Insurers “Had a Seat at the Table” when Reformers Hammered Out the ACA, but Things Didn’t Work Out Quite As They Expected . . .

What This Means for Health Insurance Stocks–and Your Premiums

When Congress passed the Affordable Care Act (ACA) in 2010, liberal critics feared that the Obama administration had “cut a deal” with for-profit insurers.  Single-payer advocates were particularly incensed when reformers invited the insurers’ lobbyists to the table to help hammer out the details of the legislation.  Some charged that, in return for the industry’s support, the administration agreed to a mandate that would force 30 million uninsured to buy private-sector insurance (or pay a penalty,) thus guaranteeing carriers millions of new customers, and billions in new revenues.

“It pays to be one of the few sellers of a product the government is going to force everyone to buy and provides subsidies to help them do it,” one Obamacare opponent sniped. 

Why Health Industry Insiders Were Offered Seats at the Table

At the time, I didn’t believe that the administration was selling out to the health care industry. Reform’s architects offered insurers, drug makers and device-makers seats at the negotiating table, in part because because they hoped to persuade them to help fund reform – and they succeeded.

Ultimately, the industry agreed to shell out over $100 billion in new fees and taxes to help fund the legislation. Those contributions are critical to financing subsidies for low-income and middle-income Americans.

The Obama administration also did not want to watch re-runs of the “Harry & Louise” television ads that helped torpedo “HillaryCare.” Here too, they prevailed.  In a new series of 2009 ads, the make-believe TV couple were all smiles: “A little more cooperation, a little less politics, and we can get the job done this time,” Louise declares.

Still, some feared that the administration was giving away the store. “No wonder the cost of reform keeps going up and up and up,” said  Bill Moyers.  “Could it be” he asked, “that Harry and Louise are happier because, this time, they’re in on the deal?” 

              But Didn’t the  Administration Capitulate On the “Public Option”?

Skeptics on the Left also believed that  reformers agreed to quash the “public option”—a government insurance plan that would compete with private sector carriers.
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Navigators: The Folks Who Will Help You Surf the New Insurance Exchanges

Over at Healthinsurance.org, I’ve addressed some “frequently asked questions” about the “navigators” who will help individuals and small business find the coverage they want in the new Exchanges. 

– Who Will Become Navigators?

–  Can Insurance Agents and Brokers Apply to Be Navigators? (Wouldn’t that create a conflict of interest?)

–  Just How Will Navigators Help People Sort Out Their Options in the Exchanges?

–  How Much Training Will They Receive?

–Finally, many people worry that the “navigators” just won’t be able to handle the heavy traffic. Giving the American public the information it will need about Obamacare is an enormous task. Will these navigators be up to it?

The answer to that last question is that the navigators will have help.  Patient advocacy groups, the states, and county health agencies will pitch in.  The federal government  also is launching a marketing program, “Enroll America” that will urge mothers to nag their uninsured 20-something and 30-something sons. (Seriously– and I expect that in many cases, this will be effective.)

Meanwhile insurers will be eager to draw young, healthy customers into the Exchanges. This means that they will invest in marketing campaigns designed to let 20-somethings and 30-somethings know that the vast majority will be eligible for generous government subsidies.

Just one example: Blue Cross and Blue Shield of Illinois already has launched a “Be Covered Illinois” campaign. The campaign is being funded by the insurer, and carried out by various community groups:  

Keep in mind that if insurers mislead customers about their offerings, those customers will have an opportunity to pick a different plan a year later. And under the ACA, they will have “navigators” to help them make a better choice.

Insurers know this. They  also are well aware  that under the new ACA rules that regulate them, a health insurance company will have to draw—and keep—a large share of the market’s customers in order to survive financially. For that reason, I suspect that savvy insurers will make a major effort to provide information about specific plans that will attract customers who will want to stick with those plans.

For my answers to the first four questions above, go to Health Insurance.org, click on the question and the answer will pop up.

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Problems with Health Insurance? Under the Affordable Care Act You Will No Longer Be Alone

If you sent in your health insurance payment on time, and paid it the way you always have (as a direct withdrawal from you checking count), but made a mistake when you put the checking account number on your payment,  would you expect that your insurer would drop you?

What if your insurer sent you an email a few days after you sent in your payment saying “Your payment has been received? Wouldn’t you assume that you were still insured?

Mike Holden did. He was wrong.

Yesterday, he sent an email explaining his story.  

 “On March 16, I paid my family’s monthly health insurance bill to United Healthcare (UHC) the same way I have for almost a year now. But I was using a new bank account that we set up after a recent move. Unfortunately, I entered the account number incorrectly. It turns out I left off three digits that are part of the account number but listed separately on the checks.”

Holden had no idea that he had made a mistake. On March 20, he received an email from UHC saying “Your payment has been received.”

Yet in April, when he went online to pay his family’s April bill, he was told his coverage had been terminated. He then talked to a customer service representative at UHC and received a letter explaining that he had until March 31 to correct his mistake.

Unfortunately, the letter, which was postmarked March 27, went to his old address. .

