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Are Death Spirals Real? Has Anybody Ever Seen One?

A THCB reader in Virginia writes:

“As a small business owner, I’ve been following the arguments about Obamacare with a mixture of amusement and total horror. Just when you thought Washington couldn’t screw things up any worse, they find new and creative ways to do exactly that.

My question concerns the phenomenon of the “death spiral” the terrifying sounding scenario that observers predict will occur if not enough people buy insurance. According to this theory, if not enough people buy health insurance, insurers will be forced to abandon unprofitable markets.  As a business owner myself, this argument resonates. But I still don’t get it. This seems like common sense.

It is certainly true that if nobody buys my goods and services, my business will go into a “death spiral.” I will no longer be able to make a living selling my widgets. I will be forced to invent a new widget. Or go get a new job. This is like my kid saying if he doesn’t to play more Call of Duty IV he will go into an “entertainment death spiral” and be unable to do his homework ever again or be a productive member of society.

Or McDonalds warning that if too many people take up vegetarianism, its business will go into a horrible “hamburger death spiral.” So what evidence do we have? I need documentation. Like, let’s say, a picture. Or a YouTube clip.

Seriously, when has this happened? Otherwise, the death spiral thing sounds like really good economic spin to me …”

We Signed Up for a Plan in December. Now They Are Telling Us a Glitch Canceled Our Payment. What Do We Do?

A THCB reader in California writes in…

“As it happens my husband has medical issues so we know to stay on top of our heath care. Our insurance canceled us after years of paying high premiums. We were happy with the coverage and our doctors. We just did not have maternity or pediatric, dental [care].

We are 64-62, children in their 40s. No need there.

They offered us a policy that was $1750 per month with deductibles and out-of-pocket costs no one would ever reach. We went on Covered California to find a policy. We found one with the same company so we thought our doctors and hospital would be in-network, paid the premium Dec 4, and left for Christmas out of state feeling pretty safe.

When we returned we received a letter from Blue Cross stating that they did not receive our payment. And so our metal anguish starts!

I called, was on hold three hours. The system hung up on me [and] called back. Was on hold two hours with Covered CA. When someone came online we spent another hour trying to locate the application. They said that Covered CA had a glitch in the system that was duplicating people. We had three people on our application that was why Blue cross did not take our payment. They said they fixed it took another payment and promised all would be fine.

Went to get my husband’s medication to find out we were not covered. He had to have the meds. Came home and spent eight hours on the phone between Blue Cross and Covered CA trying to fix it. They told me to pay out of pocket for my husband’s medication until they fixed the problem.

I told them that my husband had a doctor’s appointment on Thursday that we could not postpone. It was with his Cardiologist. They had no idea except to pay-out-of-pocket. Went to the appointment, the doctor said he needed an operation NOW.

We told him about the insurance issues and had to postpone the operation until the next Friday hopefully the insurance would be in force by then…”

If you have questions about the Affordable Care Act or your buying insurance on the federal state exchanges, drop us a a note. We’ll publish the good submissions.

What Exactly Are Insurers Canceling? And Why?

A THCB reader in New York writes in:

There is one aspect of the ACA that isn’t being discussed a lot, but is pertinent to the future landscape of health care in this country — the extent to which the ACA is causing a sort of reset, or wiping of the slate, when it comes to insurance policies and procedures.

Previously, there were multiple insurers and multiple policies, many of which had been around for a long time.  If an insurer wanted to suddenly change providers in its network, ratchet down provider reimbursement, alter covered procedures or make other adjustments, this was feasible, but too much of a change would entail an outcry limiting insurers’ freedom of action.  The overall system had a certain air of stability or inertia, making any changes stand out, any big changes cause for scrutiny and possibly rebellion.

Now, with the ACA, everything is being tossed up in the air and when things land, much can and will be different.  Some changes are mandated by the ACA, such as minimum coverage, and insurers are cancelling inadequate policies, substituting very different ones.  But even when a policy doesn’t need to be changed, insurers will justify change by pointing to the ACA.

