to the furor."

Sure, they say it's not related to the Daraprim kerfluffle, but it certainly reflects a, shall we say, blase attitude towards ethical behavior that seems to permeate his business dealings.

Of course, he's innocent until proven guilty, but who's really taking the over/under on that?

So long, Marty!

Happy, Wonky Holidays!

Heath Wonk Review co-founder and all-around enabler coordinator Julie Ferguson hosts the last edition of 2015. Be sure not to miss her wonderful, whimsical take on The Santa Index (who knew that The Big Guy was pulling in The Big Bucks?), and of course the cornucopia of terrific posts.

Droning on

With Christmas just around the corner, 'drones' seems to be the hot item this year. I've seen some that fit in the palm of one's hand, and others the size of large dinner plates. regardless, they look like a lot of fun, but they also represent a potential insurance risk (or three):

“Almost no one is thinking about insurance coverage when they’re opening the box,” says Jeff Antonelli, a Chicago attorney who specializes in federal regulations for unmanned aerial systems."

I reached out to Bill M (our favorite guru of all things P&C) for his take. He tells us that there seem to be two main issues:

First, if you (or your child) manages to crash that new drone into the neighbor's window or head, will your homeowner's insurance cover that damage? And second, since many of them also include video capability, there's the issue of invasion of privacy. Bill says that the property damage will likely be covered (although you may want to consider paying that out of pocket to avoid the potential hit to your rate at renewal time), but that it's unlikely they'll cover the invasion of privacy.

He suspects that the Courts will ultimately decide, and then the industry will correct forms to charge more or exclude coverage.

In the meantime, best keep a watchful eye out.