San Francisco Chronicle by Victoria Colliver –

October 8, 2013:

More than 16,000 California families completed applications for health coverage in the first five days of operation of the state's insurance exchange, the new marketplace created by the federal Affordable Care Act.

Officials for Covered California, the state exchange, released numbers on Tuesday showing strong consumer interest in the new marketplace, which opened Oct. 1. They made the announcement to counteract reports of long wait times to reach call-center representatives and slow online performance for the agency's website.

Covered California's website received more than 987,000 unique visitors, and about 59,000 people called the agency's call centers, according to the official Oct. 1-5 tally. The completed applications represent some 28,700 individuals, and another 27,300 applications were started but have not been completed.

“These are big numbers, and they're proof of the pent-up demand for coverage that is here in California and also across the nation,” said Peter Lee, Covered California's executive director, who described the response as “phenomenal.”

Some consumers A live free online Roulette wheel can be very exciting. had reported being on hold for up to 40 minutes and had trouble logging in to the website and completing the sign-up process in the first couple days of operation.

Consumers waited an average of 15 minutes for help from representatives at the call centers in Concord and Rancho Cordova (Sacramento County). But Covered California officials said the wait time had dropped to less than 4 minutes by Friday. The agency also opened a third call center in Fresno on Monday.

Also on Monday, the exchange added an online directory of hospitals and doctors so consumers can compare insurers and see which ones include their health care providers. That feature had been delayed because the agency's staff did not want to add such a large file

while the site was struggling with problems related to high demand.

“People should do their homework,” said Nicole Evans, spokeswoman for the California Association of Health Plans, which represents the state's insurers. “They should make sure, even if they're sticking with the

same health plan, that their preferred doctor or hospital will

be available through Covered California next year.”

Covered California is trying to enroll people who are uninsured or do not have health coverage through their jobs. The agency hopes to enroll 500,000 to 700,000 people who are eligible for federal subsidies to help pay for their coverage.
adobe creative suite 6 design & web premium
Consumers can review their options anonymously before starting an application and can even change their minds before coverage begins, Lee said. Enrollment continues through March 31 but in order to have insurance effective on Jan. 1, applicants must sign up by Dec. 15.

The Washington Post –

October 9, 2013:

More workers at big U.S. companies will likely start paying a greater share of their doctor’s bill because of a health insurance shift forecast by benefits consultant Aon Hewitt.

Consumer-directed health plans, or CDHPs, could become the most common form of coverage offered by companies with 500 or more workers in the next three to five years, Aon Hewitt said Wednesday, as companies continue trying to cut health-care costs.

Under these plans, a smaller amount is usually taken out of employees’ paychecks for insurance. But the plans come with a deductible that can top $2,000 and must be paid before most coverage starts. That means a bill for more than $100 could replace the $20 co-payment the worker is used to after a doctor’s office visit.

It also means care like MRI exams will cost more for employees until they meet their annual deductible.

To ease that expense, CDHPs come with accounts fed by either the employer or employee through pre-tax

contributions to help cover costs.

Aon Hewitt said its annual survey of more than 800 large and mid-size U.S. employers found that 56 percent are offering CDHPs as a plan choice and another 30 percent are considering offering one in the next three to five years.

Many employers offer a choice of insurance plans for their workers, and most offer traditional plans with lower deductibles. But Aon Hewitt found that 10 percent offer CDHPs as the only option and another 44 percent are considering doing that.

Employers are considering these plans because they make workers aware of how much their care costs, which could help slow growth in health care expenses for companies. Patients tend to think more about what coverage they

need and how to get a better deal for it. That means the employee may fill a prescription with a generic drug instead of the pricier brand-name medicine. They also may look for a better deal on an MRI exam instead of heading to the nearest hospital.

Health care expenses and administrative costs for the coverage grew about 4 percent last year for employers with CDHP plans, according to Aon Hewitt. That compares with growth of 6 percent and 7 percent for more traditional health insurance plans with lower deductibles: HMOs, health maintenance organizations, and PPOs, preferred provider organizations.

Health care cost growth has slowed in recent years, but employers are still worried about it. Costs are still climbing faster than overall inflation, and companies also are concerned about a special tax on expensive health insurance coverage that starts in 2018 as part of the health care overhaul, the federal law that aims to cover millions of uninsured people.

“A lot of employers are trying to get their plans under cost control … just to avoid the impact of that tax,” said Maureen Fay, an Aon Hewitt senior vice president.

