Archive for the ‘Association Health Plans’ Category

Recent Headlines suggest that High-Deductible Health Plans have “Fallen from Grace”. Is that true? Many Insurers hope so!

October 18, 2018

A number of stories have been published in recent weeks making the statement that “HDHP Fall From Grace in Employer-Based coverage”. Some of these stories rely on reports from the Kaiser Health Foundation (KHF) and articles from KH News (KHN).

KHF is a reliable source for health care and health insurance data; and your humble author has cited their data in numerous posts. The notion that HDHPs are getting less popular seems to stem from a survey conducted by the National Business Group on Health (NBGH) which predicts that the percentage of employers offering HDHPs will drop from 39% this year to 30% next year.

One factor cited for this forecast is that employers ( specifically larger employers) are being pushed to offer richer health plans in order to recruit and maintain a sufficient workforce. The great economy and historically low unemployment rates are making it harder for larger employers to find and hire the staff they need and will need to keep up with the growing economy.

We usually associate a growing economy with prosperity for more Americans but this time the economy and the jobs created by it is outpacing large employer’s ability to stay staffed. This issue is not being reported too heavily but it could lead to American businesses falling behind in filling orders and improving revenues. This kind of employment environment has never occurred in a peace-time economy.

The phrase “Employer Driven Health Plans” was trademarked many years ago as one firm in California pioneered the practice of putting Employers in the driver’s seat of their health plan, By integrating an HRA with a HDHP (usually HD but any plan really) the Employer can provide the benefits it desires or requires at a lower cost that traditional plans.
So, I offer a contrarian view for two reasons.

One, the forcast is based heavily on large employers and less on small employers who are growing just as fast as larger employers. If an employer with 10 employees adds one employee to staff that is 10% but if a larger employer( example 500 EEs) adds 10% it is a bigger number of Americans employed. While it is easier to survey large employers than small employers, the result stays the same, American businesses are hiring and need good benefits to compete for staff.

Two, it does not include the huge potential for Employer Driven Health Plans (EDHP) utilizing HRAs. Employers can continue buying HDHPs , which keeps premium costs lower, but then implement an HRA to improve the benefits employees desire.
Ever heard of  a plan “Turning Bronze into Platinum”? Well, that’s what EDHPs were created to do for employers.

Fact is:

  • Employers, both large and small, can provide richer benefits to their employees at lower cost using EDHPs than the standard or conventional plans available.
  • EDHPs can be more attractive to potential and current employees thus accomplishing the goal desired to attract and maintain good staff.
  • EDHPs not only lower cost and improve benefits but will also improve the quality of care received.
  • EDHPs also provide greater access to  that quality care  we all seek by making more providers available than are currently available on many plans.

Larger employers have utilized HDHPs on a greater percentage than small employers but not by implementing the concept of EDHP.

Smaller employers have had less access to EDHPs over the past 10 years due to the unlawful restrictions that many insurers have implemented. But due to a recent anti-trust lawsuit Insurers are no longer threatening brokers about using EDHPs.

This should mean that more small employers will see an EDHP proposal as an option when selecting its next health plan.

Brokers, consultants, Insurers and Employers should not give up on HDHPs as a potential solution to meet the health plan requirements for their staff. Employers should be presented every plan possible in the region to fulfill the RFP it presented, including an EDHP.

The result will be a resurgence in HDHPs with an increased level of satisfaction by both the sponsoring employer and covered member.

Employers just need to find a good TPA to present the EDHP options to them. If their broker/consultant does not present them with a proposal from an experienced TPA administering EDHPs then the employer needs to find a new consultant.

EDHPs are possibly the best example of why and how we are all in this together.

BTW, be sure to vote on November 5th.
Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
It means “Walk the Faith”.

 

Autumn is a Season for two things: Elections and partisan promotion of the ACA’s Health Plan Exchanges. Boy, do facts get skewed for both!

October 11, 2018

I know my title was remiss by not including football and the World Series both of which are far more fun than mid-term elections or the ACA open enrollment period. Remember, this is a healthcare blog so I will stay on message.

I don’t want to address the facts, stats, and promises politicians make at election time but I do want to point out a few corrections or misunderstandings (make that mis-information) that ACA supporters use to promote the Government run Health Exchanges at Open Enrollment (OE). You see Autumn or rather the Fall season signals the coming Open Enrollment period for Government run Exchanges so the proponents of the ACA, which includes most of the Media, many Think Tanks and Foundations and all Democrats work to sell the Government run program to our citizens.

How do they do that? They start with some statistics reported in a manner that supports their position even if it requires a skewing of the facts, which we’ve witnessed in the past. As your humble author has written before, the media has often delivered a biased lopsided view of the current status of the health plans that we all require. They write of Out of Pocket costs, of higher deductibles, of pre-existing conditions, of premium increases, of provider access and even lack of choices in a manner that suits their agenda.

