And this is News?

It must be quite frustrating to be HHS Secretary Shecantbeserious - she's almost a "reverse Midas." That is, pretty much everything she and her minions touch become massive fails.

Latest case in point:

"Medicare paid billions in taxpayer dollars to nursing homes nationwide that were not meeting basic requirements to look after their residents ... One out of every three times patients wound up in nursing homes ... they landed in facilities that failed to follow basic care requirements laid out by [Ms Shecanthbeserious]"

This is basic, day-one stuff, not advanced health care metrics. And yet we expect these ... people ... to run our entire health care system with any more competence?

Riiiight.

Health Wonk Review: Insightful Nuggets edition

Jaan Siderov hosts this week's compendium (hey, I thought we were the only folks who used that term!) of wonky healthcare-related posts. As usual, he does it with elan and good humor (not to mention modest acumen).

Wednesday LinkFest

■ As we've long noted (most recently here), The ObamaTax has proven quite lethal to the job market. As if more evidence was needed, we offer this little tidbit:

"Henderson Properties in Charlotte, has 48 employees and seven job openings. But he’s considering a hiring freeze ... if he hires two more employees, he’ll reach the 50-employee threshold that [triggers the ObamaTax Employer Mandate]"

Mr H best be thinking outside that box, as well: too many part-timers and he's screwed, too.

■ The science is settled! You and your fellow passengers can now breathe easier (or maybe not):

"A three-thousand word treatise published by The New Zealand Medical Journal on Friday has given anxious flyers prone to bouts of flatus good cause to breathe easy again, after a highly-scientific conducted by actual scientists produced empirical evidence supporting those in favour of farting on planes"

Ah, fresh air!

■ And because it's making its way - rapidly - across the 'net, here's more proof that ObamaTax advocates remain clueless:

Matt's Missed Mark

Sometimes I despair of the modern media. Case in point, Matthew Yglesias and his inane take on a recent Time article on the cost of health care. As co-blogger Nate pointed out, the magazine got almost everything wrong. But that doesn't stop the illustrious Mr Yglesias from piling on, only adding to the torrent of misinformation.

To wit:

"Time’s long investigation of American health care prices missed one thing: We pay our doctors way too much."

Really, Matt? That's what Brill missed?

First, though, it's only fair to point out that Mr Y acknowledges one rather obvious elephant in the room, one that the press routinely ignores:

"[T]he best deal of all goes to the biggest insurer around: the federal government"

This simple statement goes a long way towards explaining how programs like Medicare and Medicaid distort the cost of health care for the rest of us.

Even a blind squirrel...

Unfortunately, that's the  last time he makes sense. Consider this example of his craft:

"America has the highest-paid general practitioners in the world. And our specialists make more than specialists in every other country except the Netherlands."

So. What?

Hey Matt, ever hear of tort law? Malpractice insurance? RAC's?

In fact, our own Kelley Beloff destroyed this myth almost three years ago:

"Government has mandated that all physicians implement an Electronic Medical Records system by 2014 or face punishments ... Government has mandated that all physicians must have on staff a certified coder by 2012 or face punishment ... Any efficient medical office needs three staff members to every provider."

And the list goes on. Hey Matt, who do you think pays for all that?

But this barely hidden gem is the real prize of his vapid little excercise:

"If doctors earned less money, fewer people would want to be doctors"

Wow, Matt, that's some brilliant, almost Krugmanesque economic and financial insight there. Good thing we have a glut of practitioners to handle the influx of all those newly insured folks thanks to The ObamaTax.

Wait, what?

[Hat Tip: FoIB Holly R]

Sorry, Pool's Closed

As promised, the gates to the ObamaTax High Risk Health Insurance Pool are quickly closing.

Via email from Medical Mutual:

"[HHS Secretary Shecantbeserious] directed us to suspend enrollment for new applicants into the Ohio High Risk Pool as of the end of the day March 2, 2013 ... We will accept applications until Saturday, March 2."

Now, this (ostensibly) doesn't affect folks already on the plan, which is slated to sunset at the end of this year, when the power of the fully functioning ObamaTax goes into effect.

Oh, goody.

Medicare Advantage Plans Lose Under Obamacare Cuts

If you like the Medicare Advantage plan you have . . . get over it. The rest of us were told if we liked our plan we could keep it but that isn't working out very well.

