Author Archive | John Barrett

Humana CEO: Health insurance will go the way of pensions

The health care system of the future will likely come with fewer guarantees, said Bruce Broussard, CEO of Humana Inc.

  • In other words, rather than offering a health plan, employers will probably begin offering specified payments and telling their employees to buy their own insurance.
  •  “What happened to retirement is probably going to happen to health care,” Broussard told me Wednesday. The shift, from defined-benefit to defined-contribution plans, is exactly what happened when 401k retirement accounts replaced pensions.

Broussard figures that change will take a decade to kick in fully. Corporations will increasingly use wellness offerings, he said, to differentiate themselves in recruiting.

Questions that insurance companies already face, such as whether their customer is the employer or the individual, will be amplified. “Our role becomes a role around health more than just the financing of health care,” he said.

*Modified from a Cincinnati Business Courier article

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Obama Trims Details on Health Law as Exchange Cost Rises

  • The $1.3 trillion U.S. health-care system overhaul is getting more expensive and will initially accomplish less than intended.
  • Costs for a network of health-insurance exchanges, a core part of the Affordable Care Act, have swelled to $4.4 billion for fiscal 2012 and 2013 combined, and will reach $5.7 billion in 2014, according to the budget President Barack Obama yesterday sent to Congress. That spending would be more than double initial projections, even though less than half the 50 U.S. states are participating.

The unanticipated spending is a consequence of an ambitious timetable dictated by Congress and a complex new way of offering people medical coverage, say analysts, lobbyists and administration officials. Combine that with a majority of Republican governors declining to cooperate with a Democratic president and U.S. regulators are left grasping to get the 2010 health law up and running by a Jan. 1, 2014, deadline.

“Once you’re behind schedule, the way you solve problems is you write checks,” said Doug Holtz-Eakin, a former Congressional Budget Office director who is now president of the American Action Forum, which has opposed the health law.

  • For the areas that money can’t solve, the Obama administration is opting for delay. It temporarily backed off some provisions of the law, including restrictions on coverage for executives and a promise to offer small businesses greater choices of health plans.

The basic requirements of the health law must function by Jan. 1, even if all the bells and whistles aren’t complete, said Ron Pollack, executive director of Families USA, a consumer advocacy group that backs the overhaul.

Long-Term Strategy

“The Affordable Care Act is not a short term, temporary fix of America’s health-care system,” he said in an interview. “It’ll have long-term benefits, and so the administration clearly is making sure the most essential elements of the new law are effectively in place on a timely basis.”

Obama administration officials say the bulk of the health law will be up and running on time.

“There’s an awful lot to implement and we want to do it efficiently,” Ellen Murray, the assistant secretary for financial resources at the Health and Human Services Department, said in an interview. “It’s a big job, and we want to do it right.”

  • The government has warned that the exchanges, which are supposed to open in every state on Oct. 1, may not be easy for low-income people to navigate. In many states, people found to be eligible for Medicaid, the state-run program for the poor, will have to sign up through their state government instead of through the exchange.

Beyond Imagination

  • “It’s a lot more complicated than anybody imagined,” Joseph Antos, a health economist at the nonprofit American Enterprise Institute who advises the CBO, said by phone.

That’s because the federal government has been forced to build part or all of the exchanges in 34 states where governors or legislatures declined to do it themselves. The government expects to spend $1.5 billion this year on the federal exchange, Murray said.

In those states, connections between computer systems that run the federal exchange and state Medicaid programs are incomplete, said Caroline Pearson, a vice president at Avalere Health, a consulting firm based in Washington that is tracking exchange development.

The extra step required to sign up might discourage enrollment by low-income people, she said in an interview.

“You sort of always want to minimize the number of interactions you have to have in order to get people into the system,” Pearson said. These are “additional hurdles that could present a problem,” she said.

People Covered

  • The result is that the number of Americans projected to gain insurance from the law has already eroded, by at least 5 million people, to 27 million by 2017, the CBO said in February. In addition, as many as 8 million people will lose health-care plans now offered through their employers, almost three times more than the CBO initially projected.

