By Robert Laszewski

After months of speculation on just where the Obama administration is toward the development of the new health insurance exchanges, the Government Accountability Office (GAO) has issued a 48-page report complete with timelines and a detailed report on just where the Obama administration is––or at least was last month.

The key summary:

“Much  progress  has  been  made,  but  much  remains  to  be  accomplished  within  a   relatively  short  amount  of  time.  CMS’s  timelines  provide  a  roadmap  to   completion;  however,  factors  such  as  the  still-­evolving  scope  of  CMS’s  required   activities  in  each  state  and  the  many  activities  yet  to  be  performed—some  close   to  the  start  of  enrollment—suggest  a  potential  for  challenges  going  forward.  And   while  the  missed  interim  deadlines  may  not  affect  implementation,  additional   missed  deadlines  closer  to  the  start  of  enrollment  could  do  so.  CMS  recently   completed  risk  assessments  and  plans  for  mitigating  risks  associated  with  the   data  hub,  and  is  also  working  on  strategies  to  address  state  preparedness   contingencies.  Whether  these  efforts  will  assure  the  timely  and  smooth   implementation  of  the  exchanges  by  October  2013  cannot  yet  be  determined. ”

Regarding the Data Hub:

“FFEs  [the federal exchanges] along  with  the  data  services  hub  services  are  central  to  the  goal   under  PPACA  of  having  health  insurance  exchanges  operating  in  each   state  by  2014,  and  of  providing  a  single  point  of  access  to  the  health   insurance  market  for  individuals.  Their  development  has  been  a  complex   undertaking,  involving  the  coordinated  actions  of  multiple  federal,  state,   and  private  stakeholders,  and  the  creation  of  an  information  system  to   support  connectivity  and  near  real-­time  data  sharing  between  health   insurance  exchanges  and  multiple  federal  and  state  agencies.  Much   progress  has  been  made  in  establishing  the  regulatory  framework  and   guidance  required  for  this  undertaking,  and  CMS  is  currently  taking  steps   to  implement  key  activities  of  the  FFEs,  and  developing,  testing,  and   implementing  the  data  hub.  Nevertheless,  much  remains  to  be   accomplished  within  a  relatively  short  amount  of  time.  CMS’s  timelines   and  targeted  completion  dates  provide  a  roadmap  to  completion  of  the   required  activities  by  the  start  of  enrollment  on  October  1,  2013.  However,   certain  factors,  such  as  the  still-­unknown  and  evolving  scope  of  the   exchange  activities  CMS  will  be  required  to  perform  in  each  state,  and  the   large  numbers  of  activities  remaining  to  be  performed—some  close  to  the   start  of  enrollment—suggest  a  potential  for  implementation  challenges   going  forward.  And  while  the  missed  interim  deadlines  may  not  affect implementation,  additional  missed  deadlines  closer  to  the  start  of   enrollment  could  do  so.  CMS  recently  completed  risk  assessments  and   plans  for  mitigating  identified  risks  associated  with  the  data  hub,  and  is   also  working  on  strategies  to  address  state  preparedness  contingencies.   Whether  CMS’s  contingency  planning  will  assure  the  timely  and  smooth   implementation  of  the  exchanges  by  October  2013  cannot  yet  be determined.”

That about sums up the whole report––CMS has been outwardly optimistic but is clearly struggling to make the deadlines.

Continue reading “Will the Federal Health Insurance Exchanges Be Ready On Time?”

By Robert Laszewski

Last week, I received my weekly email update from the Maryland health insurance exchange:

Maryland Health Connection completed its Final Detailed Design Review (FDDR) live system demo on Thursday, May 30. The FDDR is a federal stage-gate required of all state-based exchanges. Maryland Health Connection successfully demonstrated end-to-end enrollment of a split family scenario including user log in, eligibility determination, real-time data verification through the Federal Data Services Hub, enrollment into plans, payment and file generation to be sent to an insurance carrier. This major information technology milestone received high marks by federal partners. We will continue with development of Maryland Health Connection over the next several weeks and begin user acceptance testing in July.

This report tells us a few things.

