Obamacare rates to rise 4% in California for 2016 – LA Times

Defying dire predictions about health insurance rate shock across the country, California’s Obamacare exchange negotiated a 4% average rate increase for the second year in a row.The modest increase for 2016, announced Monday, may be welcome news for many of the 1.3 million Californians who buy individual policies through the state marketplace, known as Covered California.California’s rates are a key barometer of how the Affordable Care Act is working nationwide, and the state’s performance is sure to be hotly debated among supporters and foes of the healthcare law, including the current crop of presidential candidates.

Source: Obamacare rates to rise 4% in California for 2016 – LA Times

What’s notable about this figure is it is lower than the closely watched barometer of CalPERS health plan cost trends for large group health plans that have traditionally had less rate volatility and lower increases than individual plans such as those sold through Covered California.

By comparison to the four percent increase for 2016 Covered California plans, HMO plans for California state and local government employees and their dependents are set to increase on average by 7.2 percent next year and 10.8 percent for PPO plans.

However in Northern California, Covered California plans will on average track the CalPERS statewide average. According to Covered California, premiums in that half of the state will rise by an average of seven percent for plan year 2016.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Health Insurance Companies Seek Big Rate Increases for 2016 – The New York Times

WASHINGTON — Health insurance companies around the country are seeking rate increases of 20 percent to 40 percent or more, saying their new customers under the Affordable Care Act turned out to be sicker than expected. Federal officials say they are determined to see that the requests are scaled back.Blue Cross and Blue Shield plans — market leaders in many states — are seeking rate increases that average 23 percent in Illinois, 25 percent in North Carolina, 31 percent in Oklahoma, 36 percent in Tennessee and 54 percent in Minnesota, according to documents posted online by the federal government and state insurance commissioners and interviews with insurance executives.

Source: Health Insurance Companies Seek Big Rate Increases for 2016 – The New York Times

Large annual premium rate increases at this double digit level prompted the enactment of the Patient Protection and Affordable Care Act in 2010 when it became clear the individual health insurance market segment had entered an unsustainable death spiral. Sharp premium hikes ensued because adverse selection trashed the insurers’ risk pools, making them actuarially unsustainable. The Affordable Care Act attempts to restore the pooling function by putting everyone into statewide risk pools and eliminating medical underwriting to bring more people into the pool.

What’s striking here is the Affordable Care Act anticipated those who lacked medical insurance before the law’s major individual health insurance market reforms took effect in 2014 might have poorer health status and use more medical services. Hence, it contains premium stabilization provisions designed to prevent the kinds of steep rate increases spotlighted in by The Times. That raises questions as to the effectiveness of these provisions.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Sacramento region hit hard by CalPERS health plan rate hikes – Sacramento Business Journal

This set up a dynamic where next year, single public agency workers in Los Angeles will pay a monthly premium of $611 for traditional Anthem HMO coverage, while their counterparts in Sacramento will pay $1,113. Family coverage for the same plan is $1,588 in Los Angeles, $2,893 in Sacramento. Employers pay part of the tab, but workers pick up the rest. The breakdown varies by employer.“Ouch,” said Phil Wright, administrative services manager for the city of West Sacramento, said of the public agency rate hikes next year. “When your monthly health insurance premium is more than your mortgage payment, there’s a problem.”

Source: Sacramento region hit hard by CalPERS health plan rate hikes – Sacramento Business Journal

Wright’s comment reflects the unsustainable structural costs that are at the heart of the health insurance crisis. Wright is essentially putting the cost of health coverage on a par with housing costs. What’s noteworthy here is these are premiums negotiated with the purchasing power of many combined local government agencies in the nation’s largest state: California. Because of the state’s size and the purchasing power of the California Public Employees Retirement System (CalPERS), health plan cost trends in the Golden State are seen as an indicator of where rates are headed nationally.

“Frankly, these costs are unacceptable,” Doug McKeever, chief of the CalPERS health policy research division, told the Sacramento Business Journal. “It’s a really tricky dynamic for us as the cost is born by employers and members,” he added. “We need to look at alternative strategies to bring down costs.”

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

SCOTUS takes holistic, broad contextual reading of ACA in rejecting challenge of exchange tax credit subsidies

The U.S. Supreme Court adopted a holistic, broad contextual reading of the Patient Protection and Affordable Care Act in ruling today in King v. Burwell that premium tax credits to subsidize the purchase of individual health coverage are available on all state health benefit exchanges, including those states that opted to allow the federal government to set up the exchange.

