COURT BARS PPACA AID FOR FEDERAL EXCHANGE SHOPPERS

By Andrew Zajac
July 22 (Bloomberg)

President Barack Obama’s health care overhaul suffered a potentially crippling blow as a U.S. appeals court ruled the government can’t give financial assistance to anyone buying
coverage on the insurance marketplace run by federal authorities.  

The decision, if it withstands appeals, may deprive more than half the people who signed up for the Patient Protection and Affordable Care Act the tax credits they need to buy a health plan.

The way PPACA is written makes clear that the subsidy is available only to people who
bought plans on state-run exchanges, a three-judge panel in Washington ruled today.

Only 14 states have opted to set up their own marketplaces, making delivery of tax credits via
the federal exchange crucial to meeting Obamacare’s goal of broadening health-care coverage
in the U.S.

“A very large share of people need the subsidies,” said Robert Blendon, a professor of health
policy at the Harvard School of Public Health in Boston.

If the ruling isn’t overturned, “it basically would significantly cripple the law,” Blendon said in an
interview before the ruling.

Why Most Small-Business Owners Will See Premiums Rise Under A.C.A.

By ROBB MANDELBAUM

New York Times

A new report from the federal government that says more small employers will see premiums increase than fall under the Affordable Care Act appears to have put the Obama administration on the defensive once again. But the report is remarkable as much for what it reveals about the current state of the small-group market as for how it might look under Obamacare, as the law is commonly known.

The report was produced by the Centers for Medicare and Medicaid Services at the request of Congress, and it is largely an exercise in the theoretical. The Affordable Care Act outlaws premium discrimination based on a company’s industry, the size of its group, or the health status and gender of its employees. The law also limits premium variation based on age, and the study assumes that when all these rules eventually take effect, all small companies and their workers will pay essentially the same rates.

Meanwhile, the agency estimates that today, under the current rules, two-thirds of small employers pay premiums that are below the average rate and one-third pay above-average premiums. Therefore, under an Affordable Care Act that is fully in place, two-thirds will see their premiums rise, and one-third will see premiums fall.

Of course, we have long known that some people would pay more for health insurance under Obamacare and some people would pay less. What is interesting is the skew: Why is it that two-thirds of employers, and employees, according to the study, have paid below-average premiums? Why isn’t it closer to 50/50? The answer, according to the study, is that under the old system, companies that paid lower premiums because their employees posed smaller health risks were more likely to offer health insurance in the first place.

But according to Jonathan Gruber, a health economist at M.I.T. whose work was cited in the C.M.S. report, those companies’ premiums were not as far below the average as the premiums of those businesses that insured older, less healthy employees were above the average. “The most expensive firms are very expensive, while the cheaper ones aren’t that much cheaper,” Mr. Gruber said. “So what that means is that while the cheaper firms will lose, they will lose by less than the most expensive firms gain. The 65/35 is still consistent with the overall roughly net zero result that the Congressional Budget Office, myself, and others have estimated.”

It is also possible that companies that have not provided health insurance because it was too expensive may now be offered rates lower than what they were quoted in the past. The report estimates 18 million people get insurance through the small-group market, though not all will be affected by the new premium rules one way or the other. But according to the most recent figures from the Census Bureau, about 31 million people work for businesses with fewer than 50 employees. That means the current market leaves about 42 percent of small-business employees uninsured, and some of those would most likely find small-group insurance more affordable under the new rules.

The report did not quantify how much premiums would rise or fall. And it acknowledged that Congress asked the agency to study only three of the law’s provisions and that other aspects of the law could affect how premiums change. “The impact could vary significantly depending on the mix of firms that decide to offer health insurance coverage,” the study said. “In reality, the employers’ decisions to offer coverage will be based on far more factors than the three that are focused on in this report.”

Republicans in Congress took the opportunity presented by the report to attack the law. Representative Sam Graves, the Republican from Missouri who heads the House Small Business Committee, called it “one more in a long line of broken promises from President Obama and Washington Democrats.”

