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HSA Contribution Limits For 2014

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After the PPACA was signed into law, questions started to come up regarding the impact of the law on HDHPs and HSAs.  People wondered if HSA-qualified plans would still be available within the confines of being ACA-compliant, and there was plenty of confusion as far as how high deductible plans would fare.  Now that we’re just a month away from the opening of the exchanges and four months away from ACA-compliant plans being effective, it’s clear that HDHPs and HSAs will continue to be available in 2014.

IRS 2014 HSA Contribution LimitsThey may even become more popular than they currently are, as they will likely attract people who would otherwise buy plans with out-of-pocket limits too high to be HSA-qualified.  The out-of-pocket limits on individual plans starting in 2014 will be equal to the out-of-pocket limits on HSA-qualified plans, so there will likely be HSA-qualified plans available in all of the state exchanges.  Out-of-pocket limits that exceed that amount – for example, $10,000 individual deductibles – will no longer be allowed on any policies, which will make HSA-qualified plans a popular choice for people who want to keep their premiums as low as possible.

The IRS has set the HSA contribution limits for 2014:

Individual = $3300 and Family = $6550

These limits reflect a small increase ($50 and $100, respectively) over the 2013 limits.

The IRS kept minimum deductible amounts for HSA-qualified health insurance plans the same ($1250 for individual coverage, and $2500 for family coverage), but the maximum allowable out-of-pocket on HSA-qualified health insurance plans in 2014 will increase slightly, to $6350 for an individual and $12,700 for a family (up $100 and $200 respectively from 2013).

Early Renewal Provides A Good Alternative For 2014

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Over the last few years, opponents of health care reform have often exaggerated – and sometime outright lied about – the potential negative aspects of the reform law.  This has resulted in a public that is often woefully misinformed about what the law does and does not do.  But the spin is not limited to just opponents of the law.  Sometimes ACA supporters spin things too.  This Huffington Post article from a few months ago is a good example.  The title, “Aetna seeks to avoid Obamacare rules next year” is designed to play on the general unpopularity (and over-estimation of perceived profits) of insurance companies.  When you read a little further, you find that Aetna is reaching out to brokers and insureds to let them know that Aetna will be allowing members to opt for an early renewal in December of this year – if they want to keep their current policy until December 2014.

Why is this being portrayed as a bad thing?

It is indisputable that people who are healthy, buy their own health insurance, won’t qualify for subsidies and prefer high deductible health plans are going to have higher premiums for ACA-compliant plans than they have now.  Some of these people don’t mind high deductibles.  They don’t consider their policy to be skimpy or junk insurance just because it isn’t ACA compliant.  You might have seen headlines about how only a tiny fraction of existing individual health plans meet the requirements that the ACA will impose next year, but that doesn’t mean that the existing Early renewal will provide many insureds with a good alternative to ACA compliant plans in 2014.plans are junk.  If you look closely, you’ll see that when it comes to basic medical benefits, a lot of individual plans offer coverage that is in line with ACA regulations.  But benefits like dental and vision coverage for children (required on ACA-compliant plans starting next year) are usually not part of individual coverage (Many plans allow applicants to select add-on dental and vision coverage, but a lot of people find that it’s more cost effective to pay for dental and vision out of pocket rather than paying for dental/vision insurance.  Remember, nothing is free.  And the more likely you are to use an aspect of your coverage, the higher your premiums will be in order to cover the cost.  So coverage for something like dental and vision checkups – which people plan to use – has to be priced accordingly).  In many states, maternity coverage is one of the most significant medical benefits missing from a lot of individual plans.  But in Colorado we’ve had maternity on all plans for more than two years now.

There are absolutely some bad health insurance plans on the market, with skimpy coverage, limited networks and lots of fine print.  But there are also lots of good quality health insurance plans and reputable carriers.  And there are plenty of people who are not going to qualify for subsidies next year (roughly half of the people who currently buy individual health insurance).  If those people currently have – and are happy with – a high deductible plan that is less expensive than what they would have to pay for an ACA-compliant plan, there’s no reason that they shouldn’t be able to keep their plan as long as possible in 2014.  The law requires coverage to be ACA-compliant when a policy renews in 2014.  Carriers that are offering early renewals in December are providing good customer service, especially for insureds who […]

Your Health Insurance Will Probably Change in 2014

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I frequently come across FAQs on various websites with a question along the lines of:  “Do I have to switch to a new health insurance plan if I like my existing one?”  And almost always, the answer is something like this:  “No.  The ACA allows grandfathered health insurance plans to continue unchanged, so if your plan was in effect when the ACA was signed into law on March 23, 2010 and has not been significantly changed since then, it will be considered “qualified coverage” and you can keep it”.

This is frustrating to read, because I’m sure that people who aren’t familiar with the details of health care reform might just see that first word – no – and not pay attention to the significant caveat that follows it.  Adding to the confusion is the partially true statement President Obama made in 2009, saying “If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”

The problem is that people who currently have health insurance might think that they can keep their plan – even if they’re not on a grandfathered plan – because there’s a lot of confusion about what exactly a grandfathered plan is.  In 2012, just under half of people who get their health insurance from an employer were on a grandfathered plan, but that number is dropping and will continue to do so as plans change.  There’s no way to know whether your health plan is grandfathered without calling your carrier and asking.  A plan that was grandfathered as of 2011 might not be so today, since changes to the plan can happen at any time and can cause a plan to lose its grandfathered status.

The really bad health insurance plan that I wrote about earlier this year might be a grandfathered plan that was in effect when the ACA was signed into law.  Insureds may have joined after that date and still be on a grandfathered plan.   (although that still doesn’t explain the $5 million lifetime max that was being marketed on that plan as of this year – even grandfathered plans are not allowed to have lifetime maximums).

But especially in the individual market, health plans are constantly being redesigned.  The way the process works in Colorado – and in many other states – is that existing plans are retired, or “sunset” and new ones are introduced.  In most cases, insureds are allowed to remain on the sunset plan.  If the carrier does away with the plan completely, they have to offer the plan’s insureds the option to Your Health Insurance Will Probably Change in 2014purchase any of the other plans the company offers, guaranteed issue.  So most carriers have traditionally let insureds remain on sunset plans, but the plan becomes a closed block, which means that no new insureds are being added to the pool.  The result is usually that over time, premiums within a closed block start to rise faster than premiums in other plans that are enrolling new members (keep in mind that in the individual market, medical underwriting has long been used to make sure that new members are relatively healthy.  So for individual plans, members who have been on the plan the longest tend to have higher claims expenses than new members).  This leads healthy insureds who are on sunset plans to seek coverage in another plan in order to lower their rates.

