Health Insurance News

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Since the making of the Medicaid and Medicare programs in the U.S., perhaps the most far-reaching health legislation is the health care reform signed into law by President Barack Obama. Also, other changes are likely to occur once a reconciliation bill part of the health care overhaul is passed by the Senate. It is expected that by the year 2019, the entire health care overhaul will extend insurance coverage to 32 million additional citizens, affecting almost every American in the country.

Under the new health care law, a citizen would have to have insurance by 2014 if he or she does not want to get penalized. The penalty fee would start up to 1 percent of income or 2.5 percent by 2016. However, a family has a limit of 2,085 dollars. Some would get exemption from the insurance requirement due to some reasons such as religious beliefs and financial hardships. This is best shown in those who are American Indians.

You can get eligibility for Medicaid but it depends on the income you are gaining. Medicaid is a state-federal program for people with disabilities and the poor that is expands dramatically starting in 2014. Adults with low income as well as those without children can still get eligibility as long as their income does not surpass 133 percent of the federal poverty level.

You can pay for private insurance that are sold in the new insurance marketplaces expected to start operation in 2014. You might be helped by government subsidies which you are eligible for. And for those families and individuals generating income between 133 percent and 400 percent of the poverty level, premium subsidies would be available. These subsidies will be on a sliding scale as shown in the new overhaul system. Let say for example: four members of the family are earning 150 percent of the poverty level. Then they would have to pay 4 percent of its income. 9.5 percent would be paid by a family with income of 400 percent of the poverty level. In addition, there would in a limitation to your out-of-pocket health expenses if you are gaining income below 400 percent of the poverty level.

The new health care reform law would make it easier for every American to get coverage, especially if you have a medical condition. This will bar insurers from rejecting applicants based on health status once the exchanges are starting operation in 2014. In the meantime, bill would provide a temporary high-risk insurance pool to people with medical problems rejected by insurers or those with no insurance at least six months. Also coverage for specific medical conditions for children with pre-existing problems will no longer be excluded by insurers. Insurance companies will never be allowed to set limits to lifetime coverage for adults and kids.

You can use the insurance coverage of your parents if you are not yet married in the age below 26 as long as you are not offered health coverage at work.

Furthermore, tax credits are offered to companies having small workforce and averaging wage of up to 50,000 dollars to purchase insurance.

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The Implications of Health Care Reform on Employers and the Benefits They Offer to Employers

The employer-provided health benefits in the U.S. are facing a large change, if not the largest. President Barack Obama signed into law a new health care reform that restructures employer-sponsored health benefits following the passage of the Affordable Care Act in 2010.

Many of the relevant provisions of the health care overhaul will take effect in 2014. According to some studies, employers will make dramatic changes in their organization once they become aware of the new social and economic incentives in the law. It is estimated that only about 7 percent of the workers who are presently covered by employer-sponsored insurance will transfer to subsidized-exchanges policies by 2014.

Surveys show that in the years after 2014, 30 percent of the companies will definitely stop employer-sponsored insurance. And this proportion is likely to increase to more than 50 percent among employers with a high awareness of the overhaul. Economically, at least 30 percent of employers would gain benefits from aborting coverage even if they completely compensated their workers for the change through higher salaries or other benefit offerings. Contrary to the belief, more than 85 percent of workers would retain their jobs even if their companies stopped provided employer-sponsored insurance. However, increased compensation might be expected by about 60 percent.

As the world continues to change, employers are examining the impact of health care reform on their workforce and benefit strategies, as well as the risk and opportunities generated by the reform. It is also important to note that the extent of the possible changes that employers will make will vary by the industry they belong to. Collective bargaining agreements will also take part of this.

There are several new requirements imposed by the health care reform on employer health benefits. Some changes will include the elimination of annual and lifetime limits and mandatory offering of coverage to dependents through age 26. These changes could force several companies to reconsider what benefits they have to offer to their workers. The health care overhaul is requiring all companies with more than 50 workers to provide health benefits to every employee working full time. Failure to do this would penalize them up to 2,000 dollars per employee. Also, a reasonable level of health coverage must be provided by the benefits. Moreover, high compensated executives will never be allowed to receive better benefits than those hourly employees. Thus, medical expenses for many employers will increase.

Families would spend on health coverage as the amount lower- and middle-income individuals will be capped by the subsidies. The cost of insurance coverage from the exchanges below what many workers are paying toward employer-sponsored coverage will be kept by the subsidies.