Curiously, the Obama administration seemed restrained in its response, choosing not to address the new study directly. When asked for a comment, a spokeswoman for the Department of Health and Human Services, Joanne Peters, said only, “Since the Affordable Care Act became law, health care costs have been growing at the slowest rates on record and premiums are growing at less than one-half the pace seen a decade ago. The law is making it easier for businesses to offer coverage, just like it did in Massachusetts when employer coverage increased after reform passed.”

Tom Daschle, the former Democratic majority leader in the Senate and President Obama’s first nominee to lead the Department of Health and Human Services, bemoaned what he said was an increasingly one-sided debate. “There are so many ways to look at this,” said Mr. Daschle, who is now a senior policy adviser to the law firm DLA Piper, of the C.M.S. report. For one thing, he said, the tax credits available to very small businesses that offer insurance will “change tremendously the way premiums are paid.”

He went on to question why the administration had not responded more forcefully. “I think it’s been a big mistake that we’re not pushing back as hard as we can,” he said. “There’s an old saying attributed to Winston Churchill: a rumor gets halfway around the world before the truth gets its shoes on. That has happened over and over again with the Affordable Care Act.”

-------Seems time will tell.  However costs for small group plans that were non-grandfathered migrating from the small group market to ACA plans have seen significant increases in older family coverage plans but decreases to younger insureds. BBS 

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Need Individual ACA Compliant Medical Coverage?

WEREN'T ABLE TO GET COVERAGE THROUGH THE EXCHANGE? O'MALLY INTRODUCES THE BRIDGE PLAN

Maryland Health Insurance Plan Bridge Program

On January 30, 2014 Governor Martin O’Malley signed Senate Bill 134 - Maryland Health Insurance Plan – Access for Bridge Eligible Individuals. The bill allows “Bridge Eligible Individuals” as defined in § 31-101 of the Maryland Insurance Article to obtain temporary health insurance through the Maryland Health Insurance Plan (MHIP) with retroactive coverage.

MHIP Bridge Program Policies and Procedures

• Individuals eligible for health insurance through Medicaid, Medicare or an employer sponsored plan are not eligible for the MHIP Bridge Program.
• Applications must be submitted by March 31, 2014 (a postal date mark constitutes the submission date).
• MHIP Bridge coverage will be terminated on the effective date of a Bridge Eligible Individual’s enrollment in a qualified health plan (member must provide notice in writing to CareFirst for voluntary termination to occur).
• A MHIP member whose coverage was terminated December 31, 2013 or thereafter and are eligible for the Bridge Program will be reinstated in their last MHIP plan option with no deductible reset.
• Bridge Program applicants must submit the following documents for enrollment consideration:

1. Proof of Maryland residency
2. MHIP Standard enrollment application form
3. Tax return document and/or other proof of income if applying for enrollment in one of the MHIP+ plan options
4. MHIP Bridge Program Application Addendum (Addendum must contain applicant’s signature, a written description of when and how the applicant attempted to enroll through the Maryland Health Connection (MHC) and coverage effective date choice to be considered complete)

Enrollment Coverage Choice Will Be as Follows:

Date Application Received       Effective Date of Coverage Options
Jan. 1 – Feb. 15, 2014                  January 1, 2014 or February 1, 2014
Feb. 16 – Mar. 15, 2014               February 1, 2014 or March 1, 2014
Mar. 16 – Mar. 31, 2014               March 1, 2014