The bulk of the Affordable Care Act relies on governors to build exchanges and expand Medicaid (USBOMDCA), the joint federal-state program for the poor. The law also required a myriad of regulations to be crafted and vetted by hospitals, insurers and other industry groups, all to be done within four years.

By comparison, President George W. Bush’s administration in 2003 was given three years by Congress to implement a new drug benefit in Medicare, a program whose scale is dwarfed by the health overhaul.

No Favors

“Congress did the administration absolutely no favors in setting the timetable,” said Neil Trautwein, vice president and employee benefits policy counsel at the National Retail Federation, a Washington-based lobbying group for retailers. “Because of a host of complications, the administration is behind in trying to catch up.”

For Obama that means delays. He’s pushing back a prohibition against companies giving their top executives better health plans than lower-ranking employees, and a requirement that they automatically enroll workers into the plans. Small businesses that had hoped to give their workers a choice of health plans in government-run marketplaces will instead have to choose one plan for their entire workforce.

A new program for states, called the Basic Health Program, won’t start until 2015, angering Obama’s allies. The Basic Health Plan was intended to be an option for states that want to cover more low-income people with a government health program, instead of private coverage sold through the exchanges. The provision was added to the law by Senator Maria Cantwell, a Washington Democrat, whose state operates a similar program and sought federal money to expand it.

Doing Triage

After the delay was announced in February, Cantwell threatened to oppose confirmation of an administrator for the U.S. Centers for Medicare and Medicaid Services, which is setting up exchanges. The senator questioned administration officials about the delay at three hearings, and won a letter on March 28 from Health and Human Services Secretary Kathleen Sebelius, promising to begin the program by 2015 and laying out a detailed timeline to set it up.

“It looks like what they’re doing is triage,” Holtz-Eakin said of the government. “If this isn’t going to work, forget it. If that’s not on time, forget it. Let’s get to the things that we can make work, and declare victory.”

*Modified from a Bloomberg.com article

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It’s easier to apply for green card than the Obamacare Application for new health exchanges

THE APPLICATION FOR THE NEW HEALTH EXCHANGES IS 21 PAGES, AND INCLUDES 61 PAGES OF INSTRUCTIONS

If you thought nothing could be more tedious than filling out your tax forms, just wait until you try to apply for health insurance through the Affordable Care Act’s new exchanges.

  • The draft of the paper application is 15 to 21 pages, depending on whether someone is applying individually or for their family. And the instructions for the application run no less than 61 pages. That’s nearly six times longer than the instructions for a green-card application.
  • The Department of Health and Human Services recently released the draft versions of the applications consumers will need to fill out in order to get insurance if they can’t get it through their employer or family. But while the point behind the law and the exchanges is to make it easier for Americans to get health insurance, some consumers are complaining that a major barrier now stands in their way: too much paperwork.
  • The forms bring to mind the IRS instructions for filing the 1040 tax form, which is 105 pages long. In fact, many of the questions have less to do with health matters than financial ones.
  • “It’s a lot of information that consumers are going to have to provide, and that could deter people from signing up,” says Laura Adams, senior insurance analyst at InsuranceQuotes.com.“That could be an issue for some people who don’t like paperwork. And who likes paperwork?”

“If you like IRS forms, you’re going to love this one,” says Ken Hoagland, chairman of Restore America’s Voice, a conservative organization that advocates for the repeal of the health-care law. “These are the kinds of things that are going to drive people crazy.”

Adding to the confusion from this new bureaucracy is that experts say most Americans are still largely in the dark about what the health-insurance exchanges — the new marketplaces for individual insurance stipulated by the health-reform law — even are. Though government officials are hurrying to set them up before open enrollment for 2014 begins this fall, a survey released today by InsuranceQuotes.com found that 90% of U.S. consumers don’t know that the exchanges open Oct. 1, and 22% said they thought the exchanges were already open now.

That lack of knowledge doesn’t bode well for how consumers will actually manage to sign up for insurance on their own, experts say — something they will have to do or else pay a penalty mandated by the health-reform law.

