Friday, August 29, 2014

Obamacare's Most Significant Impact on the Labor Market in One Paragraph from the CBO

"Other Indicators of Labor Market Slack. Another manifestation of slack in the labor market is the number of people who are employed but are not working as many hours as they would prefer. The incidence of part-time employment for economic reasons (resulting from slack work or business conditions or a worker’s inability to find fulltime employment) remains much higher than it was before the recession. Consequently, the Bureau of Labor Statistics’ U-6 measure of underutilization in the labor market stood at 12.2 percent in the second quarter, down from a peak of 17.1 percent in fourth quarter of 2009 but still well above its value of 8.5 percent in the fourth quarter of 2007. (The U-6 measure combines the number of unemployed people with numbers for two other groups of people: those who are “marginally attached” to the labor force—that is, who are not currently looking for work but are willing and able to work and who have looked for work in the past 12 months—and those who are employed part-time for economic reasons.) Consistent with the trends in the U-6 measure, average hours worked per worker fell substantially during the recession and remain below their prerecession level."

Source: Page 40 of the Congressional Budget Office's Update to the Budget and Economic Outlook: 2014 to 2024.

California Legislature Working Hard to Erase All Barriers to Free Healthcare in the State

*** Update: in late September, Gov. Brown did ultimately veto this bill.  ***

Some people actually refuse care when they know they might have to ultimately pay for it out of their estate.  California's Legislature wants to erase that fear and make sure basic medical services provided though Medi-Cal are always free; even if the recipient subsequently finds themselves out of financial difficulty and passes on with significant assets.

Over the past 20 years, California has recovered almost a billion dollars that paid for long-term care and basic health services through Medi-Cal under this program.  But our State Senate and Assembly just passed a bill changing that calculus.  The bill now sits on Governor Brown's desk.  

This is from Pauline Bartolone writing at Kaiser Health News (Hat tip to Angie Vitale for the pointer):
Federal law requires states to recoup money spent on institutional care, such as nursing homes, by Medicaid, the state-federal health care program for low-income people. [It is called Medi-Cal in California.]  But it also allows states to recover costs from people after they die if they received basic medical services through Medicaid at the age of 55 or older.

In California, advocates of [a new bill passed by the legislature and awaiting Gov. Brown's decision] say the current law is complicating enrollment in Medi-Cal, the state’s Medicaid program, with some people refusing to sign up, and others terminating enrollment for fear of not being able to pass on their estate. The state has enrolled 2.2 million people into Medi-Cal under the Affordable Care Act. 
According to Consumer Reports, California is one of 10 states that recovers funds from estates of Medicaid beneficiaries 55 and older for basic health services. The other states are Colorado, Iowa, Massachusetts, Nevada, New Jersey, New York, North Dakota, Ohio and Rhode Island. ... 
Anne-Louise Vernon had been looking forward to signing up for health insurance under Covered California. She hoped to save hundreds of dollars a month. But when she called to enroll, she was told her income wasn’t high enough to purchase a subsidized plan. 
“It never even occurred to me I might be on Medi-Cal, and I didn’t know anything about it," said Vernon. 
She said she asked whether there were any strings attached. 
"And the woman said very cheerfully, "Oh no, no, it’s all free. There's nothing you have to worry about, this is your lucky day.'” she recounted. 
Vernon signed up for Medi-Cal on the phone from her home in Campbell, Calif. Just months later, she said she learned online about a state law that allows California to take assets of people who die if they received health care through Medi-Cal after the age of 55. 
“So I called Medi-Cal and asked specifically, 'Does this mean what I think it means?'” she said. 
It means Medi-Cal managers can take part of her estate later for health care costs she’s accruing now. Vernon said she’s panicked and worried. She doesn’t get a monthly bill – so she’s not sure what she’ll be accountable for. ...

Wednesday, August 27, 2014

Reporting Requirement for Transitional Reinsurance Fee - Due by November 15, 2014 (Self Funded Plans)

Self-funded employers should register on beginning this fall to become familiar with the site and complete the reinsurance contribution submission process. is a web-based application where employers can report and submit the required membership data elements. Registration on is required in order to complete the reinsurance process. 

Although PPACA's "Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form” is not yet available on, self-funded employers can begin the process of collecting the information needed to complete the Form and supporting documentation, along with its data elements such as Reporting Entity Legal Business Name and Reporting Entity Federal Tax Identification Number (TIN). 

... You may recall that the Affordable Care Act (the “ACA” or “Obamacare”) added a couple of new fees for health plans, including the transitional reinsurance fee. We haven’t yet seen any acronyms for the transitional reinsurance fee (the “TRF”, anyone?), so we will simply refer to it as the fee or call it by its full name. You may have noticed that the Department of Health and Human Services (“HHS”), the agency responsible for implementing and collecting the fee, prefers to refer to it as a “contribution.” 
“Contributing entities” — including health insurance issuers and self-insured group health plans offering major medical coverage — are required to pay the fee. So, if you have a self-insured major medical health plan, you’ll need to pay the fee (or arrange for the plan’s third party administrator to pay the fee on behalf of the plan). If you have a fully-insured health plan, then the insurance carrier will pay the fee. 
The fee is owed with respect to any major medical plan. A major medical plan is one that provides minimum value, as defined under the ACA’s employer shared responsibility rules. The fee will not be assessed on the following types of health plan arrangements: (1) stand-alone dental or vision plans, (2) retiree medical plans that provide benefits secondary to Medicare, (3) health reimbursement accounts (HRAs) that are integrated with major medical coverage, (4) health savings accounts (HSAs), (5) health flexible spending accounts (FSAs), (6) employee assistance plans (EAPs), (7) wellness programs, or (8) prescription drug-only plans. 
As mentioned above, the fee will be due for calendar years 2014, 2015 and 2016 only, which is good because unlike the paltry POCRI fee of $1 per covered life, the transitional reinsurance fee is a whopping $63 per covered life in 2014. The amount due for 2015 will be $44 per covered life. The fee amount for 2016 will be announced in a future year. For 2015 and 2016 only, a self-insured major medical plan that does not utilize a third-party administrator (other than for prescription drugs) will not be subject to the fee. 
For self-insured group health plans, a plan sponsor may elect to count covered lives in one of four ways:
  • Adding the total number of covered lives (employees, dependents, retirees, COBRA qualified beneficiaries, etc.) for each day of the first nine months of the calendar year, and then dividing by the total number of days in those first nine months.
  • Adding the total number of covered lives on any date (or multiple dates) during the same corresponding month in each of the first three quarters of the calendar year, and then dividing that by the total number of dates used. For example, you could look at the number of covered lives on the 1st day of each the first month of each calendar quarter (January 1, April 1, and July 1), and divide by three. Alternatively, you could look at the number of covered lives on the 15thday of each of the first two months of each quarter (so January and February 15th, April and May 15th, and July and August 15th), and divide by six. The date(s) used for the second and third quarters must fall within the same week of those quarters as the corresponding date used for the first quarter.
  • A variation on the bullet point above: using the same quarterly dates, count each participant with self-only coverage as “1 covered life” and each participant with some other type of coverage as “2.35 covered lives.” This 2.35 becomes a proxy for the actual number of covered lives under a coverage level other than self-only coverage.
  • Use the participant count reported on the most recently filed Form 5500. For this purpose, you are required to add the number of participants as reported at the beginning and end of the year, and treat the sum of those two numbers as your total covered lives. Using this method allows you to ignore dependents, who are not considered “participants” that must be reported on the Form 5500. There is a special rule for plans that only offer self-only coverage, which allows the plan to divide the beginning and ending participant count by two. If you sponsor a small plan that is not required to file a Form 5500, then it appears this option is not available.
If your major medical group health plan has both fully-insured and self-insured options, provided you are separately tracking covered lives, you can use any of the methods above to determine the covered lives for your self-insured options. Health insurance carriers are required to use one of the methods in the first two bullet points when calculating their required fee. 
To pay the fee, the first step is to go to and access the “ACA Transitional Reinsurance Program Annual Enrollment and Contributions Submission Form.” [Note: As of the date of this publication, the form was not yet available.] You will enter the total number of covered lives on this form, designate the counting method used, list the names of the plans being covered by the form, and provide any other required information. The HHS will then auto-calculate the amount of the transitional reinsurance fee due for the year based on the number of covered lives reported, and notify the contributing entity of the amount due. The contributing entity must pay the fee in two installments. The chart below highlights the relevant reporting and payment deadlines.
Key Deadlines for 2014 - 2015
  • No later than November 15, 2014: Submit annual enrollment count 
  • No later than January 15, 2015: Remit first installment of fee of $52.50 per covered life 
  • No later than November 15, 2015: Remit second installment of fee of $10.50 per covered life 
If the plan sponsor pays the fee (or has the plan’s third party administrator make the payment on its behalf), then the plan sponsor may treat the payment as an ordinary and necessary business expense, which may be deductible. If there is a trust associated with the plan (such as a VEBA), then the fee is considered a permissible plan expense, which may be paid with trust assets if the terms of the trust agreement so allow. ...