• All MHIP Bridge Program enrollees’ coverage will be terminated on March 31, 2014, unless that date is extended by the MHIP Board of Directors.
• Bridge Program application forms can be downloaded from Marylandhealthinsuranceplan.net
• A paper copy will be mailed to the individual upon request by calling 1-888-444-9016.
• Enrollment applications must be mailed to CareFirst at Maryland Health Insurance Plan, Enrollment and Billing, 10455 Mill Run Circle, RR-380, Owings Mills, MD 21117-9685.
• CareFirst will process applications within 3 business days of receipt of a complete application.
• If the application is incomplete, CareFirst will notify MHIP staff daily and MHIP staff will reach out to the applicant to obtain the missing information in a timely fashion to facilitate a prompt enrollment.
• CareFirst will mail an approval letter and a payment slip to the individual.
• Upon receipt of payment from the individual, CareFirst will effectuate coverage and mail an ID card. Coverage is not effective until full payment is received.
• Members and providers can confirm coverage with CareFirst prior to an ID card being received by calling 1-888-444-9016.
• Certificates of Coverage will be mailed to new enrollees with terms of plan and coverage dates.
• MHIP and the Maryland Health Benefit Exchange (MHBE) will work together to assist Bridge Program enrollees in getting coverage through the MHC. An existing MOU and data sharing agreement between MHIP and MHBE will facilitate this process. Bridge Program eligible individuals will be placed on a priority list and given assistance with transitioning, as soon as possible, into a qualified health plan through MHC. MHBE will manage the priority list.
• MHBE will use social media, direct contact and other communication outlets to inform individuals of the MHIP Bridge Program as an option of choice should other options not be available for the individual.

*From MHE-2/2014

THE NUMBERS ARE IN!

Kathleen Sebelius annouced today the approximate count of people getting covered or expected to get coverage through exchanges/medicaid.   The big winners are people getting Medicaid and the big losers..........everyone else.  During the first month there were approximately 107,000 people who were able to log into the exchanges (Federal and State) and actually sign up for a plan. This is far, far, far below the estimates as one would imagine.  However, there were approximately 390,000 that were deemed eligible for medicaid or some other government funded plans. The problem that one would immediately see is that Medicaid has no income, meaning it is, for the most part, funded by the government (taxpayers) with no or little cost to the recipient.  If the administration was hoping that people paying into the system were going to help offset this, we may have a problem if the trend continues.  

Additionally, hopefully the administration will pull-back on not allowing people to keep their current health plan.  More than 11 Million people who purchased individual plans would be forced from their plan to purchase reform coverage.  This is not exactly what our President said we would be able to do.  

To be continued..................

INDIVIDUAL MANDATE DEADLINE DELAYED

With the roll-out of the Health Exchanges on October 1, 2013 came a host of problems and computer glitches that kept would-be participants from enrolling in Exchange Plans through the Maryland State and/or Federal Websites.  Due to these hurdles, the Administration is pushing the Individual Mandate Date (date which most citizens must have coverage or face a penalty) back from January 1, 2014 to March 31, 2014.  Many senate democrats are also calling for a push-back on the "Open Enrollment" time-frame as well.  

AN EASIER WAY TO FIND RATES AND POTENTIAL SUBISIDES FOR REFORM PLANS

Anyone tried to get on the Maryland Health Connection website to see how affordable the health plans are?  From time to time I was successful and generated a couple scenario plans for clients.  What I found was that you needed to input a lot of information to find out if there were any Advanced Premium Tax Credits (APTC/Subsidies) available as well as the cost of the various "Medal" plans (Bronze, Silver, Gold, Platinum).  In addition, I also found that Carefirst, in many age bands, appeared to have the most competitive rates. Below is a link through our Portal (Brooks Benefit Services), that allows you to search, review, and see if you are eligible for APTC/Subsidies and apply for coverage if you don't. If you do qualify, you can only get those APTC's/Subsidies through the Maryland Health Connection Website. The Carefirst website is much easier, less time consuming, and will not log you off in the middle of doing a search.  Here is the Carefirst Medical Plan link. Please note that when you input the plan start date you should choose January 1, 2014.  If you do qualify for the "Subsidies" please feel free to contact me, Ben Brooks,  for assistance at 410-239-5009 or ben@brooksbenefit.com.  

MARYLAND HEALTH CONNECTION, SORT OF UP AND RUNNING

What a day.  We have had a partial government shutdown and the Maryland Health Exchanges are up and running, well sort of.  Trying all day to get into the exchange to compare rates, plans and features was met with absolutely no success. What I do know from some of my clients who were able to get rates, they were not very happy.  In fact very disappointed to find out that they were going to be paying the same or higher rates for inferior plans than they currently have.  It is important to remember that the Affordable Care Act is suppose to make plans both more affordable, accessible and provide decent coverage to those who otherwise wouldn't be able to obtain medical insurance in the individual market. 