Which is to scare the common sense out of people so that single-payer government-run healthcare sounds like a good idea.

Recent reports are cheering the modest increases in premiums this Fall. For example, Covered California is bragging that the premiums for SHOP, the exchange for small employers, are increasing only 8.3%. We’ve discussed this issue before and revealed the real facts concerning the status of premiums.

First, what other good or service in your life is increasing its cost by 8.3% this year. And, if it did, would you be satisfied with the benefit of that good or service?

Second, the 8.3% increase is multiplied times a rate that has already been increased by as much as 300% over the past 7 years. We’ve discussed the impact of compound interest before, haven’t we?

But, proponents (Democrats and media) have to try to sell their product and to do so requires a real “sales job”.

Another set of facts released deal with the increase in “plan deductible”. The data clearly shows that the deductibles we have on our plans has been steadily increasing. For Employer sponsored plans statistics reveal that:

  • 85% of members have a deductible on their plan
    (10 years ago it was 59%. In 2000 it was less that 25%)
  • the average plan deductible selected by applicants is $1573 up from $1505 a year ago. That’s a 5% increase in deductible in addition to increased premium.
  • 25% of Employer plans offer a deductible of $2,000 or higher.
    (These employers need to add an HRA for their EEs)
  • Plan deductible is just a portion of Out of Pocket costs which is an issue for many and we’ve discussed in many Posts.

What do all of these statistics have in common? They are driven by increasing premiums which is the predictable outcome of an overly regulated government-run healthcare system.

As we’ve discussed before 152 million Americans (close to 60%)  get their health plan from their Employer. So, we should ask a few questions in order to maintain a solid fact-based rational for this mess.

  • Q: Why do Employers spend any money to provide a health plan?
    A: To attract and maintain a competitive workforce.
  • Q: Do Employers want to offer a health plan with huge OOP?
    A: No, they want to provide the richest plan possible.
  • Q: What is the primary reason driving Employers to provide plans with higher deductibles and OOP?
    A: Premium costs! Employer premium costs have tripled in past 7 years!
  • Q: Would Employers offer richer plans if they were affordable?
    A: Absolutely, they want to retain the best workforce possible and rich benefit plans help assure that goal!

Remember, current data shows that there are more open jobs available than people seeking a job. That means competition for employees.

Sometimes, I wonder why an Employer would purchase its group benefit plan through a Government run Exchange. There are probably a couple of reasons.
The Employer:

  • May believe it is too small to get a private group plan.
  • May not be able to meet participation  guidelines of private plans.
  • May not have a good insurance broker to guide it.
  • May be uninformed or mis-led to believe an Exchange is the only option.

Almost anything can be packaged and promoted to sound appealing.
For example: let’s say that you are selling cars but only offer your cars in the color white. However, your competitors offer cars in many different colors including white. Would you need to promote your cars in a manner that made potential customers think that your cars in white were better than the competitors cars in various colors?
Of course you would or else you go out of business.
However, if you were being subsidized by the government then you could say almost anything to compete.

We’ve discussed in previous Posts that the media will be increasingly bold in its attacks on pre-ex, premium leveling off, OOP on plans as well as unexpected OOP, choice and many other areas to support candidates in the mid-terms coming in November. We need to continue to be aware and make others aware so that these scare tactics do not work!

That’s why we’re all in this together! To help one another.

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
It means “Walk the Faith”.

Why do California’s state politicians dislike Californians so much? Gov. Brown just signed legislation that guarantees Ca’s citizens will see no relief from rising health plan premiums.

September 27, 2018

Some things are just too crazy to understand such as why California’s legislature and Governor continue to put forth healthcare related legislation that guarantees the good premium-paying citizens of CA will get no relief.

The legislation that the Governor just signed, SB 910 and SB 1375, put a “ban” of the health plans referred to as Short-term medical plans as well as on Association health Plans both of which came about as a result of the Trump Administration’s efforts to lower healthcare cost and increase alternatives. The proponents of the bills Gov. Brown just signed applaud that this moves CA one step closer to universal coverage which to them means “state run healthcare”.

As we’ve discussed in previous Posts, the efforts in healthcare related legislation by CA’s liberal politicians cause more pain, both physical and financial, to 90% of the population just to move toward their stated goal of government run healthcare. One piece of legislation after another, over the past 10 years, has reduced access to care, raised cost of insurance and increased out of pocket cost for patients. I could list numerous pieces of legislation that punish the majority but did nothing to benefit the people the Legislators claim to help.

