Medical stop-loss claims over $1M ballooned in 2013: Study

This is from Matt Dunning, writing at Business Insurance: 

The frequency of catastrophic medical stop-loss insurance claims in excess of $1 million has risen dramatically in the last four years, according to a new report by Sun Life Financial Inc.   

Sun Life's analysis of stop-loss claims processed from 2010 to 2013, released on Friday, revealed that the incidence rate for catastrophic claims exceeding $1 million more than doubled last year to 4.3 per 5,000 claims, compared with incidence rates of 1.8 in 2012 and 0.4 claims in 2010. 

The report, “Top Ten Catastrophic Claims Conditions: Spring 2014,” showed that more than two-thirds of the $1 million-plus claims filed in 2013 were for medical care provided to dependent children, primarily related to premature births and postnatal complications. 

“In 2013 alone, we paid twice as many individual $1 million or more catastrophic claims compared to the prior year, by far the biggest annual jump in the study,” Karin James, Wellesley, Massachusetts-based assistant vice president of strategic operations for Sun Life's stop-loss division, said in an email to Business Insurance. ... 

Poverty's Grip on California is Man Made

California is ranked 47th for business outlook [amongst states] this year by the American Legislative Exchange Council. Arizona and Nevada are ranked 7th and 8th, respectively. Texas is ranked 13th and North Dakota is 4th. ... 

From 2000 up to 2010, the latest data available, California lost 410,000 residents to its low-tax neighbors, Arizona and Nevada. These residents took over $12 billion in adjusted gross income with them. Another 225,000 residents and nearly $4.5 billion went to Texas. This money could have benefited California’s economy through residents purchasing goods and services at local stores and financing business creation and expansion. However, in this case, one state’s loss is another’s gain. ...

Source: Jared Meyer, a policy analyst at Economics21 at the Manhattan Institute for Policy Research.

 

The 8 Biggest Myths About Obamacare

Full story is absolutely worth reading from John Graham at NCPA:

56% Companies Increase Employees' Health Ins. Cost Sharing in 2013; 59% will in 2014

... In 2013, 56 percent of companies increased their employees’ share of health care premiums or co-pays; another 59 percent plan to do the same by the end of 2014. 

Employers and insurance companies have both markedly shifted towards a new model where consumers pay higher out-of-pocket costs every time they actually use health services — in addition to rising premiums. 

A vast majority of workers still feel insecure about medical costs, however: The report found that the average American worker is just one serious medical event away from financial hardship. 

Sixty-six percent fear that they wouldn’t be able to handle the large costs of a serious illness or injury. When it comes to paying unexpected out-of-pocket medical costs, 49 percent of workers have less than $1,000 on hand; 27 percent of employees have less than $500. 

Employees’ consistent worries about handling health-care costs were supposed to be alleviated by the health-care law, but even insured employees remain largely unprepared to deal with typical out-of-pocket costs. 

The threat of bankruptcy due to unexpected medical costs was a key talking point for the Affordable Care Act’s supporters. Obamacare limits insurers’ ability to cap annual and lifetime payments for essential health benefits, but with many workers unable to pay over $1,000 out-of-pocket, financial hardships will arise for more routine health services. ...

Full story from the Daily Caller.

  

Are Part Time Employees Losing Health Coverage at Work?

• Between 2007 and 2012, workers employed 40 or more hours per week experienced a 3% reduction in the likelihood of having coverage from their own job
• Those employed 30–39 hours per week experienced a 12% decline
• Those employed fewer than 30 hours per week experienced a 20% decline 

• In 2012, 60.5% of workers employed 40 or more hours per week had coverage from their own job
• 33.6% of workers employed 30–39 hours per week had such coverage 
• 12.8% of workers employed less than 30 hours per week had such coverage

Source: EBRI.  

The Obmacare Bronze Plan Trap

Source: Investors Business Daily. Hat tip: Dr. John Goodman.

Taxpayer Bailout of Insurers in Obamacare, Video

5-21-14 - National Center for Policy Analysis President John C. Goodman, discusses the looming possibility of an insurance company bailout.

On Armstrong & Getty 5/27/14 Re: The VA, Employers Shifting Employees to Exchanges, Stats on Bailouts and Employer Mandate's Demise

In this morning's visit:

• McGraw Hill Financial Report: Large Employers Could Shift as Many as 90% of Employees to Obamacare Exchanges by 2020
• Sickest Employees Being Dumped in Exchanges and here.  
• The Employer Mandate is on Life Support After the Urban Institute Argues It's Not Needed and here  
• Taxpayer Funded Bailout of Insurers to Equal Half of Humana's Profit
• Obamacare Plans are So Inadequate that Pharmacy Experts Anticipate Patients Foregoing Needed Rx.  
• Deductibles in 'Average' Obamacare Plans More than Twice Employer High Deductible Plans
• Obamacare Subsides Are Wrong to 1 in 8 Enrollees  

All Armstrong and Getty Show Podcasts.

Congresswoman Pelosi Implies We Should Reduce Number of Veterans as a Solution to V.A. Rationing Deaths

This was on Fox News Sunday with Chris Wallace on Sunday morning.

Focus on the point she makes in the below video clip from 20 seconds in to 44 seconds.

As our veterans die waiting for care in the United States' version of "single payer healthcare," Pelosi's solution is to avoid creating so many Veterans.  To wit, single payer healthcare (the V.A.) would work just fine as long as no patients needed it.  Similarly the government could feed the entire world with a sandwich provided only one man needed to eat.

Mrs. Pelosi has already concluded, as a given in her argument, that government healthcare cannot work with any appreciable level of demand.  Her solution?  Reduce demand.
  

