Tag: "health insurance"

Oregon Health Plans Ordered to Raise Rates!

All that complaining about double-digit Obamacare rate hikes for 2016? Well, at least one Insurance Commissioner thinks they’re not high enough. Plans in Oregon have lost so much money on Obamacare that the state’s Insurance Commissioner fears for their solvency unless they hike premiums more than they have asked for:

The Oregon Insurance Division says it is pushing health insurers to charge higher individual rates in 2016 because they are reporting huge underwriting losses for 2014.

The insurers collected just $703 million in premiums for 2014 and spent $830 million on 2014 claims, officials say.

(Alison Bell, “5 Oregon insurers under orders to raise their rates,” LifeHealthPro, June 19, 2015)

Strict Antitrust Review for Health Insurers, Hospitals

As Obamacare accelerates the transformation of the U.S. health sector into a complex of regulated utilities, providers are concentrating into oligopolies. The Wall Street Journal reports that the U.S. Department of Justice will use “strict review” when considering mergers of health insurers, while the Federal Trade Commission will also review hospital mergers closely:

The prospect of consolidation poses high stakes for the Obama administration, whose signature domestic policy legacy is the 2010 health-care law. Some aspects of the health law were designed to increase insurance-industry competition, including marketplaces for health coverage and the creation of new nonprofit cooperative health plans around the country.

But the law also includes provisions that may have helped inspire consolidation, at least indirectly.

(B. Kendall & A. Wilde Mathews, “DOJ Girds for Strict Review of Any Health-Insurers Mergers,” Wall Street Journal, June 28, 2015)

Obamacare and Employer-Based Benefits

(A version of this Health Alert was published by American Thinker.)

Now that we have over one full year of ObamaCare under our belts, a mystery is unfolding: What is happening to employer-based benefits? Data from different sources convey widely different messages, but until we solve this mystery, it is difficult to predict the political future of President Obama’s troubled health reform law.

The puzzle is obscured by the media’s focus on topline figures, which indicate significant increases in the number of insured people, including millions added to Medicaid, the joint state-federal program for low-income households. In truth, it is inappropriate to categorize Medicaid dependents as “insured” — for the same reason it is inappropriate to consider jobless people who receive cash welfare benefits as “employed.” The fiscal difference between people who depend on government benefits and those who do not is one of kind, not of degree.

But how should we classify consumers covered through the ObamaCare exchanges? Are they government dependents or not? The issue is tricky.

Health Insurers Consolidate on Business; Fragment on Policy

A few days ago, this blog discussed the wave of consolidation among health insurers. The two main deals discussed in the business press are Anthem’s bid for CIGNA and the likely takeover of Humana by a bigger insurer which wants to beef up its Medicare Advantage and/or Medicaid managed care business.

While this consolidation plays out, the policy world was surprised to see the largest insurer, UnitedHealth Group (UNH), pull out of AHIP, the health plans’ trade association. Both parties soft-pedalled the exit of the association’s largest member.

I do not plan to speculate recklessly on the reasons for the exit. UNH noted that its “diversified portfolio” is not best served by membership in AHIP. UNH has two very distinct businesses, UnitedHealth Group and Optum. The former is a health insurer and the latter a vendor of big-data analytics. UNH consistently stresses that they are different businesses, to the degree that it sometimes verges on denying it is a health insurer at all.

Employer Benefit Plans’ Subsidy of Obamacare Increased

The administration has just increased the amount it will play plans under one of the “3 R’s” of Obamacare. Reinsurance, risk corridors, and risk adjustment are three mechanisms the administration uses to protect insurers from losing money in Obamacare.

Last year, I focused my efforts on limiting risk corridors, which exposed taxpayers to a potentially unlimited liability. This had a largely successful legislative result in Congress. Now, reinsurance has become a problem. As Ed Haislmaier of The Heritage Foundation has explained, reinsurance taxes all plans, including those covering the employer-based group market, to reduce risk in Obamacare.

Well, the administration collected more money than it expected from this tax:

Shrink Obamacare’s Costs by Removing Rule Driving up Young People’s Premiums

(A version of this Health Alert was published by Forbes.)

The Supreme Court will soon decide King v. Burwell, the case that will determine whether tax credits being paid in at least 34 states without their own exchanges are legal. If the Supreme Court makes the administration follow the letter of the law, billions of dollars of federal tax credits will continue to flow to 16 states, but not the rest. This will result in a political crisis giving Congress and President Obama the opportunity to fix the worst aspects of Obamacare.

Here is one suggestion: Remove Obamacare’s rule forbidding accurate premiums by age. The difference in rates between young adults and older ones can be no greater than three to one. The actuarial consensus is that average health spending for 63-year-olds is five times that of 22-year-olds. However, instead of reducing premiums for older applicants, the rule dramatically increases premiums for younger ones.

Responding to King v. Burwell: Give Benefits to People, Not Health Insurers

(A version of this Health Alert was published at Forbes.)

The Supreme Court is expected announce its decision on King v. Burwell soon. The case hinges on whether Obamacare tax credits can be paid in states that did not establish their own exchanges. If the plaintiffs win, health insurers will lose tax credits that allow them to offer artificially low premiums to Obamacare beneficiaries. About seven million people will suddenly be asked to pay full premiums for their plans. To be blunt, they will freak out, and many will drop out of Obamacare, putting the president’s signature achievement in jeopardy.

This gives Congress the opportunity to present the president with reforms that, while falling well short of the promise to “repeal and replace Obamacare,” can address some of its worst shortcomings. Here is one suggestion: Every single penny of Obamacare’s federal spending on health benefits goes to insurers. Not one penny goes to beneficiaries themselves. How about giving that money to beneficiaries directly, and allowing them to decide how much to spend on medical care directly, instead of premiums to health insurers?

Employer-Based Benefits Steady In Obamacare’s Second Year

Urban Institute researchers have published new research supporting the thesis that Obamacare has not harmed either offers or uptake of employer-based health benefits:

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  • Employer-sponsored insurance coverage, offer, and take-up rates remained unchanged among nonelderly workers from June 2013 through March 2015.
  • Coverage, offer, and take-up rates were stable for workers in both small and large firms as well as for workers with higher and lower incomes.
  • Employer-sponsored insurance coverage also remained unchanged among all nonelderly adults from June 2013 through March 2015.

This corroborates the case I recently made, although there is contrary evidence.

Milliman: Health Costs Rising Again

The latest annual edition of the Milliman Medical Index (which estimates “the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization”) suggests that last year’s moderate rate of growth was idiosyncratically low.

Last year’s 5.4% growth rate was the lowest in the history of the Index. This year, the growth rate has climbed to 6.3 percent – exactly the same as 2013.

Milliman also concludes that the “Cadillac tax” is fast approaching, especially for workers at smaller firms.

Republican Study Committee Reintroduces Health Reform Bill

The RSC has re-introduced its American Health Care Reform Act, previously introduced in September 2013.

Most importantly, it eliminates the current exclusion from taxable income of employer-based benefits as well as Obamacare’s tax credits paid through exchanges. Instead, it offers a standard deduction of $7,500 for individuals or $20,500 for a family that buys qualifying health insurance.