While the health reform law also provides for a support staff known as “Navigators” to help consumers sign up for insurance in the exchanges, experts worry that the Navigators will be overwhelmed with requests, and consumers who call their inundated phone lines will be stuck on hold for a while. “People won’t be able to get through,” Adams says. (Yesterday, HHS proposed training and ethics regulations for the Navigators, which don’t include specific provisions about answering phones in a timely fashion, but dictate that Navigators “will be fair and impartial and will be appropriately trained, and that they will provide services and information in a manner that is accessible.”)

Adams recommends that consumers start the application process right away when the exchanges open in October, because as 2014 approaches, the deadline for when all Americans must have health insurance, the rush of last-minute applicants may bring the enrollment websites crashing down. “Our fear is that people are going to put it off til New Year’s Eve, and by then the sites will be overloaded and Navigators will be overloaded,” Adams says.

*Modified from a MarketWatch.com article

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Millions Could Get Surprise Tax Bills Under ‘Obamacare’ If They Don’t Accurately Project Their Income

WASHINGTON — Millions of people who take advantage of government subsidies to help buy health insurance next year could get stung by surprise tax bills if they don’t accurately project their income.

  • Health care providers, advocates and tax experts say the vast majority of Americans know very little about the new health care law, let alone the kind of detailed information many will need to navigate its system of subsidies and penalties.
  • The Patient Protection and Affordable Care Act (PPACA) will offer subsidies — advanced premium tax credits (APTC) — to help people buy private health insurance on state-based exchanges, if they don’t already get coverage through their employers. The subsidies are based on income. The lower your income, the bigger the subsidy.
  • The vast majority of taxpayers won’t actually receive the subsidies. Instead, the money will be paid directly to insurance companies and consumers will get the benefit in reduced premiums.
  • But the government doesn’t know how much money you’re going to make next year. And when you apply for the APTC subsidy, this fall, it won’t even know how much you’re making this year. So, unless you tell the government otherwise, it will rely on the best information it has: your 2012 tax return, filed this spring.
  • What happens if you or your spouse gets a raise and your family income goes up in 2014? You could end up with a bigger subsidy than you are entitled to. If that happens, the law says you have to pay back at least part of the money when you file your tax return in the spring of 2015.  That could result in smaller tax refunds or surprise tax bills for millions of middle-income families.
  •  A draft of the application for insurance asks people to project their 2014 income if their current income is not steady or if they expect it to change. The application runs 15 pages for a three-person family, but nowhere does it warn people that they may have to repay part of the subsidy if their income increases.
  • The subsidies, which are technically tax credits because they are administered through the tax code, will help low- and middle-income families buy health insurance through the state-based exchanges.
  • The subsidies are available to families with incomes up to 400 percent of the poverty level. This year, four times the poverty level is about $62,000 for a two-person family. For a family of four, it’s $94,200.
  • If families get bigger subsidies than they are entitled to under the law, the amount they have to repay is capped, based on income and family size. If they get less than they qualify for under the law, the government will pay them the difference in the form of a tax refund.
  • “It’s potentially going to come as a shock to individuals who meet that criteria where their income hits a point where they owe money back,” said Rep. Charles Boustany, R-La., chairman of the House Ways and Means oversight subcommittee. “The fact is, with variations in income, people could end up owing money back and that will create consternation and problems for them.”

There are four thresholds for repaying the subsidies:

  1. A family of four making less than $47,000 would have to repay a maximum of $600.
  2. If the same family makes between $47,000 and $70,000, the amount they have to repay is capped at $1,500.
  3. If the same family makes between $70,000 and $94,200, the amount is capped at $2,500.
  4. Families making more than four times the poverty level have to repay the entire subsidy.

*Modified from a LifeHealthPro.com article

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Little hope seen for millions priced out of health overhaul

Millions of Americans will be priced out of health insurance under President Barack Obama’s healthcare overhaul because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers, a leading healthcare advocacy group said on Tuesday.