Hospitals Cutting Back on Charity Care Because of PPACA

Charitable hospitals that treat uninsured Americans are a threat to Obamacare exchanges because they represent an avenue for treatment outside of government mandated care.  We began covering this  topic in June, 2013 here and in August here. 

This is from the New York Times: 

[Obamacare] reduces federal aid to hospitals that treat large numbers of poor and uninsured people, creating an additional pressure on some to restrict charity care.

In St. Louis, Barnes-Jewish Hospital has started charging co-payments to uninsured patients, no matter how poor they are. The Southern New Hampshire Medical Center in Nashua no longer provides free care for most uninsured patients who are above the federal poverty line — $11,670 for an individual. And in Burlington, Vt., Fletcher Allen Health Care has reduced financial aid for uninsured patients who earn between twice and four times the poverty level.

By tightening requirements for charity care, hospital executives say, they hope to encourage eligible people to obtain low-cost insurance through the subsidized private plans now available under the law. ... 

The Future of Self-Funding Health Insurance: Reference Pricing

Reference Pricing (RP) in health insurance plans has been gaining momentum for a couple of years now.  It is a form of defined contribution in health benefits, where plan sponsors pay a fixed amount or limit their contributions toward the cost of a specific health care service, and health plan members must pay the difference in price if a more costly health care provider or service is selected.

For example, instead of giving an employee a list of doctors and stating the employer will pay 80% of the cost of a procedure, RP tells the employee that it may go to any provider but that the employer will only pay 30,000 for a knee replacement.  It is then up to the employee to shop for his own provider.  To assist in the process, the employer may also provide the employee with a list of some surgeons in the area who have agreed to accept that listed price.  And the employer may also link the employee up to a health advocate that can help the employee shop for a provider.  

Most employers implementing RP are only using it for a limited subset of non-urgent procedures.  But massive future savings are possible as RP expands to all forms of care.

Reference pricing saves money through a combination of: 

1. Patients choosing providers at the reference price, 
2. Patients paying the difference between the reference price and the allowed charge through cost sharing, and 
3. Providers reducing their prices to the reference price.

Reference pricing for knee and hip replacements would result in savings averaging $10,367 perknee or hip replacement according to the below study.  

In 2012, 11 percent of employers with 500 or more workers were using some type of reference pricing.  Well-known examples of RP implementations include the California Public Employees' Retirement System (CalPERS) knee- and hip-replacement program (Robinson and Brown, 2013) and Safeway’s colonoscopy and lab programs (Robinson and MacPherson, 2012).

The goal of RP is to reduce, or at least limit, health care spending by the employer, while at the same time creating a more engaged health care consumer. Copayments limit patients’ financial exposure to the cost of treatment because there is usually no connection between the total cost of a health service and its copayment. Similarly, co-insurance shields patients from health care costs because once a patient reaches his or her OOP maximum, they incur no additional costs. Moreover, although liable for a deductible, patients are still insulated from cost sharing for health services that exceed the deductible. The lower the level of patient cost sharing, the greater the likelihood that insured individuals will make inefficient health care consumption choices—a concept known as “moral hazard” (Pauly, 1968). RP seeks to address this issue by sensitizing patients to the overall cost of health care. (Page 5 in below linked study.) 

Source: Paul Fronstin and M. Christopher Roebuck. “Reference Pricing for Health Care Services: A New Twist on the Defined Contribution Concept in Employment-Based Health Benefits.” EBRI Issue Brief, no. 398, April 2014.  Click here to read entire paper at EBRI. 

See also: Kaiser Health News: 7 Things You Should Know About The Next Big Benefit Change. Kaiser Health News staff writer Julie Appleby reports, "After getting a green light from the Obama administration earlier this month, more employers may begin to cap what they pay for certain medical treatments, such as joint replacements and drugs, potentially shifting more costs to workers. Done right, economists and policy experts say the move to “reference pricing,” as the approach is known, could slow health care spending by prompting consumers to choose less expensive providers or treatments— and leading providers to lower their charges. Still, consumer advocates warn that the approach is likely to make health insurance even more complex, and could expose unwitting consumers to thousands of dollars in out-of-pocket costs" (Appleby, 5/28).

Your Doctor Sees About 19 Patients Per Day and He is Ready to Cut That Back with ObamaCare Coming

• A 2012 article in the Annals of Family Medicine noted that the average primary-care physician has about 2,300 patients on his “panel”— that is, the total under his or her care. Worse, it said that each physician would have to “spend 21.7 hours per day to provide all recommended acute, chronic and preventive care for a panel of 2,500 patients.”
• According to a 2013 survey by the American Academy of Family Physicians, the average member of that group has 93.2 “patient encounters” each week — in an office, hospital or nursing home, on a house call or via an e-visit. That’s about 19 patients per day. 
• So what is a good size for a family practice, one that keeps the patients happy and the doctor from keeling over from exhaustion? A 2007 article in “Family Practice Management” took a stab at this one and suggested that at 3.1 visits per year, a doctor who sees 20 patients a day could have about 1,400 people under his care. 
• Physicians are working fewer hours, seeing fewer patients and limiting access to their practices in light of the significant changes to the medical practice environment.  The research estimates that if these patterns continue, 44,250 full-time-equivalent physicians will be lost from the work force in the next four years.

Source: Lenny Bernstein, Washington Post, "How Many Patients Should Your Doctor See Each Day?"

Number of Emergency Room Visits has Increased Since the Implementation of ObamaCare — and Most Docs Expect It to Get Worse

From Life Health Pro: 

The number of emergency room visits has increased since the implementation of the Patient Protection and Affordable Care Act — and most doctors expect it to get even worse over the next few years.

