Category Archives: Health Care Reform

Obama administration unveils health insurer fees

Criticism is swift–and harsh
By 3/1/2013  BenefitsPro

The Internal Revenue Service on Friday unveiled its proposal to
raise billions of dollars through annual fees on health insurers, a
“$100 billion health insurance tax rule” that the industry says will
significantly drive up costs for consumers. 

The rule as part of the Patient Protection and Affordable Care Act
imposes annual fees on health insurers that start at $8 billion in 2014,
increases to $14.3 billion in 2018, and will increase every year after
that. The Joint Committee on Taxation estimates the tax will exceed $100
billion over the next ten years.

The proposed rule will be published Monday for public consideration in the Federal Register. The IRS will accept comments for 90 days, beginning Monday.

Not paying on time will result in a $10,000 penalty for insurers, plus $1,000 for every day they miss deadline.

America’s Health Insurance Plans blasted the rule as a tax that will
financially drown both employers and consumers. They warn that the costs
will have to be passed along to consumers in the form of higher
premiums, a claim that the Congressional Budget Office has also verified
in its analysis.

“Imposing a new sales tax on health insurance will add a financial
burden on families and employers at a time when they can least afford
it,” AHIP President and CEO Karen Ignagni said Friday. “This tax alone
will mean that next year an individual purchasing coverage on his or her
own will pay $110 in higher premiums, small businesses will pay an
additional $360 for each family they cover, seniors enrolled in Medicare
Advantage will face $220 in reduced benefits and higher out-of-pocket
costs, and state Medicaid managed care plans will incur an additional
$80 in costs for each person enrolled.”

There is currently legislation to repeal the fees, recently
introduced by Reps. Charles Boustany, R-La., and Jim Matheson, D-Utah,
which AHIP strongly supports.

A 2011 report by Oliver Wyman found that nationally the health
insurance tax alone “will increase premiums in the insured market on
average by 1.9 percent to 2.3 percent in 2014,” and by 2023 “will
increase premiums 2.8 percent to 3.7 percent.”

Families purchasing coverage in the individual market will be hit the
hardest in New York while those getting coverage from a small employer
will be most impacted in West Virginia, Oliver Wyman analysis also
found. Medicare Advantage beneficiaries in New Jersey and the Medicaid
managed care program in Washington, DC top their respective lists of
those that will be hardest hit by the tax

Why your boss is dumping your wife

Companies are dropping health coverage for spouses to cut costs

By Jen Wieczner | Marketwatch

By denying coverage to spouses, employers not only save the annual
premiums, but also the new fees that went into effect as part of the
Affordable Care Act. This year, companies have to pay $1 or $2 “per
life” covered on their plans, a sum that jumps to $65 in 2014. And
health law guidelines proposed recently mandate coverage of employees’
dependent children (up to age 26), but husbands and wives are optional.
“The question about whether it’s obligatory to cover the family of the
employee is being thought through more than ever before,” says Helen
Darling, president of the National Business Group on Health.

While surcharges for spousal coverage are more common, last year, 6% of
large employers excluded spouses, up from 5% in 2010, as did 4% of huge
companies with at least 20,000 employees, twice as many as in 2010,
according to human resources firm Mercer. These “spousal carve-outs,” or
“working spouse provisions,” generally prohibit only people who could
get coverage through their own job from enrolling in their spouse’s

Such exclusions barely existed three years ago, but experts expect an
increasing number of employers to adopt them: “That’s the next step,”
Darling says. HMS, a company that audits plans for employers, estimates
that nearly a third of companies might have such policies now. Holdouts
say they feel under pressure to follow suit. “We’re the last domino,”
says Duke Bennett, mayor of Terre Haute, Ind., which is instituting a
spousal carve-out for the city’s health plan, effective July 2013, after
nearly all major employers in the area dropped spouses.

But when employers drop spouses, they often lose more than just the one
individual, when couples choose instead to seek coverage together under
the other partner’s employer. Terre Haute, which pays $6 million
annually to insure nearly 1,200 people including employees and their
family members, received more than 20 new plan members when a local
university, bank and county government stopped insuring spouses,
according to Bennett. “We have a great plan, so they want to be on ours.
All we’re trying to do is level the playing field here,” he says.

