Tuesday, July 22, 2014

Game Changer

U.S. Court of appeals delivers body blow to Obamacare handouts.

In a case with potential to scramble the Affordable Care Act, the U.S. Court of Appeals ruled that federal subsidies for health insurance were not properly designed.
If upheld by the Supreme Court, the ruling could limit subsidies on the federal healthcare.gov exchange currently used by 36 states. (Click link to see ruling)

Monday, July 21, 2014

Stupid Anthem Tricks: One Week Later

For those following along at home, it's now been a week since we reached out to Anthem for the answer to a very simple question:

"Does one receive deductible credit from a "legacy" plan when one transitions to an ACA one or not?"

[ed: I had initially reached out to Anthem last Monday, but gave them a few days to respond before posting that]

I just emailed my contact to see if she'd gotten a definitive answer yet, and she's replied "I have not. Still waiting."

Since this seems to be dragging on, I've suggested to my client that we file a formal complaint with the Ohio Department of Insurance. I'll let you know if she's up for doing so.

Friday, July 18, 2014

Navigator Two-fers

So those unlicensed, unvetted Navigators, which (at last count) cost over $67 million, have racked up some pretty impressive numbers.

For certain values of "impressive:"

"If you do the math, 28,000 individuals assisting 10.6 million people over 210 days breaks down to 1.8 people per day per service representative."

Bob broke these numbers down a little differently, but the point remains the same: a colossal failure. Part of the problem was baked into the cake: because of the complexity of the subsidy calculations and the sheer number of available plans, coupled with folks with no prior insurance experience or knowledge, Navigators were spending upwards of two hours per "prospect." Not exactly cost-efficient.

But then, this is the gummint, not exactly known for it's spendthrift ways.

Cavalcade of Risk #213: Call for submissions

Jason Shafrin hosts next week's Cav. Entries are due by Monday (the 21st).

To submit your risk-related post, just click here to email it.

You'll need to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

Thursday, July 17, 2014

And now for something completely different... [BUMPED and UPDATED]

Tom Ireland published his first paper (which took First Place in a Big 8 competition) while in college, and never looked back. As an Air Force officer, and then in private industry, he developed and honed his unique and successful leadership style, and now you, too, can benefit from his many years of successful experience.

For the next two days (today and tomorrow), you can download - Gratis! [ed: Peruvian for Free] - his newest effort: Information Technology Strategic Leadership. All he asks in return is that you give it a positive comment on Amazon if you like it.

Tom says he's making this generous offer because he "feels strongly about the subject of IT leadership. Frankly, as an outside consultant and as an executive staff member, I have watched too many people promoted to the leadership ranks based on their great technical knowledge rather than their leadership ability. This is never a good decision for the enterprise."

Just click here to download your copy.

Frustrating Carrier Tricks

So apparently, Anthem has hired Nancy Pelosi:

"We cannot tell if the accums have been moved from facets until there is an actual claim on the new ACA policy/system."

[Translation: "she must have new expenses for us to learn whether her previous ones count"]


Allow me to explain:

One of my clients has had an Anthem HSA-compatible health plan for a number of years. Effective July 1, her plan was "mapped" (transitioned) to a new, similarly-configured ACA-compliant plan with a slightly higher deductible.

A few weeks before the "new" plan took effect, she had an injury. The cost of treatment satisfied her deductible, and we wanted to know if these expenses would apply to her new plan, or whether she has had a brand new deductible as of July 1.

Look, this is not complicated: Does one receive deductible credit from a "legacy" plan when one transitions to an ACA one or not?

Since I couldn't get a straight answer from my regular sources, I reached out to the media relations folks (a practice with which I have had previous success) for help. I had already written the bulk of this post, castigating Anthem for its lack of transparency and forthrightness, and included several quotes from it.

I was soon contacted by a very nice young lady who asked for a copy of the proposed post, which I gladly provided. She promised to look into it. This was Monday. It is now Thursday, and the fact that we still have no definitive answer (despite also providing my client's name and policy number) tells me all that I need to know.

The rocket surgeons at Anthem will not give us a straight answer to a very simple question. It seems to me that there can be only two reasons for this:

One, they truly don't know, in which case they are so incompetent as to have no business issuing "insurance" contracts that they don't even understand themselves, or they are deliberately obfuscating (for what purpose I have no idea).

Right now I'm leaning towards the former. In which case, one would do well to avoid having anything to do with Anthem's "insurance" policies.

Health Wonk Review: It's a Dry Heat edition

Jennifer Salopek hosts this week's terrific round-up of wonky posts, including David Williams' cool v-logs and Julie Ferguson's update on a lab tragedy that cost a young woman her life.

Wednesday, July 16, 2014

80% Closing Ratio

According to the folks at Kaiser Health News, "navigators and assisters" helped 10.6 million people navigate the Obamacare nightmare. 

