An Update on The Risk Corridor - Death Spiral Edition

I've written about Obamacare's Risk Corridor provision many times. From the Rubio Amendment to Suing for the Slush Fund we have learned that not only was government funding this leg of the 3R's likely illegal but it was also never going to be budget neutral. In fact we can conclude from the year-to-year view that the losses insurers are incurring through Obamacare marketplaces are on an expedited death spiral.

Recently (and quietly) released payment and charge amounts show just how far off of budget neutral this mess really is. More concerning, what every insurer thought was bad last year is even worse this year. And. It's. Not. Even. Close.

In two years this temporary program that was budget neutral (allegedly) has lost a total of $7,871,900,000. Payments due to insurers have more than doubled from 2014 to 2015 and revenues have been reduced by almost 75%. With numbers like this how much longer can insurers remain before they are put on life support?

Tuesday Morning HealthyLinks

■ The folks at Cigna tell us that the IRS has extended the reporting dates for 1095's (these are the forms carriers and employers use to demonstrate that individuals have abided by the tax penalty Mandate). They were originally due out by January 31st of next year; that's been moved back over a month, to March 2nd.

Yay.

■ FoIB Holly R tips us to this interesting story about how a Cincinnati-area doctor "uses jet engine knowledge to fix woman's vocal cords."

At age 13, Anna Kessler was diagnosed with asthma, which kept getting progressively worse over time. She finally met with Dr Sidd Khosla, who had studied at MIT and was able to combine his knowledge of how jet engines work with Anna's condition.

Pretty cool.

■ And finally, a two-fer on lifesaving healthcare trends:

"1. Focus on people first ... getting patients actively engaged in managing their health and working with the physicians and technicians who treat them."

And "2. Why you need to go wireless ... a move toward continuous home monitoring and an effort to bring care to patients rather than requiring them to travel long distances to see specialists."

This, I think, is related to the burgeoning and ubiquitous use of telemedicine. I'm not completely told that it's a panacea, but it certainly has its place.

MVNHS© and Medicaid vs Babies

The Much Vaunted National Health System© continues its war on children. This time, a preemie was "left to die alone in a sluice room at an NHS trust plagued by clinical errors and bad staff attitudes."

In case you're wondering, a "sluice room" is "where used disposables such as incontinence pads and bed pans are dealt with, and reusable products are cleaned and disinfected."

For the MVNHS© "disposables" now includes babies, apparently.

Great system over there.

And lest we forget, our own version leaves much to be desired, based on this cautionary take from Florida:

"Kim and Richard Muszynski love Florida ... in September, the couple left the Sunshine State ... because they think Abby's health insurance was killing her."

The kicker?

"Like nearly half of all children in Florida, Abby has Medicaid"

Leaving aside for the moment that appalling statistic, it may be instructive to note that, as with the Much Vaunted National Health System©, Medicaid is not not insurance (after all, who pays premiums?) but taxpayer-funded health care. And, again as with the MVNHS©, who pays the piper calls the tune.

[Hat Tip: Holly R]

Thanksgiving 2016

Please remember everyone deployed away from their families this Thanksgiving. pic.twitter.com/w9Pv3UTHUQ

— Meoso (@MeosoFunny) November 24, 2016

Pre-Thanksgiving Heads' Up

It's time once again to break out Captain Kirk William Shatners wise words of warning about frying your fowl:



Have a great (and safe) Thanksgiving!

From the P&C Files: Easy Peasy, Yeezy

We've blogged before about Special Event policies for things like hole-in-one contests, special product promotions based on sports scores or political conventions. Here's another example:

Rap star Kanye West has been on tour recently, and was just hospitalized; he's since cancelled the balance of his tour, at a cost of at least $30 million. That's a lot of scratch even for a successful musician, which is why he (reportedly) has an insurance policy that likely covers this kind of situation.

Assuming that it ends up paying out (there may be specific exclusions, for example), his wallet will be grateful.

Wow, Pre-Existing Claims

With 2017's Open Enrollment in full swing, lots of folks are calling in for quotes and explanations, hoping to get their coverage in place for January 1. By now most of us know that, for better or worse (but mostly worse) ObamaPlans cover pre-existing conditions. This means that if one has, say, asthma, the new plan will cover it right away.

