LTC8K6

May 18 2015, 08:06 PM

http://www.nytimes.com/aponline/2015/05/18/us/ap-us-health-overhaul-tax-twist.html?_r=0

Health Law Tax Passed Along to States

Baldo

May 18 2015, 08:12 PM

LTC8K6

May 18 2015, 08:06 PM

http://www.nytimes.com/aponline/2015/05/18/us/ap-us-health-overhaul-tax-twist.html?_r=0

Health Law Tax Passed Along to States

The federal government issued guidance in October requiring states to build the tax into what they pay for-profit Medicaid health plans that serve low-income people. The first year's tax was due to the IRS in September, and state governments are now settling up with insurance companies.

It works like this: State governments pay insurers for the tax. The insurers then pay the tax to the federal government. The federal government then reimburses part of the cost to the states.

It may sound absurd, but it's not amusing to state governments, which wind up losing 54 cents for every dollar of the insurance tax. State taxpayers end up the biggest losers, without any added benefit to their state's low-income Medicaid patients.

"It's like a merry-go-round with an extra loop in the middle," said Rebecca Owen of the Society of Actuaries.

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The numbers are in: Hawaii’s Obamacare Exchange enrolled a grand total of ZERO — yes, zero people during its special enrollment period.

The Obama administration had implemented the special enrollment period from March 15 - April 30 to assist individuals who were unaware they would face a tax penalty for not having “qualifying” health insurance. In all, less than 250,000 individuals decided to enroll nationwide meaning that millions of Americans would rather pay the tax than enroll in Obamacare.

While Hawaii enrolled zero individuals and is the worst performing state, it is not alone. Vermont signed up only 97 households, while Rhode Island enrolled just 25 households.

Hawaii’s dismal performance should not be surprising. The website cost taxpayers $205 million but could only enroll 8,592 individuals in year one. Cost to taxpayers per enroll: $23,899.

The state legislature recently rejected a $28 million bailout for the website meaning that a contingency plan to dismantle the exchange and migrate to the federal exchange will be implemented immediately. Unfortunately, taxpayers are not off the hook yet as it is expected that moving to the federally run healthcare.gov will cost $30 million.

...

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http://www.yalejreg.com/blog/more-unlawful-aca-premium-tax-credits-by-andy-grewal

More Unlawful ACA Premium Tax Credits, by Andy Grewal

I might be accused of picking at low-hanging fruit, but I’d nonetheless like to devote another blog post to more IRS regulations that expand and contradict Section 36B. My prior blog posts, which I’ve adapted into an essay upcoming in Bloomberg BNA, discuss regulations that improperly extend ACA premium tax credits to persons in the Medicare coverage gap and to some unlawful aliens. In this post, I want to highlight regulations that improperly penalize employers and that give credits to taxpayers already enrolled in employer-sponsored minimum essential coverage.

Broadly speaking, Section 36B offers premium tax credits, on a month-by-month basis, to taxpayers who purchase Exchange policies only when they can’t otherwise obtain minimum essential coverage. However, the mere offering of minimum essential coverage by an employer to a taxpayer will not disqualify her from tax credits. Instead, the employer coverage must be affordable and provide minimum value. See Sections 36B(c)(2)(C)(i) & (ii).

Congress recognized that some taxpayers would enroll in minimum essential coverage through their employer, whether or not that coverage was affordable or provided minimum value. In these circumstances, Congress decided that premium tax credits should not be allowed. Why should the federal government subsidize a second set of health insurance coverage?

Section 36(c)(2)(C)(iii) consequently indicates that the employer affordability and value limitations “shall not apply if the employee . . . is covered under the eligible employer-sponsored plan.” In proposed regulations, the IRS followed the statutory command and denied credits for a given month when a taxpayer was covered under an employer plan that offered minimum essential coverage. See Prop. Reg. 1.36B-2(c)(3)(vii), 76 F.R. 50942 (2011).

The IRS, however, eventually expanded the statute. Commenters worried that many employers automatically enrolled employees in coverage, and taxpayers might unwittingly find themselves with employer-sponsored minimum essential coverage for a given month, thereby disqualifying them from credits.

The final regulations address this and give credits to taxpayers when they are automatically enrolled in employer minimum essential coverage. In so doing, the IRS explicitly acknowledged that “Section 36B(c)(2)(C)(iii) and the proposed regulations provide that an individual who enrolls in an eligible employer-sponsored plan is not eligible for the premium tax credit even if the plan is unaffordable or fails to offer minimum value.” See 77 F.R. 30381 (2012) and Treas. Reg. 1.36B-2(c)(3)(vii)(B). In refreshingly candid terms, the IRS thus noted that its regulations contradicted the language of the law.