In a poll of some 1,800 emergency physicians by the American College of Emergency Physicians, nearly half said more patients have been coming through their ER doors since Jan. 1, when many of PPACA’s key provisions went into effect.

Another 27 percent said the numbers haven’t changed, while 23 percent said they’ve seen a decline in ER visits.

Over the next three years, 86 percent of these doctors believe emergency room use will increase. And what’s more, 77 percent say their ERs are not adequately prepared for significant increases in traffic.

The poll’s findings about increasing ER visits are noteworthy given the law’s promise that it would reduce costly emergency room visits, because it was designed to encourage patients to seek care in a doctor's office or clinic settings. Though the fact that ERs are experiencing flooding isn't surprising, given the number of newly insured patients. ... 

Employer Alert: COBRA Election Period Not Exactly the Same as Exchange Special Enrollment Window and Severance Agreements Can Eliminate Exchange Option

This is from Winstead, Attorneys at Law: 

For former employees contemplating electing COBRA continuation coverage (“COBRA”) or medical coverage from health reform’s insurance marketplace (the “Marketplace”), there are two distinct 60-day periods during which they may elect health insurance coverage, but these periods are not equal or equivalent. ... 

If an employer uses both the 30-day period to notify the Plan Administrator of the employee’s termination of employment and health coverage and the Plan Administrator uses the full-14 day period available for it to notify the terminated employee of his right to elect COBRA, this may significantly reduce the period during which the former may compare COBRA coverage with coverage available on the Marketplace with full information. This limitation occurs because the employee’s termination of employment starts the 60-day special enrollment period during which the individual is eligible to enroll in coverage on the Marketplace, while COBRA’s 60-day election period begins when the election notice is sent to the former employee.  If the COBRA notice is not sent by the employer until near the end of the initial 30-day period and the plan administrator does not act on such notice until near the end of the 14-day period, this means that 44 days have passed since the termination of employment and there are only 16 days remaining during which the former employee may compare coverage available on the Marketplace to the COBRA considering both the coverage and premiums (see attached timelines).  An employer and plan administrator who take the maximum time periods for providing the COBRA election and notice may lead more employees to electing COBRA because they may have miss the opportunity to enroll under the Marketplace’s special enrollment period for termination of employment. ...

If an employer offers a separation package providing continued medical coverage for a period following employment termination, this continuation of coverage can delay the deadline for providing the COBRA notice and election.  Some such delays effectively eliminate any period during which the former employee can choose between the two coverage options.  For example, if coverage is continued for two months after employment termination and the COBRA notice will not be required to be sent until after the period during which the former employee can elect coverage on the Marketplace. ... 

Covered California also expressly makes this same point on its website, here: 

My employer agreed to pay for a few months of my COBRA coverage. Can I enroll in a Covered California health insurance plan after my employer stops paying for my COBRA?

No, if your employer pays your COBRA premium for a limited time and then stops paying your COBRA premium, that loss of COBRA will not qualify you for special enrollment in a Covered California plan. If you go without health insurance coverage, you may face a penalty when you pay your taxes. You can enroll in a Covered California health insurance plan during open enrollment. The next open enrollment period will be in the fall of 2014.

Employer Alert: Pay or Play - When to Begin Tracking Employees, Stability Periods, Measurement Periods and More

We continue to receive questions on tracking employee hours under the Affordable Care Act (ACA).

To prepare for compliance, employers that intend to use the look-back measurement method for determining full-time status in 2015 need to begin planning for tracking their employees' hours of service in 2014.

The following legislative alert lays out steps employers should be implementing to identify their full-time employees.

  

Pay or Play Penalty: When to Begin Tracking Employee Hours

Stories Causing Atlas to Shrug, May 22, 2014 Edition

CBO: A family of 4 faces an additional 13% implicit tax from ObamaCare if it raises its income from $35,300 to $47,100.

There is now a fine for lying about income in ObamaCare applications. But 2 law professors supporting the law agree the Government won't enforce it.

The Administration just published a rule abandoning the fantasy of budget neutrality in ObamaCare's Risk Corridors ("Insurer Bailouts").

Federal taxpayers spent $4,633 per enrollee that signed up on the exchanges.

Bay Area Rapid Transit's New Rail Line to Oakland Airport Cost $29,000 Per Foot.

Across the country, in all demographics, Americans are exercising slightly more — and eating a lot more. That imbalance is what's behind an obesity crisis that's affecting pretty much everybody.

  

IRS Reaffirms That Employers Cannot Reimburse Employee Non-Group Healthcare Expenses on a Pre-Tax Basis

From the IRS:  

Q1. What are the consequences to the employer if the employer does not establish a health insurance plan for its own employees, but reimburses those employees for premiums they pay for health insurance (either through a qualified health plan in the Marketplace or outside the Marketplace)? 

Under IRS Notice 2013-54, such arrangements are described as employer payment plans. An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation. As explained in Notice 2013-54, these employer payment plans are considered to be group health plans subject to the market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing. Notice 2013-54 clarifies that such arrangements cannot be integrated with individual policies to satisfy the market reforms. 

Consequently, such an arrangement fails to satisfy the market reforms and may be subject to a $100/day excise tax per applicable employee (which is $36,500 per year, per employee) under section 4980D of the Internal Revenue Code. 

Q2. Where can I get more information? 

On Sept. 13, 2013, the IRS issued Notice 2013-54, which explains how the Affordable Care Act’s market reforms apply to certain types of group health plans, including health reimbursement arrangements (HRAs), health flexible spending arrangements (health FSAs) and certain other employer healthcare arrangements, including arrangements under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy. 