While couples generally prefer to be on the same health plan, companies
often find that spouses are more expensive to insure than their own
employees. That’s because, say benefits experts, covered spouses tend to
be women, who as a group not only spend more on health care, but also
have more free time to go to the doctor if they don’t work. Indeed,
JetBlue’s covered spouses cost 50% more than crewmembers themselves,
according to the airline’s online Q&A about its health plan, which
this year extended wellness incentives to spouses for the first time.

About a fifth of companies had policies to discourage spouses from
joining their health plan in 2012, according to Mercer, though most just
charged extra—$100 a month, on average—to cover spouses who could get
insurance elsewhere, rather than deny coverage entirely. Indeed, large
firms including generics maker Teva and supply chain manager Intermec
have spousal surcharges costing $100 a month, or $1,200 annually, while
Xerox charges $1,000 for the year. See: 10 things your office won’t say

But experts say more firms are likely to drop spouses altogether,
whether they work or not—especially when the new federal health-care
exchanges open in 2014, providing an alternative for spouses left out in
the cold. “When there’s a place for people to go, employers won’t feel
as beholden or compelled to cover the spouse,” says Joan Smyth, an
employee benefits consultant with Mercer.

Firms that recently decided to drop spouses from their plans range from
private insurance agencies to school systems and universities like Ball
State, as well as large companies like pump and valve manufacturer
Flowserve. Wisconsin-based furniture company KI carved out spouses this
year when couples flocked to its plan for the first time during open
enrollment. “Now, each employer is responsible for its own employee,”
says Timothy Van Severen, corporate risk manager for KI, which insures
about 1,700 employees in its health plan. “We were going to see a higher
claim cost if we didn’t do that, because of the migration coming back
to us.”

Some companies drive spouses away using other tactics, such as making
spousal coverage prohibitively expensive through higher surcharges or by
making reimbursement rates so low that spouses can’t afford the plans.
The share of employers who allow spouses in their plan but don’t pay for
any part of it rose from zero to 3% this year, according to human
resources consulting firm Towers Watson. Northrop Grumman, the large
security firm, will cover spouses who can get insurance through their
own employers, but only if they first enroll in their own plan, and use
Northrop’s as secondary coverage. (Some companies actually pay spouses
an incentive if they enroll in their own plan, though insurance experts
say the incentive is a waste of money—and that employers would do better
by just cutting spouses off.) “You’re making it kind of a no-brainer
for the other adult dependent to get on his or her own plan,” says Helen
Darling, president of the National Business Group on Health. “No one
wants to be just a dependent magnet.”

But like any breakup, the separation of spouses into different health
plans can be traumatic for families. Greg Fischer, a vice president in
the employer solutions division at HMS, says demand has increased for
the company’s dependent audits, which have revealed that 3% of spouses
are ineligible for the health plans, either because of plan rules or
divorce and legal marriage issues. The news can be upsetting to couples
when one partner is forced to pay more for coverage or accept lesser
benefits: One spouse may even have to stop seeing the family doctor if
his or her new plan stipulates a different set of providers. “I think
that’s where the pain point comes in for the employee—that their spouse
may have to be covered under a different plan, or their benefits might
be reduced,” Fischer says.

Couples then have to decide whether to stick together, even if it means
losing benefits, or to split up so at least one spouse maintains
coverage. If they separate, they may also have to choose which plan to
insure the kids under, or whether to use different plans for each. “It
certainly makes the family unit have to do some real soul-searching and
figure out what works best for them,” says Karen McLeese, vice president
of employee regulatory affairs for CBIZ Benefits & Insurance
Services. The decision, she adds, will likely come down to dollars and

For their part, employers say they try to educate employees on their
options well in advance of the change, and health plans or insurance
brokers sometimes step in to guide people through the transition and
help them find doctors in their new network. In announcing its spousal
carve-out, Ball State University, for one, warned employees to prepare
“since this is a potentially life-changing event.” The university
employee benefits staff worked with spouses and their employers to guide
them through the transition onto their own plan, and have even allowed
some spouses with “uncooperative” companies to stay on “until the
conflict is resolved,” says Joan Todd, a spokeswoman for the university.
“We wanted to be very careful that no spouse would lose coverage before
they could be placed on their own employer’s plan.”

