Brad Wright did an outstanding job with the Health Wonk Review this week, hosted at his always excellent blog, Wright on Health. There are plenty of posts about the latest in ACA implementation, including several differing viewpoints on the recent news about policy cancellations. I particularly liked Joe Paduda’s article about Medicaid expansion – it’s an… Read more about News From The Health Wonks – Lots Going On In Health Care Reform Land
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Getting Past The Health Insurance Plan Cancellation Hysteria
Much has been said recently about how the ACA is causing a tidal wave of policy cancellations, and resulting in people losing coverage that they would prefer to keep. The frustrating part about this – as has generally been the case with every big uproar about the ACA – is that we’re not really getting… Read more about Getting Past The Health Insurance Plan Cancellation Hysteria
Fewer Plans Available In Exchanges In 2013, But Maybe That’s A Good Thing
At the end of September, just as the exchanges were about to open for business, HealthPocket created a comparison of the number of individual and family health insurance policies available in each state in 2013 and compared that with the number of policies that would be available in each state’s exchange in 2014. It’s an… Read more about Fewer Plans Available In Exchanges In 2013, But Maybe That’s A Good Thing
The Public Should Be Aware Of Actual Health Insurance Premiums As Well As Subsidized Rates
Jaan Sidorov hosted this week’s Health Wonk Review at his most excellent Disease Management Care Blog – be sure to check it out if you haven’t already. One particularly interesting post in this edition comes from Hank Stern, writing about how one of the widely-criticized flaws in the HHS-run exchanges was actually an intentional part… Read more about The Public Should Be Aware Of Actual Health Insurance Premiums As Well As Subsidized Rates
Early Renewal Does Not Mean You’re Taking Advantage of a Loophole
A few weeks ago, I wrote a post about our family’s health insurance policy and the changes coming in 2014. To make a long story short, our premiums are going to go up significantly and we don’t qualify for subsidies. We’re not complaining… we know that the ACA makes healthcare more accessible for a lot… Read more about Early Renewal Does Not Mean You’re Taking Advantage of a Loophole
The Government May Be Shut Down, But the Health Wonk Review Is Open For Business
Joe Paduda did an outstanding job with the most recent Health Wonk Review, hosted at Managed Care Matters. This edition is all about the government shutdown and Obamacare, and there’s a little something for everyone. My favorite article in this HWR comes from David Williams, explaining why Conservative lawmakers ostensibly hate Obamacare – along with… Read more about The Government May Be Shut Down, But the Health Wonk Review Is Open For Business
House Republicans Want To Strip Congressional Staffers Of Their Health Insurance Benefits
Yesterday I explained why the Republican House Amendment to “delay Obamacare” (actually, just the individual mandate) would be impossible from a practical standpoint. I am not under any illusions that the people who created it were actually trying to implement something practical or realistic. They don’t care that millions of people have been waiting 3.5 years since the ACA became law to be able to enroll in guaranteed issue individual health insurance. They don’t care that millions of uninsured Americans will finally be able to afford health to purchase their own health insurance thanks to the subsidies in the marketplaces/exchanges. Their priority is to get rid of the ACA, and it appears that they consider the shutdown of the federal government to be acceptable collateral damage in their fight. Their goal is not really to delay the law, but to derail it entirely – they know full well that delaying the individual mandate would throw the whole law into a tailspin.
But there’s another part of the House Amendment to H.J. Res. 59 that is also worth talking about, since it goes hand in hand with an ACA myth that just won’t die. So before we go any further, I want to clarify: Congress is not exempt from the ACA. The President and Vice-President are not exempt from the ACA. Political Appointees are not exempt from the ACA. Being “exempt from the ACA” or “exempt from Obamacare” doesn’t really mean anything anyway. The talk show hosts who perpetuate this myth are deliberately trying to obfuscate an aspect of the ACA that actually penalizes Congress.
They talk about how this amendment gets rid of “special treatment” for Congress. If you consider losing your employer-sponsored health 
insurance to be “special treatment,” then I guess that’s true. The amendment basically lays out provisions to make sure that the President, Vice President, political appointees, Congress and congressional staffers must purchase health insurance in the marketplaces (exchanges) and strips them of any contributions from the government to help pay for their policies.
