Health-Care Rule’s Delay Is Applauded By Business Groups - Stay Informed!

As Perry Castro contemplated implementing the Affordable Care Act at his business in Virginia, he feared he would need a new full-time employee to handle all the requirements.

In mere months, Allied Associates International would have to tell the government how many hours each of its 70 employees worked, whether they were enrolled in the company’s health plan, and numerous other facts. Such extensive recordkeeping was the last thing the defense contractor needed as it struggled to navigate federal budget cuts and a halting economic recovery, Castro said.

Complaints from small businesses across the country influenced the Obama administration’s decision Tuesday to delay a requirement that all employers with more than 50 workers provide health insurance to employees who log more than 30 hours a week.

 

In the months before the administration’s decision, companies have said they would stop hiring or cut some workers’ hours to part time to avoid the law’s bureaucratic burdens. Others anticipated spending more to keep up with the law’s reporting requirements and to beef up their health insurance offerings.

 

So for many companies such as Castro’s, the one-year delay came as a relief, if only a temporary one.
“Sure, it gives me one more year to operate without the added costs of the new reporting requirements, but other than that, it doesn’t really help us,” said Castro, whose company provides cyber-intelligence and training services to the Defense Department. “As long as that hammer is still cocked and ready to fall, we’re going to get hit with it sometime. It’s just a matter of when.”
The requirements were confusing, burdensome and more work than his staff could handle, Castro said. It is frustrating given that the company already provides health insurance that most employees use, he said.

“I run a very lean back office, which helps me keep my costs down [and] my employees well compensated,” he said. “The more reporting requirements they add, the more my administrative costs go up, and that’s a shame.”

Since the 2010 enactment of the health-care overhaul, business owners have railed against many of its provisions, including the “employer mandate” and its financial penalties for noncompliance.

Businesses said the reporting requirements that come with the law will eat away at valuable staff time or, in cases such as Castro’s, require a new employee.

They say the work would be especially burdensome in many retail and service jobs, where employee hours often shift from week to week and turnover is high.

In addition, many businesses were concerned that the federal reporting systems used by employers to report on their employees’ health benefits were untested. Many complained that the law’s regulations have yet to be fully fleshed out.

At a minimum, business advocacy groups said, the delay will give employers time to learn more about how the health-care marketplace is being reshaped by the law.

Employers said they would benefit by seeing how the new health insurance exchanges are working and what options are available from insurance plans before they make crucial decisions about health-care offerings for their workers.

“It is a welcome relief for most employers, especially for those who had to make some decisions about benefit changes and maybe even workforce changes for 2014,” said Steven Wojcik, vice president of public policy at the National Business Group on Health, a nonprofit association of more than 360 large employers. “We should know a lot more a year from now.”

Although the employer mandate is delayed, other parts of the law are moving forward, creating new tasks for employers.

“This type of ad hoc, individualized reporting beginning this fall and continuing through 2014 is still likely to be administratively challenging for many employers,” said Brian Haile, senior vice president for health policy at Jackson Hewitt Tax Service.

Many opponents of the Affordable Care Act have argued that the law will be a disincentive to create new jobs in a struggling economy, particularly for firms that have just fewer than 5o workers.

Some employers said they would cut workweeks below the 30-hour threshold to avoid the mandate.
The National Federation of Independent Business is among the organizations that have predicted that the law will prove to be as unworkable next year as they believe it is now.

“Temporary relief is small consolation,” said Amanda Austin, director of federal public policy for the business group. “We need a permanent fix to this provision to provide long-term relief for small employers.” 

Original Article By Michael A. Fletcher and J.D. Harrison via http://articles.washingtonpost.com/2013-07-03/business/40344147_1_health-insurance-requirements-employees

Obamacare's Medicaid Expansion Shortfall Shuts Millions Out of Health Care - Must Read!

Rose Ruiz earns $8 an hour taking care of a 67-year-old diabetic on Medicaid in Austin, Tex. At an annualized rate of $16,640, she can’t afford to buy her own medical insurance. Her best shot at getting coverage was through the expansion of Medicaid mandated under the Affordable Care Act. But because of a U.S. Supreme Court decision that the law’s Democratic authors in Congress never anticipated, millions of low-wage workers who were supposed to be helped by Obamacare will probably end up without coverage.

Obamacare set aside billions of dollars for states to expand their Medicaid programs. Twenty-four of them, most led by Republican governors, have opted out since the Supreme Court ruled a year ago that states could choose not to participate in the expansion. That’s left their low-wage workers in a bind: They make too much to qualify for Medicaid in its present form, but too little to afford a plan their employer might offer. And they don’t earn enough to qualify for subsidies available to help the uninsured buy plans on the state-run Obamacare marketplaces opening in October. These subsidies are available to people with modest incomes—$24,000 to $94,000 for a family of four. Democrats in Congress who wrote the law figured anyone making less would get coverage through the Medicaid expansion.

States dictate the rates they pay companies for providing Medicaid services. The companies then decide the hourly wages they pay home-health aides like Ruiz, which average less than $10 an hour nationally, says William Dombi, vice president for law at the National Association for Home Care & Hospice. Many health aides in states that aren’t expanding Medicaid could need pay raises equal to triple their current wages or more to qualify for the Obamacare subsidies. “It’s one of those things that I’m sure nobody thought about when they were putting this together,” Dombi says.

The problem leaves employers with their own predicament. Those who don’t offer coverage face fines of as much as $3,000 per employee. Yet if an employer offers a new health plan for workers who can’t afford the existing one, and the new plan is deemed “affordable” under the law—meaning it would cost an employee no more than 9.5 percent of his income—then the employee becomes ineligible for Obamacare subsidies to buy a potentially cheaper plan offered through a state-run marketplace. “Lots of employers are really agonizing with the decision,” says Steve Wojcik, vice president for public policy at the National Business Group on Health, a lobbying group. They’ll now have more time to figure it out. On July 2, the Obama administration pushed back the penalties, set to take effect next year, to 2015.

The snafu might hurt low earners in Texas the most. The state has the highest rate of uninsured people in the U.S.; expanding Medicaid would have extended coverage to 1.5 million Texans by 2017, according to the state health department. Many home-health aides would have qualified, says Jennie Baird, president of the Texas Association for Home Care & Hospice in Austin.

Only days after the Supreme Court ruled last June, Governor Rick Perry vowed not to let the state expand Medicaid, saying it would “make Texas a mere appendage of the federal government when it comes to health care.” State lawmakers considered a proposal to press ahead with the expansion, but Perry threatened a veto and it died. His spokeswoman, Lucy Nashed, says the governor prefers to make “common-sense” changes to the existing program. He wants Texas to have more authority to limit eligibility for Medicaid, and to charge Medicaid patients co-pays.