As a matter of abstract policy, the substance of the IRS’s re-write seems somewhat reasonable. The problem is that it has no statutory basis. Congress plainly denied credits to taxpayers who actually receive health benefits from their employers. Nothing in Section 36B(c)(2)(C)(iii) allows the IRS to rewrite the law whenever it thinks that doing so is a good idea.

The IRS’s re-write is especially problematic because it leads to further employer penalties under Section 4980H(b). Employers who offer minimum essential coverage generally don’t face penalties unless an employee receives a credit under Section 36B. Under the language of Sections 36B and 4980H, employers will avoid penalties when minimum essential coverage is actually provided, because no credit is allowable in these circumstances. But the IRS regulation ignores this limitation and essentially demands a penalty from employers. This seem quite unfair.

As I hinted in the opening line of this post, the IRS’s flippant approach to Section 36B is nothing new. However, taken together, the various IRS re-writes paint an odd picture. When one compares Section 36B to the IRS regulations, one does not see a legislative enactment with a complementing set of administrative regulations. Instead, when viewed together, Section 36B and the IRS regulations look more like a legislative proposal by one house of Congress and a counterproposal by another house. That is, the IRS has, in various circumstances, rewritten Section 36B to reflect the statute it believes should have been enacted, rather than that which was enacted. The IRS’s aggressive approach will ensure continuing litigation over Section 36B, regardless of how King v. Burwell turns out.

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Wellmark Blue Cross Blue Shield sent a request to the South Dakota Division of Insurance this month asking it to approve a 42.9 percent rate increase, saying the hike was necessary because of large claims, costly prescriptions and members dropping coverage after expensive procedures.

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That influx of new, previously uninsurable and sicker members who are now required under the law to be covered is likely the main factor driving up costs, according to one national health policy expert.

Laura Jackson, the executive vice president of Wellmark, in a webinar earlier this month, said the company anticipated the new population would have some pent-up demand but said Wellmark has been incurring even higher costs than anticipated from its members with individual ACA-compliant policies who are using services at a higher rate.

"This is merely an unsustainable proposition for Wellmark when we're actually taking in less dollars than we're paying out," she said.

LTC8K6

May 22 2015, 05:33 AM

http://finance.yahoo.com/news/wellmark-seeking-43-percent-rate-223512671.html

Wellmark seeking 43 percent rate increase for 14,000 members

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Wellmark Blue Cross Blue Shield sent a request to the South Dakota Division of Insurance this month asking it to approve a 42.9 percent rate increase, saying the hike was necessary because of large claims, costly prescriptions and members dropping coverage after expensive procedures.

Who didn't see that last one coming?

snip

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http://www.wsj.com/articles/health-insurers-seek-hefty-rate-boosts-1432244042

Health Insurers Seek Hefty Rate Boosts

Proposals set the stage for debate over federal health law’s impact

Major insurers in some states are proposing hefty rate boosts for plans sold under the federal health law, setting the stage for an intense debate this summer over the law’s impact.

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016. The biggest insurer in Tennessee, BlueCross BlueShield of Tennessee, has requested an average 36.3% increase. In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products. Moda Health, the largest insurer on the Oregon health exchange, seeks an average boost of around 25%.

All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act.

Under that law, insurers file proposed rates to their local regulator and, in most cases, to the federal government. Some states have begun making the filings public, as they prepare to review the requests in coming weeks. The federal government is due to release its rate filings in early June.

Insurance regulators in many states can force carriers to scale back requests they can’t justify. The Obama administration can ask insurers seeking increases of 10% or more to explain themselves, but cannot force them to cut rates. Rates will become final by the fall.

“After state and consumer rate review, final rates often decrease significantly,” said Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, the federal agency overseeing the health law.

[...]

Insurers say their proposed rates reflect the revenue they need to pay claims, now that they have had time to analyze their experience with the law’s requirement that they offer the same rates to everyone—regardless of medical history.

Health-cost growth has slowed to historic lows in recent years, a fact consumer groups are expected to bring up during rate-review debates. Insurers say they face significant pent-up demand for health care from the newly enrolled, including for expensive drugs.

“This year, health plans have a full year of claims data to understand the health needs of the [health insurance] exchange population, and these enrollees are generally older and often managing multiple chronic conditions,” said Clare Krusing, a spokeswoman for America’s Health Insurance Plans, an industry group. “Premiums reflect the rising cost of providing care to individuals and families, and the explosion in prescription and specialty drug prices is a significant factor.”

[...]

