WSJ June 25. 2014 People enrolled in new plans under the health law are showing higher rates of serious health conditions than

other insurance customers, according to an early analysis of medical claims, putting pressure on insurers around the country as they prepare to propose rates for next year. Among those health-law marketplace enrollees who have seen a doctor or other health-care provider in the first quarter of this year, around 27% have significant health issues such as diabetes, psychiatric conditions, asthma, heart problems or cancer, the data show. That is sharply higher than the rate of 16% for last year’s individual-consumer market over the same time frame, according to the data, which was supplied by Inovalon Inc., a health-technology firm that receives medical claims directly from nearly 200 insurers that are its clients. (Explore the data in a graphic.) It is also more than double the rate among people who held on to their existing individual policies; among those enrollees, the rate was 12%. Those consumers, who kept so-called grandfathered individual plans, are showing by far the lowest rates of use for health-care services such as emergency-room visits, hospital stays and prescriptions. The findings provide the clearest picture so far of the health status of those who bought plans under the Affordable Care Act, and show a sharply bifurcated consumer insurance market—with sicker, and costlier, people in health-law plans and healthier people sticking with previous coverage. The upshot, in some places, is “a parallel market where the healthier people stay in the transitional plans,” said Cliff Gold, chief operating officer of CoOportunity Health, a health-insurance startup serving Iowa and Nebraska. He said CoOportunity Health is proposing to raise rates by an average of 14.3% for health law plans in Iowa, with nearly half of the boost tied to the effect of people holding on to older coverage from other insurers. Inovalon uses insurers’ claims data to identify patients with health conditions and help manage their care under contract with the health plans. The data for the health-law analysis drew on claims that were paid out in the first quarter, from health plans based in 16 states spread around the country. Those aggregated claims, from the firm’s research database, cover 6.6 million people for 2014, including about 458,000 exchange-plan consumers, 800,000 with health-law coverage that wasn’t bought through a government marketplace, and 1.1 million who remained in grandfathered plans. Most of the rest are in large employer-sponsored coverage. The claims don’t include people who signed up for plans in the final weeks of the enrollment period, which stretched into April. Insurers have said they received younger—and possibly healthier—enrollees late in the enrollment period. Because insurance markets are different in each state, some parts of the country may prove to have healthier enrollees under the law than others. Inovalon tallies health conditions identified by federal regulators as increasing insurers’ costs, such as diabetes. For insurers that are offering health-law plans, such counts carry a vital financial interest, as they will be a basis for some payouts set up under the law to reduce the financial risk of covering unhealthy people The rate of documented health conditions is “a good leading indicator of where medical costs are going,” said Dan Rizzo, Inovalon’s chief innovation officer. Though insurers don’t yet have a complete picture of enrollees’ health, Mr. Rizzo said the firm believed the 16 states provide a “representative mix of the experience of health plans” nationally. What impact the health of consumers will have on next year’s rates depends in part on how accurately health insurers foresaw their costs when they set rates for this year. Some insurers, such as WellPoint Inc., WLP +0.60% have said that initial signals have shown that their health-law enrollees appear to roughly match projections. A spokesman for the Centers for Medicare and Medicaid Services said the health law includes protections for insurers that enroll unhealthy people, and more insurers are seeking to sell marketplace plans next year, “creating increased competition and providing consumers with even more affordable coverage options.” Still, some insurers say enrollees so far appear less healthy than they had projected. “It’s even worse than what we thought,” said Patrick Getzen, chief actuary for Blue Cross & Blue Shield of North Carolina. “We’re seeing more chronic conditions than we would have expected,” he said, and that will “put pressure on the 2015 rates.” Among them are diabetes, depression, asthma, heart disease and cancer, he said. People in many health-law plans are likely to be less healthy on average than traditional individual health-coverage consumers because of the law’s requirement that insurers can no longer charge people more, or refuse to cover them, based on their health history. Some early enrollees were people who had been unable to obtain insurance previously because of pre-existing conditions. Jo Cooper, 62, who has hepatitis C, said individual insurance was always unaffordable before the health law took effect. But in December, the Washington, D.C., resident signed up for a “bronze” marketplace plan from CareFirst BlueCross BlueShield, which serves Maryland, the District of Columbia and portions of Virginia. As a result, Ms. Cooper was able to give up a job with health benefits and work full-time for her own Web-design and marketing business. “I was kind of stuck” until the health law’s changes, she said. CareFirst’s chief executive, Chet Burrell, says the insurer is seeing many early enrollees with health conditions who are “beginning coverage, quite evidently, because they need it.” Marketplace enrollees appear less healthy than CareFirst had reflected in its rates for this year; it is now seeking an average 25% rate increase for its Maryland exchange plans, Mr. Burrell said. “Over a period of time, the rates have to go up to catch up with the reality of who enrolled.” Most Americans with private coverage are enrolled in large group health plans, such as those sponsored by big employers, that aren’t affected by many of the law’s changes. About eight million people picked exchange plans—including those sold through the federal HealthCare.gov and state-run exchanges in 14 states—by April 19, according to data released by the Obama administration. But many healthier consumers didn’t want to give up their old 2013 individual plans, many of which were priced to reflect their lower expected costs. Facing an outcry, the Obama administration announced last fall—after insurers had set rates for the coming year—that it would allow the old plans to be continued if states and insurers opted to do so. Last year most states authorized such “grandfathering,” according to a tally by America’s Health Insurance Plans, the industry’s trade group. About half of states will let old plans persist at least into 2015. The people in pre-health-law plans are overall “a lot healthier,” and the effect is “going to be a major issue for some states and some health plans,” says Ross Winkelman, an actuary at Wakely Consulting Group, which is using data from 51 insurers in 33 states to analyze the health status of enrollees. Keeping these healthier people out of the new plans could increase average per-member medical costs for some health-law plans by “double digits” in percentage terms, he said. MDwise, a nonprofit health insurer in Indiana, has proposed an approximately 25% rate increase for 2015. Chief Executive Charlotte MacBeth said “a big portion” of the increase was tied to the effect of people keeping old plans. MDwise, which mostly focuses on Medicaid, didn’t sell individual plans before this year. The full impact of the continued grandfathering will play out in coming months, as insurers’ rates for next year become public. Overall, rate filings from the handful of states that already have released them show a mixed picture. The wide variance is driven by many factors, including insurers that are trying to boost enrollment with low prices. Also, premium increases are being damped by the law’s financial protections for insurers, industry executives say. An analysis of filings from 11 states by Sector & Sovereign Research LLC found the average increases by state ranged from 1.2% to 21.8%. Weighted by enrollment, the average among them was 10%. Inovalon’s data show the new health-law enrollees, despite their relatively high rate of documented health conditions, weren’t yet using pricey services at the fastest clip. They were less likely to have seen health-care providers than those with employer plans, for instance. Mr. Rizzo said newly insured patients may not have existing doctor relationships. Another likely reason, industry executives said, could be the big deductibles in many health-law plans.