There are lots of reasons for new plan designs:  It’s a way for carriers to create product differentiation (especially true in robust markets like we have in Colorado).  New plan designs also allow carriers to create products with lower premiums, as they’re well aware that price is one of the most important factors when consumers are shopping for coverage (a good example is the trend over the past decade towards health plans with separate prescription deductibles instead of integrated Rx deductibles or Rx coverage with traditional copays).  New plan designs also […]

Why ACA Compliant Plan Premiums Will Vary Significantly In 2014

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David Williams did an excellent job with the most recent edition of the Health Wonk Review – be sure to check it out.  One post that everyone should read comes from Health Affairs Blog, and was written by Joel Ario, Adam Block and Ian Spatz.  They dig into the details of Silver plan premiums in four major US cities, finding lots of variation in pricing in some areas, and surprisingly little variation in others.  As premiums have been slowly publicized over the last several weeks, I’ve seen numerous articles describing rates for ACA-compliant plans and how they vary from one Why ACA Compliant Plan Premiums Will Vary Significantly In 2014plan to another within the same metal designation.  But the Health Affairs article is the most thorough and helpful that I’ve read.  The authors not only explain the details, but they also provide five very well-reasoned explanations for rate variation.  If you’re confused about premiums for ACA-compliant plans, this article is a must-read.  It’s also helpful in terms of helping people understand how plans can differ – even at the same metal level – beyond the basic deductible/copay amounts.

Wide variation in health insurance rates is nothing new.  When I run current quotes (not yet 2014 ACA-compliant) for my own family, I get 11 pages of results, with prices ranging from $238/month to $1889/month.  Much of that is explained by the vast differences in deductibles ($10,000 for the lowest priced plan, $500 for the highest), but even if I focus on plans that all have the same deductible ($5000, just to pick a middle-of-the-road number), I still get rates that range from $325/month to $924/month.  Plan designs can vary greatly from one carrier to another, and provider networks make a big difference in terms of explaining premium variation from one area to another within a state (as an example here in Colorado, the carriers that offer the best rates in the Denver metro area and along the front range are typically not the same carriers that offer the best rates in the mountains or even in nearby Boulder, and much of the variation has to do with provider networks).

So it’s not at all surprising that rates will be significantly different from one carrier to another next year, both in and out of the exchanges.  In most states […]

Colorado Health Insurance Options On the Exchange in 2014

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Although we’re still at least a week away from knowing the specific details on rates and plan designs for policies that will be sold in the Connect for Health Colorado exchange, the Division of Insurance has approved 242 plans that will be available in the exchange from 13 Colorado health insurance carriers.  In late May, the number of carriers stood at 11 and the number of plans was 250+.  But as we noted last week, there was still a lot going on behind the scenes over the summer, and some carriers had to resubmit plan information that was not accepted in the spring.  The final count is 150 plans that will be available to individuals and 92 for small groups (keep in mind that this is just for plans within the exchange.  There will be lots of other ACA-compliant plans available outside the exchange).

The plans for individuals will be available from ten different carriers (All Savers, Cigna, Colorado Choice, Colorado Health Insurance Cooperative, Colorado health insurance plans available in the exchange in 2014Denver Health Medical Plan, HMO Colorado (Anthem), Humana, Kaiser, New Health Ventures and Rocky Mountain HMO).  Although there are some new names in this list, there are also plenty of familiar ones (All Savers is a UnitedHealth company, which means that the main carriers that currently sell policies in the individual market in Colorado will all be represented in the exchange).  Although we haven’t yet seen the final premium and plan details, it appears that Colorado will continue to have a robust individual health insurance market in 2014, both in and out of the exchange.

For consumers who will qualify for a subsidy, the exchange is definitely the place to be – subsidies are only available in the exchange.  Consumers who do not qualify for a subsidy (either because their income is too high or because they have access to an employer group plan that is technically “affordable” but might actually be outside of their budget) can shop within the exchange (via an approved broker or directly through the exchange) or they can […]

Assurant and UnitedHealth Still Available In Colorado Individual Market

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The Colorado Division of Insurance has announced that finalized health insurance rates won’t be available until the middle of August – about two weeks after the originally-scheduled August 1 release date.  The preliminary rates, carriers and plan designs were announced in June, and it’s likely that the final rates will be in the same basic range.  When we first saw the list of carriers that were going to be providing individual health insurance in Colorado starting in October (for 2014 effective dates), we were surprised to see that UnitedHealth Care was only listed as a carrier for small group Assurant and UnitedHealth Still Available In Colorado Individual Marketplans (they have had a strong presence in the individual health insurance market in Colorado for many years, both as Golden Rule and UnitedHealthOne).  And we also noticed that Assurant (Time) was not included at all in the list of carriers that had submitted rates and plans to the DOI earlier this year.

We’ve recently found out that Assurant will indeed continue to offer individual health insurance in 2014, outside of the exchange.  They submitted rates and plans in May but the submission was incomplete and had to be refiled, which is why they were missing from the data that was released in June.  The Assurant details should be included with the finalized rate information that will be released in mid-August.

In addition, UnitedHealth Care will be offering individual health insurance in the Connect for Health Colorado exchange, under the name All Savers Insurance Company.  This was included with the June data, but many people might have been unaware that All Savers Insurance is a UnitedHealth Care company.

We wanted to clarify this information in case you’re looking for an individual policy from either of these companies.  More info will be forthcoming once we have the finalized rate data, so stay tuned.

Exchange Subsidy Eligibility Impeded By High-Priced Group Health Insurance Access

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We were talking with a client last week about her health insurance situation, and it inspired me to do a little more digging around to see how eligibility for subsidies could be impacted by the availability of employer-sponsored health insurance.  In our client’s situation, she’s a homemaker and her husband makes about $20,000 per year, working for a small business.  They also have a child, who is currently covered by Medicaid.  Her husband can get health insurance from his employer for $75/month.  But if he adds his wife, the cost goes up to $500/month.  $6,000 per year for health insurance when you earn $20,000 isn’t really a viable option.  Fortunately, as of January 2014, Medicaid will be available in Colorado to families with household incomes up to 133% of FPL (in 2013, that’s almost $26,000 for a family of three).

