CO-OPs: That flushing sound you hear...

Last month, we again noted that CO-OP's (Consumer Operated and Oriented Plans) were in financial trouble:

"[O]nly one Co-op, Maine Community Health Options, reported both favorable underwriting and net income at $10.9 million. All other Co-ops reported both underwriting and net losses"

As the saying goes "that which can't go on, won't." And so we find ourselves (unsurprisingly) at the edge of a cliff:

"Ominous signs are proliferating among 22 Obamacare health insurance co-ops of imminent financial collapses that could leave more than a million Americans without coverage"

So, while everyone's eyes are on SCOTUS, another major piece of The ObamaTax is facing its demise. And of course, that means all those taxpayer dollars down the terlit.

And just how many tax dollars?

Well:

"[A]n Obamacare co-op that defaulted earlier this year, suffering $163 million in operating losses in a single year ... net losses for the co-ops reached a record $614 million in 2014"

Yes, yes: petty cash to the DC bureauweenies, but actual, hard earned dollars to thee and me.

What's particularly troubling is that "[t]he figure is nearly three times the $234 million in losses suffered through the first three quarters of 2014 ... It means that the burn rate for the experimental Obamacare co-ops is quickening."

Maybe that's a good thing, though: the faster it burns up, the sooner we can start having a serious discussion about alternatives (and reality).

Narrowly Framing LTCi (Part 1)

Our good friend David Williams has written a blistering review of a recent WSJ article on why people aren't buying Long Term Care insurance (LTCi). Before addressing his concerns, I'll offer my own thoughts on the piece:

■ Based on the results of their study, Drs Olivia Mitchell and Daniel Gottlieb "found that many people regard long-term-care insurance as having no real value if ultimately the payouts aren’t needed.”

It's said that people rarely buy insurance: it must be sold (to them). This would certainly hold true regarding LTCi; as agents, we do a terrible job of selling it, which seems to validate this particular conclusion.

■ The article goes on to note that "instead of looking at long-term-care insurance primarily as financial protection, many people think of it as an investment—and a bad one at that." And they're right, of course: it is a terrible investment. But then, a dump truck is a lousy commuter vehicle, and my oven does a terrible job of washing my dishes (well, there was this one time I inadvertently left a plate in on the "self-clean" cycle, but that's another story).

Insurance is a risk-management tool, not an investment. No one expects to make a profit on their homeowner’s policy, either, but we still insure our homes. That's because, as David points out, the downside of a catastrophic loss far outweighs the cost of a policy.

■ The real meat of the article, though, and the part with which David seems most frustrated, is this:

"[O]ur research suggests that some consumers’ rejection of long-term-care insurance is based on what psychologists call “narrow framing,” or people’s tendency to exclude key factors when making decisions."

As the authors point out, this is often the case when faced with making a decision about something as complicated as LTCi. It is much easier to convince oneself that "if I can't understand it, I must not really need it." Something about "the path of least resistance" comes to mind.

Where I think the conclusions fall apart is this rather innocuous-sounding sentence: "[W]e believe that insurers could better position their products in the marketplace by providing more information to consumers regarding the high probability of needing care, and the high costs of such care."

Bullcrap.

For one thing, we already do that: look at any product brochure or marketing piece, and the stats are right there in big bold letters, charts and graphs. It seems to me that piling on would simply reinforce the "narrow framer" mindset.

The authors do get this one right: "focus more marketing toward adult children whose parents will likely require nursing-home care;" the idea being that they will pay for their parents’ policy as a means of preserving their parents' estate (and thus their own inheritance). The problem with this strategy is that you still have to get the parents' buy-in, and who's to say that they're not "narrow framers" themselves?

Finally, the article suggests that insurers should "emphasize policies that provide benefits in addition to protection for long-term-care costs. For example, more policies could include retirement income payouts or life insurance"

This skirts the issue, because the more benefits you throw on a plan, the more expensive it's going to be (whether broken out as riders or simply "baked into the cake"). Making LTCi more expensive seems counter-productive.

Interestingly, the article fails to mention one of the most valuable, easily understood benefits of LTCi, one which addresses pretty much all of their concerns: the Partnership Program. Pointing out that a properly constructed plan will help keep the Medicaid folks at bay makes for a very compelling argument that even "narrow framers" would find hard to resist.

Okay, so that's the WSJ; what about our friend David? Well, seeing as how this post is up to almost 700 words already, click here for Part 2.

UPDATE: David has graciously linked back to this post. Thanks, David!

Promises, Promises

If you like your health insurance plan you can keep your health insurance plan. Blah, blah, blah .........

Obamacare was going to fix all that was wrong with health insurance. No more plans that exclude coverage or cause consumers to go bankrupt over unpaid medical bills.

Tell that to Marlene Allen.

Marlene Allen thought she had decent medical coverage after she fell in December and broke her wrist. She had come in from walking the dogs. It was wet. The fracture needed surgery and screws and a plate.

Weeks later, she learned her employer health plan would cover nothing. Not the initial doctor visit, not the outpatient surgery, not the anesthesiology. She had $19,000 in bills. - Kaiser Health News

And her employer health insurance plan paid .................. $0.

The employer plan only met the spirit of the law in providing minimum essential coverage. In this case the minimum was "Preventive Services Only".

That's what her insurance card said. I guess she didn't read the card or the summary of benefits before signing up for this minimum coverage.

To make matters worse, the advice given by the folks at MNsure was less than stellar.

Actually it was downright criminal.

Except there is no one to be held accountable at these exchanges. You place your bets and they take your money.