SB 161 is a good example of these bad bills. In legislative hearings the proponents of SB 161 openly stated that their goal was to eliminate competition for the group plans of Covered California. So SB 161 was created to restrict small employers from gaining access to lower cost group health plans that utilize self-insurance and stop loss policies. The result – small employers lost access to competitive group health plans and of course we all know that Covered Ca’s group plans suck.

This time, the CA legislature’s goal is to block both Short-term medical plans (STPs) (what liberals refer to as junk insurance) as well as Association Health Plans (AHPs).  Democratic Senator Ed Hernandez, who authored the afore mentioned SB 161 has also authored SB 910 and SB 1375 which ban STPs and AHPs respectively. Remember that both of these health plan options are designed to offer more choice, that means potentially better alternatives than the ACA’s metallic plans provide.

The opponents of these innovative and competitive types of coverage claim that because these plans are exempt from some of the Affordable Care Act rules these plans will “cherry pick” healthy citizens. That these STPs and AHPs would leave the un-healthy citizens on the current plan offerings of the ACA, which we all know suck.

BTW, by suck I mean:

  • Too expensive
  • Too high out of pocket limits.
  • Too much risk for “unexpected” costs as we’ve discussed.
  • Too skinny provider networks
  • Too few options for individuals and families

The Liberals claim that the STPs and AHPs are bad because:

  • They can underwrite which means they can accept or reject applicants.
    (While not all are accepted this does bring premiums down)
  • That members with pre-existing conditions might see their claim denied.
    (Folks with Pre-ex could remain on the ACA compliant plan of their choice)
  • They don’t need to cover ‘essential health benefits which Liberals always highlight includes mental health and maternity care.
    (Not everyone needs maternity care, pediatric dental, or mental health benefits so AHPs and STPs can cover what folks really care about at lower premiums)

The real story is that California’s liberal legislature has convinced itself, and any new politician that joins them, that CA needs “universal coverage” run by the State of Ca. Can you imagine how horrific a state run plan would be for everyone including those citizens with pre-existing conditions. (Who the Libs say they care about)

Have you ever tried to fight the Government when it makes a mistake? It’s impossible to get help, a correction, satisfaction or relief.

But, if your private plan’s Insurer mucks something up you can get relief or at least an explanation. Plus, you have a regulatory body such as the Dept. of Insurance or Dept. of Manage care to step in, if needed. Insurers try to avoid intercession by regulators.

Who would you rather fight: the State Government Bureaucracy that does not give a hoot about us as individuals or an Insurer that lives in fear of the DOI?
You know the answer!

The sad fact is that we are all being penalized as the CA tries to implement its vision of state run health care. As stated many times, 90% of us are paying increasing premiums while getting decreasing benefit and the legislation the Governor just signed won’t make it better for the 90% of us.
Enough on that!

As a random thought, have you noticed the press and liberal candidates increasing the fear mongering about pre-existing conditions. As we predicted a month ago,  every article about health care includes a paragraph or two about the GOP’s desire to cut off your coverage for your pre-existing conditions. These statements would be laughable if it weren’t so darn serious.

As I’ve stated, no Conservative or Republican would dare take Guarantee Issue and Coverage for Pre-ex away from us. Remember, these people want re-elected more than anything. Why would they do something stupid like that? Plus, the Insurers have learned to be profitable in the new era, very profitable.

OK, next week you’ll read about E Clampus Vitus as I venture to my Fall Trek. I hope you will enjoy reading about the history of the Clampers.

Always remember, we’re all in this together.

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
It means “Walk the Faith”.

We warned you about the Employer Mandate. The Congress is working quickly toward an outcome that makes little sense! let’s see why.

September 20, 2018

You read here on August 16th 2018 how the US House passed out of Ways and Means a bill  which would suspend the employer penalty payments for the period after December 31, 2014 up to January 1st, 2019. Again Yes, you read that correctly. For years, 2015 through 2018 the employers affected by “play or pay” would not be required to make the penalty payments. I’m sure it’s some clever GOP move to throw off logic.

The Bill was voted out of the House last week which means the Senate gets a whack at it. Will it make it into law before the mid-terms? I doubt it but let’s take a look at the brilliance of our House GOP as it stumbles over itself yet again in its efforts to repeal and replace the ACA.

Here are a few high points of what H.R. 3798 would provide:

  • Change the ACA employer coverage mandate threshold for “full-time employee” to 40 hours per week, from 30 hours per week. (May increase uninsured ranks)
  • Keep the ACA employer coverage mandate from applying to any month beginning after Dec. 31, 2014, and before Jan. 1, 2019. (Will employers that complied receive any restitution?)
  • Postpone the start date of the ACA excise tax on high-cost health benefits packages to Dec. 31, 2022, from the Dec. 31, 2021, start date now in effect. (No one likes this tax or even understands who will pay it. Why not just eliminate it?)
  • Repeal an ACA excise tax on indoor tanning services. (Duh, who cares!)
  • Require employers to provide Form 1095 coverage statements to individuals only when individuals ask for the statements, instead of having to send the statements to all employees, recently departed employees and certain dependents every year.
    (This is not a bad idea, but if there is no Individual Mandate and no Employer Mandate why is reporting necessary at all?)

