Wednesday, December 7, 2016

Reality What a Concept




Editor’s Note: All articles, blogs, and news reports about Obamacare (The Patient Protection and Affordable Care Act) must, per the edict from the incoming president, begin by stating that Obamacare is a terrible burden on the American public and that it needs to be repealed immediately. If you have benefited by the law because of the subsidies, preexisting conditions, or access to care, please have the good sense to keep that to yourself. You wouldn’t want the most powerful man in the world to tweet about you at 3 AM.

The election was about a month ago. Each day brings new proclamations and trial balloons. The Congress beat at Health Insurance Issues With Dave has been working overtime to monitor all of the pronouncements coming from our elected officials. Today’s post will serve as an update.

Republicans in both the House and Senate are eager to repeal Obamacare. The repeal may even be HB 1, the first bill of the new legislative session. It will be a great moral victory. The newspapers, Facebook, and TV news will talk about it that night. The details are more important. Some in Congress want to have the replacement bill be introduced as soon as the celebration and back-slapping dies down. Others believe that the replacement package is still 1, 2, EVEN 3 years away. This is known as Repeal and Delay.

There are advantages and disadvantages to both strategies.


On June 22, 2016, Speaker of the House Paul Ryan released his health care plan, A Better Way. His proposal begins with the repeal of Obamacare. “…This law cannot be fixed…We need a clean start in order to pursue the patient-centered reforms the American people deserve”. That has been the Republican line of attack since the bill was passed in March 2010. No compromise. No tweaking. No amendments. The Republicans have bludgeoned the Democrats with Obamacare to the point that even those Americans who have benefited the most from the new law might not understand or appreciate it.

If Obamacare is repealed and immediately replaced we, the American people, would be able to quickly identify winners and losers, the before and after of the Republican’s actions. The insurance companies and the medical providers would also know their places in the new market. Unfortunately, that is not going to happen. There is no Republican alternative plan. There never was one. Speaker Ryan’s recent interviews confirm that. Reality: What a Concept.

So we are looking at Repeal and Delay. The concept is simple. As detailed by the Urban Institute, the partial repeal of Obamacare could be done through the process of reconciliation. The Senate Democrats could not stop this since reconciliation only needs a simple majority in the Senate. Congress would starve Obamacare by cutting off the funding for Medicaid, tax credit subsidies, and eliminate the individual and employer mandates. Doing that immediately would be the equivalent of dropping a bomb in Times Square. But it could be phased in over a three year period.

Why three years? For one, Paul Ryan, Mitch McConnell and the entire Republican team want to take a victory lap for killing Obamacare even before it is really gone. The real impact of their actions wouldn’t hit until after the 2018 election, just the press releases. The other reason is that they need several years to come up with a viable option that can be phased in properly. Mr. Ryan doesn’t want to take health insurance away from 20 million Americans. That is not his goal. Plus, some of them vote! And, if they can buy three years they have enough time to find a Democrat or two to sign on to their final legislation which will provide the illusion of bipartisanship. The Democrats tried the same thing in 2009 and 2010. But in the end Senator Chuck Grassley and Senator Olympia Snowe still walked away from the negotiations.

The insurance companies, already losing money in the individual market, and the medical providers aren’t real excited. Eliminating Medicaid expansion will force millions of Americans out of the health care system. No routine care. No access to maintenance prescriptions for diabetes, high blood pressure, and other common easily treated illnesses. The E/R waiting rooms will again be filled with people seeking care for minor ailments better treated in a doctor’s office. Would the Republican controlled Congress reinstate reimbursements for charity care? Who knows?

The insurance side is worse. The law would still require insurers to cover anyone who applied, regardless of preexisting conditions. But healthy people would not be required to retain coverage. Only the unhealthy and the responsible would seek coverage. Insurers would be foolish to offer coverage under those circumstances. Major insurers, now publicly owned, would be forced to leave markets or face the ire of their shareholders.

Other alternatives? Darned if I know. You can’t have health insurance if there isn’t an insurance company to sell it. I am scheduled to go to Washington in February to meet with our members of Congress. I have no idea what I’m going to find when I get there.