Friday, August 22, 2014

We Won't See Massive Employer Dumping of Employees into PPACA Exchanges ... Yet

As always, a provoking and thoughtful column from Megan McArdle at Bloomberg with her take on whether we'll see massive employee dumping into the exchanges.  I generally concur with her.  If PPACA sticks around and the Exchanges turn out to be an adequate form of coverage it will take five to ten years for large employers (more than 100 employees) to really undertake a whole-scale transition.  But we will see it from smaller companies and in the hospitality, service and manufacturing industries sooner.  
... After all, why do employers offer insurance in the first place? Yes, yes: tax arbitrage. Wages are taxable to employees, while fringe benefits aren’t, so you can offer higher overall compensation by substituting benefits for wages. 
But that’s also true of luxuriously appointed offices. Yet relatively few employers have chosen to provide everyone a cavernous office with a luxe couch and a wine fridge. A lot of employers, on the other hand, provide luxe health benefits. The difference is that employees value the health benefits highly enough to trade off a lot of wages for them. For all the talk about how people are insulated from the cost of their insurance, if you follow union negotiations, you’ll know that when it comes to making explicit trade-offs between more expensive benefits and higher wages, the union representatives very frequently choose the benefits. 
That suggests that as long as employees are afraid of the exchanges, employers are going to be reluctant to force them there. This effect will probably be weakest at the low end, where the workforce is already struggling to find and keep jobs....
   Full story.

Survey: Obamacare's Dramatic Impact on Manufacturing Businesses

Mish has a truly amazing post up over at his Global Economic Blogspot detailing the crippling effect of PPACA on insurance plans, hiring and employment in the manufacturing industry.  For many higher-end, white collar companies that already used benefits to compete for the very best talent, Obamacare was not nearly as disruptive as it has been in the lower-wage industries.  At architecture, law, engineering and financial service companies, for example, Obamacare acts primarily as an additional, annual 3% tax (boost in premium) to cover new fees, taxes and benefits.  But in manufacturing, hospitality and service, Obamacare truly stifles economic growth.

Here is an excerpt from Mish's column:
Net Percentage of Manufacturing Firms That ...
  • Decrease Employment ..... 15.2
  • Increase Part-Time Workers ..... 16.7
  • Increase Outsourcing ..... 10.7
  • Increase prices ..... 28.8
  • Raise Healthcare Premiums ..... 85.3
  • Raise Healthcare Deductibles ..... 91.2
  • Raise Out of Pocket Maximums ..... 73.6
  • Increase Copays ..... 61.8
  • Reduce Medical Coverage ..... 38.3
  • Decrease Network Choices ..... 26.5

Thursday, August 21, 2014

PPACA Employer Compliance: Changes in Employment Status under the Look-Back Measurement Method

By far, the most difficult task employers will have in 2015 with respect to Healthcare Reform will be employee hour tracking.  The below is a great summary of some of different situations you'll be sure to face. 

This is from Michael Arnold writing at Mintz Levin
... Full-time employees 
A newly-hired employee that is not a new variable hour employee, a new seasonal employee or a new part-time employee—i.e., a full-time employee—must be offered coverage beginning no later than the first day of the fourth full calendar month of employment, provided, of course, that the employee is still employed on that day. ... 
Thereafter, the employer determines an employee’s status as a “full-time employee” based on the employee’s hours of service for each calendar month from date-of-hire until such time as the employee becomes an ongoing employee. 
New variable hour, seasonal, and part-time employees 
In the case of a new variable hour, new seasonal, or new part-time employee who experiences a “change in employment status” during his or her initial measurement period such that, if the employee had begun employment in the new position or status, the employee would have reasonably been expected to be full-time, an employer is not be subject to an assessable payment for that employee until (i) the first day of the fourth full calendar month following the change in employment status, or (ii) if earlier and the employee is a full-time employee based on the initial measurement period, the first day of the first month following the end of the initial measurement period (including any administrative period). 
As in the case of offers of coverage to full-time employees, the nature of the offer of coverage makes a difference. Where the employer’s offer of coverage fails to provide minimum value, the employer is not subject to an assessable payment under Code § 4980H(a) with respect to the employee, but the employer remains subject to the assessable payment under Code § 4980H(b). If the offer of coverage provides minimum value, the employer also will not be subject to an assessable payment under section 4980H(b). 
  • NOTE: The relief from penalties under Code §§ 4980H(a) and (b) in the case of changes in employment status mirrors the general rule governing offers of coverage during a stability period, under which the employer will not be subject to an assessable payment as follows: 
    • (i) Code § 4980H(a). The employer will not be subject to an assessable payment under Code § 4980H(a) during the initial measurement period (and any associated administrative period) if the employee who qualifies is offered coverage no later than the first day of the associated stability period (provided the employee is then still employed). 
    • (ii) Code § 4980H(b). If the offer of coverage provides minimum value, the employer also will not be subject to an assessable payment under Code § 4980H(b). 
Ongoing employees 
If an ongoing employee experiences a change in employment status before the end of a stability period, the change will not affect the application of the classification of the employee as a full-time employee (or not a full-time employee) for the remaining portion of the stability period. As a result, if an ongoing employee fails to qualify for an offer of coverage during a stability period because the employee’s hours of service during the prior measurement period were insufficient for full-time-employee treatment, and the employee experiences a change in employment status that involves an increased level of hours of service, the treatment of the employee as a non-full-time employee during the remainder of the stability period is unaffected. 
(1) Part-time employee gets promoted into a full-time position 
A new part-time employee who transfers to a full-time position during his or her initial measurement period is treated as full-time under the rule described above. The employer will not be subject to an assessable payment for the period before the first day of the fourth full calendar month following the change in employment status, or if earlier (and the employee averages 30 or more hours of service per week during the initial measurement period) the first day of the first month following the end of the initial measurement period including any administrative period. If the change occurs when the (previously, new) part-time employee is an ongoing employee, however, then no offer is required until the end of the stability period. 
  • NOTE: The rules barring “waiting periods” in excess of 90 days under the Public Health Service Act must also be satisfied. Fortunately, final regulations implementing the waiting period rules generally facilitate simultaneous compliance with both standards. 
(2) Part-time employee terminates employment and is subsequently rehired within 13 weeks (or within 26 weeks in the case of an educational organization) 
The final regulations include “break-in-service” rules, under which an employee who resumes providing services to an employer “after a period during which the employee was not credited with any hours of service” may be treated as having terminated employment and having been rehired. Such an employee is treated as a new employee upon the resumption of services, only if the employee did not have an hour of service for a period of at least 13 consecutive weeks (or 26 consecutive weeks in the case of an educational organization). In addition, the final regulations include a “parity rule,” under which an employee may be treated as rehired after—
  • [A] shorter period of at least four consecutive weeks during which no hours of service were credited if that period exceeded the number of weeks of that employee’s period of employment with the applicable large employer immediately preceding the period during which the employee was not credited with any hours of service.” 
For example, if an employee started employment and worked for six weeks, then had a period of eight weeks during which no hours of service were credited, the employer could treat the employee as a rehired employee. 
Where the employee has not experienced a break-in-service, he or she is a “continuing employee.” As such, his or her status vis-à-vis the application of the look-back measurement method does not change. The analysis set out in item (1) above applies here as well. 
(3) Full-time employee transfers to a “variable hour” position, whether or not after a break in service of less than 13 weeks (26 weeks in the case of an educational organization)
The transfer to a position that would qualify as variable hour if occupied by a newly hired employee makes no difference where an employee was originally determined to be, and is hired as, a full-time employee by an employer using the look-back measurement method. This employee will be full-time from date-of-hire until he or she becomes an ongoing employee. Accordingly, his or her treatment is determined month-by-month.