Here are the challenges as stated by experts:

One challenge supporters of H.R. 3798 face is finding new federal revenue, or new federal spending cuts, to offset the effects of ACA employer mandate changes on the federal budget.

Analysts at the Congressional Budget Office estimated in a report posted Tuesday that H.R. 3798 could cut federal revenue by about $12 billion in 2019, and by about $52 billion over the period from 2019 through 2028.

The delay in the effective date of the employer mandate and the change in the definition of full-time worker could cost the government about $46 billion in revenue over the 10-year period starting in 2019, according to the CBO analysts.

Here’s what I said before and I’ll say it again:
Is it even close to being a good idea in the first place or just a political gimmick by politicians so that they have bragging points as they campaign for reelection? We know from the Individual Mandate that they won’t repeal it outright but rather they will  simply reduce the penalty to zero. Jeez, that’s a cowardly way to legislate.

As we asked previously, is the employer “play or pay” mandate a good idea or should it be eliminated? Plus, what effect will it have on the thousands of employers and hundreds of thousands of employees who complied already?

I am a free market, let the private sector resolve it and keep the Government the hell out of it, kind of guy. But, this issue is a complex one because as I mentioned tens of thousands of employers have already taken steps to comply.

Those employers stepped up to do what was required, those employers purchased the plans that complied with the law and spent money that the non-compliant employers did not. It would be unfair for non-compliant employers to avoid the penalty while other employers have already spent untold fortunes with no hope of getting that money back.
Can these employers, who feel they were forced to comply, receive any restitution equal to what they paid to comply?

Remember this example:
If Company A and Company B both bid on the same project they would both include all of their operating and legacy costs in those bids. Therefore, if Company B provides no health plan, because it was and is noncompliant, then its costs might be lower thus allowing it to submit a lower bid and possibly win a project over Company A which does provide benefits.

Personally, I think an employer who provides benefits is probably a better run company and certainly tries to take care of its staff. So, that employer should have an advantage but money is money which means the buyer may take the lower bid. That sucks but happens.

But, the other side of this is the employee’s. Hundreds of thousands of employees have been offered and enrolled on a health plan, possibly for their first time. What happens to them if their employer discontinues a plan because it’s no longer required legally? Many would go without coverage simply due to affordability.

Let’s face it, the ACA has caused premiums to increase astronomically over the past 7 years on individual plans (all plans really). These employees, pushed off an employer sponsored plans, would be required to go into that ACA Individual Plan jungle, and I do mean jungle as it is a “freaking” mess in that market. Would those employees want to pay those high premiums – could they afford those premiums? Probably not.

In addition, the health plan landscape, that is alternatives and access, varies greatly state by state. Many states, like California, are not allowing any of the Trump administration’s new ideas to come to California. California says No AHPs, No to skinny plans on top of what California had already implemented to harm small employers with its stop loss killing legislation known as SB 161.

Again, I would wager that many employers, who bit the bullet and complied, will maintain their plans thus continuing the expense they incur. The elimination of the penalty will make it so that non-compliant employers will be allowed to continue not providing benefits, not spending those funds and may think they have a financial advantage in the market against competitors.

So, against my human nature and all that helps one develop values I don’t think the “Play or pay” mandate should be eliminated for large employers. In fact it should be enforced. The IRS has had difficulty identifying which employers should or should not be Playing and less success in getting noncompliant employers to pay. Big deal – get it done so that the law is applied equally.

So, even though the House will be in recess as you read this, you will be informed. Together we need to stay focused on healthcare issues like this. Can you think of a single big government bureaucracy that has ever not fouled it’s intended objective? No, so when we identify issues that need attention or fixed or eliminated we should shout for it.

That way they’ll know that we’re all in this together.

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
It means “Walk the Faith”.

Mid-term elections and YOUR coverage for Pre-existing Conditions: what do they have in common?

September 6, 2018

I realize that the mid-term elections are two months away and most of us hate the campaign adds and the rhetoric but we should prepare now for the “mis-information” we will see and hear concerning what the GOP plans to do to coverage for Pre-existing conditions. We’ve discussed before how difficult it is to decipher the facts vs. fiction or the truth vs. campaign promises (Bullsh#t). That is just not easy for folks to do.

The Dems have focused on a number of issues on which to campaign this year. The GOP strategists probably thought that healthcare and the ACA would not be one of the issues on which the Dems would campaign but they were wrong and the Dems are taking advantage of the thickheaded dopey actions taken by the GOP to dismantle the ACA.