Because of the dramatic implications that this health care reform has on business, many employers are expected to turn to alternatives to employer-sponsored insurance. With increasing awareness of reform, interest in these alternatives will rise. Employers dropping employer-sponsored insurance will escalate employee compensation in other ways such as benefits like retirement, vacation time and health-management programs. Nonetheless, employers in the country will remain competitive as the introduction of new health care reform continues.

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The best thing that came out of the current health reform legislation is PCIP which has been a godsend to some of our uninsurables.   What we have been doing is placing these people with a low cost discount carrier until the 6 month waiting period elapses and they can sign up with PCIP.  It is working really well for everyone.

However, it seems the medical costs (not the admin costs) for the members in these plans is costing more than double what the Obama administration estimated. Check out this report on the PCIP medical expenses.

I guarantee that right now United Health, Aetna, Humana, and Blue Cross are all laughing at this.  They knew what was going to happen.  Everyone blames the greedy insurance companies for the spiraling medical costs, but now it seems maybe its the actual members?

The PCIP law set aside $5 billion to provide insurance coverage to those that have been declined by private individual carriers or more plainly, the undesirable uninsurables.

By 2014, the PCIP plan will be phased out as all plans will become guarantee issue.  (If you recall the central tenant for this is a mandate or tax to ensure compliance, otherwise there will be a looming moral hazard disaster.)

The exact numbers include an estimate of $13,026 per member and an actual expense to be $28,994!  Or more, than double.  Whoever these actuaries are that performed this estimate should come forward and point out their other estimates so we can identify other weaknesses in the health reform legislation.

Another funny piece of data, is that the estimate was correct in the respect that similar state-run high risk pools only spent $12,471 per member.  The difference?  Well the federal government is one piece of the puzzle.  The other piece is that the state run risk pools had much higher premiums which prevented a good deal of the moral hazard.  The plan designs are also different but I am not sure that is related.  However pent up medical demand is a reasonable excuse as well.

Most of the PCIP expenses are coming from cancer, heart disease, and chronic conditions.  However these people are having eight times as many hospital admissions as normal government workers, and the worst part, three times as many ER visits.

The Obama administration has spent $600 million of its $5 billion budget for the program over the past 18 months.  Enrollees in the high-risk pools also tend to be older, with 67 percent of participants over the age of 45. Fewer than one in five enrollees are under 34.

While the administration has tried to put a positive spin on these numbers by saying things like, “oh yeah dude, that means we are serving the right people, bro,” or “hey are you gonna eat that?” in reality it is putting the whole reform bill into new light.

These figures present a challenge for federal high-risk pools over whether the program can take on many new enrollees and stick within its budget constraints. Congress appropriated only $5 billion for the program, to last through 2014. Some states have blown through their budgets faster than expected and have begun capping enrollment. Wait till PCIP goes away and private health care companies need to administer these people.

Not too mention that many people will only get health insurance when they are riding in the back of an ambulance.  In fact, part of our new marketing plan should be to buy ad space in ambulances and hospitals so as agents we can capitalize on the moral hazards.   And you thought lawyers were ambulance chasers? Wait to you see what insurance agents do!

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If your nose is bleeding or you have a wart, the emergency room is the not the correct place for you.  I only say this because apparently many American’s don’t know it.  And as a result many of our nation’s emergency rooms are jammed up and losing unnecessary money, and now they want revenge.

The policy has actually been tested at HCA (the nation’s largest for profit hospital chain) for the last year in which apparently 80,000 patients went home rather than spend the $150 that HCA demanded when it was determined that they did not have a true emergency.

Now because of the success of the policy a  growing number of hospitals are also jumping on the pay-first bandwagon in order to rid themselves of chronic ER time wasters.  Currently about half of all hospitals nationwide are charging this fee after a federally required screening.

HCA considers the policy a smashing success as well which is not going to lead an overturn of the policy anytime soon, in spite of the ER doctors and patient advocates that are blasting the policy as potentially harmful.  Even if they are correct in claiming that mild illnesses don’t clog the ER, why should they even be there at all for these routine illnesses or procedures?

The Real Fear

Physicians might have a point that perhaps a certain percent of legitimately sick people will skip treatment, but currently there is no data on this, and if the screening process is viable the exposure to this concern would appear minimal.

