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What the “Doc Fix” Should Tell You About the “Grandfather Fix”

With his announcement on Nov. 14 of a plan to offer a temporary reprieve to people facing cancellation of their health-care policies, President Barack Obama may have created his own version of the much-maligned, often yearly, Medicare “doc fix”.

The doc fix, a recurring effort by Congress to override statutory formulas that limit the growth in Medicare payments to doctors, often sparks political theatrics as lawmakers work to assuage the concerns of physician groups and Medicare recipients. Many members of Congress want to repeal and replace the underlying program — the sustainable growth rate formula for reimbursing physicians — but agreement has proved elusive, in part because of deficit concerns and the high cost of repealing the formula.

The president may have set himself up for another situation similar to the doc fix with his proposal to administratively tweak the health law. Obama said he will temporarily allow health insurance companies and state insurance commissioners to continue offering insurance plans “that would otherwise be terminated or canceled” for failing to meet the requirements of the Affordable Care Act (ACA).

Has President Obama created his own version of the annual “doc fix” by continuing insurance plans that would have otherwise been canceled?

While this change will help some health-insurance consumers, it is a serious complication for health insurers who in a few weeks will have to readjust their plans. In the 24 hours since the announcement, the initial reaction from insurers and state health insurance commissioners has been mixed. Some insurers have already voiced concerns that any short-term fix will deprive their ACA-compliant exchange plans of the healthier customers needed to keep rates down for everyone, including older, sicker customers.

Fast-forward 11 months to late October, 2014, with the midterm elections imminent and the president’s “transitional policy” about to expire. Will Democrats want the issue of whether people can “keep their health plan if they like it” raising its ugly head again, just as voters are about to cast their ballots?

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You Can Keep Your Plan. Maybe.*

Facing a revolt by Democratic lawmakers unhappy with the rollout of the health law, the Obama administration announced this morning that it will allow insurers to renew cancelled health plans that fail to meet the standards set by the Affordable Care Act.

Insurers will be required to notify customers with cancelled plans that they have the option of upgrading to an ACA-compliant plan. Plans can be extended through the end of 2014.

The decision does not impact new customers who will still be required to buy coverage that meets the stricter standards set by the new health law – either on the exchanges or directly from an insurer.

The move is likely to add additional confusion and uncertainty to an already chaotic marketplace shaken by the widely publicized problems at HealthCare.gov.

It is unclear, for example, how the customers of specific health plans who have already had their coverage cancelled will be impacted. The decision of whether or not to reinstate individual plans is being left up to individual insurers.

Exactly why they’d want to reinstate the cancelled plans isn’t obvious. Five million people have received cancellation letters according to one recent estimate.

Health plan insiders have argued for months that reversing course will be difficult, if not impossible, for plans that have built their actuarial models on the assumption that certain numbers of healthy people will enroll by certain dates.  Industry representatives immediately warned that the impact would likely be higher premiums.

In a letter sent to state health insurance commissioners this morning, Center for Consumer Information and Insurance Oversight (CCIIO) director Gary Cohn spelled out the details of the fix.  A plan must have been in effect on October 1st, 2013.  Health plans must notify consumers in writing of their eligibility for an ACA-compliant plan.  And they must explain what they’re not getting. A request that, in effect, asks insurers to advertise the Obamacare plans, something they haven’t exactly been enthusiastic about doing in the past. That may or may not turn out to be a smart move.

Health plan consultant Robert Laszewski – a frequent THCB contributor – warned:

This means that the insurance companies have 32 days to reprogram their computer systems for policies, rates, and eligibility, send notices to the policyholders via US Mail, send a very complex letter that describes just what the differences are between specific policies and Obamacare compliant plans, ask the consumer for their decision —  and give them a reasonable time to make that decision —  and then enter those decisions back into their systems without creating massive billing, claim payment, and provider eligibility list mistakes. This puts the insurance companies, who have successfully complied with the law, in a hell of a mess.

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The Opening Act

That past month of debate over the botched launch of the health care exchanges has brought the programming geeks, and their hired mouthpieces, out in the open to defend the indefensible. As painful as this has been for so many Americans, we cannot help but be amused to hear so many commentators doing their best impression of Captain Renault and expressing their shock that the federal procurement system could have produced such an outcome. Of course, most of this is a sideshow, the opening act to an even more serious drama in the making.

Let us be clear from the outset, the rollout of Healthcare.gov is an embarrassment. However, this only becomes a real problem if it dissuades enough people who were already marginal customers with respect to their purchase of health insurance on the exchanges to simply pay the penalty and avoid the hassle of staring at a computer screen, waiting on hold for hours, or refusing to try again once the geeks get this all sorted out.

While the self-appointed technology experts on both sides of the aisle have been debating the causes of the web site debacle, attention has been diverted away from the necessarily frank discussions we must have about the real potential benefits and looming costs of the exchanges.