To briefly summarize the history of this fight, back in 2010 Republican Senator Chuck Grassley felt that “we [in Congress] need to go into the exchange so that we would have to go through the same red tape as every other citizen.” This is sort of a warm-fuzzy statement if you just take it at face value. But in truth, it’s ridiculous, because the majority of US citizens are not going to be using the exchanges. Most people will continue to get their health insurance from their employers or from the government (Medicare, Medicaid, VA).
Federal government employees get their health insurance from the Federal Employees Health Benefits Plan (FEHB). Just like almost every very large employer, the federal government provides health insurance benefits to its workers and pays a large portion of the premiums. The benefits are one of the ways that the government is able to recruit talented employees. The marketplaces/exchanges were created in order to help people who are uninsured or who purchase their own individual health insurance (because they are self employed or work for a company that doesn’t provide benefits). Federal government employees do not fall into this category by any stretch of the imagination. So it has always seemed ridiculous to me that the Grassley Amendment was added in the first place. But it was.
Although the original amendment didn’t include a provision for Congress et al to keep their employer contributions (the amount that the government already pays towards their FEHB policies) and use them towards individual health insurance in the marketplaces, it also did not require the government to stop contributing to their health insurance premiums. The Office of Personnel Management (OPM) issued a proposed ruling in August that allowed the government to continue to fund Congressional health insurance after the switch is made from FEHB to the exchanges. Then at the end of September, OPM issued a final ruling which states that
“OPM has clarified that Members of Congress and designated congressional staff must enroll in an appropriate Small Business Health Options Program (SHOP) as determined by the Director in order to receive a Government contribution.”
This is what they came up with in order to work around an amendment that never made sense in the first place. The OPM ruling doesn’t really make a whole lot of sense either, since the SHOP marketplaces in 2014 are designed for businesses with up to 50 employees – not exactly the definition of the federal government’s employment roster. But the SHOP markeplaces are set up to allow employers to contribute to their employees’ health insurance premiums, so it works on that level.
And now the House Amendment to H.J. Res. 59 would remove that allowance. It states that “No government contribution under section 8906 of title 5, United States Code, shall be provided on behalf of an individual who is a Member of Congress, congressional staff, the President, Vice President, or a political appointee for coverage under this subparagraph.” The basic effect of this would be to strip these government employees of their employer-sponsored health insurance benefits, even though these benefits are part of what helps keep the government competitive with other big companies in the labor market. Keep in mind that we’re not just talking about highly paid lawmakers… congressional staffers are included. These are regular people with jobs that probably aren’t all that glamorous. And now House Republicans want to strip them of their employer-sponsored health insurance benefits?
Interestingly enough, Senator Grassley has said that he didn’t intend for lawmakers to lose the money that the federal government contributes towards their health insurance coverage (just like any other large employer would). And yet, here we are.
Overall, the House Amendment to H.J. Res. 59 is a mess. It makes no sense, and lawmakers who voted against it should be commended. It’s only seven pages long, so take a look at it yourself if you’re curious. As I mentioned in yesterday’s post, there are much more productive, sensible ways that Speaker Boehner and his colleagues could go about changing the law, if they’re so inclined. They’re throwing a Hail Mary here, because they know that once the marketplaces are running smoothly and people get used to guaranteed issue health insurance and subsidies to help pay for it, the ACA will probably be a pretty popular law. An amendment that attempts to hobble the law under the guise of “delaying” it is disingenuous. The American people deserve better than this.
Government Shutdown: Is The Republican “Plan” Actuarially Feasible?
Although I’ve seen a lot of media references placing blame for the government shutdown squarely at the feet of House Republicans, I’ve also heard people saying that both sides are to blame and that the Democrats could have “compromised.” I’ve just finished reading the text of the House amendment to H.J. Res. 59. This is the amendment that would have “delayed Obamacare” by a year.
