Insurance Journal by Alex Wayne and Shannon Pettypiece –

July 31, 2014:

Even as Obamacare continues to be attacked by foes and challenged in court, hospital chains and insurers are making more money, more patients using emergency rooms are paying for their care, and the country as a whole is enjoying slower growth in its healthcare spending.

HCA Holdings Inc., the largest for-profit hospital chain, yesterday raised its forecast and reported a 6.6 percent drop in uninsured patients at its 165 hospitals, a reduction that grows to 48 percent in four states that expanded Medicaid, a top initiative of the Patient Protection and Affordable Care Act. WellPoint Inc., which made the biggest commitment of any publicly traded insurer to the Obamacare markets, raised its guidance today after handily beating analyst estimates for the quarter on rising membership linked to the overhaul.

Taxpayers too may be benefiting from the law approved in 2010. Medicare spending rose by just $1 per beneficiary in 2013, the fourth year in a row that saw a slowdown, the government reported yesterday.

“Obamacare’s turned out to be quite good for healthcare companies,” said Les Funtleyder, a portfolio manager at Esquared asset management, in a telephone interview.

LifePoint Hospitals Inc., another for-profit chain, also raises its forecast yesterday while the largest insurer, UnitedHealth Group Inc., said earlier this month it added 635,000 people to its Medicaid plans and was expanding into two dozen Obamacare exchanges in 2015, from five this year.

Early Life

Still, it’s early in the life of the law, which just began enrolling Americans into insurance plans last year. Longer term, questions remain on whether the slowdown seen recently in health-care costs can be definitively tied to Obamacare or whether it was the result of a slow recovery from the 2008-2009 recession.

At the same time, investors will be watching to see if WellPoint’s bet on Obamacare pays off, a question largely turning on how healthy the new customers are and whether their medical costs are largely covered by premiums.

Other hurdles remain, as well. Americans’ opinions on the measure may be too hardened for Democrats to see much political benefit this year, or to fight off changes to the act in the future, said Robert Blendon, a professor of health policy at the Harvard School of Public Health.

Recent polls indicate that more Americans remain opposed to the healthcare law than support it, although that includes people who think it isn’t liberal enough.

‘Trend Lines’

“In the election campaign Democrats are going to really make a good case that things are not as bad people said, and in fact they’re getting better,” Blendon said in a telephone interview. “If you watch the trend lines, there’s a significant share of people who feel over the long term this isn’t going to work out well and they’re not affected by daily news.”

Costs are a top concern, as insurers and state regulators decide premiums for 2015. If rates rise too much in the future, people who don’t receive U.S. subsidies to help with the bill may drop coverage, undercutting the act’s intent to have everyone insured.

Californians who bought individual insurance plans saw rate increases this year of 22 percent to 88 percent, Dave Jones, the state’s insurance commissioner, reported yesterday.

“For those whose incomes were low enough, there were premium subsidies under the Affordable Care Act,” Jones said in a statement. “But for Californians whose incomes were not low enough, there was likely a major rate increase.”

8 Million Enrollees

About 8 million Americans signed up for private plans offered through the health law’s insurance exchanges by April, and another 6 million were added to Medicaid, the state-federal program for low-income people, according to the Obama administration.

The proportion of the U.S. population without insurance has fallen 3.7 percentage points to 13.4 percent since the end of the 2013, according to Gallup Inc., the lowest rate since the firm began surveys of coverage in 2008.

“We’re now halfway through the first year of expanded coverage under the Affordable Care Act and, so far, our experience has been very positive,” William Carpenter, LifePoint’s chairman and chief executive officer, said in a July 25 conference call. The company operates 100 hospitals, according to data compiled by Bloomberg.
$13 Million Gain

The law contributed as much as $13 million to LifePoint’s earnings in the second quarter, about 40 percent more than the company had expected, he said. People paying bills themselves, a proxy for the uninsured, represented just 4.8 percent of admissions, down from 7.1 percent a year earlier.

Jennifer Lynch, an analyst at BMO Capital Markets Corp. in New York, raised earnings estimates for the company on July 28.

“Benefiting from Obamacare,” Lynch said in a succinct explanation to clients.

HCA hospitals have likewise seen “fairly noticeable reductions in our uninsured volume,” Milton Johnson, the company’s chairman and CEO, told analysts yesterday on a conference call. “We believe we are well positioned to succeed in the health-care reform marketplace.”