The majority opinion by Chief Justice John Roberts is the second major decision he authored turning back significant challenges to the law. In June 2013, Roberts upheld the Affordable Care Act’s requirement that all individuals have some form of health coverage or pay a tax penalty.

The petitioners argued the Affordable Care Act permitted the tax credits only in states that established an exchange through direct state action rather than defaulting to the federal government operation of an exchange. The majority opinion however took a three-legged stool analysis in concluding the tax credit subsidies are one of three critical elements of the law’s reforms of the individual health insurance market that work together in a unified manner. Removing the subsidies in some states would thus collapse this tripartite reform scheme and result in the failure of the market that Congress clearly intended to remedy, the majority concluded.

“The combination of no tax credits and an ineffective coverage requirement could well push a State’s individual insurance market into a death spiral” of adverse selection, Roberts wrote for the majority. “It is implausible that Congress meant the Act to operate in this manner.” Roberts noted Congress passed the Affordable Care Act “to improve health insurance markets, not to destroy them. If at all possible, we must interpret the Act in a way that is con­sistent with the former, and avoids the latter.”

Two words trump four: The petitioners’ challenge turned on the last four words at Section 1311(d)(1) in the Affordable Care Act, defining an exchange as a governmental agency or nonprofit entity that is “established by a State.” But the law’s general reference to the mandatory exchanges using the term “such exchange” trumped those four words, the majority reasoned, creating parity between exchanges created by state action and those set up by the federal government: (The Affordable Care Act requires exchanges operate in all states from 2014-16 with provisions for a waiver beginning in 2017)

If a State chooses not to follow the di­rective in Section 18031 to establish an Exchange, the Act tells the Secretary of Health and Human Services to establish “such Ex­change.” §18041. And by using the words “such Exchange,” the Act indicates that State and Federal Exchanges should be the same. But State and Federal Exchanges would differ in a fundamental way if tax credits were available only on State Exchanges—one type of Ex­change would help make insurance more affordable by providing bil­lions of dollars to the States’ citizens; the other type of Exchange would not.

The majority’s legal analysis was not based on the doctrine of deference to reasonable regulatory agency interpretation of ambiguous statutory law under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837. While that analysis is based on the premise that Congress delegated interpretation of a statute to regulators, it is not appropriate in this case, Roberts wrote:

“In extraordinary cases, however, there may be reason to hesitate before concluding that Congress has intended such an implicit delegation.” This is one of those cases. The tax credits are among the Act’s key reforms, involving billions of dollars in spending each year and affecting the price of health insur­ance for millions of people. Whether those credits are available on Federal Exchanges is thus a question of deep “economic and political significance” that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so ex­pressly.

The full opinion as well as a dissenting opinion authored by Justice Antonin Scalia is available here.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Growing Medicaid enrollment poses potential fiscal threat to state health benefit exchanges

The biggest threat to the future financial sustainability of the state health benefit exchange marketplace may be declining economic prosperity and the resulting polarization of household income strata, particularly in the states that have elected to expand Medicaid eligibility to households earning up to 138 percent of federal poverty and to single adults.

The reason? Low income households that qualify for Medicaid generally cannot purchase qualified health plans (QHPs) offered on state health benefit exchanges. If the growing Medicaid eligible population isn’t able to purchase QHPs, the exchanges don’t derive fees assessed on health plan issuers – their main source of revenue as federal establishment grant funds dwindle — that are based on a percentage of premium or set amount for each “effectuated” enrollee. (In states that have opted not to expand Medicaid eligibility, households earning at least 100 percent of federal poverty are eligible to purchase exchange QHPs.)

A Rand Corporation analysis of 2013-15 health coverage enrollment trends issued in June 2015 reported 6.5 million newly enrolled in Medicaid as of February 2015, outpacing by 58 percent the 4.1 million that enrolled in exchange QHPs. According to federal data, 71.1 million Americans were enrolled in Medicaid and the Children’s Health Insurance Program as of April 2015, 12.3 million more than the average for July to September 2013.