  • In its rule making, or final interpretation of the law, the IRS said affordability should be based strictly on individual coverage costs.
  • Tax credits are a key component of the law and the White House has said the credits, averaging about $4,000 apiece, will help about 18 million individuals and families pay for health insurance once the Affordable Care Act takes full effect, beginning in January 2014.
  • The tax credits are geared toward low and middle-income Americans who do not have access to affordable health insurance coverage through an employer. The law specifies that employer-sponsored insurance is affordable so long as a worker’s share of the premium does not exceed 9.5 percent of the worker’s household income.
  • That means that, even if family coverage through an employer-based plan far exceeds the 9.5 percent cutoff, workers would not be eligible for the tax credits to help buy insurance for children or non-working dependents.
  • “It could mean the difference between being able to move in to purchasing private insurance and not purchasing private insurance.

“It’s an issue. It needs to be fixed,” Ron Pollack, executive director of Families USA, an influential healthcare advocacy group said on Tuesday, referring to what he called “the family glitch problem.”

“The tax credit subsidies are a game changer. They will help make health coverage affordable for huge numbers of uninsured families who would have been priced out of the health coverage and care they need,” Pollack said.

Speaking after the call, Families USA health policy director Kathleen Stoll told Reuters recent studies showed that anywhere between 2 million and 4 million people across the United States would be adversely affected by the federal rule limiting aid and the IRS interpretation of whether an employer’s health plan is affordable.

 

*Modified from a Reuters article

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Health Insurers Warn on Premiums

  • Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation’s biggest firm projecting that rates could more than double for some consumers buying their own plans.
  • In a private presentation to brokers late last month, UnitedHealth Group Inc., the nation’s largest carrier, said premiums for some consumers buying their own plans could go up as much as 116%, and small-business rates as much as 25% to 50%
  • Other carriers have also projected steep rate increases during private meetings and conversations with brokers. Brokers say they are being told to prepare the marketplace for small-business and individual rate increases as carriers get ready to file specific rate proposals and plan designs with regulators.
  • An official with Blue Cross & Blue Shield of North Carolina told a gathering of brokers last week that individual premiums could go up by as much as 40% to 50%, according to brokers who were present.
  • Aetna Inc., in a presentation last fall to its national broker advisory council, suggested rates on individual plans not being grandfathered under the law could go up 55%, on average, and gave a figure of 29% for small business rates.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year—a subject of rigorous debate.

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law.

The projected increases are at odds with what the Obama Administration says consumers should be expecting overall in terms of cost. The Department of Health and Human Services says that the law will “make health-care coverage more affordable and accessible,” pointing to a 2009 analysis by the Congressional Budget Office that says average individual premiums, on an apples-to-apples basis, would be lower.

The gulf between the pricing talk from some insurers and the government projections suggests how complicated the law’s effects will be. Carriers will be filing proposed prices with regulators over the next few months.

Part of the murkiness stems from the role of government subsidies. Federal subsidies under the health law will help lower-income consumers defray costs, but they are generally not included in insurers’ premium projections. Many consumers will be getting more generous plans because of new requirements in the law. The effects of the law will vary widely, and insurers and other analysts agree that some consumers and small businesses will likely see premiums go down.

Starting next year, the law will block insurers from refusing to sell coverage or setting premiums based on people’s health histories, and will reduce their ability to set rates based on age. That can raise coverage prices for younger, healthier consumers, while reining them in for older, sicker ones. The rules can also affect small businesses, which sometimes pay premiums tied to employees’ health status and claims history.

The law’s 2014 effect on larger companies is likely to be more limited. Many of the big changes coming next year won’t touch them as directly as individual consumers and small businesses, though some will have to grapple with the cost of covering more workers or paying a penalty.

The possibility of higher premiums has become the latest focal point of the political tussle over the health law, which marks its third anniversary Saturday. Republican lawmakers have held hearings on the issue, and six GOP members of the House Energy and Commerce committee wrote last week to more than a dozen insurers asking them to turn over internal analyses on the law’s impact on premiums and costs.

The insurance industry has also been talking publicly about big potential premium increases in lobbying for tweaks to the law.

The individual market includes about 15 million people, and around 18% of the roughly 149 million with employer coverage were at small companies, according to 2011 figures from the Kaiser Family Foundation. The individual market is expected to grow to around 35 million people by 2016 as a result of the law.

. The company said the estimates were driven in part by growing medical costs not directly tied to the law. It also cited the law’s requirements that health status not affect rates and that plans include certain minimum benefits and limits to out-of-pocket charges, among other things.

