The ObamaCare Awakening- Editorial 10/30/2013 – WSJ

Americans are losing their coverage by political design.

For all of the Affordable Care Act's technical problems, at least one part is working on schedule. The law is systematically dismantling the individual insurance market, as its architects intended from the start.

The millions of Americans who are receiving termination notices because their current coverage does not conform to Health and Human Services Department rules may not realize this is by design. Maybe they trusted President Obama's repeated falsehood that people who liked their health plans could keep them. But Americans should understand that this month's mass cancellation wave has been the President's political goal since 2008. Liberals believe they must destroy the market in order to save it.

Until this month, consumers who weren't insured through their jobs were allowed to buy insurance that provides the best value based on their own needs. One of every 10 private policies is sold through the individual market, covering about 7% of the U.S. population under age 65.

Some states have ruined this market through regulation and price controls, and in others costs can be high. But the individual market works well for millions of people, who can choose from many plans—from Cadillac coverage to cheaper protection against catastrophic illness.

The political problem for the White House is that these choices are a threat to ObamaCare. If too many people keep these policies instead of joining the government exchanges, ObamaCare could fail. HHS has thus reviewed the decisions of people in the individual market and found them wanting. HHS believes as a matter of political philosophy that everyone should have the same kind of insurance, and in the name of equity it wrote rules dictating the benefits that all plans must cover and how they must be financed.

In most cases these mandates are more comprehensive and thus more expensive than the status quo, but the ObamaCare refugees aren't merely facing higher costs. The plans they want and are willing to pay for have been intentionally outlawed. Ponder that one.

Liberals claim the new insurance should cost more because it's better, at least as defined by liberal paternalism. But the real reason they want policies to cost more is to drive as many people as possible out of this market and into the subsidized ObamaCare exchanges.

The exchanges need these customers to finance ObamaCare's balance sheet and stabilize its risk pools. On the exchanges, individuals earning more than $46,000 or a family of four above $94,000 don't qualify for subsidies and must buy overpriced insurance. If these middle-class ObamaCare losers can be forced into the exchanges, they become financiers of the new pay-as-you-go entitlement.

The political press corps is reporting this as a shocking discovery, and we suppose it is if you believed Mr. Obama's promises. NBC News even reports as a “scoop” that the White House knew all along that millions would lose their policies. But HHS's trail of purpose has been there for anyone willing to look.
buy a research paper online
The text of the Affordable Care Act said that none of its language “shall be construed to require that an individual terminate coverage” that existed as of March 23, 2010, or the date the law was enacted. But as early as June 2010 HHS published a regulation reinterpreting this “Preservation of Right to Maintain Existing Coverage” to obviate that promise.

Even minor policy changes, such as increasing a copay by as little as $5, means that a plan cannot be renewed without rewriting it to obey all of ObamaCare's regulations. In HHS's “regulatory impact analysis” published in the Federal Register, the department estimated that between 40% and 67% wouldn't qualify as a permitted plan, and this was the point—to prevent such policies “from being bought and sold as a commodity in commercial transactions.” HHS knew that lightly regulated policies might be popular, especially compared to the restricted choices in the exchanges.

Next, HHS applied very prescriptive mandates to all plans, including

those sold outside the exchanges. The law's 10 very broad categories of statutory benefits like hospitalization, prescription drugs or maternity care were construed so that 79.6% of current individual plans didn't meet the targets, according to HHS's own analysis. The rule even put floors under cost-sharing to prevent consumers from paying out of pocket.

HHS wrote that the purpose was to offer merely “a small number of meaningful choices.” Letting people make tradeoffs for themselves “would have allowed extremely wide variation across plans in the benefits offered” and “would not have assured consumers that they would have coverage for basic benefits.” Forced equity again trumped individual choice.

Hard to believe, but at the time liberals complained that this HHS “essential health benefits” rule wasn't restrictive enough. Pediatric services stop being required at age 19, not 21, and what about speech therapy, medical foods or lactation services?

Liberals needn't have worried. Once customers are herded into the exchanges, HHS has the power to further standardize benefits, further limit choices by barring certain insurers from selling through selective contracting, and generally police the insurers to behave like the government franchises they now are. The state-run exchanges in Vermont and the District of Columbia have already barred individual coverage outside their exchanges.

None of this is an accident. It is the deliberate result of the liberal demand that everyone have essentially the same coverage and that government must dictate what that coverage is and how much it costs. Such political control is the central nervous system of the Affordable Care Act, and it is why so many people can't keep the insurance they like.

Corporate Strategies Inc
Martin Levy, CLU/RHU
October 18, 2013

Starting January 1, 2014, the maximum waiting period for eligible employees in new or renewing California group plans is 60 calendar days. A waiting period is the amount of time an eligible employee has to wait before coverage starts.

This is for new or newly eligible employees and applies to all fully insured medical plans regardless of employer size.

The state mandate also includes a special rule about individuals in a waiting period greater than 60 days and prior to the renewal date. If the employee is subject to a waiting period that exceeds 60 days and is within 60 days of the group's renewal date, the employee must be given the

opportunity to elect coverage no later than the group's renewal date.

Note that this mandate applies to all insurance policies issued in the state of California and to all California residents regardless of the state in which their insurance contract is issued.
download software
Look for carrier notices with your forhcoming election notice in the mail or email.

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.