There are a couple specific aspects of the ACA that House Republicans were trying to delay or delete. The most significant is the individual mandate (keep in mind that this has been challenged all the way to the Supreme Court and found to be Constitutional), which the amendment would postpone until 2015. [The amendment also contains some other provisions regarding health insurance for Congress and the President, which I’ll address tomorrow.]
The initial provisions of the ACA started to take effect in 2010. January 1, 2014 is about 3.5 years after that, so the individual mandate had a significant built-in delay. But let’s assume for a moment that the Democrats wanted to accept this “compromise” and allow the individual mandate to be delayed until 2015. What would that have involved from a practical standpoint?
An actuarial nightmare
Back in the spring of this year, health insurance carriers all across the country were scrambling to submit rates and plan designs for review. There were some delays, and some carriers ended up having to redo their rates and submit them again, but by the middle of August we had a pretty good idea of what plans were going to be available in the Colorado marketplace (exchange) – and news was also coming in from lots of other states. This was six weeks before the marketplaces opened, and a full 4.5 months before the new policies were going to be effective. Once the rates were finalized, they had to be loaded into each marketplace’s online quoting software so that they would be available to navigators, brokers and applicants once the marketplace opened for business.
This whole process took many months. Creating the ACA-compliant plan designs and doing the actuarial work to price them was not something that happened overnight. Carriers were working on this early in the year, getting their plan design and rate info ready to submit in the spring. And then the rate reviews, final approval, and user interface updates added to the time frame.
So let’s go back and look at the Republican “compromise” of delaying the individual mandate for a year. All of the new plans and rates that actuaries, marketplaces and Divisions of Insurance have been working with this year are designed around the basic concepts of the ACA: Policies must be guaranteed issue (a huge change from the way policies have historically been issued in the individual market, where underwriting has been part of the process in all but five states), they can only be issued during open enrollment or following a qualifying event (loss of other coverage, birth, adoption, marriage, divorce), and the individual mandate is expected to generally increase enrollment.
Removing any of these elements would drastically change the pricing of the policies and basically mean that the actuaries would have to start over. Incidentally, the House Amendment does not mention delaying the requirement that individual health insurance be guaranteed issue starting in 2014. To roll out guaranteed issue coverage without the individual mandate would mean that rates would be significantly higher for the people who do opt to purchase a plan. But regardless, removing one of the primary elements upon which the 2014 rates have been based would mean a complete do-over of the actuarial process of pricing the new policies.
But what about just keeping things the way they are? Can’t we just keep our 2013 plans and roll them into 2014 with no changes?
No. Remember, the House Amendment to “delay Obamacare” (that’s the language most often used in the media and by lawmakers themselves) would actually just delay the individual mandate. It doesn’t delay the other crucial aspects of the ACA that guided plan design for 2014. So policies would still have to provide essential health benefits. They would have to be guaranteed issue and priced the same regardless of gender (in Colorado, this has been the rule for almost three years now, but the ACA bans it everywhere).
So current 2013 policies could not continue to be issued in 2014. They’re not compliant in terms of plan design, even if actuaries were able to perform a miracle and redo all of the pricing in the next few weeks.
That puts us back to starting over with the new ACA-compliant plans that carriers created months ago, and trying to reprice them for 2014 to reflect a delay in the individual mandate. Remember that the actuaries have to come up with the pricing (not a quick process), DOIs and marketplaces have to review the pricing, and then the final rates have to be uploaded to quoting systems (both marketplace systems and private “off-exchange” quoting systems) and added to printed sales materials in time for consumers to be able to use them. For 2014 plans, this process started early in 2013. Starting over at the beginning of October would have been mission impossible.
Consumers have generally always been able to submit applications one to two months prior to the effective date they want. A lot of people wait until the last minute, but quotes are available several weeks out. That means that if actuaries were to start over at the beginning of October and redo everything, the entire process would have to be completed by mid November at the latest in order for accurate pricing information to be available for consumers looking for a January 1 effective date. The House Amendment did not mention delaying the opening of the marketplaces, so it’s unclear what lawmakers wanted the marketplaces to do. Would plan information still be available in early October, but with no rate data?
