Health Business Blog's David Williams hosts this week's interesting, healthful collection of health care punditry and wonkery. Good info, helpful summaries, what's not to love?
Thursday, 5 November 2015
Wednesday, 4 November 2015
The Problem with Obamacare
Amidst all the saber rattling about whether Obamacare is good or not, this simple example illustrates why
health insurance carriers are losing money and leaving the market.
Ocare was supposed to eliminate medical bankruptcy. At least that was the campaign promised.
Then there is this.
OK, in case you missed it, the healthy people are not buying coverage, but the sick ones are.
Houston, we have a problem.
Obamacare insurance carriers are burning money faster than DC can print it and hand it out to the "less fortunate"
#ObamacareFail
Lisa Patton turns 26 years old this month. That means, she will lose coverage under her parents health insurance. But she doesn't want to pay up to $250 a month for a plan under Obamacare.
"Being a graduate student and living in D.C., and kind of barely making ends meet now, it's just hard to factor in the cost of an extra bill," she said. - CBS NewsI got news for you dear. The $700 penalty is nothing compared to having to come up with money to pay off medical bills of several thousand dollars.
Ocare was supposed to eliminate medical bankruptcy. At least that was the campaign promised.
Then there is this.
"I've had Obamacare insurance now for two years and it did go up the second year," said Dawn Erin an actress and singer living in Texas.
Erin said Obamacare made her Hepatitis C medication affordable.
"Total cost of that medication was approximately $70,000. And my co-pay was 5 bucks," she said.
OK, in case you missed it, the healthy people are not buying coverage, but the sick ones are.
Houston, we have a problem.
Obamacare insurance carriers are burning money faster than DC can print it and hand it out to the "less fortunate"
#ObamacareFail
Piling on: A physician's perspective
Right about the time that Kelley posted on the very real challenges that she's seeing at her practice (as well as her colleagues'), I received this in email from a physician:
"I've had issues with the way insurance is moving with caring for patients. Many patients on high deductible plans want me to go over ALL their medical problems/concerns during their preventative visit then code it as preventative since that has to be covered 100%. That just seems like fraud to me, and when I tell them I can go over their back pain and their side effects from their blood pressure medications but it's not preventative so there may be some charges, multiple patients have gotten very angry at me."
I of course pointed out that it is, in fact, fraud, and that it was wise to have declined the request. The rest seems to confirm what we learned from Kelley, and is likely to get worse.
I actually received a follow-up email this morning (in direct response to Kelley's post):
"I was seeing a patient for blood pressure and adjusting their medication because her blood pressure was still high. She hadn't paid her bills yet, but I was still happy to see her for a follow up (we can set up a payment plan if a patient has difficulty paying their bills). She asked my secretary if there would be an additional charge for that visit that day. When my secretary said that, yes, a charge for that day's visit would be sent to the insurance company, the patient had a break down. She started screaming that it's a follow up and should be covered under the same charge as her first visit. She then said that if she dies it's our fault, refused to be seen if the visit wasn't guaranteed to be free, and stormed out of the office."
That'll teach that awful doc.
Right?
It seems to me that there are actually a number of different issues at play here:
First, it'd be interesting to know how many of these folks are newly-insured, and thus unfamiliar with how office visit co-pays have worked for a very long time. After all, the idea that co-pays apply to each discrete visit isn't new. And even on plans without co-pays (such as HSAs) it's always been the case that each visit generates its own charge.
I'd also be interested to see if this trend holds, and whether it drives more physicians to DPC or Concierge models.
Oh brave new world, indeed.
"I've had issues with the way insurance is moving with caring for patients. Many patients on high deductible plans want me to go over ALL their medical problems/concerns during their preventative visit then code it as preventative since that has to be covered 100%. That just seems like fraud to me, and when I tell them I can go over their back pain and their side effects from their blood pressure medications but it's not preventative so there may be some charges, multiple patients have gotten very angry at me."
I of course pointed out that it is, in fact, fraud, and that it was wise to have declined the request. The rest seems to confirm what we learned from Kelley, and is likely to get worse.
I actually received a follow-up email this morning (in direct response to Kelley's post):
"I was seeing a patient for blood pressure and adjusting their medication because her blood pressure was still high. She hadn't paid her bills yet, but I was still happy to see her for a follow up (we can set up a payment plan if a patient has difficulty paying their bills). She asked my secretary if there would be an additional charge for that visit that day. When my secretary said that, yes, a charge for that day's visit would be sent to the insurance company, the patient had a break down. She started screaming that it's a follow up and should be covered under the same charge as her first visit. She then said that if she dies it's our fault, refused to be seen if the visit wasn't guaranteed to be free, and stormed out of the office."
That'll teach that awful doc.
Right?
It seems to me that there are actually a number of different issues at play here:
First, it'd be interesting to know how many of these folks are newly-insured, and thus unfamiliar with how office visit co-pays have worked for a very long time. After all, the idea that co-pays apply to each discrete visit isn't new. And even on plans without co-pays (such as HSAs) it's always been the case that each visit generates its own charge.
I'd also be interested to see if this trend holds, and whether it drives more physicians to DPC or Concierge models.
