Tag: "Health Reform"

Reflections on Risk Adjustment, Reinsurance, and Risk Corridors in ObamaCare

fgdfgOn Wednesday, June 18, 2014, I had the pleasure of testifying at the House of Representatives’ Committee on Oversight and Government Reform’s Subcommittee on Economic Growth, Job Creation, and Regulatory Affairs. The subcommittee held a hearing it called “Poised to Profit: How ObamaCare Helps Insurance Companies Even If It Fails Patients.”

Much of my testimony was drawn from content in this blog. What struck me was the minority’s emphasis that these provisions, which protect insurers from losing money in ObamaCare, are designed to motivate insurers to offer coverage to sick people.

It is a well-worn talking point of ObamaCare’s supporters that insurers can no longer charge higher premiums or deny coverage to applicants who are expected to have higher health costs, or exclude coverage for pre-existing conditions. Obviously, no insurer will seek to cover these people just because the government wants it to. The market has to be structured to achieve that objective.

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Jun 19, 2014 | 11 comments | by

Study: Half a Million More Uninsured by 2019, Four Million More by 2025

A new study by Professor Steve Parente and Professor Michael Ramlet estimates that the number of uninsured will increase under ObamaCare, from 36.5 million in 2015 to 40.5 million in 2025. It further estimates that the average cost of an ObamaCare Silver plan will increase by over $4,000 in five years.

Nationally, we estimate an initial decrease in the uninsured with greater use of the private health insurance subsidies, but over time health plan prices are likely to increase faster than the value of the insurance subsidy. As a result of the declining purchasing power of the insurance subsidy, the implementation of the qualified health plan requirements and the end of the reinsurance and risk corridor programs we estimate a significant reduction in the private insurance market in 2017 with steady declines continuing for the rest of the decade. The Medicaid population is estimated to grow substantially in 2015 as more individuals are enrolled in states who have chosen to expand the program. Medicaid enrollment is estimated to slow down to between 2% to 3% each year from 2016 to 2024.

I guess they had not heard the President’s declaration that the debate over ObamaCare is over.

Jun 03, 2014 | 11 comments | by

Health Insurers Continue To Grow Under ObamaCare

Although health insurers’ profit margins shrank a little in 2013, enrollment amongst the largest for-profit insurers jumped by eight million over 2012, according to a new analysis by Mark Farrah Associates. The report concludes that “leaders in the health insurance sector have good reason to remain optimistic”.

Although all major insurers succeeded in enrolling members in the new ObamaCare health insurance exchanges, this is still a small fraction of their business.

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May 30, 2014 | 8 comments | by

How Many Signed Up for ObamaCare? Time to Bury That Story

health-insuranceThe most transparent administration in history has decided to discontinue the monthly Affordable Care Act enrollment reports now that open enrollment is closed.

But while the official open enrollment period is closed, that doesn’t mean that activity on the health insurance exchanges has shut down. People who have experienced a “qualifying life event” — getting a job, having a baby or moving to another state, among others — are still eligible to enroll in an exchange policy.

Meanwhile, other people will be exiting the system — they will get a job that has benefits, marry someone with benefits, or just stop making their payments and go without insurance.

And, of course, voters need to know these numbers in order to evaluate the signature legislative achievement of this administration and the many members of Congress who will be standing for re-election come November.

(Megan McArdle, Bloomberg View)

May 27, 2014 | 19 comments | by

Tax Credits Cure Food Sales Tax Complexity. Why Not Use Them in ObamaCare Reform?

California’s tax treatment of food and ObamaCare’s tax treatment of health insurance have something in common. Both sets of regulation are so bad that people buying the same product can be taxed or subsidized differently in ways that are almost impossible to decipher.

As Joe Eskenazi of SF Weekly explains, California taxes the same bunch of carrots differently depending on whether the “buyer is a homeless shelter (no), a racetrack (yes), an ostrich farm (no), or a zoo (maybe).”

Sold in combination, a cup of coffee and a cup of gazpacho are a taxable meal. Sold separately, they are not. Cream-filled donuts are not taxable, but a croissant sandwich is. A cold sandwich with hot gravy poured on it is taxable even if it is cooled to room temperature. So is a previously hot, but currently cold, soup.