New York Federal Reserve: Higher Health Costs, More Part-Time Workers Due to Obamacare

Obamacare puts employers in a bind, two New York Federal Reserve surveys show. Employers’ health care costs continue to rise, and the health care law is driving them to hire more part-time labor, CNBC reports:
Obamacare's higher costs will cascade down to consumers. The surveys found that “36 percent of manufacturers and 25 percent of service firms said they were hiking prices in response” to Obamacare’s effects. ... 
The median respondent to the N.Y. Fed surveys expects health coverage costs to jump by 10 percent next year, after seeing a similar percentage increase last year. 
Not all firms surveyed said the Affordable Care Act (ACA) is to blame for those cost increases to date. But a majority did, and the percentage of businesses that predicted the ACA will hike such costs next year is even higher than those that said it did this year. ...

Wednesday, August 20, 2014

Statistics on the Growth of Medical Tourism: 1.25 Million Americans Will Leave the U.S. for Procedures This Year

Using U.S. cost as a benchmark, the below details the average range of savings for the most-traveled destinations:

  • Brazil: 20-30%
  • Costa Rica: 45-65%
  • India: 65-90%
  • Malaysia: 65-80%
  • Mexico: 40-65%
  • Singapore: 25-40%
  • South Korea: 30-45%
  • Taiwan: 40-55%
  • Thailand: 50-75%
  • Turkey: 50-65%


How Far Will $100 Go in Your State?

Economists at the Tax Foundation have developed a map detailing what $100 is worth across the United States.
  • $100 is worth much less in Washington, D.C. ($84.60), Hawaii ($85.32), New York ($86.66) and New Jersey ($87.64) than it is in Mississippi ($115.74), Arkansas ($114.16), Missouri ($113.51), Alabama ($113.51) and South Dakota ($113.38).
  • In Mississippi money has a whopping 40% more buying power than in Washington, D.C.
  • Nominally, New Yorkers have much higher incomes than Kansans. But after adjusting for prices, Kansas residents have higher average incomes than New York residents.
  • High incomes are often found in states with high prices, but not always: in North Dakota, for example, residents have high incomes but low prices.
Source: Alan Cole, Lyman Stone and Richard Borean, The Real Value of $100 in Each State

Tuesday, August 19, 2014

Pensions in California's Merced County are Only 51.4% Funded

This is from Ed Mendel writing at Calpensions:
Merced County pensions may have the lowest funding level of any public pension system in California, a shortfall officials attribute to a big retroactive pension increase for all county employees a decade ago and faulty actuarial work. 
Like most pension systems, the funding level of the giant California Public Employees Retirement System has gone up since a stock market crash in 2008 punched a big hole in investment funds, increasing from about 60 percent to 76 percent. 
But the funding level of the Merced County Employees Retirement Association has continued to drop since the crash, decreasing from 70.5 percent in 2008 to 51.4 percent last year, despite nearly doubling employer payments into the pension fund. 
In the latest annual public pension report from the state controller’s office, Merced County stands out with the lowest level of funding in the last reported year, 54.7 percent in 2010-11. ...
The 4,600-member system owes $1 billion for pensions promised in future decades, up from $692 million in 2008. The projected assets from employer-employee contributions and investment earnings only increased from $488 million to $547 million. 
Merced County pension fund investments earned an annual average of 6.6 percent during the last 10 years, less than the 7.75 percent currently expected. ... 
Read full story here.  Hat tip to BenefitsLink.  

California Repealed Its 60-Day Limit on Eligibility Waiting Periods and Now Conforms to PPACA's 90-Day Rule

Just in case you were not fatigued by the never ending barrage of changes to President Obama's Health Law, California has passed a significant change that will certainly make employers' heads spin - again.  A year and a half ago, California decided that the 90-day waiting period limit imposed by PPACA (further explained here) was too long and cut that period to 60 days via a series of confusing state laws. We reported on that change here and again later here.

Carriers (and therefore employers) scrambled to make sure that their waiting periods were either first of the month following 30 days or first of the month following one month to ensure they fell inside of 60 days. Some carriers even allowed a waiting period of 60-days-on-the-dot, but who really wants to administer partial month premiums and contributions? I've yet to come across that employer.

It is now official.  Senate Bill 1034, repealing the 60-day rule was approved the Governor on August 15th. Specifically, SB 1034 amended, repealed and added numerous sections to the California Health and Safety and Insurance Codes.  Reading the text of the new statute itself is confusing because it consistently states: 
A health benefit plan for group or individual coverage shall not impose any waiting or affiliation period.  (Health and Safety Code section 1357.51 (c).) 
In reading the codes, however, it is important to remember that the relevant code sections only apply to California's insurers.  Therefore when the amended law states that a health plan "shall not impose any waiting or affiliation period," the law has been amended to tell California's HMOs and PPOs that they can't apply waiting periods.  This frees up employers to set their waiting periods at whatever they deem appropriate as long as it complies with PPACA's 90-day (or maybe 90-days plus a month, more on that here) limit.

SB 1034's legislative intent and effect is to:
Prohibit a health care service plan or health insurer [meaning HMO or PPO] offering group coverage from imposing a separate waiting or affiliation period in addition to any waiting period imposed by an employer for a group health plan on an otherwise eligible employee or dependent. ... [and] Permit a health care service plan or health insurer offering group coverage to administer a waiting period imposed by a plan sponsor [or employer]....
The emphasis added is mine.

The new law prohibits a carrier from imposing any waiting or affiliation period by deleting all references to waiting or affiliation period authorizations from existing law governing group health insurance.  The law also clarifies that in California, employers may now simply default to the federal law on that matter and insurers are free to administer the employer's selected waiting period.

Effective Date

During its debate and passage, this law was intended to become effective immediately upon signing.  There has been a considerable amount of confusion as to the official effective date of the law as January 1, 2015 would be the typical date for laws enacted in this session.  Practically speaking, whether this became law upon its signing on August 15th or becomes effective on January 1, 2015 depends on your carrier's interpretation.  And unfortunately, carriers are not handling this in a uniform fashion.