For those who have not been playing along, Obamacare imposes very strict requirements on carriers that sell fully insured health insurance plans. Most of the press has discussed the merits and negatives of the imposed MLR (medical loss ratio) and the impact it has had so far and will have going forward on pricing of health insurance plans.

Until now, it was felt the MLR only applied to individual major medical plans for those under age 65 and employer group health insurance plans.

Apparently we were mistaken.

The MLR rules that require carriers to spend at least 85% of premium dollars on medical claims will also apply to Medicare Advantage plans (MAPD).

The CMS (Medicare) propaganda line is as follows.

Similar MLR requirements are already benefitting consumers in the private health insurance market, says the Centers for Medicare and Medicaid Services (CMS), which has sent the proposed rule to the White House Office of Information and Regulatory Affairs (OIRA).
“We are working to ensure that people with Medicare have affordable access to health and drug plans, while making certain that plans are providing value to Medicare and taxpayers,” said Jonathan Blum, acting principal deputy administrator at the CMS and director of the agency’s Center for Medicare.

PharmaTimes

It's too early to tell how Medicare Advantage plans will be impacted, but here is what we have seen in the under age 65 major medical market.

Premiums have continued to rise, not fall, and in most cases the new business rates and renewal rates are HIGHER than they would have been without Obamacare.

Several carriers have already left the market while others are indicating they will no longer offer health insurance after 2013.

Every carrier has laid off employees, which leads to longer hold times when policyholders call customer services, and delays in issuing policies.

In addition to higher premiums, carriers are reducing benefits on most plans.

If you think your Medicare Advantage plan is immune to this kind of action you are wrong.

The proposed new rule will require Medicare Advantage and Medicare Prescription Drug plans to meet a minimum MLR from the start of next year. “Plans must spend at least 85% of revenue on clinical services, prescription drugs, quality improvements, and or/direct benefits to beneficiaries in the form of reduced Medicare premiums. Enrolled seniors and individuals with disabilities will get more value and better benefits as plans spend more on health care,” says CMS.

The MLR rules will impact not only Medicare Advantage plans, but drug plans as well.

Higher premiums. Higher copay's. Fewer drugs covered under the formulary.

How is paying higher premiums and more for services considered "more value"?

Medicare supplement plans are apparently not included in these cuts.

Why is it the folks in DC that feel empowered to say anything and yet their pants never seem to catch on fire.

Hmmm . . . Freelancers? . . . Freelancers? . . .

Oh yeah, now I remember.  The Washington Examiner has the story:

“A health insurance company headed by an old friend from when President Obama was an Illinois state senator got a $340 million federal loan to establish Obamacare co-ops in New York, New Jersey and Oregon despite having a chronic record of consumer and regulatory complaints.. . . The New York-based Freelancers Insurance Company has been rated the "worst" insurer for two straight years by state regulators”

[Hat Tip: InstaPundit]

Please read the whole thing.  But - first - I would check my supply of Milk of Magnesia.  I think we're all beyond surprise and shock when stuff like this comes to light, but plain old nausea is harder to stifle.

You can read even more here where InsureBlog commented on the Freelancers' CEO giggling over her big score a couple months ago:

“It’s like venture capital for health care,” said Sara Horowitz, the group’s executive director." 

Just what we need – a federal snowstorm of high-stakes venture-capital wagers, based on political calculations, not business calculations. Another wager like Solyndra. 

Can I be the only one who is beginning to think that ACA functions best when used as a cover for laundering & distributing political pork?

MassMutual Takes the (Reverse) Plunge

As we've long noted, Long Term Care insurance rates have been headed ever higher. While John Hancock may have led the charge, other carriers haven't been lagging, and now MassMutual is set to raise new business rates in a few days. From email:

"Effective March 1, Illinois, Ohio, Puerto Rico and Vermont will be added to the list of jurisdictions approved for the SignatureCare® 500 long-term care insurance (LTCi) updated rates"

There doesn't seem to be a specific percentage available at this time. We'll update this post if that changes.

Oh, the message?

If you're thinking about buying Long tern Care insurance, don't wait too* long to make up your mind. It'll cost ya.

MVNHS© Fail: Private vs Public

We've been highlighting the many failures of the Much Vaunted National Health System© since 2006, and explaining why our own private-sector system - while flawed - is superior. Of course, we bring a certain bias to the discussion (and by "bias" we mean "factual analysis").

