Last week President Obama announced that he will try to keep his oft repeated promise to Americans in the individual market that they can keep their plans if they like them … for a year. The media have done an excellent job explaining why President Obama’s temporary patch to the ACA may endanger its existence; in the process the American public has learned more than it ever wanted to about adverse selection, cream skimming, and most importantly crass politics.
Though the full costs of adverse selection will be muted in the first year by risk corridors and reinsurance, it is clear that the failing website, the bad press, and the recently announced delay are placing maximal stress on even those backup provisions of the bill.
Even if the ACA survives this additional insult against the economics that support its very existence, we have witnessed yet another missed opportunity for positive reform to President Obama’s signature legislative achievement. And this time we can’t just blame intransigent tea-party Republicans and their quixotic efforts at repeal; here the buck stops at 1600 Pennsylvania Ave, NW.
While many of the plans that are affected by the President’s temporary patch might actually be plans that don’t qualify as “insurance” (i.e. they have low lifetime caps on expenditures or don’t cover hospital services), numerous others actually offer quite good coverage that just don’t meet the exceptionally high standards of the newly developed minimum essential health benefit (EHB).
In many ways, the first dollar coverage for preventive care and the wide ranging number of services covered by the ACA aren’t truly insurance either. Instead, these features amount to a very generous pre-payment plan for medical services supported by the United States treasury.
These elements of the EHB are too costly and unnecessary. Perhaps even more concerning, they are just the ante. As time goes on, vested interests for everything not included in the EHB will work tirelessly to insure that their favorite benefits are included. If you want evidence of this eventuality, you need look no further than the remarkably long and growing list of benefits mandated by most states.
Keep in mind that as the EHB grows more generous the premiums and subsidies on the exchanges will also grow. And we know who will pay their “fair share” of those increases.
On February 16 of last year, I was in a New Orleans hotel room preparing for a meeting when my wife Becky called and said simply, “I have cancer.”
We knew it was possible, but that didn’t in any way lessen the impact of those three words.
I have cancer.
Everything that was right and comfortable was in that instant washed away by a million questions with no answers. At a time when we needed nothing more than certainty and clarity, there was only confusion and doubt.
Upon landing in Philadelphia hours later, I called to see how she was doing with her newly diagnosed breast cancer. Feeling numb, I managed to make one other call soon after landing. Not to friends. Not to family. Instead, it was to our insurance company.
That’s right: Other than my wife, the one person I most wanted to speak to in the world was a Cigna call center operator.
We hadn’t even had a chance to meet with her oncologist to discuss potential courses of treatment, but we had questions because we had recently changed our plan to carry higher out-of-pocket costs and lower deductibles. We needed answers to those questions so we could go about worrying about more important things.
What procedures are covered? Are the doctors at the cancer center in plan? What is the maximum out of pocket? What other limits should we know about?
A 15-minute conversation later, we were comfortable that insurance wouldn’t be an issue and had a decent understanding of what our share of the costs would be. At a time of absolute fear and confusion, our insurer provided a moment of comfort and clarity.
That is the kind of financial and emotional stress that millions of people face every day in the United States. That is also the kind of financial and emotional security the Affordable Care Act was supposed to provide — especially to those who currently lack health insurance. Continue reading…
A THCB reader in New York writes in with this timely observation:
“If you want everyone to be able to get insurance, everyone has to actually have insurance.
Most people agree that one shouldn’t be denied insurance because of illness and pre-existing conditions. This is probably the least controversial aspect of healthcare reform. The problem is, you can’t insist that insurance companies sell to all comers at reasonable rates unless you also guarantee a sufficiently large risk pool that includes the healthy as well as the sick.
If you don’t see to it that the healthy sign up, people will go without insurance until they get sick, and the pool of the insured will become so costly that premiums will quickly spiral out of control.
So, to make sure everyone CAN get insurance, everyone MUST get insurance.
This isn’t a moral or political stance, it’s not something you can choose to believe in, it’s basic economics.
The problem with the ACA’s approach to ensuring universal coverage is that the incentives for the healthy to sign up are too weak.
The healthy who decide not to purchase insurance will have to pay a penalty, but that penalty will usually be substantially lower than the price of insurance. Perversely, this weakened approach to ensuring universal coverage could make things worse than they are today. How?
Today, if I’m healthy and uninsured, I know that if I develop a serious illness, I won’t be able to get coverage. At all. This is an incentive for me to go out and spend the money on insurance. Once the ACA is in full force, if I decide that I would rather pay the (cheaper) penalty than buy insurance, I have the security that should I become sick, assuming it’s not a super emergency, I will be able to get insurance to cover future costs, since policies will have to be offered to all. This security blanket for those who choose to remain uninsured is a major problem.”
