The data portend a vigorous debate over the “risk corridors” program, which is one of three mechanisms in the law designed to give insurers incentives to continue to participate in its exchanges even if they are at risk of significant financial losses. Some Republicans, particularly Senator Marco Rubio of Florida, Senator Jeff Sessions of Alabama and Representative Fred Upton of Michigan, have decried this program as an insurer bailout.The premise behind the risk corridors is that the financial winners in the Obamacare exchanges would compensate the financial losers such that the flow of money would make the system self-sustaining. What may not have been anticipated was what would occur if the financial losers the sicker enrollees far outpaced the financial winners the healthier ones.
The success of Obamacare always rested on getting enough “young invincibles” to enroll on the exchanges. Since the scheme bars health plans from pricing their insurance policies to the actual risk, Washington needs a lopsided share of cheaper young people paying too much in order to subsidize older people who are paying too little.
As many people expected, not enough young folks are signing up to pay the high premiums. But the structural problem could run much deeper. The young people who are enrolling also tend to have more serious and costly medical problems.
In short, Obamacare’s young enrollees aren’t invincible enough to underwrite the law’s delicate scheme.
Thursday, July 17, 2014 | 10:00 a.m. – 11:30 a.m.
AEI, Twelfth Floor 1150 Seventeenth Street, NW Washington, DC 20036
About This Event: Recent scandals at medical centers for veterans have trained a spotlight on longstanding inefficiencies within the US Department of Veterans Affairs VA. In the case of the VA’s disability system, a nearly century-old approach to wounded veterans still prevails. The widespread consensus is that the problem goes much deeper than falsified waiting lists and delayed access to care, and necessitates a global overhaul. What would a renewed vision of veteran care look like, and how should we clarify the objectives of the VA’s disability system? In the interim, what short-term reforms are practical?
Please join AEI as former VA Assistant Deputy Secretary for Policy Michael H. McLendon presents a blueprint for reform, followed by a discussion with experts in health care, disability, and public administration.
eHealth Offers Fixed-Benefit Indemnity Plans for Consumers Who Want Additional Coverage Options Outside of Open EnrollmentJune 25, 2014
An eHealth analysis of fixed-benefit indemnity plans offered through the company’s website reports an average monthly premium of $112.98 for fixed-benefit indemnity plans. The coverage offered through fixed-benefit indemnity health insurance products may be summarized by the following:Fixed-benefit indemnity medical plans provide set benefits, typically in the form of a cash payout, to help cover services such as doctor’s visits, urgent care, x-rays, prescription drugs in some cases, and certain hospital expenses.
These products typically do not require policy holders to meet an annual deductible, but will not provide coverage beyond specified caps. Lifetime coverage limits may also apply.Benefits are typically paid directly to the policy holder who may then apply that amount to cover a portion of his or her medical expenses.
According to guidelines issued by the Centers for Medicare and Medicaid Services, fixed-benefit indemnity plans will no longer be available for purchase as a stand-alone product beginning in 2015, which means that consumers will only be able to purchase fixed-benefit indemnity plans to supplement their major medical coverage.
There have been a number of recent news reports about additional insurers applying to offer coverage in Obamacare exchanges in 2015. Although it is too early to draw any conclusions—since this is just the beginning of a three-month process—it is still likely that at least a few more insurers will participate in the exchanges next year.That said, here are 10 things to look for as the process plays out:
The story of 2015 is a nuanced one. At first glance, the health sector appears to be reverting to historical patterns of bouncing back as the nation recovers from the economic doldrums. Whether spending more freely because of the improved economy or shopping with insurance provided through the Affordable Care Act, consumers triggered the first bump in growth in the first quarter of 2014. We expect that to continue through next year.But other factors are helping to moderate that growth. The $2.8 trillion industry is becoming more efficient. Doctors and hospitals are adopting standardized processes that offer the prospect of better value for our health dollar. “At-risk” payment models that hold healthcare providers financially accountable for patient outcomes are beginning to take effect. One tangible sign of shrinkage: growth in healthcare system administrative and clinical employment has declined since 2011.And major purchasers—namely the federal government and large employers—are tamping down the spending growth rate analyzed in this report, in part by demanding greater value and in part by shifting financial responsibility to consumers.
It is not possible to displace Obamacare without advancing a credible alternative. Simply repealing the law implies a reversion to the pre-Obamacare status quo, which had its own set of problems. To repair American health care, critics of the president’s plan must offer reforms that address the defects of the old system while jettisoning Obamacare’s fatal combination of soaring costs and shrinking access to doctors and leading hospitals. Doing so would win broad public support. In polling done for the 2017 Project, a group advancing a conservative reform agenda, the public favored replacing Obamacare 44 percent with an alternative, as opposed to keeping and fixing it 32 percent.