Most brokers/consultants have taken the appropriate training to become certified to sell these plans both inside and outside of the Maryland Health Connection.  We are trying hard to educate not only the employers but the employees as well. Below please note the Maryland Health Connection logo and our reference ID which we would appreciate the employees using when completing applications as this not only credits our firm but also keeps the employees connected to our clients through Brooks Benefit Services.  In the upcoming weeks/months we will be reaching out to offer a time to set-up educational meeting for your employees.   If you would like to schedule a meeting in the meantime or request a copy of the PowerPoint Presentation, please do not hesitate to contact us at 410-239-5009 or ben@brooksbenefit.com.

Brooks Benefit Services, LLC

Benjamin Brooks

Consumer Assistance Reference ID: 9000054278

NEVERMIND, WE AREN'T GOING TO FORCE YOU TO NOTIFY YOUR EMPLOYEES OF THE EXCHANGES

The U.S. Department of Labor, after stating fines of about $100 per day for noncompliance, is now telling employers that they will not be fined if they fail to notify their workers of their health insurance exchanges by October 1, 2013.  What’s interesting is that they wait nearly two weeks prior to the “drop dead” date to do this.  Most employers have probably complied with the requirement already.

The Department of Labor announced on September 11, 2013 through a question and answer format specifically addressing the fine:

Q: Can an employer be fined for failing to provide employees with notice about the Affordable Care Act's new Health Insurance Marketplace?

A: No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.

Employers are told that they should still provide the information to their employees, seemingly as a recommendation rather than as a requirement.

NOTIFICATION OF THE EXISTENCE OF HEALTH EXCHANGE-URGENT

Essentially all employers must notify all of their employees, regardless of those on a medical plan or not, of the existence of the Health Exchanges.  The Model Notice of Health Exchange is the Notification issued by the Department of Labor (or one that contains essentially the same information) that MUST be sent to ALL employees by 10-1-2013. There are three pages to the notification.  Page 2 needs to be completed by you prior to sending to your employees. The third page is optional.  All newly hired employees must be given the notification within 14 days of Hire.

Below please find the distribution and delivery requirements. 

Distribution Requirements

Employers

Any employer who is subject to the Fair Labor Standards ACT of 1938 is required to distribute the Exchange Notice to its employees. Employers who do not currently offer health care coverage to their employees and/or are not subject to the Employer Mandate under the ACA are not exempt from this notification requirement.

Employees

ALL employees must be provided with an Exchange Notice, including employees who are not eligible to enroll in employer-sponsored benefits. A few exceptions do apply. A notice does not need to be issued to:

• Spouses and dependent children covered under an employer’s plan,
• COBRA participants, and
• Retirees (even if they are enrolled in an employer-sponsored health plan).

Delivery

When it comes to getting the Exchange Notice into the hands of employees, the updated guidance provides employers with two options: 1) First Class Mail and 2) Electronic Distribution. You may choose one option for all employees or a combination of both (depending on your employee population). Please note that electronic distribution is only permissible if the following DOL regulations are satisfied:

• Access to the electronic delivery system is an integral part of the employees’ work duties.
• A statement regarding the importance of the Exchange Notice is provided.
• A free paper copy is made available upon request.

     

POSSIBLE DELAYS TO THE INDIVIDUAL MANDATE UNDER TRANSITION RELIEF

According to IRS Notice 2013-42, for non-calendar year Medical Plans, transition relief is available for those plans that begin in 2013 and end in 2014.  If your coverage is available through an employer, depending upon when that coverage is made available to you (or your spouse) would depend upon when you would need to obtain coverage.

Example 1. You are eligible for enrollment in a non-calendar year employer sponsored medical plan beginning August 1, 2013 and ending July 31, 2014.  You have parent/child coverage for you and your 10-year old son.  You do not elect coverage for yourself/son on August 1, 2013.  Under this rule you would have transition relief through July 31, 2014.  If you do not elect coverage at this time, penalties would be assessed.