There were two high-profile apologies in the news this week — by the Leader of the Free World and by a Man Who Makes Yoga Pants.
Neither was well executed and neither was well received.
Let’s start with President Obama, who offered his belated apology on the rollout of the federal health exchange at the heart of the Affordable Care Act. After more than five weeks of shifting stories, blame and timelines, the president sat down with Chuck Todd to say “I’m sorry” for repeatedly saying some variation of, “If you like your health plan, you can keep it. Period.”
“I am sorry that they are finding themselves in this situation based on assurances they got from me,” he told NBC News. “We’ve got to work hard to make sure that they know we hear them and we are going to do everything we can to deal with folks who find themselves in a tough position as a consequence of this.”
Critics quickly and loudly objected to the president’s use of passive voice — and the fact that he claimed people found themselves with cancelled plans “based on assurances they got from me.” They pointed out that it wasn’t the assurances that cancelled the plans; it was the way Obama’s administration wrote the regulations that required insurance companies to cancel the plans.
In short, Obama didn’t own the cause of the pain. He only apologized for the “assurances” (which, by almost all accounts, are better known as “lies”).
Now, the Man Who Makes Yoga Pants.
Lululemon founder Chip Wilson got in hot water for blaming women’s bodies for well-publicized problems with his company’s yoga clothes, including see-through pants and pilling:
“Even our small sizes would fit an extra large, it’s really about the rubbing through the thighs, how much pressure is there … over a period of time, and how much they use it,” he said.
This, of course, led to a predictable backlash — particularly on the company’s Facebook page, where women shared their views of the company and Wilson’s basically saying “You’re too fat to wear our clothes.”
Many health care experts and journalists, including me, felt that the month of October would be the key barometer of the success of Healthcare.gov, the online health insurance marketplace that is a cornerstone of the Affordable Care Act.
But as days became weeks, and the problems plaguing the website stubbornly went unfixed, the question now is whether the administration can make the website work well by the end of this month and salvage the president’s signature achievement. If Healthcare.gov, which handles health insurance enrollment for 36 states, is working well at the end of this month, it will leave consumers just two weeks to choose plans if they want them to take effect on Jan. 1, 2014.
In other words, November is the new October.
The din of partisan accusations and counter-accusations is deafening and only getting louder. But in the interest of finding out what’s really happening on the ground, I consulted Kip Piper, who advises large health care organizations on Medicare, Medicaid, and health reform policy, finance and business strategy.
Piper has served as senior advisor to the administrator of the Centers for Medicare and Medicaid Services (CMS), Wisconsin state health administrator, director of the Wisconsin Medicaid program, a senior Medicare budget officer at the White House Office of Management and Budget, among other roles. He is articulate and clear-headed.
All eyes are on the hullaballoo created by the challenges at Healthcare.gov and several of the states’ public insurance exchanges. Yet all the while, like in a magic show, attention has been diverted from the real action going on elsewhere. Quietly and in a relatively drama-free way, the private health insurance exchanges are busily taking over the world of insurance and, in my opinion, portend a radical set of changes in how our health insurance system operates.
Several years back, a number of companies began building private health insurance exchanges to initially help companies offload the incredible burden of retiree benefits. Companies such as Extend Health (now owned by Towers Watson), Senior Educators (now owned by Aon), and several others provided a way for large employers to get themselves out of the business (and balance sheet liability) of providing group benefits for retirees, instead providing them with money to purchase their own individual health policies through then small, now large companies. The private exchanges went about the business of building websites that work, call centers that buzz and a wide array of insurance product offerings at various prices. Now, several years later, hundreds of thousands and possibly millions of individuals are out there shopping their little hearts out, choosing their own plans, and dealing with the consequences of high deductibles and the like.
These various private exchanges are now poised and ready to begin serving active employees in 2014 as guaranteed issue (the requirement that all can be insured and no one turned away) goes into effect as a result of the Affordable Care Act. And lest you think this is a small marketplace, you are wrong. In 2008 there were about 120 million total employed workers and just over half of these worked for companies of 500 employees and above (39 million worked for companies with 5000 employees or more). In other words, we are talking about nearly half of American adults and that doesn’t even include the dependents they bring along into their insurance plan.
