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
Group Health
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.
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
Apples And Oranges: Employer Mandate And Individual Mandate
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 
work 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 […]
Networks And Carriers Are Part Of The Big Picture With Exchanges
[…] 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.
Here 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
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.
Roy 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 […]
Most Americans Might Not See Big Premium Hikes, But The Individual Market Is Different
One of our all-time favorite bloggers, Julie Ferguson of Workers’ Comp Insider, hosted the most recent Health Wonk Review – the “why hasn’t spring sprung?” edition. Maybe Julie just needs to move to Colorado… here on the Front Range, we’re definitely starting to see signs of spring – today was a beautiful sunny day,… Read more about Most Americans Might Not See Big Premium Hikes, But The Individual Market Is Different
Health Insurance Premiums Coming To A W2 Near You
I’ve noted many times on this blog that one of the difficulties faced by proponents of health care reform is the fact that a lot of Americans are somewhat shielded from the actual cost of health insurance because a portion of their health insurance is paid for by their employer. And when we talk about… Read more about Health Insurance Premiums Coming To A W2 Near You
The ACAs Looming Premium Hikes are Big – How We Can Lower Them
It’s been almost three years since the ACA was signed into law, and in that time, the implementation process has been both steady and plagued with difficulties. The major provisions of the law have largely adhered to the original scheduled time frames, but there have been numerous hiccups along the way, culminating last summer in a Supreme Court case that challenged the legality of several aspects of the law. Once SCOTUS ruled in favor of the ACA, the path was largely cleared for implementation of the health insurance exchanges (marketplaces) that are scheduled to be open for business this fall with policies effective next January. The individual mandate will also take effect in January, but the penalty for not having health insurance in 2014 will be very small ($95 per uninsured person, or 1% of taxable household income). This has caused some concern that the mandate might not be strong enough to avoid the looming problem of adverse selection: specifically, that people who are in need of healthcare might be much more likely to purchase health insurance than people who are currently healthy once all plans are guaranteed issue.
Last month I wrote an article about how the ACA will largely erase the differences that currently exist between the small group and the individual health insurance markets. Once that happens, it would be odd to expect to not see a corresponding change reflected in the premiums. I think it’s unlikely that the premiums will equalize via a drop in small group premiums (if anything, the requirement that small group plan deductibles not exceed $2000 might mean that the average small group premiums increase too). The individual market is poised to become more like the small group market once the policies become guaranteed issue, and the premiums in the small group market are currently significantly higher than the premiums in the individual market. There will likely be a price decrease for people at the upper end of the age spectrum in the individual market, since their premiums are going to be limited to a maximum of 3 times the premiums for young people. But there is a growing concern that those young people – and probably a lot of people in the middle too – might be in for some sticker shock.
Yes, the subsidies will help cushion the blow for people earning less than 400% of federal poverty level. But that still leaves a lot of people facing higher premiums and no subsidies. People who aren’t poor but definitely aren’t wealthy either – in other words, people who are middle class. Some of them are probably quite healthy. Some of them might have money stashed away in HSAs in order to pay for unexpected medical bills. Some of them might be happy to opt for higher deductibles and “catastrophic” health insurance plans in trade for lower premiums. But the way the ACA is currently written, they won’t be allowed to do that. The “catastrophic” plans will only be available to people under the age of 30 or people who meet the economic hardship qualifications. Everyone else will have to have at least a “bronze” plan that provides a broad range of benefits mandated by the ACA.
Please don’t misunderstand me here. I firmly believe that our healthcare system needed […]
It’s a Health Insurance Marketplace, Not An Exchange
HHS has officially started referring to “marketplaces” instead of “exchanges” when describing the state-based online venues where people will be able to purchase health insurance and receive income-based subsidies starting in 2014. Some are calling this a sign that HHS is desperate to garner approval for the ACA-created system for purchasing individual and small group… Read more about It’s a Health Insurance Marketplace, Not An Exchange
Individual Health Insurance Premiums And The ACA
Chris Fleming hosted the Inauguration Edition of the Health Wonk Review this week at Health Affairs Blog, and it’s an excellent compilation of articles. The article written by one of our favorite bloggers, Maggie Mahar, about health insurance premiums in 2014 and beyond caught my attention, because that’s an issue we’ve been watching closely for some time. It’s a question that’s on a lot of minds right now – especially for people who buy their own health insurance and are in the segment of the population that is most likely to experience changes (in coverage, premium, how policies are purchased, etc.) in 2014. Jay and I not only work in the individual health insurance industry, but we’re also policyholders – we’ve have individual health insurance since 2003. We’ve had two carriers and several plan designs over the last decade, and we’ve experienced double digit percentage rate increases nearly every year (somewhat offset by the fact that we’ve been willing to increase our deductible and out-of-pocket limits several times).