In some of the dozen states where The Wall Street Journal reviewed filings that are public, the biggest insurers are seeking significant but less eye-popping increases. Anthem Inc., in Virginia, wants an average increase of 13.2%. Blue Care Network, part of Blue Cross Blue Shield of Michigan, applied for a 10% average increase.

In Washington state and Vermont, the market leaders have sought relatively modest average increases, akin to those proposed last year, of 9.6% and 8.4%, respectively. In Indiana and Connecticut, the leading plans want 3.8% and 2% boosts. So far, Maine is the only state where the market leader proposed keeping rates generally flat

The 2010 health law made sweeping changes to the way medical insurance is sold to consumers who don’t get coverage through jobs or a government program such as Medicare. The federal government subsidizes premiums for some consumers, based on income, and the validity of those subsidies in most of the country is the subject of a lawsuit the Supreme Court is expected to decide in late June.

The filings from insurers are based on the assumption that those subsidies remain in place.
[Because they changed the rules to allow them to drop coverage IMMEDIATELY if the ruling ends subsidies at exchanges NOT established by the State they are in!]

Insurance premiums have become a top issue for consumers and politicians as they evaluate how well the law is working. Obama administration officials weathered a storm as some younger, healthier consumers saw their premiums jump when the law rolled out, but were also able to point to modest premiums overall as insurers focused on other ways to keep costs down, such as narrow provider networks.

[...]

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http://www.tennessean.com/story/money/industries/health-care/2015/05/20/things-know-bluecrosss-percent-increase/27588797/

3 things to know about BlueCross' 36 percent increase

It was widely reported last week that BlueCross plans to raise rates on individual health insurance policies an average of 36 percent in 2016. That is a big increase, which caught the eye of many health care consumers.

Following are three things to bear in mind.

1. It is only for under-65 individual plans.
[So the good news is rate hikes only applies to the age group that MUST buy Obamacare???]

[...]

2. There are other options. If you receive a letter from BlueCross later this year indicating a big increase, know that you have lots of options.

First, you could change the plan you have with BlueCross. The company offers a multitude of different plans and networks, and changing to a less robust plan would mean a lower premium. If you have not already explored a Health Savings Account-eligible option, this might be the year to do so. These plans have lower premiums, and allow you to set up a tax-advantaged bank account called a Health Savings Account that can mean even more savings.

Second, you could switch insurance companies. Other options include CIGNA and Humana. You passed on these guys last year, but a big increase from BlueCross this year might change your mind. After all, it has been reported that CIGNA is only asking for a .4 percent increase in 2016.
[They can buy the plan that were the higher priced plans of last year ...or get lower premiums by saving money to pay for care out of their own pocket???]

3. There is a bright side. It is frustrating to get a big increase on your insurance rates. After all, you went through the trouble of getting individual insurance all set up. Maybe you even went to the trouble of getting your BlueCross login configured so that you could view your historical claims data. Now, a big increase is causing you to face the possibility of going through all of that again with a new carrier. Plus, even if you do a lot of work and research to find another option, it is likely you will be paying more next year.

Wait, so then what is the bright side? Indeed, it is hard to find one. Pressed, one might say that the bright side to BlueCross's announcement is that you have been getting a good deal on health insurance for the last year or two. Further investigation indicates that BlueCross BlueShield of Tennessee has been offering some of the lowest rates in the country.

The reality is that this may just mark the beginning of a new normal for health care consumers. Historically, our employers were the ones leading the effort of changing health insurance companies every few years. Usually, it was after getting a big increase. As more and more individuals have their own health insurance, more of us will be evaluating these decisions ourselves.

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http://www.nytimes.com/2015/05/22/us/politics/florida-hospitals-get-1-6-billion-offer-from-obama-administration.html

$1.6 Billion Is Offered to Hospitals in Florida

The federal government opened the door on Thursday to a compromise that could ease Florida’s budget impasse, rooted in a disagreement over Medicaid expansion and the cost of caring for the uninsured.

In a letter to Florida’s top health care official, the Obama administration said that it could authorize $1 billion for the 2015 fiscal year and $600 million for the 2016 fiscal year to reimburse hospitals for treating patients who do not have insurance. The cost would be shared by the state and federal governments. The $1 billion offer is less than half of what the state requested for this year for the Low-Income Pool program, which is set to expire June 30.

[...]

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http://www.washingtonexaminer.com/article/2564841

Rate hikes expose shaky foundation of Obamacare

...Surveying the national landscape, industry consultant Robert Laszewski told the Examiner that, "What we are seeing is a mixed bag in terms of how carriers are responding to their 2016 rates. There seems to be a trend growing where carriers with the largest market share are coming out with the eye-popping increases. Carriers with the least share are still coming in with the smaller increases."