After she learned that her work plan covered hardly anything and tried to get back on a marketplace policy, MNsure told her she’s not eligible for subsidies to buy it. Wrong again.“Horrible situation,” said Sabrina Corlette, project director at Georgetown University’s Center on Health Insurance Reforms. It “does make you wonder about the training these call-center folks are getting.”

Yeah, it does.

But didn't the president say buying health insurance was as easy as going online and buying an airplane ticket? How much training to ticket agents get?

I don't know but I suspect it is more than these exchange phone clerks get.

Aetna exiting small group arena?

Well, how else to explain this:

"A new producer service fee arrangement introduced by Aetna looks to eliminate broker commissions on small-group business ... The Producer Service Fee model requires brokers and their clients to negotiate a service fee that will be paid by the customer/employer to Aetna, and then paid out by Aetna to the broker."

Right after they skim off their vig, I'm sure. But what's behind this?

Well:

"They are specifically angling to say that we do not represent them, that we would be engaged by the customer and that therefore they have absolutely no obligation to pay us"

Sounds about right.

Of course, it's Aetna's prerogative to do pretty much anything it likes, but there are always those pesky consequences. For one thing, it's possible (likely?) that this violates MLR requirements.

How's that?

Well, premiums are calculated based on a group's demographics, location and the like, but they also include the commission. Nothing in the announcement indicates that premiums will be reduced based on the carrier's lower cost (perhaps they're emulating the old Blue Cross model?).

I haven't received my copy yet, so I'll withhold judgement until then. But I'm pretty sure I know my response should this prove out.

Completely Asinine Carrier Trick

So, Medical Mutual of Ohio sent me a new Broker Agreement form (essentially the contract that allows me to sell their products and receive a commission for doing so). Very standard, very simple, no big deal.

Except:

The form is 13 pages long, and only 3 of them require any input (name and contact info, signature). So, I print off and complete those 3 pages, scan them back in (and could somebody explain the rocket surgery in emailing an electronic form which then needs to be printed out, then scanned back in?) and hit the send button.

Easy peasy lemon squeazy.

Or so I thought.

This morning, I'm greeted with this:

Good Morning
Our legal department requires at all  13 pages are returned .

I have attached a new blank document for your use

Please complete
Page 1 – List your name  
Page 11 – your contact information
Page 13 – Sign and print your name and added your NPN Number

Return all  13 pages please

Thank you

Um, Einstein's? Those were the three pages I sent you; the rest is boilerplate. But I'm now supposed to print out 10 more pages of your idiotic verbiage? How bad is it when I'm complaining about killing trees?

Sheesh.

Health Wonk Review: Tinker's Ready edition

Boston Health News blogger Tinker Ready hosts this week's roundup of of wonky posts, with an emphasis on the upcoming King/Burwell SCOTUS case. As usual, the posts are interesting and thought-provoking (and don't miss the roll-out of a new term: "horrendoma").

Great job, TR!

An embarrassment of riches linkage

■ Who says crime doesn't pay? Oh, I guess that would be "Tracie Yvette Clay, 46, chief executive of N.C. Behavioral Health and Counseling Services" who's just been sent to the slammer for the next half-dozen years.

Why, you ask?

Well, as FoIB Jeff M tips us, Ms Clay admitted that she's "submitted claims for services for at least 56 clients – none of whom received the services."

And the value of those not-actually-provided services? A cool million dollars. Easy come, easy go.

■ For those following the Halbig/King/Burntwell saga, here's some perspective: "Only 1 out of 5 whose insurance costs grew because of obamacare got subsidies."

That is "the subsidies also served to mask the significant health insurance premium increases that would inevitably result from the law’s new insurance benefit requirements and regulations."

Of course, the current meme-of-the-day is that current rate hikes are "modest." Try telling that to my clients facing double-digit increases, and essentailly no options if they want to maintain comparable coverage.

■ And in Blast-From-The-Past news, the home of RomneyCare continues to embarrass itself:

"MassHealth squandered more than $500M ... The state’s Medicaid program squandered more than $500 million over a five-year span ... the state paying twice for the same service on nearly 1.5 million occasions"

Could be worse, of course.

Where Has All the Money Gone?

50 years ago Peter, Paul and Mary asked "Where have all the flowers gone?". This folk song originally written by Pete Seeger became a classic in the early 60's when recorded by the Kingston Trio, the Four Seasons, Joan Baez, Peter, Paul and Mary and several others.

The song was sung at "peace rallies" and adopted as a war protest song.

Fast forward to 2015. There are still wars, soldiers that die way before their time and families left to ponder what could have been. Now the OIG (Office of Inspector General) is asking a different question.

Where has all the money gone?

Apparently the folks in DC can't account for all the subsidy money paid out under Obamacare.

as “we await a Supreme Court decision that could have a huge impact on ObamaCare” and revealed “just how much confusion the President's health care law is causing with book keepers.” 

In a live shot from the White House, correspondent Kevin Corke explained that the 39-page report contained “a number of recommendations about how to deal with a potential accounting gap between what the administration has been paying insurers under ObamaCare and what it may ultimately end up owing.” - Newsbusters

Potential accounting gap.

Say what?

“[t]he problem actually lies in the healthcare.gov web site and its unfinished back end” where insurers are supposed to “communicate enrollee information with [the] federal government,” but have not been fully able to do so to the tune of “almost $2.8 billion in subsidies or tax credits to insurers in just the first four months of 2014.” 

And in the middle of everything is the STILL UNFINISHED healthcare.gov website.

