Beaver State CO-OP Shuttering

Looks like Oregon's Health CO-OP's suit lawsuit against the Feds has come to naught. As co-blogger Patrick reported earlier this year:

"Oregon Co-op Health Republic has filed a $5 Billion dollar class action lawsuit on behalf of all of the insurers who didn't receive funding from the Risk Corridor program"

How'd that turn out?

Not so great:

"Oregon’s Health CO-OP will shut down at the end of this month after the company dramatically overestimated the amount of financial support it would receive from a federal program."

But hey, if you like your plan...

[Hat Tip: FoIB Catherine S]

ObamaCare Winning

For certain definitions of "winning:"

(Courtesy Fox News Research)

Methinks that Open Enrollment v4.0 will not be pretty.

[Hat Tip: FoIB Rich W]

ObamaTax subsidy news

FoIB Allison Bell has an excellent overview of proposed new IRS rules regarding employees who may qualify for subsidies. There's a lot of good stuff here, but I want to focus on two items that we'll call problematic:

First, regular readers know that subsidy calculations are, at best, a crapshoot. That is, very few (if any) people know what their next year's income is going to be with total accuracy. As we've noted time and again, Ouija boards lack dollar signs. So the Rocket Surgeons in DC© have decided to "to get tough about clawing back premium tax credits provided for taxpayers who appear to have "recklessly or intentionally" provided inaccurate information about how high their future income might be."

Heck of a lot of room for creative interpretation on their part, no? Perhaps if one just claimed there was no intention to overestimate?

And second, there's actually an appeals process for folks who believe they've been wrongly denied a subsidy, but it's apparently quite time consuming and as a result, "resolving eligibility appeals has been taking so long that key premium payment deadlines have passed."

So what's their solution?

This is pure genius: "Officials say they want to clear up those conflicts by giving a taxpayer who wins an eligibility appeal up to 120 days after the decision has been made to pay the taxpayer's share of the premium bill."

Are they not aware that the maximum grace period for folks buying subsidized coverage is only 90 days? How are they going to enforce this? It's almost as if they have no idea what they're doing.

Industry Kudos

This year's crop of National Underwriter Industry Elite Award winners has just been announced. As a past winner myself, I was pleased to see that (finally), other actual agents were included this year, including:

Leasha West, a retired Marine and successful agent who also runs a task force to help other vets, and Ron Alexander, who's worked to bring about significant marketing innovations. Brooklyn's David Simkowitz focuses on high net worth clients, and is also known for his willingness to mentor others.

Mazel tov, and welcome to the club!

MidWeek Potpourri

■ For the most part, "Limited Benefit" (aka MiniMed) plans have been verboten by the ObamaTax. Which is a shame, since they could serve a very vital service, such as Direct Primary Care supplements (among other uses). There may be some good news ahead, though:

"A federal appeals court says the U.S. Department of Health and Human Services has no authority under the Affordable Care Act to regulate how consumers use fixed indemnity health insurance"

This would seem to open the door, but I'm not holding my breath just yet. Time will tell whether or not this actually gains traction.

■ I'm not generally a fan of dental insurance, but dental health is still, well, health, so this item caught my eye:

"[R]esearchers have come up with a new kind of biomaterial that not only encourages the natural regeneration of teeth, but also might eliminate root canal procedures for good."

This may not be great news for dentists who count on root canals as significant portions of income (NTTAWWT), but seems promising for those of us who don't relish the thought of oral surgery.

■ Hard to believe, but it's been over 8 years since my mother passed away. At the time, I noted with gratitude the ceaseless efforts of hospice angels, er, caregivers. I couldn't imagine how draining - and, ultimately, rewarding - their work is, but (thanks to FoIB Holly R) the New Yorker gives us a glimpse:

"She sees her work as preparing a patient for the voyage he is about to take, and accompanying him partway down the road. She, like most hospice workers, feels that it is a privilege to spend time with the dying"

Angels among us.