Example 2. You are Married and both you and your spouse are eligible for enrollment in a Non-Calendar Year Plan of an Employer for the 2013-2014 Plan Year and in a Calendar Year Plan with your Spouse’s Employer for 2014.  Your plan begins August 1, 2013 and ends July 31, 2014.  Your spouses plan begins January 1, 2014.  You do not elect coverage for you and your spouse under your plan August 1, 2013 and your spouse does not elect coverage for the both of you on January 1, 2014. In this example both you and your spouse would have transition relief until your plan renewal in August of 2014.  If at this time, no coverage was elected, penalties would be assessed.

(From IRS Notice 2013-42)

WHAT SOME COMPANIES ARE DOING TO AVOID REFORMS AND PENALTIES

Strategy 1

As we all know starting January 1, 2014 almost every man, woman and child must have medical coverage or pay a fine.  Some religious groups, Indian Tribes  and others are exempt.  Here in the state of Maryland the exchange will begin enrolling people October 1, 2013.  In addition when employers renew their medical coverage, they are then subject to the reforms as well.  What this means is that each person within the group will stand on their own and pay premiums based on them self.  In other words a person who is individual and 38 may have a different premium than someone who is 58.  In addition, the family rate will be separated out to include the individual, the spouse, number of children, etc.  There will not be a melded four rate structure any longer.  In addition, there will also be additional premiums due on those employees who smoke, up to a 50% increase over the standard rate.  For this, employer group can expect (according to some carriers) an additional 5-15% increase on top of their already ridiculously high renewals.  What are the carriers suggesting?  Early renewals.........most of the carriers are coming out and saying renew early if it makes financial sense.   If you have a renewal that may be in January, 2014 through say July, 2014, you may want to renew December 1, 2013.  What this will do is simply delay the impacts.  However, if you have a HRA, HSA or some other high deductible plan, these deductibles re-set so it may not make sense to you.  

Strategy 2

Larger organizations with lower paid employees are going to get killed either by having to offer Affordable, Minimal Essential Coverage or paying fines......period.  What some companies are doing is offering Minimal Essential Coverage although unaffordable and creating  a potential penalty to the employer. What employers are doing is making available Limited Medical Benefit Plans at a lower cost than the subsidized coverage made available to them on the exchange.  A limited Medical Benefit Plan, depending on the persons age may cost approximately $40-$50 per month.  Lets say a 30 year old person making $10 per hour would pay $80 per month on the exchange for a subsidized medical plan.  The idea is that if an employee has a Limited Medical Benefit Plan that is working for them and the costs are considerably less than the exchange plan (although not nearly as comprehensive), they will stay with the lower cost plan.  If they do, the employer has avoided a $3,000 penalty since the only way they are penalized is when an employee actually gets a subsidized health plan on the exchange.  

As a note, Limited Medical Benefit Plans typically offer preventive care, some prescription benefit's and other services.  They typically do not or have limited coverage for hospitalization.  These plans can be dangerous to the employee if they aren't explained very well and would caution any employee electing this coverage in place of a true medical plan. 

Strategy 3

Self-Fund....or partially self-fund.  Since health insurance, for the most part, will be guaranteed issue (except self-funded plans), and rates will favor older people rather than younger people, the population will be made of an older, more expensive pool.  If you have a relatively healthy group, you may be able to avoid the additional costs that the exchange will saddle employers/employees with and your healthy population will stand on its own merit.  Partially self-funded plans go down to as small as 5 employees and have premiums that are guaranteed.  In addition you will have a standard four tier rating structure. 

HEALTH REFORM: WHAT ABOUT THE KIDS?'

I just received a call from a client who said "What about the kids?  If coverage is affordable at work for me but not when I add my children and/or spouse, then what?"  Well, that's a great question.  Since affordability is only contingent on the cost as it pertains to individual cost and earnings (no more that 9.5% of W-2 income), it doesn't take into consideration the financial impact of family health care costs.  So, depending upon the income level of the family, the children may be eligible for the Children's Health Insurance Program or "CHIPS".  In addition if the household income does not qualify them for the CHIPS program, Children Only health plans will be made available on the exchange at the same coverage levels as adults (bronze, silver, gold, platinum, etc).  It is also important to note that there are tax penalties associated with not having medical coverage starting January, 2014 (Individual Mandate).  However, in a separate proposed regulation the IRS stated that uninsured children and spouse of an employee will not be subject to the individual mandate if the cost of coverage for the entire family was more than 8% of household income.  Of course that will be up to each individual family to prove to the IRS.