Opinion- an early indication that Health Care Reform is underfunded

“The Obama administration is terminating new enrollment and cutting benefits for existing enrollees in the Pre-existing Condition Insurance Plan (PCIP), a government program that provides health insurance for people with serious health problems.” (Tony Ondrusek, 2/25/13, IFAwebnews)  The plan was this was the place you went if you were sick until 1/1/14, when there would be all new options.

The PCIP program is the Pre-Existing Conditions Insurance Pool, and it came about with the initiation of Health Care Reform.  The concept- that folks with pre-existing conditions that prevented them from getting coverage would have someplace to go – was a great idea, gone horribly  awry.

I was never able to get one person on the program, and the reason is simple – it was (rightfully) expensive, and had a requirement that you have been without insurance for 6 months.  So you got laid off, your plant closed, and you have a medical problem?  Ok, now just wait 6 months and then we will “help” you with this expensive plan!  Small wonder that enrollment was much lower than forecast by the Administration.  But it turns out that low enrollment was a good thing, as I forecast when it started – this had nowhere enough funding.

Why are they suspending the program 10 months early? How about this quote from HHS-  “Based on program experience and trends since the start of the program, PCIP enrollees have serious and expensive illnesses with significant and immediate health care needs…This suspension will help ensure that funds are available through 2013 to continuously cover people currently enrolled in PCIP.”  Apparently the government just figured out what was obvious to everyone in the industry from the outset – the people who joined were going to be really sick, the claims were going to be high, and they didn’t have enough money!

The funding in the Health Care Reform bill scares me.  Despite premium taxes, fees and charges totalling about 7.6% of premiums (showing up on a bill in your mailbox next year) there are basic math issues:

1)  Individual Mandate – Picture yourself telling a 26 year old just out of college, living at home with parents and barely getting buy in a $25,000 a year job, the following:  You have the choice of paying $2375 for health insurance, or the government will tax you an additional $95.  Does anyone think they are choosing to pay the premium?  Without all the young healthy members contributing money to the pool, there won’t be enough to fund the car for us gray-hairs.

2)  Subsidy – this again is basic Math.  The law essentially incents small employers to not offer health insurance and let their employees go to the exchange.  According to the Census bureau probably about 30 million americans work in companies below 50 employees.  Assuming the average premium is $400, the average employee (earning $35000) at about $277 a month, that leaves a shortfall of $123 per month.  Multiply that by $30 million employees and thats a shortfall of $44,280,000,000.  Thats potentially alot of zeros.

Wheres the money coming from to pay for all this?


–  Reeve


Will your Medicare Advantage Premium go up $90 next year?

Medicare Advantage enrollees could take hit in 2014

By | February 26, 2013 • LifeHealth Pro
The potential 2.3 percent reduction in Medicare Advantage payments
proposed by an arm of the Department of Health and Human Services (HHS)
combined with PPACA’s payment cuts will result in benefit reductions and
premium increases of an average $50 to $90 per month for a typical
Medicare Advantage beneficiary next year, warned America’s Health
Insurance Plans (AHIP).

The cuts would affect 14 million seniors, or roughly 28 percent of all Medicare beneficiaries, the lobbyist group says.

The new analysis prepared for AHIP states that the combined effect of
the changes included in PPACA and the new payment cuts will result in
an estimated 6.9 percent to 7.8 percent cut to Medicare Advantage plans
in 2014, causing the net out of pocket for seniors and those with
disabilities to rise, according to AHIP.

The cuts were proposed last
week by Centers for Medicare & Medicaid Services (CMS) to take
effect next year. The analysis is by actuaries at Oliver Wyman, prepared
for AHIP.

According to the Oliver Wyman report, “Virtually all of the 14.1
million Medicare beneficiaries are likely to be affected by these
changes, either through increased premiums, reduced benefits, or plan
exits from local markets.”

The cumulative impact of these changes will reduce Medicare Advantage
payments next year by more than eight percent, or approximately $11
billion.  These cuts will result in seniors facing higher out-of-pocket
costs, reduced benefits, and fewer health care choices, AHIP stated.