Shantelle Williams, a home-health aide who makes $7.25 an hour caring for Medicaid patients near Dallas, is one of the many Texas health-care workers who’s likely to go without any coverage at all. “The politicians don’t know where I’m coming from,” she says. “That decision was for them, it wasn’t for me.”

The bottom line: Because nearly half of U.S. states aren’t expanding Medicaid, poor workers are likely to end up without insurance.

Original Article By Alex Wayne and David Mildenberg via http://www.businessweek.com/articles/2013-07-03/obamacares-medicaid-expansion-shortfall-shuts-millions-out-of-health-care

Why a Health Insurance Penalty May Look Tempting - Says 55% of Americans MUST READ

 Traditional Major Medical Health Insurance Is Looking Less Appealing ????

OFTEN, when the government wants you to do something, it makes you pay if you don’t. That would seem to be the case with Obamacare, which penalizes companies for not providing health care. But in that penalty, there could be a paradoxical result: dropping health coverage could save companies a lot of money.       

 

Minh Uong/The New York Times

$11,429

Employer portion of family health benefit, average current cost

$2,000

Employer penalty for not providing benefits under Obamacare

Once new health insurance exchanges are up and running in October, companies with 50 or more full-time employees will face a choice: Provide affordable care to all full-time employees, or pay a penalty. But that penalty is only $2,000 a person, excluding the first 30 employees. With an employer’s contribution to family health coverage now averaging $11,429 a year, taking that penalty would seem to yield big savings.

      

Yet there may be costs in employee satisfaction, especially if companies don’t raise pay enough to keep workers whole when they buy insurance on the exchanges.

      

“No one wants to drop health insurance and have unhappy employees,” says Rick Wald, who heads Deloitte’s employer health care consulting practice.

      

Few experts see immediate, big changes to existing employer-sponsored coverage. But that may change in time. A generation ago, defined-benefit pensions were prevalent. Not so today.

So why did the government set the penalty at $2,000?

      

Policy experts don’t agree on the rationale, and the White House didn’t respond to requests for comment. Perhaps the intent was to start a gradual shift from employer-sponsored coverage to the new exchanges. Or maybe the low amount was a compromise needed to pass the law.

      

Whatever the reason, the government is about to conduct a huge experiment in corporate decision-making.

      

Sources: 2012 Employer Health Benefits survey from the Kaiser Family Foundation and Health Research and Educational Trust; the Affordable Care Act

Original Article By ANNA BERNASEK via http://www.nytimes.com/2013/06/23/business/why-a-health-insurance-penalty-may-look-tempting.html?_r=0

Risky Health Insurance Bets Could Backfire for Small Employers - A MUST READ!

A growing number of small businesses have tried to reduce their health-care costs in recent years by replacing traditional insurance with self-insured plans. That means that instead of buying policies from big insurers such as Aetna (AET) or WellPoint (WLP), the company sets aside money to pay for workers’ medical claims directly. The practice is common at big companies, where a large number of claims make it easier to predict health-care costs. Most small employers, who can face exploding health bills from a single unexpected illness or injury, have still stuck to conventional insurance.

A new report today from the progressive Washington advocacy group Center for American Progress warns that a shift toward self-insurance by small companies may put their workers’ health and their own finances at risk. Self-insured plans aren’t subject to some of the requirements of health reform, such as the minimum coverage requirements that traditional policies must now provide. And as the CAP report points out, self-insuring can save companies real money if their workers are healthy:

“As long as these employee groups remain young and healthy, there are few incentives for employers to join the fully insured risk pool that includes older, less healthy individuals, who increase the price of insurance premiums.”

But if costs go up—if an employee or family member has a car accident, say, or gets cancer or HIV—the company might choose to buy an insurance policy, where the risk will be shared with other employers. Under Obamacare, insurers aren’t allowed to charge companies with sicker workers higher premiums. This could raise costs for other groups buying insurance:

“Churning between the self- and fully funded markets would allow small businesses to capitalize on the fully funded and regulated market only when employer risk is high without otherwise participating in the risk pool. This adverse selection could, in turn, raise premiums in the fully funded small group market.”

Think of the health insurance system as a spectrum of how much risk is shared. At one extreme would be a system where everybody pays the same amount into a pool of money (a “single payer”) that pays for everybody’s care. Risk is shared completely. At the other extreme, everyone would bear his or her own medical risk directly. There’s no insurance, and people are on their own to pay for the care they need.

The U.S. health-care system operates somewhere in between—risk pools are sliced and diced by geography, employer, and type of insurance. That creates incentives for “adverse selection,” or gaming the system by sharing risk only when you’re likely to have high costs, and going it alone when costs are low.

Some states are trying to rein in the practice of self-insurance by small businesses, mostly by regulating stop-loss insurance. Those are secondary policies that employers buy that will pay out if medical claims get very costly. Last month Colorado passed a law (pdf) to limit how stop-loss policies can be sold to small businesses. It’s not clear yet how much self-insurance by small businesses might affect premium costs in the broader marketplace. But it’s clearly something regulators are watching.

Original Article by: John Tozzi via http://www.businessweek.com/articles/2013-06-19/risky-health-insurance-bets-could-backfire-for-small-employers

OBAMACare Perspective: A Tsunami of Bureaucracy

Americans will be shocked by details of Affordable Care Act

The Affordable Care Act expands America’s healthcare system to provide guaranteed insurance coverage for all citizens, financially incentivizes and targets healthcare providers’ services to improve the wellness of their patients, and makes healthcare’s system of compensation based on wellness instead of fees for the treatment of sickness and disease. These are, philosophically, lofty ACA ideals on which almost everyone can agree.

 

While the concept of universal health insurance promoting wellness for all Americans is good, concerns about implementing the ACA in 2014 on a nationwide basis are these:

• In 2014, the U.S. population will approach 320 million.
• Approximately 50 million U.S. residents are uninsured – a large number of new clients to evaluate and enroll into healthcare insurance plans, as well as provide quality medical services.

• The U.S. healthcare market now services around 250 million persons. Sixteen percent of the U.S. Gross Domestic Product is expended for medical services. Delays and mismanagement could have a significant negative impact on the health of the U.S. economy.

• Over 40 federal government agencies are authorized by ACA legislation to promulgate regulations controlling the healthcare industry. Many of these regulations have not yet been released to the public – even though implementation of the ACA is supposed to commence around October 2013.

• To fund the ACA, every resident will be required to purchase healthcare insurance from a private insurer or from a healthcare insurance exchange operated in each state by either the U.S. government or a state healthcare agency. Healthcare exchanges in over 50 percent of the states have not yet been either announced or established.

The cost will be expensive

The U.S. Supreme Court ruled (National Federation of Independent Businesses v. Sebelius, Secretary of Health and Human Services) that ACA legislation was constitutional and requiring persons not purchasing mandated health insurance to pay a penalty to the U.S. government was a tax levied by Congress.

