Under Obama Plan, Wealthy Would Pay More For Medicare.

McClatchy   (4/26, Gibson) reports that the President's budget would expand the number of Americans who are required to pay more for Medicare due to their higher income levels. Healthcare analysts say the plan, if approved, "would gradually squeeze more and more middle-class households as their incomes rise." McClatchy notes that the President has proposed other charges, including $100 co-pays for every 60 days of service for patients receiving home healthcare and an additional $25-per-year deductible for Part B for new Medicare enrollees. The proposals are part of an effort by Obama and Congress to "rein in spending on 'entitlement' programs.

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Good News for HSA Policy Holders!

Group Plans Will Offer HSAs With Higher Deductibles

From: Real Health Care Reform

The Affordable Care Act (ACA) states that health insurance deductibles will be lowered to $2,000 per person, or $4,000 per family, in group plans. But a deductible that low would change the structure of an HSA plan you already have, making it less favorable as an investment tool and a security against health emergencies.

Employers Will Run from ACA Regulations

Actually, employers are likely to switch to HSA-qualified plans with even higher deductibles… That’s because there’s a loophole in the law.

The fact is the ACA cannot lower the deductible on Health Savings Accounts that far and still allow a plan to meet other conditions of the law. It’s true that the law states in one area that a group plan should have a maximum deductible of only $2,000 for an individual. But the law also says the following in another section:

“Section 1302(c)(2)(C) of the Affordable Care Act directs that the limit on deductibles described in section 1302(c)(2)(A) for a health plan offered in the small group market be applied so as to not affect the actuarial value of any health plan…we propose that a plan may exceed the annual deductible limit if it cannot reasonably reach a given level of coverage (metal tier) without doing so.” (The emphasis is mine.)

In other words, the law waffles, stating that the deductible can be raised above $2,000 if the actuarial value of the plan won’t meet the minimums for a bronze plan, for example.

The Simple Meaning of “Actuarial Value”

You’re going to hear the term “actuarial value” more in the news in coming months, so here’s what it really means. It means that the government figures the amount of money that a typical policyholder will receive in medical services in an average year—that’s the actuarial amount.

Then, the metal tiers in the ACA pay different percentages toward meeting that value; for example, the bronze tier pays for 60 percent  of the actuarial value—60 percent of the yearly amount that the average policyholder spends. And the policyholder pays the other 40 percent.

Group Plans Will Offer HSAs With Higher Deductibles

But the math simply doesn’t work to create the actuarial value if the deductible is set at the low $2,000 level on an individual bronze plan. So people will be allowed to purchase a policy with a higher deductible, such as an HSA plan.

This is good news, because HSA plans typically cost at least 30 percent less in premiums than traditional copay plans. And having been in the HSA business since they first became available in 2004, we know that people with Health Savings Accounts spend their money carefully, because it is their own money.  With an HSA you also have a tax-advantaged savings account to pay for services when you need them most—and to grow into an additional retirement account if you stay healthy.

What’s interesting to me is that our high-deductible HSA plans will meet the guidelines of the ACA better than the typical plans that the law proposes. The wisdom of saving money for yourself and building it tax-free is clearer and clearer, and real reform is still possible if more people do this.

Rate Increases and Health Care Reform

A Lot of Talk About Rate Increases
From: Real Health Care Reform

I’ve been talking for a long time about how rates are going to be going up as the “Affordable” Care Act gets further implemented. And gradually, the truth is coming into clearer focus for more and more people.

Last week the Society of Actuaries released a study that predicts a 32% increase in claims cost under the new healthcare reform law. They believe that the large number of sicker people entering the market will drive this increase in claims.

Unfortunately for everyone in the individual market, this is going to further drive up premiums. To the shock of many, Kathleen Sebelius actually admitted the same. She told reporters “there may be a higher cost associated with getting into that market”.

She also noted that people will receive government subsidies to help pay for their health insurance: “But we feel pretty strongly that with subsidies available to a lot of that population that they are really going to see much better benefit for the money that they’re spending.”

She didn’t seem to even consider the millions of hard-working middle-class citizens who are buying their own health insurance, without having someone else pay for it. These are of course the same citizens who are paying the taxes that fund these subsidies.

And lastly, she admitted that young people will pay even higher premiums in order to subsidize older policyholders; and that men would pay more in order to subsidize women’s premiums.

The big question related to this issue, is whether the young, the males, the healthy – are going to be willing and able to pay these higher premiums. Those who don’t will have to pay a tax-fine in 2014 ($95, or 1% of income).

If large numbers opt out, those still in are paying even more.

The administration is hoping that competition among insurance companies will bring down premiums. But all signs are that competition will actually decrease, as it becomes more difficult for smaller insurance companies to manage the more highly regulated business climate.

The very best option at this point remains going with a high deductible HSA plan, fully funding it, and paying for it (if you qualify) through your Health Reimbursement Arrangement. If you currently have a grandfathered plan, consider keeping it.

More Effects of "The Affordable Care Act" on Employers

HHS Delays Small Business Exchanges For A Year.

The New York Times (4/2, A12, Pear, Subscription Publication) reports that the Obama Administration, "unable to meet tight deadlines in the new health care law," is "delaying parts of a program intended to provide affordable health insurance to small businesses and their employees - a major selling point for the health care legislation." The Affordable Care Act "calls for a new insurance marketplace specifically for small businesses, starting next year." However, "in most states, employers will not be able to get what Congress intended: the option to provide workers with a choice of health plans," settling instead for a single plan.

Some Great News Under the New Healthcare Reform!

Premium Hikes In California May Be Offset By ACA Subsidies.

The Wall Street Journal (3/29, Mathews, Subscription Publication) reports that a new report written by the actuarial consulting firm Milliman for Covered California, the agency charged with creating California's new health-insurance marketplace, says premiums for Californians who purchase their own insurance could be significantly higher next year due to the Affordable Care Act, but government subsidies will compensate for the difference for lower-income people. According to the report, currently insured people who do not qualify for subsidies could see a premium increase of 30% on average.

Here is Someone That Really Understands the Outcome and it's Effects!

Wyden Warns Families Will Be Hurt By "Glitch" In ACA.

The Hill (3/28, Cox) "Floor Action" blog reports that Senator Ron Wyden (D-OR) warned Tuesday "that millions of workers' dependents would still be left without options for affordable family health insurance under the Affordable Care Act." He said, "Without action, millions of hard working Americans are going to be squeezed by the family glitch. Many people will be left with a false choice of taking family coverage through work they can't afford or struggling to find a better plan in the exchange without a subsidy." He explained that the "family glitch" exists "because workers will be ineligible for federal tax credits to help them buy into the health insurance exchanges starting in 2014, unless the cost of their individual employer-based health coverage premium exceeds 9.5 percent of a worker's household income."

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.

Related Video

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.

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.


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