Your government has shelled out $2.8 BILLION in premium subsidies cannot be tracked to particular individuals or policies. At this time they don't even know if they legally owed that money or not.

To make matters worse, the audit only covers the first 4 months of 2014.

Perhaps we need our own protest song. Too bad Pete Seeger is no longer with us. We could use his talents right now.

Deductible Creep

And here is one more thing Obamacare has done to your health insurance plan ..........

Red fish/Blue fish, Big fish/Gulp!

Well, it used to be a dog-eat-dog world out there, but lately the prevailing metaphor would seem to be big fish eating smaller ones. There's always been a certain amount of consolidation in the insurance biz, but that appears to be heating up of late as The ObamaTax kicks into high gear. Cases in point:

■ Anthem eyeing Cigna and/or Humana: "Anthem Inc. has explored a takeovers of smaller health-insurance rivals Cigna and Humana ... Humana has also drawn interest from Aetna Inc."

I believe this is known as "jockeying for position."

■ United Healthcare pursuing Aetna: "UnitedHealth and Aetna on Monday night joined the list of health giants said to be exploring a potential merger"

Given that Anthem and UHC are the two 800# gorillas in the room, it no longer seems improbable that someday, in the perhaps not-too-distant future, we'll be down to two mega-carriers. On the one hand, this would be good for stockholders of both (and, one supposes, those of the smaller companies they swallowed up).

On the other hand, this doesn't bode well for fans of a competitive, free market. Competition breeds innovation and helps push down costs, but it's not clear to me that having two such behemoths left as the last ones standing would be to society's benefit.

On the gripping hand, it would certainly make the transition to single-payer (the true goal of the ACA) that much easier.

On "Losing" Subsidies

No one yet knows how SCOTUS will rule in King v Burntwell, but that hasn't stopped the doomsayers from claiming that a gazillion people will "lose their subsidies" should Plaintiff (King) prevail.

No, they won't.

That's because you can't lose something to which you were never entitled.

The fact of the matter is, should SCOTUS insist that the law be applied as it was written, then folks in states using the 404Care.gov site were never eligible to receive subsidies in the first place.

It's really not that complicated:

Here in Ohio, we have a very cool program called the Golden Buckeye card:

"All Ohioans age 60 or older ... are eligible for a free Golden Buckeye card ... Merchants of all types (e.g., restaurants, retail, auto care, medical and more) voluntarily offer special savings or deals for older Ohioans who carry [it]."

Now let's suppose that I (who have not yet reached that august age) do, in fact, patronize a store that offers a GB discount. Am I "losing" that discount (aka subsidy)? No, since I don't qualify for it. It really is that simple.

What's frustrating (albeit not surprising) to me is the wailing and gnashing of teeth, as if the evil folks who dare to upset the subsidy applecart are somehow the villains. No, they are not; that would be the bureauweenies (primarily the IRS) who granted them to ineligible folks in the first place.

Really.

Sex, Drugs Rock and Roll [UPDATED]

[SCROLL DOWN FOR UPDATE]

Stevie Nicks sang "Tell me lies, tell me sweet little lies". Walter Scott wrote "What a tangled web we weave when once we practice to deceive".

Thanks to (allegedly) Chinese hackers all the dirty little secrets that are stored in government warehouses will now see the light of day.

The hacking of the White House Office of Personnel Management (OPM) could provide a treasure trove for foreign spies.

When a retired 51-year-old military man disclosed in a U.S. security clearance application that he had a 20-year affair with his former college roommate's wife, it was supposed to remain a secret between him and the government.

The disclosure last week that hackers had penetrated a database containing such intimate and possibly damaging facts about millions of government and private employees has shaken Washington. - Yahoo News

If you ever applied for a job with the government, applied for taxpayer funded assistance or needed a government loan, your secret information may no longer be secret.

The man had kept the affair secret from his wife for two decades before disclosing it on the government's innocuously named Standard Form 86 (SF 86), filled out by millions of Americans seeking security clearances.

Now the government and the Chinese know.

Has he told his wife yet?

So just how much information is needed for Standard Form 86?

The SF 86 form, which is 127-pages long, is extraordinarily comprehensive and intrusive.

Among other things, applicants must list where they have lived; contacts with foreign citizens and travel abroad; the names and personal details of relatives; illegal drug use and mental health counseling except in limited circumstances.

This is not good.

FROM HGS: Pardon the piling on, but it ain't just OPM and the military (past, present, and possibly future) at risk:

"A government data warehouse stores personal information forever on millions of people who seek coverage under [The obamaTax], including those who open an account on HealthCare.gov but don't sign up for coverage." [emphasis added]

Get that? Even if you ultimately decided not to enroll, your personal medical, financial and credit information is potentially at risk. Now, the investment folks always warn that "past performance is not necessarily indicative of future results."

But that's the way the smart money bets.

Best Kept Secrets About Obamacare

Unless you have been living under a rock for the last 5 years, you probably know about Obamacare. You might not know everything, but you should have at least heard of it.

Even still, there are people that apparently never watch the evening news, listen to the radio or read a newspaper.

About half of those living in Kentucky and classified as poor were not aware of the basics of Obamacare.

Since the fall of 2013, Medicaid enrollment in Kentucky has jumped by more than 500,000 people, or 88 percent, the highest increase in the country.  Another 109,000 people have enrolled in a private health plan through the state’s exchange.  - KHN

Well apparently the word is getting out somehow.

Interesting to note, but not all that shocking, that Medicaid enrollment is 5x the number enrolled in private health insurance.