But let’s consider a hypothetical family that makes a little more – say $28,000/year – and has the same option for employer-sponsored health Exchange Subsidy Impeded by Access to High Priced Group Health Insuranceinsurance.  They would be above the cutoff for family Medicaid, but well below the 400% of poverty level that determines eligibility for premium assistance tax credits (subsidies) in the exchange  (400% of FPL for a family of three is a little over $78,000 in 2013).  And I think we can probably all agree that spending $6000 a year on health insurance would be a significant burden for a family that earns $28,000 a year.

We’ve all heard lots of talk about how subsidies are available in the exchanges for people who don’t have access to “affordable” employer-sponsored health insurance.  I think most of us take that to mean that for families who earn less than 400% of FPL, subsidies are available both to those without an option to purchase employer-sponsored health insurance, and for families that have the option to do so but at a prohibitively high premium.  You’ve probably also heard that the cutoff for determining whether employer-sponsored health insurance is “affordable” is 9.5% of the employee’s wages.

Unfortunately, it’s not as simple as it might sound, and the official rules might leave some families without a lot of practical options.  I discussed this scenario last week with the Colorado Coalition for the Medially Underserved (CCMU).  Gretchen Hammer is the Executive Director of CCMU, and she’s also the Board Chair of Connect for Health Colorado (the state’s exchange), so there’s a good flow of information between the two organizations.  CCMU (and Connect for Health Colorado, via CCMU) responded to my questions quickly and thoroughly, and I highly recommend both sources if you’re in Colorado and curious to see how your specific situation will be impacted as the ACA is implemented further (here’s contact info for CCMU and Connect for Health Colorado).

My concern in the case of our hypothetical family was that the employee’s contribution for his own health insurance is $75/month, which works out to only 3.2% of his income – well under the threshold for “affordable,” based on the 9.5% rule.  And as […]

Avoiding Scams As The ACA Changes The Health Insurance Landscape

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Nina Kallen did an excellent job hosting the most recent Cavalcade of Risk – be sure to check it out.  It includes a good cautionary tale about avoiding scam artists, from Hank Stern of InsureBlog.  (And for a little extra clarification about electronic and telephone applications, there’s also some additional commentary from Bob Vineyard (another… Read more about Avoiding Scams As The ACA Changes The Health Insurance Landscape

Delaying the Employer Mandate Has Minimal Impact on ACA

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Much has been said about the employer mandate over the past few weeks.  It’s been in the news a lot because of the delay of its implementation to 2015, and it’s been a popular for politicians – who are opposed to the ACA – to take the position that the obvious next course of action should be a similar delay of the individual mandate.  I’ve explained why that doesn’t make sense – just because they’re both referred to as a mandate doesn’t make them comparable elements of the ACA.  The employer mandate will help to provide the ACA with financial strength, but the individual health insurance mandate is a much more crucial leg of the legislation – without it, other aspects of the law (like guaranteed issue coverage in the individual market) would topple.

 So what is the employer mandate and what does it involve?  Rather than relying on articles and talking points that can be easily biased for or against the ACA, let’s take a look at what’s actually written in the legislation.  The ACA is a very long document, so here are the three pages that ACA Employer Mandate Delay has minimal impactcontain the wording about the employer shared responsibility for health coverage.  And since the ACA wording is rather convoluted and full of legalese, here’s an excellent summary from Cigna that explains it in more clear language.
As I explained in a post last week, the employer mandate will impact a very small percentage of businesses in the US.  That’s because 96% of businesses with 50 or more employees already offer health insurance.  And businesses with fewer than 50 employees aren’t required to offer health insurance under the employer mandate.  The vast majority of companies in the US have fewer than 50 employees.  Out of the roughly 5.9 million US firms that have employees, only 635,162 have 20 or more employees (many of these – the ones that have more than 20 employees but fewer than 50 – are not impacted by the employer mandate).  So for most American companies, the employer mandate is a non-issue (on the other hand, the ACA-created tax credits that help small businesses pay for health insurance should be of interest to a lot of those small business owners who are not required to provide health insurance but might want to anyway).
So the employer mandate really only becomes an issue for large employers who are not already offering health insurance to their employees.  But what does it mean?  What exactly do they have to provide in order to avoid a penalty?  And how much is the penalty?  Here are the highlights:
  • The employer shared responsibility mandate applies to employers with 50 or more full time or full time equivalent employees.  “Full time equivalent” applies when a business has part time employees:  The total amount of hours worked per month by all of the part-time employees is added up and then divided by 120 to get the number of “full time equivalent” workers.  So if you have 100 workers who each work 80 hours per month, you have 67 full-time equivalent workers (8000/120).
  • The requirement to offer coverage applies to all full-time workers, which is defined as 30 or more hours per week.
  • The coverage has to cover at least 60% of total allowed costs, which is comparable to the bronze level of coverage in the individual market.
  • The coverage has to be “affordable”, which means that the employee contribution cannot be more than 9.5% of the employee’s wages.
  • Coverage has to be offered for the employee and any dependent children up to age 26, with total employee contributions not exceeding 9.5% of the employee’s wages (employees are not required to keep their children on their policies until age 26, but they have to be given the option to do so if they want).
  • Employers are not required to pay for coverage for a spouse.  Employees can choose to add their spouse to their plan if they want (this is no different from the way employer coverage currently works), but the employee is not required to contribute financially towards the spouse’s premium.
  • If a large employer does not offer 60%+ actuarial value, “affordable” health insurance to eligible workers and at least one worker ends up getting individual health insurance through a state exchange and getting premium subsidies or a cost-sharing reduction on their policy, the penalty will be applied to the business.
  • The details of the penalty assessment are explained on the first page here, but they’re much more clearly illustrated in the example that Cigna put together (see page 3). The amount of the penalty depends on whether the employer isn’t offering coverage at all, or if they’re offering coverage that isn’t up to the minimum standards and/or affordability requirements.  For the purpose of penalty calculation, the first 30 employees are subtracted from the equation (so if you have 150 employees, the penalty is calculated based on 120 instead).