Bites the dust

Connecticut joins the parade of failed Obamacare exchanges. Unexpectedly.

The reason?

"The move stems from an order, made Thursday, [June 30] that the company pay $13.4 million to the federal Centers for Medicare & Medicaid Services as part of the Affordable Care Act’s Risk Adjustment Program."

Even when Risk Adjustment works as designed . . . 

Still another 3000% Rate Decrease

This never gets old:



As we've previously mentioned, Grandmothered plans often renew mid-year (that is, not on January 1), and very few carriers acknowledge them as Special Open Enrollment triggers. In fact, here in my area, there are exactly two that do so, one of which is the current carrier, and the other doesn't offer any plans comparable to what this particular client currently has.

Ralph and Laura's plan is an HSA with a $3,000 deductible ($6,000 family max), currently running them $805 per month. Their renewal is a "modest" 17%, meaning their new premium will be $945 a month.

They have the option of "upgrading" to a new ObamaPlan, also HSA-compliant; unfortunately, the closest I could come has a $4,000 per person deductible (33% higher), and clocks in at a hefty $1,500 a month (a mere 60% higher than their renewal).

Think they'll bite?

#ObamaCareFail Unlucky Number 13

It's no surprise that ObamaPlan enrollment numbers continue to decline, but the sheer magnitude of that drop off is surely something to behold. Via the fine folks at HotAir, we learn that:

"Nearly 1.6 Million People Dropped Out Of Obamacare This Year"

That represents a 13% attrition rate from the less than 13 million suckers folks who signed up for subsidized plans so far this year.

And the best part?

"The pattern of attrition is not new, and has been seen each year"

Winning!

Friday LinkFest - UPDATED

[Scroll down for update]

■ First up, the folks at Employee Benefit News ask a rather interesting question:

"Should HSAs and 401(k)s be more closely linked?"

My first reaction was "what part of health savings account" did you not understand?" But then, when one thinks about it, it begins to make sense; after all, if one stays healthy and the account continues to grow, why wouldn't one wish to maximize the return on the excess amount?

And even with the ObamaTax train-wreck, the popularity of the underlying HSA-compliant plans continues to grow:

So, something to consider.

■ And thanks to FoIB Jeff M, we learn that it's not just enrollment in HSA's that's skyrocketing:

"It's Working: Blue Cross/Blue Shield Reports Heavy Obamacare Losses Across the Country"

Bending the cost curve down: How does it work?

■ And finally, via our friends at Consul Insurance, a tragic event raises some pretty interesting claims questions:

"Tesla’s Autopilot Has Its First Deadly Crash"

Apparently (and I hadn't really been following this), Tesla's Model S has the ultimate cruise control feature: an autopilot mode. Unfortunately it still has some rather, um, significant bugs to be worked out:

"Neither Autopilot nor the driver noticed the white side of the tractor trailer against a brightly lit sky, so the brake was not applied"

Seems like there would be a host of insurance-related issues here. The folks at Consul tell me these include "product liability, BI/PD, manufacturer vs operator, a bunch of issues to be settled."

Indeed.

■ UPDATE: Several months ago, we reported on a Special Event policy that Cleveland was requiring of the folks running the upcoming Republican convention:

"The city has hired a "risk consultant" (why not just say "broker?") to arrange for "a $10 million insurance policy, required under the terms of Cleveland's hosting of the convention."

Well, apparently even $10 million wasn't enough:

"A city of Cleveland panel on Wednesday authorized spending nearly $10 million to purchase $50 million in insurance to protect the city against claims during the Republican National Convention"

Apparently, still a bargain (or more likely: it is what it is).

Land o'Lincoln Lawsuit

InHealth may be the most recent Co-Op casualty, but it's not the one most recently in the news:

"A struggling Illinois health insurance co-op is suing the federal government, claiming it is being shortchanged $72.8 million in promised payments under the Affordable Care Act."