While 49.5 percent of Kentucky’s poor said they heard little or nothing about the coverage options in the health care law, an earlier survey by the Foundation for a Healthy Kentucky found that only a third were unfamiliar with “Kynect,” the Kentucky exchange.

Kynect sounds like children's building blocks. Maybe a name change is in order?

Another factor in low awareness, he said, is that many poor people lead busy lives and don’t make health insurance a priority when they are healthy.

Poor people have not cornered the market on having no interest in health insurance until they need it. I get tired of hearing people say they want to pay for something they probably won't ever need.

Also get tired of politicians voting on laws they have never read.

But that's a topic for another day.

Transjenner Insurance

Bruce Jenner may be the celebrity-du-jour of the transgender set, but he's certainly not the only member of it. While he and his extended family can most likely afford to pay for the procedure(s) out-of-pocket, most folks lack the requisite funds to do so.

And just how much does this process cost? Well:

"The total typical cost of a transition usually includes: expenses incurred in the year before surgery, during which hormone therapy, counseling and living full-time as the target sex are recommended; the cost of the surgery and follow-up care; and ongoing costs after the surgery, including hormone therapy for life and continued doctor visits."

All told, a successful (for certain values of "success") transition seems to run between $40,000 and $50,000. That's a lot of scratch for a non-celebrity, so to what other source might one turn for help?

If you thought "health insurance," give yourself a cigar (preferably a candy one: tobacco use results in higher insurance rates). Now, you may be thinking "Henry, I understood that health insurance covers only medically necessary procedures; how can this possibly fit that bill?"

And you'd be right again.

Sorta:

My initial reaction was "no way a health insurance policy covers this."

But then alert reader and FoIB Jeff M sent me this gem:

"Obamacare to cover majority of transgender woman's sex reassignment surgery costs ... with the help of Obamacare, Larson says she is looking at paying $5,000 out of pocket for the surgery."

Surely that can't be right: what carrier in its right mind would cover such a thing?

Turns out, more than a few: Aetna, Anthem Blue Cross Blue Shield, Cigna and several others cover the surgery (or surgeries), subject to a very specific definition of medical necessity. Interestingly, UHC generally doesn't.

And those plans that do offer coverage treat it the "same as any other illness;" that is, subject to deductibles and co-insurance, as well as any network pricing issues. So depending on what plan one has, out-of-pocket could be as little as a few thousand dollars. Reason #4,835 why premiums are skyrocketing.

Ah, what brave, new world.

BX in the Crosshairs

Surprised only that it took this long:

"Blue Cross and Blue Shield (BCBS), along with the Blue Cross Blue Shield Association, was sued across all states in a class action brought by two types of plaintiffs ... BCBS is able to buy services as a cartel and is not passing savings on to consumers."

This would be news, of course, only to those who haven't been following along, or who don't understand the true role of Blue Cross/Blue Shield (BX):

"In the insurance world, MFN (no, that's not an acronym for something dirty) means "Most Favored Nation," a term usually reserved for international trade agreements. In this case, it's an agreement between an insurer and a provider (or many providers) which grants the insurer exclusive and substantial discounts on medical services."

Back in Aught 10, we noted how BX had (seemingly) abused this status, but the sad truth is that they are the 800 pound gorilla in (virtually?) every market.

The challenge here is that as premiums increased, there was no concomitant rise in provider reimbursements. And in true vicious cycle fashion, these savings weren't then funneled back to the insureds.

Now, the lawsuit covers the period from 2000 to 2007, so it pre-dates the ObamaTax and thus MLR (Medical Loss Ratio) requirements. The fact that the case is still going forward is interesting, inasmuch as the underlying problem seems to have been resolved. Still, one supposes that those (allegedly) harmed by it deserve their day in court.

On the other hand, who do they think is going to actually pay should plaintiffs prevail?

Obamacare, the Full Monty

Obamacare, "Full Monty" version, is just over 17 months old and it isn't pretty.

2014 rates were mostly uneducated guesses without any real data. Look at it this way:


Government Mandated Food Program

Suppose the government created (and mandated) a new market for food. You can no longer buy what you want to eat, only the approved list of food.

Something like the new school lunch programs that are a total failure.

Under the new program you can forget about hot dogs, anything fried, anything canned, nothing with added sugar. Grocery stores and restaurants must only serve food that is permitted under the new rules. If they fail to follow the mandate they will pay a penalty tax.

Grocery stores and restaurants will no longer be able to turn people away because they can't afford the prices.

And these food establishments will now have new competitors funded with taxpayer dollars. The government will also use your tax dollars to establish a food distribution channel and will heavily promote this new distribution system.

Buying food will now be as easy as ordering on Amazon.


New Ways to Buy Food

If you owned a grocery store or restaurant before the change, how would you price your product and how would you promote it? Maybe you were buying advertising before but now the government is telling consumers they can get their food at a reduced price through the new Market Place.

Even your regular customers are confused and now think the only way they can afford to eat is to order through the Market Place.

Grocery stores and restaurants had to redesign food aisles and menu's.

Had to find new vendors that would sell them approved foods.

They would need to estimate how many customers would show up and how many would pay. Under the new system, if you cannot afford to pay the government will pay a portion of your bill but will only do so months after they receive proof that you have bought or eaten from the prescribed list and paid your fair share.

Grocery stores and restaurants must serve you and only collect what you can afford to pay at the time. They must file a report with the government, proving you bought food from them and how much you paid.

