About those "High Deductible Health Plans"

Back in 1992, I was introduced to the world of Medical Savings Accounts. These then-cutting edge plans were unique in that they touted $1,000+ deductibles in a world where $500 was considered exorbitant. But they offered substantial savings, part (or all) of which could be socked away to help defray future needs.

As time went on, MSA's evolved into tax-advantaged HSA's, but the basic premise was undisturbed: in consideration for the insured taking on more risk, the carrier agreed to a lower premium.

Win-win.

Especially because a young, healthy person could sock away quite the nest egg.

Eventually, though, the ObamaTax came along, with out-of-pockets that dwarfed traditional HSA's, coupled with premiums that matched what used to be considered the most expensive "high end" plans. So: lose-lose.

FoIB Allison Bell has a terrific new article on the effect that ACA-compliant plans with ever higher deductibles - and premiums that don't reflect them - are having on the average person. She cites a new Guardian Life report "based on a recent online survey of about 1,700 U.S. workers."

And the findings are eye-opening (or cringe-worthy; your call). For instance:

"[O]only 44 percent of the workers surveyed this year told Guardian they had enough cash in a checking account or savings account to pay a $3,000 medical bill.

About 34 percent said they would use credit cards to pay bills that big."

Great.

And here's another:

"About one-third of the workers in high-deductible plans said they had skipped what they thought was a necessary doctor visit, avoided a blood test, delayed a procedure, failed to fill a prescription or avoided X-rays because of cost."

We've seen this before: your insurance is too expensive to use. Of course, because plans are guaranteed issue and can't exclude pre-existing conditions, by definition they're going to cost more - much more - so any savings that were once available to those with higher deductibles is now gone.

#O'CareWinning!

If you like your plan... (Part 6,392)

And the hits just keep on coming: first Nebraska, then Indiana, and now The Volunteer State:

"Blue Cross Blue Shield of Tennessee is dropping most of its Obamacare customers"

And no wonder: the carrier anticipates eating half a billion dollars in losses from these plans. That's a lot of scratch, even for the Blues.

Look for more of these as we inch closer to Open Enrollment v4.0.

#O'CareWinning!

It's only money [UPDATED]

[Scroll down for update]

The ostensibly toothless Individual Mandate seems to have hit more people in '14 than previously reported.

A lot more:

"[A]bout 560,000 more taxpayers paid about $200 million more in penalties than was previously reported"

That upped the total for the year to $1.7 billion, and graphically demonstrated (as if this weren't obvious from the git-go) just how "sustainable" the ObamaTax isn't.

To help mitigate the pain, several senators have introduced the Obamacare Tax Relief and Consumer Choice Act under which, if passed and signed into law [ed: Heh], "individuals would not have to pay the penalty if health insurance premiums in their state rose by 10 percent or more or if they could not afford deductibles."

Exit question: Why won't the Powers That Be tell us how many folks actually paid the penalty (in cold hard cash) as opposed to having it withheld from their refunds?

[Hat Tip: FoIB Holly R]

UPDATE: And it just got more challenging for folks in Indiana:

"About 27,000 Hoosiers will lose their Obamacare plans next year, after Indiana University Health Plans announced it is withdrawing from the Indiana marketplace."

But remember:



[Hat Tip: Adriana Cohen]

Is there a future for private insurance exchanges?

The collapse of most Obamacare exchanges has captured the attention of the media in recent months.  This may explain the lack of news about private exchanges.  Private exchanges have not exactly caught fire, but they have not disappeared either.  The failure of Obamacare exchanges may increase calls for a national medical welfare program.  Ironically that same failure increases the future potential for private exchanges.  So even as Obamacare exchanges continue to collapse, work to develop and market private exchanges continues and the future of those private exchanges remains hazy.  Some factors:

(1)  The Massachusetts insurance reform enacted in 2006 is widely considered the model for Obamacare.  This legislation established a state-run insurance exchange called “the Connector”.  Just this August, The Society of Actuaries released an extensive report on the impact of the Massachusetts legislation on insurance markets, pricing and profitability.  This report finds in part that:

“Despite its success in the subsidized market, the Connector, managed by the Massachusetts Health Insurance Connector Authority, enrolled few insureds in the unsubsidized nongroup and small group markets and was unable to exercise much influence on the merged market.”

https://www.soa.org/.../research-2016-ma-health-insurance-reform.pdf  (Copy & past the link to your browser)

 Apparently a different, more effective tactic is needed to reach the “unsubsidized markets”.  That is consistent with the experience of the failed Obamacare exchanges.  Do privately-run exchanges offer a more effective tactic for the unsubsidized markets?  Perhaps – provided the federales will allow a private-sector solution.    

(2)  National consulting firms such as Mercer, AonHewitt, and Willis Towers Watson are investing in their own private exchanges.

This move appears a good fit with their existing business strategy of expanding admin support to employers – e.g., member service functions, 401(k) administration, annual enrollments, etc.  These firms clearly see a future in private exchanges.

(3) Large insurance companies, e.g., Aetna, United, and Anthem, that initially expressed interest in building their own private exchanges, seem to have become less enthusiastic.   I’m guessing they’ve lost appetite for gearing up to administer multiple other companies’ coverage.  Isn’t it much simpler for the insurer to participate in one or more third-party private exchanges and sell its own individual policies there?  I wonder if they aren’t asking themselves, what’s the point of building a proprietary private exchange?

