Tag: "health insurance exchange"

Think About the Worst Corporate Merger Ever – Then Add Obamacare

I hate to recycle the old slight about “re-arranging the deck chairs on the Titanic,” but the latest news from state exchanges makes it impossible to avoid:

Under the Affordable Care Act, the federal government gave states a collective $4.8 billion to set up and customize their own exchanges for their own state residents. The idea was that the federal government would help prop up the exchanges, and then states would have to make them self-sustainable by this year.

However, a number of states including California and Oregon are having trouble financing their exchanges now that federal funding is drying up. Covered California, for example, is running a deficit of $80 million.

To save on costs, California is reportedly in talks with Oregon, another state struggling to afford its exchange, to merge their exchanges, The Hill first reported.

They’re not alone. Other states are contemplating building similar multi-state exchanges. New York and Connecticut are also discussing the plan, though both are in the very preliminary stages. (Brianna Ehley, “States Band Together to Keep Obamacare Afloat,” The Fiscal Times, May 26, 2015)

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Most Employers Will Use Private Benefits Exchanges by 2018

A new survey from Array Health reports four of five insurance executives anticipate that most employers will use private exchanges to offer benefits by 2018. According to the survey, private exchanges are a win-win situation because they reduce administrative costs.

We like private exchanges because they pave the way for individual health insurance to be the standard. The Array report seems to support this conclusion:

More exciting, perhaps, is the future outlook around business savings as single-insurer private exchanges start to move with consumers – from group settings to individual plans – keeping loyal consumers tied to particular insurance brands through the exchange model.

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Obamacare Exchanges Still A Bad Consumer Experience

The media have cheered the fact that Obamacare exchanges in 2015 operated better than 2014. It is one of the “achievements” that led them do declare “Mission Accomplished” for Obamacare.

Improvement over 2014 is a very low bar. Indeed, it is hard to imagine how the exchanges could possibly have performed worse this year. New research from the Wharton Business School at the University of Pennsylvania concludes that the exchanges are still ineffective:


…… when users were provided with non-standardized plans sorted by price, an overwhelming 60% relied on a simple rule of thumb for making their selection: choose the plan with the lowest monthly premium. This emphasis on premium cost defeats the entire purpose of the exchanges.

The portals also came up short in helping consumers understand what they were purchasing. Research has shown that health insurance consumers have only a limited understanding of technical aspects of how health insurance works. In a study by the Penn Center for Health Incentives and Behavioral Economics at the Leonard Davis Institute, only 14% of consumers were able to correctly answer four multiple-choice questions about the most important terms in health care: deductibles, copays, premiums and maximum out of pocket costs

Health Plans’ Mastery of Obamacare Poses Challenge To Repeal

electronic-medical-record(A similar version of this Health Alert appeared at Forbes.)

Can Obamacare still be repealed? Well, that depends. If the politicians will legislate according to the people’s preferences, Obamacare is a jump-ball.

According to the Kaiser Family Foundation’s latest tracking poll, 43 percent have a generally favorable opinion of Obamacare, while 42 percent have a generally unfavorable opinion. Further, 22 percent claim Obamacare has hurt them or their family directly, while only 19 percent claim it has helped. That leaves more than half who do not think Obamacare has directly affected them.

Perhaps the 25 million who have become insured or dependent on Medicaid after Obamacare rolled out will confirm its success. Actually, there has been no improvement in access to care due to Obamacare. The Commonwealth Fund reports that 35 percent of adults delayed medical care because of cost last year – versus 37 percent in 2005. Further, the proportion of adults ages 19 through 64 who had a medical problem but did not visit a doctor or clinic was 22 percent in 2003 and 23 percent last year. Thirteen percent did not receive needed specialist care last year – the same percentage as in 2003.

Basically, when it comes to access to care, Obamacare has returned us to the status quo from before the Great Recession – at great cost to taxpayers. And that is only the picture in broad strokes. Very few people account for most medical spending, and those very sick people are doing poorly in Obamacare plans. A politician who offers a compelling plan to restore prosperity, as well as repealing and replacing Obamacare, should not face overwhelming odds convincing Obamacare beneficiaries.

The real obstacle to advancing an alternative to Obamacare will be interests in the health sector, which has mastered Obamacare remarkably. The latest evidence is the first quarter earnings reported by UnitedHealth Group and Hospital Corporation of America, both of which Forbes colleague Bruce Japsen describes as having had the “best Obamacare quarter yet.”