Jeff Alter, who leads UnitedHealth’s employer and individual insurance business, said the numbers represented a “high-end scenario,” not an average. “There are some scenarios in which a member could see as much as a 116% increase or over,” he said, though others, such as some older consumers, could see decreases. He said the company dwelled on the possible increases because it was trying to prepare brokers to speak with clients facing big jumps.

Insurers are “not being shy that premiums are going to increase in 2014,” and are urging brokers to “brace our clients,” said John Lacy, vice president of group benefits at Bouchard Insurance, a brokerage in Clearwater, Fla. His firm has been hearing from carrier representatives that individual premiums in Florida could go up 35% to 50%, on average, and small-business rates around 30%, though it hopes to find strategies to blunt the impact.

There has long been debate, even among insurance experts, over how the law will affect premiums. Because the effect is likely to vary, different measurements can arrive at different conclusions. The CBO analysis cited by the administration determined that average premiums for consumers who buy their own coverage would be 14% to 20% lower because of the law—if the law didn’t change the types of plans they purchased.

But the CBO also suggested the law would lead to consumers buying more expensive plans, largely because it requires coverage to include certain benefits and limit charges such as deductibles. When this effect was taken into account, the average premiums would go up 10% to 13%, the agency said, though subsidies would ease the bite for most people. The agency also said small-business policies were likely to cost within a few percentage points of the amount they would have without the law.

Health and Human Services officials say competition among insurers, as well as provisions to limit their financial risk from attracting high-cost consumers, will exert downward pressure on premiums, and point to the tax subsidies that will limit many consumers’ costs.

Subsidies will be available on a sliding scale for people with incomes of up to four times the federal poverty level—currently $45,960 for a single person and $94,200 a year for a family of four. More than half of the 35 million people expected to be in the individual market by 2016 are likely to qualify for credits. People whose incomes are around the poverty level could see almost all of the cost of their insurance subsidized, while people at the upper end will get only a small discount toward their premiums.

*Modified from a WSJ article

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More Docs Plan to Retire Early

Six in 10 physicians said it is likely many of their colleagues will retire earlier than planned in the next 1 to 3 years.

Most physicians have a pessimistic outlook on the future of medicine, citing eroding autonomy and falling income, a survey of more than 600 doctors found.

  • Six in 10 physicians (62 percent) said it is likely many of their colleagues will retire earlier than planned in the next 1 to 3 years, a survey from Deloitte Center for Health Solutions found. That perception is uniform across age, gender, and specialty, it said.
  • Another 55 percent of surveyed doctors believe others will scale back hours because of the way medicine is changing, but the survey didn’t elaborate greatly on how it was changing. Three-quarters think the best and brightest may not consider a career in medicine, although that is an increase from the 2011 survey result of 69 percent.
  • A quarter of physicians would place new or additional limits on accepting Medicare patients if there were payment changes.

“Physicians recognize ‘the new normal’ will necessitate major changes in the profession that require them to practice in different settings as part of a larger organization that uses technologies and team-based models for consumer (patient) care,” the survey’s findings stated.

About two-thirds of the survey responders said they believe physicians and hospitals will become more integrated in coming years. In the last 2 years, 31 percent moved into a larger practice, results found. Nearly eight in 10 believe midlevel providers will play a larger role in directing primary care.

Four in 10 doctors reported their take-home pay decreased from 2011 to 2012, and more than half said the pay cut was 10 percent or less, according to Deloitte. Among physicians reporting a pay cut, four in 10 blame the Affordable Care Act (ACA), and 48 percent of all doctors believed their income would drop again in 2012 as a result of the health reform law.

Other findings:

26 percent believe Medicare’s sustainable growth rate formula will be repealed in the next 1 to 3 years
One in 10 believe medical liability reform will pass Congress in the next 1 to 3 years
55 percent of physicians believe the hospital-doctor relationship will suffer as admitting privileges are put at risk to comply with hospital standards of meaningful use
31 percent gave the U.S. healthcare system a favorable grade of “A or B” compared with 35 percent in 2011

Despite those pessimistic views, seven of 10 said they were satisfied about practicing medicine, although that number was lower for primary care providers and higher for younger age groups, the survey found. Dissatisfaction was attributed toward less time with patients, long hours, and dealing with Medicare, Medicaid, and government regulations.