I’ve heard some people say that the employer mandate requires employers to pick up the entire tab for employees’ health insurance, and this is incorrect.  I’ve also heard […]

A Midsummer Wonk’s Dream

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Welcome to the Midsummer Health Wonk Review!  It’s always a pleasure to host, and this edition actually isn’t a Shakespeare theme, but it is jam-packed with excellent articles from some of the best writers in the healthcare blog world.  The HWR had a break before this edition and will have a hiatus after this one too. We’re starting things off with a few articles that help to shed light on some aspects of health care reform that should be straight-forward but sometimes get a bit convoluted with political rhetoric.  Then we’ve got several posts about corruption in healthcare and healthcare policy, and lots of posts that provide contrasting and well-reasoned viewpoints on healthcare reform and healthcare in general.  We’ll keep things cool with some winter and spring pictures we took around us here in Northern Colorado.  Enjoy!

Colorado mountains near Fort CollinsIn an excellent piece debunking popular “wisdom” regarding immigrants and healthcare, Joe Paduda of Managed Care Matters explains that when it comes to the Medicare Trust Fund, immigrants put in a lot more than they take out:  In 2009, immigrants paid in 14.7% of trust fund contributions but only accounted for 7.9% of its spending, with a net surplus of almost $14 billion.  US-born people accounted for a deficit of almost $31 billion in the Medicare Trust Fund that same year.  This appears to be a long-term trend:  From 2002 to 2009, immigrants contributed $115.2 billion more to the Medicare Trust Fund than they received in Medicare benefits.  Joe goes on to explain the details and warn those who rally behind strict immigration reform that they may want to rethink their position.  Our Medicare Trust Fund would be in a lot worse shape without the immigrant population.

And if you’re curious about the implementation track for the ACA (and understandably confused by the constant talk of repeal, delay, replace, etc. that we keep hearing from some politicians) Linda Bergthold has what I consider to be a straight-forward and factual review of the situation.  To sum it up, she’s predicting that the employer mandate will go into effect in 2015, as currently scheduled (following a one-year delay, but not a repeal), and that the individual mandate will be implemented in 2014, as planned.  And while some states that delayed the creation of an exchange marketplace will likely have a tougher time getting everything up and running by 2014, the exchanges will be operational next year.  I imagine there will be some bumps in the road as the ACA is fully implemented over the next few years.  But we can work on ironing those out as we go – there’s no need to start from scratch.

Although the exchanges are likely to be successful in the long run, it won’t be without significant effort on the part of the people running them.  At Health Affairs Blog, Barbara Markham Smith and Jack Meyer explain their recommendations for strategies that can help the exchanges be successful both out of the gates and for the long haul.  They discuss pricing (don’t make it too high!) as well as communication/advertising programs that need to be unified, clear, concise and nation-wide in order to generate awareness and interest in as many people as possible.  Baby pine tree in snow(Unfortunately, there’s a significant portion of the country’s leadership who seem to want the exchanges to fail – even to the detriment of the American people – and are content to spread mis-information about the entire law.  This is a considerable hurdle that the exchanges will have to overcome.)  Barbara and Jack recommend a temporary respite from the tax reconciliation that will be done to determine whether a person or family that received a subsidy is required to pay back a portion of it due to increased income compared with the prior year.  And they also call for fostering increased competition and CO-OP creation in the states have not yet done so.  All in all, pretty solid ideas for success in the exchanges and policy-makers would be wise to take heed.

I think of Dr. Roy Poses as the healthcare blog world whistleblower – he can always be counted on to expose nefarious acts in the healthcare industry, and Health Care Renewal is a must-read blog.  Here is his take on the recent Transparency International poll that found 43% of US respondents believe that the US healthcare system is corrupt, and that 64% believe that the government is run by big money and special interests.  Roy notes that unfortunately, most of the media coverage of the Transparency International poll has focused on world-wide data and/or specifics from far-away lands.  Instead of focusing on our own serious problems with corruption in healthcare, it seems that a lot of media outlets (keep in mind that media is sometimes beholden to special interests too…) prefer to present the problem as something that happens in other countries as opposed to something that we need to work on here in the US.

Continuing with the corruption theme, Eric Turkewitz of the NY Personal Injury Law Blog shares a multi-part series about Dr. Katz, who has been rebuked for lying on the stand in a personal injury trial that resulted in a mistrial because of the doctor’s actions.  Central to the issue is the practice of independent medical exams (with the word “independent” being very loosely used in this case) conducted by doctors who are hired by insurance companies when they are defending personal injury cases.  In the case that Eric is writing about, the doctor makes a 7 figure income creek in Fort Collins Coloradofrom his medical-legal practice, but in one case that has been made public, he grossly over-stated the amount of time he spent with a patient (he claimed it was 10 – 20 minutes, but a secretly-made video recording of the visit showed that it was under two minutes).  Eric has looked at additional data and found that the average length of Dr. Katz’s exams was around 4 minutes.  Additional details on this story are here.  Wow.  The doctor was obviously concerned first and foremost with money, but the insurance companies who hired him were likely not doing due diligence to make sure that he was providing accurate data.  They may have been more concerned with finding a doctor who would tell them what they wanted to hear rather than the actual details of the patients’ medical cases.  Sad all around, but sadder still is the fact that it’s probably not all that unusual.

And for a little more on the cronyism/corruption topic (maybe those corruption figures Roy mentioned from the Transparency International poll were skewed a bit too low?), Hank Stern of InsureBlog writes about agencies and individuals who have been involved with the Obama Administration for some time, and are now finding themselves in lucrative financial and/or influential positions as the ACA gets implemented.  In other words, business as usual in the government.  Government appointments, grants, etc. are often awarded this way (ie, appearing to be rewards for donations and/or loyalty), in every administration, regardless of which party is in power.  There’s ample room for opponents to cry foul, but it also has to be pointed out that presidents and secretaries and others in power have to be able to select people they trust for top leadership positions.  And trust is earned over time.  There’s a fine line between selecting the right candidate for the job, having that person be someone trusted by the top officials, and avoiding cronyism.  I don’t know what the right answer is, but it’s easy to see how the appointments and grants and leadership roles being handed out with the ACA could be construed as rewards for political support and loyalty.