He appealed to UHC, explaining the problem and asking that his insurance be reinstated,

He then received a letter telling him that his appeal had been denied:  “United Healthcare Benefit Services follows the guidelines for payments and grace periods defined by the Department of Labor. Your account has been reviewed and the termination remains, as payment was not received within the guidelines provided.”

                          How the Affordable Care Act Brings Us Together

Beginning in 2014, people like Mike Holden will no longer be alone, trying to stand up to insurance companies. Individuals and families who buy their own insurance will be able to purchase coverage in “Exchanges”—marketplaces where insures will be regulated and individuals and families who purchase their own insurance will become part of a large group. There, they will have far more clout than they do now.
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Who is Douglas Holtz-Eakin and why is he saying such terrible things about health reform?

Today, the House Energy and Commerce Committee’s Subcommittee on Health will hold a hearing entitled: Unaffordable: Impact of Obamacare on Americans’ Health Insurance.  (Always nice to know that our elected representatives are keeping an open mind.)

Prominent on the list of witnesses: “Douglas Holtz-Eakin.” Even before reading his testimony, I knew what Holtz-Eakin would say: young, health Americans should brace for “sticker shock.”  Conservatives like Holtz-Eakin tend to stay on script. However stale the rhetoric, they firmly believe that if you repeat a sound-bite often enough, people will believe it.                                     

                                        Who is Douglas Holtz-Eakin?

If you recognize the name, it’s probably because Holtz-Eakin has become a familiar figure in the mainstream media, quoted in the New York Times, writing Op-eds for Reuters and Politico.com, and appearing, not only on Fox Business News, but on CNN and the PBS’ Newshour.

Alternatively, “Holtz-Eakin” may ring a bell because he served as a member of George W. Bush’s Council of Economic Advisers (CEA), and as Director of Bush’s Congressional Budget Office (CBO.)

In a remarkably candid 2011 interview, Holtz Eakin recalled his tour in the Bush administration:

“Going into the summer of 2001, things were getting worse. . . When we first went in and talked to the President, Glenn [Hubbard] and Larry Lindsey said, ‘Mr. President . . . We’re probably not going to run a surplus on budget.  We’re going to run a deficit.”

Bush’s reply: “We’re not going to run a deficit. If you come in here with a deficit, you’re both fired. Go fix it.’”

We ended up running a budget surplus of one billion dollars,” Holtz-Eakin confided, “driven by gimmicks of remarkable proportions.”
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Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

Health reform’s critics are sounding the alarm: in 2014, they say, health insurance premiums will climb, both for small businesses and for individuals who purchase their own coverage. “Hold onto your hat,” writes  Bob Laszewski, editor of Health Care Policy and Market Place Review. “There Will Be Sticker Shock!” 

Laszweski’s piece has been cross-posted on popular blogs, and his forecasts have been popping up in mainstream newspapers, including  USA Today Such wide circulation makes Laszewski’s warnings worthy of attention, and compels me to ask an important, if impertinent, question: Is what he says true?

Cherry-picking a CBO report

The Congressional Budget Office expects  that the ACA will have a “negligible” effect on the premiums that large employers pay for insurance, and most experts agree. But in the individual market, Laszewski claims that CBO projections show “10% to 13% premium increases.”

Here is what the CBO actually said:

About 57 percent of people buying [their own] insurance would receive subsidies  via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium.

“Thus, the amount that subsidized enrollees would pay would be roughly 56 percent to 59 percent lower, on average, than the premiums charged under current law.”

Wait a minute: “56 to 59 percent lower?” Where does Laszweski get “10 percent to 13 percent higher?

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Health Wonk Review-The Holiday Edition

On this last holiday week-end, I hope many of you will have the time to read  the  newest edition of Health Wonk Review, a round-up of some of the best health care posts of the past two weeks.

This time Lynch Ryan hosts HWR on  Worker’s Comp Insider. . The posts raise provocative  questions:

Did the LA Times Sensationalize Blue Cross of California’s rate increases?

Why doesn’t President Obama require that CMS negotiate for drug discounts –a move that would take us $200 billion closer to a cliff-avoiding deal?

[My guess is that this will happen sometime this year. Back in April of 2011 Naomi published a HealthBeat post suggesting that Obama had put the idea of letting Medicare negotiate prices back on the table].

How do commercial insurers evaluate physician quality?

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Can U.S. Businesses Afford Obamacare?

No doubt you have heard that the Olive Garden, Denny’s and Papa John’s Pizza all are slapping an “Obamacare surcharge” on the price of their products.  They claim they have no choice.

But the news that Americans might pay 50 cents more for a mediocre $10 meal at the Olive Garden is not what bothers me most. Since President Obama was re-elected each of these restaurant chains have announced that they also plan to cut many full-time workers’ hours back to less than 30 hours a week in order to duck the cost of providing health care benefits.. This means that employees who are now working 40 hours a week will have to look for a second job—or find a way to support themselves on less than three-quarters of their current salary.

