Posts Tagged ‘individual mandate’

Fate of individual market hangs in balance

January 11th, 2017 Comments off

An immutable truth of any market is sellers and buyers must be able to get together on mutually agreeable terms and conditions and do so on a sustainable basis. If that doesn’t occur, markets grow weak and eventually fail. Sellers withdraw and buyers don’t buy. That has certainly been happening in the individual medical insurance market. Some health plan issuers have pulled back their offerings in many states for the current plan year. Many consumers are reluctant buyers, accustomed for decades to all inclusive, low co-pay managed care plan model. They naturally see individual plans that come with both high premiums and high out of pocket costs as a poor value, expecting a greater inverse relationship between the two. Particularly if they don’t benefit from premium and cost sharing subsidies.

That’s not a prescription for long term buy side support. The Patient Protection and Affordable Care Act forces sellers and buyers of individual plans together by requiring sellers to sell regardless of an individual’s medical history and buyers to buy under pain of paying an income tax penalty for not having some form of continuous, credible coverage. But even those efforts to prop up the market appear less than certain to achieve a robust, well-functioning market. The big questions for the incoming administration and new Congress are:

  • Whether the individual medical insurance segment that covers a sizable and growing portion of the working age population can sustainably function as a market?
  • To what extent government policy should support the market and does the political will exist to do so?
  • If the market should be left intact, what must be done to make it actuarially viable over the long term and avoid its tendency toward adverse selection?

Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

IRS updates individual health insurance mandate exemption filing instructions

January 22nd, 2015 Comments off

Just in time for tax season, the Internal Revenue Service recently updated information on how to file for an exemption from the Individual Shared Responsibility requirement to maintain qualifying health insurance coverage for tax year 2014. The update (linked below) lists 19 types of exemptions and how to file for them using IRS Form 8965. Most can be claimed directly on the form while six types of exemptions require a certificate of exemption be obtained or requested from the taxpayer’s state health benefit exchange. Three exemption categories can be claimed either with an exchange certificate of exemption or directly on Form 8965.

Individual Shared Responsibility Provision – Exemptions: Claiming or Reporting.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Health plan issuers concerned individual mandate being weakened

August 7th, 2014 Comments off

The Patient Protection and Affordable Care Act aimed to remedy market failure in the individual health insurance market segment by effectively forcing sellers and buyers to get together. On the sell side by requiring health insurers to accept all applicants for coverage regardless of their medical condition or history and providing premium subsidies to make coverage more affordable. And on the buy side by mandating all U.S. citizens obtain individual coverage if they are not covered by a private or public health plan under pain of a tax penalty.

However, individual health plan issuers worry that the mandate is being weakened by a growing list of exemptions, according to this Wall Street Journal item. In particular, they are concerned that too many younger individuals who tend to use fewer medical services and cost less to cover will be exempted from the mandate, undermining the actuarial viability of the market.

“To make these new reforms work, there needs to be broad participation in the system,” Karen Ignagni, president and CEO of America’s Health Insurance Plans, told the newspaper.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Multiple factors skew plan year 2014 enrollment toward older population

November 8th, 2013 Comments off

The Patient Protection and Affordable Care Act seeks to achieve a better spread of risk in state individual health insurance markets by requiring heath plan issuers to accept all applicants for coverage without medical underwriting and treating all enrolled individuals as part of a single statewide risk pool effective January 1, 2014. In addition, the law bars individuals from “going bare” without any form of health coverage under pain of a tax penalty. This provision is largely aimed at young adults who aren’t covered under their parents’ plans and are less likely than older people to incur high medical treatment costs. To broaden the pool to include them, the ACA also imposes a flatter premium pricing structure so that older individuals can be charged a maximum of three times the rate charged young people.

Policy wonks worry too few young adults will enroll in coverage, leading to an actuarially unsustainable risk pool overly populated by higher cost older individuals. Those concerns are underscored by early reports on state health benefit exchange enrollment such as this Wall Street Journal item indicating initial exchange enrollees tend to be older. While the WSJ story characterizes the trend as unexpected, I think it’s entirely expected since the greatest pent up demand likely exists among older individuals not yet eligible for Medicare and who have gone without coverage – in many instances for years – due to unaffordable premiums or rejection by health plans based on their health histories.

Socio-economic factors are also likely to initially hinder the goal of getting sufficient numbers of so-called “young invincibles” into state risk pools to better balance out risk for plan issuers. The vast majority of working age Americans continues to equate health coverage with employment. This is probably even more the case with young adults more dependent on employment income than older adults who have more education and work experience and thus in a better position to sustain themselves though self-employment. Over the short term, going without coverage while seeking a job with health benefits (and paying the modest $95 first year tax penalty) may factor as a rational financial calculation for many unemployed young adults, particularly when money is tight and there’s little to pay for individual health coverage.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

ACA mandates, exchange marketplace could be temporary, 3-year phenom under state waiver provision

October 2nd, 2013 Comments off

Partisan disagreement over the Affordable Care Act’s individual and employer mandates and state health benefit exchange marketplace has jammed the gears of the federal government machinery, leading to a partial government shutdown that began this week. All the strum und drang over these ACA provisions, however, could end up being over a temporary circumstance lasting only three years in at least some states.