About 40 percent of customers with plans from the law’s insurance exchanges previously had no coverage, Bill Rutherford, HCA’s chief financial officer, said on the call. There were 5,500 people with exchange plans admitted to HCA hospitals in the second quarter, and 19,000 visited the company’s emergency departments.

Funtleyder said the hospital chains’ reports may also reflect an improving economy, allowing more people to seek care that they postponed during the recession.

More Quarters

“We may need to see a couple more quarters to parse out who’s going and why,” he said. “If it’s the individually insured who didn’t have insurance going to the hospital, it’s Obamacare. If it’s everybody, it’s probably the economy.”

UnitedHealth, the largest for-profit insurer, said on July 17 it would offer plans in as many as two dozen exchanges in 2015, from five this year. The company also added 635,000 people to its Medicaid plans, growth that Gail Boudreaux, the CEO of United Healthcare, the company’s insurance division, called “tremendous” in a conference call with analysts.
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Kaiser Health News by Michael Ollove –

July 25, 2014:

For the 8 million people who persevered through all the software trapdoors in the new health insurance exchanges and managed to sign up for coverage in 2014, their policies will probably automatically renew come November when open enrollment begins.

Seems like good news after all the headaches consumers endured after the program’s launch last year. Except that renewing the same policy may not be the best choice. Many may end up paying far more than they need to and with policies that don’t best fit their individual circumstances.

“(Automatic re-enrollment) could conceivably mean people will pay more in premiums unless they proactively take steps to comparison shop,” said Jenna Stento, a senior manager at Avalere Health, a health care research and consulting firm.

If you made a good choice last year, what could be so wrong about re-upping with the same plan?

Turns out plenty, particularly for those among the 87 percent of enrollees in health insurance exchange plans who received a federal subsidy to help pay for premiums. Understanding why that’s a problem isn’t easy, the result of complicated quirks in the Affordable Care Act, which established the exchanges in the first place.

Premiums Up 8 Percent

Overall, premiums on the exchanges in 2015 may be a bit higher for most people, at least according to one analysis of proposed plans and rates in nine states. Avalere found that the average premiums for Silver plans will climb an average of 8 percent. (There are four grades of plans offered, starting with Bronze plans with the cheapest premiums, but higher deductibles and co-pays, and moving up to Silver, Gold and Platinum.)

The Obama Administration announced last month that consumers who bought their policies on the federal exchange would have them automatically renewed, as well as the amount of their subsidies. It will be up to each state exchange whether to offer a similar automatic renewal. People whose level of income has changed would need to enroll again since it would affect the amount of their subsidies.

But consumers who automatically re-up with the plan they already have could face steep and unexpected premiums and out-of-pocket costs, particularly if they received a federal subsidy.

Changing Benchmark Plans

Here’s why. The subsidy people receive is pegged to the second-lowest priced Silver plan, the so-called “benchmark plan,” meaning that the amount of a subsidy any individual receives no matter which plan he or she selects, is based on how much they would receive if they picked that benchmark plan.

In a hypothetical example Avalere provides, “Sue,” a Maryland resident, enrolled in the 2014 benchmark Silver plan in her region – offered by CareFirst Blue Cross — which had a monthly premium of $214. Based on her income, Sue’s contribution toward her monthly premium was set at $58, so she qualified for a monthly federal subsidy of $156 to make up the difference. If Sue had chosen a plan with a higher premium, her federal subsidy would have remained fixed at $156 and she would have had to pay more out of her own pocket.

However, in 2015, according to Avalere’s analysis of early rate filings, CareFirst Blue Cross will no longer be the second lowest Silver plan in Sue’s region but the ninth lowest out of 18 Silver plans, meaning that it will lose its status as the benchmark plan. CareFirst’s new monthly premium is $267. The new benchmark Silver plan (the Silver plan with the second lowest premium) will be the Kaiser Foundation Health Plan with a monthly premium of $231.

Sue’s contribution remains the same, but she will now qualify for a higher federal subsidy of $173 to make up the difference between her ability to pay $58 per month and the higher $231 monthly premium of the new benchmark.

If she automatically re-enrolls with CareFirst, however, she will have to cough up another $36 a month. By doing nothing, her out-of-pocket contribution will rise by 62 percent.

In another example, “Dave” enrolled in the benchmark Silver plan in Washington state, Group Health Cooperative, which had a monthly premium of $281. He received a federal subsidy of $85 each month, leaving him with a monthly out-of-pocket bill of $196.