Oh, and did I mention that Speaker Ryan would like to change Medicare?

DAVE

www.cunixinsurance.com

Sunday, November 13, 2016

The Post-Election Update



ferris-wheel

Wednesday was a terrible day in the office. I was a mess. I had been awake most of the night, my worries as dark as the bedroom. Clients called. Clients texted. Everyone, all through the day, wanted to know how this election would affect them. I was too busy to write this update. And I was too concerned about the possible impact to prepare a full report. A friend came in around 5:30. He asked me how I was doing. I told him. I probably did ten minutes on where we were and how worried I was about my clients. He was very patient. Then he asked me, again, how I am. I had completely forgotten that my friend David is totally apolitical. He was asking about my health!

We’ve had a couple of days to watch the president-elect articulate his vision and the current Congressional leaders voice theirs. They are not the same. The future of health insurance will be determined by both the new president and Congress. And the courts may also play a part in our future.

This blog is Health Insurance Issues With Dave. It is not my interest nor place to discuss any part of the election that does not deal with health insurance. And health insurance is our method of compensating medical providers for their products and services. Health insurance is regulated on both the state and federal level, which means that decisions are influenced by finances and the public good. Finances are in black and white. The public good is open to discussion.

The president-elect campaigned on the promise to Repeal and Replace Obamacare (The Patient and Protection and Affordable Care Act). The Republicans who control Congress have promised this for years. On Tuesday the coyote caught the roadrunner.

First, Mr. Trump. As discussed in March, there wasn’t a detailed Trump alternative. We had no idea, prior to the election, what his priorities were or how he would accomplish them. Our closest peek into his thinking came at his Gettysburg speech in late October when he spoke of selling insurance across state lines and of increasing access to Health Savings Accounts, both Republican ideas. This week he expressed his view that the Repeal and Replace would take place simultaneously and that two key provisions of Obamacare – coverage for pre-existing conditions and the ability of children to retain their parents coverage till age 26 – would be continued.

Congress has a different view. Some in Congress have PRIVATELY admitted that Obamacare couldn’t be repealed. Amended? Sure. Changed? You bet. But the idea of repealing the law and blowing up our system, and 20% of our economy, and then eventually replacing the law would be a disaster. Passing repeal bills was safe and easy. There was no danger as long as a Democrat was in the White House to veto the law.

We have had a chance to review the various alternatives. Over the las few years I have covered plans from Governor Scott Walker, Speaker of the House Paul Ryan, and Senator Orrin Hatch. Some have been exercises in ideology and others are closer to marketing projects, the rebranding of Obamacare to a Republican name. You will hear a lot more about this in the coming months.

Let’s quickly hit a couple of the major talking points.

Selling Insurance Across State Lines – I have tackled this a number of times. This is a link to the Kaiser Foundation’s explanation.

Covering Pre-existing Conditions – Everybody loves this, but it doesn’t work unless we have everyone participating. Given the opportunity, lots of healthy people would choose to save their money until they needed coverage. Health insurance is really expensive if only the unhealthy buy it. That means that any law, Obamacare or its replacement, needs to have some form of mandated participation.

Subsidies – The current Tax Credit Subsidy is complicated. There is a lot of room for improvement. Some of the Republican plans will give you a tax credit in 2018 for what you paid in 2017 on insurance. That only works if you can afford the premium in 2017. That eliminates millions of Americans.

Health Savings Accounts – Another great idea if you’ve got disposable income and could us a tax break. Otherwise, no big deal.

Preventive Care – This is really important, especially for children. There is an upfront cost, but long term savings. How preventive care is defined may be changed under the new administration. This has been very contentious.

This has been a very long post and I truly appreciate your patience. There are no simple answers for complex questions. I am very concerned about what the next year holds for us.

I leave you with a thought about a Ferris Wheel. The ride stops when you get to the top. The view is incredible. You are filled with joy. The ride begins to move again and eventually you are at the bottom and forced to leave. The world, even our little world of health insurance, is never as euphoric or bleak as it might seem. We will get through this together.