DOL has issued a notice in substantially identical form to Notice 2013-54, DOL Technical Release 2013-03, and HHS will shortly issue guidance to reflect that it concurs with Notice 2013-54. On Jan. 24, 2013, DOL and HHS issued FAQs that addressed the application of the Affordable Care Act to HRAs.

Short Synopsis of the Utter Distopia of Our Corporate Tax Code

The amount of dead loss time, money and energy we spend as a society rent seeking to avoid the arcane and oppressive tax code is mind numbing.  

From the Washington Post: 

... In apparent desperation, the group of 13 Democrats and one independent, led by Sen. Carl Levin (D-Mich.), are proposing legislation that would make it more difficult for U.S. firms to buy a smaller foreign company in order to incorporate in countries with lower taxes. The practice is known as tax inversion, and companies are using it aggressively to avoid paying the U.S. corporate tax rate of 35 percent.

The rush to incorporate abroad can be seen a simple cost-cutting measure, but it's also reflection of how just unlikely big companies think Congress is to pass any sort of tax reform. "I view tax inversions as motivated by existential tax despair," said Ed Kleinbard, a law professor at the University of Southern California.

The most recent corporation to attempt this maneuver was Pfizer, which tried (unsuccessfully) to buy AstraZeneca in order to become a British company, even though there didn't seem to be any good reason for a merger beyond avoiding the U.S. tax rate. (The British rate is scheduled to drop to a mere 20 percent.) A passel of other pharmaceutical companies, such as Endo International, have successfully relocated through tax inversions.

Levin's bill would require that foreign shareholders own 50 percent of the combined company's stock before it can reincorporate abroad through a merger -- the current threshold is 20 percent. The bill resembles an earlier proposal from the Obama administration, which expects that thwarting inversions would raise $17 billion over 10 years. The bill also follows an editorial by Sen. Ron Wyden (D-Ore.) earlier this month calling for a broadly similar change in policy.

Under the current system, the profits that U.S. firms make abroad they keep overseas to escape the U.S. rate. According to a report from Moody's cited by the Financial Times, firms have accumulated some $947 billion this way. The amount has increased rapidly in the past few years, partly as a result of the explosion of value in intellectual property. Because copyrights and patents have no physical location, pharmaceutical firms and technology companies have found it easy to shift their profits around the globe to find lower tax rates. Google has designated intellectual property as existing in Bermuda, allowing it to shift nearly $10 billion in annual revenue to an island nation with no corporate tax.

Yet while firms have much more money than they would if they'd been paying U.S. taxes all along, they can't really do much with it. They can't begin new, potentially profitable projects in the United States, which is what policymakers would like them to do, nor can they return the money to their shareholders, which is what Wall Street would like them to do. If they did, they'd get hit with a U.S. tax bill. They've been sitting on the money, hoping that Congress will eventually reform the tax system and reduce rates for U.S. corporations, or that legislators will grant another temporary holiday like the one in 2004 that allowed corporations to bring profits home free of tax. ...

Poll: 47% of Unemployed Have 'Completely Given Up' Looking for a Job

From Mark Hemingway at The Weekly Standard: 

A new poll suggests that finding employment, particularly for the long-term unemployed, continues to be a struggle for Americans. The poll, conducted by Harris Poll on behalf of Express Employment Professionals, asked questions of 1,500 unemployed adult Americans last month.

“This survey shows that millions of Americans are at risk of falling into the trap of prolonged unemployment, and it should give policymakers a greater sense of urgency to focus on the singular goal of creating jobs," said Bob Funk, CEO of Express and a former Chairman of the Federal Reserve Bank of Kansas City, in a release. "We can take heart that in these difficult times the American spirit of confident hopefulness endures, but we can’t accept this status quo—not for our country, not for our unemployed neighbors.”

Some of the key findings:

• 47 percent agree with the statement, “I’ve completely given up on looking for a job.” (7 percent said they “agree completely,” 7 percent “agree a lot,” 15 percent “agree somewhat,” and 18 percent “agree a little.”)   
• 60 percent say looking for work has been harder than expected. 10 percent say it’s been easier than expected. ...

2011 Law Review Paper Predicted Employers Would Dump High Cost Employees Into ObamaCare Exchanges

Will Employers Undermine Health Care Reform by Dumping Sick Employees? 

By Amy Monahan and Daniel Schwarcz

Virginia Law Review, March 2011

Abstract:

This Article argues that federal health care reform may induce employers to redesign their health plans so that high-risk employees opt out of employer-sponsored coverage in favor of insurance available on the individual market. It shows that, if properly designed, such an employer dumping strategy can promote the interests of both employers and employees by shifting health care expenses on to the public at large. Although largely overlooked in public policy debates, employer dumping of high-risk employees would expose individual insurance markets and insurance exchanges to adverse selection caused by the entrance of a disproportionately high-risk segment of the population. This, in turn, would increase the costs to the federal government of subsidizing coverage for qualified individuals and exempt more individuals from complying with the so-called individual mandate. The Article concludes by offering several potential solutions to the threat of employer dumping of high-risk employees. 

Read the full article.

Sepsis Contributes to Half of all Northern California Kaiser Hospital Deaths

Medpage Today:

... In reviewing two major databases, research scientist Vincent Liu, MD, an intensivist at Kaiser Permanente in Santa Clara, Calif., said that depending on the definition of sepsis, 34.7% to 52% of deaths in the Healthcare Cost and Utilization Project Nationwide Inpatient Sample were due, in part, to a sepsis diagnosis, and in the Kaiser Permanente Northern California cohort, sepsis was a contributor to 44.2% to 55.9% of the deaths occurring in those hospitals. 