During the Affordable Care Act’s first open enrollment period, about 10.6 million people received personal help from navigators and other enrollment assisters, according to an online survey of the programs released Tuesday by the Kaiser Family Foundation. (KHN is an editorially independent program of the foundation.)
Kaiser Health News

And 8 million bought coverage.

Damn good closing ratio.
Almost 90 percent of assister programs surveyed reported that most or nearly all of the people they helped were uninsured. More than 40 percent said that most and or nearly all of the people they helped did not have Internet access.
They can't use their Obamaphones?
“How can you explain coverage options to someone who doesn’t know what a deductible is?” asks Pollitz. “It’s just a much longer conversation,” which might help explain why most of the programs reported that assistance required one to two hours per client. “
I wonder how many assisters knew what a deductible is.

How many checked provider networks and drug formularies before suggesting a plan?

Stupid Governor Tricks

One of the problems with the ObamaTax (and they are legion) is that so many states have opted in to the Medicaid expansion scam scheme. Among those, to my regret, is my own home state:

"Enrollment in Medicaid under Ohio Governor John Kasich’s Obamacare expansion has rocketed to 285,553 in just six months"

But that's just the tip of the iceberg:

"Gov. Kasich, a Republican, projected that 366,000 Ohioans would enroll in Medicaid under Obamacare by July 2015."

Why is this such a problem?


"Nearly all of those covered by Kasich’s Obamacare expansion are able-bodied childless adults."

It's bad enough that so many folks qualify for subsidies (a euphemism for income redistribution); at least some of those folks are paying something in the form of premiums. But Medicaid is essentially a free ride, and the fact that so many folks are opting in means gargantuan tax increases on the rest of us once Uncle Sugar pulls the plug in a few short years.

Now, another way to look at this - and this isn't exactly great news, either - is that it means that a lot of Buckeyes who could work just aren't able to make ends meet because they can't find jobs in this listless economy. Of course, these are not mutually exclusive phenomena.

Regardless, this expansion is not sustainable in the long run, and one wonders what will happen when the Federal funds run out, and taxpayers can't handle the burden.

Tuesday, July 15, 2014

Sticky Economics

Years ago, Bob wrote a fascinating post on price"elasticity:"

"The economics of goods and services can be reduced to simple demand and supply. Health care is no different. It follows economic theory just like every other consumer good.At either extreme you have inelastic price curves and elastic curves. Most consumer items track a bell curve but some things are totally elastic or totally inelastic."

In this case, "elastic" means that the price of something will almost directly influence the demand for it. Take, for example, sugar. As Bob explained:

"Sugar has price elasticity. As the price of sugar rises, demand decreases since there are substitutes for sugar. If sugar suddenly rose to $10 per pound sales would drop to almost zero."

As long as there's an acceptable substitute for a particular good or service, the price will reflect the demand.

But healthcare's different: short of just living (or dying) with the pain, one will seek help:

"Consumers want to be healthy and the way most of us deal with it is through medical services."

And so we come to the challenge of how to pay for that care, which we call health insurance. When someone else is footing most (if not all) of the bill, then demand for health care is going to remain high, even as the number of providers of it remain stable (or subside).

And this is the fallacy of the ObamaTax. When folks who were previously uninsured needed care, they sought it only for the most serious of conditons (or through the most expensive provider: the ER). But with so many newly-minted insureds, it's like opening the door to the newest all-you-can-eat buffet:

"Researchers in Michigan compared the prevalence of surgery in Massachusetts, New Jersey and New York both before and after Massachusetts went to universal insurance in 2007. They found that expanding coverage was associated with a more than 9 percent increase in discretionary operations and a 4.5 percent increase in nondiscretionary ones. They estimated, based on their results, that the A.C.A. could lead to more than 465,000 additional discretionary surgical procedures within a few years."

This makes sense, of course, when one stops and considers Bob's point about elasticity. And it also poses a parallel problem, which we addressed last week:

"Sick enrollees may be more likely to stick with their QHPs, even if prices rise, because they are in the middle of courses of treatment and need to keep their doctors and hospitals"

Now, we fisked this point on its merits, but the larger issue is that, once these people have insurance, and especially subsidized policies, it doesn't really matter to the system whether they're with (for example) Anthem or Aetna or UHC or, well, you get the picture. The demand for services is going to continue, unabated, regardless of which carrier is actually paying the bills at the moment.

So how does this "bend the price curve" down?

You tell me.

Monday, July 14, 2014

The Continuing Rise of Medicare Advantage

Last week, the economist Austin Frakt said in the NY Times that “Today, 30 percent of Medicare beneficiaries are enrolled in a Medicare Advantage plan, more than at any time in history. In some states, like Hawaii and Minnesota, about half of Medicare beneficiaries are in such plans. This is despite the fact that government payments to plans were cut by the Affordable Care Act. They’re down eight percentage points from their peak in 2009, as measured relative to the cost of traditional Medicare coverage.”