In 2015, BridgeSpan Health will replace Group Health as the benchmark plan in Dave’s area, with a premium of $263 a month. Because of that lower premium, Dave will be entitled to only a $67 a month federal subsidy, leaving him again with a $196 monthly out-of-pocket expense if he switched to BridgeSpan. But if Dave sticks with Group Health, which hiked its premiums to $313, he will have to pay $246 each month out of his own pocket, a nearly $600 increase compared to last year.

This is not a theoretical wrinkle. Of the nine states whose 2015 premiums Avalere examined (Connecticut, Indiana, Maryland, Maine, Oregon, Rhode Island, Vermont, Virginia and Washington), all but Vermont appear headed for a new benchmark plan when open enrollment commences. Consumers who live in six of these states may have an unpleasant surprise when they see their bills if they let their policies automatically renew.

In Rhode Island and Virginia, the opposite may be true. Last year’s benchmark plans are expected to become the lowest price Silver plans, instead of the second lowest. Consumers renewing the 2014 benchmark plans in those two states could actually see their out-of-pocket premium costs decrease in 2015.

“There could be significant financial value to take a look at the site and see if there might be more affordable options for you, given the changes since last year,” Steno said.

Website Tools

As re-enrollment approaches, numerous health care advocacy organizations, including Easter Seals, the March of Dimes, the Livestrong Foundation, the National Alliance on Mental Illness, and many others have urged the U.S. Department of Health and Human Services, which operates the federal health exchange, and the states that run their own exchanges to develop tools on their websites that will help consumers identify the plans that best fit their particular circumstances, not only in terms or premium costs, but also their actual usage.

In the first year, all exchanges showed the differences in premiums of the various health care plans as well as their differing cost-sharing formulas. Cost-sharing refers to deductibles, copays and co-insurance. (Copays are a fixed amount you pay for a particular medical service, such as $40 per primary care visit; co-insurance is a percentage that you have to pay for each service, such as 20 percent of a hospitalization.)

The lower the premiums, the higher the cost-sharing burdens on patients. As a result, cost-sharing formulas can result in the difference of thousands of dollars between one plan and the next, depending on an individual’s or family’s specific health care needs.

Those with chronic conditions, for example, who need many doctor visits in the course of a year, would do best to enroll in a higher premium plan with lower co-pays for individual visits. Relatively healthy people, on the other hand, would likely come out ahead by enrolling in a lower premium plan with higher co-pays.

That is why health advocates want all the exchanges to offer calculating tools that would enable customers to plug in information on their actual health care usage from the previous year to get an idea of how much they would be likely to spend in each plan in the year ahead.

“Our goal is that every state website will have the information to help you understand your real out-of-pocket costs,” said Marc Boutin, president of the National Health Council, which offered its own calculating tool for customers during the last enrollment.

But with all the computer mishaps in the first enrollment year, neither the 36 federal nor 15 state exchanges had such a tool in the first year. Colorado tried in the first year, but consumers found the tool confusing and the exchange disabled it, said Adele Work, director of product implementation for Connect for Health Colorado. Consultants are working on a replacement, she said, but it may not be available in time for November. It’s not clear which, if any, other states will have such a tool in place either.

Exchanges also did poorly in providing two other categories of information of great interest to consumers. Many exchange websites were unable to offer up-to-date lists of the medical providers who were in each network plan. And very few exchanges – Colorado and Nevada were exceptions – could tell consumers which medications each health plan covered, information that could make a difference of thousands of dollars.

Because of last year’s disastrous roll-out, most exchanges will have modest ambitions for the second enrollment period. Offering consumers a smooth enrollment experience is the goal of most exchanges. But a smooth experience won’t necessarily be enough to guarantee landing the best policy.

Orange County Register by Bernard J. Wolfson –

July 28, 2014:

It’s unlikely that state health insurance exchange officials will deliver a rate shock later this week when they announce premiums for 2015 plans sold by Covered California.

Several factors, including recent comments from some of the state’s largest insurers, suggest there will be only modest increases on those policies offered under the Affordable Care Act, or Obamacare. In some cases, there may be no hikes at all.

The state-run insurance exchange is scheduled Thursday to unveil rates and other details of the private sector insurance policies it will market to individuals and families for coverage that begins on Jan. 1. Enrollment for 2015 plans will open Nov. 15 and run through Feb. 15.

In addition to new enrollments, Covered California will also need to renew coverage for many of the 1.4 million state residents who signed up for 2014. People who want to renew existing policies will be able to do so starting in October.