To say that this was a poorly planned amendment is an understatement. It was political posturing designed to appeal only to people who “hate Obamacare” (and unfortunately, some of those people are woefully uninformed about the law). It had no basis in actuarial reality, and would have thrown […]
Getting ACA Information and Ignoring “Obamacare” Misinformation
One of the major hurdles for the ACA has long been a lack of public understanding about the basics of the law. This is significantly exacerbated by the blatantly false information that has been circulated by many “Obamacare” opponents over the last few years. That’s not to say that the ACA is perfect – it definitely has its flaws. But public understanding of the law has been greatly hampered by people whose sole purpose is to defeat it. If you’re trying to learn about the ACA and how it will impact you and your family, you’re probably better off getting your information from a source that isn’t hell-bent on doing away with the law (and if that’s their intent, they probably have zero interest in your family’s access to healthcare, which is one more reason to ignore them).
In addition to a widespread lack of understanding about the law, there’s also a significant gap between how people expect to learn about the law and how they probably actually will learn about it. A recent AFLAC survey found that 75% of employees think that their employer is going to educate them about changes to their health insurance as a result of the ACA, but only 13% of employers indicated that was a priority for their company (more info from the AFLAC study available here).
This comes in conjunction with the announcement that employers should communicate with their employees about the health insurance marketplace (exchange) by October 1, 2013, but there is no fine or penalty for employer who don’t. Of course some employers will provide information and support to their employees. But some will not. In the latter group, you’ll have a combination of employers who lack understanding themselves about the ACA and the marketplace, and those who simply forget or are too busy to deal with it. But there will also be employers who are actively opposed to the ACA and choose not to inform their employees about the marketplace or changes to health insurance as a result of the ACA.
Ultimately, a lot of people, including the self-employed as well as employees who don’t have access to employer-sponsored health insurance (keep in mind that the employer mandate that requires employers to offer health insurance only applies […]
Roadtrip HWR And Good Info About The Government Shutdown
Peggy Salvatore of Healthcare Talent Transformation did an excellent job with the Health Wonk Review this week, taking us on a legislative and healthcare policy roadtrip with lots of interesting stops along the way. She starts things off with Brad Wright’s concise summary of why a government shutdown on October 1 won’t do much to… Read more about Roadtrip HWR And Good Info About The Government Shutdown
No More HRA Funded Individual Health Insurance Policies In 2014… But Does It Make Sense?
A couple years ago, I wrote extensively about the rules regarding HRAs (Health Reimbursement Arrangements) and individual health insurance in Colorado. To sum it up, it used to be against the law for employers in Colorado to reimburse employees for individual health insurance premiums. Then, the IRS said it was ok for HRAs to be used to pay for individual health insurance premiums. Colorado’s DOI resisted though, and initially said that employers could only pay – directly or indirectly – for group health insurance, period. But then they repealed that order and said it was ok for HRA funds to be used to purchase individual policies. And then Colorado passed a law in the spring of 2011 that expressly allowed employers to pay for individual health insurance premiums, but only if the employer had not had a group health plan in place during the past 12 months (this was to prevent employers from dropping their group health insurance in favor of an HRA and individual policies). There are a lot more details about the whole saga in the two posts I linked to at beginning, but that’s the story in a nutshell.
And now it looks like it’s all changing again in 2014. The IRS issued new guidelines last week about HRAs, and they’re pretty clear about the fact that stand-alone HRAs can no longer be used to reimburse employees for individual health insurance premiums for plan years starting in 2014 (most of the details about this start on page 4 of the IRS regulations document).
What I find interesting is their reasoning: They note that “an HRA is not integrated with primary health coverage offered by an employer unless, under the terms of the HRA, the HRA is available only to employees who are covered by primary group health plan coverage that is provided by the employer and that meets the annual dollar limit prohibition.” They then go on to explain that an HRA cannot be integrated with individual health insurance (obviously, because that’s part of the definition they wrote for what it means to be “integrated”). And that an HRA used to reimburse individual health insurance premiums would fail to comply with the annual dollar limit prohibition.
The most interesting thing about all of this is that for plan years starting in 2014, individual health insurance cannot have annual benefit limits (or lifetime limits, a rule already in place) on “essential health benefits.” This is the same in the small group market (although curiously enough, the large group market doesn’t have the same restrictions).