One doctor was estimating however that the as high as 2-7% of these screened patients end up admitted to hospitals within 24 hours, and if he is right (I feel like he is using psychic powers rather than numerical), than obviously the screening process should be improved.

One consumer advocate rightly identified the fee as a financial barrier between the patient and care.  And while this is true, we all need to accept responsibility for wasting the time of others and obviously of the 80k turned away from HCA at least 90% of them had issues that had no business being in an ER.

One agency, the U.S. Centers for Disease Control and Prevention, has said that about 8 percent of ER visits are for non-urgent problems that should be treated more efficiently and at less cost in a clinic or doctor’s office.  However, many others think that the 8% number is exceedingly too low.  A comparable, 2010 Health Affairs study found that 27 percent of those visiting ERs could be treated more cost-effectively at doctors’ offices or clinics.

Do they have a point?

Hospital officials are saying that in order to stay in business that they have no choice to chase these fees especially in light of the declining number of properly insured Americans, and the declining reimbursements from private and government insurers.

Three states actually followed the HCA trend and either reduced or eliminated Medicaid reimbursements for those visiting ERs for specific absurd reasons such as warts or colds.

HCA needs to be very careful with this process as well as it opens them up to increased liability, and they are treating the screening very seriously.  HCA has even published their findings which include more than 6 million ER visits to HCA hospitals and out of those 314,000, or about 5 percent, were determined not to be emergencies.  And actually in spite of the fees about 230,000 of those patients paid and remained in the emergency room for treatment.  Only 80,000 or so left. The HCA payment policy excludes children 5 and younger, pregnant women and those 65 and older.

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Good news for America!  2.5 million young adults are now newly covered under their parents plans bringing the percentage of this segment of the population from 34% uninsured to only 29%.  In fact, in 2011 the overall percentage of Americans between 18-64 without insurance dropped from 22.3% in 2010 to 21.3% in 2011.  Another supposed good sign from this is that most of the increase in coverage came from private health plans instead of public programs like Medicaid.

Of course, I would warn America not to get too excited as these numbers are not likely to move too much again until 2014.  And once 2014 rolls around, don’t expect a miracle either.  In fact, unless there is a strong mandate that compels all American’s to get coverage before they need it, than I predict either rates will move to unprecedented levels which will make the Medicaid rolls swell, or the health insurance companies themselves will be regulated out of business which will be a heavy shock to the system.  In either case, eventually we end up with universal health care until the deficit swells and no one will support our egregious consuming habits anymore.

One unintended consequence of this so called victory is that premiums will rise at least 1 – 2% to cover the expansion.  The expansion also highlights how poorly our economy is doing as these young adults continue to move home in record numbers.  Would we have seen this effect had unemployment been closer to 5%?

But still, we are here to celebrate the victory of 2.5 million more Americans getting coverage.

So what is behind the victory?  Well the law that paved the way for this victory was the provision that allows young adults up to age 26 to remain on their parents plan instead of where it used to be which was age 22.  So all the college graduates living at home have now found yet another way to siphon monies from their parents.   In most foreign countries it considered normal to live with your parents till much later in life so I imagine that as globalization changes our country even more we will see even more of this suckling.

And now listen to the gloating from Kathleen Sebelius who needs to take a less myopic view on this reform law.  (I support single payer, but I believe that Obamacare is a disaster.)

“Thanks to the Affordable Care Act, 2.5 million more young adults don’t have to live with the fear and uncertainty of going without health insurance,” Secretary of Health and Human Services Kathleen Sebelius said Wednesday. “Moms and dads around the country can breathe a little easier knowing their children are covered.”

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I believe this is an important issue for many people and I am sure there are at least a few google searches per month on this very topic.  The question of course is does your health insurance plan cover your brand new penis (or lack thereof)?

And in what must be a good sign of fairness under the law, the majority of health insurance companies that are covering this surgery has more than doubled over the past year.  And who is keeping score?  One of the nation’s largest gay rights group who would have no reason to lie or exaggerate.

The exact numbers provided by the Human Rights Campaign in a report to be published Thursday is that 207 of the 636 businesses it surveyed for its annual Corporate Equality Index either are already providing transgender- inclusive employee health benefits or plan to at the start of the new year.  The previous year only had 85 companies that had coverage to pay for this procedure, and the year before that (2009) it was 49, and 10 years ago it would have been 0.