This is from Christine Roberts over at E is for ERISA:
... [U]ncertainty remains for California employers regarding eligibility waiting period limits for “late renewal” insured group health plans that follow, most commonly, a December 1 through November 30 cycle. ...
[This] repeal left open the issue of whether carriers would hold employers renewing late in 2014 to the 60-day waiting period limit. 
At least with regard to small group coverage (2 to 50 employees), the answer to that question appears to be “yes” for two major carriers in the state whose approach may be a bellwether for other carriers.   They will not permit a 90-day eligibility waiting period on small group policies or HMO contracts that are renewed or first issued during the remainder of 2014.  The permissible waiting period choices will be first of month following date of hire, or first of the month following 30 days from the date of hire. 
For small group policy renewals and new sales occurring on or after January 1, 2015, the carriers will permit waiting periods equal to 90 days from date of hire, first of month following date of hire, and first of month following 30 days from the date of hire.   One of the carriers may also offer first of month following 60 days, but this is not yet certain.  Another carrier will prorate premiums when the 91st day after hire falls in the middle of the month. 
So far these carriers are silent on waiting periods for large group renewals and new sales occurring in the remainder of this year.  Employers in this category likely can establish their own waiting period limits within the overall ACA 90-day cap. ...
If you wish to change your waiting period in light of this change, please contact your BB&T - Liberty Account Manager so that we may begin that process for you.  So far we have had success in moving to first of the month following 60 days for groups in the large group market (even prior to January 1, 2015).

* Note: the California Department of Managed Healthcare has not yet updated its website as it has this posted as of September 9, 2014:

* Note 2: the Effective Date portion of this article was updated on September 9, 2014 to reflect the confusion over the official date.

One in Three Americans Has Yet to Begin Saving for Retirement

According to a report released Monday from, a consumer financial services company:
  • More than 33% of Americans haven’t started putting away money for retirement.  
    • 70% of Americans between the ages of 18 to 29 have not started saving for retirement. 
    • Similarly, 33% of 30 to 49 year olds and 26% of 50 to 64 year olds haven't begun saving.  
    • One in seven Americans 65 and older have no retirement savings.  

Sources: and U.S. News.  

Monday, August 18, 2014

California About to Experience Doctor Rationing with Excessive Wait Times. 30% of State Now on Medicaid

Many Californians are about to see that having an insurance card guarantees nothing.  Emergency room visits will continue escalate as newly enrolled Medicaid and Obamacare subscribers face rationing by waiting in their struggle to find a doctor.  Below is an outline of the key points from a longer article published by Anna Gorman in the Kitsap Sun outlining California's daunting task.  
  • 11 million Californians, 30% of the state population, are now on Medi-Cal (the state's version of Medicaid). 
  • This makes Medi-Cal the largest version of the nation's Medicaid program for low-income and disabled people.  
In Obamacare, the federal government pays 100 percent of the costs for newly eligible Medi-Cal enrollees for the first three years (and then 90% until 2022). But the state is responsible for 50 percent of the costs for those who qualified for the program before the Obamacare expansion, even if they hadn't previously enrolled. 
  • The higher-than-expected number of enrollees will cost the state an additional $1.2 billion this year,
  • bringing the state's total share of the costs for the program to $17 billion a year.
With payments of $18 to $24 a visit, "doctors can't continue to accept new patients and keep their doors open," said Molly Weedn, a spokeswoman for the California Medical Association. 
Another problem rests with the state bureaucracy. California has an application backlog of about 490,000 people, which underscores the need to modernize and streamline the technology used for enrollment. 
The full story can be read here.  The added emphasis is mine.  

Ironic Twist: "Nonprofit" California Carrier May Lead to Price Controls on California Carriers

  • Kaiser's announcement of a 40% increase in profits to $2.1 billion for the first half of this year is the latest in a string of hefty health insurer profit reports that add fuel to California's Proposition 45 firestorm. 
  • If passed in November via a statewide ballot initiative, Proposition 45 will place bureaucratic price caps on insurers in the Golden State for the first time in history.  
  • After raising rates last January for individuals by as much as 22 percent and for small businesses by as much as 56 percent, Kaiser had some of the highest premium rates in California this year. Those high rates dramatically increased Kaiser's profits. Kaiser's net income the first six months of this year was $601 million higher than the $1.5 billion reported for the same period in 2013.
  • On top of this, Kaiser has accumulated a reserve that, as of December 31, 2103 was $21.7 billion, or 1626% more than is required by the state to remain financially sound. 
Source: Insurance News Net.  Hat tip: Ryan Kennedy.  

Negotiating Your Medical Bill? Heartland Corrections Offered in Response to Manhattanite's Platitudes

This is from Kelley Beloff, writing at InsureBlog:
Recently, longtime foil Sarah Kliff (she who couldn't understand her own Explanation of Benefits) set out to enlighten folks in flyover country on how to negotiate better prices for their health care:
"Earlier this year, I got an unpleasant surprise in my mailbox. A $820.19 surprise, to be exact ... Even as someone who writes extensively about America's health care system — who had, coincidentally, recently attended a three-day seminar for a story on the subject — I was stuck."
She then goes on to offer five steps one might take to entice the provider to offer a price break.

As someone with many years of first-hand experience actually running medical practices, here's my take on her efforts. ...
Read all of Kelley's article, "Kliff Diving with Sarah" here.  It is a wry, direct, correction to Ms. Kliff's misinformed counsel.

Sunday, August 17, 2014

Policy Brief: A Roadmap for Transcending Obamacare, Reining in Costs and Covering More Americans

For four and a half years, conservatives have sought to repeal Obamacare. It is an understandable and widely held goal but likely short sighted. There may be a better path.  

The actual government takeover of the U.S. health-care system took place in 1965 (not in 2010), when Lyndon Johnson signed into law the bills enacting Medicare and Medicaid: the “Great Society.”
  • Medicare and Medicaid were (and are) single-payer, government-run health-insurance programs for the elderly and the poor, respectively. 
  • Nearly one-third of the U.S. population is on single-payer health care, thanks to Medicare, Medicaid and the Veteran's Health Administration.  
    • In 2013 93 million Americans were on either Medicaid or Medicare.
    • 6 million got coverage through the Veterans Health Administration, the most socialized health-care system in the U.S. 
    • Hence, nearly 100 million Americans were on single-payer health care, or its facsimile, before Obamacare.

Obamacare builds on the LBJ legacy, to be sure by expanding the scale and scope of the Medicaid program. 

Many European Economies are Freer than America's and Healthcare is no Different
  • In 2012, U.S. government entities were already spending $4,160 on health care for every man, woman, and child in the country. That’s more than all but two other countries in the entire world.
  • In the 2014 edition of the Heritage Foundation’s Index of Economic Freedom, the U.S. ranked 12th, behind Hong Kong, Singapore, Australia, Switzerland, New Zealand, Canada, Chile, Mauritius, Ireland, Denmark, and Estonia. 
  • Every single country on it save Mauritius has some form of universal health care. 

Switzerland: While nearly a third of Americans are on single-payer health care, not one Swiss citizen is. The Swiss use a system quite similar to that of Obamacare’s exchanges, in which individuals can buy subsidized and regulated private insurance plans. While the Swiss system shares many of Obamacare’s unattractive features — most notably its individual mandate — Switzerland’s per capita government spending on health care is less than half that of the United States.

Singapore: does have a single-payer system for catastrophic coverage. But all other health spending is funneled through health-savings accounts: precisely the instrument that free-market health-policy analysts have long advocated. Because Singaporeans control their own health dollars, their government spends about a fifth of what we do on health care.

Free-market Reform must Tackle Medicare and Medicaid.