SO WHAT'S IT GOING TO LOOK LIKE?

I know, everyone is on the edge of their seats wondering what the health care environment is going to look like come the big day....January 1, 2014.  The date of the full enactment of the Affordable Care Act (Health Reform) in all its glory.  Well, it's anybody's guess but I'll give you mine.  Carriers will be offering their guaranteed issue Medal Coverage's (bronze, silver, gold, platinum plans) through the Maryland Health Benefit Exchange.  Coverage may be accessed by individuals or groups of up to 50 employees.  Our firm will be able to help you access those coverage options in the same way we do now.  Carriers will also be offering the same coverage directly through them.  So, in a sense, they will be competing against themselves.  

Plans that probably will start to become very popular are the partially self-funded medical plans.  These are plans that look at the medical history of the group and come up with a premium much as plans are now.  However, if you have a good claims year and dollars aren't spent on claims, these will come back to the employer.  If they don't, then your only exposure is what you've already paid in premium, no more. 

 In time, the exchanges become full of unhealthy people and will probably become unattractive to most healthy employer groups and individuals who will purchase on the underwritten private market.  It seems that the exchanges are going to be a death spiral unable to sustain itself.  So in order to keep it breathing those life support dollars will need to come from somewhere.......fines, taxes and penalties.  

In the meantime........................

Employers of all sizes need to:

1. Make sure their plans aren't discriminatory based on income.
2. Not allow waiting periods longer that 90 days
3. Make sure their part-time employees are working 29 or less hours a week on average
4. Notify ALL employees of the existence of the Health Exchanges (was in March now June/July maybe)
5. Issue Summary of Benefits Coverage of medical plans to ALL eligible employees
6. Let employees also know that they will be charged an additional 50% surcharge for medical plans offered through the exchanges if they are smokers.

In addition, those employers over 50 employees:

1. To avoid potential penalties associated with offering "Affordable" "Minimal Essential Coverage" Do a "Pay or Play Calculation".  (We will/have worked with our clients to arrive at these numbers)
2. Show value of health plan for those employers issuing more than 250 W-2's

This is simply a snap-shot of what the health care landscape could look like come 2014 and some areas needing to be addressed to avoid fines or penalties.

HEALTHCARE EXCHANGES AND COVERAGE COSTS

January 1, 2014 and people are flocking to the health exchanges to find cheap health coverage because the Affordable Care Act (ACA) has promised "Affordable Health Care". According to the ACA, affordable means the cost will be no more than 9.5% of income.  If it is higher than 9.5% there will be tax credits and/or subsidies given to make it affordable.  

Interestingly, the cost of a person who is 64 years old cannot be any higher than 3 times the cost of a 20 year old.  In other words, the cost for older people, who use on average 5 times the amount of health care than a 20 year old, would pay less while the 20 year old will pay more, than in our current market.  In addition, if you are a smoker, your premium can be up to 50% more than a non-smoker at the same age level.  The question is, if I am a smoker and paying 50% more than a non-smoker making it unaffordable for me, will I get a subsidy even though if I wasn't a smoker it would be affordable?  Since the smoking surcharge is considered a penalty, the answer seems to be no.  

Since coverage in the exchanges will be guaranteed issue, it seems that younger, healthier people will find cheaper coverage elsewhere while older, sicker people will flock to it. If this happens it won't be long before the exchanges implode and/or we are taxed even more to supplement the deficit. 