Once the government has verified the purchase they will reimburse the restaurant or grocery store for the balance due.

Sounds far-fetched doesn't it?

But this is exactly what has happened with health insurance carriers.


Health Insurance Carriers Meet the New World Order

They had to completely redesign their product line.

New products must be approved by the government.

The government also approved pricing. No more free market rates. Carriers have to guess how much it will cost to operate.

Health insurance carriers had to estimate how many customers would buy from them and how many they would lose to the Market Place.

Would these customers pay their bill in full or only a portion? How long would the carrier have to wait before collecting the outstanding premium balance from the government?

Would these new customers eat a "normal" amount or would they treat it like an all-you-can-eat buffet?

It takes about a year and a half for the carriers to see actual data. How many people bought? How quickly were the premiums paid? How many sick people will buy and how many healthy people will take a pass?

So here we are. A little over 17 months into Obamacare (Full Monty version) and it isn't pretty.


Preview of Coming Attractions

Double digit rate increases are just around the corner.

Robert Laszewski has penned a very detailed preview of coming attractions. Here is a snippet.

• after two years the Obamacare enrollment is coming up way short of what it needs for us to be assured that we have a sustainable risk pool
• Texas Blue Cross lost $400 million in their first year
• CareFirst Blue Cross of Maryland is asking for a 34% rate increase 
• Blue Cross Blue Shield of Tennessee is asking for a 36.3% increase
• In Iowa the biggest Obamacare insurer went broke last December
• But wait, there's more! When the new plans become public expect to see bigger deductibles and co-pays as well for 2016.

And it get's worse.

Health plans are still dealing with incomplete data. Really, they are looking at just one year of claims experience (early 2014 to early 2015) for a brand new book of business in which the enrollment has not been stable.

If you want to read the full article you can find it here.

First, a warning. 

You might want to have an adult beverage (or three) handy while reading it. Just don't let anyone know. Consumption of alcohol is not allowed under the new government rules.

It's official (Assurant waves buh-bye)

As we predicted a month-and-a-half ago, Assurant is saying adios to health insurance:

"Assurant Inc. said today it will exit the health insurance market and sell some small group business lines ... Assurant Health will cease sales of its individual major medical, small group fully insured and short-term medical health insurance policies on June 15 and will not participate in open enrollment under the Affordable Care Act for 2016."

No reason was given for this shocking development.

Just kidding!

It was The ObamaTax:

"Approximately half Assurant’s projected 2015 losses are attributable to a reduction in 2014 estimated recoveries from the ACA risk mitigation programs"

That would be the highly suspect touted Risk Corridors.

And what about the other half?

Well:

"The remainder reflects elevated claims on 2015 ACA policies."

Hey, remember that promise?

Front!

We first took a substantive look at (so-called) "Concierge Medicine" over 7 years ago, noting that "[p]rimary care physicians are battling to save their practices by looking at new ways to increase revenues ... a few have gone to concierge services."

So it was with some bemusement that I read this piece, sent to us by FoIB Jeff M, lauding a Tar Heel State physician purportedly at the forefront of this phenom:

"It turns out that a physician from North Carolina was one of the trailblazers who adopted early this type of practice. Dr. Brian Forrest is a family practitioner who owns and operates Access Healthcare Direct in Apex, NC."

His practice's website doesn't indicate when it was founded, but another article refers back to a 2009 "Cardiovascular Centers of Excellence" award, so I'll give him that mulligan.

More important, he recognizes that both political parties are heavily invested in "mak[ing] insurance-based medicine extraordinarily burdensome." We see this with HI-TECH and EHR regs, and the lowball reimbursements from Medicare and Medicaid, which also drive non-governmental providers' revenues (via insurance).

About 2½ years ago, we interviewed Dr Rob Lamberts, who at the time had just  set up his own version. He noted at the time that an overarching motivation was being able to walk away from the administrative costs and overhead of dealing with multiple carriers, each with their own rates and rules. This tracks very well with Dr Forrest's experience.

Of course, signing up with one of these practices doesn't obviate the need for some kind of catastrophic coverage: hospitals and oncologists don't use this model. Still, it seems to be a growing trend, and I think that may well be a good thing.

Yeah, about that promise...

You know, this one:



Sitting down?

Good, because this is shocking (not):

"Due to changes for 2015 requiring H S A deductibles be a minimum of $2600/$5200 for embedded deductible plans, plans E51, E52, and E1 with copays are no longer eligible as an H S A plan. These plans will be removed from the quoting tool around 6/12. We have added E58, E59, and E5 with copays to replace those plans." [ed: from Anthem email]

Got that? Folks who were perfectly happy with their existing Health Savings Account compliant plans have just been forcibly moved into new ones with different (perhaps unwanted/unneeded) "benefits."

[Hat Tip: FoIB Beth D]

Centennial State HIX Hiccups

The latest news from Colorado reinforces the fact that state-run Exchanges are no panacea, either (as if further confirmation was needed - Aloha!):

"Colorado’s health exchange board today approved a final budget for the next fiscal year that requires aggressive sales growth and higher fees, but still doesn’t bring in enough cash."

Shorter: we're losing money hand-over-fist, but we'll make up for it in volume.

A big part of the problem is that a disproportionate population of folks are being added to the Medicaid rolls, which bring in zero premium dollars, and exacerbate an already-overwhelmed health care delivery system.

But they certainly have their priorities in order:

"Kevin Patterson, the new interim CEO, pledged that his primary goal is to improve customer service"

Yeah, because that's the most pressing issue.

Top. Men.