DAVE

www.cunixinsurance.com

Monday, October 17, 2016

Unicorn




October 16, 2016

I got to the office in the middle of the second quarter of the Browns’ game. I left a 7:30. It was time. I had spotted a unicorn.

Open enrollment for Medicare Part D (Rx) and Medicare Advantage products technically began yesterday. It will officially start at 9 AM tomorrow morning in my office. Most of my Medicare visitors will be coming to confirm that they don’t need to do anything. No changes, just a cup of coffee and some conversation.

My real challenge is the open enrollment for individuals under age 65. Most of my clients received their renewal packet on Saturday, October 1st. They began calling my office that day. Unfortunately, we, the agents that service these insureds, never got our copy. We were told that the packets were in the mail. We were also told that we could download, one 8 page renewal at a time, from the insurer’s website. Hundreds and hundreds of renewals. I gave up and started to pull and print these a few days ago.

And today I am in my office to work on these renewals.

I am not complaining. I am not telling you about this process because I am some kind of insurance martyr. I love this gig and I’m not the only guy working on a Sunday. Successful agents throughout this country are evaluating their clients’ 2017 health insurance options.

One by one I review each renewal. Should the client stay with his/her current insurer or move? Would a higher deductible save enough money to be worth the additional exposure? Is this the year we should try for a tax credit subsidy? And then, once I know what I would like for them to do, I send them an email or a hand-written note.

This process isn’t fast and it can’t be delegated. The insureds are counting on the agent’s experience and expertise. The health insurance premium may be someone’s second or third largest monthly bill. My goal is to have all of these processed before November 1st. My fellow agents are working just as hard.


I had predicted a tough year. I expected increases of 15% - 20%. Policies that have Rx and office visit copays are coming in around 17%. My HSA policies seem to be averaging a few percent less. The highest HSA deductible plans, now $6,400, were renewed at the best rates. Those policies may work for some people, but not for everyone. Analyzing the options, not simply choosing the cheapest, gives us a better claims experience should you ever get sick or injured.

One of the clients that contacted me on the 1st was particularly concerned about his increase. He and his family got hammered. 25%! It took some time this afternoon to figure out why. What happened? I determined that his son was the main reason for the price jump. He turned 21 this year and will now be rated as an adult, not a child. Just to be sure, I went to the insurer’s website and ran a quote as if he was only 20. I don’t know if this family will be any happier about their new rate, but at least they will understand why.

A unicorn is a mythical creature. They supposedly exist, but no one has ever seen one. My insurers said that the renewal rates were the best that they could offer. Heck, some people might even see a rate reduction as the deductible on the HSA qualified policy drifts from $6,000 to $6,400. It was about 7 PM when I found a renewal with a 7% decrease. A decrease! I rerated the family just to be sure. I sent the client an email, packed up my stuff, and locked up.

Once you spot a unicorn, it must be time to go home.

DAVE

www.cunixinsurance.com

Thursday, September 29, 2016

One Choice Is No Choice



empty

I was licensed with over fifty different insurers. Sure, most of my Cuyahoga County clients acquired their health insurance from one of the half-dozen major carriers, but Gosh there were a lot of choices. That was 10 years ago. Now we have two or three good options in Greater Cleveland. And we’re the lucky ones.

Ohio’s population is spread across eighty-eight counties. We have major metropolitan regions, cities, towns, and rural areas. We all may share the same state government, but we do not share the same health insurance options. Cleveland, Columbus, and Cincinnati have choices. Nineteen Ohio counties will have only one health insurer participating on the Exchange in 2017. One! Twenty-eight Ohio counties will have twice as many insurers, Two.

In nineteen counties, if you don’t like Anthem Blue Cross, you can still choose Anthem Blue Cross. That’s it. And by the way, thank G-d it is Anthem and not some tier 3 level Brand X insurer. But one choice is no choice. Will Anthem’s network cover Your doctor? Your hospital? Be affordable? I can’t answer that until the final rates and plan information are released.