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More Than One in Five Obamacare Enrollees From 2014 Have Not Re-Enrolled

Avalere Health has released a new analysis of exchange enrollment, emphasizing that states with the federal Obamacare exchange (healthcare.gov) retained more 2014 Obamacare beneficiaries than states with their own exchanges:

Federally-facilitated exchange states reenrolled 78 percent of their 2014 enrollees in 2015, on average. In state-run exchange states , that percentage drops to 69 percent of 2014 enrollees. California, the state with the highest enrollment in 2014, only retained 65 percent of their 2014 enrollees.Avalere

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Healthcare.gov: Are English-Speakers’ Civil Rights Being Violated?

This blog has not written about the U.S. Department of Health & Human Services weekly enrollment data for a couple of weeks, when we noted that they had “slowed to a trickle“. Well, Obamacare enrollment is booming again, hitting 7.1 million enrolled on January 16.


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Three Reasons the Health Care Bills are Unconstitutional

Individual Mandate: “Congress must be able to point to at least one of its powers listed in the Constitution as the basis of any legislation it passes. None of those powers justifies the individual insurance mandate.”

Cash for Cloture: “This selective spending targeted at certain states runs afoul of the general welfare clause.”

Health Insurance Exchange: “The Constitution forbids the federal government from commandeering any branch of state government to administer a federal program.”

Full piece on the unconstitutionality of the health care bills by Orrin G. Hatch, Kenneth Blackwell, and Kenneth A. Klukowski in The Wall Street Journal.

The Baucus Bill Explained

Under the 1,502-page Baucus bill, everyone will be required to have health insurance and, for most people, the insurance will be very expensive. In 2016, for example, the minimum coverage is projected to cost:

Individual: $5,000 plus $1,700 of potential deductibles and copayments
Family: $14,700 plus $5,100 of potential deductibles and copayments

If you do not get insurance from an employer, you will be required to buy this insurance in an “exchange,” where there will be government subsidies for those who earn between 100% and 400% of the government poverty level. These subsidies can be quite large. For a family earning $30,000 the (premium plus out-of-pocket) subsidy is $17,300 — an amount equal to more than half of the family’s income! At $42,000 income, the subsidy is $14,000. (See the tables below.)

Now here’s the rub. There are 127 million nonelderly Americans living between 100% and 400% of the federal poverty level. Yet the Congressional Budget Office (CBO) projects that only about 17 million will be in the exchange getting these subsidies.

So what happens to everyone else? They will have to bear this cost on their own (through out-of-pocket premiums and reduced wages) without any new help from government.

And what if people don’t buy the insurance they are required to buy? They will pay a (2016) fine of $600 — a tempting alternative considering that if they get sick and really need insurance, insurers will not be allowed to deny them coverage or charge them a higher premium.

Stop in the name of love….
Think it over,
Think it over.


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Will Obama’s Health Insurance Exchange Crowd Out Employer Coverage? Lessons from Massachusetts.

This is Harvard Business School Professor Regina Herzlinger, writing in National Review:

In Massachusetts, for example, subsidies available only to the non-insured (for example, families of four earning up to $66,000) and relatively low penalties for employers who do not offer health insurance have already caused enrollment in employer-sponsored health insurance to slip from 85 percent in 2003 to 78 percent in 2007. Similarly, employer contributions for the payment of policies declined from 82 percent in 2001 to 75 percent, compared to 85 percent nationally, in 2007.

The Health Insurance Exchange: Lessons from the Netherlands

This is Harvard Business School Professor Regina Herzlinger, writing in National Review:

Rather than entrepreneurialism, government-controlled markets encourage consolidation. In anticipation of the government market “reform,” for example, Dutch insurers consolidated to control 80 percent of the market. The providers consolidated, too, so they could bargain effectively with these oligopolistic insurers.

Limited choice, little price differentiation, consolidated insurers and providers, lack of entrepreneurs – this deadly brew causes price inflation. In the Netherlands, while total health-care-cost increases declined two years before the national market reforms, total costs rose by 4.4 percent and 5.1 percent, respectively, in the two years after the reforms were put into place. Individual health-insurance premiums rose about 8 to 10 percent in 2006-2007 and even more in 2008. Not surprisingly, the Dutch are unhappy with their insurance plans and the perceived quality of their health care.