Fellow insurance agent John Luhman notes that a key problem (aside from, you know, customer service) is that the Exchange itself is plagued with technical problems. In response, the rocket surgeons tasked with maintaining it claim that "that’s the case about 10 percent of the time and they are trying to build a better shared IT system with state Medicaid officials."

"10%" Sure, sure.

But the best quote comes from board member Davis Fansler, who said he’s "concerned about the projected losses. There’s a gap here (between revenue and expenses) no matter how we slice it ... We’re ultimately going to have to take a look at what some ancillary revenues might be."

No kidding. And what are these "ancillary" revenues of which he speaks?

Good question.

ObamaTax Breakage

There's an old saying in retail: You break it, you bought it. One most often encounters this in, for example, fine china shops. Notice, though, the construction: if you break it, then you buy it.

On the other hand, I've never understood why, since no Republican voted for (or supported) the ACA, they are in any way obligated to offer any alternative. And yet, the press (and even members of the party) insist that there's some kind of obligation to "replace" it with some other (no doubt cobbled together) plan.

This is akin to saying "well, a rival of yours broke it, now you must pay for it."

Rubbish.

And it appears that I'm not alone in this calculation:

"No Republicans voted for Obamacare, so it’s not their problem to fix."

So opines David Harsanyi, writing at the National Review. David's expertise in this area goes back a long time, which adds credibility (as if it's needed) to his argument:

"Most [Republicans], in fact, cautioned that passing the largest health-care reform in American history — written by one party, jammed through using reconciliation, and haphazardly implemented — could be problematic as not only an ideological matter but a practical one. Now they have to act?"

Spot on.

Of course, we don't call it The Stupid Party© without reason, so expect to see a spate of articles like this one (from Employee Benefit Advisor):

"House Republicans [have] introduced a plan to repeal the Affordable Care Act and replace key pieces of it with high-risk health pools and tax credits that benefit industry experts oppose, saying it would undermine the employer-sponsored health care system in place today."

Leaving for a moment the relative merits of such a plan (and I do, in fact, think it's worth consideration), there are a number of problems with the formulation:

First, as noted above, Republicans are not obligated to put forth any plan, let alone a "replacement" one. And second, why is it a given that "employer sponsored" health plans are the bee's knees? As we've previously blogged, employers don't tell us what groceries or house to buy: they pay us our wages and we're free to make our own choices. Why should health insurance be any different?

Obamacare Health Co-ops Circling the Drain

Health insurance co-ops are looking puny these days. Seems to be a rash of terminal losses accompanied by substantial rate increases.

Blue Cross and Blue Shield of Montana is asking regulators to approve an average increase of about 22 percent over the rates approved in 2015 for its individual plans. PacificSource is asking for an average 32 percent increase. The Montana Health Cooperative is requesting an average 34 percent increase. - KULR8

And then there is this earlier report from AM Best.

only one Co-op, Maine Community Health Options, reported both favorable underwriting and net income at $10.9 million. All other Co-ops reported both underwriting and net losses. 

Net losses through Sept. 30, 2014 ranged from $2.6 million for Montana Health Cooperative to a loss of $39.8 million at CoOportunity Health. The aggregated underwriting loss was $243.6 million at Sept. 30, compared with $72.3 million for the first quarter of 2014. 

Clear as mud

(via Twitter) Well. This clears that up. The Obamastration has released some 750 pages of emails and other doc's on Herr Gruber's role in drafting the ObamaTax.

Here's a sample for your edification:

In The Beginning

In the beginning, Obama begat Obamacare.

He looked out over the void in the market place and heard the voices of those who did not have health insurance.

And He said to Himself, this is not good.

There must be a way to insured these people without adding one dime to the deficit. They must have unfettered access to health insurance, regardless of any pre-existing conditions.

Further, they must have free annual exams and free birth control without adding one dime to the deficit.

So He made it so.

And out of Obamacare came health insurance co-ops funded with taxpayer dollars that did not add one dime to the deficit.

And all was well and good, until the co-ops could no longer pay their bills.

Farmer said the DOI had been monitoring SCHC's finances since its licensure in June 2012, but stepped up surveillance after concluding a financial examination on Oct. 31 which revealed SCHC was in a "financially impaired state" and unable to pay all their claims. - Greenville Online

But wait, there's more.

 it was determined that the two letters of credit SCHC held totaling $8 million - which were to be to be used in the event of insolvency to pay claims - were fraudulent.

And that is just the tip of the iceberg.

"Contractually, the employers are responsible, but they do not have enough money to pay the claims," 

Employers are liable.

This was a co-op. A MEWA. Not real insurance.

Just a pot of money.

"If this had been a traditional company, they would be covered by ... a guaranty fund. This is not covered by a guaranty fund."

Ponzi would be so proud.

And all this was accomplished without adding one dime to the deficit.

80% Failure

Say you had a company that sold a product every consumer was required to own. The first year you met or exceeded your sales goal, but then something happened.

80% of your customers failed to pay for their purchase.

Just 8,200, or 21 percent of individuals enrolled on Hawaii’s Obamacare exchange have paid for their health premiums this year, according to a report released this week.

The $205 million state exchange has failed to reach financial viability despite spending nearly $24,000 for each individual it enrolled in its first year of operations. The state needed at least 32,000 more enrollees, but this assumes that they actually pay their premiums. - ATR

$24,000 spent per enrollee.

80% fail to pay.

The net effect is, taxpayers spent close to $120,000 per NET enrollee.

Show of hands. Who says this is working?

