ObamaCare 'Glitch" Affects Dependents and Employers

According to recent information, a situation with regard to employer coverage under the ACA (ObamaCare) may create severe hardship for dependents of employees participating in group health coverage plans through their jobs.

The way the bill was written (apparently the government can't fix it, either), a family offered health coverage through an employer plan who might otherwise be subsidy-eligible in the individual exchange would be prohibited from receiving that subsidy to buy there because the employer's plan meets the definition of 'affordable coverage'.  Here's where it gets sticky..............

Defined as affordable coverage in this situation means that the health premium for the employer plan does not exceed 9.5% of the family's income.  But that's not all...................

The 9.5% is keyed to the self-only coverage premium available to the worker, not his or her family. 

Generally employers will subsidize a portion of the employees health premium (in CA at least 50%) but often don't offer any cost-share for the spouse and dependents.  Also, dependent costs tend to be much higher than employee costs for health plans, sometimes three times as much.  The numbers in an article published by the Huffington Post quoting Kaiser Family Foundation suggest that a typical workplace health plan costs about $5,600 for an individual worker while family coverage in nearly three times higher at $15,700.  But............

The $15,700 won't enter the calculation for determining the affordability of the employer plan relative to the individual subsidy exchange (assuming the family would qualify for a subsidy), it will be based solely on the $5,600 self-pay premium for the employee.

This is another reason why I believe, when all of the information gets out there, employers may begin to drop health coverage, send their employees to the individual exchange for their subsidy and maybe assist with premium or give them a pay raise.  

Dave
www.davefluker.com

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%

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

California PCIP To Suspend New Enrollments March 2, 2013

Following on the HHS directive closing new enrollments in federal PCIP 2/16, the California PCIP has announced that it will suspend further enrollments in the CA PCIP effective march 2, 2013.  

http://www.pcip.ca.gov/PCIP_Program/PCIP_Not_Accepting_New_Enrollments_After_March_2nd_2013.aspx

This new enrollment suspension comes 9 months earlier than anticipated when the program was set up in 2010.  It was schedule to enroll through December, 2013.

CA PCIP enrolled the most of any state.  PCIP in total enrolled 135,000 nationally of which approximately 100,000 remain enrolled.  Cost for PCIP was $5 Billion.  Average cost per enrollee in the PCIP ran around $37,000 in benefits on a very small premium.

CA PCIP applicants after March 2 will be denied enrollment in PCIP and vetted for eligibility for the MRMIP (CA Major Risk Program).

Dave
www.davefluker.com

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.
This from today's Tampa Bay Times:

His [Scott's] endorsement of the expansion came hours after the federal government
agreed to grant Florida a conditional waiver to privatize Medicaid
statewide for the state's

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.
Under the new

PCIP Shutting Down New Enrollments Early

The PCIP (Pre-Existing Condition Insurance Program) will be closing new enrollments.

As directed by HHS yesterday, the federal PCIP will cease accepting new enrollments today (Saturday) for enrollment in the PCIP.  States have been directed to curtail enrollments as well for those states (like California) which run a state-based PCIP.  Many states are scheduled to cease new enrollments on march 2, 2013.

Update: California PCIP will close for new enrollments on Saturday, March 2, 2013.  See my blog post regarding California PCIP closing.  

http://davefluker.blogspot.com/2013/02/ca-pcip-to-suspend-new-enrollments.html

The PCIP program was established in 2010 under ObamaCare to provide a temporary high risk pool for approximately 400,000 individuals nationally over the 4-year scheduled run.  It never enrolled more than 135,000 with approximately 100,000 still on the rolls.  

Even with that low mark, PCIP has run out of money and only has enough money left in the system to provide care for existing subscribers.  The US Government seeded the PCIP with $5 Billion to fund the 4-year operation.  What's left of that money is only enough to possibly cover those already enrolled.

PCIP was intended to run through December 31, 2013 and then shutter in favor of ObamaCare.

Dave
www.davefluker.com

Final California Health Benefits Exchange Plans Released

The California Health Benefits Exchange (Covered California) has released the final standard health benefit designs for 2014.  

Designs include two Platinum plans, two Gold plans, 5 standard Silver plans (3 Individual and 2 SHOP small group exchange), six Silver low-income plans, two Bronze plans and one Catastrophic plan.

HSA -compatible plans are available in the Silver and Bronze tier, one plan each tier.

Now we wait for the insurance carriers to design their versions of these standard designs for placement in the California Health Benefits Exchange.  All insurance carriers may not participate in in the exchange nor will they necessarily provide exchange health plans at each metal tier.

