Author Archives: Reeve Conover

Will Health Insurance Premiums jump next year?

Thats the argument made by Fortune Magazine in a recent article.  Several of the initial cost-control measures expire shortly.

The law included 3 mechanisms to keep premiums down – risk adjustment, reinsurance, and risk corridors.  These were designed to give some stability as carriers were setting premiums in a new environment for which there was only limited rate experience.  The loss of 2 of these mechanisms (risk adjustment isn’t expiring) will likely cause increasing premiums.

 

For the full article, click here.

Northwell Health Systems sues HealthRepublic

Northwell Health Systems, formerly North Shore/LIJ Hospital Network, is suing HealthRepublic for back claims money owed it, according to an article in Newsday.  An individual attorney on Long Island has joined in with another, much smaller suit for his claims to be reimbursed.

This comes after the Federal Government failed to meet its financial obligations under ObamaCare and provide funding for CO-OPS around the country last October 23, forcing 10 of them to shut down.  Health Republic was the largest CO-OP.  New York State Financial Services has also been blamed as not monitoring the plans finances close enough, and allowing premiums to be charged that were too low to pay claims.  Neither of those issues are mentioned in the lawsuit.

I have some clients that have been hurt by this ObamaCare failure and had to pay claims out of their own pocket.  I have urged them to file a complaint with the New York State Department of Financial Services, and to contact their Legislators.  I urge you to do the same if this has affected you.

NY State should have done more about Healthrepublic collapse

Found in the Times Union:

The Empire Center is out with a report contending that the state, specifically the Department of Financial Services, should have seen the impending collapse of the Health Republic insurance co-op long before they ordered it to close in September.

The closure has forced about 215,000 New Yorkers to scramble to find an alternate, and almost certainly more expensive, health insurance carrier.

To be sure, these co-ops, which were created as part of the Affordable Care Act, have been falling apart in a number of states and there is a debate as to whether they were simply unrealistic in their pricing or under-funded by Congress.

In their report authored by veteran journalist Bill Hammond, Empire Center argues the former — that their rates were too low to cover their claims and the state, intent on seeing the co-ops make it, saddled them with rates that were so low they couldn’t cover their cost.

There were other issues as well including the amount of reserves they had to keep on hand and a state policy of controlling premiums. The report contends that market forces and competition would have provided a better mechanism for setting sustainable rates.

Here are the details:

The collapse of Health Republic Insurance of New York, a non-profit insurance co-op established under Obamacare, can be blamed largely on “an apparent breakdown in state oversight,” concludes a report released today by the Empire Center. The report says the state Department of Financial Services (DFS) should loosen its regulatory control of insurance premiums and refocus on the financial soundness of insurance companies.
Written by longtime Capitol journalist Bill Hammond, the report marks the first independent post-mortem on Health Republic’s failure—which disrupted coverage for 215,000 customers, stuck hospitals and other health providers with hundreds of millions in unpaid claims, and left federal taxpayers with a quarter-billion dollars of uncollectible debt.

The necessity for Health Republic’s state-ordered shutdown “should have been no surprise” to the state Department of Financial Services, the report says, citing the company’s “steep operating losses, mounting debt, unanticipated costs and heavy reliance on a federal risk-management subsidy that failed to materialize.”

“Yet the department did not intervene to order an increase in Health Republic’s premiums, as other states did in similar situations,” the report adds. “To the contrary, DFS repeatedly cut the company’s premiums below what the insurer had requested, aggravating the co-op’s losses.”

The report questions whether the department’s regulatory judgment was “clouded by the political desirability of keeping health insurance prices artificially low in the short term.” There was, it says, “an inherent conflict between the department’s longstanding regulatory role—which is to assure that health plans are financially sound—and rate-setting authority granted by the Legislature in 2010.”

The law reinstituting the agency’s power of “prior approval” over premiums for individual and small-group health insurance policies “is having no clear impact on New York’s health insurance costs versus national averages,” the report says. “This suggests that consumers might be better off if DFS kept its entire regulatory focus on the financial health of insurance companies while leaving price-setting to market forces.”

The Empire Center is a non-partisan, non-profit independent think tank based in Albany

It’s a Great Time for Buying or Selling a Business

Our new infographic, “It’s a Great Time for Buying or Selling a Business,” looks at how small businesses change hands in the United States.

After jumping in 2013, small business transactions have remained stable with around 7,000 businesses bought or sold each year. “Part of the reason transaction activity stabilized in 2015,” BizBuySell reports, “may be that small businesses continue to grow financially healthier, allowing owners to ask for more money, creating a more balanced market.”

The price of purchasing a business is rising — and that’s good news for anyone considering selling. Last year, businesses tended to sell for just $25,000 lower than their asking price.

Internet B2B companies cost the most to buy, so be prepared with about $365,000 if you’re in the market for one. Meanwhile, you can likely buy a dry cleaning shop, restaurant, convenience store or barber shop for under $200,000. In fact, restaurants accounted for 22 percent of business sales in 2015, the highest of any industry.

But before you write a check, you’ll want to follow a few financial guidelines. Don’t invest more than 15 percent of your net worth into buying a business, and keep at least 10 percent of your liquid assets free for future business needs. “It is important to have a little bit of a financial buffer, in case some emergency would arise or the business would suddenly need some extra operating funds,” Jason Rueger of FitSmallBusiness advises. “Instead of investing all your liquid assets and being stuck with no cash, buffer gives you a financial cushion which you can draw from when needed.”

Thinking about selling your business? Don’t wait until the last minute — start doing your research and planning for sale two to five years in advance. Be sure to review your finances, as 31 percent of brokers surveyed reported bad financial health as a major reason why businesses don’t sell.

Check out the infographic for more details. If you’re considering buying a business or selling one you’ve built, contact a SCORE mentor. These seasoned volunteers can guide you through the process — and may have personal experience to share!

Should you self-fund your benefits plan?

Level funding, and self-funding, are becoming commonplace in the small business community.  It provides a way to soften the blow of Obamacare’s regulations, provides more flexibility, and can lower costs significantly – we have seen groups premiums lowered 30% or more.  Here are a two things to consider that would make you a good candidate:

Stability-  If you company is fairly stable in its size, and finances, then the product can work well for you.  If you are either growing or shrinking more than 10% in the next year, it may not be as good a fit.  If your cash flow is inconsistent or elusive, this is not the product to get involved with.

Claims History-  Do you have access to your claims history, or are pretty sure your group is mostly healthy?  Do you feel your firm is not getting its monies-worth from the insurance company?  If so, consider the product.  On the other hand,  if you group are high utilizers of the plan, then this may not be for your company.

If you want to know more just give us a call at 843-800-8190 or email Reeve Conover at reeve@reevewillknow.com.

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA.
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