So if we look at this from a practical standpoint, if an employer funds an HRA that is used by an employee to purchase individual health insurance, the policy being purchased (as of 2014) would have to have essential health benefits covered with no annual (or lifetime) benefit limits. In the past, there were a lot of differences between the individual and group health insurance markets, which had a lot to do with the huge price differences between the two (individual health insurance has historically been much less expensive, but it’s also medically underwritten and in a lot of states doesn’t cover key benefits like maternity). That’s all changing in 2014. Individual health insurance is going to look a lot like small group health insurance, both in plan design and premiums (subsidies will help a lot of people pay much less for their coverage than the “retail” price).
So although the definition in the IRS guidelines makes it impossible for an HRA to be “integrated” with individual health insurance, there’s not really a logical reason that this should be the case.
Here’s the problem as I see it. The employer mandate does not […]
Healthcare Data, Privacy And Flip-Flopping Health Wonks… Don’t Miss The HWR!
David Williams: What would happen if health insurance companies tracked our health-related habits the way Progressive tracks driving patterns for insureds to opt to let them do so? This is similar to the concerns that many people had (and still have) about the results of genetic testing being available to employers and insurers… what can be done with that data? Of course, the key is that Progressive only puts the tracking device in cars if their insureds give them the go-ahead. If my car insurance company offered that, I’d be happy to let them put one in my car. And I think I’d also be willing to let my health insurance carrier track various data about me from a health standpoint.
The ACA has built-in limitations on using medical data to set rates or make eligibility determinations, but I can see real-time health tracking data being used for all sorts of purposes a decade from now. Heading out to the porch for an after dinner cigarette? You could get a text from your insurance company advising you to take a nicotine-free walk instead (or by then, maybe texting will be old-school and our phones will just be able to send messages straight into our thoughts). Who knows, but David makes a good point: the technology for […]
Skinny Health Insurance In The Large Group Market
We’ve railed against “mini-med” health plans many times here on our blog, and have spoken with lots of people over the years who have found themselves stuck with medical bills because their mini-med had such low benefit limits. We’ve even had one client who found himself stuck paying for a mini-med until the following open-enrollment period, even after his plan had reached its very low benefit maximum.
We are not fans of mini-meds, and were glad that one of the provisions of the ACA was to do away with lifetime and annual benefit maximums on essential health benefits. For the past couple of years, most sources that report on healthcare reform (including us) have been explaining that mini-meds are going away in 2014. Not everyone was in agreement that this was a good thing – some people expressed the view that businesses that hire large numbers of minimum wage workers would be switching to more part-time employees or suffering dire financial consequences. But the general consensus was the mini-meds would be a thing of the past once all of the benefit maximum waivers that HHS had granted ran out.
Alas, that doesn’t appear to be the case. Over the last few weeks, I’ve seen several articles explaining how a new type of “skinny” health insurance policy might take the place of mini-meds in the large group market for employers in the retail and food industries who typically hire minimum wage employees. The most thorough article I’ve seen is on Forbes, written by Avik Roy, and it’s worth a read.
To summarize, the ACA focused almost entirely on reforms in the small group and individual market. We’ve been talking about those reforms for three years now, and for the most part, they’re working well to improve the safety net that health insurance should provide. The primary reform in the large group market was the employer mandate, which requires employers with more than 50 full time-equivalent employees to offer health insurance or pay a penalty. This provision of the law has been delayed until 2015, so it’s even more of a back-burner issue right now as we head into open enrollment in the individual market and the opening of the exchanges for individual and small business coverage.