And yet we are still considered fortunate in Ohio. Less than 15,000 current Exchange enrollees reside in a single-insurer county according to the Iowa City Press-Citizen. The national picture is much worse. Five states – Alabama, Alaska, Oklahoma, South Carolina, and Wyoming – are limited to a single insurer for the individual health insurance Exchange. That is five entire states. Several others are limited to a single insurer for most, but not all, of the state. According to a recent New York Times article, 17% of the U.S. population will have only one individual health insurer available in 2017.

Where are the other insurers? We’ve seen companies fail (the government created Co-ops, HealthSpan) and we’ve seen companies abandon the market. Aetna and UnitedHealth Care have been the most vocal about leaving the individual market. UHC and Aetna both reported incredible profits this year. It is important to note that these profits are in spite of, not because of, their individual Exchange business. UnitedHealth Care reported a loss of close to $500 million in 2015 on new individual health policies compliant with the Patient Protection and Affordable Care Act (Obamacare). An Aetna press release of August 15, 2016 details a Second Quarter pretax loss of $200 million.

Neither Aetna nor UnitedHealth Care see any reason to continue to bleed money by selling individual policies on the Exchange. They have a duty to their shareholders to market products that make money. Individual policies do not appear to be profitable under the PPACA.

Where does that leave us? In truth, we are right where I predicted we’d be when I wrote Over The Tree, Close To The Front Of The Green in April 2010. Our “Grandfathered” and “Grandmothered” policies are getting too expensive to keep. The new policies, even with a tax credit subsidy, are too expensive for many Americans. And we have few choices. What is the solution? The answer, for many, is the Public Option.

According to USA Today and the Huffington Post, to cite a couple of sources, the Senate Democrats are pushing for an alternative to the private insurance market, a Public Option. And this isn’t just Bernie Sanders (I-Vt.). Senator Chuck Schumer (D-NY) and Senator Patty Murray (D-WA) are involved in this effort to offer a government plan to all Americans. There is also a parallel concept of expanding Medicare from age 65 to age 55.

As we learned from the disastrous Co-op experiment, the government, and the people the government empowers to run business-like entities, will over-promise and underprice the product. The insurers will not reduce their premiums and increase their losses to compete. They will abandon the market completely and let the public option drown. And then? And then the government will be forced to ride in and save us with a true, Medicare-like product for all of us.

And we will be left with one choice. And one choice is no choice at all.

DAVE

Cunix Insurance

Tuesday, September 6, 2016

We Don't Need No Regulations



Door

They were at it again. The politicians were railing against unnecessary regulations. Their #1 villains are those damn government bureaucrats who make our products uncompetitive and cost us jobs. They can pontificate for hours but become strangely quiet when pressed to address the benefits of regulation.

We aren’t going to waste time discussing the recent Olympics in Rio, the air quality in Beijing, or the new interest in earthquakes in Oklahoma. This being Health Insurance issues With Dave, we are going to look at prescriptions.

Insurance applications used to ask health questions. EpiPens, like inhalers, appeared on a few applications each year. That changed about ten years ago as more and more clients kept an EpiPen or inhaler just in case. The inhalers were for a sudden asthma attack. The EpiPen was designed to inject the generic hormone epinephrine to prevent anaphylactic shock from an allergic reaction.

What was once rare was now common. By 2013 the federal government was strongly encouraging schools to have an emergency supply of epinephrine (EpiPens).

We have a product that has been around for decades, cost next to nothing to make, and does great business. These things should sell for about the price of a bottle of ketchup. OK, it is a prescription so maybe the price of a case of ketchup.

The EpiPen is sold in two pen sets. Ten years ago a set was a little over $100. Today, over $600. Is the drug more effective? No. Are the ingredients more expensive? No. What changed?