Oh brave new world, indeed.
Tuesday, 3 November 2015
Obamacare's Three R's - And Then Some
So what are the Three R's of Obamacare? It's Reinsurance, Risk Adjustment, and Risk Corridors. All are mechanisms designed to help insurers stay in business when the pool of sick people cannonballed into the Exchanges last year. The confusion begins because most folks don't understand that each works through a different channel with different funding mechanisms and payouts.
Here's a little explainer that I hope will provide insight into the trouble insurers are getting into because they have relied on these three mechanisms.
We will start with the two "temporary" programs, Transitional Reinsurance and the Risk Corridor.
TRANSITIONAL REINSURANCE
Transitional Reinsurance began in 2014 and is scheduled to end in 2016. This mechanism is designed to pay plans that insure higher cost individuals. All health insurance issuers and all self-funded plans pay into this fund (yes, everyone who has insurance pays this). However, only individual market plans with high cost enrollees receive funds.
In 2014 the reinsurance fund received $63 per covered person per year. If you have a family of five the insurer pays $315 to the reinsurance fund. For 2015 the fund is receiving $44 per covered person. The last year of the program is scheduled to be $27 but has not yet been finalized.
Originally the Transitional Reinsurance fund was scheduled to pay high claims in the individual market. The insurer would receive 80% reimbursement of a claim from $60,000 up to $250,000. For example, if a covered member with insurer A had a $160,000 claim the insurer would pay $60,000 plus 20% of the remaining $100,000 for a total of $80,000. The Reinsurance fund would pay the other $80,000.
Because the enrollment in individual plans was so low and everyone still paid in, the the geniuses in DC decided to change how they were paying out the Reinsurance. They lowered the threshold down to $45,000 and increased the coinsurance to 100%. So in the scenario above the actual payment would have been $45,000 for the insurer and $115,000 paid by the Reinsurance fund.
RISK CORRIDOR
The Risk Corridor program is one that is currently getting all of the attention. This three year program was set to transfer money from profitable insurers to insurers who suffered losses in Exchanges. It only applies to insurers who offer Qualified Health Plans (QHP). In this case any insurer who participated and had less than 97% of target amounts of claims pays into the funds and any insurer who had more than 103% of target amounts receives the funds. It was supposed to work in conjunction with the Minimum Loss Ratio provisions of Obamacare. In this program payments do not have to be net to zero. In other words, if there is money left over the government keeps it. Or, if there isn't enough money then insurers could get hammered with losses.
The goal of this program was to push insurers not to set their rates too high by promising to pay those who undercut their premiums with money from insurers who set their rates too high. In many cases insurers, especially the new non-profit insurance Cooperatives, assumed they would be receiving money from this mechanism.
Last year 86% of all insurers either recorded a receivable (30%) or no receivable or payable (56%) meaning that they all were either counting on funds or didn't plan to have to pay any funds. Initially HHS estimated that $2.9 billion dollars would be available for those insurers who were losing money. What is actually paying out is around $362 million. Yes, that is 13% of the original target.
The outcomes have been brutal, especially for those insurers who were just starting up or are regional or local carriers that weren't flush with capital to begin with. As of this post it appears that 11 of the 23 Obamacare financed Insurance Cooperatives have announced they are shuttering their plans. In almost every case the main culprit is the extreme reduction of Risk Corridor funds they were counting on to keep them afloat.
RISK ADJUSTMENT
The Risk Adjustment program is the only permanent program under Obamacare's reinsurance vehicles. This is designed to transfer funds from insurers who have lower insured risk profiles to insurers with higher risk profiles. The program has a net to zero payment system meaning that there should always be funding for it. This could mean more payments for profitable insurers and more receivables for insurers who suffer heavy losses.
This program includes all insurance plans in the individual and small group markets that are not grandfathered regardless of whether or not they are in the Exchange. It has been hard to determine how much this fee will cost insurers as the volatility in the marketplace is pretty intense. Until there is credible claims data, insurers will have to hope their actuaries have excellent crystal balls.
CONCLUSION OR JUST THE BEGINNING?
While these three items appear to be getting all the attention it's important to note this is just the beginning, and in most cases, a very small sliver of the new costs insurers are facing due to Obamacare.
If you really want to see how your costs are impacted we must also include the PCORI fee that indexes annually but sunsets in 2019, the annual Health Insurance Industry Fee that according to most insurance carriers will account for 3%-4% of your premiums annually, the Health Insurance Marketplace fee that HHS has set at 3.5% in states using the Federal Exchange, and finally, the soon-to-come Cadillac Tax on premiums in excess of a set amount. The Cadillac tax will be a 40% excise tax on insurance companies who have plans with premiums that are considered "too high".
THE REAL CONCLUSION
We all have been hoodwinked and Democrats keep telling us that Obamacare is working. They are right: it's working for the government.
A government which now has assembled a 3.5% fee on your premiums for Exchange operations, a 4% tax on insurance premiums that insurers must pay, a $2.08 PCORI fee that each insured person must pay, a $63 (now $44) per insured person fee for reinsurance, an unknown amount that profitable insurers must pay to insurers who incur losses through risk adjustment, and lastly an overwhelmingly underfunded risk corridor program that is causing insurers to consider closing their doors because they can't financially stay in business.