But although the idea was to make sure that large employers offered good qualify coverage in order to avoid paying a fine, it appears that some large employers will opt for the fine instead. The penalty is steep if a large employer doesn’t offer any coverage at all: if even one employee (of a business with at least 50 employees) seeks coverage in an exchange and gets a subsidy, the employer has to pay a penalty of $2000 per employee (the first 30 employees are waived). So if a company has 90 employees, doesn’t offer any coverage […]
Risk Management, Step One: Identify the Actual Risk, Not The Perceived One
Julie Ferguson hosted the 191st edition of the Cavalcade of Risk this week – be sure to check it out! She opens with a link to a particularly good article about how we tend to worry about all the wrong things. We worry about being eaten by a shark if we swim in the ocean, but don’t think much about the risk of biking/walking/driving to the ocean in the first place. Even though most people die in rather mundane ways, it’s the dramatic, high-profile dangers that grab our attention. If we’re really paying attention to risk, we’ll focus more on making the ho-hum aspects of our daily routine safer, and not worry so much about being attacked by a bear while hiking. Pretty much sums up what risk-management is all about: first you have to understand the risks!
I liked David Williams’ post about an unintended consequence of the oral chemotherapy parity law in Mass. In his case, he’s getting a refund of previously paid copays because someone on his plan is using an oral medication that can be prescribed for cancer, although in this case it’s used to treat something else. But since his plan covers infused chemo with no cost-sharing, the oral medication must also be covered with no cost-sharing.
Colorado is among the 26 states that have oral chemotherapy laws on the books (I would image that all of the rest will within the next few years), and overall, the concept makes perfect sense: Chemo is chemo, and patients should have access to whatever type of chemo they and their doctors feel will be most successful, without having to consider whether oral chemo will be more expensive. Oral chemo parity laws might end up saving money in the long run, since they avoid the hospital or clinic fees associated with a traditional multi-hour chemo infusion. And oral chemo also makes it easier for the patient to carry on with day to day life. But it would also make sense to have a clause in the law that requires the parity only if the oral medication is actually being used to treat cancer, as opposed to some other use.
Renewal Options for Each Individual Health Insurance Carrier in Colorado
Last week I explained how early renewal at the end of 2013 might be a good option for some people who have individual health insurance. If you’re happy with your coverage and aren’t going to qualify for a subsidy in the Colorado exchange, keeping your existing plan for most of 2014 might be a good way to save some money on premiums. This is especially true for people who prefer very high deductibles, as those plans are generally not ACA compliant and thus will not be available for purchase after the end of 2013. But if your carrier allows it, you can keep your current policy until it renews in 2014, and switch to an ACA compliant plan at that time. For people with plans that renew late in the year, this could mean keeping a lower-cost, higher deductible policy for most of 2014. If you’ll be eligible for a premium subsidy, it’s definitely worth your time to compare a subsidized exchange plan with what you have now. But if you’re happy with your coverage and you’re going to be paying full price for an ACA compliant plan, check with your carrier to see about keeping your current plan in 2014.
Keep in mind that each Colorado health insurance carrier is doing things a little differently in terms of 2013 renewals heading into 2014. It’s important to check with your carrier to make sure you’re aware of what steps you need to take – don’t assume that your plan will automatically renew – or automatically not renew. The Colorado Division of Insurance has left a lot of leeway for carriers to determine their own protocol for renewals going into 2014. There is no state requirement that existing policies be cancelled as of the end of 2013, although some carriers have opted for that as a default. All plans must be ACA-compliant by January 1, 2015. So when your policy renews in 2014, you will have to transition to an ACA compliant plan. But the date of that renewal can be anytime from January to December.
Here’s a brief summary of what we have heard so far from some of the main carriers in Colorado. This is subject to change, so check with us or your carrier before you make a decision.
Anthem Blue Cross Blue Shield: The default is for your plan to just keep its current renewal date and continue unchanged until that date in 2014. But Anthem is also offering insureds an option […]
HSA Contribution Limits For 2014
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.
They 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
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 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
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 purchase 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
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 plan 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
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, Denver 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 […]
Questioning The Medicare Status Quo
R.J. Weiss made his hosting debut today with the 189th Cavalcade of Risk – be sure to check it out. This article from David Williams gets my vote as one of the most interesting in this edition of the Cavalcade. David writes about a small but growing number of doctors who are choosing to not… Read more about Questioning The Medicare Status Quo
Assurant and UnitedHealth Still Available In Colorado Individual Market
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 plans (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
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 insurance. 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
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
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 contain 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.
contain 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 […]