The biggest single change was Medicare Part D (Rx). The 2003 law “exempts Part D drugs from ‘best price’ rebates that drugmakers have been required to give to the state Medicaid programs since 1991” (The Hill). While some may argue that this provision has caused a large increase in the development of senior-related medications, many of us have also noticed that there is a huge market for senior-related products since 10,000 baby boomers turn 65 daily. I believe that the R & D would have come with or without the government handing the pharmaceutical companies the keys to the vault.

The last thirteen years have given us drug company mergers, hostile takeovers, and even a hedge fund guy who increased a little known HIV drug by 5000%. And that takes us back to Mylan Pharmaceuticals and their EpiPen.

Did Mylan develop the EpiPen? Hell No. Mylan purchased a generic drug manufacturer in 2007. The EpiPen was just one of the products they acquired. R & D cost – Zero. Current price? Whatever the market will bear. There is very little that can be done about this. Oh sure, there will be a lot of harrumphing in the Senate. But in the end, there will be some coupons, a slightly lower price, and a promise from Mylan’s CEO to be a better corporate citizen.

What we need is both more and more effective regulation. There are thousands of generic drugs waiting for final approval. This is not effective regulation. And, at the very least, we need to create a pricing formula for decades’ old generic medications.

The EpiPen problem reminds us that we have no way to prevent price gouging and other unscrupulous business practices without regulations. Regulations can be the locked doors that keep honest people honest.

DAVE

www.cunixinsurance.com

Monday, August 15, 2016

Mongoose




It happened again on Friday. Another COBRA victim. I have talked with three people in the last few months who lost money due to COBRA. There is talk of ending or, at the very least, amending the Consolidated Omnibus Budget Reconciliation Act (COBRA). That should be a goal for the spring of 2017.

What is COBRA? This is from the Department of Labor:

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

In English – You get to keep your health insurance policy if your ex-employer 1) had a policy, 2) had more than 20 employees, and 3) if you pay the full monthly premium plus up to 2% for processing. You may keep the policy for up to 18 months, 36 months if you are losing coverage due to death or divorce.

COBRA was very important. Prior to the Patient Protection and Affordable Care Act (PPACA or Obamacare), unhealthy individuals and families could be declined for coverage due to preexisting conditions. COBRA guaranteed 18 months to find an acceptable option.

COBRA also allowed someone who had already met an annual deductible to retain coverage for the balance of that calendar year. This may still prove useful even under the new law.

COBRA, retaining the ex-employer’s policy, may also be less expensive than purchasing a new policy. This is more likely if the individual is in his/her late fifties or early sixties.

So far, so good. What could be bad?

Christopher (name changed) worked for over twenty years at a local service organization. His position was consolidated with two others and he was let go. This was in October. The first six months of COBRA were paid by his ex-employer as part of a generous severance package. Chris was shocked by the $1,100 bill he received in late April for his May premium. He had no idea. He was referred to me and we met a few days later. I was forced to deliver terrible news. Chris missed the Annual Open Enrollment. Discovering that you have expensive COBRA does not qualify for a Special Enrollment Period. Christopher must keep this policy for the balance of 2016 if he wants to retain PPACA compliant coverage. What looked like a lifesaver had become cement shoes. His ex-employer didn’t understand how COBRA works in this new environment.

Another issue is that COBRA and Medicare are like oil and water. If you are over 65 and work for a business that has over twenty employees, your group health insurance is primary. Medicare is secondary. Most of these people save their money and don’t enroll in Medicare Part B. But, COBRA doesn’t count. Failing to enroll in Medicare Part B when you become eligible may result in a penalty and being forced to wait until the annual enrollment period the following January. This is an expensive common mistake.

Angela (name changed) made the above mistake. She was supposed to enroll in Medicare Part B six years ago, a few months into COBRA. She didn’t. Angela got a new job with benefits about a year later. Now, at age 71 and ready to retire, she will be forced to wait until next July for Medicare to begin. Angela will pay more than twice as much for inferior coverage due to her error six years ago.

