Archive | Employers Reaction to Bill

ObamaCare’s Secret Mandate Exemption

HHS quietly repeals the individual purchase rule for two more years.

ObamaCare’s implementers continue to roam the battlefield and shoot their own wounded, and the latest casualty is the core of the Affordable Care Act—the individual mandate. To wit, last week the Administration quietly excused millions of people from the requirement to purchase health insurance or else pay a tax penalty.

  • This latest political reconstruction has received zero media notice, and the Health and Human Services Department didn’t think the details were worth discussing in a conference call, press materials or fact sheet. Instead, the mandate suspension was buried in an unrelated rule that was meant to preserve some health plans that don’t comply with ObamaCare benefit and redistribution mandates. Our sources only noticed the change this week.
  • That seven-page technical bulletin includes a paragraph and footnote that casually mention that a rule in a separate December 2013 bulletin would be extended for two more years, until 2016. Lo and behold, it turns out this second rule, which was supposed to last for only a year, allows Americans whose coverage was cancelled to opt out of the mandate altogether.
  • In 2013, HHS decided that ObamaCare’s wave of policy terminations qualified as a “hardship” that entitled people to a special type of coverage designed for people under age 30 or a mandate exemption. HHS originally defined and reserved hardship exemptions for the truly down and out such as battered women, the evicted and bankrupts.
  • But amid the post-rollout political backlash, last week the agency created a new category: Now all you need to do is fill out a form attesting that your plan was cancelled and that you “believe that the plan options available in the [ObamaCare] Marketplace in your area are more expensive than your cancelled health insurance policy” or “you consider other available policies unaffordable.”
  • HHS is also trying to pre-empt the inevitable political blowback from the nasty 2015 tax surprise of fining the uninsured for being uninsured, which could help reopen ObamaCare if voters elect a Republican Senate this November. Keeping its mandate waiver secret for now is an attempt get past November and in the meantime sign up as many people as possible for government-subsidized health care.
  • Sources in the insurance industry are worried the regulatory loophole sets a mandate non-enforcement precedent, and they’re probably right. The longer it is not enforced, the less likely any President will enforce it.
  • This lax standard—no formula or hard test beyond a person’s belief—at least ostensibly requires proof such as an insurer termination notice. But people can also qualify for hardships for the unspecified nonreason that “you experienced another hardship in obtaining health insurance,” which only requires “documentation if possible.” And yet another waiver is available to those who say they are merely unable to afford coverage, regardless of their prior insurance. In a word, these shifting legal benchmarks offer an exemption to everyone who conceivably wants one.
  • Keep in mind that the White House argued at the Supreme Court that the individual mandate to buy insurance was indispensable to the law’s success, and President Obama continues to say he’d veto the bipartisan bills that would delay or repeal it. So why are ObamaCare liberals silently gutting their own creation now?
  • The answers are the implementation fiasco and politics. HHS revealed Tuesday that only 940,000 people signed up for an ObamaCare plan in February, bringing the total to about 4.2 million, well below the original 5.7 million projection. The predicted “surge” of young beneficiaries isn’t materializing even as the end-of-March deadline approaches, and enrollment decelerated in February.
  • Meanwhile, a McKinsey & Company survey reports that a mere 27% of people joining the exchanges were previously uninsured through February. The survey also found that about half of people who shopped for a plan but did not enroll said premiums were too expensive, even though 80% of this group qualify for subsidies. Some substantial share of the people ObamaCare is supposed to help say it is a bad financial value. You might even call it a hardship.
  • The larger point is that there have been so many unilateral executive waivers and delays that ObamaCare must be unrecognizable to its drafters, to the extent they ever knew what the law contained.

*Modified from a WSJ.com article

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“Junk” Health Plans and Other Obamacare Insurance Myths

Obamacare affects nearly all areas of health care, but the most disruptive provisions of the law affect insurance sold in the individual market. In 2013, at least 4.7 million policyholders across 31 states and the District of Columbia were notified that their current coverage was being discontinued. The number is likely even higher, since data were not available for 19 states.