First, the Maryland health insurance exchange is on track to launch on time and ready to serve all comers. I continue to be impressed by how well this state-run health insurance exchange is working toward implementing the Affordable Care Act (“ObamaCare”) on October 1, 2013.

Second, apparently the Federal Data Hub is up and running. While that is what the Obama administration has been telling us, it has been hard to find anyone who has actually seen it or used it.

Third, Maryland has its system ready to exchange eligibility and premium information with the health insurance plans––perhaps the biggest challenge the new exchanges, state or federal, face.

Across the country, I am not so worried that consumers will have a website to go to on October 1 in order to shop for the new health plans as I am concerned with how things will go on January 1, 2014 when patients show up in a doctors office. If we don’t have a clean exchange of eligibility and payment information there are going to be lots of people who will have their doctor or hospital telling them they don’t know anything about their coverage.

Continue reading “Will the Affordable Care Act’s Health Insurance Exchanges Be Ready On Time? The Obama Administration’s Top Secret Enterprise”

By Robert Laszewski

I have to say I was surprised with the press reports last week that there wasn’t “rate shock” in California when the California exchange offered preliminary information about their new plans and rates.

At least one prominent health actuarial group had predicted a 30% baseline increase in costs for California’s new health insurance exchange plans under the Affordable Care Act (ObamaCare”).

As the director of the California exchange put it, “These rates are way below the worst-case gloom-and-doom scenarios we have heard.”

But a few days later there is lots more information coming out and it would appear we have a case of apples to oranges to grapefruit. And, we have a pretty good case of rate shock.

First, the exchange officials pointed out that we have to be careful to compare apples to apples when looking at 2013 rates and comparing them to the 2014 exchange rates because the 2014 exchange plans have far more generous benefits.

Yes we do, particularly when the California exchange forces us to give up our apple and buy a more expensive orange.

One of the reasons health insurance in the exchange will cost a lot more in most states is because the new health law outlaws many of the existing plans now being offered and requires only those much richer plans to be sold.

Are people going to get more coverage for their money? Yes. Do they want more coverage if the premium costs for those plans is a lot higher? Likely yes if taxpayers are paying for most of it. If not, clearly they didn’t want to pay for it before. Come January, lots of California consumers in the small group and individual market are going to get a letter from their existing insurer telling them their current plan is no longer available and the cost of the new required plans will be a lot more.

Simply, the new law is taking plan design choices away instead of letting the consumer decide what is good for them. Does that matter in California?

Continue reading “Rate Shock and Awe in California”

By Robert Laszewski

Every week, I get an email from the Maryland Health Connection––the state run health insurance exchange.
Maryland is one of a minority of states that are building their own Affordable Care Act (“ObamaCare”) exchange.

You can go to their site and sign up for these weekly updates.

Let me suggest that Maryland is an example of what an on-track and well organized effort looks like for any exchange hoping to be ready to enroll people on October 1––and ensure that they will be covered should they walk into a doctor’s office on January 1, 2014.

Maryland is simply ticking through all of the key milestones they must meet. The latest release reviewed its efforts to launch the connector program (those who will assist people in signing up), the status of the carrier filings (Maryland Blue Cross has filed for an average increase of 25% for individual coverage warning young people could pay as much as 150% more), the timelines for carrier submissions of coverage packages, and they outlined their third party administration program to be able to launch the small business choice (SHOP) option––unlike the federal exchange Maryland will have the SHOP option.

Continue reading “A Health Insurance Exchange That Won’t Be a “Train Wreck””

By Robert Laszewski

As the Obama administration continues its top secret effort to build federal insurance exchanges in about 34 states while 16 states are doing it on their own, that continues to be the big question.

HHS is using IT consulting firm CGI for much of the work on the exchanges and the federal data hub. CGI has their plate full since they are not only working on the federal exchange but also doing work for the state exchanges in at least Colorado, Vermont, and Hawaii.

Earlier this month, the Senate Finance Committee held an oversight hearing. The Obama guy in charge of exchange development testified before them. I thought it was notable that it was the Democrats who expressed the greatest concern, and frustration, over senators not getting a clear idea for just where the administration is toward the goal of launching the new health insurance exchanges on October 1.

