Are Health Exchanges 'Built to Fail?'

The Affordable Care Act, often called simply 'Obamacare', has called for the establishment of health care exchanges in order to allow for the education and enrollment in new health care programs.  The idea is that individuals can go to these exchanges to compare plans purchase plans on a wider scale and less expensive basis than currently offered.  While this idea sounds great in principle, is it doomed to fail from the start?  This is exactly the question posed by Director of the Manhattan Institute's Center for Medical Progress Paul Howard and University of Minnesota Insurance Industry Chair of Health Finance Stephen T. Parent e in a guest opinion piece for Kaiser Health News.

While the merits of the exchanges have been debated often before, Howard and Parent e bring up a unique criticism of the logistics of such a massive collaboration:

"Logistically, these requirements present a massive challenge. For the first time, secure data feeds from the Departments of Homeland Security (establishing legal immigrant or US citizen status), Justice (for felon history), Treasury (for tax return information to impute income) and the Social Security Administration (establishing that the recipient is not deceased) would have to be combined. These data feeds would then have to be securely coordinated by the Department of Health and Human Services. There is no history of these agencies ever bringing their data together at this scale. It would qualify as the largest IT integration project in U.S. history. "

 Given this perspective, it is difficult to imagine that implementing health care exchanges will actually cause administration costs to decrease, as widely proclaimed by proponents of an exchange system.  Add this new found skepticism of the exchanges administration abilities to the existing merit-based criticism of exchanges in the first place and it is clear Howard and Parent e have posed an apt question: Are these health exchanges built to fail?

Many Employers Set to Drop Health Coverage in 2014, Obama displeased

A McKinsey & Co. study says 30% of all employers will “definitely” or “probably” stop offering their workers health insurance once the bulk of the healthcare reform law’s mandates take effect in 2014.

That figure jumps to 50% among employers with a “high awareness” of the reform law’s requirements, the study found.

While the Obama administration was quick to question the study, the numbers do not surprise me.  As more and more small business owners, mid market accounts and large group administrators examine the repercussions of Health Care Reform, they are finding that there is an economic disincentive to provide coverage as outlined in the law.  Many owners find that paying the penalty and providing alternative compensation to their employees makes more fiscal sense for their business.  This strategy seems sound, as the same study found that 85% of employees would stay at their employer even if they were to drop coverage, and only 60% would expect some kind of additional compensation for their loss of coverage.

 As a small business owner, what will you do in 2014?  What are you doing in the meantime?  As always, you can use the same tools insurance professionals and insiders use to quote your current group.  Alternatively, if you are one of those employers (and specifically, small business owners) who has decided to drop coverage already, you and your employees can go here to find an individual plan.

Not-for-Profit Entity Blue Shield of California Announces Cap on Profit

With health care costs rising for both insurers and consumers alike, it seems like rate "adjustments" are always going upward, and we never actually hear about rate reductions.    Blue Shield of California recently revealed that they will cap their profits.  Specifically, they have made a commitment to keep only 2% of net revenue, dispersing any additional funds back to policyholders and the community. While this is not the long term lowering of rates many would like to see, it is a step in the right direction. In an op-ed piece in the San Francisco Chronicle, Blue Shield of California Chairman and CEO Bruce Bodaken declared:

"If at the end of any year our net income is more than 2 percent because medical costs were lower or investment income was higher than we had projected, we'll return that amount to our members and the community. This is a long-term commitment and, we believe, the first of its kind in the country. We are committed to the 2 percent pledge"

He went on to enumerate exactly how this would be handled for the 2010 business year:

"We will apply this new policy beginning with our income in 2010, the year health reform was enacted. Our net income last year exceeded the 2 percent target by $180 million. As a result, we will give back $180 million this year: $167 million to our policyholders; $10 million to physicians and hospitals that invest in new ways to coordinate care through accountable care organizations; and $3 million to the Blue Shield of California Foundation to support the safety net."

