Thursday, March 26, 2015

Headline: "Exchanges Struggle to Enroll Consumers As Income Increases" It's Because of the Obamacare Dichotomy

Here is an excerpt from a post on this blog from June 21, 2014:
Kaiser Family Foundation Survey Finds Most People Who Bought Health Insurance on the Exchanges Are Happy With It

This week the administration reported that 76% of those who received a subsidy paid less than the full premium for the plans they selected. And, 69% are paying less than $100 after the subsidies––46% are paying $50 or less.

It would appear from this data that it is the lowest income people who are most often signing up for coverage. They are the ones who get the biggest premium subsidies as well as the reductions in their deductibles and co-pays.

So, the Kaiser Family Foundation has found that these people who are having their premiums and deductibles disproportionately subsidized are happy with their coverage. Hardly a surprise. If you paid for most of my insurance and cut my deductibles from the standard levels I'd be pretty happy too.
My sense has always been that Obamacare appeals to people very differently depending on their incomes. I will call it the Obamacare dichotomy: Poorer people get by far the lowest premiums and deductibles from Obamacare and working class/middle class/wealthier people, who pay very high premiums for high deductible plans, get relatively very little from it.

Why do most people express dissatisfaction with Obamacare in most of the polls? Why did Obamacare fare so badly in the last election? It seems to me that all of this has to do with who benefits and who does not.

This week consulting firm Avalere found the same enrollment breakdown I pointed to last June between the poor and the middle class after analyzing the most recent enrollment reports from the government:
"New analysis finds that while exchanges have succeeded in enrolling very low-income individuals, they continue to struggle to attract middle and higher income enrollees."
Here is the chart Avalere published looking at enrollment and the federal poverty level:


 Their report went on to say:
"Exchanges will need to attract higher income consumers to ensure enrollment continues to grow over time. 
Agreed.

But then Avalere said:
"So far, tax credits do not appear to be enough to entice participation, so greater emphasis on individual mandate penalties may be needed to help increase enrollment among low- and middle-income individuals."
Baloney.

As Avalere has reported before, the average Silver Plan deductible is now up to almost $2,700 a year. The problem for those not having their premiums and deductibles heavily subsidized is that Obamacare offers a lousy product.

We don't need to put more emphasis on the penalties for not buying Obamacare; we need attractive insurance products people want to buy.

Looking at the chart, only 20% of those eligible making between 251% and 300% of the poverty level bought Obamacare. Why?

According to the Kaiser Calculator, a family of four making $60,300 a year (253% of poverty) would still have to pay out premiums of $4,934 a year (8.18% of household income) for the second lowest cost Silver Plan after their Obamacare subsidies. The good news is this is about half the price of an unsubsidized policy.

The bad news is this is still costing this family $4,934 a year for a policy with a deductible of almost $2,700. How many families making $60,000 have an extra $4,934 in their budget for a policy that will likely pay them almost nothing?

Apparently, many of these families have concluded that they are better off staying uninsured and paying for their health care costs out-of-pocket.

Of course if someone in the family is really sick, this can be a great deal.

And therein lies the challenge as the administration tries to sign-up enough healthy people to offset the cost of the sick.

I will suggest the answer is not a "greater emphasis" on the individual mandate penalties when people choose not pay more than they can afford for a lousy product.

I have also heard some argue that the problem is that Obamacare needs more emphasis on outreach––those not buying just don't know how good the benefits are. More outreach will do no good as long as the Obamacare value proposition for these people is unacceptable to them.

Giving people health insurance choices they find worth the money is the answer.

How?

Consumer-Friendly Obamacare Fixes - USA Today Op-Ed



Wednesday, March 25, 2015

The New York Times: Has Obamacare Enrollment Stalled?