So why the sudden love for transsexuals?  Its because the Human Rights Campaign grades corporations on whether their medical plans cover the whole set of operations including counseling and genital construction (or reconstruction if that is your pleasure) and this plan must cover at least $75,000 worth of surgery.  And if the HRC gives you a 100% than you are listed in their preferred vendors guide for gay, lesbian, and transgender consumers.

Still, it is important to realize, that individual health insurance is probably never going to cover this so don’t be surprised when you bring your new insurance card to the gender reassignment doctor and he tells you gently that you are not going to be covered for your penis removal.  Many insurers still categorize sex reassignment surgery as cosmetic, even though the American Medical Association considers it vital for some people who have been diagnosed with gender identity disorders.

Many of the corporations that expanded their insurance coverage this year are well known companies that appeal to consumers and need to maintain a good relationship with the gay and transgender community such as Apple, Chevron, General Mills, Dow Chemical, American Airlines, Kellogg, Sprint, Levi Strauss, Eli Lilly, Best Buy, Nordstrom, the U.S. division of Volkswagen, Whirlpool, Xerox, Raytheon and Office Depot.

Some companies like Office Depot, cover the procedure but only if it is ruled medically indicated, and not elective.  Office Depot also has started sponsoring gay rights events such as an annual leadership conference held by the National Gay and Lesbian Task Force in order to maintain their top ranking with the HRC.

The Human Rights Campaign also found that corporate America is far ahead of the public sector in terms of providing job protections for transgender people.

Half of the Fortune 500 corporations and 80 percent of the companies the campaign surveyed have equal employment opportunity provisions that prohibit discrimination on the basis of gender identity of gender non-conformity, according to the new index. Only 16 states, by contrast, have laws designed to protect transgender people from job and housing discrimination.

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In a controversial decision (especially among health insurance brokers), the Obama administration issued or rather reissued a rule that is likely to crush many health insurance agents.  Fees or commissions paid to us by insurance carriers won’t count as medical care under the MLR rule.

Some people like David below doubt that brokers (like me and my company East Coast Health Insurance) even satisfy a need.  Read his charming thoughts;

Will someone please tell me what value a health care insurance broker offers consumers. In 2014, the exchanges will open up and anyone with a computer can go online to purchase a plan that suits their needs. Why do we need brokers after January 2014? In my view, they are just adding to the already outrageously high cost of health care that currently pushes over 50 million Americans out of the market and also made sure that another 25 million that are under-insured and don’t know what coverage they have until they go to use it and find out they’ve been seriously restricted. Face it folks, AHIP, the AMA and PhRMA have ruined America’s health care system. They had their chance to make things work for consumers and they chose profits ahead of consumers. Americans need Obamacare and, further still, they need a Robust Public Option included in every health care exchange. The sooner we make health care work for the consumer, the sooner we will take back control of America’s health care system.

Do you know what they are doing now?  Selling minimeds!  Minimeds exist mostly to rip off people as they won’t cover any meaningful expenses should you need them too.  People can and will die from this coverage.  If I had my wish I would kick these shysters out of the business merely to validate our argument that brokers do provide a benefit.  By the way, if anyone that works for a minimed shop or carrier actually has a minimed on themselves I will pay them $500.  That’s how sure I am that while they sell this garbage all day, they carry real coverage on themselves.

In the end the consumer advocates won by arguing that commissions are clearly administrative costs and removing them would make it easier for insurers to avoid paying the required rebates to consumers. Those rebates will go out next year to individuals and small-business policyholders whose insurers fail to hit spending targets this year. The rebates could come in the form of reduced premiums or actual tax free rebate checks.

The rebates just became tax free as under an earlier rule, rebates to employers would have been taxable, so the final rule legislates that any rebates given for employer policies should be in the form of lower premiums or “in other ways that are not taxable.”  It will then be up to the employer or group policyholder to “ensure that the rebate is used for the benefit of subscribers.” In addition, the rule requires insurers to provide notices of rebates not only to the employer, but also to the enrollees.

“If your insurance company doesn’t spend enough of your premium dollars on medical care or quality improvement this year, they’ll have to give you rebates next year,” said CMS Acting Administrator Marilyn Tavenner, who is in her first day as chief of the agency. “This will bring costs down and give insurance companies the incentive to focus on what matters for patients – high quality health care.”

Just to be clear though, we are not dead yet as the final rule does not explicitly address the plea from brokers and agents, instead leaving the calculation of administrative costs unchanged from the original draft.

