Signs of trouble – and progress – as Obamacare 2019 open enrollment nears
Jayne O’Donnell, USA TODAYPublished 6:00 a.m. ET Aug. 19, 2019 | Updated 6:04 p.m. ET Aug. 19, 2019
Ashley Candler of Austin was able to get in-patient addiction and mental health treatment thanks to the Affordable Care Act. (Photo: Courtesy of Ashley Candler)
The latest health insurance data gives new ammunition to the Trump administration as it touts the latest bad news on Obamacare, but supporters of the law say there are positive signs for the state and federal marketplaces as 2019 open enrollment nears.
There’s as much disagreement over why and whether things are worse as there was over the health law.
Health and Human Services Secretary Alex Azar tweeted that the 40% drop in people covered by insurance represents half what the Obama administration promised when the law passed.
This group that left the state and federal marketplaces doesn’t get federal tax credits to pay for their plans. Under the ACA, only people who make less than 400% of the federal poverty limit (or $103,000 for a family of four) are eligible for financial help.
The administration has also tried to repeal all and parts of the law, which ACA backers say has undermined the law, but some see bright spots in the more recent data.
Others say there’s plenty of blame to go around.
For those who don’t get federal help to pay their premiums, “there is nothing in the ACA that makes insurance affordable and nothing that has been passed that has or will bring down the cost of health insurance,” says Ronnell Nolan, a Baton Rouge, La. insurance broker and president of the trade group Health Agents for America. “Health care and the cost of drugs continue to skyrocket.”
The new numbers out Thursday from the Urban Institute show the uninsured rate climbed from 10.0 percent in 2016 to 10.2 percent in 2017, accounting for 700,000 fewer people with insurance.
Several factors, led by high premiums, slowed health insurance enrollment by people who aren’t getting their coverage subsidized by the government. Insurers that continued to sell on the exchanges after the first couple of years raised rates to adjust for sicker patients and these rates only soared higher after the administration refused to continue reimbursing insurers for their share of subsidies to reduce patients’ out of pocket costs.
Chief among them are all the other health insurance options that are now both available and allowable. Starting in 2020, They also include court battles over administration proposals including to allow employers to band together in what’s known as “association” health plans, the availability of group plans for as few as two people in some states and the elimination of the tax penalty for remaining uninsured.
“The result is that middle class people felt the full brunt and in many cases dropped out entirely,” says Larry Levitt, executive vice president at the non-profit Kaiser Family Foundation.
In some states, insurers can and will sell a group policy to even a married couple, said Nolan, although they have to work together. Tracy McMillan, who owns the Arlington, Texas-based Marketplace Insurance Exchange Group, says she has clients in very small group plans who wind up paying about half of what they’d pay if they bought unsubsidized plans on HealthCare.gov.
Some insurance companies maintain these plans violate the Employee Retirement income Security Act and agents including Gail Hiller-Lee in Uniondale, NY have been pushing state and federal regulators to make them more widely available because of the premiums self-employed people ineligible for subsidies are facing.
“We try to get them the cheapest price and group plans are cheaper than individual,” says Nolan.
Katherine Hempstead, a senior policy adviser at the Robert Wood Johnson Foundation, says there have been “signs of improvement” this year, including with enrollment by people who don’t receive financial help to buy their insurance.
Cathryn Donaldson, spokeswoman for the trade group America’s Health Insurance Plans, notes that every county had at least one option for individuals seeking insurance coverage. Premium increases were also generally lower, and decreased in some markets with increased competition.
Consumers in some rural states are starting to see more options and lower prices. Several states that have struggled with a lack of competition – Nebraska, Mississippi, Oklahoma, Utah, South Carolina, Wyoming and Iowa — all showed healthy increases in enrollment among people below 400% of the federal poverty limit, according to CMS’ new data.
Several insurance companies, including Bright Health, Oscar, Centene, Cigna, and Anthem, have expanded where they are selling after years of declines in overall insurance participation on the exchanges, says Hempstead. For 2020, Hempstead says she expects premium increases to be below average and more insurers to enter the marketplaces than leave. The number of counties with only one choice has been declining since 2018.