"Most of these patients had sepsis at admission," Liu said in his oral presentation at the American Thoracic Society meeting here. "Given the prominent role it plays in hospital mortality, improved treatment of sepsis -- potentially a final hospital pathway for multiple other underlying conditions -- could offer meaningful improvements in population mortality." 

In performing his study, Liu accessed the Nationwide Inpatient Sample that included 6,555,621 patients who were hospitalized for any reason -- a number than represents 20% of the national subsample. The cohort involved patients from 1,051 hospitals and covered the calendar year 2010. 

The Kaiser Permanente sample included 483,828 patients who stayed overnight at the hospital -- excluding obstetrical cases -- from 2010 to 2012. 

The Kaiser data included information on whether the patient was diagnosed with sepsis on admission. The national sample did not provide that information, Liu said. The research team scoured admission records for hospital codes signifying a sepsis diagnosis. 

In the Kaiser Permanente data, sepsis was listed as an explicit cause of death in 36.7% of cases and was listed as a cause of death in 40.8% of implicit cases. When sepsis or infection was listed as a cause of death in the hospital codes, the explicit percentage was 71.7%; the implicit percentage rose to 66.6%. ... 

 

Survey: 83% of Actuaries Note That ObamaCare Has Increased Healthcare Costs

Reuters:

... Based on current data, most health insurance actuaries believe that the demographics of individuals moving onto the exchanges will create a riskier health insurance market. According to the study, 86 percent foresee a shift in the relative morbidity of the newly insured and predict a significantly less healthy group of people joining the exchanges.  Of those actuaries polled, 84 percent felt that the age mix was a cause for concern from a risk perspective, and 62 percent noted anti-selection was occurring. Further, 93 percent anticipate a spike in utilization by the newly insured due to ‘pent up’ demand among those who didn’t previously have or qualify for health insurance, in turn creating a riskier market. 

“Risk is going to be increasingly managed by medical providers. But hospitals are not going to have the actuarial ability to do that well, and most won’t have the financial reserves - they will need reinsurance,” said Howard Dean, former Governor of Vermont and former Chairman of the Democratic National Committee, at the recent Munich Health Symposium. 

Shifting Risk, Higher Costs 

The vast majority of actuaries (83 percent) noted that the overall impact of the ACA has been negative on health insurance costs. Additionally, nearly half of the respondents (45 percent) noted that there will likely be an increase in pricing for the commercial market in 2015, as a result of the ACA. 

“Expect premiums to go up, cost to go up, spending to go up, utilization to go up, and that will all be directly attributable to Obamacare,” said Bill Frist, former U.S. Senate Majority Leader, at the 2014 Munich Health Symposium....

 

Berkeley Prof: ACA Discourages Many from Marrying or Staying Married & from Accepting Jobs Offering 'Affordable' Insurance

This is from David Gamage University of California, Berkeley - Boalt Hall School of Law:

This Article argues that, once key provisions of the ACA come into effect in 2014, the ACA will impose effective taxes on a number of important decisions affecting low- and moderate-income Americans, including:

• The ACA will deter low- and moderate-income taxpayers from accepting jobs with employers that offer affordable health insurance.

• The ACA will discourage many low and moderate-income taxpayers from attempting to increase their household incomes.

• The ACA will penalize many low and moderate-income taxpayers who choose to marry, and will incentivize many low- and moderate-income taxpayers to divorce.

• The ACA will dissuade employers from hiring low and moderate-income taxpayers, and will encourage employers to reduce the salaries paid to some low and moderate-income employees.

• The ACA will prompt employers to shift some low and moderate-income employees from full-time positions to part-time positions.

• The ACA will tempt employers to implement a number of other costly strategies for circumventing the ACA’s employer mandates and penalties.

• The ACA will induce employers to stop offering “affordable” health insurance to at least some low- and moderate-income employees, and, if this occurs to a significant enough degree, the budgetary cost of the ACA may greatly exceed the official projections issued by the Congressional Budget Office.  

 

Study: Employer Healthcare Costs to Rise 9% in 2014

• Employer healthcare costs are expected to rise nearly 9% in 2014 

• 126 insurers and health plan administrators nationwide surveyed 

• PPO plans are expected to rise 8.7% this year and HMOs 8.6%  

• Many health economists and industry officials have attributed the slowdown primarily to lingering effects of the Great Recession, when millions of Americans cut back on medical care 

Source: L.A. Times.  

Pepsi Experiences the Latest Wellness Failure

Note that the "wellness" program lost them money but disease management proved to generate a savings.  The below is taken in its entirety from Dr. John C. Goodman's Health Policy Blog.  It was written by Linda Gorman: 

PepsiCo is the latest large employer to report that its wellness program has a negative return on investment, returning $0.48 for every dollar invested. 

A voluntary program to help people manage actual diseases returned $3.78 per dollar invested. 

The authors note that the results likely overstate the return on investment because they did not include the cost of program staff or the cost of employee time. 

Beginning this year, ObamaCare requires that the government spend $200 million on wellness grants for small businesses that did not have a program in place when the law passed in 2010.  

Obamacare Plans Are So Inadequate on Rx That Pharmacy Experts Predict Uptick in Patients Forgoing Needed Drugs

• In a typical employer-sponsored health plan, on average, people pay about 22% of the cost of prescription drugs.  Insurance covers the rest.  
• Obamacare's bronze and silver plans (the two most popular) require more than double that amount from a patient.  
• The out-of-pocket cost a patient must pay before coverage begins –  has an average deductible of $3,631.   

Source: Kaiser Health News. 

 

Average Deductibles in Obamacare Plans

All of you HR practitioners out there should stop and ponder for a moment how your employees would respond if you rolled out these plans in your workplace:

• Average individual deductible: $4,164
• Average family deductible: $7,771
• 1/3 of sign-ups opted for Health Savings Account compatible plans

Employer sponsored plans average about a fifth of this.  