Health care analysts said insurance companies probably relied on guesswork in setting premiums for next year since they still do not have a complete picture of how their spending on medical care has been affected by this year’s influx of hundreds of thousands of newly insured Californians – some with longstanding conditions for which they could not get adequate care before.

Because assumptions, computer modeling and business strategies will differ from insurer to insurer, there is likely to be a lot of variation in the magnitude – and possibly the direction – of premium changes for next year, they say.

But there are reasons to believe that, on average, there won’t be anything close to the kind of double-digit increases that have been so common for health insurers in recent decades. And the consumer impact of any increases will be mitigated by the vast majority of exchange enrollees receiving federal subsidies to help keep premiums at a fixed percentage of their income.

“I would expect increases in California to be on the modest end of the spectrum,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a nonprofit health care research group based in Menlo Park.

He noted that following the political uproar last year over the cancelation of health policies that did not comply with the new coverage requirements of the Affordable Care Act, some states allowed people to stay on their old, noncompliant plans, which tended to attract younger, healthier people. That meant healthy people were “siphoned” out of the exchanges in those states, leaving them with a sicker population, which would tend to push premiums up.

But that did not happen in California because the state didn’t allow the old plans to remain in force.

Also favoring premium moderation in California, Levitt argued, is the robust 2014 enrollment number, which was double Covered California’s most optimistic forecast. In states with low enrollment, the people who did sign up were likely to be “sicker than average,” he said.

“In California, the enrollment has been strong, so the risk pool is likely to include healthy people as well as sick,” Levitt said.

Blue Shield of California embraced this argument, offering a possible clue to its 2015 premiums. The insurer, one of the state’s largest, “was pleased with the larger-than-expected enrollment numbers, signaling strong enrollment by healthy individuals,” said company spokeswoman Mia Campitelli.

Anthem Blue Cross, which drew the largest number of Covered California enrollees statewide this year, seems similarly pleased with its demographic mix. In a speech last month in Los Angeles, Anthem president Mark Morgan revealed that the average age of Blue Cross enrollees in Covered California was 41 years old, “within a year of what we expected. So our team got it right in terms of setting that pricing based on age.”

That suggests Anthem Blue Cross may not need to make any dramatic adjustment to its rates for next year.

“We will not have double-digit increases in our Covered California population,” Morgan said. “So stay tuned, but I think that’s a good indication of how we feel about the success of our early work, because there are other parts of the country where we’re hearing 20s and higher.”

Indeed, in states that have already reported their 2015 exchange premiums, some insurers have proposed rate hikes well in excess of 20 percent. But others, often within the same states, are reducing their premiums.

In Oregon, for example, the biggest premium hike is 28 percent, while the lowest is actually a decrease of 21 percent, according to data compiled by Families USA, a Washington, D.C.-based health care consumer advocacy group.

It appears that Kaiser Permanente, which charged the highest prices of any plan in Covered California this year, is aiming for moderation in its 2015 premiums. According to Families USA, Kaiser is cutting premiums 12.1 percent in Maryland and is proposing an increase of just 3.3 percent in Virginia — the lowest of any insurer in that state.

“We are optimistic that consumers will see at most only very modest increases, if any, next year,” said John Nelson, Kaiser Permanente’s Southern California spokesman.

Some health care observers think Kaiser may be unhappy about the dampening effect its high prices had on its enrollment numbers in Covered California in 2014. Though it is an undisputed giant in the state, with more than nine million Californians enrolled, Kaiser had fewer sign-ups in the exchange than Anthem Blue Cross, Blue Shield and even Health Net, which previously was a small player in the individual market.

For a family of four with parents 40 years old, Health Net’s HMO at the silver tier – the second cheapest type of plan – costs $762 a month, compared to Kaiser’s $1,003. Health Net was able to cut prices largely because of its stripped-down network, while Kaiser offers its full network to everyone.

“Kaiser may be regretting how they did things last time around, and they may come in lower,” said Betsy Imholz, director of special projects at Consumers Union.

If Health Net has any desire to raise prices, it will likely be tempered by an instinct to protect the considerable new market share that its low premiums delivered. Asked what lessons Health Net has drawn from its first year in Covered California, company spokesman Brad Kieffer replied: “Price is king. Our Communitycare HMO – the lowest priced plan in Southern California – sold like hotcakes.”

With the Affordable Care Act driving millions of newly insured people into exchanges, the individual insurance market has suddenly become a much more important – and competitive – business.