The ACA created a broad array of new taxes to help pay for the cost of universal healthcare insurance (irs.gov/uac/Affordable-Care-Act-Tax-Provisions).

There are numerous new taxes detailed at the referenced IRS website. Here are a few examples:

• 3.8 percent net investment income tax on unearned individual income over $200,000
• 0.9 percent additional Medicare tax
• 2.3 percent medical device excise tax
• Employer “shared responsibility” payment of $2,000 per employee
• Health insurance company taxes – based on each insurer’s market share
• Brand name prescription drug tax – based on drug maker’s market share
• Individual “shared responsibility” payment – effective in 2014.

ACA legislation was enacted March 23, 2010, and contained about 2,000 pages (healthcare.gov/law). Agencies of the federal government, as authorized by the healthcare law, are in the process of writing and issuing ACA regulations and guidelines. The precise number of pages of ACA guidelines is unknown but healthcare attorneys estimate they could total 20,000 pages by 2014.

As earlier stated, the lofty ideals of the ACA are goals most Americans would support. The concerns relate on how to achieve these goals. Bureaucracies of the U.S. government are not competent to manage one-sixth of the U.S. economy. The power of a free-market economy and the competitive forces of millions of American consumers will be diminished. The few government officials making decisions on healthcare cannot be adequately informed about the medical needs of more than 300 million Americans.

 

Implementation of the ACA could morph info a financial disaster. The healthcare industry could be overwhelmed by massive paperwork, corporate overhead costs, unsustainable operating losses, a backlog of new patients, slow bureaucratic response to time-sensitive matters, and mass confusion by millions of Americans endeavoring to deal with thousands of pages of legislation and regulations.
Only time will tell if the federal government can responsibly regulate the U.S. healthcare system or if ACA legislation reaches too far and attempts to do too much.

Original Article By: Ed Laneis chief executive of Lane Consultants, Inc. and publisher of The Lane Report

California Health Insurance Premiums Under Obamacare Revealed - TN Rates Will Be More!

California Gov. Jerry Brown (D) announced 13 health insurance companies will offer products to the state's residents under President Barack Obama's health care reform law.

           

A 40-year-old Californian with a moderate income will pay between nothing and $219 a month for a basic health insurance plan next year under President Barack Obama's health care reform law, a state agency announced Thursday.

Covered California, the authority in charge of the state's health insurance exchange, has released details about what the health insurance market for individuals who don't get coverage at work will look like next year. In all, 13 health insurance companies will sell products on the exchange, and premiums will range from 2 percent more to 29 percent less than what comparable plans cost this year, the agency said.

California is not only the most populous state in the U.S., but it also has the highest number of uninsured residents, 7.3 million in 2011. The state is tied for the fourth-highest percentage of residents without health insurance at 20 percent, census data show. The state embraced health care reform soon after Obama signed the law in 2010 and is seen as a bellwether for whether the initiative can succeed.

The results of Covered California's negotiations with health insurance companies belie predictions of massive premium increases under the law, at least for products that offer a range of benefits similar to those currently sold to small businesses.

The average cost of a standard health insurance plan sold on the health insurance exchange will range from $304 to $321 a month in the Golden State next year, Covered California announced. Compared to existing plans with comparable benefits and factoring in available subsidies for low- and moderate-income people, prices like these represent either a small increase or a significant decrease in the monthly costs, the agency said.

"This is a home run for consumers in every region of California," Peter Lee, the executive director of Covered California, said in a press release. 'Our active negotiating will not only benefit potential enrollees to Covered California, but will benefit all Californians by making health care affordable.' California is one of just six states that will use their negotiating leverage to force lower premiums under Obamacare.

Health insurance companies and political opponents of the health care reform law repeatedly have cautioned that its benefit mandates and limitations on industry practices like excluding sick people and charging higher rates to women and older people would dramatically raise premiums.
The evidence to date is mixed. In Maryland, CareFirst BlueCross BlueShield requested that the state approve a 25 percent hike in premiums for individuals for next year. In contrast, two health insurers in Oregon actually scaled back their proposed increases after seeing what their competitors planned.
Prices could be higher for individuals who currently buy skimpier coverage than will be permitted under Obamacare in the individual market. The law mandates that insurance covers things like prescription drugs and maternity care, which will tend to increase premiums. This especially could affect younger and healthier customers.

"Californians in the individual market may pay more than they have before for the additional benefits -- even if those are benefits they may never use," the California Association of Health Plans said in a press release.

Tax credit subsidies may offset premium increases for those who earn less than four times the federal poverty level, or $25,960 for a single person this year.

Affordable Rates Available Now! Contact us today!

Starting next year, 5.3 million Californians who don't receive health benefits from their jobs will be eligible to buy health insurance from the exchange marketplace, according to Covered California. Individuals who buy health coverage for themselves rather than get it through their employment represent just 5.6 percent of the state's current health insurance market, the California Association of Health Plans said in a press release Thursday.

California's leading health insurance companies, including Kaiser Permanente, WellPoint subsidiary Anthem Blue Cross, Health Net, and Blue Shield of California will participate in the exchange. Several large national health insurance companies including UnitedHealth Group, Aetna and Cigna, won't sell products through Covered California.

"With today’s announcement, we have proof that health reform can stimulate competition and increase value for consumers," Blue Shield of California President and Chief Executive Officer Paul Markovich said in a press release.

Among those who can purchase health insurance via Covered California, 2.6 million will qualify for financial assistance because they have incomes ranging from 133 percent of the federal poverty level, which is $15,282 for a single person this year, to four times the poverty level. Those with lower incomes will gain access to California's Medicaid program, called Medi-Cal.
Covered California estimates that 46 percent of those eligible to shop on the health insurance exchange will be Latino, 33 percent will be white, 14 percent will be Asian and 4 percent will be African-American.

Under Obama's health care law, four grades of health insurance will be available on the state-based exchanges. They are named after metals that signify the levels of coverage and premiums: Bronze, Silver, Gold and Platinum. Subsidies are based on an individual's income and pegged to the cost of a Silver plan. People younger than 30 can opt for a bare-bones "catastrophic" plan, but cannot receive subsidies to offset its cost.

In practice, that means a 40-year-old Californian can choose among a variety of levels of coverage at a range in price. This table from Covered California illustrates the average amount a consumer will pay, displayed in black, and the value of what the government will pay to insurers, in green.



One of the most important, and least certain, goals of health care reform is to attract younger and healthier people into the health insurance market. This segment of the population would pay premiums into the system but have fewer medical costs, and they are needed to balance the high health care costs of older, sicker people. This is particularly important, since Obamacare forbids health insurance companies from rejecting people with preexisting conditions and restricts how much older customers can be charged.