If you think folks are screaming now over their discontent with the quality of the Exchange plans, just wait until they actually have to try and come up with these deductibles.   

Source: Health Insurance Price Index Report for Open Enrollment and Q1 2014, eHealth.  

The Real Math of ObamaCare's Employer Mandate Penalties in 2015

This is from Investors Business Daily:

Study: Just One of the 20 New Taxes in Obamacare to Cost 152,000 to 286,000 Private Sector Jobs

This study looks at the Health Insurance Tax (HIT) within Obamacare.  It is just one of the 20 taxes in the law and equates to about 2.5% of the premiums we all pay.  Note that self-funded plans circumvent this particular tax all together.

The report forecasts that there will be between 152,000 and 239,000 fewer private sector jobs in 2023 as a result of the tax.

This is from the latest study by the NFIB:

Federal ObamaCare Contractor with Contract of $1.2 Billion is Paying Workers to Do Nothing

From Megan Styles at the Campaign for Liberty: 

An investigative report out of KMOV shows that Serco, which has a federal contract worth upwards of $1.2 Billion, is paying workers to do nothing. 

According to a current employee, “the main thing is that the Data Entry side does not have hardly any work to do. They’re told to sit at their computers and hit the refresh button every ten minutes- no more than every ten minutes. They’re monitored to hopefully look for an application. Their goals are set to process two applications per month and some people are not even able to do that.” ... 

Obamacare's Insurer Bailout Program Equates to HALF of Humana's Annual Profit

Full story.

Blue Shield of CA Sued for Lying About Its ObamaCare Network Size

From Terry Baynes at Reuters:

... As insurance companies have tried to make their plans offered on health exchanges more affordable, they have adopted a strategy of limiting their networks of medical providers. These networks have come under scrutiny as individuals have begun to realize their new plans may exclude their preferred doctor or hospital. 

Both Harrington and Talon, who were previously uninsured, purchased health plans from Blue Shield of California to comply with the new insurance requirement, known as the individual mandate, the complaint said. 

Harrington bought a so-called silver plan on California's online exchange while Talon bought a platinum plan through the insurer's website. They said they made their choices based on Blue Shield's alleged representations that their doctors would be covered. 

The lawsuit accuses Blue Shield of advertising "one of the largest networks in the state" - with more than 60,000 physicians and 351 hospitals - and of failing to disclose that the networks for certain plans were substantially smaller. 

After receiving medical treatment numerous times between January and March, Harrington and Talon later discovered that their providers were not covered, forcing them to pay the charges out-of-pocket, the complaint said.

The lawsuit alleged claims of false advertising, unfair business practices and breach of contract under California law.

The case is Harrington et al v. Blue Shield of California et al, San Francisco Superior Court, No. 14-539283.

 

The Myth of Six Small Meals

This is from SuppVersity:

If you want my honest opinion, the only thing that's surprising about the following line you are about to read in all major science news outlets, today, is that it has taken scientists years to understand that "two large meals (breakfast and lunch) better than 6 small meals with same calories for controlling weight and blood sugar in people with type 2 diabetes." This is a quote from the press release that was published along with a recent paper in the scientific journal Diabetologia (the journal of the European Association for the Study of Diabetes) which "suggests that two large meals (breakfast and lunch), rather than six small meals with the same total calories, are better for controlling weight and blood sugar in people with type 2 diabetes."... 

Eating more frequent makes you hungry and will shut down your metabolism

No, that's not a typo. In total contrast to what common stupidity... ah, I mean wisdom still says, eating more frequently will not decrease your hunger, and avoid the metabolic shut-down you'll experience on every energy restricted diet, sooner or later - on the contrary!

What eating frequent small meals really does [t]o the average lifestyle diabetic is:

• leave him hungry even right after meals 

• elevate plasma glucagon ("hunger"-hormone) and thus increase the conversion of glycogen back to glucose 

• have his thoughts revolve around food 24/7 ...

Paper: ObamaCare’s Medicaid Expansion Punishes Work and Increases Unemployment

If the Medicaid expansion mandated in most states under PPACA enrolls the anticipated 21 million additional adults:

• 511,000 to 2.2 million fewer people will be employed; and 
• It will knock almost a full point off of today’s labor force participation rate -- or share of the civilian population that is working -- a measure of economic health that is already at its lowest point since 1977.

Source: Bloomberg View.

Study: ObamaCare to Lead to Double Digit Premium Increases Next Year As Premium Payers Subsidize Exchange Enrollees

This is from Kathryn Mayer of Benefits Pro: 

Double-digit premium increases will likely be seen this year because of Obamacare, according to an analysis from Avalere Health.

Many in the industry had expected the age mix of exchange enrollees to drive up premiums but Avalere said that wasn’t the case. Instead, the consulting firm this week blamed the increasing cost of medical care, utilization of services and new medical technology — all of which “make it likely that exchange plans will need to increase their prices.”

Premium increases will vary geographically, and will depend in part on the competitiveness of provider markets, it said.

The firm’s findings about increasing premiums is not a new prediction, echoing other reports about rising health costs for consumers. Last month, a survey of brokers by Morgan Stanley health care analysts concluded that health premiums are rising so sharply that, in some states, increases are in the triple-digits.

Avalere research also found that the federal government [taxpayers] will “bear a disproportionate burden of premium increases” in states with high rates of subsidized enrollees. Nationwide, 85 percent of exchange enrollees are receiving financial assistance.

“This ranges from 16 percent in Washington, D.C., to 94 percent in Mississippi."... 