So much for the promise of $2500 savings in our insurance premiums. With the government piling on layer after layer there's no way your insurance premiums won't keep going up.
Wolverine CO-OP flailing
Looks like we can add Consumers Mutual Insurance of Michigan to the growing list of CO-OPs headed down the tubes:
"While Eich said he could not disclose the options, he said one is “winding down” the company, which has 28,000 members, including about 6,000 on the exchange"
This, after blowing through an initial $72 million of tax-payer dollars just to get started, and another $150,000 from various Michigan counties. The good news is that all of these funds will be paid back...wait, what?
"It is not clear who would be responsible for paying back any of the loans, after all the claims are paid by Consumers."
Oh.
[Hat Tip: Co-blogger Bob V]
"While Eich said he could not disclose the options, he said one is “winding down” the company, which has 28,000 members, including about 6,000 on the exchange"
This, after blowing through an initial $72 million of tax-payer dollars just to get started, and another $150,000 from various Michigan counties. The good news is that all of these funds will be paid back...wait, what?
"It is not clear who would be responsible for paying back any of the loans, after all the claims are paid by Consumers."
Oh.
[Hat Tip: Co-blogger Bob V]
Monday, 2 November 2015
Musings on ACA Open Enrollment Day
“I’ve paid you enough”
This is an actual sentence uttered to me by a patient who was resisting coming back in for an appointment to see the physician regarding treatment of a severe infection. The physician wanted to monitor her during her run of medications, but due to her high co-pay and astronomical deductible, she “felt” that she had already paid enough.
” I need to cancel this test for now. My insurance will not pay because it will go straight to the deductible which is $5500 and my family has not even met it yet. I CAN NOT AFFORD A LARGE MEDICAL BILL. I will just have to wait until next year, maybe August 2016 before i can have the test.”
This is a message another patient left on the portal, canceling a rather important test due to her high deductible.
Then from my medical practice list serve was this quote regarding patients paying their co-payment and out of pocket expenses:
“We are looking to strengthen the policy about collection of deductibles but sometimes the amounts are just too darn high that folks don't come in because they are not able to pay for them.
Classic example: The patient's deductible is literally $5.000.00 who is not coming in the door with this kind of money even with enough balance on their credit limit to pay for it even if having one. Meaning that if we verify coverage before they come in it's still not helping.”
Now, correct me if I am wrong, but wasn’t the ACA supposed to LOWER medical costs to encourage patients to INCREASE their visits to the physicians? What I and my colleagues across the country are experiencing is that patients are not coming in for their visits, citing costs as the most common reason for cancelling their appointment or putting off treatment.
I noted several years ago that more patients had plans with high deductibles and that our bad debt by patients was rising, I instituted a payment plan to help my patients pay their large medical bills. I became more proactive in contacting the patients regarding high out-of-pocket expenses and then setting them up on a payment plan, anywhere from two to six monthly payments, to handle their expenses. For some patients, even payment plans do not work because they do not have any extra money. It is becoming more difficult to collect monies owed by patients and I do not see it becoming any easier in the near future.
So, as Americans go to the Marketplace today and in the next few weeks and are enticed to buy a bronze plan because the premiums are lower, please remember to look at the deductible and calculate if you can “afford” to have such “inexpensive” health insurance.
Medicaid vs Insurance
So, over on Twitter (among other places), folks have been crowing that Medicaid expansion has contributed mightily in bringing down the number of uninsured. I politely pointed out that Medicaid ≠ insurance, which then set off a storm of protests:
"CHIP has the word insurance in the title."
Abraham Lincoln had an answer for that one.
I also pointed out that (obviously) insurance = risk + premium, while Medicaid = income redistribution.
They didn't like that either:
Sigh.
It's really a very simple thing, so I challenged my detractors to "name an insurance company that sells Medicaid policies."
FoIB Allison Bell gamely offered "Anthem, UnitedHealth, Aetna, Centene" as examples. This refers to carriers which have entered into agreements with states seeking to "privatize" Medicaid.
Unfortunately, this answer also doesn't fly, for the simple reason that these carriers don't "sell" Medicaid policies, they administer Medicaid for participating states. They are paid by taxpayers as a whole, not individual policyholders.
Nice try, though!
The salient point here is that Medicaid beneficiaries [ed: hey - that's another clue!], unlike those who purchase insurance, have no skin in the game. Now, one could make the case that neither do folks who "buy" fully subsidized ObamaPlans, but that's another post.
Unfortunately, this answer also doesn't fly, for the simple reason that these carriers don't "sell" Medicaid policies, they administer Medicaid for participating states. They are paid by taxpayers as a whole, not individual policyholders.
Nice try, though!
The salient point here is that Medicaid beneficiaries [ed: hey - that's another clue!], unlike those who purchase insurance, have no skin in the game. Now, one could make the case that neither do folks who "buy" fully subsidized ObamaPlans, but that's another post.
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