Individual Mandate Ruled Unconstitutional

On June 6th, 2011 a federal appeals court in Cincinnati ruled that the Individual Mandate (the portion of the reform law that states all individuals must have health insurance) was constitutional.  This was the first appellate court to rule on the issue.  Well, on August 12, 2011 a second federal appeals court in Atlanta has ruled the Individual Mandate as unconstitutional.  When ruling, they stated that this provision, although unconstitutional, is "severable" from the rest of the legislation.  This means that the Individual Mandate would be eliminated but the rest of the law would remain. 

Since there are now two federal courts that have ruled on the issue and have split their decision, it makes it much more likely that this issue will be in front of the U.S. Supreme Court as early as the fall with a decision in 2012.

GANG OF SIX..........DEATH TO THE CLASS ACT!!!

"GANG OF SIX" 

The Gang of Six, a bipartisan group of senators challenged with trying to cut the deficit, has put the Class Act in its cross-hairs.  This act, in PPACA (Health Reform), was slated to set-up a government run Long-Term Health care Plan.  Some of the key elements of The Class Act include: 

1. Average premium should be in the $150 per month range (less for youngers, more for olders)
2. You must pay into the plan for 5 years before accessing any benefits
3. You must be actively at work at least 3 out of 5 years
4. Guaranteed Issue (Except for the limitations noted above)
5. It is a voluntary plan primarily delivered through employers-employers are able to opt-out or opt-in.  If employers opt-in employees area able to opt-out on a case by case basis.

The Gang Of Six wants to repeal the program which in-turn would create $500 Billion in cuts from federal health care programs over the next ten years according to documents provided by the senators at a July 19th, 2011 meeting.

The Class Act has been under scrutiny because people would have to pay in for 5 years before ever being able to access benefits, mostly only the sick would apply, because it's guaranteed issue, creating adverse selection and it's seen as a way for the Federal Government to subsidize Medicaid, something we already pay for.    Also, according to Kent Conrad, (D-ND), Chairman of the Senate Budget Committee, speaking on the sustainability of the Class Act stated "a ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of." 

"The Gang" is also considering major changes in the Tax-Code, Medicare and Social Security.

McKinsey Report: Act II

ACT II

This whole McKinsey report thing has been a mess, and a lot of publicity for McKinsey.  The McKinsey Report was a survey of more than 1,000 employer groups and found that approximately 30% would "definitely" or "probably stop offering employer sponsored health coverage to their employees because it could be less costly to send the employees to the exchange and pay a penalty, if any.  

The White House is still pushing McKinsey to release more information on the findings since the outcome of the McKinsey Report was so different from that of the Congressional Budget Office, RAND or Urban Institutes findings. 

McKinsey commissioned IPSOS, the third largest market and research firm in the world to conduct the survey.  The survey was comprised using employer groups ranging from less that 20 employees to more than 10,000 and from a pool of hundreds of thousands of people in IPSOS databases. 

There are many surveys and some will have countering views.  However, if I am an employer and paying $10,000 a year for my employees health care and they can go to an exchange and get it cheaper while I pay a $2000 penalty, I may just do that.  And so may many other employers.  However, many won't because they may believe that keeping their coverage intact, keeps them more competitive. 

I guess time will tell and we will see what happens in 2014.  Cause if you can't keep the plan you have, as the President promised, it may be big pill to swallow for many people. 