Why the Employer Mandate Will Be Repealed or Amended, Again

According to a 2013 Gallup poll of small businesses: 

• 41 percent held off hiring new employees, 
• 19 percent reduced their workforce and 
• 18 percent reduced employees to part-time work. 

Similarly, a survey from the International Foundation of Employee Benefit Plans found that: 

• 19 percent of small employers were reducing hiring in order to avoid the employer mandate, while 
• 15 percent were adjusting their workers' hours so that fewer employees would be subject to the mandate.

Source: NCPA. 

State and Local Individual Income Tax Collections Per Capita

Full story from the Tax Foundation. 

Now Many on the Right and Left Want to Nuke It. Big Business Hates It. The Employer Mandate is Dead

As we first discussed on the radio in July of 2013, there is no way the employer mandate will actually be enforced as it presently stands.  It's already been delayed twice.  And now the political constituencies lining up against it are overwhelming.

This is from the Urban Institute:

Study: From 2009-2011 U.S. Businesses Collapsed Faster Than They Were Being Formed - a 1st in American History

From Christopher Ingraham at the Washington Post:

The American economy is less entrepreneurial now than at any point in the last three decades. That's the conclusion of a new study out from the Brookings Institution, which looks at the rates of new business creation and destruction since 1978. 

Not only that, but during the most recent three years of the study -- 2009, 2010 and 2011 -- businesses were collapsing faster than they were being formed, a first. Overall, new businesses creation (measured as the share of all businesses less than one year old) declined by about half from 1978 to 2011. 

The authors don't mince words about the stakes here: If the decline persists, "it implies a continuation of slow growth for the indefinite future." This lack of economic dynamism, particularly the steep drop since 2006, may be one reason why our current recovery has felt like much less than a recovery. As Matt O'Brien noted on Wonkblog last week, annual job growth rates have stubbornly refused to budge above 2 percent for the duration of the recovery. ...

Ironically the worst states (Oregon, New Mexico, Wyoming, Alaska and Vermont) are not the states with the highest tax burden (New York, California and Illinois).  I suppose that folks in favor of bigger government and more taxation can use this as an argument that those states can go even further.  

Employers Eye Moving Sickest Workers To Insurance Exchanges - Kaiser Health News

Question: Can corporations shift workers with high medical costs from the company health plan into online insurance exchanges created by the Affordable Care Act? 

Answer: Probably so. "Such an employer-dumping strategy can promote the interests of both employers and employees by shifting health care expenses on to the public at large," wrote two University of Minnesota law professors in a 2011 paper that basically predicted the present interest. The authors were Amy Monahan and Daniel Schwarcz.

Much of the recent buzz in the media on Obamacare has been a parroting of White House talking points that more young people than anticipated enrolled and that will be good for the demographic profile of the Exchanges.  But frankly, age only means something because of the actuarially correct assumption that younger people are healthier.  That assumption crumbles when there is a powerful financial incentive for self-insured employers to entice their sickest employees off of the employer plan and onto a PPACA Exchange.  

I've personally become aware of a few of these cases already.  And in a few months once insurers realize that they just enrolled, for example, a 24 year old who should generate less than $500 a year in claims but is generating near $1 million, we will start to see the premium response and we'll be well on our way to the unsustainable.  

This is from Jay Hancock and Kaiser Health News in collaboration with the Daily Beast:  

... Here's how it might work. The employer shrinks the hospital and doctor network to make the company plan unattractive to those with chronic illness. Or, the employer raises co-payments for drugs needed by the chronically ill, also rendering the plan unattractive and perhaps nudging high-cost workers to examine other options. 

At the same time, the employer offers to buy the targeted worker a high-benefit "platinum" plan in the marketplaces. The plan could cost $6,000 or more a year for an individual. But that's still far less than the $300,000 a year that, say, a hemophilia patient might cost the company. 

The employer might also give the worker a raise to buy the policy directly.
The employer saves money. The employee gets better coverage. And the health law's marketplace plan --required to accept all applicants at a fixed price during open enrollment periods -- takes on the cost. 

"The concept sounds to[o] easy to be true, but the ACA has set up the ability for employers and employees on a voluntary basis to choose a better plan in [the] Individual Marketplace and save a significant amount of money for both!" says promotional material from a company called Managed Exchange Solutions (MES). 

"MES works with [the] reinsurer, insurance carrier and other health management organizations to determine [the] most likely candidates for the program." 

Charlotte-based consultant Benefit Controls produced the Managed Exchange Solutions pitch last year but ultimately decided not to offer the strategy to its clients, said Matthew McQuide, a vice president with Benefit Controls. 

"Though we believe it's legal" as long as employees agree to the change, "it's still gray," he said. "We just decided it wasn't something we wanted to promote." ... 

For more on this topic on this blog see here, here, and here.

Inside Today's Job Numbers. The News is Not Nearly as Rosy as Most Headlines Suggest

Unemployment dropped from 6.7% to 6.3%, but:

• The sharp drop occurred because the number of people working or seeking work dropped. The Bureau of Labor Statistics does not count people not looking for a job as unemployed. (Source) 

• 806,000 Americans gave up on trying to find a job. (Source) 

• The amount (not seasonally adjusted) of Americans not in the labor force in April rose to 92,594,000, almost 1 million more than the previous month. (Source) 

• The labor force participation rate fell from 63.2% to 62.8%, trying for lowest since January 1978. (Source) 

• In the past year population rose by 2,260,000; the labor force rose grew by 62,000; and those not in labor force rose by 2,203,000. (Source) 

• Since the peak of the depression in February 2010, the average monthly number of job additions is 172K while the average monthly number of people who drop out of the labor force is 175K. (Source) 

• Real Unemployment: Were it not for people dropping out of the labor force, the unemployment rate would be well over 9%. (Source) 

• When you count all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, you get a closer picture of what the unemployment rate is. That number is what the government calls the U-6.  It is at 12.3%.  (Source) 

Sources: Zero Hedge, Mish's Economic Blogspot and CBS DC/AP.   