We currently pay just over $400/month (for our family of four) for an Anthem Blue Cross Blue Shield CoreShare plan with a $3500 deductible and another $3500 in coinsurance. We know that our rate will go up in the fall – it always does – but how much? How much will prices go up for all of our clients who are covered by all of the biggest health insurance carriers in Colorado?
I don’t know the answer to that question. And I don’t think that anyone really does. The post Maggie wrote references an article from Bob Laszewski that predicts rate increases of 25 – 50%, with some rates actually doubling, while Maggie’s prediction is more along the lines of a price decrease for people who qualify for subsidies, with an average price increase of just over 10% for those who don’t (anyone making more than 400% of FPL). The answers seem to change based on who’s doing the math, and it would be disingenuous to say that all of the numbers are objective. In general, I’ve found that the people who support the ACA are more likely to predict small rate increases and smooth sailing next year, while those who oppose the law are likely to predict large rate increases and general doom and gloom.
Here’s what I do know.
The MLR (medical loss ratio) has already been in effect for two years. Carriers have had to limit their overhead to 15 – 20% of premiums since […]
No 2013 CoverColorado Assessment
CoverColorado announced that there will be no assessment in 2013 on Colorado health insurance carriers. The 2012 assessment was roughly $3.79/month/contract for individual/family insureds.
Anthem Blue Cross of Colorado has also announced that their membership this year was higher than expected this year. They were making up for a shortfall by charging $4.36/month/contract in 2012. Due to the higher enrollment, Anthem BCBS has enough funding to satisfy December without billing subscribers a CoverColorado assessment.
Health Insurance Premiums And The ACA
[…] We wrote a couple years ago about the Colorado Division of Insurance bulletin that laid out the reasons for rate increases in 2010 – almost all of them were the same factors that had been driving health insurance premiums for the previous decade; only 5% of the total premiums could be attributed to the ACA. […] The predicted long-term cost savings from the ACA are definitely not a sure thing. But we need to keep in mind that many of the substantial changes included in the law have not yet taken effect. And many of the changes that have been implemented are those that tend to increase short-term costs and/or utilization of care. […]
Will Exchanges Really Be Able To Provide Lower Cost Health Insurance?
[…] It will be interesting to see how health insurance premiums in both the individual and small group market look in 2014 when the exchanges get underway, and then again in 2015. If we do see a significant reduction in the cost of small group health insurance via the exchanges, I have no doubt that plenty of small businesses will be eager to set up group plans for their employees – we already know that cost is the primary barrier, and that a lot of businesses would like to offer health insurance but simply cannot afford to do so. But I also wonder whether we might see trends in premium increases that are similar to what we have now, even within the exchange. In order to really get a handle on health insurance premiums, we have to find effective ways of controlling healthcare costs first. The ACA included numerous cost-control provisions, but it remains to be seen how effective they will be. The exchanges are a good way for people and businesses to be able to shop for health insurance and coordinate their coverage with their federal health insurance subsidies. But the exchanges cannot address the actual cost of healthcare, which continues to climb much faster than inflation.
How Individual Health Insurance Measures Up
[…] So although it’s true that out-of-pocket costs are higher in the individual market (likely due in large part to people opting for policies that are less expensive), if we combine the premiums and the out-of-pocket costs, the total expenses are lower in the individual market ($8,821 in the individual market versus $15,158 in the group market, using Colorado private sector family premiums for the group data). To ignore cost when comparing the policies is to leave out a large piece of the equation.
The Commonwealth Fund study mentions maternity coverage as an example of a benefit that is often not included on individual policies, thus earning them a “tin” rating. In Colorado, maternity is now included on all policies that have been issued or renewed since January 2011 (the data for the study was collected in 2010). But in many states, maternity coverage in the individual market is rare and/or quite expensive as an optional rider. This will change in 2014, and based on our observations of the Colorado individual market over the past year and a half, I would say that the change will be a positive one. But given the fact that so many individual policies did not include maternity coverage in 2010, I’m curious as to what percentage of individual health insurance plans would have earned at least a “bronze” ranking if maternity had been excluded from the data. If we don’t count maternity, how do individual health insurance plans measure up? Most individual plans (assuming they aren’t mini-meds or some sort of limited benefit coverage) in Colorado in 2010 covered complications of pregnancy and charges incurred by a newborn (eg, a premature baby who is in NICU for weeks). But routine maternity care was included on very few individual plans in Colorado prior to 2011. Given that fact, and the fact that all new individual plans in Colorado now have maternity coverage, I’d be curious to see how individual and group plans compare in 2012.