At first, the state held that movie popcorn was heated food. The movie theaters disagreed. They claimed that the lights over the popcorn were dehumidifier lamps, not heating lamps. They hired popcorn experts to measure the internal heat of the popcorn piles. Multiple hearings and many dollars later, the California Board of Equalization ruled that the heat in the popcorn was indeed a by-product of those dehumidifier lamps. Movie popcorn became a tax exempt food.

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May 27, 2014 | 14 comments | by

For Opponents, ObamaCare’s “Bailout” of Insurers is a Richer Target than Ever

UntitledghgThe Administration continues to move the goalposts on its so-called “bailout” of insurers which lose money in ObamaCare’s exchanges. Formally, this is labelled “risk corridors”, and describes a process by which the Administration will take money from insurers which profit more than expected in the exchanges, and transfer it to those insurers which lose more money than expected.

Unfortunately, taxpayers are at risk because the revenue coming into the risk corridors is determined by premiums, whereas the payouts are determined by medical claims. If, overall, the insurers charged premium that are too low, the risk corridors will suffer deficits. This blog has covered the risk corridors thoroughly, and we expect that there will be a significant deficit. Our latest entry on the topic questioned the Administration’s assertion that the risk corridors would be budget neutral.

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May 21, 2014 | 14 comments | by

ObamaCare Subsidies Wrong for More Than One in Eight ObamaCare Beneficiaries

The government may be paying incorrect subsidies to more than 1 million Americans for their health plans in the new federal insurance marketplace and has been unable so far to fix the errors…

So piles of unprocessed “proof” documents are sitting in a federal contractor’s Kentucky office, and the government continues to pay insurance subsidies that may be too generous or too meager. Administration officials do not yet know what proportion are overpayments or underpayments. Under current rules, people receiving unwarranted subsidies will be required to return the excess next year.

The problem means that potentially hundreds of thousands of people are receiving bigger subsidies than they deserve. They are part of a large group of Americans who listed incomes on their insurance applications that differ significantly — either too low or too high — from those on file with the Internal Revenue Service, documents show.

The government has identified these discrepancies but is stuck at the moment. Under federal rules, consumers are notified if there is a problem with their application and asked to upload or mail in pay stubs or other proof of their income. Only a fraction have done so, according to the documents. And, even when they have, the federal computer system at the heart of the insurance marketplace cannot match this proof with the application because that capability has yet to be built, according to the three individuals.

Source: Washington Post.

May 19, 2014 | 11 comments | by

Wellness Fails Again

UntitledPepsiCo is the latest large employer to report that its wellness program has a negative return on investment, returning $0.48 for every dollar invested.

A voluntary program to help people manage actual diseases returned $3.78 per dollar invested.

The authors note that the results likely overstate the return on investment because they did not include the cost of program staff or the cost of employee time.

Beginning this year, ObamaCare requires that the government spend $200 million on wellness grants for small businesses that did not have a program in place when the law passed in 2010.

May 19, 2014 | 21 comments | by

Urban Institute: Kill the Employer Mandate

Caduceus with First-aid KitA new report from the Urban Institute urges the end of the employer mandate. The mandate has little effect on coverage: 251.1 million people would have health insurance if the employer mandate is fully implemented, versus 250.9 million if it were repealed. However, the mandate hurts low-income workers, by influencing some employer to cut back both hours and headcount:

Creating arbitrary thresholds (e.g., potential penalties for firms of 50 or more workers not providing coverage for employees typically working 30 or more hours per week) for financial requirements will change the employment decisions in some firms, and at least some workers will be adversely affected by them.

(Linda Blumberg, John Holahan, & Matthew Buettgens, Why Not Just Eliminate The Employer Mandate?)

May 14, 2014 | 8 comments | by

Update: Federal Taxpayers Have Spent $655 Million on Three State Exchanges That Have Shut Down

Here’s the list:

Maryland                 $171,013,111

Massachusetts        $179,036,455

Oregon                    $305,206,587

Total                       $655,256,153

(Phil Kerpen, The Federalist). See previous posts here and here.

May 14, 2014 | 7 comments | by
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