To the surprise of many, especially those who have received rate increases in the last year, Mr. Bodaken admitted that this rebate was not enough to satisfy policyholders or Blue Shield alike, as he called on others in the industry to follow his lead:

"While we are taking this action to help our customers pay for their health care coverage, we know that this is not enough. We have long advocated for health care reform to expand coverage, reduce costs and improve quality. We have developed innovative programs to restrain the rising cost of medical care, but we can't make a major dent in rising health care costs on our own.

That's because making coverage affordable is not something any company can do by itself. We all need to take better care of ourselves. Insurers, hospitals, drug companies, physicians and government must look inward, think creatively and take bold action to reduce costs. That's what we're doing - and we invite others to join us."

It will be interesting to see if others heed Mr. Bodaken's call, or simply dismiss his Op-Ed as unnecessary and redundant.  Blue Shield of California is, after all, a not-for-profit organization.  Should their declaration to limit profits really garner such headlines?

Health Care Reform Watch - PPACA: The Bad Nuts and the Bad Bolts

PPACA: The Bad Nuts and the Bad Bolts

A brief but informative look at the Patient Protection and Affordable Care Act ( PPACA's) impact on employers with small group health plans.  It looks like "if you like your plan, you can keep it" is not the case for these folks, and many others like them.

Health Care Reform coverage changes begin today

As many of you may know, the federal health care reform legislation, known as the Patient Protection and Affordable Care Act (PPACA), was signed into law March 23, 2010, by President Obama.

Some of the PPACA provisions will impact health care benefits this year but many other provisions will not take effect until 2014 and beyond.

The following are some of the PPACA changes that are effective September 23, 2010 for new business plans with October 1, 2010 effective dates and later: 

•    Dependent coverage up to age 26
•    No lifetime benefit limits - based on dollar amounts
•    No cost-sharing obligations for preventive services (in-network)
•    Eliminate pre-existing condition exclusions for dependent children (under 19 years of age)

If you have recently received notice from your existing insurance carrier, pay special attention to the new term and conditions, as well as any potential premium adjustment.

To compare your current plan against other statewide plans, visit Quotebroker for a free health insurance quote and market comparison. 

Insurance Companies close the door to new Children Only plans

Every mother and father want to provide valuable health care for their children, especially if they have a serious pre-existing medical condition.

Health Care Reform was designed to insure that this option would be available, offering no pre-existing exclusion period for people under age 19 — Anyone under 19 with a pre-existing condition cannot be denied coverage for that condition at any time starting with the first plan year beginning on or after Sept. 23, 2010, four years before all carriers must accept everyone, regardless of health status. In addition, insurers are not allowed to impose waiting periods for coverage of pre-existing conditions for people under 19 years old.

Sounds great, however several insurance companies, including Aetna and Cigna have announced that they will not be offering "child(ren)" only policies after September of this year. This must certainly be a shock to the politicians who wrote this bills and raced it through the house and senate. Watch more companies to follow these giants lead and exit the child marketplace, meanwhile every families health insurance premiums will likely increase to spread the risk of this specific market.

To locate the most affordable health insurance plan options online, visit QuoteBroker.com for a free market comparison and analysis.

Health Care Reform Rumors

There is a popular email chain letter being circulated stating that a new tax that is created by Health Care Reform, which requires employers to add the cost of your health insurance benefits to your W-2.

The chain letter is correct that employers will be required to start listing the cost of insurance. The requirement starts for the tax year 2011, so employees will see it on the W-2s they receive in 2012. But that amount will NOT be taxed.

This provision is in the law to assist the IRS in determining who has health insurance and who does not, because when health reform is fully implemented, there will be penalties for people who do not have health insurance and increased taxes starting in 2018 for the so-called "Cadillac" plans -- plans that have a value above $10,200 for individuals and $27,500 for family policies.

Requiring employers to report the value of the health insurance they provide employees is not a bad idea, by the way. Most people have little idea how much their employer contributes, because they pay only a portion of the premium -- usually around 20 to 30%. The W2 will make it clear just what the value of that insurance is to the employee.