Speaking of the ACA, fewer physicians (38 percent in 2012) believe the ACA is a step in the wrong direction compared with 44 percent in 2011. The number who think the law is a good place to start remained the same.

Two-thirds of physicians in the Deloitte survey say they use an electronic health record (EHR) that meets meaningful use stage 1 requirements, but that number has been lower in other surveys. Three in 5 respondents were satisfied with their EHR.

Deloitte mailed the survey to more than 20,000 physicians selected from the American Medical Association’s master file. Just 613 returned completed surveys, giving a margin of error of 3.9 percent at the 0.95 confidence level.

*Modified from an EveryDay.com article

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Obama Administration Plans to Cut Medicare Advantage Reimbursements

The Obama administration is planning new cuts to Medicare, a federal regulatory filing reveals, cuts that could mean higher premiums or seniors losing their coverage altogether.

  • In a Feb. 15 regulatory filing, the Centers for Medicare and Medicaid Services (CMS) announced the surprised rate cuts of 2.3 percent – meaning it would pay health care providers 2.3 percent less for providing services to patients.
  • The Obama administration already plans to cut the Medicare Advantage program by $200 billion as part of Obamacare. However, the proposed reductions it announced in February are new, and will cut the program in addition to the planned $200 billion in Obamacare cuts, most of which are delayed in 2014.
  • The new cuts are also scheduled to go into effect in 2014, but as a function of the normal rate-setting process for that year, not a political effort to delay financial pain for seniors past an important election, as apparently was the case with the original Medicare cuts that Obama signed.
  • If the Obama administration continues with its proposed new Medicare cuts, some or all of the 14 million seniors who get health care through the MA program could be negatively affected, that is, paying higher premiums or possibly losing coverage.
  • One health insurance provider told its shareholders that the proposed rate cuts could mean the end of Medicare Advantage all together.

The new cuts come in the form of a planned reduction in the reimbursement rates the government pays to insurance companies that operate Medicare Advantage plans, which are services administered by private for-profit or non-profit providers that offer additional services than can be found in traditional Medicare.

CMS said it was cutting payments because it foresaw the overall costs of the Medicare Advantage program shrinking by 3.2 percent, despite the fact that health care costs – the driver of all federal health care program costs – are only rising.

Medicare Advantage is like traditional Medicare except that its plans are administered by insurance companies, who are paid a per-enrollee reimbursement fee by the government. If insurance companies can provide care to seniors at less than what the government pays them for it, they make a profit.

Medicare Advantage provides coverage for approximately 28 percent of all Medicare beneficiaries, offering them higher-quality services and additional benefits, such as vision and dental care, than the traditional government program at slightly higher cost.

In its regulatory announcement, the CMS said it was assuming that reimbursement payments in traditional, government-run Medicare will be cut, and cited that as justification for cutting Medicare Advantage.

However, while those cuts to traditional Medicare have been set into law for more than a decade, Congress has never allowed them to happen, instituting what is known as the Doc Fix every year, to keep reimbursement payments the same.

Senator Marco Rubio (R-Fla.) wrote to the CMS urging them to consider political reality and reverse their planned Medicare Advantage cuts.

“This assumption is highly problematic because – even though it almost certainly will turn out to be wrong – it translates into lower funding to support the health benefits of the 14 million Medicare beneficiaries who are currently enrolled in MA [Medicare Advantage] plans,” Rubio wrote on March 8.

This is because the proposed cut could make the program unprofitable for insurers, who would be forced to either stop offering MA plans or pass the increased costs on to seniors in the form of higher premiums.

“There are going to be some markets that at these rates, if they go the way they’re going, it’s going to be very hard for Medicare Advantage to survive,” Universal American Corp CEO Richard Barasch said in a February 19 conference call with shareholders, the industry publication Health Plan Week reported.

“I think it’s going to be sort of a market-by-market, company-by-company exercise,” Barasch said.