My last example is Charlotte (ditto) who visited my office on Friday. Her last day at a major Cleveland employer was June 30th. She spent twenty-nine years at a really big company. Charlotte signed up for Medicare Part B. Since she didn’t have the time to do any research and had zero help from H.R., she enrolled in her employer’s retiree COBRA plan, a mediocre $400 Medicare Supplement-like policy. A month later she realized that her friends all have better coverage for a lot less.

Charlotte paid a price for convenience. Even though she is 66, this was her Medicare Initial Enrollment Period. You have just one bite of the apple and she picked a bad one. She still has options, but she has forfeited some of the flexibility and guarantees that had been available in June.

There is still a place for COBRA under Obamacare, but it is not as important as it once was. So maybe it is too early to unleash the mongoose, but I’m keeping mine fed and ready.

DAVE

www.cunixinsurance.com

Sunday, July 24, 2016

A Cheap Date



 

There was a time, back when I was in high school, when a boy asked a girl out for a date and paid for the evening.  Movies, a dance, even dinner – he asked and he paid.  A cheap date was a girl who didn’t insist on the fanciest restaurant for every date and didn’t search the menu for the most expensive meal.   When we got into our twenties, a cheap date was someone who might only order one or two glasses of wine and didn’t view dating as a competitive drinking sport.
The young woman in my office last week has never been a cheap date, at least not from an insurance perspective.  Millie (name changed) is an insulin-dependent diabetic, has been most of her twenty-four years.  She has lots of claims every year.  There was a time, about ten years ago, when her mother and I had real concerns about finding health insurance for her.  Now it is no big deal.
I used to be a cheap (insurance) date.  The only time I saw the doctor most years was for my annual physical.  No Rx.  No issues.  This year has permanently changed my status.  University Hospital and the doctors have submitted bills for over $550,000 for my care.  Millie and I now have something in common.  No Insurance company would take us if they had a choice.
We are not alone.  Many of you have pre-existing conditions from an illness or injury.  You used to be cheap dates.  You paid your premiums and seldom filed a claim.  An accident or ailment changed that.  The most important benefits of The Patient Protection and Affordable Care Act (Obamacare) are the absence of medical underwriting and that all policies cover pre-existing conditions.  Millie and I can apply for coverage with no fear of being turned away.
Are those benefits safe?
I get the calls at least once week:
  • Are they going to repeal Obamacare?
  • What happens if the Republicans win?
  • Is my policy going to be cancelled?
My standard answers are:
  • No.
  • Nothing.
  • Probably not, but if it is we’ll find a new one.
We just watched the four day infomercial for the Republican Party and are moments away from the Democratic Party’s version.  Did you hear a substantive discussion about healthcare, 20% of our economy?  Of course not.  Six years of Obamacare have yielded millions of dollars of negative political ads but not even one serious alternative proposal.  Even if we wanted to, we can’t magically return to February 2010.  We can’t just repeal the PPACA and then begin the difficult process of creating a new program.  If there is to be an alternative, it must be designed with a seamless transition.
That is, of course, just my opinion.  This blog has reviewed all of the Republican plans including Speaker Ryan’s latest last month.  I have been trying to include coverage of the Libertarian Party’s proposal.  In May I interviewed one of the candidates who had been running to be the standard bearer for the Libertarians.  His suggestion was to eliminate the PPACA and to make charitable donations a dollar for dollar tax reduction.  People would then donate to hospitals and everyone would receive the care they needed without any government involvement.  I laughed until I realized that he was serious.  Their official platform has no information or details.
But with no disrespect to either the Libertarian or the Green Parties, our next president will most likely be either a D or an R.  But that doesn’t mean that there aren’t major issues with the PPACA.  The insurers have not found a way to make money under this new system.  They will continue to tinker with their networks and plan designs.  Hospital and doctors are looking at different business models to reduce expenses and maximize payments from the government and insurers.  A new president may be more successful working with a new Congress to make the needed changes to Obamacare.  Perhaps, under new leadership, we can get a bipartisan buy-in once we change the name.
It is important to remember that we are talking about 20% of our economy.  Our population is aging.  Our cost of care is rising.  Americans demand the very best of care.  And we are never a cheap date.