Health Care Reform News for Larger Companies

The law's 2014 effect on larger companies is likely to be more limited. Many of the big changes coming next year won't touch them as directly as individual consumers and small businesses, though some will have to grapple with the cost of covering more workers or paying a penalty.

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Manhattan Institute fellow Paul Howard on the rhetoric versus reality ObamaCare’s promise to bend the cost curve.

..The possibility of higher premiums has become the latest focal point of the political tussle over the health law, which marks its third anniversary Saturday. Republican lawmakers have held hearings on the issue, and six GOP members of the House Energy and Commerce committee wrote last week to more than a dozen insurers asking them to turn over internal analyses on the law's impact on premiums and costs.

The insurance industry has also been talking publicly about big potential premium increases in lobbying for tweaks to the law.

The individual market includes about 15 million people, and around 18% of the roughly 149 million with employer coverage were at small companies, according to 2011 figures from the Kaiser Family Foundation. The individual market is expected to grow to around 35 million people by 2016 as a result of the law.

In a private presentation to brokers late last month, UnitedHealth Group Inc., UNH -1.18%the nation's largest carrier, said premiums for some consumers buying their own plans could go up as much as 116%, and small-business rates as much as 25% to 50%. The company said the estimates were driven in part by growing medical costs not directly tied to the law. It also cited the law's requirements that health status not affect rates and that plans include certain minimum benefits and limits to out-of-pocket charges, among other things.

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Good News About UnitedHealth Group

Fortune rates UnitedHealth Group as
'World's Most Admired Company'
  in Insurance and Managed Care    


For the third year in a row, UnitedHealth Group has ranked No. 1 among industry peers by Fortune magazine in its category of “most admired companies.” The company was also rated No.1 in innovation for the fourth year in a row. In addition, UnitedHealth Group ranked highest for quality of products and services, quality of management, and long-term investment and global competitiveness, among others.



The Affordable Care Act and the Unexpected Higher Costs

MedPage Today by David Pittman -

March 8, 2013

Higher-than-expected costs for the Affordable Care Act's (ACA) preexisting condition risk pool are a sign that the law will cost more than first expected, according to some lawmakers and analysts.

The Centers for Medicare and Medicaid Services (CMS) last month told states that it was suspending enrollment in the Pre-Existing Condition Insurance Plan (PCIP), a program created under the ACA to help provide health coverage to those with preexisting medical conditions before other aspects of the law take effect in 2014.

CMS said it would no longer enroll individuals because of financial constraints in the $5 billion program, even though enrollment has been lower than expected.

"This is another reminder that the costs of [the ACA] are significantly understated," seven leading Republican lawmakers, including House Speaker John Boehner (Ohio), wrote to President Obama this week. "Your administration's action will leave thousands of Americans with preexisting conditions without access to healthcare."

They suggested rerouting money from other ACA programs -- including the Prevention and Public Health Fund, aid for establishing state-based health insurance exchanges, and a program for comparative effectiveness planning -- to allow the plan to continue.

"We believe allowing those with preexisting conditions access to health insurance is another worthy reason to reprogram these funds," wrote the Republicans, which included Rep. Michael Burgess, MD (R-Texas). "In fact, there are numerous programs within ACA that receive greater levels of funding than PCIP. With your support, we could help these Americans get the care they need."

A Department of Health and Human Services (HHS) official said HHS has taken steps to continue coverage for the more than 100,000 people already in the PCIP program.

"We have made a number changes to the program to manage the program's growth and claims costs and to ensure that open enrollment could continue for as long as possible," HHS said in an emailed statement to MedPage Today. "We have balanced this approach with maintaining an appropriate level of resources to cover current enrollees and have consistently monitored the impact of these changes on program enrollment and expenditures."

When asked to elaborate on what those changes were, HHS did not respond.

Other health policy analysts had predicted the $5 billion would be far too little, outsiders said.

"What is surprising is that so few people have signed up and drained the program. The expectation was that lots more would sign up than have, but the money is gone anyway," Robert Laszewski, president of Health Policy and Strategy Associates in Alexandria, Va., told MedPage Today in an email. "The concern I have is does this mean the sick people that will come to the exchanges are going to be way more expensive than we thought they would be?"