“President Obama is sticking it to seniors yet again by cutting
Medicare Advantage funding,” according to Dan Weber, president of the
Association of Mature American Citizens (AMAC).

It was announced last week that the CMS
will publish new rules for Medicare Advantage programs on April
1. Subsidies will be slashed and access will be severely restricted,
according to insurance industry analysts, AMAC stated in a press release

Medicare Advantage is the part of Medicare through which private
health plans provide comprehensive medical coverage to seniors and other
Medicare beneficiaries.

Health insurance stocks reacted to the news negatively, according to a
report by the Associated Press. The costs per person for Medicare
Advantage plans are a bigger drop than many analysts who cover the
industry anticipated, the AP report stated.

Conservative bloggers and the health insurance industry are not happy, arguing the payment cuts are funding entitlement programs and leaving seniors happy with their plans strapped.

AHIP contrasted the cuts against the projections for medical cost increases of 3 percent.

“This is the lowest growth rate in the history of the Medicare
Advantage program, and it is far below the 2.8 percent increase in
payment rates for 2013,” AHIP stated.

“The proposed changes to Medicare Advantage payments are a crushing
blow to the millions of seniors and people with disabilities who count
on this critically important part of Medicare,” said Karen Ignagni, AHIP
president and CEO.

However, CMS is expecting per-capita plan medical costs to fall 3.2
percent, CMS officials said in a 199-page description of the 2014 Medicare plan bidding methods.

The new proposed payment cuts are in addition to the Medicare
Advantage cuts and the new health insurance tax included in PPACA.

AHIP says that only 4 percent of PPACA’s $200 billion in Medicare
Advantage cuts have gone into effect thus far, and the Congressional
Budget Office (CBO) projects that, when fully phased in, these cuts
alone will result in three million fewer people enrolled in the

PPACA’s new health insurance tax starts in 2014; Oliver Wyman had
previously estimated that this tax alone will result in seniors facing
$220 in higher out-of-pocket costs, reduced benefits next year and
$3,500 in additional costs over the next 10 years.

Oliver Wyman also projects that individuals with lower incomes and
those more likely to need medical services will be particularly
adversely impacted by these cuts.

The new report follows a previous analysis by
AHIP which found that low-income and minority Medicare beneficiaries
continue to rely on the high-quality health care coverage provided by
Medicare Advantage plans.

CMS stated recently that since the Affordable Care Act was passed in
2010, Medicare Advantage premiums have fallen by 10 percent and
enrollment is expected to increase by an estimated 28 percent through
this year. In addition, costs of the defined standard Part D plan will
be lower in 2014 than they are in 2013.

“The Affordable Care Act helps us strengthen Medicare Advantage and
Part D,” said Jonathan Blum, CMS acting principal deputy administrator
and director of the CMS’ Center for Medicare in a statement last week.
“We are working to ensure that people with Medicare have affordable
access to health and drug plans, while making certain that plans are
providing value to Medicare and taxpayers.”

7M Americans Live in Possible Primary Care Shortage Areas

Written by Heather Punke | February 21, 2013
About seven million people could be drastically affected by primary
care physician shortages after the Patient Protection and Affordable
Care Act expands insurance coverage next year, according to a new study
in Health Affairs.

The expansion of insurance coverage will raise demand for
primary care physicians across the country and exacerbate the growing
physician shortage, but some regions will be hit harder than others.

According to the study, about 44 million Americans live in areas where the
estimated increase in demand for primary care is greater than 5 percent
of current supply. Further, seven million people live in areas where
demand will likely be 10 percent greater than the current supply after
insurance coverage expansion.

The states with the largest projected demand increases, and therefore the states most likely to have
dire physician shortages, are:

•    Texas
•    Mississippi
•    Nevada
•    Idaho
•    Oklahoma

The study’s authors are Elbert Huang, MD, associate professor of medicine
at the Pritzker School of Medicine at the University of Chicago, and
Kenneth Finegold, PhD, social science analyst in the Division of Health
Care Financing Policy, part of the Office of the Assistant Secretary for
Planning and Evaluation in the Department of Health and Human Services.

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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. - SIPC - Brokercheck