Employer-sponsored health insurance is the most common form of coverage in the United States, covering about 149 million non-elderly people according to the non-profit Kaiser Family Foundation, which researches health care issues.

Companies first started offering CDHPs to their employees about nine years ago. They made up 4 percent of all employer-sponsored plans offered in 2006, but have grown to about 20 percent this year, according to Kaiser’s annual benefits survey, which was released in August and is separate from the Aon study.

Gary Claxton, a vice president for the foundation, said he’s sure a lot of companies are considering CDHPs. Whether they wind up offering them is another matter. Companies have to spend a lot of time and money teaching their workers about the coverage, because it is different from more traditional plans.

He also noted that employers use benefits to retain

workers, and they have to make sure a switch to CDHPs doesn’t motivate their employees to leave.

Bloomberg by David Goldhill –

October 6, 2013:

Ignore the inevitable startup glitches. The new health-insurance exchanges will work just fine — in the sense that all government health-care programs work: Many people will ultimately become dependent on them for coverage. That won’t mean the exchanges have fulfilled their promise, however.

Forget the superficial comparisons to a commodity exchange, an online retailer or even a bulletin board. The health exchanges won’t resemble any other marketplace. Over time, rather than encourage insurance providers to offer ever more attractive and affordable policies, the exchanges are poised to push up the cost not only of insurance but also of health care itself. That means, if the history of U.S. health-care policy is any guide, the exchanges’ very “success” will have the effect of limiting access to care for the 30 million people who are estimated to remain uninsured.

Why are things set to go so badly? Because the architects of the health-care exchanges have relied on three crucial assumptions, all of which are probably wrong.

First, they have assumed that if insurers are prevented from competing on benefit design or on underwriting, they will compete on price. But why should they compete at all?

Limited Competition

The exchanges embody what seems like a simple trade: In return for many new customers, insurers accept broad restrictions on their freedom to design and market policies. The biggest requirement is that they agree to insure at the same policy price any and all customers, regardless of their health (with only small formulaic adjustments for age and smoking). From a consumer point of view, that sounds great, and indeed it’s one of the most popular elements of the Affordable Care Act. But from the insurer’s perspective, it courts disaster. With too many sick or high-risk people in its pool an insurer can lose money. So the insurer’s smartest approach is to set premiums high enough to make a profit even if it winds up with a lot of sick beneficiaries.

Competition among insurers is supposed to counteract this incentive, but the exchanges can perversely limit competition. The same pricing transparency that makes it easy for consumers to shop enables insurers to make sure they don’t charge less than their competitors do. This is how airlines take advantage of their electronic exchanges. It’s not as if insurance is currently a competitive market; even most private companies have trouble getting more than one bid for employee coverage. Rather than compete aggressively for customers, insurers can use exchanges to informally divide the market among themselves at high premiums.

Understanding Health Insurance Exchanges

The designers of the health-care exchanges have also assumed that consumers, by shopping for the best deal, will drive down premiums. However, a major flaw in the design of insurance subsidies will insulate almost all of the initial customers — the estimated 20 million subsidized households — from concern about how much their policies cost.

Now, it’s not supposed to work this way. Only those Americans who don’t get insurance at work and who have income that puts them between 100 percent (138 percent in Medicaid expansion states) and 400 percent of the federal poverty level are eligible for exchange subsidies. As income rises within this bracket, the subsidy shrinks. But in practical terms, everyone who is subsidized has an infinite subsidy that will make them insensitive to premium levels.

How can that be? Let’s take an example. A family of four at 138 percent of the poverty level ($32,499) has its premium capped at 3.29 percent of income or $1,071. The rest is subsidy. So, if the cost of a silver plan is $10,000, the subsidy for this family

is $8,929. A family at 400 percent of the poverty level ($94,200) has to pay up to 9.5 percent of its income for a plan, or $8,949. So the same $10,000 premium carries a subsidy of only $1,051.
essay help service
Insurer’s Perspective

But now look at those two families from the insurer’s perspective. A $10,000 plan already costs more than the maximum amount either family would pay. If the insurer raises the premium to $10,001, both families get $1 in additional subsidy. If it raises premiums to $11,000, both families get $1,000 in additional subsidy. In other words, no matter how much an insurer raises rates, a subsidized household pays zero more.