Beginning in 2017, ACA Section 1332 titled Waiver for State Innovation allows states to petition the U.S. Department of Health and Human Services for — as the title suggests — a waiver allowing them to opt out of these requirements. The waiver also extends to premium tax credit subsidies and cost sharing reductions for plans sold on the exchange marketplace.

That means states that don’t like the ACA’s approach to restoring their individual and small group markets to functioning can devise their own programs after three years of complying with federal mandates.

The Section 1332 waiver comes with some provisos. States opting out of the ACA rules would have to demonstrate their programs would ensure individual and small group plans would offer coverage at least on a par with plans providing the 10 essential benefits prescribed by the ACA. State programs would also have to ensure residents and small employers have access to coverage with affordable premiums and protections against “excessive” out-of-pocket costs (such as annual maximums) like those for ACA plans and cover a comparable number of residents as ACA plans.

Section 1332 also provides federal funding to aid states opting out of the ACA rules to set up their own programs. States receiving a Section 1332 waiver would be eligible for “pass through” funding operating like an annual block grant. The funding would cumulatively represent what state residents would otherwise be eligible to receive under ACA rules for premium tax credits, cost-sharing reductions and small business credits if they are ineligible for them under the state programs.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

ACA’s individual, employer mandates aimed at frayed edges of U.S. private health coverage

July 14th, 2013 Comments off

Daniel Weintraub penned an opinion piece appearing in today’s Sacramento Bee that laments the likely continuation of employer-sponsored health coverage under the Affordable Care Act – notwithstanding the Obama administration’s decision this month to delay enforcement of penalties against employers of 50 or more who don’t offer their employees health coverage meeting minimum standards of quality and affordability.  Weintraub argues – and many across the political spectrum would agree with him – that employers shouldn’t be in the business of providing health coverage to their employees (and might not be, but for a 1940s quirk of history) and that it should be left to individuals and families to buy what’s best for their needs. In this vein, Weintraub favors a 2011 proposal to amend the ACA to allow employees of companies with 100 or fewer workers to take their employer’s health care contribution and buy coverage in the state health benefit exchange marketplace.

That sounds a lot like an existing provision at Section 10108 of the ACA that allows employers to provide “free choice vouchers” to their employees to buy coverage on the exchange marketplace.  Employers however would still have to offer their employees minimum essential coverage and could only offer the vouchers to employees whose share would be between 8 and 9.8 percent of their household income. Plus the employee’s household income could not exceed 400 percent of the federal poverty limit.

The debate over both the employer and individual mandate is heating up again, a little more than a year after the U.S. Supreme Court upheld the constitutionality of the latter in NFIB v. Sebelius.  Both mandates are aimed at the frayed edges of the pre-ACA health insurance market and don’t affect the majority of Americans covered through their employers or government programs such as Medicare and Medicaid. In the large group market, the employer mandate is directed at a small minority of large employers that pay low wages and provide little in the way of health benefits. At the other end of the market, the individual mandate hopes to help restore that market segment to actuarial and functional health. Both are governmental market interventions intended to trim these rough, problematic margins of the current system of private health coverage.  Whether they are ultimately successful won’t be known for several years.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Changes in the individual market, adverse selection to have largest impact on 2014 premiums, Milliman projects

April 28th, 2013 Comments off

One month after it produced a projection of factors affecting 2014 premiums in California’s individual health insurance market segment for the Golden State’s health benefits exchange, Covered California, the actuarial consulting firm Milliman has issued a similar study with a national focus.  Like its analysis of the California market, Milliman’s review examined the impact of new coverage requirements under the Patient Protection and Affordable Care Act as well as individuals opting to “buy up” to plans with richer benefits, premium and benefit subsidies and the underlying upward trend in the cost of medical treatment.  It was commissioned by America’s Health Insurance Plans.

Milliman’s national study took into account additional factors including new taxes and fees on health plan issuers and premium stabilization programs including a transitional reinsurance program to protect plans from unexpectedly high care costs.  It concludes “average individual market pre-subsidy premiums are anticipated to increase significantly from what standard rates are today.”  It adds advance tax credit premium subsidies for coverage purchased through state benefit exchanges for those earning 400 percent or lower of the federal poverty level will produce “significant reductions from current premium levels.”

The Milliman study projects that Affordable Care Act changes in the individual risk pool and adverse selection — largely due to the law’s ban on medical underwriting of individuals looking to purchase or upgrade coverage — will have the largest impact on premiums.  Those factors including the potential for younger, healthier individuals to remain in plans issued prior to 2014 and sicker people opting for 2014 plans with more extensive coverage could increase premiums by 20 to 45 percent, according to Milliman.