Land of Lincoln Health, headquartered out of The Windy City, is hoping to get the Feds to part with the cash in order to avoid InHealth's fate. My initial thought was "rotsa ruck with that," but it turns out that they may actually prevail.

Richard Mayhew works for an insurance carrier himself, and told me that "it [should] be a fairly easy win by spring 2018 as there is a permanent judgment fund appropriation to pay out fed court losses." As this was news to me, I reached out to him for some background and predictions, and he pointed me to a post he wrote at the end of last year:

"If I am understanding the argument correctly, PPACA tells HHS to pay, money is not appropriated, but the money is still owed, so the full faith and credit of the United States government comes into question if the government does not pay. Therefore, once insurers start suing when it is obvious that they will not be made whole for 2014 risk corridor payments, they’ll win easily in court and the government will pay."

Based on the history of this train-wreck, it's hard to disagree with this assessment, and I suspect that this will indeed come to pass. And he further notes that, while this is likely good news for large insurers, it's not necessarily so for smaller ones:

"Well capitalized insurers can wait years to get $100 million dollar payments while using other cash reserves to cover the degradation of the risk corridor account receivable on the balance sheet. However, waiting several years and using other reserves is not feasible for co-ops and other smaller start-ups and new entries to the insurance market."

There are at least 15 newer small/regional carriers that are primarily focused on the individual or small group health insurance market. They'll probably be fine in the short run, because 2014 was a surprise, but now there's a track record. So they've survived the initial shock, and are likely positioned to hang on for at least a few more years.

He also agrees with me that there'll likely be more co-ops down the tubes in the near future, with perhaps a handful or so left standing a year from now.

So, Thank You to Richard, and we'll leave you with a line from his December post that I believe is the best precis of the ObamaTax yet:

"In the long run, the insurers will be made whole, or at least the creditors of the insurers that folded will be made whole."

Think about that.

From the P&C Files: Halt (Production)!

This is interesting:

A few days after the Orlando nightclub terror attack, the TV show "The Last Ship" postponed its season premier because the plot involved a similar scenario. In this case, the episode was already "in the can" and could be shown at a later date.

But what if a production, drama or musical or whatever, was interrupted due to terrorist activity?

Thanks to FoIB Holly R, we have an answer:

"One of the music industry’s top insurers is extending its standard coverage to include a growing risk of performing live: terrorist attacks."

The carrier, New Jersey-based ProSight Specialty Insurance Group, will now begin "covering the cost of rescheduling shows if they are interrupted or canceled due to terrorism." And the best part? The cover will be included at no extra charge. There are the usual disclaimers and conditions, of course, but certainly better than the producers having to eat the entire cost of rescheduling venues and artists.

Be interesting to see if carriers in other, related fields follow suit.

IB In The News

Well this is nice:

The folks at PR Newswire have published a list of insurance-related sites that "do a good job with promoting and contributing to the conversation." There are only a handful of sites listed, and we're in the top two.

Very cool!

Friday Afternoon Dreams

I'll take "Wishful Thinking" for $400, Alex:

Settling for Life

We've written before about viaticals, which are generally used by folks with end-of-life financial needs. But there's another, related strategy called life settlements:

"The insured had a $300,000 term policy that was also at that end of the level premium paying period and conversion period. When he called his agent to drop the policy because he no longer needed the coverage, the agent said, “Before you do, let’s see if there could be value in the secondary market.”

That is, the client had no particular health issues, but no longer needed the plan. Since life insurance is property, it can generally be sold. In this case, the client saved the annual premium and picked up an easy $5,000.

Which sounds great, and far be it from me to pooh-pooh anyone coming into a windfall. But I also have some major reservations about mentioning this "secondary market." It's not that I have any particular ethical qualms; after all, it's my client's policy, so why should I care? It just feels ... weird to bring this up.

So I reached out to some colleagues for their thoughts; FoIB Brian D immediately pegged it for me:

"I also fear how it would be received. Would it poison the well right before finalizing a sale."