Readers of this blog know that I have made a number of points about Obamacare in recent months:
  • The number of people signing up for Obamacare is well below the level necessary to make the rates stable over the long-term––the longstanding insurance industry standard calls for getting 75% of an eligible group in order to have enough healthy people in the pool to pay the costs of the sick people. I have reported to you that less than half of the subsidy eligible have signed up so far.
  • The Obama administration's enrollment estimates, that they now use to celebrate their 2015 enrollment results, were low ball estimates that aren't close to the kind of enrollment they need to make the program both politically and financially sustainable.
  • Obamacare's overall enrollment is coming up way short of original projections and has slowed down considerably in the most recent second open enrollment.
In the face of these comments you have likely noted any number of press reports in the past weeks pointing out just how well Obamacare has been doing.

But now none other than the New York Times has picked up the same themes I have been talking about for months.

Here are some excerpts from Monday's article:
On average, so far only 43% of eligible people in the federal exchanges and 38% in the state-run exchanges picked plans.
"I think the concern about running out of momentum is legitimate," said one expert. He went on to point out that states should be aiming to sign up 65% to 75% of eligible residents. "If we end up running out of gas before 50%, that's very disappointing."

Obamacare's 2015 market share increase was "much smaller" in the state-run exchanges that did comparatively better the first year––"If the states that did everything right the first year and have stalled, what does that say about what we can expect from the states in year 3?"
"Over all, though, the gap between state- and federal-run exchanges this year becomes worrisome when considering that most models for Obamacare estimate that it will take about three years for the program to hit peak enrollment, and that the peak will be somewhere around 24 million people. The Congressional Budget Office estimates that 10 million more people will enroll in plans next year [less than 4 million more enrolled this year]."

Another expert is quoted as asking, "Why did the states hit such a wall. I'm starting to wonder if we've overestimated this whole thing."
So, why is Obamacare hitting a "wall" well before either achieving the original enrollment estimates or sustainable enrollment levels?

Maybe the dogs don't like it.




Thursday, March 5, 2015

The Obamacare Supreme Court Subsidy Challenge––Surprising Comments From Anthony Kennedy and Maybe a Way Out for John Roberts

The Supreme Court heard oral arguments yesterday in the King v. Burwell case that would throw out the Obamacare subsidies for millions of people now receiving them in the federally run health insurance exchanges.

It sure sounded like perennial swing vote Justice Anthony Kennedy is ready to save the subsidies and Obamacare given his comments suggesting a finding for the plaintiffs would end up coercing the states into building an insurance exchange––something that would present Kennedy with a "serious constitutional problem."

But I was also struck by this line in a Washington Post article about the oral arguments: "More than the other justices, Kennedy is the one most likely to think out loud during oral arguments, trying out various theories and posing quandaries for lawyers."

Translated: It ain't over til it's over.

At one point, conservative Justice Samuel Alito asked if perhaps the Court could delay the effect of a ruling ending the subsidies thereby giving the Congress and the states time to remedy the fallout.

Will this be the tack the conservative Justices will follow to get another perceived swing vote, Chief Justice John Roberts, on their side this time?

Many observers have been wondering out loud, including me, how Roberts would vote to deal Obamacare such a serious blow now when he didn't three years ago in the face of the challenge over the constitutionality of the individual mandate.

By finding for the plaintiffs and then allowing a substantial period before the ruling takes effect, conservative Justices might argue, either the Congress would have time to fix the problem or states would have the time to decide whether or not to set up an exchange and keep the subsidies for their residents.

So, the conservatives would argue, Roberts would have the opportunity to vote with the conservatives and craft a way for the elected representatives to avoid any catastrophic outcome. His Court would not be responsible for causing a major insurance market mess and he would have voted for a judicial outcome that followed the plain text of the law.

As a practical matter, having just watched the House Republican fiasco over holding up funding for the Department of Homeland Security as a means of reversing Obama's recent actions for illegal residents––that resulted in Republican leaders having to heavily rely on Democratic votes to bail them out, giving this Congress time to agree with Obama on fixing Obamacare would likely be a fools errand.

But many state legislatures and governors would likely act to quickly do the paperwork––and it wouldn't be much more than simple paperwork––necessary to create a state-based exchange and then contract with the feds to continue running it, without consumers having to lose their subsidies.