The impressive results of Switzerland and Singapore drive home a powerful message: that health care works best when individuals have more control over their own health spending.  “Disinterested” government experts cannot better and more cost-efficient decisions for you than you would make for yourself.

If we gradually migrated future retirees onto Obamacare’s exchanges, the result would actually be more market-oriented than that of retaining the current system of Medicare.

Migrating the Medicaid population onto exchanges would also yield dividends. Exchange-based plans would give those below the poverty line access to high-quality, private insurance and phase out single-payer public-option health insurance.

Nevertheless, there’s no reason we should accept the Obamacare exchanges as they are.

Bring Freedom, Choice, and Affordability Back to Insurance Markets.

Instead of forcing Americans to buy insurance plans that they neither need nor want — the Obamacare way — we should convert the exchanges into real marketplaces, places where people can voluntarily buy coverage that is suited to them. We can do this by repealing Obamacare’s individual and employer mandates, and by rolling back the plethora of new federal regulations and tax hikes that make insurance more costly without improving its quality.

It’s possible to do all this while still ensuring that Americans with preexisting conditions can obtain coverage at a reasonable price.
  • A Manhattan Institute study estimates that this collection of reforms could increase by 12 million the number of Americans with health insurance, over and above projected Obamacare levels.
  • This approach would actually reduce federal spending by $10.5 trillion, and federal revenues by $2.5 trillion, for a net deficit reduction of $8 trillion.

How is this possible?
  • The Manhattan Institute plan makes consumer-driven health plans, with health-savings accounts, the centerpiece of a reformed set of state-based insurance exchanges. 
  • This drives down the cost of insurance policies for a single person by approximately 17 percent. 
  • Because health insurance is cheaper — especially for young and healthy people — more people freely choose to buy it. 
  • The market-driven Medicare prescription-drug benefit, for all of its flaws, spent 43 percent less in 2013 than it had been projected to in that year.

The plan doesn’t require the total repeal of Obamacare. As a result, this approach solves a political conundrum for Republicans: how to bring our health-care entitlements under control, while avoiding the political pitfalls that would come from repealing the health-insurance plans that, according to the CBO, 36 million Americans will be on by 2017.

This is an abridged version of "How to Transcend Obamacare," written by Avik Roy, a senior fellow at the Manhattan Institute. The full article is published at National Review. Edited on this blog by Craig Gottwals.

Saturday, August 16, 2014

Obamacare Penalties are Coming. Make Sure You Have Employees Classified Properly - Temp Agency Employees Are Your Employees

This is a nice reminder of the legal challenges that employers will have in determining whether they are properly classifying employees for purposes of the employer mandate under PPACA.  This is from Monique Warren of Jackson Lewis
... An employee, for employer shared responsibility penalty purposes (as for other purposes considered by the IRS), means a “common law employee” of the employer as explained under Treasury Regulation § 31.3401(c)-1(b). A common law employment relationship exists “when the person [entity] for whom services are performed has the right to control and direct the individual who performs the services, not only as to the result to be accomplished by the work but also as to the details and means by which that result is accomplished.” Whether a common law employment relationship exists obviously turns on a subjective “facts and circumstances” test and the IRS gets to decide whether the relationship passes or fails that test. The IRS considers whether the employer has behavioral and financial control as well as the nature of the relationship. Important among the facts and circumstances the IRS considers is whether the employer has the right to hire and fire the worker. The IRS also considers things like whether the employer gives the worker the tools, equipment and place to work, among other facts and circumstances. The IRS does not consider as relevant how the employer refers to the worker (e.g., independent contractor, consultant, etc.). For employers that have misclassified workers as independent contractors who should have been treated as employees, the IRS’ Voluntary Worker Classification Settlement Program remains open, enabling those employers to reclassify workers as employees who’ve been misclassified as independent contractors in prior years for a fraction of the cost (in penalties) that otherwise could be incurred. 
An individual paid by a staffing firm, but working under the direction and control of another entity is the common law employee of the entity for whom the individual performs the work. Thus, using a staffing firm to hire workers will not reduce the number of employees an employer has. However, for purposes of avoiding employer shared responsibility penalties, the employer will be treated as offering affordable minimum value coverage to those workers if the staffing firm offers such coverage to the workers and the employer pays a higher fee for those workers who enroll in coverage than for those who don’t. ... 
The added emphasis is mine.  

Friday, August 15, 2014

Stories Causing Atlas to Shrug, August 15th 2014 Edition

7.2 million more Americans are dependent on Medicaid due to Obamacare. That is more than "bought" Obamacare plans with government subsidies. And here.

As many as 300,000 illegal aliens have received taxpayer dollars to buy Obamacare. Think we'll ever get that money back?

Study: California taxpayers cover 95% of state employee health costs.

The IRS failed to do background checks on some private contractors who handled confidential taxpayer information, exposing more than a million taxpayers to an increased risk of fraud and identity theft.

The U.S. Federal Bureau of Investigation released a new statistic, which states 8 out of every 10 law enforcement members are overweight.

Chart: Charges for 10 Common Blood Tests in California Hospitals Are All Over the Map

To determine the variation in charges for 10 common blood tests across California hospitals in 2011, BMJ Open conducted a cross-sectional analysis of the degree of charge variation between hospitals for 10 common blood tests using charge data reported by all non-federal California hospitals to the California Office of Statewide Health Planning and Development in 2011.

As you might guess, charges for blood tests varied significantly between California hospitals. For example, charges for a lipid panel ranged from US$10 to US$10 169, a thousand-fold difference. They analyzed charges for between 166 and 189 hospitals, depending on the blood test, as not all blood tests were included in each hospital.  The patient populations were on average 25% Medicaid and 41% Medicare.

In the below chart, the horizontal line in the box is the median. The bow contains the 25-75th percentiles. The lines at the top and bottom are the 5th and 95th percentile. The range is, to be frank, insane. Hence, a comprehensive metabolic panel cost $79 at one hospital and $948 at another.  

This is an Open Access article from BMJ Open.  Hat tip for the pointer to Aaron Carrol at the Incidental Economist

Hospitals and Insurers Fighting Over Whether to Allow Hospital Payment of PPACA Plans for Large Claimants

Low-income consumers struggling to pay their premiums may soon be able to get help from their local hospital or United Way.

Some hospitals in New York, Florida and Wisconsin are exploring ways to help individuals and families pay their share of the costs of government-subsidized policies purchased though the health law’s marketplaces – at least partly to guarantee the hospitals get paid when the consumers seek care.

But the hospitals’ efforts have set up a conflict with insurers, who worry that premium assistance programs will skew their enrollee pools by expanding the number of sicker people who need more services.

“Entities acting in their [own] financial interest” could drive up costs for everyone and discourage healthier people from buying coverage, insurers wrote recently to the Obama administration.

Insurers are asking the federal government, which regulates the health insurance marketplaces, to restrict the practice.

To date, regulators have sent mixed messages about whether they will permit such programs—even as providers across the country are moving to set them up.

“We saw the need in our community,” said Sarah Listug, spokeswoman for United Way of Dane County, a Wisconsin group that is using $2 million donated by a local hospital system to help more than 650 near-poverty-level policyholders pay their premiums. “We have had calls from all over the U.S. asking how to set up partnerships like this.”

The South Florida Hospital and Healthcare Association is seeking at least $5 million in donations from its 45 member hospitals toward premiums for first-time insurance buyers next year.

And members of the Healthcare Association of New York State, which represents 500 hospitals and nursing homes, are considering expanding existing consumer assistance programs to help people pay their premiums “to the extent that is legal and proper,” said Jeffrey Gold, senior vice president and special counsel.

Providers Have Financial Incentive

Hospitals or their foundations have long paid premiums for some patients— often those who fell behind after leaving their jobs and taking on the entire cost of coverage under a 1986 law known as COBRA.