Continue reading “Six Months Out Health Plan Execs Say They Doubt Exchanges Will Be Ready”

By Robert Laszewski

So far California has received $910 million in federal grants to launch its new health insurance exchange under the Affordable Care Act (“Obamacare”).

The California exchange, “Covered California,” has so far awarded a $183 million contract to Accenture to build the website, enrollment, and eligibility system and another $174 million to operate the exchange for four years.

The state will also spend $250 million on a two-year marketing campaign. By comparison California Senator Barbara Boxer spent $28 million on her 2010 statewide reelection campaign while her challenger spent another $22 million.

The most recent installment of the $910 million in federal money was a $674 million grant. The exchange’s executive director noted that was less than the $706 million he had asked for. “The feds reduced the 2014 potential payment for outreach and enrollment by about $30 million,” he said. “But we think we have enough resources on hand to do the biggest outreach that I have ever seen.”

Continue reading “A $910 Million Price Tag For California Exchange: A Dark Omen of Things to Come”

By Robert Laszewski

A million Floridians will now be eligible for Medicaid––the Obama administration is happy about that.

Republican Rick Scott gets to do it his way––in an almost entirely private market.

This from today’s Tampa Bay Times:

His [Scott's] endorsement of the expansion came hours after the federal government agreed to grant Florida a conditional waiver to privatize Medicaid statewide for the state’s more than 3 million current recipients, more than half of which are children or people under age 21.

Scott has agreed to only a three year trial expansion and the legislature must vote in favor of it––not a certainty. And, the Obama administration is taking some big risks––a five county trial of Scott’s privatization program has had lots of problems.

In prior posts I have said that Republican governors, so adamantly opposed to “Obamacare,” ought to go to Washington and negotiate a deal on Medicaid expansion. If they believe they can manage Medicaid better than the traditional federal route, which is what they claim every time they demand block grants, then they should put a deal on the table. Ultimately, the feds will pay 90% of costs and the state will pay 10% of the cost of the expansion. The Republican governors don’t believe they can save 10% if given more flexibility?

Continue reading “Rick Scott’s Privatization Experiment in Florida”

By Robert Laszewski

Last week, I reported on my informal survey of health insurance companies and their estimate for how much rates will rise on account of the Affordable Care Act (“Obamacare”).

Today, there are press reports quoting the CEO of Aetna with their estimate. The Aetna estimate is worse than mine.

From Bloomberg:

Health insurance premiums may as much as double for some small businesses and individual buyers in the U.S. when the Affordable Care Act’s major provisions start in 2014, Aetna Inc. (AET)’s chief executive officer said.

While subsidies in the law will shield some people, other consumers who make too much for assistance are in for “premium rate shock,” Mark Bertolini, who runs the third-biggest U.S. health-insurance company, told analysts yesterday at a conference in New York. The prospect has spurred discussion of having Congress delay or phase in parts of the law, he said.

“We’ve shared it all with the people in Washington and I think it’s a big concern,” the CEO said. “We’re going to see some markets go up as much as as 100 percent.”

Continue reading “More Signs of Rate Shock and Awe”

By ROBERT LASZEWSKI

What will health insurance cost in 2014?

By ROBERT LASZEWSKI

The Obama administration just released another set of regulations, the “Draft Notice of Benefit and Payment Parameters for 2014.”

Among many other things in the 373 pages, they have announced their proposed assessments to cover the cost of running the federal exchange.

In order for the feds to administer the new insurance exchanges, they have proposed a fee of 3.5% of premium on each insurance policy sold in the exchanges (page 224).

This from the Kaiser Foundation 2011 “Primer” on Medicare:
“The costs of administering the Medicare program have remained low over the years––less than 2% of program expenditures.”

Many times over the years I have heard from advocates of a single-payer Canadian-style health plan that Medicare proves the federal government can do it cheaper than the private sector and should therefore take it all over.

So much for the notion that the feds are the model of insurance efficiency.

Under the new health care law’s Minimum Loss Ratio (MLR) provisions, insurance companies are limited to no more than 20% of premiums for expenses in the small group and individual markets.

Continue reading “Inside Baseball: Getting the Federal Exchange Right”