  • Myth: The canceled health plans were “substandard” policies.
  • Myth: Before Obamacare, there were routine plan cancellations in the individual market.
  • Myth: Pre-existing condition exclusions were rampant before Obamacare.
  • Myth: Obamacare plans are “better” insurance.

Obamacare’s advocates claim that the law and its plethora of new insurance regulations were necessary to better protect consumers in this market. They discount the large disruption of coverage for millions of people by claiming that the plan cancellations were for “substandard” policies and that plans were routinely canceled in this market regardless of Obamacare. Further, they assert that the law will replace these plans with “better” insurance all of which is largely untrue.

  • Myth: The canceled health plans were “substandard” policies.

President Obama has repeatedly referred to the 4.7 million discontinued policies as “substandard.” When the President announced his administrative “fix” that attempted to allow those with canceled plans to keep their existing plans for another year, Senator Tom Harkin (D–IA) said he was still “concerned about people having policies which don’t do anything. They’re just junk policies.”

Typically, “substandard” refers to plans with limited benefits, which are commonly seen as inadequate because they do not protect against catastrophic costs. These types of plans typically cover routine care, but if there were a major medical event, they might pay only up to a certain amount before leaving the enrollee to pay the rest.

Obamacare gradually phased out these types of plans from 2010 to 2013—completely outlawing them by 2014—by prohibiting both annual and lifetime limits on coverage.

Limited-benefit plans are not nearly as prevalent in the individual market as they are portrayed to be. Of the nearly 16 million enrollees in the individual market in 2012, 725,710 individuals were enrolled in plans classified as limited-benefit plans, and slightly more than a million were in student health plans, which also typically have a limited benefit package. Thus, less than 11 percent of the individual market in 2012 had a plan that could reasonably be considered “substandard.”

Limited-benefit plans are mostly offered by employers in the group market. Indeed, of the temporary waivers received by over 4 million plan enrollees from the Obama Administration for Obamacare’s annual limit caps before they were completely phased out, only 3.7 percent were for individual market plans; the rest were given to enrollees in group market plans.

  • Myth: Before Obamacare, there were routine plan cancellations in the individual market.

Many Obamacare defenders blame the discontinued policies on “bad apple insurers,” claiming that it was typical in this market to have plan cancellations and that they are not a result of Obamacare.

For instance, former Obama Administration official Van Jones called the individual marketplace a “‘wild, wild west’ where people were denied coverage for pre-existing conditions and policyholders were continually dropped by insurers offering thin, sketchy coverage.” In addition, President Obama said, “Before the Affordable Care Act, the worst of these plans routinely dropped thousands of Americans every single year.”

But since the enactment of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), insurers have been broadly prohibited from canceling or refusing to renew coverage. One of the few exceptions to that prohibition is if an insurer discontinues a particular plan or type of coverage. In such cases, the insurer must provide the affected individuals the option to enroll in any other applicable coverage that the insurer offers.

That is largely what happened with the 4.7 million plan cancellations that were reported at the end of 2013. The insurers were discontinuing their pre-Obamacare plans and offering policyholders replacement coverage that complied with Obamacare’s wide variety of new mandates and regulations.

  •  Myth: Pre-existing condition exclusions were rampant before Obamacare.

Individuals being denied health insurance or kicked off their plans because of pre-existing medical conditions is often cited by defenders of Obamacare as justification for the law. The President has said that “up to half of all Americans have a preexisting condition.”

However, while the problem did exist, it was on a much smaller scale than depicted. The issue was in the individual market, where about 10 percent of the privately insured purchase coverage. In the group market, where about 90 percent of privately insured Americans are covered, the issue was mostly resolved by HIPAA.

Beginning in 2014, Obamacare enforced a blanket prohibition of pre-existing condition exclusions in the individual market. A consequence of this policy is that it incentivizes people to wait until they are sick to purchase coverage. Thus, the law also included an individual mandate to force all Americans to purchase health insurance or pay a tax penalty.