Unsubsidized catastrophic health insurance will cost an average of $136 to $168 a month for a 21-year-old next year, according to Covered California. That same customer could elect for a Bronze plan that, depending on her income, would cost between nothing and $185, or a Silver plan with monthly premiums that range from $44 to $230.

Read Covered California's report on 2014 health insurance premiums:

via http://www.huffingtonpost.com/2013/05/23/california-health-insurance-premiums_n_3328110.html 

Original Article By: Jeffrey Young

Want to Improve Health Care? Spend Less on It

According to a new study of Medicaid recipients in Oregon, increased health-care spending has only a limited impact on improving people’s health. This points to an underlying reality: Hospitals and doctors’ surgeries may account for a considerable majority of health-care expenditures, but they aren’t the main factors in health outcomes. That’s true not only in the U.S. but around the world.
The Oregon study suggested that expanding Medicaid had considerable benefits: Recipients got more health care and didn’t suffer the impact of catastrophic health costs. Depression rates fell by 30 percent. But after two years, blood pressure and cholesterol levels of participants hadn’t shifted, and while more people were on medicine to control diabetes, the relevant tests suggest the treatments were having limited impact. Better health coverage for particularly vulnerable groups does save lives, but previous analyses have also suggested that a general expansion in insurance coverage doesn’t necessarily do a huge amount for health outcomes.

Americans get terrible value for money from their health spending. According to data from the World Bank, the U.S. spends $8,608 per person per year on health care. But the country has a lower average life expectancy than Chile, where health expenditure is $1,292 per year, or Israel, where expenditure is $2,172 per year. U.S. life expectancy is nearly four years shorter than it is in Spain, yet Spain’s annual health expenditure per person is about one-third of the U.S. level.

One reason for that weak link is the obscene prices charged by U.S. health providers. American hospitals as a whole often charge two to four times as much for a procedure than the cost of flying overseas and then paying full price for the same treatment somewhere else. But in partial defense of U.S. health care, the link between health expenditure and health outcomes is weak worldwide. The relationship between the number of doctors or hospitals in a country and mortality rates is even weaker. That’s because the measures that are most effective in raising a population’s life expectancy don’t require complex medical techniques and don’t cost that much.

The cheap interventions include vaccines that can be had for cents a shot. They can pretty much wipe out the risk of dying from a range of communicable diseases. Measles is one example: Thanks to more widespread vaccine coverage, the number of kids dying each year from the disease has fallen from 2.6 million in 1980 to 139,000 in 2010. Add a few more simple things—such as sugar-salt solutions to treat diarrhea, antibiotics to fight a range of infections, and better health practices such as washing with soap—and you massively reduce mortality rates, especially among young people. That’s how Vietnam can spend 63¢ a day per person on health care and get a life expectancy of 75 years—only marginally behind the U.S. expectancy of 79 years.

At the same time, as people get richer, they spend more money on health care but also more money on a range of things that make them sick—such things as fats, cigarettes, sugar, and alcohol. About a third of the world’s adult population now smokes, and cigarettes kill five million people a year. Over the past 30 years, global obesity rates have approximately doubled, and obesity takes away 36 million years of healthy life pdf) from the world’s population every year.

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That’s why health can sometimes improve when people have less money to spend. Cuba’s economy nosedived in the 1990s after the Soviet Union’s support ended. A recent study in the British Medical Journal reports that between 1980 and 1997, the average Cuban lost more than 5 kg in weight, obesity rates plummeted, and cigarette consumption per person fell by half. Deaths due to diabetes also halved between 1996 and 2002, and deaths from coronary heart disease fell more than a third. As Cuba’s economy recovered, deaths due to diabetes returned to precrisis levels.

Back in the U.S., obesity rates have declined slightly since 2009—falling from 26.5 percent of the population to 26.2 percent. Smoking rates also fell. Perhaps part of that is a very small silver lining to the recession. Overall, improving diet and exercise habits, combined with weaning a fifth of the population off nicotine, would do more to improve health than throwing yet more money at a dysfunctional health-care system.

With lower violent crime and safer driving as well, the U.S. might even surpass Spanish levels of life expectancy, for a fraction of what Americans spend on health care today. Doctors and hospitals can do some things to ameliorate the results of our addictions to fat, sugar, nicotine, guns and automobiles –but it would be far better for America’s health to fix the addictions themselves.
It’s shocking that, in one of the richest countries in the world, millions are still denied access to health care—and especially preventative services—because they can’t afford coverage. And the pain and disruption associated with paying medical bills is immense. The U.S.’s move toward universal health coverage is a step in the right direction. But the U.S. also needs to get more serious about keeping people out of doctors’ offices and hospitals in the first place. That’s the most effective –and by far the cheapest— path to longer, healthier lives.

Original Article By Charles Kenny via http://www.businessweek.com/articles/2013-05-13/want-to-improve-health-care-spend-less-on-it

Your Health Insurance Company May Owe You Money - MUST READ!

Photograph by Martin Barraud

Last year health insurance companies sent small businesses $321 million in rebates. In California, tens of millions more are on the way, according to the Los Angeles Times. The money comes from a little-known piece of Obamacare meant to keep premiums in check.

In all the talk about death panels, mandates, and insurance exchanges, it’s easy to miss how the Affordable Care Act tries to limit health insurance premiums. The rule, known as the medical loss ratio, requires insurers to spend at least 80¢ of every premium dollar on medical care. That means marketing, salaries, dividends to shareholders, and other expenses can’t make up more than 20 percent of what an insurer collects from policyholders. (The proportion insurers must spend on medical care goes up to 85¢ for policies sold to large employers.)

The idea is that if the actual cost of paying for medical care comes in well below what insurance companies predict when they set premiums, that money goes back to the policyholders rather than becoming a windfall for the carrier. The first rebates went out last summer. Insurers refunded $1.1 billion on policies that covered more than 12 million Americans, with an average rebate of $151 per family, according to the Department of Health and Human Services.

While it’s easy to conclude that insurers are deliberately overcharging consumers and employers, the rebate actually discourages insurers from pricing plans too conservatively, says Cori Uccello, a senior health fellow at American Academy of Actuaries, the professional society of risk modelers.“There is some underlying uncertainty in what claims are going to be,” she says. And the adjustment only works in one direction: to benefit policyholders if plans are priced too high. “If that plan’s claims experience is worse than expected, they don’t get to go back and charge more,” Uccello says.
The bulk of the rebates in California this year are heading to small businesses, the L.A. Times’ Chad Terhune reports:

“Blue Shield, the state’s third-largest health insurer, will be sending rebates to about 29,000 small businesses. That’s because the San Francisco insurer spent 76.6% of premiums on their medical care. Those small firms cover 90,000 employees and dependents.