The Final Solution

Health insurance carriers are tallying the results from their first full year as purveyors of Obamacare and it isn't pretty. Losses are in the tens of millions of dollars and no relief in sight.

Carriers have filed preliminary rates for 2016. Increases are in the 20 - 50% range.

Not pretty.

But have no fear. HHS Secretary Burwell has a solution to avert the losses.

Lower premiums and make up the losses on volume.

Secretary of Health and Human Services Sylvia Mathews Burwell argued Thursday that premium hikes floated by health insurance companies this week will likely end up being lower once they are finalized. - The Hill

Either Ms Burwell is looney or she thinks we are.

Thursday ObamaTax News (Oy)

■ First up, FoIB Jeff M tips us to this breaking news lie:

"Blue Cross and Blue Shield of North Carolina requested a 25.7 percent increase to premium rates ...  the N.C. Department of Insurance must approve the request ... apply only to ACA plans, meaning those purchased largely through the federally facilitated marketplace"

Why is this a lie? Because we were explicitly promised 3000% rate decreases.

Let's unpack this a bit farther: these plans affect only those bought On-Exchange, meaning that most (if not all) of them will be subsidized (why else risk the 404Care.gov security black hole?). Higher premiums mean higher subsidies, and thus higher taxes for the rest of us.

Gee, thanks!

On and, by the way?

In late-breaking "news," looks like most other Tar Heel State insureds will get to share in the joy noted above:

"Most state residents will see their health insurance costs rise next year under proposed pricing plans from insurers offering health coverage."

You're welcome!

■ Next up, Green Mountain State citizens may have dodged the aforementioned 404Care.gov bullet, but they'd be wrong:

"The online insurance marketplace that Vermont built to enroll people in private coverage under the law had extensive technical failures ...  even though its residents’ subsidies appear safe for now, Vermont stands as a cautionary tale."

As readers may recall, the current SCOTUS subsidy cases are about states (like North Carolina) that outsourced their marketplace efforts to the Feds. Since Vermont went the DIY route, their citizens' subsidies should be safe (for the nonce). Still, state leaders had hoped to springboard into single-payer, and now see those plans crumbling.

Gee, darn.

■ And finally (but by no means least): you know all those folks touting the recent "success" of Open Enrollment v2.0? You know, the one where they (allegedly) enrolled an additional 10 million suckers folks on ObamaPlans?

Well, aside from the fact that they repeatedly (and conveniently) fail to disclose how many of those folks had been previously insured and then lost their old plans, the results themselves are, in fact, a bitter disappointment:

"A little bit of math shows that sign-ups in 2015 came in 22% below the CBO's earlier forecast."

Ooops.

So it seems that - quelle surprise! - O'Care proponents not only moved the goalpoats, they also failed to score.

Oh well: lose some, lose some.

Health Wonk Review: Hello Summer!

Our good friend Louise Norris hosts this week's collection of interesting and thought-provoking posts on health care wonkery.

Come for Roy Poses fisking of the JEJM, stay for Jaan Siderow's excellent advice on planning for the future.

The Lighter Side of Health Care

Our own Kelley B has written about the new ICD-10 codes that providers use for billing purposes. Not everyone, though, is as up to speed as she is:

MVNHS© Doubles Down

It's been a while since we last checked in with Britain's Much Vaunted National Health System©, and it's, um ... heartening to see that they haven't lost their touch. On the one hand:

"Elderly people are being denied life-saving operations because of age discrimination within the [MVNHS©] ... New data reveal for the first time that across large areas of the country, almost no patients above the age of 75 are receiving surgery for breast cancer or routine operations"

Now, we were assured two years ago that the (infamous) Liverpool Pathway was no more. And yet, here we are:

"Last October, the Government introduced age discrimination laws which mean patients should not be denied procedures on grounds of age ... [but] Prof Norman Williams, said the scale of the differences was “extremely worrying,” raising suspicions that some parts of the NHS were operating covert blanket bans against procedures on age grounds."

That is, while the practice is technically illegal, it is at least tacitly  approved for use by the rocket surgeons who provide care to seasoned citizens. On the other hand, maybe seniors just need to pony up a bit of coin:

"Hospitals are letting patients jump NHS queues for knee and hip replacement surgery if they pay for the operations themselves."

Actually, this isn't exactly breaking any new ground. Early last year, we reported on the case of Grandma Stanton, an elderly subject of the Crown, who was denied life-saving chemo and was forced to sell her house to pay for it. She would probably have appreciated knowing that simply greasing the correct palms might have saved her home - and her life.

As it is, "[p]atients are being charged up to £14,000 for some procedures – almost treble the cost to the Health Service – leading to accusations that hospitals are ripping off the sick." So the Brit's do, in fact, have in place a tiered health care system favoring those with the cash to pay for that care. In fact, there's quite the little cottage industry amongst the various MVNHS© "trusts" (hospitals) to attract such patients:

"[M]ore than 40 trusts are promising patients they can have the ops in as little as a week – if they can afford it."

Seems like a promising candidate for GroupOn, no?

Preview of Coming Attractions

How much MORE will your Obamacare health insurance cost in 2016? We bring you a preview of coming attractions by clicking here.

Click the link.

Select "Search ACA compliant products"

Pick your state, carrier and effective date (1/1/16 suggested).

Read them and weep.

These are filed rates, not yet approved. Some rates may change if SCOTUS rules against subsidies paid for plans purchased through federal exchanges.