But the issue of “third-party payments” has taken on new urgency because of a provision in the federal health law that could leave providers on the hook for unpaid bills. Under the law, insurers must give subsidy-eligible enrollees who fall behind on payments a 90-day “grace period” before cancelling their policies.

While insurers must cover bills for the first 30 days, they may hold off paying those bills for the next 60 -- and ultimately, deny payment if the patient doesn't catch up on premiums. That means doctors and hospitals face the prospect of not getting paid for their services, or having to seek payment directly from their patients.

That’s a big incentive for providers to help pay those premiums.

“It’s a situation where patients will be better off and the providers are better off as well if patients are able to maintain coverage,” said Mark Rukavina, a Massachusetts-based expert on medical debt who consults for the hospital industry. “But it does raise questions.”

Insurers argue that if federal regulators permit such programs, they should bar hospitals from selecting participants based on their health, or from directly paying the premiums.

"If third parties provide incentives to gain coverage only once someone is sick, that will -- as the administration has warned -- clearly lead to a less healthy risk pool and put upward pressure on premiums for everyone,” said Brendan Buck, a spokesman for the trade group, America’s Health Insurance Plans (AHIP).

But Gold of the New York hospital group thinks insurers’ concerns are overblown. He says insurers have already calculated into their rates that a certain percentage of policyholders will be sicker than average.

“If a couple of people who show up at hospitals or other providers have a premium lapse, I don’t understand why someone making them whole [by paying their premiums] would skew the risk pool,” he said.

Hospitals Try To Allay Fears

To avoid problems, hospitals are drafting selection criteria tied to income level -- and are paying consumers’ premiums for an entire year, rather than simply when they lapse.

In the Wisconsin program, for example, eligible residents must live in Dane County, earn between 100 percent and 150 percent of the federal poverty level – about $11,490 to $17,235 for an individual— and enroll in a subsidized silver plan.

The program, called HealthConnect, pays the difference between the subsidy and the cost of the plan for the entire year, which could be as little as $20 to $50 a month for individuals, although it runs higher for families. Money for the program comes from the University of Wisconsin-Madison health system.

In South Florida, meanwhile, “we’re not talking about making premium payments for those who enrolled, then fell behind, but only [for] first-time buyers,” said Linda Quick of hospital group, which has not yet finalized its plans.

The association plans to enlist several local United Way chapters to help find and enroll eligible residents.

Still, Quick acknowledges that getting the program off the ground may be difficult because of the cost to hospitals.

“I have a couple of systems where we’re talking about half a million dollars” in contributions, she said.

And the enrollees who are helped may never need hospital care, in which case those facilities would see no return on their investment.

Regulators Send Mixed Messages

To date, the administration has said insurers must accept payments toward premiums and other costs from government programs such as the Ryan White HIV/AIDS Program, which helps provide medical services and defrays costs for people living with HIV/AIDS.

But it has been less clear about the role hospitals and other health care providers might play.

Last October, a letter from the administration to Rep. Jim McDermott, D-Wash., indicated that hospitals and drugmakers could help subsidized policyholders pay their premiums.

But that was quickly followed by a Nov. 4 online FAQ discouraging such “third party payments” by hospitals and others because they could “skew the risk pool.”

After protests by patient groups, another advisory said insurers could also accept premium payments from not-for-profit foundations which set financial eligibility criteria and do not consider enrollees’ health status.

An interim final rule in March left out any mention of payments by charitable foundations, although it reiterated concern about payments made directly by hospitals.

Both the insurance industry and hospital groups are seeking clarification.

AHIP, the insurers’ trade lobby, has asked the government not to allow hospital-affiliated foundations to run aid programs. The funds “must be donated to a legally independent foundation that is separate from the organization with a potential financial interest,” AHIP said.

The hospital industry, meanwhile, wants insurers to be required to accept premium payments made by health systems as well as by their foundations.

“Any effort to limit the ability of hospitals or hospital-affiliated foundations to help individuals in need to obtain access to health insurance coverage is bad public policy,” wrote Rich Umbdenstock, president and CEO of the American Hospital Association.

Story provided by Kaiser Health News

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

Thursday, August 14, 2014

Armstrong and Getty Cover the Latest Obamacare Stories from Benefit Revolution

In one lightening segment, Joe covers the following:
  1. Revisited: The Total Evisceration of the Individual Mandate. 98.8% of Americans Won't Pay It
  2. Actuary: Admin's Attempted Fix to 'If you like your plan, you can keep it,' Lie Could Cost Taxpayers $474 Per Insured Per Year
  3. Health Reform Causing 'Tremendous Uhheaval' in America's Charitable Care Clinics

2015 Projected Healthcare Cost Increases for Large Employers, on PPACA Plans and In States with 'Keep Your Plan Fix'

This is from Doug Hochberg and Douglas Holtz-Eakin writing at the American Action Forum:
The more things change, the more they stay the same. For years, health care costs grew faster than incomes — to the point that health care grew to one-sixth of the economy. Then came the revolution; namely the financial crisis, recession, and Obamacare. Health care costs supposedly were tamed by a combination of new laws and weakened consumers. 
Not so fast, according to the National Business Group on Health. Its survey indicates that the nation's largest employers are projecting health-benefits costs will rise 6.5 percent in 2015. With 2 percent inflation, that amounts to 4.5 percent real, inflation-adjusted growth. This is, in turn, way faster than anyone believes that real Gross Domestic Product (GDP) will grow. Here we go again. 
Actually, for some workers the increase will be more dramatic. The firms expect to keep their own cost increase to just 5 percent. That means shifting more costs to employees through high-deductible plans or higher copays and deductibles in comprehensive plans. 
Meanwhile, over on the Obamacare exchanges the average premium increase will be 7.5 percent according to PriceWaterhouseCoopers (PWC). This translates to real premium hikes of 5.5 percent and even more daunting math compared to GDP. But once again, it could be worse. In this case, the president’s decision to flip-flop and permit individuals to keep plans made illegal by his health care reform means that the young and healthy are especially underrepresented in states that allowed the existing policies to survive. In those areas, premium hikes are anticipated to average 11 percent. 
Health care costs used to be public policy enemy #1. They still are.

Average Annual Wage for New Jobs is 23% Less than the average Annual Wage of Jobs Lost during the Great Recession

This is from Bernice Napach at Yahoo Finance:
There's no doubt that the U.S. economy has recovered from the Great Recession, reclaiming the 8.7 million jobs that were lost. But apparently they aren't the same jobs because the average annual wage for new jobs is 23% less than the average annual wage of jobs lost during the recession, according to a new report from the U.S. Conference of Mayors. And there was no wage growth in the latest monthly jobs report, which also showed the economy gaining 209,000 jobs. 
"We're stuck in a kind of trap where we see a slowly accelerating economic recovery, but on the wage side it is basically still flat except for those top earners," says Tyler Cowen, economics professor at George Mason University, referring to the top 20% of earners whose wages are rising. 
Cowen says wages are fundamentally tied to the productivity of workers, which is affected by foreign competition and technology innovations. ...
Cowen tells Yahoo Finance in the video above that slow wage growth will likely continue. "If you look at the typical American wage, it was as high in the year 2000 as it is today. That's about 14 years of stagnation," he notes. "In my view it is quite possible we will be seeing another 14 years of exactly that same pattern." ...