“Anthem Blue Cross, a unit of industry giant WellPoint Inc. (WLP), will be giving rebates to nearly 45,000 small businesses. The state’s largest for-profit health insurer spent 79.3% of premiums on their medical care, just shy of the threshold. Those small employers cover about 322,000 workers and family members.”

 

For businesses of all sizes, the rebates go to the employer. Companies are supposed to pass along the portion of the refund that applies to employees’ contributions to health premiums.

Insurance companies, unsurprisingly, are not fans of the rule. The industry lobby, America’s Health Insurance Plans, points out that medical costs—not insurers’ overhead—drive rate increases. And the majority of health insurance policies didn’t have to send back money last year, according to HHS: “Approximately 66.7 million consumers are insured by an insurance company that provides the required value for their premium dollars. … 62% of consumers in the individual market; 83% in the small group market; and 89% in the large group market.”

Health insurers must pay rebates for 2012 by Aug. 1. Lots of people are focused now on what premiums will look like for the year ahead—and how much employers and consumers should fear rate shock in the first year of Obamacare’s mandates. But the real verdict on the premiums we’ll see quoted this fall may not come until 2015, when we find out how much insurers may have to refund.

Original Article By John Tozzi via

Democrats' New Argument: It's A Good Thing That Obamacare Doubles Individual Health INS Prem.

Irvine, California, where health insurance premiums for the average 25-year-old who purchases insurance for himself will nearly double under Obamacare. (Photo credit: Wikipedia)

Well, it’s been an interesting week in health care land. For a while now, independent analysts—and conservative critics—have raised concerns that Obamacare will dramatically increase the cost of individually-purchased health insurance for healthier people. This would, of course, contradict President Obama’s promises that “if you like your plan, you can keep it” and that the cost of insurance would go down “by $2,500 per family per year.” What’s new is that liberal columnists, facing reality, are conceding that premiums will go up for most people in the individual market. But they’re justifying it by saying that “rate shock” will help a tiny minority of people who can’t get insurance today. If they had said that in 2009, would Obamacare have passed?

Last month, progressive pundits were trumpeting news out of California that the cost of health insurance under Obamacare in that state was surprisingly low. “Well, the California bids are in,” wrote Paul Krugman on May 27. “And the prices, it turns out, are surprisingly low…So yes, it does look as if there’s an Obamacare shock coming,” the shock that Obamacare will work just fine.

It turns out, however, that Krugman was uncritically regurgitating California’s misleading press release. In fact, the average 25 and 40-year-old will pay double under Obamacare what they would need to pay today, based on rates posted at eHealthInsurance.com (NASDAQ:EHTH). More specifically, for the typical 25-year-old male non-smoker, the average Obamacare “bronze” exchange plan in California will cost between 64 and 117 percent more than the cheapest five plans on eHealth. For 40-year-old male non-smokers, it’s between 73 and 146 percent more.

Democrats now: It’s ok if premiums double for average people

Ezra Klein of the Washington Post, in response to my article on this topic, checked out the eHealth rates for plans in his hometown of Irvine, California, and compared them to a similar website sponsored by the government at healthcare.gov. He found that the third-cheapest plan there cost only $109 a month, “if they’ll sell it to you for that price.” According to the government, Ezra notes, 14 percent of people who tried to buy that plan—Health Net’s IPF PPO Value 4500—were turned away. Another 12 percent were asked to pay more than $109.

To Ezra, it’s galling that three-fourths of his compatriots can pay $109 for health insurance, because 12 percent were not eligible for the plan, and another 14 percent had to pay somewhat more. This is why Obamacare is a great achievement, he says, because Health Net will have to serve all comers, regardless of prior health status.

And I appreciate Ezra’s perspective. I, too, am a supporter of universal coverage, so I understand Ezra’s passion for providing health insurance to the sick. But what we didn’t know last week—and we do now—is how much more the healthy will have to pay for that insurance, under Obamacare. In Orange County, where Irvine is located, the three-fourths of the 25-year-old population that is in good health will have their premiums jacked by 95 percent.

And that’s for Obamacare’s “catastrophic” coverage; the more comprehensive “bronze” plan increases premiums by 130 percent. For the fraction—one-eighth of the total—who, under the old system, would have been charged more, the premium increase due to Obamacare will be somewhat less.

And the vast majority of those who were turned away are able to find insurance—albeit at a higher price—elsewhere. Based on enrollment in Obamacare’s high-risk pool program, the number of people in America who are truly uninsurable is closer to 150,000. That’s a pretty small number in a nation of 300 million. Previous estimates of the uninsurable population came in around 2 to 4 million people, but it’s likely that for many of these individuals, the principal problem is not that they’re denied coverage, but that the premiums are high.


Experts in the economics of health insurance understand that this has been Obamacare’s central flaw from the beginning. The law’s heavy-handed approach to the health insurance market massively drives up premiums for the average person.

Ezra makes another accurate point that is important to emphasize: these increased premiums affect people who shop for insurance on their own. If you get insurance through your employer, especially if your employer is large, you should be significantly less affected. But an increasing number of people shop for insurance on their own, because fewer and fewer employers are sponsoring health coverage. According to the Congressional Budget Office, in 2022, around 25 million people will be purchasing coverage for themselves, and another 25 million will be enrolled on the exchanges. That’s a lot of people. And it doesn’t include the 30 million that will remain uninsured.

Universal coverage, done right, can address these problems in a way that makes insurance affordable for everyone. But Obamacare’s sops to special interests—from the various services all plans are required to cover, to the fact that the law forces young people to pay more to subsidize well-established older people—is not the right way, because it makes insurance too costly.

Get An Affordable Health Insurance Quote Today!

Democrats then: Rate shock is a right-wing myth

The key thing to remember is that back when Obamacare was being debated in Congress, Democrats claimed that it was right-wing nonsense that premiums would go up under Obamacare. “What we know for sure,” Obamacare architect Jonathan Gruber told Ezra Klein in 2009, “is that [the bill] will lower the cost of buying non-group health insurance.” For sure.

In 2009, was Ezra saying that it’s ok that premiums will double for the average person, because a minority of people will pre-existing conditions will benefit? No.

Earlier that year, AHIP, the private insurer trade group, commissioned a report from PriceWaterhouseCoopers to analyze the impact of Obamacare on health insurance premiums in the individual market. That report, which I reviewed here and elsewhere, found that the version of Obamacare then being considered by the Senate Finance Committee would increase premiums by 14 to 32 percent, depending on the year you looked at. In retrospect, the PwC report was a bit optimistic.
But Ezra described the PwC analysis as “the insurance industry’s deceptive report,” comparing it to sham research put out by the tobacco industry and Big Oil. Ezra did concede at the time that “buying better insurance will cost somewhat more,” because insurers would no longer be able “to sell a deceptive and insufficient product.”