Some people, though, are less clear on the subject.

For example, 29 year old Megan Tice-Royea, is a grocery store manager in Newport, Vermont. Last year, she she decided she couldn't afford health insurance, despite making what appears to be enough to qualify for a healthy subsidy (or just buying a Cat Plan).

Which was a fine, rational decision, until it wasn't:

"In September, she was admitted to the hospital with a gallbladder infection. The surgery left her $32,000 in debt."

Ouch.

But here's the very best part:

"Now she’s considering signing up for an insurance plan through Obamacare, but only if it will help pay off her earlier medical bills."

Good luck there, Megan.

Now let's rewind the tape a bit, and take a look at "what might have been:"

Megan's 29, makes $14 an hour, and we'll assume that she doesn't smoke. Had she taken (literally - I timed it) 3 minutes, she could have visited her state's Exchange, where she would have learned that she qualified for a $347 per month subsidy, and then purchased a Bronze level plan for less than $60 a month (that's about $2 a day).

[ed: all rates and plans based on 2017 Exchange info, YMMV]

Her maximum out-of-pocket (including deductible) would have been $7,150 plus the $720 in premiums, meaning that the $32,000 claim would have cost her less than eight grand (about 25% of the actual bill).

Expensive 3 minutes.

[Hat Tip: FoIB Dr Dino]

LifeLock News

So this happened:

I reached out to our friend Steve Geis (VP at Cornerstone) for his thoughts. Steve's the one who basically put our LifeLock discount program together; he replied:

"In my opinion, this will only make LifeLock stronger.  I’m sure it will lead to new advancements in Cyber Crime/ Data Breaches using Symantec’s resources.

It’s too soon to tell if this will impact on brokers (and clients) but my guess is it will be business as usual.  We still have to wait for regulatory approval before the deal is done.

We’ll just have to wait and see what comes to us from LifeLock and we’ll communicate upon notice."

Thanks, Steve!

As a reminder, you can get a 10% discount on LifeLock services (15% is available for most employer groups).

[Hat Tip: Holly R]

Yeah, About That Cost Curve

We were promised from the outset that The ObamaTax would "bend the cost curve down;" that is, reduce the costs of both providing and paying for health care.

Here at InsureBlog, we've also blogged extensively about Medical Tourism, where folks go across the border (or the ocean) in search of cheaper health care.

Reason I bring these up is because our friend Holly R tipped me to this interesting piece at CNBC:

"Here's where you can get health care a lot cheaper than in the US"

The article gives several examples of care purchased in France versus here. For instance:

"[A] single day in a hospital in the U.S. costs, on average, $1,514 (up to as much as $12,537), while in France it costs $853."

And:

"Hip replacement surgery costs an average of $25,061 (up to $87,987) in the U.S., but just $10,927 in France."

Of course there are various travel expenses involved, but depending on the time of year, and how far ahead one booked, it seems likely that the total cost would still be a (significant?) net savings.

To be sure, this really only works for elective (non-emergency) procedures, and it's also only available to those with the resources to pay for flights and lodging, plus the fact that one's going to have to front the money (no insurance billing back to Blue Cross or Humana). And follow-up care may be an issue, as well.

But what really piqued my interest was that the author focused on why costs here in the US varied so widely from area to area, city to city, and the role insurance companies play in negotiating prices. It does acknowledge the role that tort-reform could play in reducing the cost of (for example) malpractice insurance.

But it completely missed the elephant in the room (and to be fair, that's perfectly understandable: it is about the advantages medical tourism, after all). So what goes unsaid here?

"Remember the President's assurances that his ACA would finally “bend the cost curve”?"

That is, one of the explicit promises of ObamaCare was that not only would insurance rates go down, but so would the overall cost of health care itself.

So how's that working out?

From the P&C Files: Freeze!

It may not seem like it now (at least here in southwest Ohio), but sub-zero weather is around the corner. And that means a lot of folks will be in danger of severe damage from their home's water pipes freezing and bursting.

The Cincinnati Insurance Company has thoughtfully provided this helpful video to share with our readers about how to prevent this from happening:


Prevent Frozen Pipes from The Cincinnati Insurance Company on Vimeo.

Thanks, CIC!

