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Covered California Insurance Hikes are starting to Pinch

From: SF Chronicle – 10/16/16

Next year’s health insurance rates for individual policyholders are starting to hit mailboxes, and that’s proving to be painful for some California consumers.

Covered California, the state’s health insurance marketplace created by the federal health law, warned in July that 2017 premiums would go up an average of 13.2 percent, or more than triple the average 4 percent rate increases that consumers have seen since the exchange started offering coverage in 2014.

Around 90 percent of Covered California’s

1.4 million Enrollees get some federal aid to help cover the cost of their premiums. The increases will be felt most acutely by those policyholders who make too much money to qualify for those subsidies. These are self-employed people or those who otherwise don’t get health insurance through their employers.

“I was in favor of Obamacare,” said Ted Weinstein, a self-employed literary agent in San Francisco, referring to the Affordable Care Act. “Now I’m taking it in the shorts with a 27 percent rate increase (next) year.”

Weinstein, who emphasizes he supports expanding coverage to the millions of Americans without health insurance, said he’s frustrated that his Anthem policy, which cost $773 a month in 2014 when the major elements of the health law kicked in, has now shot up to over $1,300.

About 10 million Americans who buy individual health insurance either through or outside the state and federal marketplaces don’t receive any federal subsidies to help lower their costs, according to the Congressional Budget Office. Weinstein, for example, does not qualify for a subsidy.

President Obama’s signature health legislation has come under fire in this election season, with major insurers like Aetna and UnitedHealth retreating from the marketplaces, as well as the rising premiums. Even the law’s supporters, like Minnesota Gov. Mark Dayton, a Democrat, are lobbing criticisms. Dayton last week declared the Affordable Care Act “no longer affordable,” with individual premiums in the state exchange increasing next year by an average of 50 to 67 percent.

California has been largely considered successful in rolling out its exchange and keeping premiums under control, but this year is proving to be challenging.

While rates are going up an average of 13.2 percent statewide, Covered California’s largest insurers — Anthem and Blue Shield of California — are increasing rates by 17.2 percent and 19.9 percent respectively. The state has no laws or regulations that cap premium increases.

“Things are working better in California than almost everywhere else, but it’s still not perfect,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonpartisan health research and communications organization. “If open enrollment goes poorly, it’s possible there could be further plan exits and bigger premium increases this next year.”

This year’s open enrollment period starts Nov. 1 and ends Jan. 31, 2017, but people can sign up outside that period under special circumstances such as if they lost their coverage due to a job loss, divorce or move.

Anthem and Blue Shield have blamed the increases on several reasons, including higher-than-expected use of medical services by members, increased cost of prescription drugs and high costs incurred by people who signed up for coverage outside the open enrollment period.

The burden of the higher rates isn’t being shared equally throughout the state. Northern California historically has had higher premiums than Southern California for a variety of reasons including hospital-network mergers, but some of the contrasts are stark.

In Santa Clara County, premiums are going up a weighted average of 9.2 percent, while people in San Francisco will see their rates increase by 14.8 percent, according to figures released by Covered California. Meanwhile, in Monterey, San Benito and Santa Cruz counties, where there is little competition among providers, average premiums are skyrocketing by 28.6 percent.

Covered California, which started sending out renewal notices on Oct. 5, has recommended that consumers shop around and compare plans.

The exchange offers 11 plans, but the number of choices varies by region. Covered California officials estimated 7.4 percent of enrollees can choose from only two plans. San Francisco, by contrast, offers six different carriers.

Weinstein, 54, said similar coverage from other insurers cost about the same, but he’s most disturbed by benefit changes in his plan that no longer provide coverage if he wishes to visit an out-of-network doctor or hospital.

Weinstein said Republican presidential candidate Donald Trump’s message about how the Affordable Care Act is not affordable resonates for many Americans. While he doesn’t support Trump’s solutions, he said Trump talks more directly about the law’s problems than does Hillary Clinton, the Democratic nominee.

“Real people who are paying out of pocket are getting ravaged with rate increases,” he said. “Until they address that, Obama and Hillary and everybody else are not going to get any public support.”

Covered California Insurance Hikes are starting to Pinch

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GAO report says Obama administration failed to follow health law

From: Modern Healthcare;  9/29/16

The Obama administration failed to follow the president’s health care law in a $5 billion dispute over compensating insurers for high costs from seriously ill patients, Congress’ investigative arm said Thursday.

The opinion from the Government Accountability Office is a setback for the White House and bolsters Republican complaints that administration officials bent the law as problems arose carrying out its complex provisions. The finding may complicate efforts to stabilize premiums in the law’s insurance marketplaces, where about 11 million people get coverage.

At issue is how the administration has handled a little-known, but important program called “transitional reinsurance.” Working in the background of the law’s coverage expansion, the three-year program collects fees from employer and other private health insurance plans and channels the money to health plans that face large claims for treating patients with catastrophic medical problems.

The law specified that the fee would collect $25 billion from 2014-2016, and $5 billion of that would go directly to the Treasury. But when fee collections fell short, the Health and Human Services Department failed to allocate a share of money to the Treasury, saying it would do so later as more money came in.