The preexisting condition plan's woes could spell more trouble for the broader population if more healthy young people -- those still paying premiums but not using as many services -- don't sign up for health coverage when open enrollment starts later this fall, Laszewski said. Health insurance companies would need those premiums to help offset the most expensive individuals it would have to cover.

In addition to the controversy over the preexisting condition plan, there is widespread debate occurring over whether the ACA would increase costs for consumers in the form of dramatically higher premiums.

Premiums in the individual markets will increase in most states anywhere from 30% to 40% or possibly even double starting next year, according to a report released this week by the Republican staffs of three Congressional committees. It says the higher costs will mostly impact young adults and working families who won't reap the benefits of the ACA's premium subsidies to help them purchase coverage in state exchanges.

The congressional report compiled data from more than 30 studies and analyses -- mostly those written by conservative think tanks or commissioned by insurance companies -- to make its estimates.

"At a time of negative economic growth and sluggish job creation, middle class families are struggling to make ends meet," the report stated. "Higher healthcare premiums are the last thing single young adults and working families can afford."

The drivers of the cost increases are the ACA's mandate that individuals purchase health insurance, the law's essential health benefits which requires plans to cover a minimal coverage in 10 broad areas, and the bevy of new taxes and fees on insurance plans, drugs, and medical devices, according to the report.

The more liberal Urban Institute released its analysis of the health reform law's noted 3:1 ratings band. The band means that insurance companies can't charge seniors more than three times what they will charge someone in their 20s for the same coverage in the non-group market.

The report admits premiums will be higher for young adults and families, but asserts that the out-of-pocket costs are overstated. The authors point out that enrollees may be able to take advantage of expanded Medicaid coverage (if they qualify) or the ACA's premium subsidies -- a point directly disputed by this week's congressional Republican report.

"While the ACA will increase costs for young adults and families purchasing such coverage, the out-of-pocket implications of this provision have frequently been over-stated," the Urban Institute report stated.

Opponents of the ACA say the penalty for opting out of the law's mandated coverage is far less than that of paying health insurance premiums, and that many will do without coverage and take the financial hit from the penalty instead.

Great News About Kaiser!

Kaiser Tops California Insurers For Customer Satisfaction.

The Los Angeles Times (3/11, Terhune) reports, "For the sixth consecutive year, Kaiser Permanente ranked highest in customer satisfaction for health insurance among California policyholders, according to ratings firm J.D. Power and Associates." Anthem Blue Cross and Health Net "scored the lowest on customer satisfaction among seven California health plans." The national average for customer satisfaction was 701 out of 1,000. Health Net scored 661 points while Kaiser had 760 points. Furthermore, the survey "found considerable interest among consumers nationwide in new state-run insurance exchanges slated to open in October." 73% of those who currently buy their own policies said they were likely to use exchange next year when shopping for coverage. Families making up to $93,000 a year will qualify for subsidies through the exchange.

Healthcare Costs During Retirement

Study: Americans Underestimate Healthcare Costs During Retirement.


The New York Daily News  (3/8, Knowles) reports that new study published in the American Journal of Law & Medicine concluded that a "startling number of Americans who have either recently retired or are about to do so are badly miscalculating how much money they will need to save to cover health care costs." The study noted that "even though 60% of current medical costs for retirees are covered by Medicare, the 40% that individuals must pay out of pocket is far above the estimates that most people are anticipating, especially over time." Allison Hoffman, an assistant professor at the UCLA School of Law and the co-author of the study, said that it is "very concerning" that young people "especially don't seem to be anticipating what they'll spend in the future." Make sure to have the appropriate coverage.


Call us for to find out how can you secure your retirement :



Younger Policyholders Under Obamacare

From:  Real Health Care Reform

The official name of the health care reform legislation that President Obama signed into law in 2010 is the Patient Protection and Affordable Care Act.  This has lead many to believe that health insurance premiums will go down.  Unfortunately this is not the case, particularly for younger policyholders.

This is going to be a surprise for many people.  In 2009, supporters of the proposed law were bringing out economists that were actually claiming that the law would cause health insurance costs to go down.  President Obama was claiming that the law would “bring down premiums by $2,500 for the typical family”.