Bye, Bye Grandma!

We've written about Grandmothered plans (most recently here), focusing primarily on individual major medical policies. But these rules also apply to group plans, and the clock's ticking on them, too.

Grandmothered plans are those which were issued after ObamaCare was established, but were given a "hall pass" from many of its mandated "benefits." Much like the Doc Fix that kicked Medicare's provider reimbursement cuts down the road, Transitional Relief was ObamaCare's safety valve that allowed these plans a temporary reprieve. For the past several years, group clients have been able to re-cast their renewal date to continue to take advantage of it.

In theory, this will be last time (since no one really knows what's going to happen under the next administration). But, carriers are soldiering on; I received this in email today from United Healthcare:

"For many customers, there are significant cost implications in the change from Transitional Relief to ACA compliant plans ... you may be interested in changing your renewal to Dec. 31, 2017 ... This allows you to take advantage of the extension of Transitional Relief and keep the coverage you like for the maximum period currently allowed by law"

'Course, I'm old enough that I remember this.

In the event, UHC (and, of course, other carriers) is contacting its group clients to offer them a bit of relief.

Based on recent quotes I've seen, this is definitely an offer they shouldn't refuse.

MVNHS©: "We could tell you, but then..."

You can't make this stuff up (well, you could try, but then reality's still going to trump you):

"NHS chiefs are trying to keep plans to cut hospital services in England secret ... Managers were even told how to reject freedom of information requests"

Of course, now this particular cat's out of the bag, so it'll be interesting to see how successful MVNHS© bureauweenies will be in fighting off those FOI requests. And just what are they trying to cover up?

Well, according to leaked information, the cuts include the closure of at least one hospital in London, maternity and stroke services country-wide, and the forced merger of four hospitals in Merseyside, to name a few.

There are actually quite a few services and facilities on the chopping block, which is interesting because we've been told that nationalized health care schemes deliver better care than ours at a fraction of the cost, effectively bending the cost curve down.

How's that working out for the Much Vaunted National Health System©?

[Hat Tip: Ace of Spades]

Rx Ch-ch-changes

Interesting news from Medical Mutual of Ohio (via email):

"Ensuring Members’ Specialty Drug Costs Are Accurately Reflected in Benefit Accumulations

Beginning January 1, 2017, only the amount a member truly pays out of pocket for specialty drugs, when filled through one of our contracted specialty pharmacies, will accumulate toward the member’s annual deductible and/or maximum out of pocket (MOOP)."

Now, this applies only to ACA plans (on- and off-Exchange), but I'm guessing that these make up the bulk of MMO's current individual book of business. The impetus for this new process is the use of those ubiquitous manufacturers' coupons for pricey meds.

The example they gave was a drug that cost $500 but the insured had a manufacturer's coupon for $450, bringing their actual out-of-pocket cost for that scrip to $50. In that case, the insured's "balance" would be credited the actual amount paid.

MMO also pointed out that these coupons, while essentially disguising the true cost of a given med, may actually be leading to over-utilization:

"Over the past five years, the use of manufacturer’s coupons for high-cost brand-name drugs contributed to an additional $700 million to $2.7 billion in drug spending. We believe the amount of financial assistance received for specialty drugs by the Medical Mutual ACA plan population could exceed $3 million in 2017."

Hence, finally applying some brakes to this runaway train.

And I get that. As I mentioned to co-blogger Patrick:

"I have no problem with this.

1 – If they only spent $50, they only spent $50.

2 – I do wonder how much over-utilization results from mfrs sending out these coupons. OTOH, I 'get' that there are folks who couldn’t afford the med otherwise, and that gives me pause. On the gripping hand, there are no perfect solutions."

And Patrick agrees:

"I think of it this way, under a PPO plan with $25 copay the member pays only that amount. The difference between negotiated and copay don't go toward the MOOP just the copay does. I know it's not exactly the same due to a "coupon" but the reality is not everyone gets the coupon. Members who do receive them should rejoice that they aren't paying the whole amount. Members who don't receive them have a greater expense and therefore should get credit toward the MOOP for what they pay."

Point being: you don't (shouldn't) get credit for expenses that you don't, in fact, incur.

Kudos to MedMutual. 

Why can no one spell?