Since the provisions did not take affect right away, the law created the pre-existing conditions insurance plan (PCIP) to operate from 2010 to 2014. It funded new high-risk pools in each state to provide temporary coverage to those with pre-existing conditions.

The PCIP experience revealed that the number of individuals facing pre-existing condition exclusions was not nearly as large as it was portrayed. The Obama Administration initially estimated that 375,000 people would enroll in the PCIP by 2010, but the highest enrollment total ever to occur over the three-year period was in March 2013: almost 115,000, only about 30 percent of original projections.

  • Myth: Obamacare plans are “better” insurance.

Obamacare does indeed mandate a host of new benefits that every plan must cover and new rules that each insurer must follow, but the result is not just standardization and over-regulation of health insurance; it also increases costs, which is seen in premiums and cost-sharing levels.

For instance, the average deductible for a bronze plan in the 34 states with a federally facilitated exchange is $5,095 a year for an individual, and the average catastrophic plan carries an individual deductible of $6,346. Moreover, 42 states will see significant average premium increases—in many cases, over 100 percent—for individuals purchasing from the exchanges. Therefore, enrollees may not see “better” insurance for their money.

*Modified from a heirtage.org article

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Health insurance marketplaces signing up few uninsured Americans, surveys say

The new health insurance marketplaces appear to be making little headway so far in signing up Americans who lack health insurance, the Affordable Care Act’s central goal. A pair of surveys released on Thursday suggest that just one in 10 uninsured people who qualify for private health plans through the new marketplace have signed up for one — and that about half of uninsured adults has looked for information on the online exchanges or plans to look.

  • One of the surveys, by the consulting firm McKinsey & Co., shows that, of people who had signed up for coverage through the marketplaces by last month, just one-fourth described themselves as having been without insurance for most of the past year.
  •  The survey also attempted to gauge what has been another fuzzy matter: how many of the people actually have the insurance for which they signed up. Under federal rules, coverage begins only if someone has started to pay their monthly insurance premiums.
  • And, the survey show, that just over half of uninsured people said they had started to pay, compared with nearly nine in 10 of those signing up on the exchanges who said they were simply switching from one health plan to another.
  • The McKinsey survey, its fourth since late November to measure the behavior of Americans in the new insurance marketplaces, is based on a national sample of about 2,100 people. It shows that 27 percent of people who had bought coverage by early February had been uninsured, compared with 11 percent a month earlier.
  • McKinsey’s survey also includes people who bought insurance outside the new marketplaces. It defined uninsured people as those who qualify for private health plans sold through the exchanges. It does not include anyone who is uninsured and has an income low enough that they qualify for Medicaid, a public insurance program that is being expanded under the law in about half the states.
  • The McKinsey survey also found, as it had during the previous few months, that, of people who are uninsured and do not intend to get a health plan through the marketplaces, the biggest factor is that they believe they could not afford one.
  • The second survey, by researchers at the Urban Institute and based on slightly older data from December, shows that awareness of the new marketplaces is fairly widespread but that lower-income Americans and those who are uninsured are less likely to know about this new avenue to health coverage than other people.

“If there is one point to the law, it is to lower the number of uninsured,” said Larry Levitt, senior vice president of the Kaiser Family Foundation, a health policy organization. “Ultimately, that has to happen for the law to be judged a success.”

With just over three weeks remaining in a six-month sign-up period, the question of how many uninsured people are gaining coverage so far is eluding both Obama administration officials and most of the private health plans being sold through the new marketplaces.

Inside the Department of Health and Human Services, staff analysts who have been producing monthly enrollment updates are confronted with a major hindrance to examining the question of people’s prior insurance status: the wording of the HealthCare.gov applications themselves.

The paper versions of applications, used by a small fraction of people who are signing up contain a multiple-choice question asking whether people in a household currently have insurance. “No” is one of the boxes people can check

However, the online application, used by most people to enroll, asks whether people want to apply for coverage but does not give them a place to indicate whether they have insurance now or have had it in the past. As a result, HHS analysts have no way of assessing how many of the online enrollees were uninsured n the past.