The second-cheapest silver plan is the benchmark for setting subsidies. How can insurers push up premiums artificially on this plan when there are platinum, gold and bronze plans also for sale? Again, easy. By law, these other plans differ from silver primarily by the amount of beneficiary cost-sharing. So the insurer can simply price a silver plan as high as possible, and then adjust the premiums for the other plans accordingly. If these prices end up being too high to attract any actual customers, who cares?

Why would an insurer lose the opportunity to share 20 million price-insensitive customers just to compete for a

smaller number (the Congressional Budget Office estimates 4 million by 2016) of low-profit price-sensitive ones?

There’s one more big assumption about the exchanges at work: that the price of health insurance passively mirrors the price of health care. But there’s plenty of evidence that insurance itself can drive up the cost of care — when both insurers and beneficiaries are undisciplined in controlling prices. In what may be the single greatest source of unintended consequences in the Affordable Care Act, insurers are now required to spend at least 80 percent of revenue from premiums on care. Superficially, this means that if they set premiums too high, they will have to eventually refund much of the money that they don’t end up spending on care. But let’s say you’re running an insurance company. You can find ways to spend more money on beneficiaries’ health care — say, with more generous definitions of free preventive care, more expansive rehabilitation services or higher reimbursement rates on doctors’ services — and keep 20 percent of the all money you bring in. Or alternatively, you can spend less on care and give refunds. Easy choice.

Wrong Incentives

In the end, we have incentives for insurers not to compete, for customers not to care about price, and for insurers to drive up the cost of care. Not much of a marketplace, is it?

Of course, it’s still possible that unsubsidized people will flock to the exchanges (especially if many middle-income Americans lose access to coverage at work), rebalancing insurers’ competitive interests. Or that the growing cost-sharing in all insurance will continue to moderate overall demand for services. Or that insurers will figure out clever ways to segregate price-insensitive (subsidized) buyers from price-sensitive ones.

What’s more likely, though, is that the exchanges will fit into a long pattern of U.S. health-care policy: They will serve a constituency (a policy triumph) while driving up the cost of care (which will be blamed on external factors).

When Medicare was enacted in 1965, seniors spent about 10 percent of their income on health care and worried about the cost. Today, seniors spend almost double that — about 17 percent of their income — on health care and, of course, still worry about cost. Medicare exceeded its

budget projections from day one, and its unlimited-entitlement structure led to an explosion in the volume of care. Nevertheless, the program is hailed as a great success in many corners, and its beneficiaries consider it irreplaceable.

The new exchanges will undoubtedly also be hailed as a success — no matter how much havoc their perverse incentives cause.

Associated Press –

September 25, 2013:

You might be pleased with the low monthly premium for one of the new health insurance plans under President Barack Obama's overhaul, but the added expense of copayments and deductibles could burn a hole in your wallet.

An independent analysis released Wednesday, on the heels of an administration report emphasizing affordable premiums, is helping to fill out the bottom line for consumers.

The annual deductible for a mid-range “silver” plan averaged $2,550 in a sample of six states studied by Avalere Health, or more than twice the typical deductible in employer plans. A deductible is the amount consumers must pay each year before their plan starts picking up the bills.

Americans looking for a health plan in new state insurance markets that open next week will face a trade-off familiar to purchasers of automobile coverage: to keep your premiums manageable, you agree to pay a bigger chunk of the repair bill if you get in a crash. Except that unlike an auto accident, serious illness is often not a self-contained event.

Avalere also found that the new plans will require patients to pay a hefty share of the cost — 40 percent on average — for certain pricey drugs, like the newer specialty medications used to treat intractable chronic diseases such as rheumatoid arthritis and multiple sclerosis. On the other hand, preventive care will be free of charge to the patient.

“Consumers will need to balance lower monthly premiums against the potential for unpredictable, expensive out-of-pocket costs in plans with higher deductibles,” said Caroline Pearson, a vice

president of the private market analysis firm. “There is a risk that patients could forgo needed care when faced with high up-front deductibles.”

Responding to the Avalere study, the Obama administration acknowledged the new plans aren't as generous as employer coverage, but said they nonetheless represent a big improvement over currently available individual policies, which can have gaps in coverage and even larger out-of-pocket costs.

Also on Wednesday, the administration unveiled premiums and plan choices for 36 states where the federal government is taking the lead to cover uninsured residents. Insurance markets that go live Oct. 1 will offer subsidized private coverage to people

who do not have health insurance on the job, including the uninsured and those who currently buy their own policies.