To see a summary of these provisions of the new law, go to the Kaiser Family Foundation (no relation to Kaiser health plans) website and look at the section on "new taxes." As mentioned above, employer provided health insurance is NOT taxable and the law does NOT change that provision.

For individual, family or group health insurance quotes online visit Quotebroker. Quotebroker provides free instant health insurance quotes, policy analysis and the ability to purchase insurance online 24/7.

 

Small Business Health Insurance Tax Credit

Health Care Reform provides immediate benefits for Small Business Owners.

If you a small business or tax-exempt organization that pays at least half the cost of single health insurance coverage for your employees, you may qualify for a new tax credit. The new small business health care tax credit is effective now as part of the Affordable Care Act, which became law earlier this year.

Are you eligible?

The credit is targeted to help employers with low and moderate income workers afford to offer employees health insurance coverage. Generally, employers that have fewer than 25 full-time equivalent (FTE) employees and pay wages averaging less than $50,000 per employee per year may qualify for the credit. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, employers that have more than 25 individual workers may also qualify if some of their workers are part-time.

How much is the tax credit?

For each year from 2010 through 2013, the maximum credit is 35 percent of premiums paid by eligible small businesses and 25 percent of premiums paid by eligible tax-exempt organizations. An enhanced version of the credit will be effective beginning in 2014.

When can I claim the credit?

Small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. Tax-exempt employers can expect additional information in the coming months on how to claim the credit. Find out more about the credit and how to claim it at www.IRS.gov

If you are paying too much for your small group health insurance plan, receive a free instant health insurance quote online or call (800) 783-0802

Healthcare Reform offers consumers very little change for several years

The President's signing of sweeping health reform legislation last week includes a $1 trillion commitment of federal funding to bring access to health care coverage to roughly 32 million currently uninsured Americans.

The legislation includes changes that our industry has been proposing for several years, such as guaranteed coverage, discontinued use of ratings based on health status or gender and an individual mandate.

Using a reconciliation process, H.R. 4872 must still be debated and voted on by the Senate. Assuming the Senate passes this bill with no changes, the health reform package will be complete.

A summary of major changes includes; 

• Health plans are required to cover all regardless of their health status (guarantee issue), which means an end to disqualification for pre-existing conditions. (2014)
• Beginning in 2014, individuals will be required to obtain health insurance or pay a penalty for not acquiring coverage. Also, beginning in 2014, large employers will be required to provide insurance to employees or pay a significant penalty.
• States must organize "exchanges" where individuals and small businesses can purchase insurance if their employer does not provide it. Requirements for a minimum set of benefits are outlined in the legislation, including provisions for preventive care and mental health services. Subsidies are provided to help low- and moderate-income individuals, as well as small businesses, buy insurance.
• Medicaid eligibility will expand to a broader range of income levels reaching an additional 16 million individuals across the country. The Senate bill also requires states to establish state enrollment websites to promote seamless enrollment and to coordinate with state insurance exchanges.
• Medicare Advantage plan payments for 2011 are frozen at 2010 levels.
• The federal government will implement a new system for commercial premium rate review immediately.
• New taxes will be levied on investment income, high-cost or "Cadillac" health plans, medical device companies, pharmaceutical companies and health plans, among others.

There are some immediate changes. For instance the reconciliation bill contains provisions for cessation of coverage denials for children with pre-existing conditions and an extension to age 26 for dependent children to be covered on their parents' insurance policies. Most of the more far-reaching provisions of the legislation, such as guarantee issue and the creation of insurances exchanges, will not take effect until 2014.

There will be challenges, as well. The legislation does little to address cost-containment issues - underlying medical costs - and this is critical to managing the overall cost of health care.  Although we won't see many immediate changes, preparing for the changes to come and adjusting to new market rules will require patience by everyone involved. Implementation of the new legislation and transitioning to new rules will be complicated.

Look for more Health Care Reform updates and visit www.quotebroker.com for a comparison of all major insurance company benefit plans and premium rates in your state.