Rate Shock in California!––The New Health Insurance Exchange Plans––Comparing Apples to Oranges to Grapefruit

I have to say I was surprised with the press reports last week that there wasn't "rate shock" in California when the California exchange offered preliminary information about their new plans and rates.

At least one prominent health actuarial group had predicted a 30% baseline increase in costs for California's new health insurance exchange plans under the Affordable Care Act (ObamaCare").

As the director of the California exchange put it, "These rates are way below the worst-case gloom-and-doom scenarios we have heard."

But a few days later there is lots more information coming out and it would appear we have a case of apples to oranges to grapefruit. And, we have a pretty good case of rate shock.

A Health Insurance Exchange That Won't Be a "Train Wreck"

Every week, I get an email from the Maryland Health Connection––the state run health insurance exchange.

Maryland is one of a minority of states that are building their own Affordable Care Act ("ObamaCare") exchange.

You can go to their site and sign up for these weekly updates.

Let me suggest that Maryland is an example of what an on-track and well organized effort looks like for any exchange hoping to be ready to enroll people on October 1––and ensure that they will be covered should they walk into a doctor's office on January 1, 2014.

Implementation of the Affordable Care Act––More Evidence That Rate Shock is Coming

The Society of Actuaries is out with another estimate of health insurance rate increases as a result of implementation of the Affordable Care Act ("Obamacare").

While there is a great deal of difference between states, they are estimating an average increase of 31.5% on account of the new underwriting reform and benefit expansion requirements of the health law:

Six Months to Go –– Will the Health Insurance Exchanges Be Ready on Time? Survey: Health Plan Execs Don't Think So

As the Obama administration continues its top secret effort to build federal insurance exchanges in about 34 states while 16 states are doing it on their own, that continues to be the big question.

HHS is using IT consulting firm CGI for much of the work on the exchanges and the federal data hub. CGI has their plate full since they are not only working on the federal exchange but also doing work for the state exchanges in at least Colorado, Vermont, and Hawaii.

Earlier this month, the Senate Finance Committee held an oversight hearing. The Obama guy in charge of exchange development testified before them. I thought it was notable that it was the Democrats who expressed the greatest concern, and frustration, over senators not getting a clear idea for just where the administration is toward the goal of launching the new health insurance exchanges on October 1.

I thought the following Reuters quote was telling;

I am absolutely confident that every state will have an exchange that will be functioning and ready, said Gary Cohen [HHS executive in charge of the effort], who declined to elaborate on the number and identity of states that could be in for difficulties."

He wouldn't elaborate on just where there might be problems? Why? Why does the administration have to be so secretive?

This lack of transparency has the health insurance industry––the people the feds are going to have to connect with––very worried.

In early February, information technology consultant Edifecs, which provides health care software services to health plans, hospitals, and other organizations, held a "Compliance Summit" for 125 executives from hospitals, clearing houses, state health insurance exchanges, and health plans. The audience included executives from 34 different health plans. I gave the conference's opening keynote speech.

These are the industry executives that the state and federal exchanges are working with day-to-day. So, if you want to get the perspective from those in the trenches with the state and federal health insurance exchanges (HIXs) on whether they'll be ready, this is a pretty good group to ask.

Edifecs did just that using interactive software in the room to get the audience's response to a number of questions.

The input from the marketplace doesn't inspire confidence:

The Cost to Launch the California Health Insurance Exchange is $910 million––Does That Sound Like a Lot to You?

So far California has received $910 million in federal grants to launch its new health insurance exchange under the Affordable Care Act ("Obamacare").

The California exchange, "Covered California," has so far awarded a $183 million contract to Accenture to build the website, enrollment, and eligibility system and another $174 million to operate the exchange for four years.

The state will also spend $250 million on a two-year marketing campaign. By comparison California Senator Barbara Boxer spent $28 million on her 2010 statewide reelection campaign while her challenger spent another $22 million.

Christie Removes Another Republican Excuse for Passing on the Medicaid Expansion

The New Jersey Governor became the eighth Republican to take the Medicaid expansion deal.

What I found notable is that he essentially mimicked Florida Republican Governor Rick Scott in reserving the right to back out in future years if the feds don't keep their funding promises. While the feds are paying 100% of the cost of expansion in the first three years, that support ultimately drops to 90% in later years.

Said Christie, “If that [the fed's funding promise] ever changes because of adverse actions by the Obama administration or broken promises, I will end it as quickly as it started."

C. Everett Koop, MD

Anyone who has ever read this blog and noticed its upper right hand corner has known that Dr. Koop and I were friends––for more than 20 years.

One of my more amazing experiences with Dr. Koop centers on a walk we took from the White House to my office up Connecticut Avenue. In the length of about a mile, I don't know how many people stopped him and thanked him for his service. Just regular people on the street––many tourists.

Florida's Republican Governor Scott Does a Deal With Sebelius on Medicaid

A million Floridians will now be eligible for Medicaid––the Obama administration is happy about that.

Republican Rick Scott gets to do it his way––in an almost entirely private market.

By Refusing to Implement the Medicaid Expansion Republican Governors May Be Making the Republican Block Grant Proposals Impractical

Paul Ryan's Medicaid block grant proposals have always made sense to me. Give the states their Medicaid allotment and real flexibility over how they spend what will inevitably be less federal money.

But as I have thought about the impact of implementing the Medicaid expansion under the Affordable Care Act ("Obamacare"), Medicaid block granting is looking more and more problematic.

One Fiscal Cliff Down and Three To Go––But No Real Solution On the Horizon

Last week's deal to avert the "fiscal cliff" settled very little.

For those in the health care market, I will suggest the big takeaway is that we should expect very little will be settled in the coming months and we will continue to face a great deal of uncertainty for years to come.

More Predictions of Rate Shock Because of the New Health Law

Last week, I reported on my informal survey of health insurance companies and their estimate for how much rates will rise on account of the Affordable Care Act ("Obamacare").

Today, there are press reports quoting the CEO of Aetna with their estimate. The Aetna estimate is worse than mine.

Conservative States: Do a Partnership Exchange? Expand Medicaid?

Should states build their own health insurance exchanges under the Affordable Care Act (ACA) ("Obamacare")?

Should states expand their Medicaid programs under the ACA?

These are the tough questions many, particularly conservative, states are now wrestling with. While it is too late for a state to now decide to build an exchange before the fast approaching launch date, it is still possible to build an exchange in partnership with the feds.

The Affordable Care Act: Ten Months to Launch "Obamacare"––Get Ready for Some Startling Rate Increases

What will health insurance cost in 2014?

Will the new health insurance exchanges be ready on time or will the law have to be delayed?

There Will Be Sticker Shock!
First, get ready for some startling rate increases in the individual and small group health insurance marketplace due to the changes the law dictates.

The Feds Will Administer the Insurance Exchanges for Twice What it Costs to Administer Medicare

The Obama administration just released another set of regulations, the "Draft Notice of Benefit and Payment Parameters for 2014."

Among many other things in the 373 pages, they have announced their proposed assessments to cover the cost of running the federal exchange.

In order for the feds to administer the new insurance exchanges, they have proposed a fee of 3.5% of premium on each insurance policy sold in the exchanges (page 224).

The 2012 Elections and 2013––We Face a Daunting To-Do List

The Affordable Care Act ("Obamacare") is now settled law.
It will be implemented. It will also have to be changed but not until after it is implemented and the required changes become obvious and unavoidable. We can all debate what those things will be (cost containment is on top of my list) but it doesn't matter what we think will happen––time will tell. 

There are and will be more lawsuits.
I wouldn't waste a lot of time worrying about those. Anyone in the market will do better spending their time getting ready for all of the change coming.

But, when will the Affordable Care Act (ACA) be implemented?
So far, only about 15 states say they want to implement health insurance exchanges. Some of those may not make the October 1, 2013 kick-off date.

Maybe now that it is clear the law will go forward, some of the conservative states who have said they would not build one will get into high gear rather than have the Obama administration do it for them. But they may not have enough time to be ready in less than eleven months.