While exchanges realize no revenue from Medicaid enrollments, they do incur expense in handling them. Under the Patient Protection and Affordable Care Act’s “no wrong door” policy, exchanges are required to process eligibility and enrollment for both state insurance programs like Medicaid as well as QHPs. It’s also easier to enroll in Medicaid coverage. Unlike exchange QHPs that limit enrollment to part of the year during open enrollment periods, those eligible for Medicaid can enroll at any time of the year.

In California, an expansion state with the nation’s largest Medicaid program serving 12.2 million or about 1 in 3 Californians, enrollment grew by 41.4 percent between December 2013 and January 2015, according to the state’s Medicaid administrator, the Department of Health Care Services. Before that, a severe economic downturn added about 1 million new eligibles to the Golden State’s Medicaid rolls between 2007 and 2010.

Enrollment in California’s Medicaid program – known as Medi-Cal – far outstrips that of QHPs sold through the state’s health benefit exchange, Covered California. According to the federal Department of Health and Human Services, there were 1.4 million enrolled in Covered California plans as of February 2015 — about the same number for plan year 2014. To put that in perspective, there are roughly 61 Medi-Cal enrollees for every 7 enrolled in a Covered California QHP.

Colorado, a Medicaid expansion state that operates a state-based exchange, has seen burgeoning Medicaid enrollment tax the finances of its exchange. The state enrolled 1.2 million in Medicaid — an increase of 433,172 or 55 percent — between late 2013 and February 2015. For 2015, the state’s exchange, Connect for Health, enrolled 27,465 people in Medicaid or CHIP. That’s nearly twice the 15,566 enrolled in commercial plans, blowing a $7 million hole in its budget for increased call center costs handling complex Medicaid enrollments and prompting the exchange to seek reimbursement from the federal government, according to The Denver Post.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

CalPERS 7.2% HMO plan premium rate increase in line with historical utilization cost trend

Citing higher drug prices, the California Public Employees’ Retirement System said its HMO premiums are rising by 7.2% next year. Rates for PPO, or preferred provider organization, plans are going up even more at 10.8%, on average, for 2016.This marks a departure from two years of more modest increases of about 3% at the giant pension fund. The agency’s rate hikes are a key barometer since it’s one of the largest healthcare buyers nationwide after the federal government.

Source: CalPERS approves 7.2% increase in HMO rates as drug costs climb – LA Times

The 7.2 percent average premium rate increase for 2016 HMO plans — which cover two out of three CalPERS members — aligns with the underlying medical utilization cost growth trend of recent years of about seven percent. As the story notes, CalPERS health plan rates are viewed as a harbinger of the cost of health coverage in the coming calendar year given the large size of its pool of 1.4 million active and retired state and local government workers.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

California exchange enrollees healthier than expected

SACRAMENTO, Calif. — A new study in the journal Health Services Research found that analyzing state data on health care usage by Covered California enrollees helped demonstrate that many were healthier and presented less risk to insurance companies than anticipated, helping drive down the cost of health premiums offered through the exchange in 2015.The study, “Sorting Out the Health Risk in California’s State-Based Marketplace,” which was published online June 9, 2015, found that giving health insurance companies the data needed to estimate the amount they would pay or receive from a special risk-adjustment pool helped them know they could reduce their rates in many cases. “After receiving these findings as part of their negotiations with Covered California, health plans covering the majority of enrollees decreased their proposed 2015 rates, saving consumers tens of millions of dollars in potential premiums,” the study stated.

Source: Covered California Daily News: Covered California Saved Consumers Tens of Millions of Dollars in Premiums in 2015 Through Innovative Data Analysis

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Assurant Health chooses costly exit of market over full sale – Modern Healthcare

Assurant Health offered health plans on 16 exchanges this year, the first and only ACA enrollment for the insurer. Similar to other insurers, Assurant Health looked to capitalize on the new, evolving individual marketplaces in which consumers are encouraged to shop for health plans as they would for other commodities.

. . .

The demise of Assurant Health signals hurdles for new entrants in the individual market, particularly when an insurer doesn’t have the same size or provider negotiation leverage as a larger carrier. “This is becoming more and more of a scale game,” Gunn said. “If you’re an undersized player like an Assurant, it’s going to be very difficult to make the math work.