But high-deductible, catastrophic insurance isn’t cheaper because it’s dishonest. It’s cheaper because it’s more efficiently designed. And it’s precisely that sort of efficiently-designed insurance that Obamacare abolishes.

Businesses in competitive markets can’t survive by cheating

This idea that high-deductible insurance, freely purchased in a voluntary exchange, is a “dishonest” product is an article of faith in some quarters. My good friend and Forbes colleague Rick Ungar recently dedicated an entire blog post to the subject. The numbers that come out of eHealthInsurance.com, Rick says, are lies. What data does Rick cite to prove this? He doesn’t cite any actual numbers. Instead, he cites…anonymous reviews on the internet.



Rick went to epinions.com, and pulled out quotations from people who were unhappy with eHealth’s customer service. And eHealth should certainly do what it can to address customer’s complaints. (The company, however, isn’t directly responsible for the customer service of the insurers whose products it sells.) Remember that, unlike with Obamacare, eHealth is a private business. No one is forced to use their services. Those who do have a bad experience on eHealth can go elsewhere, like healthcare.gov. eHealth, unlike the government, has an economic incentive to make its customers happy. Indeed, the default setting at eHealth is to sort the listed plans by customer popularity.
If we abolished every company with negative reviews on the internet, we wouldn’t have much of a private sector left. But that’s effectively Rick’s—and Obamacare’s—logic. Once the Obamacare battle station becomes fully operational, eHealth won’t be allowed to sell inexpensive insurance plans. Everyone will pay the higher rate, the higher rate that Rick Ungar’s commenters once thought was a bad deal.

And if we go to a site equally as reliable as epinions.com—my comments section—we find a much more revealing assessment of eHealth’s business practices. Commenter Robert W. says that, because he has a pre-existing condition, the insurer in Georgia who listed a plan costing $130 a month on eHealth charged him $260 instead. Unsurprising. But several other commenters weighed in to say that they had had positive experiences on eHealth.

Commenter Steve Getman: “That wasn’t my experience when purchasing coverage from eHealthInsurance 3 years ago. The rate I ended up paying was the same as the quote.”

Walt Kienzle: “I had a quite different experience [from Robert W] with Blue Cross Blue Shield of Illinois. I was quoted $97 per month for my premium and that is exactly what I have paid for the past year. My policy is paid up until December, so they can’t change the rate until then. When a friend of mine who is also 51 needed to buy her own coverage, I pointed this policy out to her. She has rheumatoid arthritis and gets the same rate.”

Joseph Scott: “As a 26 year old male in San Francisco, I now pay $137 per month for medical insurance and $26 for dental on an independent plan. Using the CoveredCA site, my anticipated OBAMACARE premium, for a less desirable plan, will increase to $203 per months; not including dental.”

Johnny Heedless: “Like many others, what you’re describing is certainly not my experience. I currently purchase my insurance through ehealthinsurance.com I pay EXACTLY what I was quoted.”
There’s more where those came from. And needless to say, Rick didn’t talk about the quality of customer service under Medicaid, or other government agencies like the IRS, that Obamacare substantially expands to achieve its ends.

It’s true that, if you have a pre-existing condition and you don’t put it on your application form, the insurer will call you out for it, and charge you more. They don’t do this because they’re mean. They do that because insurers would go broke if they charged people less than the cost of their care. You can’t buy car insurance after you’ve crashed your car, or homeowner’s insurance after your home has burned down, without paying a higher price, for the same reasons.

There is a better way

I wholeheartedly agree that we should do something to help the small number of people with pre-existing conditions who genuinely can’t obtain insurance. There’s a better way, as Doug Holtz-Eakin and I explained here. It’s important to remember that the problem is an artificial one, created by World War II-era wage controls and a series of other unwise government policies.

Simple changes to Obamacare, like repealing the law’s requirement that young people pay similar premiums to old people, and relaxing its constraints on deductibles and co-pays, would help reduce rate shock. But Democrats put “community rating” in the bill in order to please their allies in the AARP, and many on the left are ideologically opposed to high-deductible insurance. These provisions have a lot to do with rising premiums under Obamacare, and removing them doesn’t prevent you from covering those with pre-existing conditions.

An argument you hear from the left is that it’s no big deal that Obamacare hikes premiums, because poor people won’t have to pay those prices; their plans will be subsidized by the government. But this is an economically and fiscally irresponsible point of view. We’re going to make health insurance unnecessarily expensive—thereby placing an extra burden on taxpayers and those ineligible for subsidies—and it’s no big deal because the government will insulate a select few from the costs?



The fact that Obamacare dramatically raises premiums on young people is a big deal, because the majority of uninsured people are young. It’s the fact that insurance is already so expensive that leads so many young people to opt out. They’re perfectly healthy; they don’t have a lot of money; but they’re being asked to shell out thousands of bucks for policies they won’t use. And Obamacare’s solution to this problem is…to force them to pay more? We’ll see how that goes.

But in the end, I’m glad that we’re finally having the intellectually honest argument about Obamacare that we should have been having all along. No, Obamacare won’t decrease the cost of your insurance by $2,500 a year. Indeed, it could raise it by that much. No, under Obamacare, you can’t keep your plan, if you like your plan. Instead, you’ll be forced to buy a costlier plan with add-ons that you neither need nor want.

If you’re a leftie, you likely think that’s a good thing. But you should have said so all along. The fact is that Obamacare was sold to the public under false pretenses, and the chickens are now coming home to roost.

Original Article at http://www.forbes.com/sites/theapothecary/2013/06/03/democrats-new-argument-its-a-good-thing-that-obamacare-doubles-individual-health-insurance-premiums/ by: The Apothecary, With Avik Roy

American Workers' Health Care Costs Increase Again - MUST READ!

Health care expenses grew more than wages this year - 2013

     

 

 

The family health care tab shows no sign of shrinking. On average, according to the latest Milliman Medical Index (MMI), a family of four covered through a typical employer health plan will pay out $9,144 this year in premiums and out-of-pocket expenses. That's up about 6.5 percent over 2012, though not as much as the prior year's increase of 7.2 percent. The 2013 rise translates into slightly more than $45 a month in higher monthly premiums and out-of-pocket expenses.

A significant reason for the jump, based on today's figures from Milliman, a health care consultancy, is that employees are shouldering a greater share of the cost of health insurance. Families are paying 8.4 percent more than last year toward insurance premiums, while employers are paying 6.1 percent more. Between 2010 and now, employees have seen yearly increases of 8 percent to 9 percent in their average monthly premium; increases in the employer contribution have averaged less than 7 percent. Private-industry wages, by contrast, have risen less than 2 percent in the last year, according to the Bureau of Labor Statistics.