And, other states might well not act to remedy the problem––like Florida and Texas that have more than two million Obamacare subsidy eligible residents between them and have legislatures with a history of doing everything they can to undermine Obamacare.

But as the conservative Justices might argue, that is their decision and not something the Court can be held responsible for.

Then there is Justice Kennedy.

Monday, March 2, 2015

Republicans: "We Have a Plan For Fixing Health Care" If the Supreme Court Eliminates Subsidies in as Many as 37 States––It Won't Be So Simple

Key Senate Republican committee chairman Orrin Hatch (UT), John Barrasso (WY), and Lamar Alexander (TN) have an op-ed in the Washington Post today saying they have a plan if millions of Americans lose their Obamacare subsidies this summer.

First, I have no idea how the Court will rule, likely in late June. While it is hard for me to see Chief Justice John Roberts voting to strike a major blow to the new health law now when he had that same chance three years ago and didn't, no one can predict what is going to happen this time.

But if the Court does throw the subsidies out in late June, it will mean that the Obamacare insurance subsidies would no longer be available to millions in as many as 37 federally-run states come August 1.

Realizing just what chaos this would cause, these three senators wrote:
First and most important: We would provide financial assistance to help Americans keep the coverage they picked for a transitional period. It would be unfair to allow families to lose their coverage, particularly in the middle of the year.
They provided no more detail except to say that they have had discussions with House and Senate colleagues and that there is "a great deal of fconsensus on how to proceed."

I don't doubt their intentions, but it would be nowhere so easy.

Wednesday, February 18, 2015

Obamacare is "Working a Little Better Than We Expected"––Judge for Yourself

Here is what President Obama said in a recent video, "The Affordable Care Act is working. It's working a little better than we expected."

On Tuesday, the administration announced that 11.4 million people signed up for Obamacare in the second open enrollment.

That number is higher than the number that will ultimately pay for their coverage and complete the enrollment. Even after they complete signing up the stragglers, it is more likely the paid for number will be about 10.5 million based upon a number of conversations I have had with carriers.

But let's assume they end up with as many as 11 million people. Would that exceed expectations?

Here is what the Congressional Budget Office projected in May of 2013:

Tuesday, February 10, 2015

A Detailed Analysis of the Republican Alternative to Obamacare

House Energy and Commerce Chairman Fred Upton along with Senate Finance Chairman Orin Hatch and Senator Richard Burr have outlined what is, at least for now, the Republican alternative to Obamacare.

Republicans will now argue they have a better health insurance reform plan and that Obamacare should be repealed and replaced by it––particularly if the Supreme Court plunges the new health law into chaos by throwing the subsidies out in 37 states.

They will have an uphill battle. Not because these Republicans don't have a lot of good ideas, but because they have put a list of big and complicated changes on the table. Lots of people may not like Obamacare but Republicans have now really muddied the waters with a huge take it or leave it alternative that will have plenty of its own reasons to give voters pause.

My sense is that voters will end up liking parts of both Republican and Democratic ideas. They might ask a reasonable question: Why can't we take the best from both sides?

If Democrats would just admit Obamacare needs some pretty big fixes, and Republicans would be willing to work on making those fixes by putting some of these good ideas on the table, the American people would be a lot better off.

In fact, I am hopeful that this is eventually what will happen once Obamacare's failings become even more clear (particularly the real premium costs) and both sides come to understand that neither will have a unilateral political upper hand.

See my recent op-ed on how to fix Obamacare here.

Let's take an in-depth look at the Republican alternative, "The Patient Choice, Affordability, Responsibility, and Empowerment Act." 

It's key provisions include:

Wednesday, January 14, 2015

Rethink "Repeal and Replace" and Consumer Friendly Obamacare Fixes - Two Op-Eds in USA Today

I have no doubt Republicans will insist on proposing their own complex plan to reform the health insurance system that will include repealing and replacing Obamacare.

But I think it is going to get them into more political trouble than it's worth.