At Health Beat, Maggie Mahar writes a thoughtful and thorough review of Miriam Zoll’s Cracked Open: Liberty, Fertility and the Pursuit of High Tech Babies.  After reading Maggie’s article, I’m eager to read the book itself (Maggie leaves a bit of a cliff hanger at the end…).  Assisted reproductive technology is certainly a blessing to many families.  But it can also be fraught with problems that stem from both overly-optimistic expectations on the part of patients (and society in general), over-promising on the part of providers, and a medical field that is largely unregulated and often not covered by health insurance policies.

At Health Business Blog, David Williams explains his skepticism about DealWell, a new Priceline-style website for healthcare services.  I am very much in favor of increasing transparency in healthcare pricing and moving away from the proprietary pricing system we have now, where even the most dedicated patient “shoppers” can find it impossible to obtain real healthcare prices before having a procedure.  And to that end, I love thePut a bird on it! idea of a website where people can bid on the care they need and providers can accept or decline the offer depending on their current workload and the payment offered.  But David makes some excellent points about the downsides:  not being integrated with health insurance is a big one, especially since nearly everyone will have to have health insurance starting in 2014 (even if a procedure is lower than your deductible, it makes sense to stay in network and have the amount you pay be credited towards your deductible, in case you need additional care later in the year).  Although DealWell might be a good option for people looking for one-time services that aren’t covered by health insurance (such a LASIK or a dental implant, for example), it’s probably not going to be the next big thing in healthcare price transparency.

Over at Disease Management Care Blog, Jaan Sidorov takes a closer look at the glowing picture painted by CMS regarding ACO pilot programs, digs a little deeper, and gives us a slightly less rosy view of the results.  And there’s even a T-Rex analogy, to keep things even more interesting.  Jaan points out that the ACOs that didn’t meet the pilot program goals are likely feeling the sting of losing millions of dollars, since the initial investment costs are not cheap.  Although 9 of the 32 pilot ACO providers have said that they want to leave the program, I wonder if results will be better as time goes by, mitigating the initial investment costs somewhat?  Stay tuned.

Julie Ferguson of Workers’ Comp Insider writes about the July 6th 777 crash at SFO, detailing how the flight attendants did an excellent job of putting their emergency training into practice, saving lives in the process.  Julie notes that while it’s easy to shrug off emergency plans simply because we rarely come face-to-face with an emergency, such preparedness can mean the difference between life and death.  Does your business have a solid plan in place to deal with emergencies?  Has everyone at the business been trained on it?  How fast can your building be evacuated if necessary?  All good things to think about.

Writing at Health Access Blog, Anthony Wright discusses the one-year delay of the employer mandate portion of the ACA that will require employers with more than 50 employees to provide health insurance to eligible full-time workers.  Anthony makes some very important points:  the delay doesn’t impact anyone’s eligibility for health insurance and/or subsidies.  People who would have been offered health insurance from an sledding in Coloradoemployer with the employer mandate in place will still be able to get coverage through their state’s exchange – and if they make up to 400% of the federal poverty level, they’ll qualify for subsidies to help pay for it.  In addition, the vast majority of large employers in the US already offer health insurance to their employees and have historically done so without a mandate requiring it.  It’s unlikely that a large amount of those employers will suddenly drop their coverage in 2014.  But Anthony goes on to note that if the delay were extended for additional years, it could begin to destabilize the financial foundation of the ACA and employers might begin to shift more workers onto exchange plans, relying on tax-funded subsidies to foot a portion of the bill.

The Healthcare Economist, aka Jason Shafrin, brings us a great summary of health insurance in China over the past half century.  Until the end of the 1970s, there were three main health insurance systems in China that covered nearly everyone.  But the wheels started to come off after that; by 1998 almost half of the urban population had no health insurance, and by 2003, 95% of the rural population in China was uninsured.  In the last ten years, China has tackled health care reform in order to try to remedy the problem.  While plenty of progress has been made, there is still a long way to go.

Jared Rhoads has written a review of The Autistic Brain by Temple Grandin.  His review is a good read, and the book looks like it is as well.  Professor Grandin teaches at Colorado State University – my alma mater –  and consults for the livestock industry as well as being a bestselling author.   She’s an inspiring and accomplished person even without taking into account her own autism.  Her book combines her personal Temple Grandin professor at CSU - Colorado State Universityexperiences with the latest that science has to offer us with regards to autism.  If you’re interested in autism, Jared’s summary is that this book is a good place to start learning more.  I’m adding it to my list of books to read, so thanks for the tip Jared!

John Goodman lays out some of the results of the ACA thus far (fair enough, but keep in mind that most of the law hasn’t been implemented yet).  He details some positives and negatives, both expected and unintended, although his overall take is that the ACA is not a great solution.  Strongly worded opinions about the ACA will likely meet with a round of applause from one side of the political spectrum, and boos from the other side.  But regardless of your position, I would say that it’s tough to argue with John’s point about high deductible, consumer-driven health plans.  I think he’s correct in saying that they’re probably going to be quite popular starting in 2014, when they will be among the least-expensive plans available.  This is probably particularly true among people who won’t qualify for subsidies.

That’s it for this mid-summer edition of the Health Wonk Review.  Many thanks to Julie and Joe for keeping such a great blog carnival going all these years!  The HWR now has a summer hiatus. Don’t miss the next edition on August 15th, which will be hosted by David Williams at Health Business Blog.

Apples And Oranges: Employer Mandate And Individual Mandate

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On the heels of last week’s employer mandate delay and a few other smaller – but not insignificant – delays in ACA implementation, it’s not surprising to see that Republicans in Congress are pushing hard for a delay of the individual mandate too, with Speaker Boehner echoing many of his conservative colleagues’ position with his thoughts on the matter: “Is it fair for the president of the United States to give American businesses an exemption from his health care law’s mandates without giving the same exemption to the rest of America? Hell no, it’s not fair.“

It’s anyone’s guess what will happen in Congress between now and the end of the year.  States like Colorado that opted to run their own exchanges and got going on the process soon after the ACA passed in 2010 are likely to be less impacted by relaxed federal guidelines, since they’re probably exceeding minimum standards already.  Patty Fontneau, CEO of Connect for Health Colorado (the Colorado exchange) noted in a meeting this week that the delay of the employer mandate doesn’t change anything for the Colorado exchange, since the exchange will be offering health insurance for individuals and small businesses, while the employer mandate focuses on businesses with more than 50 employees.   If anything, the delay would mean that that Connect for Health Colorado might have more eligible enrollees, since some people who Mandate for Individuals to purchase health insurance is different than the employer mandatework for large employers might still be on their own to purchase individual health insurance next year instead of getting it through their employers (as might have been the case if the employer mandate had not been pushed back a year).