Interestingly, such large US employers as Walgreens and Petco and DineEquity (parent company of Applebee’s Neighborhood Grill & Bar® and IHOP® restaurants) are all-in on the private exchange program, committing to transfer all of their employees from group plans to the exchange to purchase individual plans come January 2014. The exchanges of Towers, Aon, Mercer, Buck Consultants and a plethora of others are alive and well and open for business at exactly the time when employers are trying to figure out how fast they can reasonably get out of the middle of health insurance administration and run for the hills.
Through a bad roll of the genetic dice, I am the unhappy host for several, rare chronic diseases. Any one of these would render me uninsurable, but the combination of them makes me incurable, and very difficult to treat. The deadliest thing that I can encounter is a well-intentioned but uninformed doctor.
I have currently have excellent insurance through my husband’s job that allows me to see my varied team of treating physicians. Two are in other states, and the rest are all heads of their departments, but none share a hospital or healthcare group. If my husband were to lose his job, I would be placed into the “high-risk-pool,” if there were any slots left, or forced onto the exchanges where my physician options would be cut significantly.
I would likely be forced to pay for healthcare coverage that I cannot use, since many doctors have been unwilling to even attempt to treat me, despite my “Cadillac” insurance plan.
I would likely have to pay cash to see my current team of physicians, which would be a tremendous financial burden on my family and likely end in bankruptcy.
I was cautiously optimistic when I heard of the end of the pre-existing condition exclusions for health insurance, but the current law will not help me at all. It does not expand my insurance options, it will definitely NOT be less expensive than what I have now, and if I am forced to see a well intentioned, overworked and uninformed (or even distracted) doctor, it just might kill me.
BTW: I am NOT disabled, and do not take any form of government assistance. I have owned my own business and paid that higher tax bracket for over 20 years.”
If you’ve had a bad or good experience attempting to buy health insurance on the state or federal exchanges, we’d like to know about it. Drop us a note.
A THCB Reader in Maryland writes:
“I realize many individual health insurance policies are being cancelled because they are not in compliance with the ACA’s new requirements.
Do the new ACA requirements effect all individual plans sold or just those available in the exchanges?
In other words, if I am a self employed, single 50 year old male who does not want maternity, pap smears and mammograms; can I solicit an individual policy outside of the exchanges that meets these needs? For that matter, could I find a policy in the exchanges that meets these needs?”
If you’ve had a bad or good experience attempting to buy health insurance on the state or federal exchanges, we’d like to know about it. Drop us a note.
A THCB Reader from California writes:
“I finally decided to go to the “Covered California” website to see how much a potential premium for my partner and myself would be given several different income scenarios.
First of all, the plan differences are so vast it appears to be a further seperation of classes through healthcare. I wonder who decided that a $40 doctor co-payments is affordable! Then you take a look at how the tax credits work and the antiquated undertones that others should pay for children.
It is amazing to me that people with kids are going to pay LESS than the coverage my partner and I will. This isn’t just for one child, it is up to 3 or more! I do not have children but I understand that in a universal healthcare system the larger the pool, the cheaper the cost. Those savings should also go to those whom have decided not to add additional risk to the system by adding children. Why is a single persons insurance more than that of a family? Why are the subsadies so large that it makes it cheaper?
At least charge as much as a single person, not less. Healthcare for all is something that everyone should pay into and the largest economy in the world should offer, but the distribution of costs need to equal the risk. Kids are expensive choices that people make, why should people who have chosen to not bear the costs pay for others that have?”
Have a question about the Affordable Care Act? Drop us a note. We’ll publish the good ideas.
This week, Health and Human Services Secretary Kathleen Sebelius apologized to Americans for the issues with the launch of the Obama Administration’s website, HealthCare.gov. In her testimony, Ms. Sebelius told Congress that we “deserve better.” And with that, the social media world was set on fire with a rage of backlash aimed at the Administration – something that has been growing feverishly for months now.
Yes, we agree that the American public deserves better – but not just from the Administration. They deserve more from the private sector, too. At this point, some of the biggest naysayers of the Fed’s exchange launch have been leaders in our industry. It’s disheartening to watch.
It’s clear by now that the private sector can offer the government a wealth of knowledge and best practices. But for the Administration to truly learn from those lessons and fix the problems, we need to step up and stop undermining this effort.
As a start, there are three things the private sector should do to counteract what much of the media refers to as a complete debacle:
1. First, just calm down.Focus instead on helping clear up the confusion about deadlines, options and the law. For example, we should remind Americans that they can still get insurance, despite all of the issues HealthCare.gov is experiencing. Legally, Americans don’t need insurance until the end of March 2014. And, if they need something sooner, not only may short-term medical insurance be an option, but there are many off-exchange plans available to buy today from multiple carriers. In other words, HealthCare.gov is not the only source of coverage.