“We are a looking at a range of data sources to determine how many marketplace enrollees previously had coverage,” said Julie Bataille, director of the Office of Communication in the Centers for Medicare and Medicaid Services, the HHS agency overseeing the insurance marketplaces. “Previous insurance coverage is an important metric, and we hope to have additional information in the future.”

In the absence of information from people who have enrolled, Obama administration officials have drawn attention to recent outside polls, which suggest that the overall number of uninsured Americans is declining. It is not clear, however, whether the trend is because of the health-care law or other reasons.

So far, of 14 states that are operating their own insurance exchanges, instead of relying on the federal one, only New York has given any indication about how many uninsured people are signing up. Last month, the NY State of Health, the state’s marketplace, reported that 70 percent of the half-million people who had enrolled since it opened in October were uninsured at the time they signed up.

*Modified from a Washingtonpost.com article

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Rising Premiums May Hit Small Firms

Report Predicts 65% Will Pay More for Health Insurance. A federal actuarial report predicts that 65% of small businesses will see their health-insurance premiums increase under part of the Affordable Care Act.

  • The report, from the Centers for Medicare and Medicaid Services Office of the Actuary, is the latest piece of bad news for the president’s signature domestic achievement. The report analyzed employers with 50 or fewer full-time employees that buy outside insurance policies for workers, a group it estimated at 17 million people in 2012.
  • The report concluded that about 65% of small businesses, or plans covering 11 million people, would see an increase in insurance premiums under these so-called community-rating provisions of the health law. About 35% of employers would see a decrease for plans covering six million people. These employers aren’t required to pay a penalty under the federal health law if they don’t insure workers.
  • The report didn’t estimate by how much premiums would increase or decrease for the groups. It also didn’t take into account other parts of the health law that impact the cost of plans, such as tax credits that small businesses are eligible for if they offer insurance.
  • In 2009, before the Affordable Care Act passed, the Congressional Budget Office estimated that most small businesses wouldn’t see a big impact on premiums from the proposed health law. It projected a rise of 1% to a reduction of 2% in premiums for small employers in 2016 when the law was fully implemented.
  • Indeed, the impact on premiums for small employers under the health law for 2014 hasn’t been fully seen. Many employers renewed existing plans early, and about half of states allowed insurance policy extensions under pre-health law rules, according to the CMS report. The report also noted “there is a rather large degree of uncertainty associated with this estimate.”
  • Additionally, the report said small businesses with healthier-than-average employees were more likely to offer health insurance before 2014 and were paying below-average premiums.
  • In November, the Obama administration delayed the online enrollment for small businesses though healthcare.gov for a year. Small businesses that want to participate in the federal small business exchange need to enroll directly through an insurance company or use an agent or broker. This exchange is available for small businesses with 100 or fewer employees.

*Modified from a WSJ.com article

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Some Small Firms See Little Relief in Latest Health-Law Delay

Small and midsize businesses stand to benefit the most from the latest delay in the health law’s employer insurance requirement. The Obama administration delayed that requirement until 2016 for companies with 50 to 99 full-time workers.

A New Your proprietor of a produce and grain farm last year rearranged her employees’ schedules and workloads to keep the farm’s full-time staff below 50 workers. Her goal was to avoid having to start providing insurance or pay a penalty in 2015 under the Affordable Care Act.

Ms. Pedersen, who owns Pedersen Farms with her husband Rick Pedersen, said she doesn’t plan to hire more workers since it would create an administrative burden for eventually complying with the law. “We’re going to continue to stay under the 50 people,” she said.

President Barack Obama on Tuesday said the administration adjusted the employer insurance requirement to ensure midsize companies had time to comply with it.

“We want to make sure that the purpose of the law is not to punish them, it’s simply to make sure that they are either providing health insurance to their [employees] or that they’re helping to bear the cost of their employees getting health insurance,” he said.

Health-benefits experts said the change will help small and midsize companies by giving them more time to research coverage options and costs. But several small businesses said Tuesday that the extra time offered only minimal relief.

“All it’s doing is delaying the ultimate for another 12 months,” said Tim Copeland, co-owner of Copeland Furniture Inc., a manufacturer in Bradford, Vt., with 95 employees.

Though his company offers insurance coverage to its full-time staff, he said he would consider dropping the benefit if the penalty were to be substantially less and if the Vermont exchange could provide his employees with comparable coverage. He is hopeful that won’t be necessary. But premiums for his business, a maker of residential hardwood furniture since 1977, rose by about 5% last year, and in 2012 premiums jumped 30%, he said.

Originally the 2010 health law called for employers with the equivalent of at least 50 full-time workers to offer coverage or pay a penalty starting at $2,000 a worker in 2014. The administration delayed the requirement last year for the first time by moving it to 2015.

David Moyal, owner of a commercial printing company in New York, cheered the delay. “It’s great news,” said the entrepreneur, whose 70-employee company, 1800postcards.com Inc., offers a health plan but doesn’t contribute any money toward premiums. “We’ve been hiring a lot of people lately, so this is amazing.”

Mr. Moyal said his 22-year-old business, with $11 million in annual revenue, can’t afford the cost of health insurance. He’s now hoping the law’s employer mandate will be delayed again in two years or even canceled. Otherwise, he said, he would probably pay the penalty because he believes it would be more affordable for his business.

When asked whether the delay could be extended, a Treasury spokeswoman pointed to the fact sheet from the news release. The fact sheet issued Monday from the Treasury Department stated: “As these limited transition rules take effect, we will consider whether it is necessary to further extend any of them beyond 2015.”

In addition to the full reprieve for smaller companies, the administration also said Monday that larger companies could avoid some penalties in 2015 if they showed they were offering coverage to at least 70% of full-time workers.

Some 91% of employers with 50 to 199 workers already offer health benefits to their employees, according to a 2013 study from the Kaiser Family Foundation.

Paul Fronstin, director of health research for the Employee Benefit Research Institute in Washington, D.C., said small employers can use the extension to talk to workers about whether they would prefer a plan with high premiums and low deductibles or the opposite. “An employer should be collecting as much intelligence as they can,” he said, because this will help in estimating future health-care costs.

OperationsInc LLC, a human-resources outsourcing firm in Norwalk, Conn., has more than 800 clients, most with between 30 and 75 employees. While all offer employee health insurance, David Lewis, president of the firm, said about 25% wouldn’t be in compliance with the employer mandate if it were in effect today, either because they don’t offer enough coverage or they don’t contribute enough toward premiums. He’s telling clients to sit tight after the latest regulatory change “because we expect things will change yet again,” he said.

*Modified from a WSJ.com article

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Duke University: 44% of U.S. firms consider cutting health care to current workers

Adding to a devastating CBO report of how Obamacare could damage the economy, a Duke University survey of top companies found that 44 percent are considering reducing health benefits to current employees due to Obamacare, confirming the fears of millions of American workers.  The survey was initially released in December and re-released Wednesday to provide context to the CBO report.

  • In its December survey of chief financial officers around the country, Duke also found that nearly half are “reluctant to hire full-time employers because of the Affordable Care Act.”
  • And 40 percent are considering shifting to part-time workers and others will hire fewer workers of fire some to avoid the costs of the program.
  • What’s more, they said in the study, “One in five firms indicates they are likely to hire fewer employees, and another one in 10 may lay off current employees in response to the law.”
  • Without the law, the CFOs told Duke that they would hire more full-time workers. CFOs indicate that full-time employment growth would be stronger in the absence of the ACA.”
  • Duke University’s Fuqua School of Business Professor Campbell R. Harvey said that the school’s survey shows that the economic hit the CBO warned of will be worse.
  • “Our survey shows that the situation is much more serious because employers tell us that they will choose not to hire and may lay people off,” he said. “I doubt the advocates of this legislation anticipated the negative impact on employment. The impact on the real economy is astonishing. Nearly one-third of firms may either terminate employees or hire fewer people in the future as a direct result of ACA.”
  • His colleague John Graham said in a statement promoting the survey, “An unintended consequence of the Affordable Care Act will be a reduction in full-time employment growth in the United States.
  • Companies plan to increase full-time employment by 1.4 percent in 2014, a rate of growth which is down from last quarter and unlikely to put a dent in the unemployment rate, assuming that the labor force participation rate remains constant.

*Modified from a washingtonexaminer.com article.

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The ObamaCare Carnival of Perverse Incentives

With fewer glitches to deter them, millions of Americans are now logging on to the ObamaCare health-insurance-exchange websites or State exchanges such as Covered California.

  • When they get there, many are discovering some unpleasant surprises: The deductibles are higher than what most people are used to, the networks of doctors and hospitals are skimpier (in some cases much skimpier), and lifesaving drugs are often not on the insurers’ formularies.
  • Even after the government’s income-based subsidies are taken into account, the premiums are often higher than what people previously paid.
  •  Why is this happening? Because the new law gives insurance buyers and sellers perverse incentives to behave in ways that create these problems. Things will only get more out of whack as more and more unhealthy people enter a system designed to be paid for by premiums from healthy people.
  • Under the Affordable Care Act, the benefits insurers must offer are strictly regulated. The law piles on benefits for which everyone must have coverage, whether they could ever use the benefits or not. At the same time, insurers set their own premiums and choose their own networks of doctors and hospitals.
  • To keep premiums as low as possible, the insurers are offering very narrow networks, often leaving out the best doctors and the best hospitals.
  • In September, the Los Angeles Times reported that Blue Shield will have only about half the doctors in its exchange plan as it has in its traditional plan.
  •  The exchange health plans appear to care only about cost. They are offering low fees—sometimes even lower than the rock-bottom fees Medicaid pays health-care providers—and accepting only those providers who will take them.
  • Under the Affordable Care Act, insurers are required to charge the same premium rate to anyone who wants to sign up, regardless of health status; and they are required to accept anyone who applies. This means that to make ends meet they must overcharge the healthy and undercharge the sick.
  • It also means insurers have strong incentives to attract the healthy (on whom they make a profit) and avoid the sick (on whom they incur losses) by, in effect, making their plans less appealing to the sick.
  • Here’s how they seem to be doing it: In structuring the plans they offer on the exchanges, the insurers apparently assumed that the healthy will choose the plan they buy based on its price, while ignoring other features of the plan.
  • It makes sense: If I am healthy why wouldn’t I shop for the lowest price? If I later develop cancer, I can move to a plan that has the best cancer care. By law, these plans will be prohibited from charging me more than the premium paid by a healthy enrollee.
  •  Insurers also assume that people who already are ill or otherwise expect to use a lot of health care pay much closer attention to the cost of deductibles and which doctors and hospitals are in the insurer’s network.
  • To have any hope of balancing their books, insurers must then attract the maximum number of customers who are likely to stay healthy and thus not use so much of the care they paid for, while unhealthy people in effect use more than they paid for. This is why most plans are apparently designed to attract people willing to overlook high deductibles and less access to health care in return for lower premiums.
  • Yet no matter how narrow the provider network, health plans are going to cost more if they enroll more people with above-average health-care costs. And that is what is about to happen.
  • For some years, the federal government and some states have operated and subsidized risk pools. These allowed the chronically ill and other high-cost people who were “uninsurable” to purchase insurance for the same premium healthy people pay. Under ObamaCare, however, the pools are due to shut down and send their enrollees to the exchanges, where the above-average cost of their care will be implicitly borne by higher premiums charged to everyone enrolled in the plans.
  • To make matters worse, cities and towns with unfunded health-care commitments are getting ready to dump their retirees on the state exchanges. Since retirees are above-average age, they have above-average expected costs.
  • Then there are the job-lock employees—people who are working only to get health insurance because they are uninsurable in the individual market. Under ObamaCare, their incentive will be to quit their jobs and head to the exchanges.
  •  In sum: A lot of high-cost patients are about to enroll through the exchanges. This will force up premiums further for all other buyers.