PPACA (Health Reform) and How To Cut Medical Insurance Costs

Under Health Reform (PPACA) and currently in the Maryland Small Group Market (Under 50 Employees), medical plans are guaranteed issue.  This means that when a small group employer puts a medical plan in place there are no questions asked.  Plans are chosen, employees enrolled and thats it.  There are two main criteria used  to establish a rate:  Average age of the employees electing coverage and Location of the Company.  All things being equal, one employer located in the same county as another employer with the same average age will pay the exact same rate for the same medical plan through the same carrier.  The rates that the insurance carrier uses are filed with the State of Maryland and based on pooling.  What this means is that regardless of how much or how little you or your employees use the medical coverage you will pay the exact same rates as other companys with the same demographics because all claims are pooled together.  Now, if your company is sick, then this is a good thing because you are going to benefit from all the healthy people in the pool.  However, if your group is healthy, you are helping to pay for all those sick, unhealthy people.  This is where self-funding or partial self-funding comes in.  For small group plans, partial self-funding is a combination of traditional medical coverage, a claims fund, and stop-loss coverage.  Under a traditional plan you pay your premium whether you use the plan or not.  Under self-funded plans, if you don't use the plan, some of those premium dollars may come back to you.  For example, lets say a 40 employee group pays $200,000 in medical premium per year.  Under a partially self-funded plan $100,000 may go to a claim fund.  To protect your fund there are limits on claims.  One is a specific Stop-Loss Insurance, maybe $10,000 (for specific one-time claims) and Aggregate Stop-Loss Insurance (this amount is the total amount of claims that will be paid out before this coverage kicks in).  If all those dollars aren't used in the plan year, they are paid back to the employer.  If claims exceed this amount, under partially self-funded plans, employers costs are only limited to their premiums paid in.  These plans will become ever more attractive to healthy employer groups as Exchanges are set-up and younger healthy employees may be opting-out to go find cheaper coverage leaving the employer group with older, more costly, employees that will only drive up the costs of their coverage. 

Gotta Light?

Fast forward to 2014.  We are now purchasing health insurance through exchanges.  Individual and small business will be able to go to a virtual site, with the help of a navigator (possibly a broker or producer) and purchase medical coverage.  Depending upon your household income, you may also be eligible for a subsidy to help pay for that coverage.  The coverage you will be applying for is guaranteed issue, no-questions-asked coverage.  As it stands now, there are only a couple things that could impact the amount that you pay for your plan:

1) Family Composition (Individual, Parent/Child, Husband/Wife, Family)
2) Where you live or Rating Area
3) Age
4) And the only question that has to do with health.......do you use tobacco?

If you use tobacco you can be charged up to a 50% higher premium than non-tobacco users.  I understand that tobacco users are at a much higher risk of having health issues and probably should pay more, but what about all the other behaviors that cause illness?  Why is there no rate increase for them?   How about people who are diabetic because of their poor diets?  How about people who use crack or heroin?   While the diabetic gets insulin and diet counseling and the drug addict gets substance abuse treatment and medications to curb the desire, the tobacco user gets a 50% rate increase instead of acupuncture, hypnosis and/or a prescription for Chantix.  In all fairness though, smoking cessation counseling is now included under preventive in all health policies.

You may be thinking to yourself that this is no different than the life insurance industry where typically a tobacco user pays at least 50% more on their coverage.  The main difference is that life insurance isn't guaranteed issue.  If you are a diabetic or drug user, you will probably be turned down entirely.  Since your health plan through the exchange will be guaranteed issue, you can't be turned down.

This is definitely a head-scratcher for me.

Boring But Important-States Can Opt-Out of Health Care Plan (Mandates) 3 Years Earlier

"If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act (PPACA) does, without increasing the deficit, you can implement that plan, and we'll work with you to do it."  This is was President Obama said while speaking at the National Governors Association 2011 Meeting in Washington, D.C.  on February 28th.  What this means is that states would be able to withdraw from some of the law's regulatory mandates in 2014 instead of 2017 through a "state innovation waiver".

In bipartisan support of "Empowering States to Innovate Act" it allows states to establish independent insurance regulatory models instead of Health Exchanges.  In addition it also allows those states to have no individual mandate and no penalties for those companies with more than 50 employees that do not meet PPACA requirements.  This could be of great interest to those states who filed a lawsuit against the PPACA's individual mandate, in Florida.

Even though there would be more flexibility for the states, they still would be required to offer policies that are as comprehensive and affordable as those offered through the exchange, cover as many residents as would have through PPACA and not increase the deficit.  In addition, certain mandates would need to stay, including: No lifetime limits, Dependents can stay on parents plan until age 26, Patients can choose any network physician and Carriers must spend at least 80% on Health Care and no more that 20% on administrative costs.

The questions I have would be how would the fed be able to police these plans?  In other words how would they ever be able to prove how many residents would have been covered under PPACA versus the states own version?  Also, states will have the opportunity to do more.  In other words they could go the other way and set-up a government run single-payer plan.