Mid-Afternoon Info Break

First, the National Federation of Independent Business (NFIB) has posted a webinar covering many of the key questions employers are asking about their responsibilities under the ACA. Click on over to "learn what the delay means, what you still need to do and what changes are yet to come."

If you own (or manage) a small business, then this is pretty crucial knowledge, available gratis.

Second, not really insurance-related, but very cool nonetheless. As a recent convert to the world of smart-phones, I hadn't realized just how critical they can be.

Case in point:

"Ricky Dean's memory problems are so severe he has to be told to do just about everything, from eating to brushing his teeth."

As an infant, he was starved of oxygen, and then later diagnosed as autistic. It was during testing to determine exactly what was wrong when a memory scan "revealed the full extent of his memory loss."

He has no sense of time passing, which makes cooking or drawing a bath impossible, but with the help of his friends, family and smartphone, he's leading a relatively independent life:

"Until three years ago, Ricky rarely left his family home, because he could never remember where he was going, but now relies on his iPhone"

ObamaTax News

While we watch the anticipated implosion of the Data Hub, we should also be keeping our eyes on some of the ways we're expected to interact with it.

Example the First:

"[A]dministration officials announced Monday that the [ObamaTax] is a step closer to reality for millions of uninsured Americans ... consumers can now go online to healthcare.gov and create personal accounts by establishing a username and password"

Well, goody! Must mean we're really close to open access to hundreds of new plans and going-out-of-business rates (so to speak).

What?

Oh:

"[S]erious shopping will have to wait until sometime in September, when details on insurance plans and premiums offered in local areas will become available."

Well, perhaps Carly Simon had it right, after all.

Which brings us to Example the Second:

"A federal health insurance exchange agency has come up with advice about how its exchanges will manage relationships with one type of consumer helper — the "certified application counselor."

So what's a CAC?

So glad you asked:

"[F]ederally facilitated exchanges" run by CCIIO will designate CACs, and how the FFEs will fire CACs violating privacy standards or breaking other program rules."

Clear as mud.

Actually, a "CAC will be like a navigator, but without necessarily having the ability to provide "culturally and linguistically appropriate" help."

M'kay.

Breaking News....

Remember that state-of-the-art Data Hub that's going to enable lightning-fast, hyper-accurate, real-time exchange of information to facilitate the wildly successful ObamaTax?

Ummmmm:

"PPACA data hub testing incomplete ... One huge hurdle will be connecting so many different federal and state agencies ... The hub also will have spokes reaching out to agencies with less obvious health insurance relationships"

So, speaking of hubs, are the wheels coming off?

Insult to Injury

So let me get this straight: I have to waste 'invest' 2+ hours in "training" and "certification" , followed by a (no doubt intrusive) identity verification process, but these jokers get to just set up sites and throw out any info they please?

First, the "AARP announced Monday that it has launched two websites ... ahead of the enactment of the healthcare reform's major provisions." About the only thing I believe from these guys is their admission that "the law is confusing."

Keen insight there, Nicole.

And then some other folks, playing cutesy with an "Embargoed News Release" (as if anyone really cares when they roll out their own toys) promising "its Health Care Reform Center for consumers and the ACA Resource Center for physicians."

And this is TOP SECRET, why?

Somebody's taking themselves way too seriously.

And there's this: Co-Blogger Patrick wonders "how much government funding they got for these sites."

Great question!

and another one bites the dust

From AP about an hour ago:

"Hartford-based Aetna Life Insurance Co. has informed state insurance officials that it has withdrawn from Connecticut's health insurance exchange . . . three insurers will now offer individual coverage through [the exchange]. They include Anthem, ConnectiCare and the nonprofit HealthyCT . . . Aetna has also withdrawn from offering individual plans in Maryland and Georgia, said Susan Millerick, an Aetna spokesman . . . "

It's still fair to say the implementation of Obamacare continues to be a slow-motion train wreck. 

But news like this increases the odds that it's becoming another Alice's Restaurant Mass-a-cree.

Oh frabjous day!

So this arrived in my in-box this morning:

"Agent/broker training for the Federally-facilitated Marketplace (FFM) is now available.