None of this is news.  Back in January the Aetna CEO said the same thing and we commented on it:

CMS pays private insurers to take over the risk for each senior who enrolls for Medicare Advantage.  At one time, the average CMS payment was 114% of the cost for traditional Medicare enrollees. These higher payments were partly because of risk-adjusters in the CMS payment formula – and partly because Medicare Advantage provides better coverage than traditional Medicare.  However – and this is important information – Bertolini said the average government payment to Medicare Advantage insurers is now down to 106%, and is “headed to zero.”  

In other words, private Medicare Advantage insurers believe they have figured out how to provide better benefits and better service than traditional Medicare, for the SAME cost. That's big.

It's big because it would bring good news all around: CMS will shed even more traditional Medicare risk – and cost – thus reducing its financial strain; private insurers will pick up even more Medicare Advantage enrollment on a profitable basis even when paid the same as the cost of traditional Medicare; the taxpayers will benefit if there is reduced need for higher taxes to support traditional Medicare; and seniors who prefer Medicare Advantage over traditional Medicare will still have that highly popular option available to them.
Frakt continues, “One answer is that baby boomers, who are just entering Medicare-eligibility age, are more accustomed to the types of insurance Medicare Advantage offers, such as H.M.O.s
Bertolini also said that back in January.   Today's employees are increasingly willing to sign up for Medicare Advantage when they reach age 65, because they have had years in which to become familiar with managed care.  I think that means enrollment growth in Medicare Advantage is likely to accelerate over the next few years; an accelerating trend would of course be compounded as more “boomers” retire.
Frakt continues “Another answer is that prior generations of retirees may have been more likely to have had coverage from former employers that wrap around traditional Medicare, filling in its gaps. This coverage has become less common as employer-sponsored retirement benefits have eroded generally.”

Frakt is correct about the withering of employer-based retiree coverage but I disagree that is a reason more of us are specifically choosing Medicare Advantage. 

I'm enrolled in a Medicare Advantage policy.  I did not enroll because my former employer ended retiree coverage; I enrolled in it because Medicare Advantage is a better deal for me then traditional Medicare.  Even today, without employer-sponsored coverage, retirees can purchase government-approved Medicare Supplement policies that fill in the traditional Medicare "gaps."  Yet retirees increasingly prefer Medicare Advantage over traditional Medicare with Supplements.  Frakt does not explain this preference. 

I think the answer is: because Medicare Advantage offers much better coverage; is a simpler arrangement; is easier to use; is thus a better value; and thus a smarter buy.

Besides, Frakt’s use of the term “gaps” glosses over the size and seriousness of the very real inadequacies in original Medicare.  Those inadequacies have been called "gaps" for a long time; Frakt is not the first to use the term, nor will he be the last.  But calling these inadequacies "gaps" is akin to calling the Obamacare Exchange systems debacle "glitches." The term makes Medicare's inadequacies sound small, even trivial. Truth is, the inadequacies are serious, not small.

Calling them "gaps" amounts to deception by vocabulary.  

So it seems to me if the decline of employer-sponsored supplemental plans is any factor at all in the growth of Medicare Advantage, it's only because such decline has for the first time exposed the serious inadequacies in original Medicare to a significant number of retirees.   Those inadequacies are the issue.  And we retirees are noticing.

FWIW. there’s an additional factor:  more and more people – not just retirees - are also noticing the federales have done little or nothing to improve the traditional Medicare product.  Medicare has not chosen to respond to its Medicare Advantage competition by improving its own product. Instead, Medicare chose to respond to its competition by using its power to kill its competitor, rather than compete with it.  That illustrates pretty well how governments tend to "compete" and we all need to keep this in mind when the "public option" idea again surfaces.

HSA's - Good news edition

As regular readers know, we're big fans of Health Savings Accounts, which have found new life under the ObamaTax. And, as FoIB Holly R tips us, they seem to be doing quite well:

" ... overall enrollment in health savings accounts linked to high-deductible health plans increased almost 12% to nearly 17.4 million this year"

Remarkably, HSA enrollments in large employer plans are up by more than a third over last year. On the other hand, small group and individual enrollments remained flat, but that's not necessarily bad news: for one thing, not losing ground is a net positive for this market segment. And for another, we don't really know, since there's so much confusion in the individual market as to whether or not folks have any insurance in-force.

Anecdotally, I know that I've seen an increased interest in these plans, and my HSA clients who've had to transition to ObamaTax-complaint plans have all requested to stay under the HSA umbrella.

Time will tell, of course.