Employee Benefit Research Institute Survey Sheds Light on Future of Employer-Based Insurance

Employers are likely to continue providing health coverage as long as they receive a federal tax exemption to do so.  It is one of the few tax free ways to compensate workers and economically, it is tough to overcome that economic advantage.  A recent survey from the Employee Benefit Research Institute illuminates the present satisfaction and future viability of employer insurance plans.
  • 70% of workers rate health coverage as the most important benefit and another 10% rate it as second most important. 
  • Of the 60% of workers who report rising health care costs, one-third reduced their retirement plan contributions, which means trading off retirement benefits to maintain health benefits.
  • When considering a specific job, 77% of workers say health benefits are the most important benefit while only 11% say retirement savings plans are most important.
  • 90% of workers are confident that their benefits are less expensive than what they could purchase on their own. 
  • 80% are confident that their employer had picked the best plan for them. 
  • 90% are satisfied with their health coverage. 
  • 75% are satisfied with the mix of health coverage and wages.

The full study can be found here.

National Business Group on Health Survey: 2015 Large Group Renewals to Average 6.5%

This is from Chad Terhune at the L.A. Times:
Large employers expect their healthcare costs to jump 5% next year, and nearly a third of businesses will offer only higher-deductible plans to workers, a new survey shows.

The annual report released Wednesday by the National Business Group on Health provides a good barometer of what employees at big companies can expect when health plan enrollment opens this fall.

Overall, large employers estimate their health-benefit costs will rise by an average of 6.5% in 2015.

But they anticipate holding increases to 5% after making changes to their coverage, such as shifting more medical costs to workers and expanding the use of high-deductible policies. Employers reported a similar 5% increase for 2014. ...

The nonprofit group represents nearly 400 large U.S. employers that provide health coverage to more than 50 million workers, retirees and dependents. ...

On average, employees will be responsible for 20% of the total health premium in 2015 and slightly more, 23%, for family coverage. ...

Wednesday, August 13, 2014

Downward Spiral: If You Hate Your Plan - You Can Drop It

As Many As 1 in 3 Obamacare Enrollees Already Dropping Out

In a predictable yet disturbing twist, Obamacare enrollment is dwindling far too rapidly for insurer comfort.  The good news is that after the newly insured endure PPACA Exchange plans' narrow networks, astronomical deductibles, and unaffordable co-pays, it is no more difficult than tying one's shoes to generate one of Obamacare's 22 freshly minted "please don't vote us out of office" exemptions

At InsureBlog, Patrick Paule authored a column summarizing how and why PPACA's, ahem, "affordable" plans have begun the march toward charging you more for less coverage. In part, Patrick wrote:
[T]he policy standards [for Obamacare's] ... cost sharing component must be updated annually. The formula they use to set the maximum is based on average premiums per enrollee based on employer sponsored insurance (not individual!). This data comes from the National Health Expenditure Accounts. They throw these numbers into their magic formula and presto, they have a new percentage. For 2015 it is 4.21%. This results in a new maximum annual out-of-pocket limit of $6,600 for singles and $13,200 for families. Wait, what? HHS is protecting consumers from 'Excessive Out-of-Pocket Expenses' by increasing our potential costs by $250 a year? Yep, they are.
Hence, as premiums escalate at two to three times inflation, enrollees will be asked to pay more in premium and in out of pocket costs at the point of delivery. Needless to say, this is a recipe for disaster.  The first insurer reports are surfacing on enrollment patterns seven months into Obamacare and as many as 30% of those enrolling have already chosen to drop their plans. 

After crowing at PPACA's "successful" launch by pointing to the fact that 8 million people had decided to go online and place a plan in their shopping cart in the spring, the Obama Administration has been silent on the topic throughout the summer. Remember, under ACA-math "signed-up" did not mean paid.  This taxpayer funded, multi-billion dollar Rube Goldberg Machine had no way to differentiate between actual paying customers and internet looky-loos. 

ObamaCare exchange statistics should clear up any doubt as to why the Obama Administration has been tight-lipped about enrollment since celebrating 8 million sign-ups in mid-April. 
Reality, evidence suggests, could require quite a come-down from those lofty claims. 
The nation's third-largest health insurer had 720,000 people sign up for exchange coverage as of May 20, a spokesman confirmed to IBD. At the end of June, it had fewer than 600,000 paying customers. Aetna expects that to fall to "just over 500,000" by the end of the year. 
That would leave Aetna's paid enrollment down as much as 30% from that May sign-up tally....
The returns are admittedly early but Obamacare needs to grow in headcount to remain actuarially sound.  And that is not happening.  Initial reports from the State of Washington as well as insurer, Cigna, also indicate that the tide of discouraged outweighs any new sign ups.  Unfortunately, we have no official statement from the federal government, since it stopped reporting the numbers after issuing the high-water mark of 8 million in the spring. 

From the 8 million looky-loos our government claimed as "enrolled" most insurers reported that only 80% to 85% ever made a payment on their plans.  This additional enrollment atrophy reported in the state of Washington and by Cigna and Aetna are in addition to that earlier leakage. 

That means that approximately 6.8 million people ever payed for an exchange plan. And if we assume that just 20% (as opposed to Aetna's higher 30%) end up dropping coverage throughout the year, we will end up with something like 5.3 million who enrolled in and paid for Obamacare.  Recall that by December of 2013, 5.6 million Americans had lost their plan due to cancellations spurred because the plans did not comport with PPACA's mandates in some way. 

That leaves us with a rather bleak picture. It isn't as simple as deducting the 5.6 million from the 5.3 million to show a zero (or negative) net increase in coverage because some of those 5.6 million who lost their plan went onto an employer plan, spouse's plan, or bought a new plan on their own outside of the exchanges. Of course some also decided to go uninsured and take advantage of one of those two-dozen exemptions and others signed up for Obamacare. 

But what we can clearly say is that this law fully up-heaved 5.6 million Americans who'd shopped for, budgeted for, purchased, and maintained an individual insurance plan that was best for them. They were then forced to pay an average of 40% to 50% more for lesser plans so that they could fund new plans for 5.3 million Americans who, for whatever reasons, had not undertaken the same insurance procurement path.  And this does not address the turmoil PPACA has caused, and is about to wholeheartedly unleash in the employer-sponsored insurance market.  If the employer mandate is enforced as scheduled in 2015, the impending restraints on employment as organizations scramble to push employees to part-time so they may avoid penalties will suffocate on an already anemic job market.  

So no, if you liked your plan, you couldn't keep it. But at least when you hate your plan, you can drop it.  Reminiscent of a little early 1990's Ugly Kid Joe ...


Tuesday, August 12, 2014

Nasty COBRA Fine Issued Even Though Employer Paid Participant's Outstanding Medical Bills

A great reminder of just how important your COBRA administration is.  This is from Fox Rothschild, LLP.:
This case should serve as a warning that the obligation to provide COBRA notices is not simply about providing coverage or making coverage available. Simply paying unreimbursed expenses does not cure the statutorily defined harm. The notice requirement exists to make sure the notices are timely issued and not tied to any actual loss. So employers should not assume that the remedy for COBRA violations is limited to simply covering unpaid expenses. The notice requirements carry their own risk and should be strictly followed to avoid those separate penalties. ...

[T]he Court award[ed] damages to the employee and her children at the rate of $110 a day for the employee and $20 a day for each of her children. Even though the employee’s bills were paid, the Court reasoned that payment of the expenses did not actually cure the failure. The notice obligation is separate from the coverage. Since the children had no actual harm (that is no medical expenses), they received the lower award, but still receive some recovery. All told, the employer was ordered to pay more than $25,000 in penalties.  

20 Plus Taxes and Fees Weren't Enough to Make Obamacare Work in Colorado

The state politicians in Sacramento must be embarrassed that they weren't the first to add more fiscal bloat onto PPACA.  They are clearly losing their touch.  