Adding to the confusion is the Senate bill that was introduced this spring to officially define full time as 40 hours a week (S 701, Forty Hours is Full Time Act of 2013).  Since the employer mandate for large businesses to provide health insurance to their employees only applies to full-time employees, the definition of full time is critical to the discussion.  While most of the public generally accepts the idea that full time is 40 hours a week (although my nurse friends who work three 12 hour shifts per week most definitely consider their job to be full time…), the ACA is worded so that employees working over 30 hours per week (assuming there are at least 50 total employees) would have to be provided with health insurance in order for the employer to avoid a fine.  Senate Bill 701 has received a lot of attention in the media, but Govtrack gives it a 0% chance of being enacted, so it appears that the 30 hour rule in the ACA will likely still be in place when the employer mandate goes into effect in 2015.

Getting back to the issue of the individual mandate, there are a few […]

Subsidies Are Key To Limiting Rate Shock for Coverage in Exchanges

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[…] because it provides premiums for bronze-level plans as well as the standard silver-level (subsidies are calculated based on premiums for silver plans, and premiums that have been discussed in the media thus far have been almost entirely for silver plans).  Healthy individuals and families who currently opt for higher deductible plans will be the ones who see the biggest change in premiums, since the ACA generally shifts plans towards richer benefits.  So while benefits will be greater in the future, premiums will be too – and families who would rather have lower premiums and higher out-of-pocket exposure will be herded onto higher-priced, richer-benefit plans.  Bronze-level plans will be their obvious choice, although even those planpremiums for bronze-level plans in Colorado health insurance exchanges will have richer benefits than many of the high deductible plans that are currently available in the individual market.  Families and individuals who prefer richer benefits already will find that their premium changes are not as dramatic, since they will likely end up with an ACA-compliant plan that is more similar in design to what they currently buy (they will be more likely to opt for silver or gold plans).

I’m using a family of four modeled after my own family so that I can compare premiums with what we pay now.  Our current plan is $403/month for two adults (mid/late 30s) and two small children.  That’s $4836 per year, and we spend an additional $540 per year on an accident supplement that would cover most of our out-of-pocket exposure if we were to have a claim because of an injury.

According to the KFF subsidy calculator, a bronze plan for our family would cost $9330/year – almost double what we pay now.  The benefits would be richer than what we have now (more in line with HSA-qualified plans, which we’ve opted not to have anymore because of their higher cost), but the premiums will be significantly higher too.  Of course we have to assume that even if the ACA had not passed, our premiums would continue to increase each year.  Over the last several years, premiums in the individual market in Colorado have increased for most of our clients by double digits most years, so we can safely assume that we’d probably have had at least a $500/year premium increase next year anyway.  But that’s not even close to the 93% increase to the bronze level premium for an ACA-compliant plan.

Those numbers don’t take subsidies into account though.  The $9330 is the base price for a bronze plan for a family similar to ours.  The actual amount the family will pay in premiums depends entirely on the family’s modified adjusted gross income (MAGI).  Here are the premium amounts that the family would pay for a bronze plan at various income levels, assuming that they purchase their coverage through their state’s exchange and take advantage of the available subsidy:

  • $40,000 annual income:  Bronze plan premium = $38/year (subsidy pays $9292)
  • $50,000 annual income:  Bronze plan premium = $1438/year (subsidy pays $7892)
  • $60,000 annual income:  Bronze plan premium = $2986/year (subsidy pays $6344)
  • $70,000 annual income:  Bronze plan premium = $4667/year (subsidy pays $4663)
  • $80,000 annual income:  Bronze plan premium = $5673/year (subsidy pays $3657)
  • $90,000 annual income:  Bronze plan premium = $6623/year (subsidy pays $2707)
  • $95,000 annual income (and above):  Bronze plan premium = $9330/year, with no subsidy.

The estimated median income for FY 2013 for four-person households in the US is $74,964 (note that this is higher than the overall estimated median household income, because it’s specific to four-person households, which often include two working parents and people who are further along in their careers, as opposed to people who have just finished school and entered the workforce for the first time).  And keep in mind the math[…]

Many Traditional Plans Are Currently Less Expensive Than HDHPs

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We used to be just as impressed with HDHPs and HSAs, but – at least in Colorado – they have lost some of their appeal over the last few years because HDHPs aren’t as price competitive as they once were.  Our own family had an HDHP and HSA for several years, but we switched a couple years ago to a new Many Traditional Plans are less expensive than HSA qualified HDHPsplan that is not HSA-qualified (we’re still allowed to have our HSA, and we are able to withdraw money from it if we need to pay medical expenses.  But we can’t contribute any additional money to it unless we switch back to an HSA-qualified HDHP).  The reason we switched was the premium.  Our HSA-qualified plan was going up to $570/month, and the new plan we chose was $311/month (it’s now right around $400).  HSA-qualified plans have one joint deductible for the whole family, and expenses like prescriptions are rolled into that unified deductible.  That’s in contrast to the type of plan we have now, with a maximum out of pocket that allows for two family members to meet individual deductible and coinsurance limits (basically doubling the potential – although unlikely – out of pocket exposure).  Our current plan also follows the recent trend of incorporating a separate prescription deductible that must be met before prescriptions are covered with a traditional copay.  This type of plan has lesser benefits than an HDHP, and thus the premiums tend to be lower as well.