Overall, I think that The Commonwealth Fund study is a good one. It highlights the out-of-pocket exposure that people have in the individual market, and it’s true that the average plan in the individual market has higher out-of-pocket exposure than the average plan in the group market. But to make the comparison without also looking at the premium costs in each market seems a bit disingenuous. If individual health insurance were two to three times as expensive as it is now, it could cover more costs for members with less cost-sharing. But that doesn’t seem like a good solution either.
Medical Underwriting Makes Individual Health Insurance Much Less Expensive Than Group Coverage
[…] But although there are differences between group and individual coverage that can account for some of the price variation, by far the biggest factor is medical underwriting. The Zane Benefits article points out that 80% of healthcare costs come from 20% of the population – individuals with serious, ongoing health conditions. Group health insurance is required to accept all eligible employees, but individual health insurance carriers use medical underwriting to eliminate the sickest applicants from the pool of insured members (70 % – 90% of applicants in the individual market are accepted and offered a policy – there is quite a bit of variation in underwriting guidelines from one carrier to another and from one state to another). This mean that individual policies are covering people who are generally healthier than the average of the entire population. And that translates to lower healthcare costs in the individual market. […]
Taxes And Individual Health Insurance
[…] Greg’s most recent article deals with the way that our tax code treats health insurance premiums. Medicare and Medicaid premiums are obviously subsidized by tax dollars. But group health insurance premiums are also subsidized, since the premiums that employers pay on behalf of their employees are not included in the employee’s taxable income.
People with individual health insurance usually don’t get such a benefit. The self-employed get to deduct individual health insurance premiums on the 1040, but there are plenty of people who purchase individual health insurance and are not self-employed. Early retirees are a good example, as are people who buy their own health insurance because their employer does not provide it.
Greg’s article goes beyond what we usually see on this topic (ie, pointing out the inherent unfairness of not allowing similar tax treatment for all health insurance premiums, regardless of whether the coverage is group or individual). He delves into what the possible implications could be for the individual health insurance market if the tax code were changed to a more equitable system. His prediction includes millions of additional people entering the individual market (thanks to a switch from group to individual coverage), more lenient underwriting standards in the individual market, more innovative products available to consumers, and more competition in the individual market. Check out his article for all the details – definitely some good food for thought.
Best Health Insurance Companies In Colorado
We recently got a call from a client who mentioned that he had done a Google search for the “best health insurance companies in Colorado” and his concern was that Anthem Blue Cross Blue Shield was not on the top ten list that he said came up as the first search result. We were a… Read more about Best Health Insurance Companies In Colorado
Kaiser Will Soon Be Available In Northern Colorado
[…] The new Kaiser facilities will be in Fort Collins at Harmony and Ziegler, and in Loveland at I-25 and Hwy 34. For hospital services, Kaiser is partnering with Banner Health and members will be able to use McKee Medical Center in Loveland and North Colorado Medical Center in Greeley. The medical offices in Fort Collins and Loveland will offer a wide range of services (primary care, lab work, pharmacy, and x-rays, and mammograms will be available at the Loveland office), and are expected to begin providing care by the fall of 2012. A medical office is projected to open in Greeley by 2014. Between now and then however, northern Colorado Kaiser members will be able to see doctors at the Fort Collins and Loveland offices, as well as physicians on the Banner Health network.
Kaiser is planning to offer group coverage to employers in northern Colorado by October 1, 2012. Individual and family coverage should be available sometime next year.
Contraceptive Coverage And The PPACA
[…] Anyway, assuming that we’re talking about contraceptives for women, new health insurance policies – except those that are exempt based on religious reasons – will cover contraception with no copays or deductibles. Non-grandfathered plans (grandfathered means that the policy was in effect prior to the PPACA being signed into law and that the plan has not made any significant changes since then) will have to start covering contraceptives as of each plan’s renewal date. This is similar to how the state maternity mandate worked in Colorado last year. New policies had to start covering maternity on January 1, 2011. But existing policies added it throughout the year as each plan renewed (for example, my family’s health insurance plan renews each year in November, so our maternity coverage didn’t begin until November 2011). This brief from the Kaiser Family Foundation website has a lot of good information regarding contraceptive coverage and should help to clarify the issue a bit. […]