In a valiant attempt to steer the conversation towards the benefits of the ACA, President Obama held a rose garden press event where he repeatedly claimed that the health insurance on the exchanges is good product. But as is all too often the case, the President talked about the benefits and side stepped the difficult conversation about the costs.

At least he is half right. If they can ever fix the web sites, people with pre-existing conditions who shop on the exchanges will gain access to insurance at a more affordable price. Enrollees may save thousands of dollars. But let’s not kid ourselves.

The exchanges do not reduce the cost of medical care; they only change who pays for it. And we all know who that is.

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Should Sebelius Resign?

As Congress begins investigations into the Affordable Care Act rollout and the healthcare.gov flaws, Republicans are calling for resignations as far up as the Secretary of Health and Human Services. The logic goes: if managerial issues were behind failures to test the website component of the federal health care exchange, we need new management.

That concern is a valid one. In the private sector and often times in the public sector, when misakes happen—particularly in an area critical to the executive’s interests—heads roll.

Yet, Kathleen Sebelius will stay, and Republicans have no one to blame but themselves.

Why is this? In an ironic twist of fate the Republican Party’s obsession with filibustering, delaying, or holding executive branch nominations will finally have negative consequences for the GOP instead of the president.

Over the past several years, Republicans in Congress had refused to confirm a director of the Consumer Financial Protection Bureau because they did not like the law that authorized the agency. They refused to confirm nominees to the National Labor Relations Board because of opposition to unions. They put a hold on the chairman of the Federal Communications Commission for fear he may require more transparency in campaign activity. The examples go on.

Why, then, would President Obama remove Secretary Sebelius and nominate a replacement? The HHS Secretary oversees the implementation of the Affordable Care Act. And GOP opposition to CFPB or NLRB or FCC pales in comparison to the visceral and existential contempt the party feels toward Obamacare. Given such opposition, the president would be foolish to make such a change in HHS leadership.

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I Oppose Obamacare. I Support the Affordable Care Act.

Today, more than three years after being signed into law, and more than a year after surviving a Supreme Court challenge, the Affordable Care Act, more commonly known as Obamacare, finally begins to fulfill its promise. Most of this country has long since taken sides, despite appalling gaps in popular understanding of what the law means, what it does, and what it doesn’t do.

Let me admit that I’ve never had particularly warm feelings toward President Obama. I think his foreign policy is a mess. The trillions in debt that the U.S. has run up over the past 5 years will hurt my generation and future generations, and if Republicans can be faulted for their fantasy that the federal budget can be balanced exclusively through spending cuts, Obama has sustained the Democratic fairy tale that raising taxes on “millionaires and billionaires” is all that is necessary to pay the skyrocketing bills.

On multiple occasions during my time in government, the President had no qualms about squashing science and scientists for political convenience. He is a perpetual campaigner, preferring theatrical gestures to the backstage grunt work of governing. And for all of his rhetorical gifts when preaching to the choir, he’s been one of the least effective persuaders-in-chief to have held the office.

And so, naturally, I oppose Obamacare. I oppose a government takeover of health care that includes morally repugnant death panels staffed by faceless bureaucrats who will decide whose grandparents live or die and make it impossible for clinicians to provide compassionate end-of-life care. I oppose the provision in Obamacare that says that in order for some of the 50 million uninsured Americans to obtain health insurance, an equal or greater number must forfeit their existing plans or be laid off from their jobs.

I oppose the discarding of personal responsibility for one’s health in Obamacare. I oppose Obamacare’s expansion of the nanny-state that will regulate the most private aspects of people’s lives.

It’s a good thing that Obamacare, constructed on a foundation of health reform scare stories, doesn’t exist and never will.

Instead, the Affordable Care Act (which I support) is based on a similar law in Massachusetts that was signed by a Republican governor and openly supported by the administration of George W. Bush. It achieves the bulk of health insurance expansion by leveling the playing field for self-employed persons and employees of small businesses who, until now, didn’t have a fraction of the premium negotiating power of large corporations that pool risk and provide benefits regardless of health status.

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Life Support and Taxes

If the devil is in the details, we got the motherlode this past week as to how the most incendiary part of President Obama’s health reform will actually work when it launches next January.

The Department of Health and Human Services issued lengthy rules on the controversial individual mandate requiring uninsured Americans to purchase a health plan. The IRS followed with nearly as lengthy a set of rules specifying who is eligible for subsidies for those purchases and who pays penalties when they refuse. In what critics will consider an Orwellian flourish, both federal agencies refer to these penalties as “shared responsibility payments” — even though the Supreme Court, in its upholding of the mandate, plainly referred to them as what they are: a tax.

The two sets of rulings represent a sort of good cop, bad cop routine from the Obama administration. The bulk of the HHS rules defines individual outs for the mandate, identifying 11 different types of uninsured Americans who will be exempt from the de facto tax, ranging from sudden financial impairment to genuine religious objection to medical care. The IRS rules are all bright hard lines about who has to pay, when, and how.