Several years ago, HDHPs were very popular among our clients in Colorado.  But over the last few years, they’ve become much less popular, mainly because there are so many less-expensive health insurance options on the market now.  HDHPs haven’t really changed in terms of design, but their premiums have climbed to reflect the rising cost of health care.  In order to provide more affordable options, health insurance carriers have designed new plans with increased out-of-pocket exposure and lower premiums.  Because HDHPs are relatively constrained by regulations regarding their structure, they haven’t been able to remain at the low end of the price scale in the health insurance market.  In fact, many HDHP plan designs are now […]

Do You Need Critical Illness Insurance?

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When my father was 54, he was diagnosed with an auto immune disease that struck quickly and in a devastating fashion.  He lost his kidneys to the disease, and spent the next 11 years on dialysis until he received a kidney transplant last summer.  Thankfully, he had long-term disability insurance through his employer, along with… Read more about Do You Need Critical Illness Insurance?

Mixed Messages In WSJ About The Independent Payment Advisory Board – IPAB

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“Signs of ObamaCare’s failings mount daily, including soaring insurance costs, looming provider shortages and inadequate insurance exchanges.”  That’s the lead-in for a recent Wall Street Journal article about the Independent Payment Advisory Board (IPAB), written by David B. Rivkin Jr. and Elizabeth P. Foley.  Regardless of how much factual information is presented in the remainder of the article, the authors show a strong bias against the ACA right from the get-go.  The reader is warned from the start that ACA provisions will no doubt be disparaged in the article, and it makes one wonder how much of the article is factual and how much is spin.

It is an interesting article, as long as you read it with a clear understanding of the authors’ biases.  It does seem a bit hyped and exaggerated in terms of the potential problems and power of the IPAB.  After reading the WSJ article, one could start to imagine the IPAB as a bunch of Mussolinis ACA Independent Payment Advisory Board - IPABsitting around a conference table, gleefully cutting payments to Medicare providers and hamstringing hospitals with higher-than-average costs.  I wrote about the IPAB last fall, in a fact-checking post following the presidential debate in Denver.  I don’t think it does our country (or our health care system) any favors to paint a picture of an uncontrolled, unaccountable bunch of government bureaucrats making decisions about medical care.  Why not focus instead on how the IPAB could be successful in reforming Medicare so that we no longer do unnecessary (and potentially harmful) screening tests?  There’s still debate over whether regional variation in Medicare spending is justified or not (the answer is probably somewhere in the middle), and that could be another place for the IPAB to focus their attention.  There are many aspects of Medicare spending where the IPAB’s intervention is […]

Subsidy Calculations Not As Simple As They Seem

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If you’re confused about the subsidies for health insurance starting in the exchanges in 2014, you’re probably not alone.  Although the basic math is quite simple in terms of the maximum amount a family or individual will have to pay based on their income if they earn less than 400% of federal poverty level, it’s still tough to pin down specifics in terms of who will end up getting subsidies, especially for people who are right on the border of the income cut-off.

There have been subsidy calculators online for quite some time.  The first one we found was from the Kaiser Family Foundation, but numerous others have appeared recently.  Connect for Health Colorado, the Colorado exchange, has a calculator on its website, but their calculations aren’t calculatin subsidies for health insurance exchangebased on Colorado data yet.  On the contrary, the calculator includes language explaining that “The premiums in this calculator reflect national estimates from the Congressional Budget Office for silver plans, adjusted for premium inflation and age rating.”  So for the time being anyway, you can’t use the Connect for Health Colorado calculator to generate Colorado-specific subsidy numbers.

That might change after the Division of Insurance releases official rates at the end of July.  Part of the confusion around rates and subsidies stems from the fact that rates are not yet finalized.  There’s still a lot of number-crunching (and maybe some “do-overs” from carriers) going on, and July 31 has been set as the date for final numbers to be released in Colorado.

For now, it appears that most subsidy calculators are using generalized national average data, estimated by the CBO.  But the numbers turn out differently depending on what calculator you use.  Let’s consider a family of four, with an income right around the cut-off for subsidy qualification.  We’ll do a calculation based on an income of $94,000 and another using $94,500 (which puts them just above the subsidy qualification limit of 400% of FPL).  For two parents (age 37 and 35) and two young children with an annual household income of $94,000, the Kaiser Family Foundation calculator estimates a total subsidy of […]

Guaranteed Issue Health Insurance Increases Entrepreneurship

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Removing the pre-existing condition barrier to entry in the individual health insurance market is a good way to make people more likely to take the leap into self-employment instead of feeling tied to their guaranteed-issue group health insurance

[caption id="attachment_5992" align="alignleft" width="169"]Guaranteed Issue Health Insurance Increases Entrepreneurship A local Fort Collins business – New Belgium Brewing[/caption]

policy.  There’s definitely room to debate the issue on an individual basis.  Some people, especially younger, healthy people who have always qualified for underwritten health insurance and who earn enough money to be above the subsidy cutoff (about $46,000 for an individual and $94,000 for a family of four), might find themselves financially worse off under Obamacare (although they will likely have better quality health insurance going forward, which could improve their financial situation if they ever needed to use it).  But from the perspective of benefiting as many people as possible, the new rules regarding individual health insurance are good ones.  Most young people (the population hardest hit by rate hikes related to making individual policies guaranteed issue) will qualify for subsidies to lower their out-of-pocket spending on premiums.  And nobody will have to deal with the frustration of not being able to qualify for health insurance outside of an employer group plan.  A few years ago, in states that didn’t have high risk pools available, people who couldn’t qualify for […]

Clearing Up Confusion Around The Health Insurance Provider Fee

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One of the funding mechanisms for the health insurance exchanges is the implementation of the health insurer fee that will go into effect in 2014.  I’ve seen this referred to as a health insurance provider fee (a bit confusing as it might lead people to believe that the fee is imposed on medical providers rather than insurers), a health insurance industry fee, and an ACA health insurance carrier fee, among others.  But whatever you want to ACA health insurance provider or carrier fee to fund exchangescall it, the fee is an amount that will be collected from health insurance carriers starting next year, and the funds will be used to help pay for the state and federal health insurance exchanges.

The fee will generate $8 billion in 2014, and will increase each year up to $14.3 billion in 2018.  After that, it will increase annually in line with health insurance premiums.  Insurance carriers will be responsible for remitting their share of the fee, which is calculated based on the insurer’s total collected premiums from the prior year.