It's certainly easy to dismiss these items as self-serving, but perhaps this news from the home of the MVNHS© will put to rest such criticism:

"The first NHS trust to be run entirely by a private firm has one of the highest levels of patient satisfaction in the country ... the trust has slashed losses at the hospital by 60 per cent and will soon begin to pay off burgeoning debts built up over years of mismanagement"

Well, well, well.

So as we (metaphorically, one hopes) throw out our own baby with the bathwater, perhaps we should stop a moment and consider the consequences. The ObamaTax (based substantially on the Brits' system) looms on our horizon, yet the folks who actually live under that system now can plainly see that it is a failure:

"Hundreds of hospital patients died needlessly. In the wards, people lay starving, thirsty and in soiled bedclothes, buzzers droning hopelessly as their cries for help went ignored. Some received the wrong medication; some, none at all."

That way lies madness, no?

Does its 3% admin cost mean Medicare is efficient?

Many people believe the admin cost for original Medicare (Part A and Part B) is lower than private insurance admin cost, because  Medicare's cost is "only 3%".  These people also believe that private insurance admin costs are much higher, up to 20% or 30%.  So Medicare, they believe, is obviously more efficient.  Well, let's look at it.  
 

Original Medicare Projected 2013 Admin Cost

Based on CBO projections of Medicare benefit costs for 2013, a 3% admin cost for original Medicare is equivalent to about $31-$32 per month, per enrolled person.  

Here are my calculations:

1.  CBO Part A and Part B benefit costs         $528 bn 

2.  Less M'Care Advantage benefit costs        $145 bn

3.  Net Part A and Part B benefit costs           $383 bn

4.  Allowance for admin @3%  (divide by:)      0.97  

5.  Cost of benefits + admin                            $395 bn

6.  Base administration cost ($395-$383)       $   12 bn

7.  Plus CBO mandatory admin add-ons        $      2 bn

     (ACA mandated e.g. quality, fraud, others)             

8.  Total admin cost                                        $    14 bn

9.    CBO Medicare enrollment                           51 mn

10.  Less M'Care Advtge enrollment                   14 mn

11.  Net Medicare enrollment                              37 mn

The monthly per person admin cost is therefore $31-$32      

                         $14 bn / (37 mn x 12)

Private large-group admin costs

Current admin costs for large groups generally run in the range of $20 to $25 per person per month.  I’ve seen lower and I’ve seen higher, but most fall within that range.   (By “large” group plans, I mean plans covering more than 20,000 persons; large, but nowhere near as large as Medicare.)

Conclusions

Comparing these results suggests the typical per-person admin cost for large private group plans is distinctly less than original Medicare, using the assumption that original Medicare admin is "only 3%" of its total cost.  Even if one excludes the ACA-mandated add-ons from the analysis, the Medicare admin cost per person, per month works out to $27 which still leaves large private groups with an admin cost advantage.

This result makes sense for several reasons.  Most important, seniors have higher medical costs than the working-age population, mainly because of chronic conditions related to age.  That's why Medicare premiums are so much higher than for working age people. But higher claims don't mean higher admin expenses; it does not cost 100X's as much to adjudicate a $10,000 claim vs a $100 claim.  A (%) of premiums uses the much higher Medicare premiums in the denominator.  Using this higher denominator produces a lower answer, which says nothing about the actual relationship between admin costs.  So comparing Medicare admin expenses to other insurance as a percentage of premiums is faulty.  Comparing admin expenses to enrollment is analytically superior.  Keep in mind that private insurance companies administer original Medicare under contract with HHS; there is no reason their admin charges should differ greatly between their large private groups and their Medicare contracts.  Nor is Medicare otherwise regarded as an efficient federal bureaucracy.  (If there is one.)

So yes, “3%” may be arithmetically correct – but it's misleading nevertheless.  It leads to the mistaken notion that Medicare is more efficient than private insurers when in fact the reverse is most likely true.   

Whenever you hear someone claim that Medicare admin is "only 3%" the smart follow-up questions are "3% of what?" and “compared to what?”  The preceding analysis suggests an answer for both of these follow-up questions.   

I've relied on CBO Medicare projections for 2013.  The private plan information is from my own experience working in three major insurance companies, a national consulting firm, and head of benefits for a large employer.  The analysis is approximate, but I believe basically sound.

Hopeful Breast Cancer news

While breast cancer is generally pretty treatable (given early detection and regular exams), some forms of the disease are especially pernicious. Now, the Feds have "approved a new "smart bomb" drug ... that can help women with one of the most hard-to-cure types of breast cancer."