Michael Tanner, a fellow at the conservative Cato Institute, argues that companies outside the restaurant business also will be forced to down-size. Just a few days ago, Tanner wrote: “While restaurants are especially vulnerable to the cost of Obamcare other business are being hit too. For example, Boston Scientific has announced that it will now lay off up to 1,400 workers and shift some jobs to China. And Dana Holdings, an auto-parts manufacturer with more than 25,000 employees, says it too is exploring ObamaCare-related layoffs.”

Obamacare will  “keep unemployment high,” Tanner claims, because under reform legislation, businesses that have at least 50 employees working over 30 hours a week are expected to offer their workers affordable health insurance. If they choose not to, and more than 30 of their employees qualify for government subsidies to help them purchase their own coverage, the employer must pay a penalty of $3,000 for each worker who receives a subsidy— up to a maximum of $2,000 times the number of the company’s full-time employee minus 30. (The Kaiser Family Foundation offers an excellent graphic explaining the rule.) 

By paying the fine, the employer is, in effect, paying a share of a tax credit that would cost the government anywhere from roughly $1,700 for a single young worker  to over $12,000 to help the average 35-year-old worker who has a spouse, two children, and reports $35,000 in total household income.

Conservatives like Tanner argue that that is unfair, and that small businesses– “the engine of job growth”– will be hit hardest.  

What they  don’t do is look at the math:

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A Centrist Perspective: Makers and Takers, Obamacare, and the Path Forward

Below, a guest post from Stephen Reid, Managing Partner at Pharmspective, a market research firm that provides advisory services to healthcare and pharmaceutical companies on strategic issues including the Affordable Care Act. (ACA)

I don’t  agree with Reid on every point. (For example, if Republicans take both the White House and the Senate, I believe that they could and would eliminate both the premium subsidies that will make insurance affordable for middle-class Americans and the mandate.) Nevertheless, when he sent his Op-ed to me I was impressed by how well he understands the legislation. A great many moderates have been confused by the arguments coming at them both from the left and from the right.  A combination of misinformation, half-truths and fear-mongering has created so much “noise” that it has become extremely difficult to separate fact from fiction.

By contrast, Reid does a very good  job of explaining the reasoning behind the Affordable Care Act, and how its “checks and balances” work. I agree with him that the legislation is far from perfect, but it represents a good beginning.

 There is just one major aspect of reform that I think Reid doesn’t understand: the rationale for expanding Medicaid. See my note at the end of his post.

                   A Centrist Perspective: Makers, Takers and Obamacare

by Stephen Reid

With a few days left before we elect a president, the prevailing belief is that an Obama win would propel the Affordable Care Act (ACA) forward with little delay and a Romney win would kill it. Both parties have gone to great lengths to characterize healthcare reform; the Democrats tout the legislation as essential to addressing a broken healthcare system that results in the U.S. spending twice as much as most developed countries on healthcare while leaving 50 million people without coverage; the Republicans cite the ACA as an example of hopeless dependency on government and contrary to free-market principles and individual rights.

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Could President Romney repeal Obamacare? No.

 Mitt Romney’s web site makes a bold promise: “On his first day in office, Mitt Romney will issue an executive order that paves the way for the federal government to issue Obamacare waivers to all 50 states. He will then work with Congress to repeal the full legislation as quickly as possible.”

Many of Romney’s supporters assume that this is what will happen if he wins. But in truth, even if Republicans take both the White House and the Senate, Romney wouldn’t have the power to “repeal the full legislation.” Nor could a new president grant waivers that would let states ignore the Affordable Care Act (ACA). We live in a nation ruled by law, not magic wands.

That said, those who support reform should keep a close eye on the Massachusetts Senate race, where Democrat Elizabeth Warren is challenging Republican Senator Scott Brown. The outcome could determine whether Democrats continue to hold 53 seats out of 100. (Political analysts rate Brown and Nevada’s Dean Heller as the two most vulnerable Senate Republican incumbents. If Republicans win the Senate, they won’t be able dismantle reform, but they could do serious damage to the ACA, by eliminating the subsidies that will help middle-class and low-income Americans purchase insurance. But even if they take over the Senate they will not be able to change the new rules for insurance companies.

                                    Romney’s Promises – and Why You Can’t Believe them

Begin with the “Obamacare waivers” for the states.

“There are no ‘Obamacare waivers’ that could be issued by executive order,” Washington & Lee health law scholar Timothy Jost explained in a recent phone interview. That’s right: these waivers simply don’t exist. Here, we’re tripping over one of those “Big Lies” that have become a feature of the Romney campaign. (Nazi propaganda chief Joseph Goebbels was the master of the tactic: if you tell a colossal lie, and repeat it often enough, people will believe it, not matter how outrageous. After all, who would make up such a whopper?)

On the HealthAffairs BlogJost elaborates :

You will find the rest of this post on HealthInsurance.org If you like, you can return here to comment.

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“The Third Rail of Payment Reform”–Tackling Wide Variations in How Much Providers Charge

Gallery

Why do some hospitals and doctors charge far more than others for exactly the same routine procedure?   “Because they can; it’s not any more sophisticated than that,” says Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and … Continue reading