Also a reminder that insurance carriers will be selling metal tier plans outside of the CA exchange and those plans will not be quoting on the exchange web site.

Final Standard CA HBEX plans

Dave
www.davefluker.com

HR 544 And Health Premium Rates (Update) Liberty Act

In my previous blog regarding the "Liberty Act" HR 544 seeks to increase the mandated ratio of premium pricing from 3:1 to 5:1 to help reduce monthly health insurance premium costs to younger people.  Currently the PPACA requires that the maximum rate differential between the oldest subscriber and youngest cannot be more than 3 times the youngest subscriber's rate.

http://davefluker.blogspot.com/2013/02/hr-544-addresses-health-premium-ratio.html

To understand what is at issue for younger California residents (and other states as well), we need to first look at rate differential under the current underwriting (can be denied if too risky) system which enrolls only generally healthy individuals.

For my area zip code 95020:

Clear Protection Plus 3300 PPO (most popular plan in CA) at standard monthly rate:

Age 19 - $86.00
Age 63 - $347.06
Age 19 Adjusted to PPACA Ratio - $115.67 (immediate 35% Rate Increase)

1/3 of the age 63 rate would be $115.67.  Under the current system (not a guaranteed-issue take all comers system), the 19-year-old would experience an immediate 35% rate increase on 1/1/2014 to meet the mandatory 3:1 ratio.  The carrier is certainly not going to lower the age 63 rate.  

SmartSense Plus 6000 PPO with Standard Rx at standard monthly rate:

Age 19 - $109.00
Age 63 - $436.00
Age 19 Adjusted to PPACA - $145.33 (immediate 33% Rate Increase)

1/3 of the age 63 rate would be $145.33.  Under the current system (not a guaranteed-issue take all comers system), the 19-year-old would experience an immediate 33% rate increase on 1/1/2014 to meet the mandatory 3:1 ratio.  

As you can see by the examples above, the immediate impact IF the current underwriting system were kept in place and high risks could be denied would result in an IMMEDIATE rate increase for a healthy 19-year-old of approximately 34% across the board.  

Further assuming that rates will be adjusted upward of these current lower-risk underwritten rates to accommodate community rated guaranteed-issue coverage and cover all required essential health benefits and precious metal tier requirements, the rate for the 19-year-old could be stratospheric.  It will certainly be more than the current 34% average increase as the medical underwriting system will disappear and anyone, regardless of health can buy coverage at the same premium rate as someone at the same age in their rating area (community rating).

HR 544 would increase the ratio from 3:1 to 5:1 which would then allow some relief for those at younger ages with the ability of the insurer to price at 1/5 the price of the 63-year-old and not 1/3 the price.

Young people need to be concerned about this.  I have heard rumors that one organization, an association for retired people, is fighting against this bill.  Young people need to be concerned or their health insurance rates (you have to buy it by law staring next January or face a penalty or tax or whatever they are calling it).  

Dave
www.davefluker.com

IRS Projects $20,000 Annual Family Health Premium by 2016

In a final regulation release recently, the IRS (Internal Revenue Service) projects that the national average Bronze plan for a family (of 5) (lowest metal level) could run $20,000 per year for health insurance.  In the same year (2016) the penalty on that family for not having qualified health insurance coverage would be $2,400.  

Some actual examples from the IRS:

"(i) In 2016, Taxpayers H and J are married and file a joint return. H and J have three children: K, age 21, L, age 15, and M, age 10. No member of the family has minimum essential coverage for any month in 2016. H and J’s household income is $120,000. H and J’s applicable filing threshold is $24,000. The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000.

"(ii) For each month in 2016, under paragraphs (b)(2)(ii) and (b)(2)(iii) of this section, the applicable dollar amount is $2,780 (($695 x 3 adults) + (($695/2) x 2 children)). Under paragraph (b)(2)(i) of this section, the flat dollar amount is $2,085 (the lesser of $2,780 and $2,085 ($695 x 3)). Under paragraph (b)(3) of this section, the excess income amount is $2,400 (($120,000 - $24,000) x 0.025). Therefore, under paragraph (b)(1) of this section, the monthly penalty amount is $200 (the greater of $173.75 ($2,085/12) or $200 ($2,400/12)).

"(iii) The sum of the monthly penalty amounts is $2,400 ($200 x 12). The sum of the monthly national average bronze plan premiums is $20,000 ($20,000/12 x 12). Therefore, under paragraph (a) of this section, the shared responsibility payment imposed on H and J for 2016 is $2,400 (the lesser of $2,400 or $20,000).”