Called Kadcyla, it attacks HER2-positive form of breast cancer; it's not necessarily a cure, but it does appear to add several months to victims' lives. It's actually a hybrid, combining an older drug (Herceptin) with the powerful chemo med DM1.

Does it work as advertised?

You be the judge:

"In a trial of 991 women with advanced HER2 breast cancer, those who got Kadcyla lived on average 5.8 months longer than those getting more standard chemotherapy ... meant about 2 ½ years of life after diagnosis, compared to two years for those on standard therapy."

Pretty convincing.

There's some bad news, though:

"A nearly 10-month course of therapy costs $94,000"

And who knows if it'll be covered under The ObamaTax. Not to mention the new taxes on medical device and other research companies.

Kadcyla, we barely knew ya.

With this ring...Ooops

Way back in Aught Eight, Bob posted on an interesting, and growing, phenomenon:

"[A] poll conducted by the Kaiser Family Foundation, a leading health policy research group, found that in the past year 7 percent of U.S. adults married so one or the other could get on a partner's health insurance plan."

He remarked at the time that this was quite extraordinary, and wondered if we'd be seeing more of this.

Well, we may never know, because thanks to The ObamaTax, that avenue is being quickly cut off:

"By denying coverage to spouses, employers not only save the annual premiums, but also the new fees ... This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014"

That extra fee is to help offset the cost of adding so many folks to the rolls of the insured, thereby making insurance even more expensive (very Orwellian, really: "we'll cut your premiums by 3000% by increasing your premiums"). New ObamaTax regs will require employers to offer coverage to dependent children (if by "children" you mean "26 year old adults"). Curiously, though, there's no such provision (yet) requiring such coverage for spouses. This has been going on for a while now: many employers require working spouses - whose employers offer health insurance - to take that coverage instead. This latest just codifies the practice.

Of course, that presents a new challenge: what if the spouse's employer doesn't offer coverage, or the spouse doesn't work outside the home? The Exchanges seem tailor-made for this, if they work as advertised.

Any bets on that?

Finally the problem is not insurance it is the cost of Healthcare

It is Time, hardly a mainstream or respected publication anymore, but that makes it all the more shocking they finally came around to the cost problem, not evil greedy insurance companies.

http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/

"Stephanie was then told by a billing clerk that the estimated cost of Sean’s visit — just to be examined for six days so a treatment plan could be devised — would be $48,900, due in advance. Stephanie got her mother to write her a check"

"About a week later, Stephanie had to ask her mother for $35,000 more so Sean could begin the treatment the doctors had decided was urgent."

"Sean was held for about 90 minutes in a reception area, she says, because the hospital could not confirm that the check had cleared. Sean was allowed to see the doctor only after he advanced MD Anderson $7,500 from his credit card."

"The total cost, in advance, for Sean to get his treatment plan and initial doses of chemotherapy was $83,900."

The whole article is great for how infuriating it is.  So much was wrong with this entire situtation.

1. We already have small group reform which guarantees them coverage and subsidized rates. How can they borrow $83,900 to pay for treatment but couldn't borrow $500 to $1,000 a month for a real insurance policy?
2. Max rates $5K HSA with Anthem wouldn't have cost that much more than their worthless $469 a month policy. 
3. $5,628 a year in premium for a $2,000 daily hospital benefit is absurd. 
4. Finally the most important part, they could have gone to UH Ajiuha new cancer center and had an entire course of treatment for $83,900. Hospitals charge these ridiculous amounts because people pay them. CTCA is just as bad. 

 I would argue the system worked perfectly this time.  Someone made a bad decision by not buying the proper insurance. They then followed it up and made another bad decision by insisting on going to an overpriced hospital. They paid for it themselves, that is exactly how it should work.

It's when they bring to light the hospitals charges we see the problem;

 "Dozens of midpriced items were embedded with similarly aggressive markups, like $283.00 for a “CHEST, PA AND LAT 71020.” That’s a simple chest X-ray, for which MD Anderson is routinely paid $20.44 when it treats a patient on Medicare, the government health care program for the elderly.

Every time a nurse drew blood, a “ROUTINE VENIPUNCTURE” charge of $36.00 appeared, accompanied by charges of $23 to $78 for each of a dozen or more lab analyses performed on the blood sample. In all, the charges for blood and other lab tests done on Recchi amounted to more than $15,000. Had Recchi been old enough for Medicare, MD Anderson would have been paid a few hundred dollars for all those tests. By law, Medicare’s payments approximate a hospital’s cost of providing a service, including overhead, equipment and salaries."