This is from Kathleen Koster at Employee Benefit Advisor (hat tip to BenefitLink):
Looking to generate additional funds for Colorado’s state health insurance exchange, the board responsible for securing its financing has levied a new fee on all insurance policies issued in Colorado, including those sold off of the exchange. 
The fee of $1.25 per member per month will be imposed on individual insurance stop-loss coverage and large- and small-group employer policies issued in Colorado from July 1, 2014 through June 30, 2015, an additional expense that employers in the state will need to factor in as they build their benefits package. ...

PPACA's Insurer "Bailouts" Could amount to 6.8% of One Oregon Insurer's Total Revenue

In many industries a 7% profit margin is considered outstanding.  Now we are seeing that PPACA's "Three-R's" risk transfer program (insurer "bailouts") could add a full 7% onto one carrier's total revenue. 

From Allison Bell at LifeHealthPro:
An actuary for Regence Blue Cross Blue Shield of Oregon says the new Patient Protection and Affordable Care Act (PPACA) reinsurance program could pay a group of the company's PPACA-compliant individual plans $20.17 per member per month in 2015, or about $242 per member per year. 
The PPACA federal reinsurance program reinsurance recoveries could amount to 6.8 percent of the plan's average monthly premium of $297, or a total of about $2.2 million for the plans' 9,124 members. ...

Monday, August 11, 2014

Revisited: The Total Evisceration of the Individual Mandate. 98.8% of Americans Won't Pay It

Thirteen months after we began covering the topic, one of America's big four newspapers is further exploring the idea.  The individual mandate has been wholly gutted for purely political reasons and its not coming back to life. 

I was on the Michael Berry Show this morning discussing the matter.

My discussion on the individual mandate's gutting began in July of 2013 on the Armstrong and Getty Radio Show:

After churning through a year of legal battles culminating at the U.S. Supreme Court, proponents of Health Reform realized they did not have the political fortitude to fine a large swathe of their constituency for not buying health insurance.  Subsequent to winning at the Supreme Court in their argument that the individual mandate was in fact a "tax", the Obama Administration quietly issued 14 "hardship" exemptions to the law's already existing eight statutory exemptions.

It is perfect example as to why no single political party can ever implement a complex law replete with twenty-plus taxes and fees.  When it comes time to collect, the negative aspects are demagogued, re-election aspirations trump policy decisions, and we end up with escalating deficits as the painful portions of a scheme are repealed, amended or softened to avoid political unpopularity.

We are up to 22 different ways a person can opt out of Obamacare.  In fact, if you can't generate an exemption for yourself, you aren't even trying.  If you can fog a mirror, you have a 99% chance of excusing yourself from the individual mandate.

The Congressional Budget Office (CBO) now estimates that only 3.9 million Americans will pay that mandate in 2016.  We have approximately 319 million people in our country.  Hence, 1.2% of Americans will actually pay the fine.  The CBO recently updated this estimate to account for the continually expanding list of exemptions:

 Here is the full list of exemptions from
  1. You’re uninsured for less than 3 months of the year
  2. The lowest-priced coverage available to you would cost more than 8% of your household income
  3. You don’t have to file a tax return because your income is too low (Learn about the filing limit.)
  4. You’re a member of a federally recognized tribe or eligible for services through an Indian Health Services provider
  5. You’re a member of a recognized health care sharing ministry
  6. You’re a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
  7. You’re incarcerated (either detained or jailed), and not being held pending disposition of charges
  8. You’re not lawfully present in the U.S. 
  9. You were homeless.
  10. You were evicted in the past 6 months or were facing eviction or foreclosure.
  11. You received a shut-off notice from a utility company.
  12. You recently experienced domestic violence.
  13. You recently experienced the death of a close family member.
  14. You experienced a fire, flood, or other natural or human-caused disaster that caused substantial damage to your property.
  15. You filed for bankruptcy in the last 6 months.
  16. You had medical expenses you couldn’t pay in the last 24 months which resulted in substantial debt.
  17. You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member.
  18. You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, you do not have the pay the penalty for the child.
  19. As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace.
  20. You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act.
  21. Your individual insurance plan was cancelled and you believe other Marketplace plans are unaffordable.
  22. You experienced another hardship in obtaining health insurance.  

To its credit, Forbes covered this topic quite well in October of 2013 here.

This is from Stephanie Armour writing at the Wall Street Journal earlier this week:
Almost 90% of the nation's 30 million uninsured won't pay a penalty under the Affordable Care Act in 2016 because of a growing batch of exemptions to the health-coverage requirement. 
The architects of the health law wanted most Americans to carry insurance or pay a penalty. But an analysis by the Congressional Budget Office and the Joint Committee on Taxation said most of the uninsured will qualify for one or more exemptions. ... 
The Obama administration has provided 14 ways people can avoid the fine based on hardships, including suffering domestic violence, experiencing substantial property damage from a fire or flood, and having a canceled insurance plan.  Those come on top of exemptions carved out under the 2010 law for groups including illegal immigrants, members of Native American tribes and certain religious sects. 
Factoring in the new exemptions, the congressional report in June lowered the number of people it expects to pay the fine in 2016 to four million, from its previous projection of six million. Also bringing down the total: At least 21 states have opted not to expand the Medicaid insurance program for lower earners under the health law, and those residents may be exempt from the penalty. 
A legal battle over subsidies provided through the federally run insurance exchange could increase the number of Americans entitled to exemptions. In July, a Washington, D.C., appeals court struck down the federal exchange's authority to issue insurance tax credits on the grounds that the health law limits them to state-run exchanges. A Virginia appeals court upheld the subsidies, setting up a legal fight that is likely to go before the Supreme Court. ... 
The exemptions are worrying insurers. The penalties were intended as a cudgel to increase the number of people signing up, thereby maximizing the pool of insured. Insurers are concerned that the exemptions could make it easier for younger, healthier people to forgo coverage, leaving the pools overly filled with old people or those with health problems. That, in turn, could cause premiums to rise. 
Patrick Getzen, vice president and chief actuary at Blue Cross and Blue Shield of North Carolina, said he saw more "older and sicker people" enrolled in 2014 than projected. He attributed some of that to the weakened mandate. "With a stronger penalty and less broad exemptions, that would be better for the risk pool." 
The Obama administration argued before the Supreme Court in 2012 that the individual mandate was an essential component of the law's insurance-market changes, and the court narrowly upheld it on the grounds it is a tax. Now, Republicans who oppose the law say the administration has undermined that requirement with the exemptions and should waive the mandate entirely. 
"If your pajamas don't fit well, you don't need health insurance," said Douglas Holtz-Eakin, former director of the Congressional Budget Office and president of the American Action Forum, a conservative think tank. "It basically waives the individual mandate." ... 
In December, a hardship application form was released that laid out the 14 exemptions. Among other things, people could avoid the penalty if a close family member had died recently, if they were facing eviction or if they had medical expenses that couldn't be paid in the last 24 months and resulted in substantial debt. 
Critics have assailed one exemption for people who "experienced another hardship obtaining health insurance" as too broad. That exemption asks for documentation if possible but doesn't require it. 
Damian Trujillo, 33 years old, of Salt Lake City, said he is hoping for an exemption under that category. The rehabilitation-facility caseworker went online during the enrollment period but was ineligible for tax credits, he said, and decided he couldn't afford federal-marketplace coverage. ... 
Nathan Maxwell, 37, also doesn't expect to pay the penalty. He belongs to a health-care sharing ministry, which is exempt under the law. ... 
CMS said about 77,000 individuals and families had requested an exemption as of April, the most recent data available. That doesn't capture everyone likely to apply because many exemption requests can only be claimed on tax returns filed next year. ...