Families with coverage like the one built into Milliman's assumptions will pay an average of $5,544 in monthly premiums through payroll deductions and $3,600 out of pocket for doctor visits, medications and other medical bills. Such figures are national averages; the most expensive 10 percent of patients run up more than seven times the average individual's expenses, according to Milliman.

"Average" means a family with two kids, enrolled in a company's standard preferred provider organization, which is the most widely used form of group coverage. The family pays about 41 percent of the actual cost of health care, according to the Milliman index. Employers pay the other 59 percent.

About half of Americans are insured through their employer; about 15 million people buy individual health insurance, according to the Kaiser Family Foundation, and are therefore responsible for all of their care.The Milliman report did not examine cost trends for such plans or for Medicare plans.

Original Article By Chris I. Young via http://health.usnews.com/health-news/health-insurance/articles/2013/05/22/american-workers-healthcare-costs-increase-again

 

Is the future of American health care in Oregon? --- MUST READ

 

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“The governor has a notion that you can move away from medical billing and towards a more flexible approach to health-care spending that makes more sense for the community,” John McConnell, a health economist at Oregon Health and Science University, is telling me. Then he stops. “You’ve heard the air conditioner story, right?”

Oregon Gov. John Kitzhaber has a plan to save Medicaid. (Robbie McClaran)

 

As it turns out, I have heard the air-conditioner story. Oregon Gov. John Kitzhaber (D) loves to tell the air-conditioner story. He loves to tell it so much, in fact, that it has become something of a running joke in Oregon health-policy circles. At this point, even Kitzhaber is in on it. Before he repeats it to me, he says, “I probably shouldn’t bore you with my air conditioner story.”

Here’s the air conditioner story: There’s a 90-year-old woman with well-managed congestive heart failure who lives in an apartment without air conditioning. That’s actually the whole story.

Kitzhaber, a former emergency room physician, sees this as the perfect example of what’s wrong with our health-care system. “A hot day could send the temperature in her apartment high enough that it strains her cardiovascular system and kicks her into full-blown congestive heart failure,” he said. “Under the current system, Medicare will pay for the ambulance and $50,000 to stabilize her. It will not pay for a $200 window air conditioner, which is all she needs to stay in her home and out of the hospital. The difference to the health-care system is $49,800. And we could save that $49,800 without reducing her benefits or her quality of life.”

Oregon’s Two Experiments

The past few years have seen two remarkable health-care experiments in the Beaver State. One is the Oregon Health Insurance Experiment, the first randomized, controlled trial comparing Medicaid — or any kind of health insurance — with being uninsured. The other is Kitzhaber’s effort to rebuild the state’s Medicaid program around community health rather than individual fee-for-service treatments. The health-insurance experiment has gotten all the attention. But it’s the Medicaid reforms that really matter.

The Oregon health insurance experiment didn’t begin as an experiment. It began as a budget cut. From 2002 to 2008, Oregon threw 93,000 people out of its Medicaid program. In 2008, the state found it had enough money to add 10,000 of them back. The only fair thing to do, state officials figured, was draw straws. So 90,000 of the poorest residents of the richest country the world has ever known entered a lottery to win health insurance.

The 10,000 Oregonians who got Medicaid weren’t the lottery’s only winners, though. Early on, a group of eminent health economists realized the lottery offered a chance to conduct a study no one in their discipline had ever managed but everyone had always wanted: a randomized, controlled experiment comparing those who received Medicaid with those who remained uninsured. This would enable researchers to isolate the effects that insurance — at least as delivered by Oregon’s Medicaid program — had on the uninsured.

“It’s hard to overstate how excited we were,” said Amy Finkelstein of the Massachusetts Institute of Technology. “We thought it was a once-in-a-lifetime opportunity to bring the gold standard of experimental design to this question.”

Two weeks ago, the group reported the data from the first two years of the study. They found that Medicaid coverage increased the amount of health care people used, offered almost total protection against catastrophic health expenses and reduced depression by 30 percent, but it didn’t show a statistically significant effect on blood pressure, cholesterol or blood sugar.

Statistical Questions

The study has come under fire from health researchers who think the sample of sick people was too small to show statistically significant improvements in those measures. “What I don’t get is if you look at the table in their study and look at baseline blood pressure it was like 119 over 76,” said Aaron Carroll, associate director of Children’s Health Services Research at Indiana University’s School of Medicine. “That was normal. You wouldn’t expect it to go down by nine. It would be a bad thing for normal blood pressure to drop that much. All we should care about is blood pressure in the small subset that had high blood pressure. But they don’t present that.”

It’s a critique that Katherine Baicker, a Harvard health economist who was one of the principle authors of the study, partially accepts. “Our power to detect changes in health was limited by the relatively small numbers of patients with these conditions,” she said. “Indeed, the only condition in which we detected improvements was depression, which was by far the most prevalent of the four conditions examined.” She also noted that the diabetes results were consistent with the improvements one would expect from the clinical literature but the number of people with diabetes was too small to establish significance.

However, she said the sample size was large enough to rule out large improvements in blood pressure and cholesterol, at least over the first two years.

All this might make for an interesting academic panel on Medicaid. But the results were quickly conscripted into the war over President k Obama’s health-care reforms. “Today, the nation’s top health economists released a study that throws a huge ‘STOP’ sign in front of ObamaCare’s Medicaid expansion,” wrote Michael Cannon, director of health policy studies at the libertarian Cato Institute. Perhaps the law’s supporters oversold what is really just “a $1 trillion program to treat mild depression,” wrote the Daily Beast’s Megan McArdle.

I would be more favorably inclined toward such commentary if the authors followed their analysis to its logical conclusion and turned in their own health-insurance cards. “My daughter needs private coverage,” says Ezekiel Emanuel, an oncologist and chairman of the Department of Medical Ethics and Health Policy at the University of Pennsylvania who worked on the Affordable Care Act. “Do I say to her the health-care system in the U.S. won’t necessarily do a great job managing your blood pressure so don’t get health insurance? No way in hell! And if that wouldn’t be my response for my daughter it shouldn’t be my response for poor people.”

 

The study’s bottom line is that Medicaid worked. It performed the core functions of health insurance. It got people access to health care and protected them from catastrophic expenses. “We can reject the ‘Medicaid does nothing’ hypothesis,” Finkelstein said. “Medicaid had impact. It increases their use of preventive care. It increases their outpatient visits. It increases their health-care utilization.

What the study called into question is the next step in the health chain: How much healthier, really, does the care we’re buying make us? And I use the term “us” advisedly. “Medicaid is a financing tool,” Kitzhaber said. “Once people get on Medicaid they are bought into the same hyperinflationary, inefficient, backloaded medical system as everyone else.” That’s the system Kitzhaber wants to change.