Click here to read the IRS Report

Dave
www.davefluker.com

HR 544 Addresses Health Premium Ratio for ObamaCare

A new bill, House Resolution 544, was introduced on February 6th by Congressman Phil Gingrey (R-GA) and Jim Matheson (D-UT).  

HR 544, 'Letting Insurance Benefit Everyone Regardless of Their Youth' or Liberty Act, addresses the reality of high premiums for younger people due to the current PPACA (ObamaCare) requirement that the ratio of premium between youngest and oldest be not more than 3:1.

Fearing that 3:1 ratio will cause rates to be especially high for younger adults, HR 544 would change the required ratio from 3:1 to 5:1 or as directed by each state allowing a potential lowering of premiums for those younger health insurance subscribers.  

HR 544 is titled "To amend title XXVII of the Public Health Service Act to change the permissible age variation in health insurance premiums" and information/updates can be found at the Congress beta site: HR 544

Dave
www.davefluker.com


 

Basic Health Plan (BHP) To Be Delayed Until 2015

HHS has announced that the Basic Health Plan (BHP) will be delayed for one year and should be implemented by 2015 under ObamaCare.

The Basic Health Plan is a plan or plans designed to fill in the area between Medicaid (Medi-Cal in California) and subsidy level plans in the exchange.  The Basic Health Plan (BHP) would provide a very low cost coverage option for those who do not qualify for no-cost Medicaid and cannot afford to pay the premium required for subsidized Silver Tier health plans.

According to Kaiser News, HHS apparently "ran out of time" to provide guidance to have the BHP program running by 2014.

This is not particularly good news for those in the 100%-150% FPL ranges.  

Dave
www.davefluker.com

Who Can Help Me Enroll In California Health Insurance In 2014?

The first annual Open Enrollment Period (OEP) for ObamaCare will begin October 1, 2013.  At that time, individuals and families in California and the rest of the country can begin the process of selecting a new health insurance plan to begin on January 1, 2014.  The intial OEP will run a full six months to allow sufficient time for millions of California residents to buy new health insurance plans and for those with existing plans to change those plans either voluntarily or due to having non-grandfathered coverage.

Outside of the Exchange

Those wishing to purchase health insurance coverage outside of the CA Health Benefits Exchange will need to use a licensed health insurance agent (either an independent broker or carrier-direct sales unit) to make that purchase.  Outside of exchange sales will be very similar to the way things work today.

Inside of the Exchange and Medi-Cal/Healthy Families

Those wishing to purchase health insurance coverage inside of the exchange, particularly those who qualify for low-income premium subsidy, may be assisted by a licensed agent, the exchange itself, or a non-licensed entity.  This includes those who are eligible for Medi-Cal (California Medicaid) and Healthy Families (California CHIP)

Non-licensed entities who may assist with exchange-only or Medi-Cal/Healthy Families enrollments will include, but not be limited to Navigators, Community Service Organizations, Community Outreach Organizations, Dept of Fish & Game, Ranch and Farm Associations, Trade Unions, Medical Groups, Medical Offices, Community Clinics and Hospitals.

Non-licensed Navigators and Direct Benefit Assisters will also be excluded from selling small group insurance plans for the SHOP exchange.  SHOP is the small business 2-50 employee group exchange.  All enrollments in group health plans will require a licensed insurance agent or broker.


Dave
www.davefluker.com

Positive active purchasing hearing

Fifteen of the nineteen testimonies for yesterday’s Insurance Committee public hearing on SB-596 were in favor of active purchasing. Proponents included the State Comptroller, State Health Care Advocate, small business and community groups, brokers, labor, patient safety, legal aid, consumer and faith-based groups. Opponents included CBIA, the HMO Association, NFIB, and the Exchange staff. The CT Health Insurance Exchange Board and staff have rejected negotiating premiums with plans to keep costs affordable. MA’s exchange has saved consumers millions through negotiation. Utah’s exchange does not negotiate, taking any willing insurer, and premiums inside the exchange are higher than outside. Committee members asked great questions about how much consumers could save, states that are making it work, operational questions, health cost drivers and solutions, philosophical questions about the role of government, and impact on the rest of the market. The committee was especially interested that CA is planning to negotiate rates with their plans and have received 30 letters of intent from plans, countering the concern that plans would not apply. Committee members were also interested in research on how much choice is optimal for consumers before it becomes overwhelming and counter-productive.