All training will occur online. ... The certification is a two-step process, with the first step now available, the training.  The second part of the process is completing the agent/broker registration, which will be available later in August. At that time, agents/brokers will be able to obtain an active FFM User ID by completing an online identity verification."

After successfully completing the process outlined above - which we are advised will take over 4 hours - we will be made privy to "the Individual and/or the SHOP Marketplace Agreements."

That is, only after investing valuable time in "training" will we be allowed to see what our own responsibilities and boundaries will be. Oh, and we'll also (eventually) receive certificates (suitable for framing!) and confirmation of our "active FFM User ID," after we've completed an  "online identity verification."

Which last, by the way, is something which apparently will not apply to Navigators.

Doesn't that make you feel all warm and fuzzy?

Maryland's strategy to ensure low cost insurance in their Exchange?

Reuters reported on August 2 that Aetna Inc will pull out of Maryland's health insurance exchange under ACA.  Apparently that's after the state told Aetna to lower its proposed 2014 rates by up to 29 percent.

Which reminds me - I  was a bartender at Busch Stadium back in the late 60's.  One oppressively hot St Louis afternoon we ran out of beer.  (Not for long, but we did run out.)  A thirsty fan asked me how much for a beer.  I told him we were temporarily out.  He then insisted to know how much for a beer.  I told him "Mister it's free.  We give it away whenever we run out."

Is that Maryland's strategy too?   Let's see how that works.  

Meanwhile, I think I hear two trains coming this way.  Don't you?

Me, too

Color me shocked:



"I'll offer a perspective as a federal employee myself and a federal employee at the IRS ...  we have right now as employees of the government, of the IRS, affordable health care coverage ... you're probably in a better position to stick with that coverage than go through the change of moving into [the ObamaTax]"

Ditto here, Mr Werfel.

Well, maybe this one little bitty exemption won't hurt

"The White House has approved a deal that will exempt members of Congress and their staff from some of the provisions of the Affordable Care Act, Politico reported late Thursday [August 1] . . . the Office of Personnel Management now plans to rule that the government can continue to make a contribution to the health-care premiums of the lawmakers and their staff, [Politico] said, citing unnamed congressional sources and a White House official. "

And here.


Except of course that this is not just one little bitty exemption -  instead it joins the hundreds  of previous exemptions, exceptions, delays, interpretations, and political paybacks that this administration has made using the incredibly broad discretionary authority written into ACA - and enacted with not a single Republican vote in either the House or Senate.  

As we all learned in our high-school civics classes, America is a government of laws.

Sure it is.

Cavalcade of Risk #189: Call for submissions

R J Weiss hosts next week's Cav. Entries are due by Monday (the 5th).

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

You'll need to provide:

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

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

41%

Breaking news from the Ohio Department of Insurance!

Just wait, soon you will be hearing about how it doesn't take into account subsidies.

Metaphor of the Day

Via FoIB Holly R:

"New Website to Answer Obamacare Questions for Businesses Crashes on First Day"

Heh.

Genworth LTCi in the crosshairs

Genworth, one of the last remaining "players" in the Long Term Care insurance (LTCi) market, is about to drop the hammer on some of its long-time policyholders:

"We're conducting an intense, very broad and deep review of all aspects of our [long-term care] insurance business ... believe the company has to increase the price of products sold before 2002 to bring them closer to the break-even point"

Yikes!

Actually, this is far from unexpected, and arguably overdue: as we've seen over the years, the current long term pricing models just aren't sustainable. For one thing, too many folks have kept their policies (not a bad thing, per se, just that carriers count on a certain amount of attrition), so both claims and reserves continue to mount.

And, of course, as the LTCi business itself matures, it becomes more and more obvious that earlier plans were substantially under-priced. While that may have been a good deal for early adopters, over time it's a problem.

Which is not to say that the LTCi market is 'kaput;' indeed, more folks than ever seem to be taking a serious look at these plans. But it's important to keep in mind that, with few exceptions, rates will continue to climb for at least a while.