 

Will Employer Health Insurance Go Away? Don’t Bet On It

Here is another opinion on the future of group benefits (see here for prediction released today that 90% of large employers will dump employees into the Obamacare Exchanges by 2020).  This is from David McCann at CFO.com:

...as a 2013 PricewaterhouseCoopers report stated, “In the seven years since Massachusetts enacted its law, the number of people covered by insurance through the workplace increased by about 1 percentage point, running counter to the rest of the nation, which saw employer-based insurance decline by 5.7 percentage points.” 

As that statement indicates, a gradual shift away from employer-sponsored health insurance has been playing out for some time. But predictions that, within six years, 80 percent or 90 percent of private-sector workers will not have employer coverage are wildly speculative. 

On the other hand, I wouldn’t bet my savings that such a scenario won’t come about, either. If a few huge, iconic employers that do business across multiple, disparate markets, like General Electric, Berkshire Hathaway, IBM and DuPont, have the gumption to take the plunge, it’s easy to imagine that corporate sheep would follow. ...

Just How Reliable are the Obamacare Sign Up Numbers?

This is from the just released HHS Brief on page 6. Hat tip to Lachlan Markay:

Obamacare Makes it Easier Than Ever to Free-Ride. Here Is a List of How Folks Will Game the System

This is from Michael Cannon of the Cato Institute writing in the Orange County Register:

... Obamacare makes being uninsured a low[er]-risk proposition than before. If you receive a serious diagnosis like diabetes or cancer while uninsured, Obamacare requires exchange plans to cover you, at the same premium as healthy people, no later than the following January. In many cases, you can get coverage even sooner. For example:

• If you live in one of the 25 or so states implementing Obamacare’s Medicaid expansion, like California, you can get coverage immediately by temporarily reducing your income below 138 percent of the federal poverty level, about $16,000 for single adults. Once January rolls around, you can enroll in an exchange plan and boost your income back to where it was. Depending on how often the state verifies Medicaid eligibility, you could return to your previous income even sooner.

• If you don’t live in a Medicaid-expansion state, you can get covered immediately by moving to one, like this Idaho family did.

• If you’re pregnant, you can get exchange coverage for both you and your child effective the day your child is born. You can enroll while you recover in the maternity ward. If you prefer immediate coverage for prenatal care and such, you can use one of the above strategies to enroll in Medicaid.

• Newly married couples can get exchange coverage beginning the first day of the month following their nuptials, or even sooner. Just as some married couples get “Medicaid divorces” to qualify for government nursing-home subsidies, we may soon see uninsured singles with a sudden need for coverage entering into “Obamacare marriages,” and then divorcing when they become eligible to enroll on their own in January.

• If you move to another state, or even within your own state, you can get exchange coverage beginning in about a month or less.

• If you’re under age 26, you may be able to get coverage before January under a parent’s health plan.

• Los Angeles Times columnist Michael Hiltzik adds you can also get exchange coverage immediately by “get[ting] yourself fired.” ... 

Five Horrific State Obamacare Exchanges Have Cost Fed Taxpayers Over $1 Billion

This is from CMS via American Commitment.org:

Insurer Bailout Provision Lacks Required Appropriation Language. Nevertheless, the Admin Will Make the Payments Anyway

This is from University of Michigan Law Professor Nicholas Bagley:

... The trouble is that the risk corridor program lacks any appropriations language. ... [T]he lack of an appropriation could matter a lot for insurers with heftier-than-expected costs. In CRS’s view, HHS cannot pay them the $8 billion they’re set to receive through the program. ...

Should Congress fail to appropriate the needed funds, the administration will come under intense pressure to find a workaround. (Sound familiar?) 

If it comes to that, my hunch is that the administration will read the ACA to establish a “revolving fund” for the risk corridor program. As explained in the “Red Book”— GAO’s bible of appropriations law—an agency that gets money from an outside source normally has to deposit that money in the federal treasury. Nothing comes out of the treasury without an appropriations statute. An agency with a revolving fund, however, can deposit receipts into the fund and then draw on those receipts as necessary to carry out the fund’s purposes. ... 

The challenge for the administration is the principle, spelled out in the Red Book, that “agencies have no authority to administratively establish revolving funds.” Congress must establish them by statute, and must do so pretty explicitly. As CRS sees it, §1342 of the ACA, which establishes the risk corridor program, doesn’t live up to the Red Book’s demanding standards. ... 

[I]f push comes to shove, could the administration “get to yes” on whether it has the legal authority to make risk corridor payments? I think it probably could. 

Report: Large Employers Could Shift Nearly all Workers’ Health Coverage to Marketplace by 2020

A new investor report predicts that Standard & Poor's 500 companies could shift 90 percent of their workforce from job-based health coverage to individual insurance sold on the nation's marketplaces by 2020. 

If all U.S. companies with 50 or more employees followed suit, they could collectively save $3.25 trillion through 2025, according to the report by S&P Capital IQ, a division of McGraw Hill Financial. 

Standard & Poor's 500 companies could save $689 billion over the same period if they did likewise, the report found. Savings for S&P 500 companies could top $800 billion if health care inflation remains at the traditional 7.5 percent rate over the next decade, the report estimates. 

If realized, the larger move to marketplace coverage would shift more of the cost and responsibility for employee health insurance to workers themselves. ...

Source: Tony Pugh at the McClatchy Washington Bureau.