So questions remain following the Obamacare failures – which, don’t forget, go beyond financial.  Their implementation and operational failures have been painfully documented.  Most states declined to set up their own tax-eating, money-losing, hard-to-run, over-regulated, politicized Obamacare exchanges.  The federales have proved they don’t have the resources to operate exchanges even as they proved ignorant of insurance management and eager to over-regulate.  Can private exchanges ever overcome the Obamacare record, and become attractive for the majority of middle-income Americans? More specifically 

        (a)  Will large employers gravitate toward private exchanges?

        (b)  Will employers that subsidize their employees’ group coverage today, continue to do so in private exchanges?   

            (c)  Will insurers decide to participate in private exchanges?

         (d)  Provided employer subsidies continue, will middle-income employees prefer coverage available thru a private exchange, vs. the choices available to them now?      

         (e)  Will the federales expand Obamacare subsidies to include private exchanges, not just Obamacare exchanges (if any)?

I think the best answer for now is “Reply hazy, ask again later.”

 

More 3000% Rate Decreases

Once more, with gusto:



Just got in another batch of renewals on some of my Grandmothered and Grandfathered plans. Sally, for example, has a $3,000 deductible, HSA-compliant plan with no co-insurance. Her current rate of $384 a month is increasing by 17% to $450. She called to ask what we could do about it, and I told her - unironically - that this was the part of the program where she writes the carrier a Thank You note.

Why is that?

Well, I found two plans that came close:

The first has a $6,550 deductible, then 100%, is also HSA-compliant, and weighs in at a respectable $525 a month. So she can spend an extra $900 a year while enjoying twice as much out-of-pocket.

Her other choice is a plan with her current carrier, with a $4,000 deductible, and a $675 a month price tag.

To put this in perspective:

Under her current plan, she's out $8,400 for the year before the insurance pays dime one (well, except for some preventive care).

Under Option A above, she's out just shy of $13,000 before the plan kicks in (well, she would have "free" birth control convenience items and maternity, which may be of limited value to her 55 year old self).

And under Option B, she'd be paying just over $12,000 for the privilege.

Yay.

If you like your plan, Nebraska style

Cornhusker State insureds (and potential insureds) just lost another opportunity:

"Blue Cross drops out of Nebraska's Obamacare marketplace"

That leaves just two carriers on the state's Exchange, one of which has a substantial Medicaid presence as well. And it leaves some 20,000 erstwhile BX enrollees scrambling for a new carrier in a few weeks.

Curiously, Blue Cross CEO Steve Martin (no, not that Steve Martin) claims that "too often federal officials let people buy insurance just before they are due to receive an expensive health treatment and then drop their coverage immediately afterward."

This particular gaming of the system seems to have become more difficult as HHS, and the carriers themselves, crack down on SEP's. Still, he would know, no? And if true, that's really on the government, not the carriers, who simply follow the rules.

For certain values of "rules."

[Hat Tip: Cynthia Cox]

Back to the Future?

Regular readers will recognize Cornerstone: they've been a great resource for me both professionally and for the blog. Steve Geis, Cornerstone's VP of Employee Benefits, recently penned a really interesting article that was emailed to their agents. It's a great perspective on what he thinks the future holds, and he's graciously granted us permission to excerpt it here:

"From its inception, we wondered if employers would offer group health coverage once the ACA became law ... Would groups even need a broker?

Fast forward to present day 2016. We have a thriving group market with employers offering health benefits to their employees. Though a small percentage of groups disbanded coverage, it wasn’t the high volume expected.

So what happened? I believe there are several reasons employers didn’t end their health plan. Groups want to offer health benefits to stay competitive in the marketplace, attracting and retaining the best talent. They also want to provide benefits because they feel it’s simply the right thing to do.

But what new threats exist on the horizon? The House of Representatives passed H.R. 5447, which is now in the Senate as Bill S.3060, also known as the Small Business Health Care Relief Act ... It states that standalone HRA’s, which are not paired with a health plan and used as a means of tax-advantaged funding, are not permitted for employee reimbursement."

I'm going to stop there, but would be happy to send along a full copy to anyone who's interested; just drop us a line.

What I'd like to do, though, is focus on that last paragraph. For a long time, Health Reimbursement Arrangements (HRAs) were a valuable tool for employers to help their employees fund health care and insurance. Sadly, The ObamaTax largely outlawed the practice (unless coupled with a compliant group health insurance plan), which is ironic, but it it what it is. What SB 3060 seems to do is to put HRAs back in our metaphorical toolbox, allowing employers to once again offer their employees the choice of either staying on the group plan (one-size-fits-a-few) or opting for an individual plan that may more closely reflect their needs and budget.

Steve also points out that this could create a problem regarding Special Open Enrollment:  unilaterally dropping off the group plan isn't a Special Open Enrollment trigger. Something to consider.

Now, how likely is it that this will pass? Who knows, but the folks I spoke (including our friends at FlexBank) with are skeptical. Still, hope springs eternal, and perhaps this is just the first volley.