April 1, 2015
Iowa’s co-op may be the first to implode, but it is not the only one facing insolvency. By the end of 2014, CMS had furnished approximately $2.5 billion in loans for co-ops. According to A.M. Best, an insurance rating firm, all but one co-op had reported operating losses in 2014.
If politicians have learned nothing else in the wake of ObamaCare and the government’s ill-conceived foray into the health insurance marketplace, they certainly know now that the health care sector is highly complex, that government is ill equipped to understand it, let alone manage the system. It is time for politicians and bureaucrats to stop interfering with health care.
via Public holds bill for health co-op’s collapse.
March 3, 2015
Even though it’s only the beginning of 2015, insurers are already starting to think about 2016 rate filings. Using 2014-2015 Health Insurance Marketplace data, we looked for correlations between silver plan premiums and variables like the number of carriers and plans in a rating area, available industry metrics, and the structure of provider networks in each rating area. We focused our analysis on the second-lowest silver plan offered in each market and discovered some interesting findings.
via 2015 health insurance marketplace competitiveness study – Milliman Insight.
February 28, 2015
Blue Cross and Blue Shield, the state’s largest health insurer, said Friday that it posted its first financial loss in 15 years as a result of insuring high numbers of older and sicker people under the Patient Protection and Affordable Care Act.
The Chapel Hill organization signed up 257,704 people under the federal health care law, which requires insurers to provide coverage regardless of a customer’s health condition.
New enrollees last year swelled Blue Cross’s covered membership to 3.91 million people, and boosted revenue by 25 percent to an all-time high of $8 billion.
But steep medical claims – for hip and knee replacements, heart procedures, specialty drugs and other costs – drove up medical claims from $5 billion in 2013 to $6.4 billion in 2014. Blue Cross also paid $156 million in ACA-related fees, a new cost for the company.
via Blue Cross and Blue Shield of NC posts first loss in 15 years | The Charlotte Observer The Charlotte Observer.
February 24, 2015
The Cadillac high-cost health plan excise tax, which goes into effect in 2018, is one of the last-to-be-implemented provisions of the Affordable Care Act (ACA). It was one of the most controversial provisions of the ACA, which contributed to its delayed effective date. But 2018 is now getting closer, and the Internal Revenue Services (IRS) is beginning a discussion about implementation of the Cadillac plan tax.
The Cadillac plan provision of the ACA will impose a 40 percent excise tax on the cost of employer-sponsored health plans when that cost exceeds certain thresholds. It is projected to be one of the biggest sources of revenue under the ACA; the Congressional Budget Office (CBO) in its 2015 Budget and Economic Outlook Report estimated that it would account for $149 billion in revenue between 2018 and 2225. Of this, however, only one quarter will come from the tax itself, while three quarters will come from increases in taxes on income as employers shift compensation from health benefits to taxable wages.
via Implementing Health Reform: Beginning The Cadillac Tax Regulatory Conversation And Other ACA News – Health Affairs Blog.
February 24, 2015
An amendment to the 2015 federal budget continuing appropriation raises a question: Will insurers receive their full 2014 risk corridor payments?
What’s the issue?
The risk corridor program created by the Affordable Care Act (ACA) has proven to be one of the most controversial aspects of the health care law. Questions have been raised about the source of payments, whether the Department of Health and Human Services (HHS) has the authority to make payments under the program, and whether the program is required to be budget neutral.
In response to questions from the Government Accountability Office (GAO) on its budget authority for risk corridor payments, HHS cited section 1342 of the ACA, which establishes the risk corridor program and requires HHS to collect payments from and make payments to certain qualified health plans. HHS says that the fees collected and the payments made under the risk corridor program are consistent with the definition of user fees.
The fiscal year 2014 appropriation gives the Centers for Medicare and Medicaid Services (CMS) the authority to collect user fees and keep the fees available for use through the 2019 fiscal year. HHS states that this appropriation along with section 1342 gives CMS the authority to collect and distribute risk corridor payments. In an opinion issued September 2014, the GAO agreed that payments collected under the risk corridor program are “properly characterized as user fees.”
via Health Policy Briefs.
February 23, 2015
But Obamacare asserts tight regulation over the annual premium increases that insurers can take, nationalizing that process. Now premium increases aren’t reported on a state-by-state basis, but closely watched as a national standard.
That turns the industry’s rate cycle into a closely watched political event. It will require a rotating roster of cause célèbre to give reason to premium hikes — politicizing that process. This will put insurers at odds with the products and services they purchase on behalf of their customers. To keep their hands cleaner, individual health plans will wage these national fights through their Washington trade association.
These premium decisions were once local events, swayed by economic factors that were particular to each state. We’re already seeing that these rate cycles will be increasingly noisy, and national, adding to the political scrutiny. Insurers need politically minded arguments that can resonate across different markets – and most of all, resound in Washington. This year, a new cure for hepatitis C became the justification.
via How Obamacare Pits Insurers Against The Medical Industry.
February 17, 2015
CoOportunity’s many customers needed more medical care than expected, according to Nick Gerhart, Iowa’s insurance commissioner, and it had priced its plans too low. After taking control of the co-op in late December, Mr. Gerhart decided last month that it could not be saved and asked a court to liquidate it. The co-op, he said at the time, faced more than $150 million in liabilities. That left its customers scrambling for new coverage, and providers wondering if millions of dollars in outstanding claims would ever get paid.
More broadly, it raised the question of whether one of the Affordable Care Act’s biggest experiments in holding down insurance costs was in trouble beyond Iowa and Nebraska. The co-ops, which the law says must be “consumer governed” by boards elected by their customers, have received nearly $2 billion in federal loans, including $145 million that went to CoOportunity. They were initially supposed to receive $6 billion over time, but Congress later slashed the amount and virtually no funds remain….
A recent analysis by the A. M. Best Company, an insurance rating agency, found that all but one of the co-ops reported financial losses through the third quarter of last year. Some analysts say that it is too early to predict the long-term viability of the co-ops, and that first-year losses were expected. But for now, the losses indicate that many were paying more in insurance claims and other expenses than they were receiving in premiums, a problem that seems to have hurt CoOportunity more than the others.
via Health Care Success for Midwest Co-op Proves Its Undoing – NYTimes.com.