Part of this might be that in the first two years of Obamacare, when they were expecting more federal help, larger insurers were able to offer "teaser rates" to rapidly build up their market share, but now that they have access to more data, they're increasing their rates. Larger insurers, he noted, have access to more data.

"The key to getting a insurance risk pool that eventually supports lower rates is to attract as many people into it as possible," Laszewski said. "Lower rates will attract more people and provide a better chance of getting more sustainable rates."

But, he said, "even with the lower rates the Obamacare reinsurance program enabled, only about 40 percent of those eligible eventually signed up after two full open-enrollments. Carriers need more like 75 percent of an eligible pool to get the most efficient pool. Things just haven't worked out."

According to the administration, as of the second open-enrollment period ending this February, just 28 percent of those who signed up for insurance came from the crucial age 18 to 34 demographic. Prior to the launch of the program, administration officials had indicated that 40 percent needed to be from the age group for the exchanges to be viable. Furthermore, in 2016, according to the Congressional Budget Office, Obamacare is supposed to make a quantum leap to covering 21 million people – but just 11.7 million people signed up for privately-administered insurance through Obamacare through February. Those who already signed up for coverage may be the low-hanging fruit — those who are older, sicker, and most in need of insurance — meaning the law still hasn't penetrated the market deeply enough.

In a regulatory filing justifying its proposed premium hike, CareFirst cited "actual claims experience" that showed a "significantly" riskier pool of customers than expected.

CareFirst also identified, "lower anticipated payments from the Federal reinsurance program." The reinsurance program was one of three programs, known as the "three Rs" that were meant to give some extra cushion to insurers who, under Obamacare, are forced to cover everybody who applies for insurance, including those with pre-existing conditions. The idea is to prevent a scenario in which certain insurers tailor policies to cherry pick the healthiest individuals, saddling other insurers with a disproportionate share of the sickest and most expensive beneficiaries.

The reinsurance program slaps fees on insurance policies and uses the revenue to funnel payments to insurers to compensate them for taking on individuals with a high-risk profile. Total payments available for the program have gone from $10 billion in 2014, to $6 billion in 2015, and $4 billion in 2016. The program is scheduled to expire after 2016.

Another program insurers were counting on is known as the "risk corridors." In theory, the program was supposed to collect money from insurers who had lower than expected medical losses and use it to compensate insurers who had higher than expected losses.

In a scenario in which there are massive industry-wide losses (and thus there isn't enough money being raised by the program to make it self-sustaining), Republicans argued that the program would take on the characteristics of an open-ended taxpayer bailout.

At first, the administration said the program would be budget neutral – meaning it would only make payments to insurers up to the amount that was collected from other insurers. But that led to a furious backlash from insurers last spring, as lobbyists and company executives warned of serious rate hikes for policies starting in 2015 unless they were given added reassurance that the federal money would continue to flow.

In an email to senior White House adviser Valerie Jarrett sent last April (and later brought to light by the House Oversight and Government Reform Committee), CareFirst CEO Chet Burrell warned that "if this transitional protection is not there, carriers will have to increase rates substantially (i.e. 20 percent or more beyond what they might otherwise file) to make sure that premiums adequately reflect expected costs – because there would be little protection if they do not."

Eventually, the Obama administration backed down to industry lobbyists. In May, the Department of Health and Human Services said that the secretary "recognizes that the Affordable Care Act requires the secretary to make full payments to issuers" and that HHS would "use other sources of funding for the risk corridors payments."
[screw that appropriations thingy!!!]

But in December, as part of the massive appropriations bill, Republicans fought for language that would cap payments to the amount that was raised by the program – meaning if it runs a deficit, insurers won't get the full amount of payments they once expected. Without as firm of a government safety net, insurers are more vulnerable.

"The change to the federal risk corridors program after the Affordable Care Act was implemented is among the reasons our proposed average premium rate in the District reflects an increase; however, it is not the only factor" Scott Graham, spokesman for CareFirst, wrote in an email to the Examiner. "It's more accurate to say the average rate increase reflects the cost of providing care to those individuals who purchased policies from CareFirst."

Laszewski said that "My conversations with carriers does indicate that the lack of clarity about how the risk corridor payments will be funded is absolutely playing into the rate actions causing big rate increases a year earlier than many of us expected." There are a number of factors driving up rates, he emphasized, "the uncertainty about the risk corridors is clearly playing into this."

Proposed rate increases are just that – proposals. They are the start of the back and forth between insurers and regulators, and eventual rates could be vary significantly from the initial proposals.

But the overall picture – a weaker than expected risk pool, the expiration of programs that have been propping up the insurance market – doesn't bode well for the future of Obamacare.