The New York Times by Robert Pear –

June 15, 2014:

The Obama administration is contacting hundreds of thousands of people with subsidized health insurance to resolve questions about their eligibility, as consumer advocates express concern that many will be required to repay some or all of the subsidies.

Of the eight million people who signed up for private health plans through insurance exchanges under the new health care law, two million reported personal information that differed from data in government records, according to federal officials and Serco, the company hired to resolve such inconsistencies.

The government is asking consumers for additional documents to verify their income, citizenship, immigration status and Social Security numbers, as well as any health coverage that they may have from employers. People who do not provide the information risk losing their subsidized coverage and may have to repay subsidies next April.

Federal subsidies for the purchase of private insurance are a cornerstone of the Affordable Care Act. More than eight out of 10 people who selected health plans through the exchanges from October through mid-April were eligible for subsidies, including income tax credits. So far this year the federal government has paid out $4.7 billion in subsidies, and the amount is expected to total $900 billion over 10 years.

Since June 1, the government has notified hundreds of thousands of people that “the information in your application doesn’t match what we found in other records.” Accordingly, the notice says, “you need to follow up as soon as possible and provide more documents to make sure the marketplace has the correct information.”

“If you don’t send the needed documents,” it says, “you risk losing your marketplace coverage or help you may be receiving to pay for such coverage.”

The government has a long list of documents that consumers can use to establish their eligibility. These include copies of birth certificates, Social Security cards, high school diplomas, driver’s licenses, pay stubs and voter registration cards.