The single effective tool the Dems will use is the scare people/voters about losing their coverage for Pre-existing conditions. The Dems historically and routinely use Medicare as a scare tactic but this issue of covering or not covering pre-existing health conditions may be more effective than scare tactics about Medicare. Not kidding!

Articles and short excepts are every where which make the accusation that the GOP’s scheme is to change the ACA so that Insurers won’t be forced to cover pre-existing conditions. These articles also carefully link eligibility and guaranteed acceptance to this issue to make folks believe that Insurers will no longer be required to accept all applicants and the Insurers will be able to deny coverage for conditions existing prior to coverage.

This tactic of weaving un-true facts into the voters minds is common from the Dems. In this instance I think the idea for this tactic started after they realized that Short-term Policies (STP) extending for up to a year would be popular among health Americans and STPs do not pay for pre-existing conditions and can qualify an applicant with a health questionnaire. In addition, Association Health Plans (AHP) have gotten traction in some states.

It is assumed, and I agree, that the STPs and AHPs have the potential to attract healthy people of all ages which could leave the standard ACA compatible plans with a higher percentage of unhealthy people. Why should anyone dispute this assumption and in fact we should support it.

The fact is healthy people have been subsidizing the unhealthy with their higher premiums for seven years. In addition the Insurers would have been subsidized for their losses but in reality the Insurers have made huge financial gains because of the ACA.

What company couldn’t be profitable if you could charge anything you wish, for a product that has huge out of pocket costs and the customer is forced to buy it. Plus, millions of customers have their premium and out of pocket subsidized as well.

So, back to Pre-ex. I have seen nothing in any of the bills floating around that eliminates guarantee issue or full Pre-ex, not one. If you have please send it to me.

The week of August 20th a group of tem GOP Senators offered a bill that they named “Ensuring Coverage for Patients with Pre-existing Conditions Act”. Catchy name isn’t it, just rolls off the tongue, doesn’t it? Why would the GOP name its bill that if it diluted the coverage for people with pre-ex?

Immediately articles started popping up quoting “healthcare experts” citing that the GOP was trying to dilute the ACA’s guidelines for covering pre-existing conditions as well as guarantee acceptance. I’ve read the bill and I see nothing that comes close to supporting that accusation. In fact, it states clearly that Insurers and health plans can not decline applicant nor can they not cover pre-existing conditions.

But you understand the Media and the Internet. Somebody, somewhere, regardless of their expertise or even if they have read the bill, says that it denies coverage  and the mis-information is off and running. A second entity states that “reports are coming in that the GOP is trying to deny Pre-ex” then another only now its plural and says “multiple reports are stating that the GOP wants to deny your pre-ex”.

Whew, it’s no wonder that folks can be misled or at least confused.
First, shouldn’t one ask themselves:

  • Why would the GOP offer legislation two months before a key election that the Dems could use to scare folks with existing health conditions?
  • Why would they name it the “Ensuring Coverage for Patients with Pre-ex Conditions” if it did not ensure coverage for patients with pre-ex?
  • Statistics and common sense tells us that everyone either has a family member that has a pre-existing condition or they have a pre-ex themselves. Why would the GOP alienate that many people two months before an election.
  • Is it possible that this information that places a negative spotlight on the GOP be “fake”?
  • What would Mark have to say about this? Just kidding with that one.

We discussed it many times. There are so many people with professional or at least private motivation that continually spew out false information. Some inadvertently but the majority of the false information is designed to achieve the originator’s objective.

We just need to watch for it and ask the question that steers our common sense to know which is which.

That’s easy though because we’re all in this together.

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
It means “Walk the Faith”

 

Let’s break down the enrollment numbers on America’s healthcare and where folks get their coverage. You’ll be surprised!

August 23, 2018

In previous Posts we have discussed how the media headlines are often misleading if not downright wrong and one may wonder how often intentionally. Your humble author has repeatedly pointed out the confusing and misleading articles that refer to premium increases, access to care, unit costs of care, individual vs. employer sponsored plans as well as Medicaid to name a few.

Let’s look at the numbers for how we Americans are covered. We will look at the coverage numbers for ER-employer sponsored, NG– non-group, Mcaid-Medicaid, Mcare-Medicare, OPub-other public coverage and Unins-uninsured. Plus, we’ll see the change from 2013 to 2016 which will support many of the statements we’ve made in the past.

Statistics for the United States:
Coverage     2013           2016                Difference

Pop    313,401,200      320,372,000        6,970,800

ER      155,696,900      157,381,500        1,684,600
NG       13,816,000        21,884,400        8,068,400
MCaid   54,919,100        62,303,400        7,384,300
Mcare   40,876,300        44,550,200        3,673,900
O Pub     6,295,400        6,192,200         – 103,200
Unins   41,795,100        28,051,900     -13,743,200

As I study these numbers a few things stick out like a skunk at the Rose Parade.