*Modified from a CNSNews.com article

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California Suspends the Pre-Existing Condition Plan Enrollment Due To Lack Of Federal Funding

Following federal direction, received on February 15, 2013 California PCIP will suspend new enrollments.

PCIP helps uninsured individuals with pre-existing conditions get affordable health insurance. The program has a limited amount of funding from Congress. Based on national experience and trends since the program began, PCIP enrollees have serious and expensive illnesses with significant and immediate health care needs. This enrollment suspension will help ensure that funds are available for existing PCIP subscribers through 2013.

  • Applications received after March 2, 2013, will be screened for eligibility for the Major Risk Medical Insurance Plan (MRMIP). MRMIP, the state high risk pool is still open for new enrollment and available for individuals with a pre-existing condition. The application is for both programs.
  • PCIP subscribers moving to California from another state, can still enroll in California PCIP.

Current PCIP subscribers are not affected by this change. However, subscribers need to pay their monthly PCIP premiums by the due date and continue to meet all eligibility requirements. Members who are disenrolled cannot be re-enrolled.

This program is administered by the Managed Risk Medical Insurance Board (MRMIB) as a contractor to the federal Department of Health and Human Services.

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Obamacare Insurance Plans Will Be Bare Bones — And Expensive

There’s mounting evidence that come fall, the health plans sold through the Obamacare exchanges will be bare bones affairs – with narrow networks of providers to select from, and heavy co-insurance once patients go “out of network.”

In many ways these plans will be a throwback to insurance schemes of the late 1990s, when managed care was dominant and restrictive networks standard fare. With one difference: The Obamacare plans won’t be cheap.

Quality of coverage is just one issue. Price is the other. There’s mounting evidence that even though the new health coverage will be austere, it’ll still be pricey.

Health plans have ample incentives to price the Obamacare coverage high, which is precisely what they’re likely to do.

  • For one thing, insurers will want to protect against the risk that individuals entering the exchanges are those who most need health insurance because of pre-existing illness. If this sort of “adverse selection” occurs, it will raise costs to insurers. To guard against this, insurers are likely to price the coverage at a premium.
  • Second, health plans want to reduce uncertainty around how all the risk-sharing provisions in Obamacare will eventually play out. The legislation puts in place mechanisms that forces Washington to share with health plans some of the cost of the covering the sickest beneficiaries. But the regulations outlining these parameters were only released last Friday. Nobody yet trusts how they’ll work.
  • Third, health insurers will want to reduce the incentive for employers to drop coverage and dump employees into the exchanges. This is especially true when it comes to insurers’ lucrative small group and large group segments. If insurers price the exchange products too low, they’ll give employers another inducement to do this sort of dropping. By pricing exchange products higher relative to the insurance offered in the private market, they reduce this incentive.
  • Finally, the providers that Obamacare plans must contract with are unlikely to offer significant price cuts to attract this volume. Since the Obamacare plans are likely to pay providers less than rates offered by standard private coverage (and maybe even less than Medicare rates) many doctors could also refuse to accept Obamacare, just like they refuse Medicaid. Or refuse to offer insurers discounts for these patients.

To mitigate uncertainty, plans will price their products high. Insurers know that any excess profits they earn will have to be paid back to the government, anyway (owing to caps that Obamacare places on how much profit health plans can earn). Health plans are better off aiming high, and owing money back, then getting underwater. After all, Washington takes away “excess” profits, but it doesn’t share in losses.

The architects of Obamacare designed the scheme without much thought to how its overlapping incentives would discourage competition on the price of the new coverage. Health plans will try to drive down costs by offering very narrow networks of providers that they can more easily control. It will be a race to the bottom to see which plan can offer the cheapest benefit, while still meeting minimum standards. But it won’t be a race to the bottom on price.

Plans have too many reasons to price their products cautiously, and not automatically pass along any cost savings to consumers.

If the Obamacare plans are priced higher than initial assumptions made by the Congressional Budget Office, it will burst the estimates placed on Obamacare’s total costs. It could also make these plans unappealing to consumers.

 
* Modified from a RealClearMarkets.com article by Scott Gottlieb

 

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