Apparently, the folks at the Washington Free Beacon can't spell "$2,500 premium savings:"

"Obamacare premiums will increase by 27 percent next year ... the government’s increase of 22 percent “can be misleading” because most of the 2017 Obamacare plans will be new"

That's because carriers have been deleting plan after plan in order to find some way to staunch the flow of claims dollars. And of course, carrier after carrier has been leaving the market completely, to the point that "one-third of the country will only have one insurer to choose from in the exchanges."

Regardless of what the new administration does (or doesn't do) come inauguration day, the die has been cast - for at least a while - for folks signing up now.

Talk about train-wrecks.

#ObamaCareWinning

[Hat Tip: FoIB Holly R]

Car Insurance That Pays For Routine Maintenance

Wouldn't it be nice if our car insurance covered the cost of routine maintenance?

Get new tires for a small copay. Free oil changes, every time.

Radiator flush?

No problem. Send the bill to my auto insurance carrier.

But it doesn't work that way. And that is a good thing. If all you had to do for routine auto expenses was have the bill sent to you car insurance carrier I doubt many of us could afford car insurance.

Since your car insurance does not pay for routine services, there is a price chart on the wall when you take your car in for work. If what you need isn't on the wall you can ask and the service manager will quote you a price.

But it doesn't work that way for health care. And it probably never will.

Enter Trumpcare 

Some agents I know have been debating suggestions for Trumpcare which is expected to be a much improved version of Obamacare. When the new model is available in the show rooms, and whether people will want to trade in their old Obamacare plan for a shiny new Trumpcare plan is subject to speculation. When it happens we will see. Until then, suggestions for Trumpcare are simply fodder for discussion.

Price Transparency

One of the hotly debated items is price transparency. More than one member of our roundtable wanted to know why we don't have price transparency when it comes to health care.

If I need to get my car repaired, I know exactly how much it will cost before  I have the work done.

True.

But who will pay the bill?

The person who owns the car.

And who pays the doctor or hospital when you get sick?

The lions share, typically 80% or more, of your medical bills are paid by the insurance carrier.

Networks

There is no transparency because of provider networks. That's why 5 people can go to the doctor for the exact same procedure and pay 5 completely different amounts.

Networks can be frustrating but they also save us money.

Without network pricing we would never know if we were being overcharged or not.

Without networks we could be balance billed for amounts over and above what the carrier says is a reasonable charge.

No matter what your doctor or hospital charges for treatment, almost invariably someone will say they have been overcharged. Who are we (as patients) to say that $12,000 is too much to pay to take out a bum appendix? Does it really matter, as long as the pain stops and you are once again fully functional?

Networks set the pricing for removing an appendix. You may still think the doctor and hospital are overcharging but so what? You are paying 20% (or less) of that cost of your care.

Network pricing results in a pre-determined cap on how much you pay for the procedure. There is no balance billing.

And that is a good thing.

#Obamacare  #Trumpcare

Promising Health News

Some potential good news for fans of the Much Vaunted National Health System©: they may be able to move on from using maggots to treat MRSA.

How's that, you ask?

Well:

"A 25-year-old student has just come up with a way to fight drug-resistant superbugs without antibiotics."

The greatest challenge in treating these "superbugs" is that we keep throwing stronger and stronger anti-biotics at them (with who knows what effects on ourselves) and pretty soon they become inured to them (think Borg). Now, Ms Lam (a 25 year old Australian PhD student) has developed what seems to be a microscopic shuriken that literally rips the bugs to shreds.

It's still early days, so we likely won't be seeing this in use on humans soon, but very cool.

Kudos, Ms Lam!

[Hat Tip: Ace of Spades]

Another ObamaCare Success Story

For certain values of "success" (via Dr John Goodman):

"The IRS demanded John payback the subsidies he had already received which amounted to $6,900 hit on his taxes. In order to pay back what he owed John took out a 2nd mortgage on his home."

The victim citizen (called "John" in the post to protect his identity) found, through a series of unfortunate events, that his previously "affordable" coverage was no longer such a deal, and as a result of clawback was forced to cough up almost $7 large. Adding insult to injury [ed: do ObamaPlans cover those?] their insurance plan now costs over $7,000 a year, and then another $12,000 in out-of-pocket.