  • Employer sponsored plans at 157 million, cover half of all Americans. Actually, I think the percentage is higher than the report suggests.
    Can you imagine the confusion and the anger and the mess if a single payer plan forced 157 million of us on to a Medicare for all plan? It would be worse that the roll out of the ACA was, is and will be if not corrected.
  • The overall population increased by 7 million while the employer sponsored and non-group increased by almost 10 million. That means responsible Americans and employer sponsored plans picked up a big part of that increase.
  • The uninsured population is still a huge number. The ACA proponents use talking points like no pre-existing conditions, open access and only 9% etc but the fact is 28 million is a darn big number. Plus, with premiums as high as they are it’s likely we won’t see a better percentage covered.
  • Medicaid grew dramatically which is due to what’s called Medicare expansion. Remember, these folks reported low income levels which honestly can not afford the premium cost of individual plans. All of those 7.3 million folks are having their benefits (premium and claims) paid by the faithful American tax-payer.
  • Medicaid recipients involve 50% more people covered than Medicare. Remember that Medicaid is primarily healthy-under age-65 working age citizens. Disabled American’s would be under Medicare so the Medicaid population is a number that should concern us all, plus it’s what the Medicare for all folks will push.

Now, you can see what we mean when we point out the biased misleading press about the impact of premium increases to the ACA “public plans”. The non-group population is 22 million of which roughly 10 million people are enrolled in the public exchanges. That’s less than 3% of our national population are enrolled  in the exchanges yet the ACA proponents use those plans when they shape their message to the uninformed. Not cool!

We should not forget that 85-90% of the folks covered by the public plans have their premium as well as their plan’s out of pocket paid for them. That means these folks are not effected by premium increases. I remind you of that fact not for critique but as reminder that when the press speaks and writes of the premium increases it seldom points out that these folks are not affected.

Let’s give the employer sponsored group a hearty “well done”. Employers generally sponsor plans that are richer that the individual plans, provide better access to providers, have been guarantee issue with no pre-ex if covered before for years, and pay for the majority of the premium.

When employers implement court-case tested HRAs then benefits are vastly improved over the standard metallic plans we all hate. BTW, California has and will continue to see the advantage of TPA administered HRAs thanks to the Court ordered injunction secured in one TPA’s anti-trust suit against a major insurer. All employers can now implement an HRA program without restriction of fear of insurer backlash. Again, thank you to the TPA who settled this for us all. But I digress!

I initially planned to include the numbers for California in the above chart. But, it would only irritate out of state readers because California enrollments are a huge percentage of the national numbers. That would tick me off if I lived in a state other than California.

With mid-term election just around the corner we will hear endless diatribes about the value of Medicare for All otherwise known as Single-payer. Don’t fall victim to misinformation as candidates make promises that they know they can’t keep. Remember “if you like your doctor you can keep your doctor” so that you don’t get pulled into the confusion.

The Congress will be back in session in a couple weeks and with mid-term elections only weeks away expect to hear a lot of “Cr*p” that will never get a word said after the election, regardless of outcome.

We’ll keep an eye and ear on it so that we don’t get fooled again. When we’re properly informed they will realize that we’re all in this together.

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf

 

 

 

 

Will the GOP succeed in suspending penalty payments for the ACA’s Employer “Play or Pay” Mandate? Is it a wise move?

August 16, 2018

As you read this in August I’ll need to remind you that during the week of July 23rd the House Ways and Means committee voted 22-15 to approve the Bill H.R. 4616 which would suspend the employer penalty payments for the period after December 31, 2014 up to January 1st, 2019. Yes, you read that correctly. For years, 2015 through 2018 the employers affected by “play or pay” would not be required to make the penalty payments. I’m sure it’s some clever GOP move to throw off logic.

The Bill can advance now but since the House is in its Summer recess for 5 weeks it won’t go to far. But, will it have a chance once the House is back in session and in light of the activity everyone will focus upon this Fall namely the mid-term elections? Doubtful.

But is it a good idea in the first place or just a political gimmick by politicians so that they have bragging points as they campaign for reelection? We know from the Individual Mandate that they won’t repeal it outright but rather they will  simply reduce the penalty to zero. Jeez, that’s a cowardly way to legislate.

I won’t continue with that issue but instead focus on the simple question – is the employer “play or pay” mandate a good idea or should it be eliminated? And what effect will it have on the thousands of employers and hundreds of thousands of employees who have participated already?