Oregon’s gamble

In 2012, Kitzhaber struck an audacious deal with the Obama administration. If the federal government would give Oregon $1.9 billion to remake its Medicaid program, Oregon would put Medicaid on a tight budget, guaranteeing $11 billion in savings over the next decade. If the savings don’t materialize, the funds dry up and Oregon is left with a huge budget hole.

“The fundamental problem with our health-care system is the growing discrepancy between the cost of care, the resources available to pay for it and the tenuous connection between that expenditure and actual health,” Kitzhaber said. “What we’re doing is instead of putting our budget into the ER and paying for congestive heart failure after congestive heart failure, we’re putting it into care coordination and community health workers. We’re investing in health. It’s just a paradigm shift.”
At the core of this shift are Oregon’s 15 “coordinated care organizations.” What makes them different from accountable care organizations or managed care is that they’re responsible for more than the health of their members, which now include 94 percent of the state’s Medicaid population. They’re also responsible for the health of the communities they’re in. They have to run regular community health assessments, and the results influence their pay.

This is a potentially transformational notion, based on a belief that the health-care system doesn’t decide or drive health, even that individuals don’t particularly drive their own health. If you live in a community where the streets are dangerous and the health of your neighbors is poor, you’re probably going to be unhealthy — and there’s little or nothing your local hospital can do about it.

Privately, many who are enthusiastic about Oregon’s effort to reimagine its health-care system admit that it’s not exactly clear how CCO’s will begin transforming whole communities.

The biggest change relates to the air conditioning story. Kitzhaber has given the CCOs radical flexibility in what they can purchase with Medicaid dollars. They can buy an air conditioner for a 90-year-old woman in a hot apartment. They can also try to improve outcomes by investing in “upstream” preventive care; one CCO is paying pregnant women to stop smoking. They’re also integrating with other public services.

“Six months ago,” said Oregon Health and Science University’s McConnell, “if you were a Medicaid patient who came to ER 20 times you’d get treated on your 21st time and go home. Now you come in and there’s a social worker with a list of names and they work with you when you leave to connect you with outpatient care and other resources.”

All that might be an improvement, but it’s a long way from a revolution. “I’m obsessed with what they’re doing in Oregon,” says Jeffrey Brenner, head of the Camden Coalition of Healthcare Providers, one of the country’s most innovative community-health efforts. (Do you remember that Atul Gawande article in the New Yorker about the doctor pioneering “hot spotting” in health? That was Brenner.) “But the problem you can run into with this population health stuff is people don’t know how to connect it to a change strategy that’s incremental. They get paralyzed by the vision and they don’t know where to start. You need small victories.”

Obamacare gives almost every American health insurance. That’s a necessary but not sufficient condition for making them healthier. Oregon’s experiment may or may not work, but it’s the right next step. “Medicaid can be improved,” Carroll said. “But we need to differentiate between the way we deliver care and the way we design insurance. Giving people insurance just gives them the access to the care itself. Denying them Medicaid deprives them of simply accessing the system. But if we want to improve quality, we have to change how we deliver care.”

In Oregon, at least they’re trying.

Original Article By Ezra Klein, Published: May 20, 2013 at 9:20 amE-mail the writer

Health Plans Cautious On Where To Sell Obamacare Coverage - A SOLUTION IS OFFERED!

National health plans so far have announced participation in “fewer than 15 states” to provide benefits under the Affordable Care Act. (Photo credit: Wikipedia)

Health insurers are being selective about which insurance exchanges they will offer products on with national health plans so far announcing participation in “fewer than 15 states,” a health plan chief executives and a new report indicate.

Health insurance companies like Cigna Cigna (CI), Aetna Aetna (AET), Humana Humana (HUM) and UnitedHealth Group UnitedHealth Group (UNH) are so far staying in familiar territory where they already have business as they decide where to offer health insurance products to uninsured Americans via the so-called exchanges or online marketplaces that will open for business this fall as part of the Affordable Care Act. At that time, uninsured consumers will be eligible for federal subsidies of up to $5,000, depending on income to buy any number of private health insurance options. Benefits kick in in January 2014.

“The health plans are being very selective about entering markets,” Dan Mendelson, chief executive officer of Avalere Health, a research and advisory services firm on health policy issues tracking development of the exchanges, said in an interview.

Avalere’s latest report, issued this month, said “national payers are entering exchange markets cautiously in 2014, with national carriers announcing participation in fewer than 15 states.”

Health insurance companies are being cautious about the poor population of customers that will be buying benefits, perhaps for the first time. Therefore, they aren’t going into many new markets to sell coverage other than the states where they sell individual and small group coverage now.

“Seven out of eight people who purchase coverage are going to be poor or near poor,” Mendelson said. “If you don’t understand those populations, there is a higher risk. (Health insurers) are looking to mitigate risk by going into markets that they understand.”

The uninsured will still have plenty of choices among health benefit firms, but there are unlikely to be new players other than what the already-insured population has.

Health plans reason it makes sense to offer products in the markets they are already in because they already have preferred lists of medical care providers known as networks. Thus, they already have doctors and hospitals for new customers to choose.

Humana chief operating officer James Murray, for example, told Wall Street analysts and investors earlier this month on the company’s first quarter earnings
call that they were looking at “aligning around participating on 14 exchanges in various — of the states that we have significant network strength.” Humana has not disclosed the states it plans to enter with products on exchanges.

Meanwhile, Cigna chief executive officer David Cordani told analysts on his company’s first-quarter earnings call earlier this month that the insurer was “sharply focused on a limited number of markets.” It did not disclose the markets.

Aetna is targeting 14 markets to sell products on exchanges, but isn’t ruling out backing out of discussions in states where terms aren’t adequate, executives have said. “We are entering these exchanges very carefully,” said Mark Bertolini, Aetna’s chief executive officer, told analysts April 30 on the company’s first quarter earnings call.

Perhaps the safest bet for long term commitment to exchanges in their markets will be the Blue Cross and Blue Shield plans, analysts say.

“The Blues are in these markets forever,” Mendelson said. “They are not going to leave.”

But experts caution consumers on if the "Blues" are really the best choice. There are Assurants, Humana, Cigna, Aetna, etc. but none come close to the exceptional coverage being offered in today's market with USHealth Group. "The company's concept is simply - head-to-toe coverage, consumer payback and your very own health insurance advisor. Not to mention for better coverage than currently being offered in the market today, USHealth Group benefits generally save consumers between 10% -30% annually. They approach the market as financial advisors to their customers and in essense, that is what they really are to a degree," said Micheal Deer, expert health insurance advisor.  

Contact A USHealth Advisor Today!

Original Article: ByBruce Japsen, via http://www.forbes.com/sites/brucejapsen/2013/05/18/health-plans-cautious-on-where-to-sell-obamacare-coverage/