The more stories like this printed maybe the politicians will stop beating up on the payors and do something about the providers and abusive charges.

In Memorium: Raymond E Mincer, CLU

In Judaism, when one learns of a death, one praises God, saying: "Baruch atah Adonai, Dayan HaEmet," "Praised are you, O God, the Righteous Judge."

Ray Mincer, who passed away this morning at the ripe young age of 78, certainly deserves the Good Lord's attention. I was privileged to know, and be close friends with, Ray for the past 23 or so years. He was a true mensch.

We met when he dropped by the office one day to help out our agency's founder on a case, and for the next couple of years, Ray helped me with some of my more .. um.. interesting cases. Then, in 1993, Ohio adopted a Continuing Education requirement for agents. That fall, we both attended a - how to put it nicely? - "less-than-compelling" (but very expensive) all-day CE seminar. At one of the breaks, we got to talking, and decided that we could do this, too (well, not the boring part, of course). And thus was born Miami Valley Insurance Educators.

Although a practicing and proud Lutheran, Ray had an uncanny Yiddish accent (much to my own chagrin - I have none). More often than I care to think, he would slay me with a classic Jewish joke, delivered dead-pan, in a flawless Yiddish dialect.

Over the past half dozen or so years, Ray fought - successfully - a series of various cancers. This last one, though, proved too much: after the latest, unsuccessful, round of chemo, and with several "appliances" attached to his failing body, he finally declared "enough."

Two weeks ago, my better half and I traveled to Cleveland (where Ray and Joyce had moved a few years ago, to be near their terrific son and his family). I am so glad we did: it was a special time to reconnect, and to see him laugh, and grimace, joke and reminisce.

Cancer may have taken my friend, but nothing can take the years of joy we shared, and the memory of his wry smile from me.

Godspeed, Ray, Godspeed.

Unclear on the concept: Teacher Fail

The crybabies  "educators" in the Mason, Ohio (northern Cincinnati suburb) Education Association seem to have missed the news that The ObamaTax would, in fact, affect them:

"The union representing 640 teachers and their families has filed a grievance over TrueCost ... several teachers who were pregnant were forced to deliver their babies at another hospital, or face the alternative of thousands of dollars in medical bills"

Boo. Hoo.

As regular IB readers know, managing networks has become a favored new tool for reining in health care costs:

"What if you could unbundle your provider network, and steer your insureds to cheaper/more efficient docs and hospitals? Might not that improve the bottom line?"

It doesn't help, though, when the district itself keeps waffling on how they're going to resolve the standoff. In the end, it looks like they'll stick to their original plan and keep TrueCost in place.

The teachers themselves seem not to have learned much the past few years. According to noted rocket surgeon and local teachers' union president Karrie Strickland, "It is not our responsibility to alter the way health insurance costs, claims and bills are paid in the health care industry in Cincinnati."

Sorry, Karrie, but you get an F (for Fair Share).

[Hat Tip: FoIB Holly R]

Universal Non-Health Insurance

The folks at Universal Orlando have read the Obamacare tea leaves and decided providing health insurance for their part time employees is not in the cards. Part-timers health insurance benefits will terminate 12/31/2013.

Universal currently offers part-time workers a limited insurance plan that has low premiums but also caps the payout of benefits. For instance, Universal's plan costs about $18 a week for employee-only coverage but covers only a maximum of $5,000 a year toward hospital stays. There are similar caps for other services.

Orlando Sentinel

OK, so it's not comprehensive coverage, but the point is, the employer is dropping coverage due to Obamacare constraints.

While other employers are laying off employees, and reducing hours to less than 30 hours per week, here is a company dropping existing coverage.

This idea of universal health insurance isn't playing out so well.

Dangerous Musings [Updated & Bumped]

[Originally posted February 19, 2013 - scroll down for update]

The National Association of Alternative Benefit Consultants is the organization which sponsors my CBC designation. It's made up of, and run by, good folks, and does a good job of hunting up interesting ways for agents to expand their business. Sometimes, though, I just shake my head in bemusement at what they send out.

Case in point, a recent email with the provocative title "HSAs, HRAs - Alive & Well Under PPACA‏"

I'm going to elide over the HRA (Health Reimbursement Arrangement) for now - although that model has some interesting challenges under The ObamaTax, as well - and focus on Health Savings Accounts.