Exactly. Now, perhaps this makes sense after the application has been approved, as a way to help the client pick up some extra cash now that their new plan is in place. And to be fair, this may well be what the folks who wrote that article do, as well, but it's just not explicitly noted.

And full disclosure: here in Ohio, agents are allowed to help make, and receive compensation for, these arrangements.

Something to consider going forward.

Thursday Insurance Conundrum

Good question:

Waivin' in the wind

We've written before about group plans suspending spousal coverage, or applying a penalty to employees whose spouses have access to coverage through their own employers. It's a way to reduce overall health insurance spending, to be sure, but it comes with its own set of problems.

Over at Benefit News, Zack Pace takes a look at how this practice affects real people, and how it continues to grow:

Zack takes a page from our own experience, and writes about a young lady who's reached out to him for advice. It's compelling, disturbing, but quite insightful.

Recommended.

Potential Good Small Employer News

Yesterday, I met with a couple who own their own small business, and had recently hired their first employee. They wanted to offer health insurance, but really don't qualify for a group plan. Regardless, they wanted to do something to help out the young man and his family.

So we started looking at individual plans, and they asked if they could pay some of the premium. Time was, they could do this, but those days are long gone, thanks to The ObamaTax.

Of course, we can still do it the old-fashioned way, via salary bonus; that has its own set of issues, as well.

Now, there's some hopeful news out of DC:

"Members of the U.S. House of Representatives are getting ready to vote on H.R. 5447, a bill that could let small employers reimburse employees for individual health insurance premiums."

FoIB Allison Bell reports that the bill passed, by voice-vote, this morning.

Be interesting to see how much farther it gets.

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!]

Hotdoggin' it with Oscar

Almost three years ago, Bob wrote about the travails of a New York-based health insurance start-up called Oscar. The fledgling carrier's "hook" was to be an emphasis on telemedicine and consumerism.

Bob was understandably skeptical, noting that "if it delivers anywhere close to the promise, Oscar should run for public office."

So, how's the campaign going?

"Oscar has attracted 135,000 customers ... But for every dollar of premium Oscar collects in New York, the company is losing 15 cents. It lost $92 million in the state last year and another $39 million in the first three months of 2016"

Ooops.

On the bright side, Oscar's CEO 'gets' it:

“That’s not a sustainable position”

No kidding there, Mario.

So what seems to be the problem, not just with Oscar but others, such as InHealth? It's simple economics, really:

"[I]nsurers put prices on their plans that have turned out to be too low to make a profit."

No kidding. And, of course, there's increasing pressure on state departments of insurance to rein in double digit rate increases. Anyone who owned a car and needed to buy gas in the early 70's knows exactly how this'll turn out.

Monday Morning Linkage

■ We first noted the Institute for Clinical and Economic Review (ICER) back in May, noting how it so closely resembled the famed Independent Payment Advisory Board (aka Death Panel). Well, seems that the cat is now officially out of the bag as regards the insurance industry's subterfuge as implemented by this organization:

"In the wake of ridiculous Obamacare mandates, the insurance industry is under tremendous cost pressure to deny its customers access to expensive lifesaving drugs. But those insurance companies don’t want to take the public relations hit for denial of these drugs that cost billions in research and development to get to market"

Hence: ICER

■ It's almost become too easy taking shots at the 3000% rate decrease, but the hits just keep on coming:

"Health insurers are seeking steeper premium hikes in 2017 than in previous years ... The report offers the most comprehensive and alarming data so far about the premium costs that ObamaCare customers will see when they renew their coverage this fall."

Just in time for Open Enrollment.

Oh, and an election.

Hunh.

■ From the Lay Down With Dogs Department:

"A nonprofit health insurer in Maryland is suing the federal government to avoid more than $22 million in fees ... said it has been unfairly asked to pay millions of dollars — about one-quarter of its 2014 premiums revenue – under the law’s “risk adjustment” program"

That fine print'll kill ya, brah.

[Hat Tip: FoIB Holly R]