Aetna Touch-N-Go, and the Big Picture

A couple of days ago, we reported on Aetna's apparent change of heart regarding the sale of individual medical insurance here in Ohio. Today, they're back in the news:

"Aetna Inc. execs remain skeptical about how the [Obamaax] public exchanges will perform ... New and expanded private exchange programs could get off to a faster start"

There are three essential differences between the Public (FFE) and Private Exchange models:

First, only plans purchased on the Public Exchange will be eligible for subsidies (maybe: the subsidy rules keep changing);

Second, plans available on the Public Exchange are expected to have much smaller ("skinnier," in the vernacular) provider networks;

And third, fewer carriers are expected to participate in the Public Exchanges (limiting competition and choice).

It's that third item that's key: absent a robust marketplace, even subsidized plans are likely to remain out of the financial reach of many folks. That's due partly to premiums, and partly to plan design. The least expensive ObamaTax-compliant plans ("Bronze" level) have potential out-of-pocket maximums much higher than many plans available today, further exacerbating the (un)affordability issue.

If (when?) major players like Aetna take a pass on the Public version in favor of the Private, it will cause an even greater strain on the former's sustainability. The Private Exchange model, on the other hand, looks poised to be reasonably successful: for the most part, these will offer more choice (and thus competition) and better service.

Wait, what's that about service, Henry?

Well, it's like this: agents (you know, the folks who are trained and experienced in the actual business of health insurance) are effectively shut out of the Public Exchanges. But a lot of us have signed up for the Private Exchanges. So when a consumer needs an accurate, knowledgeable and credible answer, to where do you think he will turn?

On the other hand, we know that a lot of agents have already thrown in the towel (and/or are planning to do so in the near future), so that may not be a realistic assessment, either.

Yeah, I'm just full of warm fuzzies today.

Wednesday Potpourri

■ While you're busy planning that end-of-summer trip to Rome or London (or Istanbul, for that matter), you should know that your health insurance works a bit differently overseas. One way to help protect yourself is with a Travel Medical plan.

■ As if the ObamaTax train-wreck wasn't causing enough damage to the health care and insurance sectors, its broad "appeal" has rippled through the whole economy:

"This letter was written by the three of the nation's largest labor unions ... Right now, unless you and the Obama Administration enact an equitable fix, the ACA will shatter not only our hard-earned health benefits, but destroy the foundation of the 40-hour workweek that is the backbone of the American middle class."

Ooops.

■ Earlier this month, the (Evil) Employer Mandate was put (temporarily) on hold. Before we start singing and dancing for joy (Hi, Joy!), though, here's some sobering news. According to the Congressional Budget Office:

"The Obama administration's move to delay a mandate on businesses to provide health coverage will mean $12 billion in lost tax revenue and additional costs ... one million fewer people will get employer coverage in 2014 as a result of the postponement"

So we get higher costs and fewer people insured. Yup, sounds like a plan!

[Hat Tips to Holly R and Gail S]

Rakin' in the ObamaTax Bucks

As Patrick noted last week, the ObamaTax Medical Loss Ratio (MLR) provision seems to have been a wonderful gift to the health insurance industry:

"So, thanks to MLR, insurance companies took in an additional $50 Billion in 2012 and paid out $800 Million less in rebates"

Lest our readers think that this is an exaggeration, we learn today that at least one carrier, WellPoint, is making some serious coin off of the ObamaTax:

"[N]ewly minted CEO Joseph Swedish said the company expects a windfall of sorts from the [ObamaTax] — as much as $20 billion by 2016."

While that's only partially due to the MLR (other factors include increased market share and more folks buying coverage through the Exchanges), it's certainly looks to be "berry, berry good" for the folks at Blue Cross.

By the way, take a look at your renewal and let us know how well you're faring.

Insurance as a loss leader

It's often asked how long carriers will put up with low margins and tight regulations. It's not a very attractive market to be in right now. Unless insurance isn't your primary business. If you're a hospital or health system breaking even but driving more business to your facilities would be a good deal. Making an extra couple points on insurance operations would just be gravy.

Even better is having your competitors or taxpayors subsidize any loses while your hospital runs up charges.

Lucy (Peanuts fame) found working in Maryland

Lucy would be called an inflation-denier for her never-ending demand that it cost $0.05. Even today hocking life insurance she is set on five cents being the price. I have to wonder if officials in Maryland aren't giving their price setting just as little thought:

"The Maryland Insurance Administration is telling some carriers that want to sell coverage through its individual exchange program to make deep cuts in their premiums. "

"In the bare-bones, “bronze level” of coverage, for example, the monthly premium rates originally requested for a 25-year-old nonsmoker living in Baltimore ranged from $136 to $350.