As we've written, HSA's are essentially outlawed under the 'Tax, because despite their built-in cost efficiency (or perhaps because of it), they fail to meet the minimum essential coverage requirements under the train wreck law. NAABC's email avers that "many employers will switch to CDHPs, either in the Exchanges or through ERISA plans to escape the regulations of the PPACA.  Even a one-deductible, 100% coinsurance plan will qualify under the "Bronze" level in the exchanges."

Their position relies on this statement from the IRS:

"Section ... directs that the limit on deductibles described ... for a health plan offered in the small group market be applied so as to not affect the actuarial value of any health plan. We interpret and implement this provision through our proposal ... by authorizing a health insurance issuer to make adjustments to its deductible to maintain the specified actuarial value for the applicable level of coverage required ... we propose that a plan may exceed the annual deductible limit if it cannot reasonably reach a given level of coverage (metal tier) without doing so.”

Which should clear up any confusion on that issue.

But of course it doesn't, any more than relying on the IRS hotlines during tax season. The agency goes on to "clarify" its position:

"We propose to use a ‘‘reasonableness’’ standard and request comment on what evidence or factors should be required from an issuer and considered in determining whether this standard is met with respect to health insurance coverage ... While it may be possible to develop plan designs to meet all of these constraints, we believe it could be difficult to develop plans with reasonable coinsurance or equivalent cost sharing rate" [emphasis added]

Talk about weasel words. Does any sane person really think it's a good idea to rely on the generosity and open-mindedness of the IRS? The NAABC seems to think so, because they end their email with this citation from the IRS regs themselves:

"A health plan’s annual deductible may exceed the annual deductible limit if that plan may not reasonably reach the actuarial value of a given level of coverage a ... without exceeding the annual deductible limit"

Uh-hunh.

So it seems that the IRS has left us a loophole through which we can drive our HSAs.

Or does it?

I would characterize this as (at best) sketchy: for one thing, those final regs have yet to be written. For another, this whole argument seems to center on the group market, but we already know that many (most?) folks will be in the market for individual plans (whether by choice or not). Given the MLR requirements for these plans (not to mention all the "freebies" they're required to include), does it really seem reasonable that carriers will be able to design cost-effective HSA plans that will be Exchange-compliant?

As a major and long-time proponent of consumer-driven health care plans (aka HSAs), I really wish that the NAABC was right. But I see no evidence to support that position. And given the actual implementation of The ObamaTax thus far, I'm not hopeful that this will turn out the way they expect.

UPDATE: Bob has a contrarian view, based on his own conversations with the author of the information on which NAABC relied:

"... cost-effective HSA plans that will be Exchange-compliant?"

As we move forward in this train wreck, I am becoming more convinced there is a viable market for major med (and ancillary lines) outside the exchange. Yes, the products will still need to provide EHB's and adhere to MLR, blah, blah, blah but they will also have more flexibility.

This seems to be especially true in the renegade states where the federales are running the show. It is possible non-HIX plans will have a lower premium (ex-subsidies of course), broader networks, broader Rx formularies and even higher deductibles.

Feedback I am getting from carriers (which are not always the sharpest knives in the drawer) indicates they really don't care if they write HIX business or not and will focus on non-HIX product lines.

I am also under the impression that major med quote engines (Norvax, Quotit) will not offer any HIX products and have heard that eHealthinsurance will also focus on non-HIX sales.

I certainly hope that Bob's correct, and that we'll continue to see consumer-centric health plans flourish under The ObamaTax. One indication that seems to validate this belief comes from Cigna, which emailed this:

"In the face of another year of economic volatility and legislative and regulatory change, Cigna's consumer-driven health plan (CDHP) participation grew by 26 percent during 2012, resulting in one-in-five Cigna customers now participating in a Health Savings Account (HSA) or Health Reimbursement Account (HRA)."

Now, HRA's aren't HSA's, but the basic idea that high deductible plans that encourage consumer participation are still valued is a hopeful sign.

Cavalcade of Risk #177: Health Insurance Update edition

Anisha Sekar makes her CavRisk hosting debut this week with a tribute to the ACA. Do stop by.

DNRs & Libertarian Choices

Was helping a friend deal with some family medical issues that unfortunately are not looking good. Due to inadequate insurance they are not getting the care they need. The problem is actually very solvable, they are just choosing not to solve it.