While many will argue that the broker commission is a benefit to consumers and that it will slow premium growth is partially correct.  Though partially in my opinion amounts to less than 10%.  Anyone that believes health care and health insurance costs rise due to health insurance companies needing to make profits is completely incorrect.  However, insurance companies will likely stop doing business with hospital and providers that let fees continue to rise.  We are seeing Aetna and UHC currently battling hospitals in North Florida on this very matter.

In conclusion, it is not necessarily the health insurance companies that are corrupt but the hospitals.  If you don’t think that the medical field is becoming a bubble check out its growth over the last 10 years.  It is likely to make the housing crash look like a fart next to Staten Island.

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Positive news out of Florida for a change.  Our state (East Coast Health Insurance makes its home in Deerfield Beach, Florida),  leads the nation in lowering the rate of uninsured children, according to a study released Tuesday.  (The downside is that adults continue to sacrifice coverage.  Florida also is near the top for uninsured adults).

As of 2010, 12.7% of Florida children are uninsured which is a significant drop from the 16.7% it was in 2008.  The current total of uninsured children in Florida is 506,934, says the report by researchers at the Georgetown University Center for Children and Families.

Actually over this period, the news was good in 34 states, as they all had success in reducing the rate of uninsured children.  Nevada however, perhaps not surprisingly has the highest rate of uninsured kids at 17.4%.   The best state?  The one with Governor Romney’s public health plan in Massachusetts which is only 1.5%.  Seemingly, the Massachusetts public plan has fared significantly better than the wild west system in most of the rest of the world.  Texas leads the nation in number of uninsured kids with nearly 1 million although it was able to lower its uninsured rate to 14.5 percent from 17 percent.

The national rate for the uninsured

Nationally, the uninsured rate for children fell from 9 percent to 8 percent from 2008 to 2010, as the number of uninsured children fell by 960,000, the study said.

The drop is probably coming from the new health care reform law and of course the community, state, and federal grants that are being advertized on billboards and television.  However, in Florida most of the expansion is credited to the economy which is literally causing new Medicaid enrollment qualifiers daily.  In other words, someone loses a job or takes a job that leaves them below the poverty line.

CHIP which is a government program that helps families that don’t qualify for Medicaid get their children health insurance also has lowered it barriers to entrance for families.  In Florida that program is known Florida Kid Care.  For instance, just recently the state lowered the penalty for failure to pay CHIP premiums from 6 months loss of eligibility to 60 days.

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A shocking if not predictable research project by the University of Minnesota has identified a loophole in the health reform law that will allow employers to push their portion of health insurance premiums towards the government.

Essentially, hidden incentives in the current health care reform law will lead to employers pushing only their sick and older (higher premiums) employees to the exchange to bring down their overall premium or premium per employee average.  The only companies however that will “enjoy” the loophole are companies that self insure as companies that do not are forced to offer coverage to everyone.

The researchers are saying that unless the loophole is closed the financial viability of the exchanges will become unsustainable.  The exchanges which are the centerpiece of the Obama plan are intended to make it easier to comparison shop for health plans and also to expand access to coverage for the uninsured.  However, the exchanges should only be open to the self employed unemployed or those that are not offered coverage through their job.  Due to this loophole however the exchanges will also be open to those that are employed by companies that self insure.  Currently 6 out 10 workers that have health benefits get them from a self insured employer.

The one question that everyone had anyways even before this loophole was identified was if the health care reform law would incentivize employers to stop offering coverage entirely since they could instead send them to the exchange and pay a fine or be less competitive in the job market.

The point of this study at UM was to anticipate via data modeling, how companies would respond to the health reform law given the harsh economic environment and soaring health insurance costs.

There is some good news to the question of if employers would skip out entirely on insuring their employees and that is the data shows that most employers will offer coverage as opposed to paying the fines.

The bad news though that is the report will show that these plans offered by self insured companies will be structured to only appeal to healthy, low-risk employees by not offering benefits that the government exchanges or;

• Limit the number of specialists in a provider network. The exchange could be more attractive to someone who needs a specialist for an expensive chronic condition.

• Couple high premiums with discounts for participating in wellness programs. Employees who are not in the best of health may not want or be able to participate in wellness discounts, such as going to the gym three days a week.
• Raise deductibles and co-pays. Substantial co-pays or deductibles are unattractive for someone who frequently sees a doctor for a chronic condition. High co-pays don’t matter as much for those who see a doctor infrequently.

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