Here's the first of my two of op-eds in Thursday's USA Today: Rethink "Repeal and Replace"

Of course that begs a question, Just what should we do to make health insurance reform politically and financially viable?

Proposals the Republicans are now considering will have no chance of getting by a Presidential veto––even if they can muster 60 votes in the Senate––so long as Obama is President. Even if the Supreme Court takes away insurance subsidies in the state exchanges I doubt this President and this Congress can agree on anything.

But in 2017, it will be a different matter. I really do expect the new President, Democratic or Republican, as well as the new Congress, will be anxious to move on past this long and tedious health care debate to other important issues.

Whoever wins the 2017 elections, I have no doubt the consensus will be that health insurance reform will need lots of reforming. And, the only way that will happen is when one political party is able to bring lots of members of the other party on board.

Democrats might think Obamacare will survive intact. It won't. Five years later it has failed to garner the support they thought it would.

Republicans might think they can do a unilateral conservative health insurance reform in 2017––just like the Democrats rammed their version through in 2010. They won't. The country has had enough of that.

So, what would fundamental changes look like that could gain bipartisan support, be politically attractive, and financially sustainable?

Here is my second op-ed in Thursday's USA Today: Consumer-Friendly Obamacare Fixes


Recent Post: Republicans Considering Proposing High-Risk Pools––Health Insurance Ghettos

Tuesday, January 6, 2015

Will Tax Season Be Obamacare's Next Big Challenge? Is There Really an Individual Mandate?

Will tax-filing season be the next reason for consumers to complain about the new health law? Come tax time, will the Obama administration really enforce the individual health insurance mandate?

The IRS is out with a 21-page publication––Publication 5187––describing what taxpayers need to know about Obamacare in order to file their 2014 taxes.

Monday, January 5, 2015

The Single-Payer Health Insurance Failure in Vermont

For 25 years I've been saying that I wished a little state like Vermont would implement a single-payer Canadian-style health insurance system––"Medicare For All." My argument has always been that such a small and limited experiment would give us the opportunity to see the ideological arguments for such a system play out in the face of fiscal reality and the stakeholders fighting it out in the political arena over who would get the money. The rest of the country would be able to learn a lot from it.

Monday, December 29, 2014

The Letter You Never Want to Get on Christmas Eve

I was reading the December 18th issue of Inside Health Insurance Exchanges and came across an article entitled, "New Kids on the Block Come Out Swinging; Co-Ops Lower Rates for Many Health Plans."

The gist of the article had to do with the success a number of Obamacare insurance co-ops have had in charging lower rates and getting lots of market share by "[underpricing] more established players inside and outside of the public insurance exchanges."

The article went on to point out that some traditional competitors are beginning to complain that the co-ops have unfair advantages.

This quote from the CEO of CoOpportunity––the market leading Iowa and Nebraska Obamacare funded co-op that enrolled 120,000 people in 2014––stood out:
For Blues plans and other carriers "with deep reserves, booming stock prices and market entrenchment to plead for relief from these nimble, undercapitalized start-ups is ludicrous and insulting," counters CoOpportunity Health CEO Cliff Gold. He says his company has been successful in attracting customers in two states despite not having the lowest cost products anywhere in Iowa or the most populous part of Nebraska. "At the end of the day, in the long term, success is determined by a company's ability to create value for customers, he tells HEX. "That critical but elusive combination of price, product features, provider network, and customer service is what separates competitors."
Here's the letter that Mr. Gold received a week later on Christmas Eve:

Thursday, November 13, 2014

How Many People Have Enrolled So Far in Obamacare's Second Open Enrollment?

Undoubtedly I will hear that question many times in the coming weeks.

The answer is that this enrollment process is so screwed up we will have no earthly idea how many new people have enrolled and how many 2014 enrollees remained on the program until at least April 2015.

Let me try to illustrate.

Monday, November 10, 2014

Is the Administration Low-Balling Their 2015 Obamacare Enrollment Estimate?