I am a free market, let the private sector resolve it and keep the Government the hell out of it kind of guy. But, this issue is a complex one because as I mentioned tens of thousands of employers have already taken steps to comply. Those employers stepped up to do what was required, those employers purchased the plans that complied with the law and spent money that the non-compliant employers did not. It would be unfair for noncompliant employers to avoid the penalty while other employers have already spent untold fortunes with no hope of getting that money back.

I would wager that many employers, who bit the bullet and complied, will maintain their plans thus continuing the expense they incur. The elimination of the penalty will make it so that noncompliant employers will be allowed to continue not providing benefits, not spending those funds and may think they have a financial advantage in the market against competitors.

For example:
If Company A and Company B both bid on the same project they would both include all of their operating and legacy costs in those bids. Therefore, if Company B provides no health plan, because it was and is noncompliant, then its costs might be lower thus allowing it to submit a lower bid and possibly win a project over Company A which does provide benefits.

Personally, I think an employer who provides benefits is probably a better run company and certainly tries to take care of its staff. So, that employer should have an advantage but money is money which means the buyer may take the lower bid. That sucks but happens.

The other side of this is the employee’s. Hundreds of thousands of employees have been offered and enrolled on a health plan, possibly for their first time. What happens to them if their employer discontinues a plan because it’s no longer required legally? Many would go without coverage simply due to affordability.

Let’s face it, the ACA has caused premiums to increase astronomically over the past 7 years on individual plans (all plans really). These employees, pushed off an employer sponsored plans, would be required to go into that ACA Individual Plan jungle, and I do mean jungle as it is a freakin mess in that market. Would those employees want to pay those high premiums – could they afford those premiums? Probably not.

In addition, the health plan landscape, that is alternatives and access, varies greatly state by state. Many states, like California, are not allowing any of the Trump administration’s new ideas to come to California. California says No AHPs, No to skinny plans on top of what California had already implemented to harm small employers with its stop loss killing legislation known as SB 161.

So, against my human nature and all that helps one develop values I don’t think the “Play or pay” mandate should be eliminated for large employers. In fact it should be enforced. The IRS has had difficulty identifying which employers should or should not be Playing and less success in getting noncompliant employers to pay. Big deal – get it done so that the law is applied equally.

So, even though the House will be in recess as you read this, you will be informed. Together we need to stay focused on healthcare issues like this. Can you think of a single big government bureaucracy that has ever not fouled it’s intended objective? No, so when we identify issues that need attention or fixed or eliminated we should shout for it.

That way they’ll know that we’re all in this together.

Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
It means “Walk the Faith”.

 

Covered California premiums for ACA Individual plans projected to average 8.7% increase for 2019. Many are cheering but I wonder, have they forgotten the effect of compound interest?

August 9, 2018

That’s right, articles are every where announcing the good news of the projected 8.7% increase in premiums, which is  smaller increase than we’ve seen since the ACA was created. ACA supporters hail this as a sign that the ACA is working, that Insurers are getting used to the ACA requirements and that it’s smooth sailing from here on.

One must remember that the writers of these countless articles expressing glee at the 8.7% probably don’t pay for their own insurance and others are subsidized by the ACA. Otherwise they would scream, “Are you kidding me, another freaking increase”.

It’s almost like they forget the effect of compound interest. What other product or service would one consider an 8.7% increase as good news? It’s been 105 degrees in the San Joaquin Valley for the past 10 days. Would an 8.7% increase in the unit rate on your electric bill be agreeable. Probably, NOT!

Plus, what other goods or services, that you use, have had unit rates increased 300% plus over the past 7 years? So, we see again that the supporters of the ACA are searching and clawing for any tidbit of a subject on which they weave a positive story about the ACA.

For instance, seven years ago, pre-ACA, the insurance rate for a single person 30 years old might have been as low as $100. If you multiply $100 times 8.7% you get $8.70 bring the premium to $108.70.

But in the real world that 30 year old rate is now $300 so when 8.7% is calculated it equals $26.10 bringing the premium a member will be asked to pay up to $326.10. So, the “compounding effect” on premiums in this example yield a huge difference between $8.70 and $26.10. Since the authors of all of the “happy” stories don’t pay premium or are subsidized they exclaim that this is good news.

If you use the premium change of  a 50 year old the impact increases in magnitude. A 50 year old 7 years ago, pre-ACA, might have paid $400 for a decent plan. But now a 50 year old would pay closer to $1,000. Again, 8.7% of $400 equals $34.8 verses $1,000 times 8.7% equaling $87.00 for a $52.20 increase in the difference.

You know what I mean. The problem, as usual, is that the majority of premium paying voting Americans are not paying attention or have assumed the attitude that there is nothing they can do. I can’t blame them for feeling that way because they are busy working, raising their family, paying the electric bills, their cable bills, their car payments etc. and just don’t have the time to even think about this issue.