Monday Morning Spindle-clearing

In no particular order:

■ Our thoughts and prayers go out to the Biden family on the loss of Beau to brain cancer. The fight against this terrible disease is still on-going, but help may soon be on the way to save other families from experiencing this kind of loss:

"MD Anderson researchers identify protein with therapeutic potential for brain cancer ...  FGL2 protein is a crucial immune-suppressive factor in glioblastoma multiforme (GBM) cancer. As such, blocking FGL2 may promote GBM patients’ enhanced survival."

Still early days, but promising.

■ Courtesy of FoIB Holly R, we learn that "44% of Covered California customers report difficulty paying premiums." Of course, this must be a lie, since the President explicitly promised that rates would decrease by 3000%.

So there.

■ Regular readers know that part of that Medical Loss Ratios are a grab-bag of admin costs which carriers must use to determine whether or not they're paying out enough in claims. One controversial such expense has been agent compensation (fees and/or commissions). The Center for Consumer Information & Insurance Oversight (CCIIO) has recently clarified when that comp may not be excluded from carriers' MLR calculations (Spoiler Alert: pretty much always). Look for lower commissions and fewer agents (that's NOT a good thing, by the way).

The Flip Side of Halbig/King/Burntwell

The goal of The ObamaTax was to extend health insurance (and thus, presumably, health care) to the minority of Americans without it. It's been an article of faith that the subsidies are what will drive that goal. The Supreme Court has yet to rule on Halbig (etc), but that hasn't stopped the chattering class from opining on what a tragedy it will be if they strike down the government's (illegal) extension of subsidies to residents of states using the 404Care.gov Exchange.

But there's another side to this, one which has thus far gone unremarked: is there a potential upside to folks whose subsidies go away? Turns out, there likely is. In fact, the case for enforcing the law train-wreck as written is pretty strong:

"Nearly 8 million people currently enrolled in 37 states through the HealthCare.gov site would lose their health insurance [by] losing their subsidies. Premiums would spiral out of control as the only ones left in the exchanges would be the sickest and most expensive patients."

Okay, making the defendants' case, so what's that "flip-side?"

"[A] new report ... says that these critics are looking at only one side of the equation ... the claim [is] that 8 million will lose insurance assumes that everyone who loses subsidies in the federal exchange would cancel their health plans."

While it's likely that many - perhaps most - would, in fact, opt for the (toothless) penalty fine tax, it's by no means certain that all of these folks would bail. After all, as IBD points out, most of these folks were already paying for insurance before the ObamaTax. It seems reasonable, then, to presume that a good portion of them would suck it up and continue paying unsubsidized premiums.

But wait, there's more:

"[P]eople in [the affected] states would be eligible to enroll in low-cost catastrophic plans, something that they can't do now without also paying the individual mandate penalty."

This is key: many folks really just want/need catastrophic cover, without unnecessary (and expensive) bells-and-whistles.

As an aside, this would be a perfect opportunity to expand HSA eligibility to these types of plans. Hint, hint.

Perhaps the greatest benefit is the one least discussed:

"Getting rid of the subsidies has benefits, too: Namely, both the individual and employer mandates would get flushed away with them."

How's that, you ask?

Well, if getting rid of the subsidies renders coverage "unaffordable" (an ACA "term of art"), then the penalty no longer applies, thus saving consumers even more money. In fact, the "study finds that 11.1 million people will be free of the individual mandate, and more than a quarter million businesses will be liberated from the employer mandate" if the plaintiff prevails: "No subsidies, no mandate."

Four words I can get behind.

Oh, and the other upside?

That would be the north of 230,000 new jobs, plus higher pay for both full- and part-time workers.

So what's the rub?

Well, all of these goodies likely go away if the rocket surgeons in Congress decide to "fix" the ObamaTax instead of deleting it. What are the odds of that?

A Quarter Trillion here, A Quarter Trillion there...

And pretty soon, you're talking real dollars:

"Obamacare is set to add more than a quarter-of-a-trillion—that's trillion—dollars in extra insurance administrative costs to the U.S. health-care system"

Keep in mind, these costs will be borne by insureds; that is, carriers will simply increase premiums to cover them. Remember: companies don't pay taxes or premiums.

And at "a whopping 22.5 percent of the total estimated $2.76 trillion in all federal government spending for the Affordable Care Act," it's just one more example of the way that the ObamaTax continues to hurt the very folks it was ostensibly passed to help.

BONUS: The rocket surgeons that wrote the report itself continue to buy into the long-since-debunked idea that Medicare "has overhead of just 2 percent." They then use this faulty "data" to justify the move to single-payer.

Of course.

[Hat Tip: Co-Blogger Bob]

Unfortunate Client Timing

Got  a call this morning from the daughter of one of our agency's long-time clients. In addition to his auto and home, my long-since-retired colleague had written a life insurance policy for him. As the official "Life/Health guy," it fell to me to get the ball rolling on the claim, so I called the carrier's home office to get that started.

The first question I always ask is "is the policy in force?" That is, is it still active and thus able to be paid out. The answer is almost always "yes," and then I start asking about beneficiaries, face amounts and the like.

So I was a bit startled when the customer service rep said "no, that policy was cancelled at the insured's request."

Whoa.

In fact, the cancellation request came in almost exactly a year ago. Of course, unless he was being treated for a terminal illness at the time, it seems unlikely that the insured knew that this was, perhaps, premature. I have no idea why he cancelled the plan; perhaps he had adequate coverage with another agent, or it had grown unaffordable, or some other reason. All I know is that it's now my sad duty to let his daughter know that there's going to be no payout from that policy.

'Tis a shame.