Before new tax credits that work like a discount for most consumers, premiums for a mid-range “silver” benchmark plan will average $328 a month nationally for an individual, the administration report found. Beneath that average are wide differences for individuals, depending on where they live, how much they make, and other factors.

Health and Human Services Secretary Kathleen Sebelius said the average consumer will be able to choose among more than 50 plan options.

“For millions of Americans, these new options will finally make health insurance work within their budgets,” Sebelius told reporters in a preview call Tuesday. The markets — called “exchanges” in some states — are the only place where consumers will be able to get a tax credit for health insurance.

HHS estimated that about 95 percent of consumers will have two or more insurers to choose from. And the administration says premiums will generally be lower than what congressional budget experts estimated when the legislation was being debated. About one-fourth of the insurers participating are new to the individual coverage market, a sign that could be good for competition.

But averages can be misleading. When it comes to the new health care law, individuals can get dramatically different results based on their particular circumstances.

Where you live, the plan you pick, family size, age, tax credits based on your income, and even tobacco use will all impact the bottom line. All those variables could make the system hard to navigate.

For example, the average individual premium for a benchmark policy known as the “second-lowest-cost silver plan” ranges from a low of $192 in Minnesota to a high of $516 in Wyoming. That's the sticker price, before tax credits.

In the three states with the highest uninsured population, the benchmark plan will average $373 in California, $305 in Texas, and $328 in Florida. Differences between states can be due to the number of insurers competing and other factors.

“One surprise is Texas,” said Larry Levitt of the Kaiser Family Foundation. “That is a state that has put up roadblocks to implementation, but the premiums there are below average.”

The second-lowest-cost silver plan is important because tax credits are keyed to its cost in local areas.

But consumers don't have to take silver. They can pick from four levels of coverage, from bronze to platinum. All the plans cover the same benefits and cap annual out-of-pocket expenses at $6,350 for an individual, $12,700 for families.

The big difference is cost sharing through annual deductibles and copayments. Bronze covers 60 percent of expected costs; silver, 70 percent, on up to platinum at 90 percent. Bronze plans have the lowest premiums and the highest cost sharing.

As the Avalere study

showed, premiums aren't the only factor consumers should weigh.

The flurry of new reports comes as the White House swings into full campaign mode to promote the benefits of the Affordable Care Act to a skeptical public. Congressional Republicans, meanwhile, refuse to abandon their quest to

derail “Obamacare” and are flirting with a government shutdown to force the issue.

Starting Jan. 1, virtually all Americans will be required to carry health insurance or face fines. At the same time, the health care law will prohibit insurance companies from turning away people in poor health, or charging them more.

Firms won't be fined

for not telling workers about Obamacare
Reuters by Lewis Krauskopf –

September 12, 2013:

Employers will not face a penalty if they fail to inform their workers by October 1 about changes under President Barack Obama's healthcare law, the administration said, in what will likely come as a relief to many small businesses.

The federal government is requiring businesses to notify employees about the new health insurance marketplaces created by the law that are set to start enrolling millions of Americans beginning October 1.

Employers are also required to inform employees that they may be able to get lower-cost insurance on the exchanges, but if they buy insurance on the exchange, they may lose their employer contribution.

Media reports have said that many small businesses had been unaware of the requirement, and therefore were at risk of potential penalties.

A notice posted on the Department of Labor's website on Wednesday said employers cannot be fined for failing to provide such notice.

“If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice,” the Labor Department said, under the heading “FAQ on Notice of Coverage Options.”

Businesses covered by the FLSA have annual sales of at least $500,000.

A Labor Department spokesperson confirmed on Thursday that businesses faced no consequences for missing the deadline.

Asked why the department posted the notice, the spokesperson said: “The reason all the FAQs go out is to provide further clarity.”

Some labor attorneys had been speculating that businesses that miss the deadline would face fines of $100 day per worker, in line with other penalties under the Affordable Care Act, said John Barlament, an employee benefits attorney with the firm Quarles & Brady.

“It's helpful for employers to have that clarification,” Barlament said. “There was some uncertainty before about whether or not there was a penalty.”

Barlament said most large employers were aware of the notification requirement.
“But among smaller clients you do see a little bit less awareness of this, and some of them probably would have been caught a little flat-footed here,” Barlament said.