Source: Assurant Health chooses costly exit of market over full sale – Modern Healthcare

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Early reports on 2016 individual rates suggest larger increases than 2015

Health insurance experts say it’s tough to draw broad conclusions about prices from the requests released Monday. The health care law only requires insurers to report proposed hikes of 10 percent or more. That’s only a partial picture of the market that tilts toward a worst-case scenario.”It’s hard to generalize, but that said, I think all signs are pointing to bigger premium increases than in 2015,” said Larry Levitt of the nonpartisan Kaiser Family Foundation, a clearinghouse for information on the health care system.Levitt said part of the reason is that insurers will be basing their 2016 premiums on a full year’s worth of cost or claims data. That’s the first time that has happened for plans sold on the overhaul’s public insurance exchanges, which started enrolling customers in the fall of 2013.

Source: Many health insurers go big with initial 2016 rate requests – Yahoo News

As the story notes, it’s still early going and more rate filing data will be needed over the coming weeks to ascertain exactly where the individual market is headed for plan year 2016. But as the Kaiser Family Foundation’s Levitt points out, plan issuers now have a full year of medical utilization costs for plan year 2014 — the first year of modified community-based rating rules — to better inform their pricing for next year.

According to some insurers and analysts, plan year 2014 saw high utilization costs due to pent up demand from new plan members who had previously been denied coverage or were placed in state high risk pools under medical underwriting that was permitted prior to the 2014 reforms. That means 2014 medical utilization may have been skewed upward, consequently putting pressure to boost premium rates for plan year 2016 that could moderate in later years. Provided of course medical utilization declines to a lower level over time.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

Exclusive: States quietly consider ObamaCare exchange mergers | TheHill

A number of states are quietly considering merging their healthcare exchanges under ObamaCare amid big questions about their cost and viability.Many of the 13 state-run ObamaCare exchanges are worried about how they’ll survive once federal dollars supporting them run dry next year.Others are contemplating creating multi-state exchanges as a contingency plan for a looming Supreme Court ruling expected next month that could prevent people from getting subsidies to buy ObamaCare on the federal exchange.The idea is still only in the infancy stage. It’s unclear whether a California-Oregon or New York-Connecticut health exchange is on the horizon.But a shared marketplace — an option buried in a little-known clause of the Affordable Care Act — has become an increasingly attractive option for states desperate to slash costs. If state exchanges are not financially self-sufficient by 2016, they will be forced to join the federal system, HealthCare.gov.

Source: Exclusive: States quietly consider ObamaCare exchange mergers | TheHill

The Patient Protection and Affordable Care Act provision referenced in this story is at Section 1311(f), which allows state exchanges to combine into “regional or other interstate exchanges,” subject to approval by the participating states and HHS. Another provision, Section 1333(a), would facilitate interstate exchanges by providing a mechanism for health plan issuers to pool risk and sell across state lines via “health care choice compacts” starting in January, 2016. Two or more states could enter into an agreement under which health plans could be offered in state individual markets, subject to regulation by the state in which the plan was written or issued, provided plans comply with the other states’ rules regarding market conduct, unfair trade practices, network adequacy, and consumer protection standards including standards relating to rating and handling of disputed claims.

While complex in and of itself, this might be easier to accomplish if state health benefit exchanges conducted eligibility and enrollment solely for commercial individual plans. A major complicating factor is Section 1413(c)(1) of the Affordable Care Act requiring each state to “develop for all applicable State health subsidy programs a secure, electronic interface allowing an exchange of data …that allows a determination of eligibility for all such programs based on a single application.”

This “no wrong door” policy requires the exchanges to screen households applying for coverage for income and household size eligibility criteria for both commercial Qualified Health Plans or QHPs) as well as state insurance programs such as Medicaid and the Children’s Health Insurance Program (CHIP). States have separate eligibility guidelines for these programs that won’t easily translate across state lines, especially considering a lack of uniformity among states on the Affordable Care Act’s expanded Medicaid eligibility. In addition, state operated exchanges as well as the federal marketplace have had difficulty integrating their IT systems to perform eligibility and enrollment functions fulfilling the Affordable Care Act’s “no wrong door” requirement.

 


The ACA health insurance market reforms are at hand. Need help understanding and preparing for the new regulatory landscape and the health benefit exchange marketplace -- and explaining them to your key stakeholders?  Pilot Healthcare Strategies can help with expert analysis and clear communications. For a free initial consultation, email me at fpilot@pilothealthstrategies.com or call 530-295-1473. 

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