*Modified for a WSJ.com article

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Look Out for the ACA’s ‘Double Whammy’

Some small businesses are facing a potential “double whammy” in 2016 from the Affordable Care Act, one expert warns. By 2016 the employer mandate will kick in for companies with between 50 and 100 employees, and they will be moved into the “Small Group Market” for insurance coverage.

  • While they are currently exempt from the employer mandate to provide insurance and not considered part of the “Small Group Market”, small businesses with between 50 and 100 employees will find that all that changes for the worse in 2016.
  • In the Small Group Market, insurers charge higher premiums, not least because, it’s cheaper to insure 200 people under a single contract than it is to insure 40 groups of five under 40 contracts, or 200 individuals.
  • By 2016, those with between 50 and 100 employees will be pushed into the Small Group, where the rates are higher. They need to think about it now, or they will be facing rate shock.
  • While the group had previously been for companies with 50 or fewer employees, the ACA raised the limit to 100 employees — though the increase was put off to 2016 because the law gave states the option to postpone, which they all took.
  • The reason they’re forcing these people into the Small Group Market is to expand the actuarial base and to absorb some of the expected losses. At the same time, Small Group premiums are likely to rise even more because of the benefit requirements in the ACA, which limit deductibles and don’t allow insurers to turn down those with pre-existing conditions.
  • Worse yet states may eventually merge the Small Group Market with the markets for individuals. If states don’t get the enrollment of young people that they expect [to make state insurance exchanges viable], then the likelihood of states combining the Small Group and individual markets will go up.
  • If the two are merged, premiums will likely rise even more. Among other things, individual deductibles tend to be higher, but the ACA caps deductibles.
  • These rules don’t apply to the Large Group Market – and to companies that are self-insured. Virtually every large company in the country is self-insured. They insure them themselves, but work through an insurance company.

*Modified from a benefitnews.com article

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Exchanges See Little Progress on Uninsured

Early signals suggest the majority of the 2.2 million people who sought to enroll in private insurance through new marketplaces through Dec. 28 were previously covered elsewhere, raising questions about how swiftly this part of the health overhaul will be able to make a significant dent in the number of uninsured.