This made me think of Do Not Resuscitate(DNR) orders, perfectly legal requests that medical care not be provided. The individual above has self imposed a DNR on themselves by not taking the steps to get the insurance that will allow them to get the care they require to stay alive. All perfectly legal.

Why can't someone choose to forgo insurance and make the same decision? Instead of spending $5000 per year in health insurance, they'd rather spend the money someplace else, which should be a perfectly legal decision. We as society will honor that decision and not provide them care if something does happen.

This thought process is considered uncivilized, cruel, and all sorts of other not-so-nice adjectives. We are told Society has to provide care to those that need it. OK, then why don't we need to provide the same care to those that sign DNRs?  What about those that refuse to seek treatment they need, like non-compliant diabetics? Shouldn't care also be forced on them?

Tuesday ObamaTax LinkFest

In no particular order:

■ Sales ObamaTaxes - Did you know that there's a sales tax on the policies we'll have to buy? Yep, ObamaTaxed if you do, ObamaTaxed if you don't.

Sweet.

■ As Nate's indicated, small business is a lot more interested in self-funded plan designs these days. Even The Gray Lady seems to have noticed. Of course, according to the solons at that august publication, it's a "loophole."

If you say so.

■ Upward, ever upward: The Congressional Budget Office has issued newly revised estimates of what those ostensible ObamaTax "subsidies" (aka redistribution) are going to cost.

Surprised?

■ Finally, the preference cascade of businesses ditching their health insurance plans continues apace. Grocery behemoth Kroger's CEO acknowledges this reality, as does Dunkin' Donuts (mmmm, donuts). As we've noted before, Wendy's is certainly considering it, as is Taco Bell. The Financial Times has a pretty exhaustive round-up of employers looking to get off the health insurance roller coaster.

Medicare Advantage Carrier Stocks Dive

If you have a Medicare Advantage Plan (MAPD) now it may not be around next year. Or it may be offered again but with higher premiums, lesser benefits, or both.

On Friday, the Centers for Medicare and Medicaid issued a news release stating plans that Humana said would result in reimbursement rates that were worse than expected for the insurer, which relies on Medicare Advantage business for nearly two-thirds of its revenue.

Marketwatch

Humana isn't the only MAPD affected by this news.

Another big player in Medicare Advantage, Universal American Corp. UAM -6.21%  , plunged by more than 6% on the news. Universal had three-fourths of its revenue coming from the government program during the first nine months of the 2013 fiscal year. Full-year results are due out this week.

This is not good news if you hold stocks in carriers that are heavily invested in the Medicare Advantage business model.

These Medicare cuts will mostly impact MAPD plans. Seniors with original Medicare and a Medigap plan will see little or no impact in rates or benefits. 

EHealth plunged Friday after missing earnings expectations and a lowered view for 2013, but analysts were concerned about the online insurance broker’s ability to survive while state health insurance exchanges were being set up. The prospect of lower Medicare rates is likely to cut into EHealth’s ability to compete even further.

EHealth is an online brokerage agency whose primary market is individual major medical plans that will be swamped by massive Obamacare rate increases next year making affordable in the "Affordable Care Act" the butt of late night jokesters.

Humana and Universal American are not the only carriers that stand to low. Stock prices for United Healthcare, Cigna, Aetna and HealthNet have also dipped on this news.

Maybe now is the time to purchase a Medigap plan while you are still healthy. Compare Medicare supplement rates now.

Not as smart as I thought I was

My plans for an early retirement seem to have hit a road bump. I have been discussing with a select few brokers methods we came up with to avoid paying any penalties and offer coverage possibly cheaper then $2,000.

Today one of them sent me a link with the basic concept outlined for all to see in LifeHealthPro.

It is possible my phone was tapped, or one of the brokers got loose lips; more likely the flaws in PPACA are just that glaringly obvious:

"PPACA will require self-insured plans to cover a package of basic preventive services without imposing deductibles, co-payments or other out-of-pocket "cost-sharing" requirements on the plan enrollees. But PPACA exempts self-insured plans from most other new coverage requirements."

"But, to avoid paying the new PPACA uninsured penalty tax, an individual worker simply needs some kind of minimum essential coverage from the employer, not necessarily coverage through the plan that meets the PPACA minimum actuarial value standards ...An employer could offer one plan that would meet the PPACA minimum actuarial value requirements for one rate, and then offer a skinny, possibly cheaper minimum essential coverage plan alongside the minimum actuarial value plan"

There really is no excuse for any employers to get stuck paying penalties, because there are numerous solutions to avoid or greatly minimize them. 