As I’ve written over the past several months, we are in a period in which people just are not paying attention to much other than their jobs, their families and every day life. That’s why it’s up to us who do pay attention to this and can see what’s happening to raise our voices.

There are things that can be done. In California voters could make a difference by voting for the correct candidate for Governor and Insurance Commissioner. Those two position would yield huge results that could lower premiums, increase options and improve access to providers. You can bet on it so vote on it!

Sorry to post on such a simple subject matter this week but frankly, it just pissed me off. Over the next few Posts we will discuss Rx costs, Insurer subsidies, impact of HRAs, and the power of Employer Driven Plans.

As always, we’re all in this together, so if you get a chance, tell a friend about the best healthcare blog you’ve ever read.

Until Next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf
It means “Walk the Faith”.

Lot’s of talk about the suspension of the ACA’s Risk Adjustment Payments to Insurers. Is this critical or just another scapegoat?

August 2, 2018

I’d bet you lunch, anywhere in town, that 99% of Americans have no idea what this risk adjustment program (RAP) is or what it does or why it was implemented by the ACA. I’d also wager that 99% of Americans are unaware of the inequities and issues the RAP created.

So, for the 99% of us – what the heck is this Risk Adjustment Program?
The idea was hatched, during the creation of the ACA, as Insurers voiced their fears that Insurers would be inundated with new applicants who had no prior coverage and whose potential healthcare cost (in other words amount of new claims) was impossible to determine. Couldn’t blame the Insurers for their concern, especially when it could be $$billions of dollars in claims on members who had no previous coverage. Plus, the ACA needed a way to entice Insurers to the table.

So, to offer some comfort for planning, the ACA created a complex formula primarily applying to individual plans, that was supposed to level the playing field, so to speak. If one insurer got hit with an inordinate amount of claims while other Insurers did not then the RAP was designed to equal out the pain.

For example: suppose there are just two Insurers offering and accepting applicants in an area, Insurer #1 and Insurer #2. Also, to make the example easier to understand let’s assume that both Insurers  end up covering 1,000 individuals. But, for what ever reason, Insurer #1’s members are all healthy people under 40 years old while Insurer #2’s members are all above 40 years old with a bunch of 60+ and the entire lot is unhealthy.

Obviously, the claim costs for Insurer #2 would be expected to be much higher than Insurer #1. If the claims experience for #2 exceeds 100%, thus loses money, then the loss would have been shared by #1 making payments into the RAP program. Theoretically, every plan should have had this potential cost factored into its plans so that it was a pass through.

Now, the Courts has ruled that the ACA’s RAP payment methodology is flawed which has caused any movement by the Feds to issue RAPs to be suspended. Actually, I don’t think this is a bad think for a couple reasons. One is that Government methodology in almost every initial program is often flawed but seldom corrected. This provides a chance for correction.

Another reason why this halt may be good is that some Insurer’s planning and pricing for initial their plans may have been skewed in an attempt to “game” the RAP.  Your humble author can report on this matter directly. I had conversations with more than one Insurer representative concerning this matter. It was widely agreed that pricing individual plans for the ACA was extremely difficult but more than once I heard “it really does not make a difference because if we’re priced too low and lose money the Gov will make us whole”

The first couple times I heard that sentiment it confused me. I thought, “How could an Insurer not be worried about underpricing their plan?”. The it hit me.

The ACA was designed to be an entitlement plan. Most folks agree that it is an entitlement for the people subsidized under the state run Exchanges. But, did you ever consider that it was an entitlement for the Insurers, too?

How else could the ACA convince Insurers to offer Individual plans with GI and no pre-ex to people who had no prior coverage or worse had been decline for previous coverage.

Now, 7 years in to the ACA and we can see a clearer picture. The big Insurers, you know them, are making money, even though they plead poverty, because they have increased their premiums 300% to as much as 900% in some areas. But, small Insurers and regional Insurers have not done so well because the RAP may have taken money from them to give to the bigger national Insurers.

Of course the battle cry, incited by the ACA supportive Press, is printing headlines about premiums increasing because of the Trump administration’s decision to suspend RAP payments. We should remember:

  1. The Trump Team did not make the decision, the Court did. The Trump folks may not be supportive of the ACA or these RAPs but the Court decided that the RAP methodology was flawed.
  2. The carriers are raising rates anyway, often just because the ACA provides cover, and ACA supporters depend on un-informed readers forgetting that premiums have already been increased a zillion percent.
  3. Finally, as stated above, it’s good to suspend a government program once in a while, at least, to verify its accuracy if not its effectiveness.

We’ll hear more about this as we head toward the Fall and the mid-term elections.

But, you and I won’t be fooled because we’re all in this together.

Until next week,

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf