The Numbers Are Great (Don't Look Too Closely)

How much will health insurance cost next year? The predictions have keenly reflected the political affiliations of the prognosticators. Democrats are still clinging to the possibility of premium reductions. Republicans are having difficulty hiding their glee over the possibility, especially in Ohio, of rate increases of 70% and higher.

The first test was the release, last week, of rates for Covered California, the individual health insurance exchange for the Golden State. Though the exchange is designed to offer up to 13 insurers per area, no area will have more than six insurance companies participating. Some areas will have only three insurers! Major national insurers such as Aetna, Cigna, Humana, and UnitedHealth Care will not be available through Covered California. Anthem Blue Cross, a division of California’s WellPoint, and Kaiser Permanente, also based in California, will be offered through the exchange.

So how are the numbers? Not bad. Paul Markovich, president of Blue Shield of California, is quoted as saying that the final rates will reflect an average increase of only 13% above individual policies currently available.



The release of these rates was met with a huge sigh of relief from the Democrats. The possibility of a 40 year old purchasing coverage in Los Angeles for $250 per month meant that the Patient Protection and Affordable Care Act (PPACA) might work. Sure San Diego will be 20% higher and San Francisco 40% - 50% more, but it could have been worse. A lot worse.

It only took a few days before we got our first end-zone celebration. Paul Krugman, writing in the New York Times, noted, “Yet important new evidence – especially from California, the law’s most important test case – suggests that the real Obamacare shock will be one of unexpected success.”

OY

Luckily for the Democrats, Krugman, and their other apologists, Washington and the national press have been too consumed by the recent out-break in scandals – the IRS, Benghazi, and the press surveillance – and the tornado in Oklahoma to look at hard numbers. A chart like the one above takes real time and effort to deconstruct and understand. Who has time for that? Hell, I consider myself lucky that you are still reading this.

Please take a few moments away from Coasterville on Facebook and look at the above grid.

Forget who is missing among the top three choices Californians will be offered and look instead at who is there. Nine of the fifteen options are HMO products. Though many of us have had excellent experiences with Kaiser Permanente here in Cleveland, even their representatives are quick to point out that an HMO, even theirs, isn’t right for everybody. Two out of the top three options in Los Angeles are HMO’s, the type of insurer that is best suited to meet the PPACA’s requirements. Are two out of three Californians currently choosing to be covered by HMO’s? I doubt it.

The PPACA mandates that men and women pay the same price for insurance and that, among other things, maternity is covered the same as any other medical condition. Those rules are already in effect in California. The maternity coverage was instituted last year. The insured in Ohio will see a bump in their rates just from those two changes. Young healthy males will be the most affected by this change.

The rates on the chart are for the Silver Plan, a policy designed to cover 70% of the insured’s health costs. Regular readers know that the PPACA mandates four levels of coverage, Platinum, Gold, Silver, and Bronze. We are told to celebrate average rates of $242 - $351 per month for tier 3 coverage. We would freak out in Ohio.Residents of Cuyahoga County pay the highest health insurance rates in Ohio. Medical Mutual of Ohio, based in downtown Cleveland, offers a High Deductible Health Policy (HDHP) that you can pair with a Health Savings Account. The $2,500 deductible policy is $139.10 per month for a healthy 40 year old man. The commonly purchased options that have higher deductible are a whole lot less.

Those policies will be a lot higher in 2014

The above grid is a basket of apples and oranges. Individual rates aren’t compared to the current individual policies. That would look awful. Instead the rates are shown with the more volatile small group premiums.

We won’t have a grid like this in Ohio anytime soon. But when we do, the numbers will be great, just as long as you don’t look too closely.   DAVE   www.bcandb.com

0 For 2

The Patient Protection and Affordable Care Act (PPACA) was supposed to cure two intractable problems:

Access to Health Care

The Cost of Health Care

Of course, if you have been paying attention, you know that the PPACA has nothing to do with the access to health care or its price. Instead, the law is about the access and pricing of insurance. We were going to eliminate the scourge of 40 million uninsureds and make the premiums more reasonable.

Today’s post is a quick status report on those two goals.

* * *

Nobody wants to be a political football. It is nobody’s goal to be the hot potato. So think what it must be like to be on the Ohio High Risk Pool policy. This is the interim program the federal government created to serve as a bridge until the PPACA becomes fully functional at the end of this year. To qualify you had to have significant medical issues and to have been uninsured for over six months.

As noted in June 2010, Medical Mutual of Ohio won the contract to administer this underfunded and poorly designed program. Since then we have had the federal government try to change the rules and even attempt to throw some of our unhealthiest Ohioans off the program.

Access to this bridge was blocked months ago. With funding running out, the program was closed to new enrollees. Today’s news was as inevitable as it was unwelcome. The federal government will take over the Ohio High Risk Pool at the end of next month. As of July 1^st all Ohio members will be transferred to the federally run Pre-existing Condition Insurance plan (PCIP). Coverage? Price? Networks? Who knows? All of this information will be officially released sometime in the next five weeks or so.

If you have a significant heart condition or stage 4 cancer and have relied on the high risk pool this last year, you might be concerned about this change. But don’t worry, as my friend and fellow agent Dave R. noted, “The people that underfunded this are the same people that decide funding for the unaffordable health care act. They refused to give the States the additional funds to keep the program in place for another five months”.

If we really cared about providing access (insurance) to the unhealthiest amongst us, we would be ready to provide the funds necessary to get the job done. Here’s a hint – it is going to take a lot of cash.

* * *

This was an EXCELLENT piece in Time". Which is why nobody read it. Time and its like minded media partners are about as frequently consulted on the news of today as the New York Sun of "Yes, Virginia" fame.

The above comment was posted by one of my readers, a local librarian. When challenged by other readers, he noted, “Nobody read it. That issue never moved from it's (sic) spot on the shelf until I placed the next unread issue of Time in its place.” I wish he was wrong. I wish dozens of visitors to his branch would have read Steven Brill’s Bitter Pill, Why Medical Bills Are Killing Us, a special edition of Time Magazine before someone had “accidently” taken it home.

But it didn’t matter.

Kathleen Sebelius, the Secretary of Health and Human Service (HHS), read and more importantly responded to Brill’s well-researched report. On May 8^th Sebelius and the Centers for Medicare and Medicaid Services (CMS) released the actual charges for the 100 most commonly performed inpatient procedures. CMS even admitted that the document dump was in part due to Time.

Shedding light on the incomprehensible and often indefensible pricing structure of our nation’s hospital was a public service. The national news covered it extensively. Local TV stations and newspapers combed the data for the specific pricing for hospitals in their service areas. Even online publications like the AOL Patch covered this news. Did you read the report? Probably not. Did your Congressman/Congresswoman read it? Maybe. But I will bet that the legislative aides have now read Brill and are now familiar with the term “chargemaster” and what that means to you.

The links are all here. It is up to you. Do you want to be just another patron at that unnamed library or do you want to know the numbers? Neither Health Care nor Insurance will ever be affordable until we understand and begin to control costs.

Our two stated goals – access and affordability – remain largely untouched and unsolved. That leaves us, for the moment, 0 for 2.   DAVE   www.bcandb.com

The Art Of The Possible

The presentation by the two attorney/consultants was only 45 minutes long. It just felt like four hours. They were on firm ground when they stayed in the tax and law side of the Patient Protection and Affordable Care Act (PPACA). Sure they got lost in the details and seemed compelled to flash every detail at their audience, but what they lacked in presentation skills was more than made up with the depth of their knowledge. That was as long as they didn’t venture into my area. They were lost when it came to the insurance part of the new law. Couple their confusion with their power-point skills and you have the perfect recipe for an agitated audience.

The young business owner seated next to me opined that none of this might matter much if the next administration reverses the law. I laughed and reminded her of the Republican’s love for the PPACA. We both just shook our heads. She isn’t old enough to remember when Democrats and Republicans actually worked together in Washington. She would never believe that Otto von Bismarck once remarked that “Politics is the art of the possible”.

There appears to be plenty of politics in Washington, but nothing seems possible.

This blog has discussed the numerous shortcomings of the PPACA for over four years, a full year before the law was even passed. But pretending that last year’s Supreme Court decision or the November 2012 election didn’t happen is not productive. We can’t all be as unproductive as the Republicans of the House of Representatives:

House Speaker John Boehner said Thursday that next week’s vote to repeal the health reform law is being held to provide new lawmakers a chance to vote on it.“We’ve got 70 new members who have not had an opportunity to vote on the president’s health care law,” Boehner said. ‘Frankly they’ve been asking for an opportunity to vote on it.”

Politico

That doesn’t mean that nothing is getting done and that no one has reached across the aisle in an attempt to make the PPACA work. It simply means that you have to look a lot closer to home if you are hoping to find anything positive.

The Ohio chapters of the National Association of Health Underwriters (NAHU) held their annual Day at the Statehouse last week. This is the trade group that represents health insurance agents. We were in Columbus to hear from some of the legislators that are the most involved in our area and from Lieutenant Governor Mary Taylor who also serves as the director of the Ohio Department of Insurance. Our afternoon was taken with appointments with various legislators. I was scheduled to meet with State Senator Scott Oelslager and the effervescent Minority Whip of the Senate, Nina Turner who represents me in Columbus.

Some of the states that have both Republican governors and Republican led legislatures have chosen to fight the PPACA. Still! We in Ohio are fortunate to have realists in Columbus. And though these leaders have taken a lot of heat from members of their own party, they continue to work through the process even though they disagree with the PPACA. Our first speaker was Representative Barbara Sears the sponsor of the recently signed H.B. 3. As Majority Floor Leader of the Ohio House Representative Sears shepherded the rules that would establish the training and responsibilities of both agents and navigators in the new exchange system. This is legislation that had bi-partisan support. While some states are satisfied with turmoil and the possibility of the PPACA dying under its own weight, Ohio is taking some of the steps necessary to make it work.

Lieutenant Governor Taylor’s presentation also gave me hope. Regardless of what she personally thinks about the PPACA, Ms. Taylor is committed to doing her job as director of the department of insurance. A big part of that job is reviewing every policy that will be allowed to participate in the Ohio exchange. That exchange is supposed to be available October 1^st. As of last week ZERO policies have been presented for review and approval. No insurer wants to go first. She is already making plans for the onslaught she is anticipating in mid-June. If there is going to be a problem with the exchanges, it won’t be because of Mary Taylor.

Regular readers of this blog know that I don’t spend a lot of time complementing our elected representatives as a whole and even less on Republicans. I certainly did not vote for Governor Kasich and disagree with most of his positions on major issues. But you have to admire any leader, Democrat or Republican, who puts his state’s needs first.

My first appointment was with Senator Oelslager from Stark County. I was there to talk about other ways to help our clients get through the coming transition. None of my issues had anything to do with me, personally. We needed to talk to the legislators about S.B. 9 which cleans up the old, but soon to be unneeded, Ohio Open Enrollment Program. We also wanted to alert the legislators that Ohio still defines full-time as 25 hours per week while the PPACA uses 30. You get the idea. Cleaning up these and other seemingly small conflicts will save our clients big headaches in the future. So that was the purpose of my meeting with Senator Oelslager.

We spent the first ten minutes talking about the Kennedys. Republican Oelslager was inspired to go into public service by John and Robert Kennedy the way countless young men were inspired to pick up a guitar after seeing the Beatles on the Ed Sullivan Show. I found him to be engaging and well-informed.

My only disappointment of the day was that Senator Turner was called into a meeting. I instead met with her bright and energetic Legislative Aide, Adam Warren. Mr. Warren was an excellent substitute. I hope to have more conversations with him in the future.

So what I have learned is that politics is still the art of the possible. We just have to limit our discussion to the actions of our state legislators. It’s a start.

All Animals Are Equal...

For once, Benjamin consented to break his rule, and he read out to her what was written on the wall. There was nothing there except a single commandment. It read:All animals are equal. But some animals are more equal than others.

George Orwell – Animal Farm

Congress never fails to disappoint. Whether you are discussing financial disclosure and insider trading or just the day to day struggles with the Sequester, our elected officials from both parties seem find the retention of their jobs as their number one priority. And unless you are a total whack job running for the Senate from Connecticut, a major determinant of election success is the campaign war chest. Money gets you to Washington and once you’re there, you sure want to stay.

Like the previously mentioned insider trading issue, Congress has crafted laws that appear to apply to everyone but them. And that brings us to the Patient Protection and Affordable Care Act (PPACA). There was a poison pill buried deep within the PPACA by Charles Grassley (R-IA). While negotiating with the Democrats in the summer of 2009, Grassley pushed for Congress and its staffers to be required to participate in the future health care process. If the PPACA was good enough for the average American citizen, it was good enough for Congress.

Theory meet reality.

Today’s POLITICO reveals the backroom negotiations that have been going on for months to resolve this problem. Congress and their staffers are currently covered by the federal government, their employer. Approximately 75% of the cost of their coverage is paid by the government. The insurance is good. The 75 / 25 split is fair. But an exchange doesn’t work that way.

The health care exchanges will be offering plans that conform to the new plan designs created by Health and Human Services. As this blog has detailed in the past, the new metal plans (platinum, gold, silver, and bronze) will have a lot of benefits that you may, or may not, want. These new benefits and the elimination of medical underwriting will have a significant impact on premiums. The new taxes on health insurance will also add to the escalating prices of individual and small group health insurance.

The first health care exchanges will be designed to sell individual policies and small group health insurance. An employee of the federal government, covered by group health insurance, wouldn’t be shopping at an exchange unless he/she was losing the group policy. BINGO! To comply with the law and reality, Congress and the staffers have to buy their own policies, at their own expense. They may qualify for a tax subsidy if any of them earn less than 400% of the federal poverty rate. But they lose the 75% now paid by their employer.

Senator Richard Burr (R-N.C) is quoted in the POLITICO article as noting the impact. “…put yourself in the position of a lot of entry-level staff people who make $25,000 a year, and all of a sudden, they have a $7,000 a year health care tab? That would be devastating.”

Congress fears a brain drain as young, under-paid employees, untainted by the cynicism years in Washington breeds, leave the Capital for a more affordable start to their careers. And who in Congress wants to pay for his/her own coverage? So Democrats and Republicans are working behind the scenes to exempt themselves and their staffs from the effects of the PPACA.

There is no one working to exempt you.

Businesses, especially those with fewer than 100 employees, are assessing their need to offer group health insurance to their employees. Many will follow the government’s lead and eliminate coverage. Dropping coverage eliminates compliance questions, paperwork and expense. The employees will be left to fend for themselves.

In other words, the PPACA will perform as designed. Less and less Americans will rely on their employers for health insurance benefits. And as we are herded into the exchanges with their ever escalating prices, a great hue and cry will rise from our fellow citizens for rate relief. The transition to a Single Payer System will then appear to be the only solution. Damn near welcome.

Except for those who have been exempted. There is really only one rule: All animals are equal. But some animals are more equal than others.  

DAVE  
www.bcandb.com  

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He Went That-a-Way

Today’s news gave me the opportunity to view two competing views of reality. The headline at the top of Page B1 of today’s Plain Dealer was “Hospitals keep leaning on lawmakers over balking at Medicaid expansion”. It took two reporters and over 30 paragraphs to clearly explain why hospitals around the state were pushing to have the Republicans in the Ohio House reconsider their decision to kill Ohio’s participation in the program to deliver health care to the poor. Dr. David Bronson of the Cleveland Clinic’s executive board and Robin Bachman, assistant vice president for government affairs and public policy at Sisters of Charity the nonprofit Catholic system that operates St. Vincent Charity Medical Center, seemed to completely understand how the Medicaid expansion would work and benefit their hospitals. The Speaker of the Ohio House, William G. Batchelder (R-Medina), wasn’t as clear. “I have never seen anything as confusing as this situation,” said Batchelder.

It was easy to understand Batchelder’s confusion. His governor, John Kasich, had crossed the big red line and agreed to expand Medicaid, a key part of the Patient Protection and Affordable Care Act (PPACA). Republicans are supposed to block Obamacare, not implement it. Worse, the Hospital Association and the Ohio Chamber of Commerce are also OK with the expansion.

There was one guy, two pages away on Page A7, who was not confused, who is never hampered by either indecision or second thoughts, and who was totally prepared to stay the course. Kevin O’Brien, the Plain Dealer’s representative from the Right and resident scold, KNOWS the answer. Unconcerned about budgets or deficits during the first six years of the Bush presidency, Mr. O’Brien now appears to spend a great deal of his waking hours tinkering with his own, personal, federal debt register. Accepting the expansion of Medicaid “would do nothing more than move some of Ohio’s hospitals a few places farther back in the line of institutions and practitioners destined to starve to death under the federal bureaucratic yoke if Obamacare remains the law of the land and produces the single-payer, government-run health care by utterly destroying the insurance market, as it is designed to do.”
Even when we agree, we disagree.

This blog has contended for three years that we are marching towards a single-payer type system. I am not a fan. Never have been. But, that doesn’t mean that we will have bodies on the streets, abandoned hospitals, and shuttered clinics. I’m not even positive that any BMW dealerships will be forced to close.

We can’t have a conversation if we don’t lower the volume.

The online Crain’s Cleveland Business released an article this afternoon about MetroHealth’s position in this fight. We are paying for the care Metro delivers. We pay in higher insurance rates and higher taxes. In an effort to take a stand against the President, Speaker Batchelder may have, accidently, destroyed a program that was funded entirely by Cuyahoga County and the federal government. The article explained why Metro is so concerned. “Expanding Medicaid to cover more of the county’s poorest residents –who typically are the most expensive to treat because they often use the emergency room for routine care or have neglected medical needs – is expected to help buoy MetroHealth’s finances.”

So will Medicaid be expanded in Ohio? I think so. It will be a bit of a slog and the horse-trading may be unpleasant, but I think it will get done. And once again we are all reminded that the national health care debate is not about health care. Never was.

The issue is money. Who is going to pay our medical providers? And once that is settled, we might tackle How Much?   DAVE   www.bcandb.com   **

Our Canary Died

Alarm bells. Warning lights. Bespectacled insurance agents jumping up and down and waving our arms. The last three years have had no shortage of dire predictions. Most have been ignored. The warnings were coming primarily from Republican leadership and insurance agents. Our motives were suspect. Though many in my industry offered possible modifications to the Patient Protection and Affordable Care Act (PPACA) to make the law more workable, the Republicans only offered to repeal the legislation, a totally impossible political grandstanding ploy. With the choice appearing to be all or nothing, the American public chose all.

The canary died last Tuesday.

The Society of Actuaries released their study on March 26^th. Their prediction is an average increase of 32% in 2014 in the individual health insurance market. That is the average. New York policies may decrease an average of 13.9%. Ohio? You don’t want to know. The Society of Actuaries is looking at an 80.9% increase for Ohio individual policies.

Does this mean that your policy is going up 80%? Yes and no. If you are really, really unhealthy, your premium may be decreasing. If you are young, healthy, and have a good job – this could get ugly. If you are young, healthy, have a good job, and male – this could get very ugly.

How much of this increase will you see? The answer depends, in part, on your income. The Obama administration is counting on federal subsidies to hide the full impact. With assistance available to consumers earning up to 400% of the national poverty level, lots and lots of Americans will be getting help.

Where will all of that money come from? Individual policies will have two new fees (taxes) assessed on them as of January 1, 2014. The Reinsurance Fee adds $5.25 per insured member per month. That means that a family of four pays an additional $21 per month. The second fee is the new Market Share Fee which is projected to be an additional 2 – 3% of premium. The rest of the money will come from federal taxpayers.

The Obama administration has responded predictably to the actuaries’ report. Health and Human Services (HHS) Secretary Kathleen Sebelius admitted that “there may be a higher cost associated with getting into that market where folks will be moving into a really fully insured product for the first time.”

That moment of clarity was quickly followed by questions about the canary. The Christian Science Monitor reported that Secretary Sebelius said that “it’s too soon to talk specifics about premiums until the insurance companies submit their bids this summer”. She again predicted that the online exchanges will encourage competition which would bring down prices. And of course, the White House has questioned the motives and validity of the study.

I am particularly amused by the competition argument. Large corporations, many of them publicly traded, are going to lose millions, not by accident, but because they will be blindly caught up in a bidding war to insure our sickest Americans. A little real world capitalism is going to be a real shock to some of our Washington bureaucrats.



My own policy, a high deductible H.S.A. qualified health plan, renewed recently. My rate increased over 30% and yet, the premium is still competitive. Claims, taxes, new charges like the facility fees that are now appearing on our bills, and the incredible cost to comply with the new legislation are all contributing to this year’s increases. Next year? I suspect that 30% will be a fond memory. 

Damn. Our canary died.

DAVE   www.bcandb.com  

Disappointed

Robert Anderson grimaced. The next to the last thing in the world Bob (name changed) wanted to do was to defend The Path To Prosperity, Paul Ryan’s new budget. The very last thing would be to defend or even to agree with the Democrats and the President. This was going to be a difficult meeting for Bob.

I would describe Bob as a Conservative, right-wing Republican. He prefers Constitutionalist. He voted for Mitt Romney because he is a realist. A vote for anyone else last November was really a vote for Obama, but it was not a vote cast with pride. Paul Ryan was a welcome addition to the ticket. Bob had touted Ryan as the country’s future for years and he felt validated when the Congressman was chosen for the number two slot. That was last year. Now, March 2013, Bob was going to take crap from his friends in the middle and the left.

Paul Ryan’s budgets have always been more about politics than numbers. These are budgets designed for the campaign trail. No Ryan budget has ever had a chance of passage in the Senate. No Ryan budget could be signed by a president, especially this President. All of that is understood in advance. But this time Ryan went too far.

How far? When FOX calls out a Republican, he has officially jumped the shark.

Mr. Ryan’s new budget assumes the repeal of the Patient Protection and Affordable Care Act (PPACA). Oh sure, he retains much of the savings and revenues from ‘Obamacare” and the tax changes of the last year. He just dumps the benefits. It is as if the last election and the two long years of campaigning never happened.

Robert Anderson – business owner, Constitutionalist, American – was totally frustrated. He has taken the time to meet with our elected officials. He has explained the significant flaws in the legislation to members of both parties. But Robert, unlike Congressman Ryan, understands how doing nothing, how letting this law be enacted without needed modifications, will hurt his business. Republicans voting for the repeal of the PPACA are Republicans voting for the legislation’s enactment in its current form.

So Bob Anderson is now forced to agree with Dave Cunix, centrist Democrat. Neither the Democrats nor the Republicans want the PPACA to succeed. The Republicans won’t help to modify it because they want to be completely uninvolved. The PPACA is the key to unlimited campaign financing. The Democrats will use the failure of the PPACA to welcome a Single-Payer system.

The insurance companies who will be selling supplemental policies and taking care of the administration of this future Medicare-like program are cheering from the sidelines. Bob Anderson may be disappointed in Paul Ryan’s budget, but the politicians, left and right, are quite content.

  DAVE   www.bcandb.com   ***