Young Must Subsidize the Old

Most experts are now expecting premiums to increase 30 – 50 percent, on average.   But for the younger policyholders (who are more likely to be healthy and less likely to need their coverage), premiums will be going up a lot more.

This is because the law states that an insurance company can charge an older policyholder no more than three times what they charge a younger policyholder.  Since the typical 64-year old has way more than three times as much health care spending than the typical 18 -ear old, it is the 18-year old is going to be the one paying for it.

Some early projections are showing that starting in 2014, a new plan may cost as much as 300% what it does now, for a young male in his mid-twenties.  The big questions is – will young people be willing to pay this much?

Potential Death Spiral

When the government manipulates pricing so that something costs more or less than it is really worth, there are always unseen consequences.  One possibility is that young people will choose to go without coverage.  In 2014, they will only face a $95 penalty for not having coverage, so this may be an option that many take.

If that happens, then premiums will have to go up more on everyone else, since we don’t have the young healthy policyholders to foot the bill.  If that were to happen, the entire system could collapse.

Congressmen Jim Matheson (D-UT) and Phil Gingrey (R-GA) have introduced H.R.455, which would change the age rating band from 3:1 to 5:1, or allow states to determine their own age band.  (In reality, there should be no age band, and young people should not have to subsidize older policyholders).

What Should You Do

You will not be required to purchase a new plan until the anniversary date in 2014 of your existing plan.  So you may want to hold on to your current plan, or get a new plan prior to the beginning of the year.

If you have coverage that initially went into force prior to March 23, 2010, it is considered to be a “grandfathered” plan, and you will not be required to purchase a new plan.

If you do have to get a new plan, and are under age 30, you can choose a catastrophic plan that will cost less (we don’t know how much less, yet).


Do You Smoke? Important News Regarding Insurance Rates!

Health Care Reform and Smokers Insurance Rates
From: Real Health Care Reform

One of the promises of the health care reform laws that take effect starting in 2014 is that people can no longer be declined or charged more because of pre-existing health conditions.  Even if you are morbidly obese, have diabetes, or are an alcoholic – you cannot be denied or charged more.  The one group that can be charged a premium though, is smokers.

The law allows health insurers to charge smokers up to 50 percent more for their health insurance.   This is on top of rate increases that are already expected to exceed 30 to 50 percent or more.

People who are covered under group plans can avoid the penalty by joining a smoking cessation program.  But once again purchasers of individual health insurance are discriminated against in this area, and do not have this option.

Tax Credits and the Smoking Penalty

Tax credits will be available to help people that are making less than 400 percent of the federal poverty guidelines pay for their health insurance.  But these tax credits can not be used to pay the smokers penalty.

It is expected that older smokers will be charged the highest smoking penalty.  Because premiums will be going up substantially due to the mandates of the health care reform law, this could mean a smoking penalty of $5000 a year or more.  Many smokers will probably find health insurance completely unaffordable starting in 2014.

Use Your HSA to pay for Smoking Cessation Classes

Of course, quitting smoking is a great idea. If you have a Health Savings Account, you can withdraw money from that account tax-free to pay for smoking cessation counseling or classes.  However, you cannot use the money to pay for over-the-counter medications like nicotine gum, without a prescription from your doctor.

Higher Deductible HSA Plans Will Be Available

From: Real Health Care Reform

There has been concern and confusion over whether HSA plans will still be available in 2014, and at what deductible level.

The answer is Yes, HSA plans will remain available.  Deductibles on individual plans should be similar to what they are now, though in some states maximum deductibles may be as low as $4500 or so for an individual (compared to $6250 now).

Deductibles on Group Plans

For group plans, the legislation sets the maximum deductibles at $2000 for individuals, and $4000 for families.  For this reason alone, many small groups may instead let their employees get coverage in the individual market.

However, this is in conflict with another part of the law, which states that people can choose a Bronze, Silver, Gold, or Platinum plan.  The bronze plans have a 60 percent actuarial value, meaning they will pay 60 percent of a typical policyholders medical bills during an average year.  This actuarial value cannot be reached with a deductible as low as $2000.

“(3) A health plan’s annual deductible may exceed the annual deductible limit if that plan may not reasonably reach the actuarial value of a given level of coverage as defined in § 156.140 of this subpart without exceeding the annual deductible limit.”