The rates approved in that category of coverage range from $124 to $237.

The rate reductions demanded range from 1.1 percent for a QHP to be sold by a unit of Kaiser Permanente to 32 percent for a QHP to be sold be a unit of  UnitedHealth Group Inc." [emphasis added]

It is important to remember that if the actuaries for United are wrong they don't get to keep the money, it would go back to the policy holders; thus they don't have any incentive to be that far off.

I have to wonder where $237 came from. That doesn't sound far off for a healthy person policy today with maternity. Guaranteed issue with community rating and $350 even sounds aggressive. 

Gov tries to circumvent ACA in way HHS clearly tells employers not to

How sweet this would be if not for the inevitable consequences:

"Under a wrinkle that dates back to enactment of the law, members of Congress and thousands of their aides are required to get their coverage through new state-based markets known as insurance exchanges. But the law does not provide any obvious way for the federal government to continue paying its share of the premiums for the comprehensive coverage" 

Like any true Democrat, Rep Waxman doesn't think they should be bothered by any actual law.

Representative Henry A. Waxman, a California Democrat who helped write the 2010 law, said, “The federal government, as our employer, should provide the same contributions it makes to our current health plans.” 

HHS has made it very clear to the rest of us though that we dare not even consider such an arrangement.

"FAQS About Affordable Care Implementation (Part XI)” (FAQ) available here issued by the Departments of Labor, Health and Human Services (HHS), and the Treasury (collectively, the Agencies) on January 24, 2013 sends a clear message to employers that trying to escape ACA or other federal group health plan mandates by replacing their traditional insured or group health plans or policies with health reimbursement arrangements (HRAs) or other arrangements under which the employer agrees to provide a fixed defined contribution to be used to buy or reimburses employees for buying individual health insurance generally won’t pass legal muster.  The FAQ also indicates that employers sponsoring HRAs that only reimburse medical expenses, not individual health insurance premiums also need to review their arrangements to verify that those programs also comply with ACA and other applicable rules." [emphasis added]

It  has been prohibited to use Section 125 unreimbursed medical funds to reimburse insurance premiums. Outside those two mechanisms I'm not aware of any way to reimburse individuals for premiums and not run afoul of any other law. The one exception being giving them a raise and taking the tax it. Would love to see Congress pass out $10,000 raises to everyone and how that would go over.

The Rate Game

Patrick's post yesterday about small group renewal rates seems to have touched a nerve, and I think it's worthwhile spending some time on the whole "early renewal" issue. The premise of early renewal is that some groups may benefit from moving their renewal dates back from (say) early 2014 to late 2013. To that end, carriers have begun offering this service to existing groups.

Yesterday, Anthem sent me a list of my eligible groups, along with what they anticipate will happen to those groups' rates once community rating (and all the rest) kicks in.

As with Patrick's experience, some of my groups would actually see significant rate reductions come next year, while others would see substantial rate hikes. What became immediately obvious is that the "sicker" (and/or older) the group, the better they will fare come January 1. And, of course, the converse is also true.

As a practical matter, then, those sicker/older groups will most likely stay put, since they have nothing to gain from renewing early. But the healthier ones will most likely pull that trigger in an effort to stave off those hefty renewal rates for as long as possible.

And I'm just a very small fish in a very large pond. Imagine this scenario playing out across the country, with many (most?) of the sicker groups staying put, and the healthy ones renewing early. The practical - and obvious - result will be that rates for everyone will skyrocket as carriers seek to find a way to balance these competing forces. It's just not a sustainable model.

One of our commenters also observed, based on his own experience, that "this leads to healthier groups dropping out, and eventually the unhealthy groups are paying even more than they used to." And since the (Evil) Employer Mandate is currently on hiatus, there's really very little that can be done to stop this from happening.

Now, there is one potential reason for those older/sicker groups to take the plunge: Health Savings Accounts (HSAs). That's because, under the ObamaTax, these plans are effectively outlawed (or at least rendered much less effective) after this year. So depending on how important a given group deems its HSA to be, they may well consider keeping it (vs a lower premium) a good trade-off. We shall see.