Problems remain, however. Along with paying for insurance, they include:
•Cost of care. Even the lowest income consumers who pay almost nothing out of pocket for their coverage, face considerable hurdles paying for their share of the actual care. McMillan hosts fundraisers to raise money for her low-income clients who need to use their cheap or even free insurance in emergencies yet can’t afford to.
•Spotty networks. Agents say many patients have trouble finding doctors who will accept the insurance they can afford. Debra Fallon and her husband Jim are paying nearly $1,000 a month with a $6,000 deductible for the least expensive plan they could find for Debra – and it doesn’t even include most of her doctors. Jim is on Medicare. The couple live in Dalworthington Gardens, Texas, where Debra’s Crohn’s Disease made it necessary for her to use the state’s high-risk pool to get her coverage before the ACA. The premium and deductible – $562 a month with a $1,000 deductible – was high at the time, but is now something they miss.
While the Fallons would be fine with the pre-ACA days, Ashley Candler of Austin credits the law with “saving her life.”
She had thousands of dollars in medical debt when the ACA passed and had no insurance after a divorce. Now she doesn’t have to pay anything for a premiums and just has to meet an $1,800 deductible. Candler says she suffers from post-traumatic stress disorder, bipolar disorder and attention deficit hyperactivity disorder. With insurance, she could get professional help for her mental health and in-patient treatment for addictions.
“Having the Affordable Care act made going to a regular doctor appointment less stressful due to not having to pay an arm and a leg to see a doctor,” said Candler.
MONDAY, Jan. 7, 2019 (HealthDay News) — Higher costs, not better patient care, explain why the United States spends much more on health care than other developed countries, a new study indicates.
U.S. health care spending was $9,892 per person in 2016. That was about 25 percent more than second-place Switzerland’s $7,919 and more than twice as high as Canada’s $4,753, researchers found.
It was also twice what Americans spent in 2000, and 145 percent higher than the Organization for Economic Cooperation and Development (OECD) median of $4,033. The OECD includes 34 countries.
“In spite of all the efforts in the U.S. to control health spending over the past 25 years, the story remains the same — the U.S. remains the most expensive because of the prices the U.S. pays for health services,” said study author Gerard Anderson. He’s a professor at Johns Hopkins Bloomberg School of Public Health in Baltimore.
“It’s not that we’re getting more; it’s that we’re paying much more,” Anderson said in a school news release.
Evaluating the drivers behind soaring U.S. spending, his team cited higher drug prices, higher salaries for doctors and nurses, higher hospital administration costs and higher prices for many medical services.
Despite those higher costs, Americans have less access to many health care services than residents of other OECD countries, according to the study.
In 2015, for example, there were 7.9 practicing nurses and 2.6 practicing physicians for every 1,000 Americans, compared to the OECD medians of 9.9 nurses and 3.2 physicians.
That year, the United States had only 7.5 new medical school graduates per 100,000 people compared to the OECD median of 12.1. And the nation had just 2.5 acute care hospital beds per 1,000 people compared to the OECD median of 3.4.
Yet the United States ranked second in the number of MRI machines per person and third in the number of CT scanners per person, suggesting relatively high use of these expensive resources. (Japan ranked first in both categories, but was one of the lowest overall health care spenders in the OECD in 2016).
Among the other findings:
U.S. health spending outpaced that of the other OECD countries between 2000 and 2016 — growing an average of 2.8 percent a year compared with the OECD median annual increase of 2.6 percent.
Inflation-adjusted spending on pharmaceuticals rose 3.8 percent annually in the United States versus an OECD median of 1.1 percent.
In 2016, U.S. health care spending accounted for more than 17 percent of gross domestic product, compared with an OECD median of less than 9 percent.
The findings appear in the January issue of the journal Health Affairs.
Administration Releases New Guidance on HRAs and Section 1332 Waivers October 25, 2018
Earlier this week, federal agencies released a proposed rule for Health Reimbursement Arrangements (HRAs) and updated guidance for Section 1332 State Innovation Waivers (now called State Relief and Empowerment Waivers). The Administration had indicated these changes are part of its ongoing efforts to increase choice and flexibility in the insurance market.