“Given the requirements of the ACA, we must make certain changes to your policy. In particular…”

We are at the beginning of a totally new insurance landscape, even if most of the insurers remain the same.  The public has been primed to expect major change and insurance companies will certainly make use of this expectation.

The result is likely to be more restrictive networks, decreased reimbursements to providers and other measures to limit cost.  Everything is now up for grabs.

If you have questions about the Affordable Care Act or your buying insurance on the federal state exchanges, drop us a a note. We’ll publish the good submissions.

Overcharged 38000% !!!

Pretty Grumpy in NC writes in :

I am writing this letter as a complaint about medical charges from Wake Forest Baptist Medical Center, which I think is excessive.

I would like to point out that I got excellent care during my stay at Wake Forest Baptist Medical Center. I am questioning charges in total of $763.50. I received my bill for my hospital stay for surgery on June 10, 2013. I noticed a charge categorized as “Cast Room” of $763.50. I called the billing department and asked for an itemized bill.

I received the itemized bill and discovered that the “Cast Room” bill was really a daily charge of $254.50 for “Basic Frame with trapeze”. I called about this charge and learned that it was the bar above the bed attached to foot of bed to the head of the bed along with a trapeze handle. This item is used to help get up out of bed.

I think these charges are excessive.

I contacted a local home health equipment company to see what the charge would be if I rented this piece of equipment, and they told me the same item is $20 per month! This just seems unbelievable that a hospital can charge over 38000% above the price I can get this equipment for my home.

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I Would Rather Die at Home

A THCB reader in Tennessee writes:

Thanks for listening. I am a single 55 year old male in Tennessee. I’m not offered insurance from my employer. June of 2012 I was diagnosed with Essential Thrombocytosis. A blood disease that messes up your platelets. Took every test they could think of to figure it out. In and out of hospital, adding up debt by the second, I stopped going to doctors, stopped buying meds. I drag myself to work, every day, just to survive. Under Obamacare it will be, for the worst plan, $571.00 a month, with a $ 5100.00 deductible. I can’t afford that. I would rather die in my home as it would be better than being homeless. Is this a joke?

What Is the Difference Between On-Exchange and Off-Exchange Policies?

A THCB reader from Colorado writes in:

“I am an individual health insurance purchaser in Colorado. I know I need to buy my policy through the Colorado exchange if I want to get a possible subsidy. I am not likely to be eligible for a subsidy, however, and I found that it’s also possible to buy policies “off” the exchange. I briefly looked at some of those policies and found similar premiums, copays, and deductibles to policies “on” the exchange. I assume the “off-exchange” policies must also be as ACA-compliant as the exchange policies. 

Given all these similarities, what is the DIFFERENCE between “on”-exchange and “off”-exchange policies?

In the ACA, what purpose do the two categories serve?”

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.

Continue reading…

Wait. So How Do I Find out if a Specialist Is Covered by My Plan?

A THCB reader in Connecticut writes:

“I’m a pretty level headed person. I’ve been following the Healthcare.gov story in the news and figured it was more of the usual partisan stupidity out of Washington. I decided to do my homework before getting too worked up.

I went on to my state exchange and compared the available plans. Gold. Silver. Bronze. All very logical. I spent some time comparing options and found a plan I liked. So far so straightforward. No complaints. No plan shortage in my state.

The problems started when I picked up the phone and attempted to communicate with a living breathing human being. I figured it would be a good idea to confirm that my OBGYN’s practice is covered. To make a long story short, I have a pretty serious pre-existing condition that could hypothetically kill me. My OBGYN is one of the best in the state. Moving to another practice is NOT AN OPTION.

Knowing how the system works, I called my OBGYN’s office and asked them to confirm that my doctor’s plan was covered. Should be a five minute call. No luck. Sorry. They don’t have the information yet. Probably yes. They helpfully suggest I give the health plan a call. Well, that’s logical, I think to myself.  It takes time for new plans to  about the plans to make it through the system. So I take their advice.

I call the health plan involved and politely tell them why I’m calling and what I need to know.  Guess what? They don’t know either.

Continue reading…

Sorry. If You Want The ACA to Work, You’re Going to Have To Actually Make People Buy Insurance

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.”

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The ACA May Kill Me

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.

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