Well, with an estimate of only 9 million to 9.9 million, apparently they are. But I will suggest the focus should not be on anybody's estimate for 2015 but rather on how many people need to enroll in Obamacare to make it sustainable.

Friday, November 7, 2014

Supreme Court Takes the Obamacare Subsidy Case--Justices Will Rule Before July 1

In a Wow moment, the Supreme Court announced Friday that they will take one of the four pending "Halbig" cases––specifically King v. Burwell.

The issue is over whether the new health law actually authorizes the payment of premium subsidies in the 37 states that will rely upon the federal government to run their exchange in 2015.

This effort is being made on a number of fronts but has been generally know as the "Halbig" challenge. I guess we will now call it the King challenge.

If the Supreme Court eventually affirms this challenge, anyone receiving a health insurance subsidy in the 37 states run by the feds would immediately lose it. Given that the bulk of those currently getting subsides are at the lower income range for those subsidy eligible, most would likely drop their Obamacare insurance unless they were so sick it made sense for them to beg, borrow, or steal the money they would need to continue making premium payments.

Wednesday, November 5, 2014

Obamacare: Death By a Thousand Votes?

We didn't see a Republican tide on election night.

We saw a Republican tsunami.

A year after Obamacare went into effect and Democrats said people would come to support it voters gave one Republican candidate after another, who made Obamacare a big part of each of their campaigns, one victory after another.

So, how will the Republicans use their convincing result on Obamacare?

Friday, October 31, 2014

Health Insurers "Expect at Least 20% Growth" From 2015 Enrollment

That was the lead in a Reuters story this morning saying, "health plans expect at least 20% growth in customers and in some states anticipate more than a doubling in sign-ups" from the 2015 Obamacare open-enrollment.

Well they better do a hell of a lot better than that!

Sunday, October 19, 2014

Figures Don't Lie But Liars Figure––Will There Be Some Obamacare Rate Shock in 2015?

Hanging around actuaries as long as I have one of the old sayings I picked up was, "Figures don't lie, but liars figure."

I have read one story after another this summer and fall about the modest Obamacare rates increases––or decreases––for 2015.

On this blog you have also seen me write about the complex way the 2015 Obamacare rates will hit people particularly because of the impact the changes in the so called second lowest cost Silver plan will have on so many people's final subsidy. You have also seen me write about the fact that we really won't know what Obamacare costs people until the now unlimited Obamacare reinsurance program stops subsidizing insurance rates in 2017.

Recently, the Kaiser Family Foundation provided a report pointing out that the cost of the benchmark Silver Plan would fall 0.8% in sixteen cities they researched:

Monday, October 13, 2014

Wednesday, October 8, 2014

The Most Transparent Administration Puts a Gag Order on HealthCare.gov Testing

With the second Obamacare open-enrollment beginning on November 15th, the enrollment system's testing begins with insurance companies this week.

Of course, last year the enrollment system testing was a real mess resulting in a humiliating Obamacare launch for the administration.

Up until now I wasn't expecting any major problems with HealthCare.gov's consumer enrollment system given all of the lessons learned and the new people running things.

But apparently, the administration is pretty worried about what could happen.

Wednesday, October 1, 2014

One Year Later: The Affordable Care Act's Launch on October 1, 2013––So How Did it Go?

Here unedited is what I posted on September 29, 2013:

The Affordable Health Care Act's Launch On October 1st––So How Did it Go?

Unavoidably, that will be the big question come Tuesday.

But there will be much more to it than that.

A 180-Day Open Enrollment––Not a One-Day Open Enrollment
What happens on the first day, for good or bad, will constitute only a tiny percentage of the open enrollment period. Consumers will likely visit the new websites many times before they make any decisions, and that is exactly as it should be.

Friday, September 19, 2014

The "7.3 Million"

The administration finally released the Obamacare enrollment count this week.

Like everything else about their scorekeeping we got a number. Just one number. A number that was conveniently better than we had expected. And, we got no real context for the number or any of the back-up information.
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