The major media, echoing criticism by Obamacare’s agitators from the Left, seized on the stinginess of the IRS rules regarding subsidies and penalties for family members of people covered by their employers, or what they call the “family glitch.” The glitch is technically real, but statistically remote, and will affect almost no one in the real world, but it does make for good inflammatory headlines.

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The 2012 Elections and 2013 — A Daunting To-Do List

The Affordable Care Act (“Obamacare”) is now settled law.

It will be implemented. It will also have to be changed but not until after it is implemented and the required changes becomes obvious and unavoidable. We can all debate what those things will be (cost containment is on top of my list) but it doesn’t matter what we think will happen––time will tell.

There are and will be more lawsuits.

I wouldn’t waste a lot of time worrying about those. Anyone in the market will do better spending their time getting ready.

But, when will the Affordable Care Act (ACA) be implemented?

So far, only about 15 states say they want to implement health insurance exchanges. Some of those may not make the October 1, 2013 kick-off date.

Maybe now that it is clear the law will go forward, some of the conservative states who have said they would not build one will get into high gear rather than have the Obama administration do it for them. But they may not have enough time to be ready in less than eleven months.

The Obama administration says they will be ready on time with federal exchanges. But they have not been at all transparent about just what they have so far done and can get done in the eleven short months that remain.

Starting today, the big question is can the Obama administration really be ready or will the October 1 insurance exchange launch date have to be pushed back, at least in some states?

It’s time for some post-election transparency and honesty from the administration.

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Rational Rationing vs. Irrational Rationing

Massachusetts has a long track record of making headlines in the area of health care reform, whether or not Mitt Romney likes to talk about it.

In 2008, Massachusetts released results of its initiative requiring virtually all of its citizens to acquire health insurance. In short order, nearly three-quarters of Massachusetts’ 600,000 formerly uninsured acquired health insurance, most of them private insurance that did not run up the tab for taxpayers. The use of hospitals and emergency rooms for primary care fell dramatically, translating into an annual savings of nearly $70 million.

But that’s pocket change in the scheme of things, so the other shoe had to drop — and now it has. Massachusetts made news recently, this time for passing legislation that aims to impose a cap on overall health care spending. That ambition implies, even if it doesn’t quite manage to say, a very provocative word: rationing.

Health care rationing is something everyone loves to hate. Images of sweet, little old ladies being shoved out the doors of ERs that have met some quota readily populate our macabre fantasies.

But laying aside such melodrama, here is the stark reality: Health care is, always was, and always will be rationed. However much people hate the idea, it’s a fact, not a choice. The only choice we have is to ration it rationally, or irrationally. At present, we ration it — and everything it affects — irrationally.

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Why Reform Will Survive Mandate’s Fall

The Supreme Court’s imminent decision on the Affordable Care Act will trigger a political firestorm whether they accept the legislation in its entirety, throw out every page of the 906-page bill or do something in between, which is the most likely outcome.

If the high court follows the polls, it probably will rule the requirement that individuals purchase insurance – the mandate – is unconstitutional but leave the rest of “Obamacare” intact. A CBS/New York Times poll released earlier this month showed that 41 percent wanted the entire law overturned, 24 percent supported it fully and 27 percent supported it but wanted the mandate eliminated.

Pooling the latter two groups suggests there is majority support for the coverage expansion, insurance protections and delivery system reforms contained in the bill – as long as there is no mandate. It was only the Obama administration’s decision to include the requirement that individuals purchase health coverage – something done to win insurance industry backing for the law – that gave opponents the cudgel they needed to stoke widespread opposition to reform.

The insurance industry, recognizing many of the reforms are popular, is already preparing for a thumbs-down ruling on the mandate. Three major carriers, UnitedHealth, Aetna and Cigna, said last week they would continue to allow young adults to stay on their parents’ plans until age 26, pay for 100 percent of preventive services and eliminate lifetime caps on coverage, reforms from the ACA that are already in place.

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ObamaCare and the End of Nothing

“The only constant in health care is change.”

It’s one of those clichés peddled at health care industry conferences by consultants who charge by the hour for helping attendees brace their organizations for all those terrifying changes just over the horizon. Not only is this cliche not true, but it is exactly untrue. The only constant in health care is gnawing anxiety about change that never actually occurs.

The Obama Administration’s health care reform plan – we can all call it “ObamaCare” now that the Administration finally owns the label it should have from the outset – is the motherlode of anxiety over change about to storm through the health care system. That is, unless you happen to cover your ears and block out all the partisan screaming, along with the political ideology dressed as legal arguments in the Supreme Court this week, and look at the actual plan and its numbers.

Yes, ObamaCare is expected to cram 30 million uninsured people into the current non-system. Complementary elements of the law make it illegal for health insurers to kick any of us out if we get too sick or stop paying our bills if we get too expensive. And if an insurer makes too much money in the process, it needs to refund a portion. Aside from these four economically intertwined health insurance market reforms, most everything else about ObamaCare is business as usual.

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