The Law That Never Was?

What if Obamacare became the law that never was? The final brick in the plan is to take place 1/1/2014 when "health insurance companies can no longer discriminate against those with pre-existing conditions".

The predicted failure of Obamacare has been discussed for years by those in the health insurance industry. The master plan was so huge, complicated and expensive, it would never get off the ground.

Now the lame stream media is catching on, even if they are late to the party.

For years they have talked about the windfall to health insurance carriers. Millions will be FORCED to buy health insurance or pay a penalty. Young people who are typically healthy will be required to buy health insurance and their premiums will be used to subsidize the older, sicker crowd.

But participating in government exchanges means playing by the government’s costly rules. Insurers will have to adhere to strict coverage standards that vary by state — and they’ll face restrictions on how they can price their products. Insurance companies will even have to pay a fee to sell insurance on the exchanges. That levy starts at 3.5 percent of every customer’s premium — and could increase from there.

Insurers may even need to put together a local provider network in each state exchange they join.

Forbes

All of these costs will be added to the premiums and passed on to the consumer.

Health insurance will be MORE expensive, not less.

In addition to carriers that have already dropped out of the major medical business, remaining carriers are either cherry picking the states and exchanges where they MIGHT participate. Others have weighed the cost of developing HMO networks and appear to be wavering on moving forward.

Reminds me of the line from the 60's. 

Suppose they gave a war and nobody came?

Well, suppose they gave us exchanges to purchase health insurance and none of the carriers participated?

The viability of the exchanges is also dependent upon whether the federal government subsidizes coverage as prescribed in the law. The cost of doing so has exploded beyond initial estimates — and the exchanges haven’t even launched.

On February 5, the nonpartisan Congressional Budget Office announced that the cost of exchange subsidies had risen an astounding $233 billion. The total tab will exceed $1 trillion over the next 10 years.

If Maxwell Smart were in politics he would use his fingers to indicate a small amount and say "Missed it by this much".

And the president will remind us that Obamacare will not add even one dime to the deficit.

This is the same guy that promised to cut the deficit in half by his first term and close Gitmo.

But wait, there's more!

In future years, Congress may not have the political will — let alone the money — to subsidize the exchanges at levels necessary to ensure widespread participation among insurers or consumers.

Further, those billions in expenses don’t include the funds that states will have to outlay for information technology systems to administer their exchanges. Nor does that trillion-dollar tab include the amount of money the feds will have to spend operating exchanges themselves in the 25 states that have defied Obamacare’s order that they establish them on their own. The Obama Administration has responded to all these concerns not by identifying ways to lower costs or entice insurers to participate — but by undertaking a rebranding effort.

Sounds like a runaway train.

Since Obamacare was signed, health insurance carriers have dropped out, the remaining ones have increased premiums significantly, health insurance carrier home offices have closed field offices and laid off staff. Employers that included health insurance as part of their package have dropped coverage, laid off staff to get below the 50 employee mandate and reduced hours in order to avoid providing health insurance for full time workers.

Lions, tigers and bears, oh my!

If you asked Veep Biden about this today, would he still say this is a BFD?

I don't think we are in Kansas any more, Toto.

Wish I could charge those fees....

Some interesting numbers in the AP article about Pre-Existing Condition Insurance Plan (PCIP) quietly being shut down:


"PCIP has served more than 135,000 people ..."the administration said the program has spent about $2.4 billion in taxpayer money on medical claims and nearly $180 million on administrative costs"

The numbers that really jumped out to me were the 135,000 people and $180 million on administrative fees, as I make my living on administrative fees.  So I did some quick looking around, and found that PCIP programs  started rolling out in August through October of 2010. Only 103,160 were covered as of 12/31/12 so 135,000 was the total; not everyone was covered the entire time.

Assuming everyone started in August, that is 29 months, so the numbers don't look as bad. Let's even assume that for all 29 months they covered 135,000 individuals. Their administrative cost averaged $45.98 Per Member Per Month. On small groups I am a happy camper at $25 Per Employee Per Month (which includes dependents). On a PMPM basis I would be elated with $20.

From what I have heard and seen of the program, they didn't even expect you to manage claims, just shuffle the paper. Which explains the $17,777 in average claims. I need to keep a closer eye out for the next RFP they put out: wouldn't take many contracts like this to retire very early.