Private Health Insurance Exchanges––Will They Save Money? Will the Idea Grow?

Private health insurance exchanges will save employers money but not make health insurance cheaper.

Because private health insurance will save employers money, they will grow.

Will Private Insurance Exchanges Reduce Health Insurance Costs?

There's lots of buzz these days about private insurance exchanges. The idea is to give employees more choice in purchasing their own individual coverage from a big menu of insurance companies and plan alternatives, and as a result, create more robust competition and thereby help control costs.

But I think private insurance exchanges will have just the opposite effect on the price of large employer health insurance plans.

Will Many of the Smallest Employers Circumvent the Affordable Care Act by Using Self-Insurance?

Not surprisingly, only about 10% of firms with fewer than 200 workers take advantage of self-insurance––and almost no very small groups (fewer than 50 workers) use the product. It just isn't worth it for these small employer groups to take the risk that they will either have too many claims or very big claims from their workers––that is what insurance companies are for.

Already, 96% of workers in firms with more than 5,000 employees are in self-insured health plans. For firms between 1,000 and 5,000 workers, 79% are in self-insured plans. For employers with 200 to 1,000 workers, the self-insured rate is 50%.

But with the bulk of the implementation of the Affordable Care Act (ACA) to begin in 2014, that may be about to change.

The Medicaid Controversy––The Republican Governors Should Put Up or Shut Up

Indiana, New Mexico, and Wisconsin are asking the federal government to exempt people making between 100% and 133% of the poverty level from the upcoming Medicaid expansion.

These Republican governors need to put up or shut up.

Ever since the passage of the Affordable Care Act (ACA), Republican governors have been clamoring for block granting Medicaid.

The Supreme Court ruled that a state doesn't have to accept the new Medicaid expansion money under the ACA.

Many Republican governors––all of them actually––were saying before the Court ruling that the Medicaid expansion was yet another unfunded federal mandate they could not afford. Now the Court has told them they don't have to do it.

Be careful what you wish for.

Romney Intends to Repeal “Obamacare” in 2013—Has He Thought Through the Unintended Consequences If He Does?

Romney says he will repeal “Obamacare” if he is elected. Given that this has been part of his platform from the beginning of the campaign he is entitled to do that if he wins.

I did not support passage of the Affordable Care Act (ACA) in 2010 because I saw it as an unaffordable entitlement expansion with no real hope of containing costs.

But the practical reality of killing the Affordable Care Act in 2013 is a different matter.

Obama vs. Romney: A Detailed Analysis of Mitt Romney’s Health Care Reform Plan

Let’s take a look at Mitt Romney’s Health Care plan using his own outline ("Mitt’s Plan") on his website.

Romney's approach to health care reform summarized:

• "Kill Obamacare" - There seems to be no chance Romney would try to fix the Affordable Care Act––he would repeal all of it.
• No new federal health insurance reform law - There is no indication from his policy outline that he would try to replace the health care reform law for those under age-65 ("Obamacare") with a new federal law--his emphasis would be on making it easier for the states to tackle the issue as he did in Massachusetts.
• Small incremental steps - His approach for health insurance reform for those under age-65 relies on relatively small incremental market ideas when compared to the Democrats big Affordable Care Act--tort reform, association purchasing pools, insurance portability, more information technology, greater tax deductibility of insurance, purchasing insurance across state lines, more HSA flexibility.
• Getting the federal government out of the Medicaid program - He would fundamentally change Medicaid by putting the states entirely in control of it and capping the annual federal contribution--"block-granting."
• Big changes for Medicare - Romney offers a fundamental reform for Medicare beginning for those who retire in ten years by creating a more robust private Medicare market and giving seniors a defined contribution premium support to pay for it.

Romney vs. Obama--Romney Would Kill "Obamacare"

“On his first day in office, Mitt Romney will issue an executive order that paves the way for the federal government to issue Obamacare waivers to all fifty states. He will then work with Congress to repeal the full legislation as quickly as possible.”