But hey, Mrs John gets free birth control convenience items.

So, success.

On Veteran's Day 2016

[Jennifer Agnello, President of Cornerstone, has graciously granted us permission to share her profound, heart-felt thoughts on this day honoring those who've served]

"In honor of Veterans Day...

After a big week in our country, (no matter how you voted), tomorrow is a day where we should all be especially thankful.  In honor of Veterans Day, please take some time to remember that it is because of our veterans we all enjoy the freedom to express our own opinions and choose to vote however we individually see fit.  Please pause to recall the sacrifices that our Soldiers, Sailors, Airmen, Marines, and Coast Guardsmen have and will continue to make, serving our Nation where and whenever they have been called upon. These courageous and brave individuals have sacrificed family life, their careers and potentially their lives by willingly taking on the greatest responsibility, upholding our freedom.  They have voluntarily joined the ranks of America's Armed Forces, fully aware of their obligations as citizens and the risks they are taking in order to stand for what our country believes in and what it was founded upon.  They serve and have given their lives for the USA with courage and unquestioned commitment, for all of us.

Through their sacrifices they have secured for millions of others the blessings of freedom, democracy, and the unmatched opportunity that we enjoy in the United States today.

Please thank and/or remember those special folks.  Cornerstone has several employees who have served (Eric Pouncy, Hal Demmerle and Miles Massey) and many more have family members currently serving or whom have served in the past and they deserve to be recognized and respected.

We have chosen to give our own Veterans ½ day off on Friday afternoon to show our appreciation corporately.

Thank you to our employees and families for making this sacrifice.  We are grateful to you for allowing us to continue to live in a thriving, peaceful, FREE country.  Have a safe Veterans Day, and as always, God bless the United States of America.

...Please take the time to THANK A VETERAN."

[Thank you, Jennifer. HGS]

Omens & Portents, Part Two

Via email an hour or so ago:

"Important Notice: Discontinuance of Individual LTC Insurance Sales

To our LTC Distribution Partners and Producers:

After a recent analysis of the macro-economic trends facing the long-term care (LTC) insurance industry, we have made the difficult decision to discontinue sales of our individual LTC insurance policies in all states.  As many of you well know, the distribution landscape for LTC insurance has shrunk significantly since the peak of the industry in 2002.  Today, there are far fewer outlets through which individual LTC insurance is sold, impacting the growth potential of the product.  In addition, consumer demand for individual LTC insurance has fallen and remains stagnant. These trends, combined with the significant capital requirements of the LTC insurance business, are the primary reasons for this decision, which was not taken lightly."

Hancock has been an 800-pound gorilla in the Long Term Care insurance market for as long as I can recall.

So I reached out to our friend and LTCi guru Ray C for his thoughts, and he reminded me that "several years age, ManuLife purchased John Hancock.

I believe this change is now saying, they wanted Hancock for life and annuity - investments and not long-term care.

We stopped doing John Hancock three years ago.

So, we see no negative impact on our business - but another black eye on the industry."

I'm glad he reminded me of this, because I then went back and saw this in a post from '13:

"Executives at Manulife Financial ... think the benefits of staying in the private long-term care insurance (LTCI) market outweigh the benefits of getting out."

Looks like they've had a change of heart.

Omens & Portents

I haven't commented on the fate of ObamaCare in the wake of Tuesday's election, nor do I currently have any plans to do so. But I was intrigued by one specific electoral result:

"Amendment 69, the ballot measure known as ColoradoCare that would have created a universal health care system in Colorado, was soundly defeated Tuesday night."

On the one hand, I've always championed the 58-state laboratory model; that is, rather than the one-size-fits-very-few ObamaCare debacle, that each state should be free to try out its own proposed solution(s). So I was actually rather happy to see Colorado put it on the ballot.

On the other hand, many of us have said all along that Single Payer was the ultimate goal of ObamaCare in the first place, so the results of this ballot measure are telling: it went down in flames 4:1 (~80% to 20%). That's a clear repudiation in a state that went pretty solidly for Mrs Clinton.

So what message should one take from this?

Well first, it seems to vindicate the state-by-state laboratory model (as if it needed vindication). And second, the end-game of ObamaCare might not be as  inevitable as its proponents may have believed.