“The law requires us to double- and triple-check this data,” said Julie Bataille, a spokeswoman at the Centers for Medicare and Medicaid Services, so “we’re reaching out to consumers — via mail, email and phone calls — to encourage them to provide supporting documentation.”

Mara Youdelman, a lawyer at the National Health Law Program, an advocacy group for low-income people, said: “In some cases, consumers say they already sent the documents to the federal marketplace. They don’t understand why they are being asked to send them in again.”

Even though consumers have sent documents to Serco’s office in London, Ky., the government cannot always link the documents to applications for coverage filed months earlier. In addition, some consumers report persistent problems when they try to upload documents through HealthCare.gov.

For months, Republicans have asserted that the administration was lax in verifying the income and eligibility of people who applied for insurance subsidies.

The government enrolled people “before the systems were in place to accurately confirm eligibility,” said Representative Diane Black, Republican of Tennessee.

In some cases, the government told consumers that they had been found eligible for subsidized insurance and could enroll right away. But to keep the coverage, it said, they had to “send the marketplace more information” to verify their eligibility.

Representative Erik Paulsen, Republican of Minnesota, said “many Americans are going to find out that they owe money to the Internal Revenue Service because their premium tax credits were paid incorrectly.”

Representative Joseph Crowley, Democrat of New York, said such remarks showed the Republicans’ “unending zeal to undermine the Affordable Care Act.”

At the same time, supporters of the health care law worry that some of its chief beneficiaries will be upset if they find next spring that their tax liability is greater than they expected.

Ronald F. Pollack, the executive director of Families USA, a liberal-leaning consumer group, said he believed that the government would not find major discrepancies in the amounts most consumers should receive in premium tax credits. But he said, “We share concerns that the longer the process of verifying and resolving inconsistencies takes, the more some consumers will owe when they reconcile their tax returns.”

The Congressional Budget Office estimates that subsidies this year will average $4,400 for each person who receives a subsidy. Federal law generally limits the amount that lower- and moderate-income people may be required to repay. A family of four with an annual income of $80,000 could be required to repay as much as $2,500.

Executives at Serco, the federal contractor, said that technical problems with HealthCare.gov had limited their ability to investigate discrepancies.

Until late May, a Serco executive said, the company had to rely on “manual processes” to resolve conflicts between information provided by consumers and information in government databases.

The government was supposed to develop a system to scan documents and transfer information automatically into electronic files, but the system was not developed, so Serco employees had to type in the information. Serco said it took an hour to perform tasks that were expected to take just five minutes.

Subsidies depend on household income and the number of people in a family seeking assistance. But internal memorandums from the Department of Health and Human Services say that the insurance exchanges had no way to verify family size.

The government has also had difficulty checking information about employer-sponsored insurance. The Obama administration delayed until 2015 a requirement for employers to inform the government of insurance that they provide. Workers are generally ineligible for subsidies if they have access to affordable employer-sponsored coverage that meets basic federal standards.

Big insurance rate hikes in the future?

Associated Press by Tom Murphy –

May 26, 2014:

The wild hikes in health insurance rates that blindsided many Americans in recent years may become less frequent because of the health care overhaul.

Final rates for 2015 won’t be out for months, but early filings from insurers suggest price increases of 10 percent or more. That may sound like a lot, but rates have risen as much as 20 or 30 percent in recent years.

The rates that emerge over the next few months for 2015 will carry considerable political weight, since they will come out before Republicans and Democrats settle their fight for Congressional control in next fall’s midterm elections. Republicans are vowing to make failures of the law a main theme of their election push, and abnormally high premiums might bolster their argument.

In addition to insuring millions of uninsured people, the other great promise of the massive health care overhaul was to tame the rate hikes that had become commonplace in the market for individual insurance coverage.

No one expects price increases to go away, but some nonpartisan industry watchers say they do expect the big hikes to hit less frequently in the years to come, even though it’s still early in the law’s implementation. They point to competition and greater scrutiny fostered by the law as key factors.

Public insurance exchanges that debuted last fall and were created by the law make it easier for customers to compare prices. The overhaul also prevents insurers from rejecting customers because of their health.

That means someone who develops a health condition like high blood pressure isn’t stuck in the same plan year after year because other insurers won’t take her. She can now shop around.

The Urban Institute, a nonpartisan policy research organization, said in a recent report that competition will help restrain individual insurance prices next year.