Insurers will want to retain their new enrollees at least for a few years, to help pay off the millions of dollars they spent upgrading their systems for the Affordable Care Act, said Ron Goldstein, CEO of CaliforniaChoice, a private health insurance exchange for small businesses based in Orange.

“One of the insurance companies we work with says they got a couple hundred thousand new individual members. That doesn’t pay for all the upgrades they made in year one,” Goldstein said. “The strategy is to keep them for a few years. So it would not make sense to increase premiums very much.”

July 22, 2014

The U.S. Court of Appeals for the D.C. Circuit released a 2-1 decision today in the Halbig v. Burwell case determining that the IRS and the federally facilitated exchange marketplace was not authorized to distribute premium tax credit subsidies to individual exchange consumers. The court determined that the Patient Protection and Affordable Care Act (PPACA) unambiguously restricts the availability of subsidies to insurance purchased in state-based exchanges, and that the IRS regulation acted outside of the parameters of the PPACA by making available subsides via the federally facilitated and partnership exchanges. While this decision could eventually have huge ramifications for the health reform law, it is very important to note that the ruling does not change anything regarding the distribution of subsidies or cost-sharing assistance, the operation of the federally facilitated exchanges or enforcement of the employer mandate for the time being. In making its ruling, the D.C. Circuit Court made a very specific decision not to immediately block subsidies, acknowledging that their decision will be appealed right away.

The Obama Administration has already announced its plan to appeal today’s ruling to the full D.C. Circuit Court. Furthermore, there are two other cases still pending before other circuit courts and, in addition to those two pending cases and the D.C. Circuit Court’s ruling, a conflicting ruling was also issued today on an almost identical case by the 4th Circuit Court of Appeals in Richmond. That court ruled unanimously 3-0 that the IRS has acted correctly in allowing tax subsidies to be issued via all federal and state-run exchange states. These conflicting rulings mean that this issue will almost certainly be appealed to the U.S. Supreme Court later this year. If and when head by the Supreme Court, we can expect a final decision regarding the availability of subsidies in federally facilitated marketplaces no sooner than June 2015.

So what does this mean for you as an agent and your clients right now? Since there are conflicting rulings and the decisions are being appealed, no action will be taken in the federally facilitated marketplaces to enforce the D.C. Circuit Court ruling on an immediate basis. This means:
◾The federally facilitated marketplaces will remain fully operational and you may continue to work with your clients to obtain coverage in the marketplace.
◾Premium tax credit subsidies and cost-sharing assistance in both the state and federally facilitated marketplaces will continue to be distributed for the time being, and likely will be continually distributed until a final decision is made in Halbig v. Burwell or a similar case by the Supreme Court.
◾Current clients with subsidized coverage are unaffected by the ruling.
◾If the Supreme Court ultimately rules like the D.C. Circuit Court and strikes subsidies moving forward, based on current legal precedents, clients that currently have or will receive a subsidy in the future will likely not have to repay those subsidies retroactively, assuming that the individual was legally eligible for the subsidy at the time of receipt.
◾The current special enrollment period (SEP) rules are still in place, and open enrollment will begin on November 15, 2014, as planned.
◾If you plan on selling in a federally facilitated marketplace during the upcoming open enrollment season that begins in November, you should continue to register to do so.
◾The individual and employer mandates are still in place and employer-client compliance efforts relative to the employer mandate should continue unchanged.

Anthem Misled Millions About Health Plan Networks, Lawsuit Alleges
Wednesday, July 9, 2014

On Tuesday, Consumer Watchdog filed a class-action lawsuit alleging that Anthem Blue Cross misled “millions” of consumers who enrolled in its health plans about which physicians and hospitals were included in their provider networks, Kaiser Health News reports.

Details of Lawsuit

Consumer Watchdog filed the lawsuit on the behalf of all Anthem members who purchased individual coverage through the state health insurance exchange or directly from the insurer between Oct. 1, 2013, and March 31.

Specifically, the lawsuit alleges that Anthem:
•Delayed giving its customers complete information until it was too late for them to switch their coverage choice;
•Did not inform its customers that it no longer offered out-of-network coverage in four of state’s largest counties — Los Angeles, Orange, San Diego and San Francisco; and
•Misled or did not inform its customers about which doctors and hospitals were participating in the insurer’s new plans.

As a result of those alleged failures, the lawsuit states that many members received thousands of dollars in unexpected medical bills and were unable to see their preferred physician.