Republicans cried foul and asked the GAO to examine the issue. On Thursday, Republicans got the ruling they had hoped for.

“HHS lacks authority to ignore the statute’s directive to deposit amounts (collected under the program) in the Treasury,” the GAO’s general counsel, Susan A. Poling, wrote.

The administration’s interpretation of the law “is inconsistent with the plain language of the statute,” she said.

Republicans accuse the administration of shortchanging the Treasury to “bail out” the health care law.

“The administration should end this illegal scheme immediately, and focus on providing relief from the burdens of this law,” Sen. John Barrasso, R-Wyo., said in a statement. Barrasso is a leader on health care issues.

Previously, Republicans have complained that the administration was flouting the law when it delayed a requirement that larger employers must offer coverage to their workers.

It didn’t help the administration’s case with GAO that the original HHS plan for distributing the fee money called for paying the Treasury.

The administration had no immediate response to the GAO opinion. The GAO has no enforcement power over its ruling, but congressional opponents of the health law could use the finding to write legislation that forces HHS to pay the Treasury. Generally, lawmakers of both parties respect GAO’s rulings on federal budget issues.

The reinsurance program is one of three financial backstops created by President Barack Obama’s law to support insurers as they built their customer base in the new markets for subsidized private insurance. Reinsurance provides a safety net for insurers by helping to pay large claims, an important consideration for companies selling coverage to a customer pool they didn’t know.

The marketplaces have been tough for insurers, due in part to less-than-promised support from a different government stabilization program. Insurers also say they’ve been swamped by higher-than-expected claims and by customers who sign up for coverage, use it on expensive care and then stop paying premiums. Major carriers such as UnitedHealth Group and Aetna have scaled back their role after forecasting annual losses that will top $300 million.

GAO report says Obama administration failed to follow health law

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Obamacare can succeed, but it needs a huge amount of work

From: Business Insider – 9/5/16

Article Excerpt:

It’s no secret the Affordable Care Act (ACA), better known as Obamacare, has taken it on the chin over the last six months or so.

Here’s the quick rundown: insurers are leaving the public exchanges, companies are worried about the impact on their jobs, even maligned drug companies are pinning blame on the law. In response, the Center for Medicare and Medicaid Services announced an extensive plan to try and mitigate some of the issues being raised.

These setbacks have led critics to say that Obamacare is in a “death spiral” (an oftused phrase among detractors) and even advocates to admit that there is work to be done.

The question, however, is whether the current spot that Obamacare finds itself in is a death sentence, or simply a setback. Despite the issues, the fact of the matter is for all of its struggles, the Affordable Care Act is probably not on its death bed.

Insurers figuring it out

The biggest problem for the ACA in recent weeks has been the pull out of large private insurers from public exchanges. These rollbacks have left a county in Arizona with no ACA exchange insurers and has many counties with few options to choose from.

The problem, at its most basic, is that insurers are losing money. Aetna, the most recent company to ditch the ACA, said it lost $200 million on its exchange business in just the second quarter alone. This, however, may be as much a function of large insurers own problems as the law itself.

Firms that have experience in lower cost government programs such as Medicaid have been far more successful in the exchanges, even making profits. These firms are able to offer competitively priced plans with a lower cost structure than the large firms like Aetna, UnitedHealthcare, and Humana. By not being able to figure out the right cost structure, some of the blame has to fall at the feet of insurers.

If these firms do retool, there is a chance that they re-enter the market. For one thing, many of these same insurers that are pulling out of the exchanges have at one time expressed support and desire to stick with the program

“We are committed to working constructively with the administration and lawmakers to find solutions that can improve this program, stabilize the risk pool and expand product flexibility, all with the goal of creating a sustainable program that makes healthcare more affordable and accessible for all consumers.,” said Aetna CEO Marco Bertolini in an earnings call in April.

Thus, if they can learn from other insurers and come up with a better ACA plan, there may be some reason for them to re-enter the exchanges.

Additionally, the CMS proposals are attempting to make adjustments so that the markets are more viable for insurers. For instance, it is planning to adjust the risk pool, which essentially rewards firms for taking on sicker patients on aggregate and penalizes those that accept a more healthy, low cost group. (There’s more to it, and you’re welcome to read a full explanation here.) This mitigates some of the risks for insurers on losing money.

So if there is combination of better support from the government and a little learning from the insurers themselves, there is a chance to reverse the flow of Obamacare entrants.

Controlling costs

A lot of attention paid to the shortcomings of Obamacare has come from the increase in the cost of premiums. While it is true that premium increases this year have been steep, it is worth noting that much of the increase may be simply insurance companies coming to terms with the economics of the exchanges.

In fact, when the prices came out for the first year of the exchanges in 2014, many observers were surprised by how low the costs were. The average premium came in below the original projection of the Congressional Budget Office. Additionally, the cost for ACA premiums have come in well below what the price of individual market plans, the precursor to the exchanges, were projected to be during the same years.

Additionally, in a recent study the Department of Health and Human Services noted that roughly 70% of those going into the Obamacare exchanges have a plan available for less than $75 per month after subsidies are applied.

Read more…

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