As is generally the case with any new fees or mandates that increase costs for insurance companies, this fee will be passed on to companies and individuals who purchase policies.  However, it won’t necessarily be easy to determine how much the fee is impacting your health insurance premiums, since many carriers are expected to just roll the fee into their total premiums.

In Colorado, Rocky Mountain Health Plans has stated that they will be adding the health insurance provider fee as a separate line item on their bills in an effort to be as transparent as possible.  They will begin collecting the fee next month (July 2013) in order to spread the fee over a longer time horizon and thus lessen the impact on next year’s premiums.  Carriers can choose to wait to begin collecting the fee, but the total amount collected will be the same regardless:  Roughly 2% – 2.5% of total premiums in 2014, and 3% – 4% of total premiums in future years.  In the individual market, RMHP will be Rocky Mountain Health Plans HMO Coloradocollecting $4.12 per member per month, for the rest of 2013.  If you have a SOLO plan with RMHP and notice a line item on your bill labeled “Health Insurance Providers Fee”, now you’ll know what it is (be aware that the total collected is per member per month, so if you have a family of five on a RMHP policy, your bill will reflect a charge of $20.60/month starting in July).  If you have coverage with another carrier, you’ll still be paying the fee (some carriers […]

Networks And Carriers Are Part Of The Big Picture With Exchanges

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[…] Aetna, United and Cigna are all absent from the CA exchange, and Dan looks into several reasons why some of the bigger carriers might have opted not to sell in the exchange on day one, and why some large provider networks are not going to be covered by plans sold in that state’s exchange.

Connect for Health Colorado Exchange Marketplace and networksHere in Colorado, Aetna stopped selling individual policies a couple years ago, so we weren’t expecting them to be in the state’s exchange, Connect for Health Colorado.  United Healthcare has been a mainstay in the Colorado individual market, and while they submitted numerous plans to the DOI for small group products, they are all to be sold outside of the exchange and there don’t appear to be any individual plans in their new lineup.  Cigna, however, will be selling individual plans both inside and outside of the exchange in Colorado.

We’ve heard from carrier representatives – who are familiar with multiple state exchanges – that Connect for Health Colorado has been particularly great to work with, and that is no doubt part of the reason Colorado will have a large number of carriers and policy options available within the exchange.  We’re happy to be in a state that has been actively working on healthcare reform for several years, and that moved quickly to begin building an exchange and implementing the ACA as soon as it was passed.

Comparing Individual Marketplace Premiums to Small Group is Disingenuous

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After a lot of confusion late last month regarding 2014 health insurance rates in Colorado and information about which carriers would be offering policies in the exchange (Connect for Health Colorado), off the exchange, or both, a lot of the dust started to settle late last week and more information has become available both in terms of rates (although they won’t be finalized for another couple months) and carriers.  The Colorado Division of Insurance has released a full list of the carriers that submitted rates for next year, including details regarding whether each plan will be for individual or small group, and sold on exchange, off exchange, or both.  Detailed rate information is available from some carriers on the Colorado Division of Insurance website, although there will likely be a lot of change between now and October.

As soon as rate data started becoming available in a few states, both supporters and opponents of the ACA jumped on the info and used it to paint two very different pictures.  HealthBeat’s Maggie Mahar (who has astutely and accurately rebuked a lot of political spin and fear-mongering from opponents of the ACA ever since it was signed into law) called out Avik Roy for his critical view of the new rates, noting that he was comparing “apples to rotten apples” in his Forbes article about rate shock.  But Roy did make a very good point is his article, which was based on the release of rates in CA.  He noted that

“The rates submitted to Covered California for the 2014 individual market,” the state said in a press release, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

That’s the sentence that led to all of the triumphant commentary from the left. “This is a home run for consumers in every region of California,” exulted Peter Lee.

Comparing Individual Marketplace Premiums to Small Group is DisingenuousRoy went on to point out the key words there, which might have gone unnoticed by people who aren’t in the health insurance industry or paying very close attention to the details:  The rates for the new individual market are being compared to the existing rates in the small group market.

It is not at all surprising that the new individual rates are looking similar to existing small group rates.  Earlier this year I wrote about how difficult it was going to be for the individual market to be priced significantly lower than the small group market once medical underwriting was no longer a factor.

But I’m not sure that most people (other than business owners) are completely aware of how high small group health insurance premiums are.  As we’ve noted many times, people who have employer-based health insurance are often insulated from the true cost of the coverage, thanks to the fact that at least a portion of the premium is paid by the employer.  Some people started […]

Doctors Moving Away From Independent Practice – What That Means For Patients

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A recent thought-provoking article in the Fort Collins Coloradoan delves into the future of independent medical practices and the pros and cons of hospital mergers and “closed” healthcare systems like Kaiser Permanente (Kaiser opened for business in northern Colorado last fall) moving into the area.  The article notes that the split between employed physicians and… Read more about Doctors Moving Away From Independent Practice – What That Means For Patients

No Colorado Health Insurance Rate Information Yet

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May 15th was the deadline for health insurance carriers in Colorado to submit rates for new plans that will be sold in the individual and small group markets in Colorado, both in and outside of the exchange/marketplace (Connect for Health Colorado).  Much has been said about today – May 22nd – being the date when those rates are available to the public, and there has been a lot of anticipation about getting to find out what health insurance premiums are going to look like next year in Colorado.  We know that in the Pacific Northwest, rates have come in lower than expected, attributed partially to the “heavy competition” in the WA and OR marketplaces (9 and 12 insurers, respectively).  Colorado has even more competition than that, with 19 different carriers submitting rates for plans to be sold through Connect for Health Colorado and on the open market (I’ve seen other reports that say 17 carriers, but either way, it will be a robustly competitive market – just as we’ve always had in Colorado).

No Colorado Health Insurance Rate Information YetThere has been much speculation about what the new rates will look like.  9News did a piece last week that highlighted the concerns that rates – particularly in the individual market – could be much higher next year.  Over the last year or so, in talking with knowledgeable representatives from the various health insurance carriers (who are themselves talking with knowledgeable actuaries), we’ve heard predictions that range from rate decreases for older policy-holders to rates more than doubling for younger insureds… and just about everything in between.  So we are very curious to see how things look once the DOI releases rates.

Today’s the day that those rates are scheduled to be made public, but I doubt that things will be particularly clear anytime soon […]