  • Insurers, brokers and consultants estimate at least two-thirds of those consumers previously bought their own coverage or were enrolled in employer-backed plans.
  •  An Ohio-based insurance broker said he has dismantled about 50 small employer-backed plans, some of which are steering workers to the new marketplaces.
  • An insurance agency that enrolled around 7,500 people in exchange plans, said 65% of its enrollees had prior coverage. Around 10% were dropping out of employer coverage, either because the employer stopped offering its plan or because they could qualify for subsidies on the marketplaces. Fifteen percent had previous individual plans canceled, and 40% decided to switch into coverage bought through an exchange from previous individual plans.
  • The data, based on surveys of enrollees, are preliminary. But insurers say the tally of newly insured consumers is falling short of their expectations, a worrying trend for an industry looking to the law to expand the ranks of its customers.
  • Only 11% of consumers who bought new coverage under the law were previously uninsured, according to a McKinsey & Co. survey of consumers thought to be eligible for the health-law marketplaces. The result is based on a sampling of 4,563 consumers performed between November and January, of whom 389 had enrolled in new insurance.
  • One reason for people declining to purchase plans was affordability. That was cited by 52% of those who had shopped for a new plan but not purchased one in McKinsey’s most recent sampling, performed in January. Another common problem was technical challenges in buying the plans, which 30% mentioned.
  • At Michigan-based Priority Health, only 25% of more than 1,000 enrollees surveyed in plans that comply with the law were previously uninsured, said Joan Budden, chief marketing officer.
  • The trend underscores a central test for the health law, whose marketplaces are meant to steer a broad cross section of new paying customers to private insurers. “One of the intents of the law was to address the uninsured problem in our country,” said David M. Cordani, chief executive of insurer Cigna Corp. Cigna doesn’t yet know what coverage its health-marketplace enrollees previously held.
  • Many health plans and providers are looking for the expansion of coverage to fuel growth. Insurers need to draw healthy uninsured people to offset costs, given that plans can no longer deny coverage to people with pre-existing conditions.
  • Department of Health and Human Services officials have said they don’t yet know the number of people who have signed up for coverage through the exchanges who had insurance at the time of their enrollment.
  • The health law is chipping away at the number of uninsured consumers in other ways. At least four million people are expected to join Medicaid rolls in the coming months.
  • But so far, health-plan executives say, subsidies to buy insurance in the marketplace, and broader changes to the law, seem to be encouraging many already-insured people to seek better rates.
  • In addition, some small companies are cutting back on coverage now that their workers can buy through the marketplaces, insurers and brokers say.
  • At Priority Health, about 25% of health-law customers had employer-supported plans last year, Ms. Budden said, while 50% bought their own coverage last year. Of the latter group, about half are getting subsidies.
  • “I don’t know we’re growing the number of people with insurance here, so much as we’re just adding complexity,” said Geoff Bartsh, vice president for policy at Medica Health Plans in Minneapolis.
  • It isn’t surprising that some percent of new purchasers of private health insurance are people who had insurance before. About 66% of people buying new individual health plans in early 2011 were covered by employer-backed plans in late 2010, according to a Kaiser Family Foundation analysis of federal survey data prepared for The Wall Street Journal. About 20% of enrollees in early 2011 were previously uninsured, the analysis found.
  • There is “massive churn in the individual market, and always has been,” said Larry Levitt, senior vice president at Kaiser. “It wouldn’t surprise me if many [health-law enrollees] were insured in the last year,” he said, but “that doesn’t mean they wouldn’t have ended up uninsured if not for the exchanges.”

*Modified from a WSJ.com article

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Another Obamacare provision for employers delayed

The Obama administration plans to delay enforcement of yet another Obamacare provision, according to a New York Times report. This line in the law would ban employers from discriminating “in favor of highly compensated individuals” when it comes to health insurance eligibility or benefits. Effectively, the provision prevents employers from providing their top executives cushy health benefits while low-level employees are given less optimal health insurance options.

  • The IRS will not enforce the provision in 2014 because they simply haven’t yet gotten around to actually writing the regulations that employers must follow, even though the Affordable Care Act was signed into law almost four years ago.
  • Obamacare originally required the IRS to enforce the health benefit “discrimination” ban just six months after the law was passed in March 2010. The Obama administration announced in 2010 that officials needed more time to write the rules, but assured Americans that the regulations would be finalized before Obamacare actually launched.

Years later, the IRS appears to still be grappling with the same questions about implementing the provision. IRS spokeswoman Michelle Eldridge denied in a statement that the agency had approved any new delay.

  • “The IRS has not announced any new or additional information on this issue,” Eldridge said. “The New York Times story refers to IRS Notice 2011-1, which was released to the press on December 22, 2010. That Notice stated that under Public Health Service Act, Section 2716 will not apply until after generally applicable guidance is issued, because the statute requires regulatory detail in order to operate properly.”
  • IRS officials appear to be stymied by the “regulatory detail” of the provision. For the IRS to mandate non-discrimination in health plans for employees with different compensations, the agency must decide how to quantify the value of employer-provided health benefits, how to define “highly compensated officials” and issue a final determination on what constitutes discrimination.
  • The tax agency has a series of scenarios made complicated by Obamacare’s structure that it will have to take into consideration before issuing guidance. Some low-earning employees may opt out of employer-sponsored health insurance in favor of increased subsidies via an Obamacare exchange, for example, while higher executives that aren’t privy to taxpayer subsidies for coverage do not. The IRS has yet to determine whether that employer would be discriminating even if the employer health plan has the same value for all employees.
  • Obamacare’s prescription for violating the ban is a $100 daily excise tax for each individual that was “discriminated” against.

*Modified from a dailycaller.com article

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