So this is good news for all – high deductible HSA plans look like they’re here to stay.

A Tip From Naama......

Reducing unnecessary emergency room (ER) visits is a great place to start!

When you  use the ER for non-emergencies, you may end up paying a lot more out of your pockets than you would if you went somewhere else. And overuse of the ER can affect everyone’s health care premiums.          

The following are some of the alternative options:

  • Retail health clinic — A clinic staffed by health care experts who give basic health care services to “walk-in” patients. Usually found in a major pharmacy or retail store.
  • Walk-in doctor’s office — A doctor’s office where you don’t already have to be a patient to get care. And you don’t have to have an appointment. Can handle routine care and common family illnesses.
  • Urgent care center — A group of doctors who treat conditions that should be looked at right away but aren’t as bad as emergencies. Can often do X-rays, lab tests and stitches.

Ask Us For More Information About....

Whether it's the densely populated Southern California coast or the mountains of rural Northern California, geography is going to play a larger role in the cost of health insurance under the federal health care overhaul set to take effect next year.

Health insurers are facing new rules and restrictions on how they set prices as part of the Affordable Care Act's aim to expand coverage to millions of Americans. No longer can insurers deny coverage because of a preexisting condition or place lifetime limits on medical care. While a person's age will remain a factor in setting rates, older customers cannot be charged more than three times what younger customers pay.

California also has rejected an option under the federal law that allows health insurance companies to charge smokers up to 50 percent more for their premiums.

All this leaves geography as one of the few ways insurers can adjust premiums. The premiums will not be set for most consumers under the law until summer, although estimates are available at the website of California's health benefits exchange

Call Us For More Information at:  818-508-7177

Obamacare and Doctor Choices

Why You Will See Fewer Doctor Choices Under Obamacare
From: Real Health Care Reform

As I’ve discussed before, theAffordable Care Act is going to (perhaps ironically) cause health insurance to become less affordable for most people.  One way insurance companies may try to counteract these rising costs is by narrowing the number of available doctors and hospitals that policyholders can use.

Return of the HMO

In the 1980s, Health Maintenance Organizations, or HMOs, were promoted as a way to keep rising health costs under control.  The way they attempted to do this was to require policyholders to go to a primary care physician first, before they could see any specialist.  Only when the primary care physician approved a visit to a specific specialist, would the care be covered under the policy.

The primary way the HMO tried to reduce expenses was by limiting coverage, and allowing policyholders to only see a small set of physicians that had contracted with the HMO.  As you can imagine, most of these plans became highly unpopular as people had to jump through hoops to get their health care.

With the full implementation of the health care reform law in 2014, these narrow networks are coming back.

Why Networks Will Be Smaller

Starting in 2014, everyone who does not have a grandfathered health insurance plan that went into effect before Obama signed the act into law March 2010 will have to switch to a new government-approved plan.  And, it looks like most of the PPO networks will be much smaller than those currently available to most policyholders.

As you can imagine, the reason smaller networks save insurance companies money is because the companies contract with the least expensive providers.  So, as a policyholder, if you have a major or complicated health situation, you may end up not being able to see the physicians that may offer you the best chance of a successful outcome.

Another reason carriers will be offering less attractive networks is because they will want to discourage the most unhealthy applicants for applying for coverage.  Starting in 2014, anyone can purchase health insurance, regardless of pre-existing conditions.  An insurance company trying to avoid business is one of the perverse consequences of this misguided law.

What This Means to Yo

If you are one of the millions of people that will be forced to choose a new plan in 2014, in addition to your new premium, you should make sure your physician is in the network, and then look at the size of the network itself.  The plans with the most narrow networks are likely to be least expensive, but balance the money saved against the increased risk you’ll face in a smaller network.

The reason I carry health insurance is to protect against the major unexpected health situations that can wipe out my savings.  I’m not too worried about paying for checkups.  If something major does happen, I want to be able to go to the best doctors out there.

This may not be possible even in the best networks, which is why I’m happy to have a sizable savings built up in my Health Savings Account.   But, I’m still going to be looking very closely at any changes in the PPO network I have access to as I move into 2014.

For all clients of HSA for America, we’ll be sharing detailed information about network availability as that information becomes available.