The study raises a red flag over the law’s restriction on the use of age as a rating factor for older individuals, predicting it will boost premiums for younger people and thus potentially drive adverse selection if they opt to forgo coverage until they need it — notwithstanding the Affordable Care Act’s tax penalties for not having some form of health coverage. “For the individual market risk pool to remain a stable market in 2014 and beyond, it is vital that young and healthy individuals enter and remain in the insurance market in addition to individuals with an immediate need for healthcare services,” the study concludes.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

We are the 401%: Middle class households ineligible for exchange subsidies could reignite health reform

March 30th, 2013 1 comment

A little more than three years ago, steep premium increases in California’s individual market sparked outrage from Sacramento to Washington, providing a political tipping point for the enactment of the then-moribund Patient Protection and Affordable Care Act (PPACA). This fall and into 2014, those without government or employer-sponsored health coverage who earn more than 400 percent of the federal poverty level (FPL) ($45,960 for singles; $92,200 for a family of four) may find themselves outraged yet again by sharp double digit premium increases.  Under the PPACA, those earning in excess of 400 percent of FPL are ineligible for income tax subsidies available for qualified health plans purchased through state health benefit exchanges.  They will bear the full amount of higher premiums on their own.

Projections of the impact of the PPACA individual market reforms issued this week by the Society of Actuaries (on the medical cost impact of those newly insured under the law) and the actuarial consulting firm Milliman (on premiums in California) suggest premiums for plan year 2014 will rise significantly for these relatively higher income middle class households.  The Society of Actuaries estimates the PPACA individual market reforms will drive up claims costs by an average of 32 percent nationally by 2017 and by double digits in as many as 43 states.  The Milliman study commissioned by the California exchange, Covered California, estimates those currently insured with incomes exceeding 400 percent of FPL purchasing the lowest cost “bronze” rated plan covering 60 percent of expected costs can expect a 30.1 percent premium hike for 2014.   “Currently insured individuals with incomes greater than 400% of FPL will experience the largest increases,” the Milliman study notes.

Those in this income range likely to be hit with the biggest increases are middle class people in their 50s and 60s – the large Baby Boomer demographic not yet Medicare eligible and not covered by employer-sponsored plans.  A major potential implication of higher premiums on top of the already relatively high rates paid by this age group (new age rating rules under the PPACA will provide some relief) is many of them may find even bronze-rated coverage unaffordable and go uninsured, contrary to the policy goal of the PPACA to increase affordability and access to coverage.

If 2014 rate increases for 401+ percent FPL households boost the price of the cheapest plans too high, tax penalties built into the law for those without public or private coverage won’t provide incentive for these individuals to purchase coverage.  The PPACA’s individual mandate expressly exempts those who have to spend more than eight percent of their incomes to purchase the cheapest bronze plan offered in their geographic rating region. The law also provides for a financial hardship exemption.

Because of the sheer size of the Boomer demographic and Boomers’ willingness to seek political redress of their grievances, if the premium increases for the 401 percenters predicted indirectly by the Society of Actuaries and directly by Milliman materialize, it could create impetus for further reforms in 2014.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Romney win unlikely to undo individual market reforms, exchanges

October 30th, 2012 Comments off

Here’s a good analysis by the Associated Press of how the Patient Protection and Affordable Care Act (PPACA) might be affected by a Romney victory in next week’s presidential election.

In public health insurance, the Medicaid expansion might be curtailed.  In commercial health coverage, payers are hoping for a repeal of the PPACA requirement they maintain minimum loss ratios of 80 percent and new tax levies on insurers.

But insurers aren’t keen on undoing the foundational political bargain of the PPACA’s individual insurance market reforms in which they must accept all applicants for coverage and individuals without other forms of public or private insurance must purchase coverage or face a tax penalty.  There’s simply too much potential new business to be had with the mandate, the AP notes, citing a PricewaterhouseCoopers projection that it and state health benefit exchanges will generate $205 billion in new premium by 2021.

Nor is a Romney administration likely to pull the plug on state health benefit exchanges given the more than $2 billion invested in them thus far in the form of federal planning and establishment grants.  Plus Romney has not publicly renounced the idea of public health insurance exchanges, a concept he innovated as governor of Massachusetts in 2006 by creating the nation’s first state run health benefit exchange, the Massachusetts Connector.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

Romney says he accepts being linked to Obamacare – Yahoo! News

September 19th, 2012 Comments off

Speaking at a Univision forum Wednesday night, the Republican presidential nominee said that now and then Obama calls him the grandfather of Obamacare.

Romney said, “I don’t think he meant that as a compliment, but I’ll take it.” He went on to defend the Massachusetts law but says it is wrong for the federal government to take that approach.

via Romney says he accepts being linked to Obamacare – Yahoo! News.

Governor Romney was also the Godfather of former California Republican Governor Arnold Schwarzenegger’s omnibus health care reform plan in 2007-08 that was largely based on Romney’s Massachusetts reforms featuring a state health benefit exchange and an “individual mandate” that everyone have public or private health coverage.  I know because I covered “ArnoldCare” nee RomneyCare from its beginnings to inglorious collapse in the state Senate as Sacramento health care correspondent for the Bureau of National Affairs.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email or call 530-295-1473. 

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