And it could have a lasting impact once the new markets for coverage stabilize in a few years, said Larry Levitt, an insurance expert with the Kaiser Family Foundation, which analyzes health policy issues.

‘Now if a plan tries to raise premiums a lot, people can vote with their feet and move to another plan,’ Levitt said.

New York Times by Robert Pear –

May 24, 2014:

Many employers had thought they could shift health costs to the government by sending their employees to a health insurance exchange with a tax-free contribution of cash to help pay premiums, but the Obama administration has squelched the idea in a new ruling. Such arrangements do not satisfy the health care law, the administration said, and employers may be subject to a tax penalty of $100 a day — or $36,500 a year — for each employee who goes into the individual marketplace.

The ruling this month, by the Internal Revenue Service, blocks any wholesale move by employers to dump employees into the exchanges.

Under a central provision of the health care law, larger employers are required to offer health coverage to full-time workers, or else the employers may be subject to penalties.

Many employers — some that now offer coverage and some that do not — had concluded that it would be cheaper to provide each employee with a lump sum of money to buy insurance on an exchange, instead of providing coverage directly.

But the Obama administration raised objections, contained in an authoritative question-and-answer document released by the Internal Revenue Service, in consultation with other agencies.

The health law, known as the Affordable Care Act, builds on the current system of employer-based health insurance. The administration, like many in Congress, wants employers to continue to provide coverage to workers and their families.

“I don’t think that an employer-based system is going to be, or should be, replaced anytime soon,” President Obama said recently, when asked if the law might speed the erosion of employer-sponsored insurance.

When employers provide coverage, their contributions, averaging more than $5,000 a year per employee, are not counted as taxable income to workers. But the Internal Revenue Service said employers could not meet their obligations under the health care law by simply reimbursing employees for some or all of their premium costs.

Christopher E. Condeluci, a former tax and benefits counsel to the Senate Finance Committee, said the ruling was significant because it made clear that “an employee cannot use tax-free contributions from an employer to purchase an insurance policy sold in the individual health insurance market, inside or outside an exchange.”

If an employer wants to help employees buy insurance on their own, Mr. Condeluci said, it can give them higher pay, in the form of taxable wages. But in such cases, he said, the employer and the employee would owe payroll taxes on those wages, and the change could be viewed by workers as reducing a valuable benefit.

Andrew R. Biebl, a tax partner at CliftonLarsonAllen, a large accounting firm based in Minneapolis, said the ruling could disrupt arrangements used in many industries.

“For decades,” Mr. Biebl said, “employers have been assisting employees by reimbursing them for health insurance premiums and out-of-pocket costs. The new federal ruling eliminates many of those arrangements by imposing an unusually punitive penalty.”

When an employer reimburses employees for premiums, the arrangement is known as an employer payment plan. “These employer payment plans are considered to be group health plans,” the I.R.S. said, but they do not satisfy requirements of the Affordable Care Act.

Under the law, insurers may not impose annual limits on the dollar amount of benefits for any individual, and they must provide certain preventive services, like mammograms and colon cancer screenings, without co-payments or other charges.

But the administration said employer payment plans do not meet those requirements.

Richard K. Lindquist, the president of Zane Benefits in Park City, Utah, a software company that helps employers reimburse workers for health insurance costs, said, “The I.R.S. is going out of its way to keep employers in the group insurance market and to reduce the incentives for them to drop coverage.”

The ruling came as the Obama administration rushed to provide guidance to employers and insurers deciding what types of coverage to offer in 2015.

In a new regulation, the Department of Health and Human Services said it would provide financial assistance to certain insurers that experience unexpected financial losses this year. Administration officials hope the payments will stabilize premiums and prevent rate increases generic viagra cheap that could embarrass Democrats in this year’s midterm elections.

Republicans want to block the payments, which they see as a bailout for insurance companies that supported the president’s health care law.

In a separate rule, the administration prohibits states from imposing onerous restrictions on insurance counselors, who educate consumers and help them enroll in health plans. Under the rule, states cannot establish standards that impair the counselors’ ability to help consumers or to perform other tasks required by federal law.

In January, a federal district judge in Missouri found that the state was illegally obstructing the activities of insurance counselors, including those known as navigators. The state has appealed the decision.