Proposed rule would allow HRAs to be used with individual coverage
On Oct. 23, 2018, the Departments of Treasury, Labor, and Health and Human Services (HHS) issued proposed rules that would allow employees to use the dollars in employer-funded Health Reimbursement Arrangements (HRAs, also called Health Reimbursement Accounts) to purchase individual coverage both on and off the public Marketplace (or Exchange). These proposed rules were released in response to the Oct. 2017 Executive Order, in which the Administration directed the tri-agencies to consider ways to expand the flexibility of HRAs.
Currently, employer-funded HRAs are used exclusively with employer-sponsored coverage to reimburse employees for health care expenses not reimbursed under their base medical plan (e.g., deductibles or coinsurance). Under the proposed rule:
Employees would be able to use HRA funds to pay the premium for individual insurance coverage purchased either on or off the public Marketplace.
Employers would be required to make the HRA available to entire “classes” of employees (e.g., full-time, part-time, or seasonal workers).
Employers could offer either a group health plan or an HRA that could be used to purchase individual coverage, but not both.
If an employer offers the HRA, employees would be able to opt out if they are eligible for premium tax credits on the public Marketplace.
In addition to offering HRAs that could be used to pay for individual coverage, the proposed rule would also allow employers that offer traditional group health coverage to offer HRAs of up to $1,800 per year to reimburse employees for certain medical expenses, including stand-alone dental or vision benefits or premiums for Short-Term Limited Duration Insurance (STLDI), which is short-term individual insurance that doesn’t have to comply with all Affordable Care Act (ACA) rules.
Tax treatment of HRAs would remain unchanged and the offering of an HRA for individual coverage would satisfy the employer mandate if it is considered “affordable.” The Treasury Department and Internal Revenue Service (IRS) are expected to release guidance in the near future on the employer mandate affordability test and potential safe harbors.
The proposed rule can be read in detail here. The tri-agencies are requesting comments by Dec. 28, 2018.
Updated Section 1332 guidance increases state flexibility
On Oct. 22, 2018, the Centers for Medicare & Medicaid Services (CMS) issued updated guidance on Section 1332 waivers, which replaces guidance published in 2015. Under the ACA, states can apply to waive key ACA provisions in order to implement innovative, alternate health coverage rules or programs while retaining basic consumer protections. The five-year waivers were available beginning in 2017 and to date, eight states have received waivers.
The new guidance makes changes to the principles that CMS will use when reviewing and approving applications. While the original “guardrails” of ensuring comprehensiveness, affordability, scope of coverage, and deficit neutrality remain in place, CMS will interpret some of them differently to loosen restrictions. For example:
2015 guidance: Focused on the number of individuals estimated toreceivecomprehensive and affordable coverage
2018 guidance: Focuses on the availability of comprehensive and affordable coverage
Beyond the basic guardrails, CMS has identified five new principles that future waiver requests should aim to achieve:
Limit cost increases for consumers and the federal government
Foster state innovation
Support and empower those in need
Promote consumer-driven health care
Changes were also made to streamline the state waiver application process. This guidance is effective for waivers submitted after Oct. 24, 2018, and has a 60-day comment period. Review the complete guidance or fact sheet for more information.
Ever heard of an Employer Health Reimbursement Arrangement (QSE HRA)?
Ever heard of an Employer Health Reimbursement Arrangement (QSE HRA)? This new form of HRA is designed to specifically allow small groups, those that do not have 50 FTE, to pay for individual health insurance premiums for their employees. The new rules surrounding the Employer Health Reimbursement are complicated and they are set to go into effect January 1, 2017.
Who can have a QSE/HRA? Only an employer who does not meet the definition of an applicable large employer under the ACA, and who does not offer coverage to its employees.
What benefits are allowed? The QSE HRA can pay or reimburse for any documented healthcare expense, as defined in Section 213(d) of the Internal Revenue Code for its eligible employees who are covered on individual health insurance.
Who pays? The employer must pay 100% of the cost of the benefit to be provided and cannot allow its employees to do pre-tax withholdings or use employee contributions on pre-tax or post-tax basis to pay for the QSE HRA’s benefits.
Are there limits? Yes, the employer can contribute no more than $4,950 for an employee or $10,000 if family member expenses are also to be paid or reimbursed. These limits are expected to increase every year for inflation.
Does the QSE HRA disqualify an individual or household from receiving premium subsidies? No, but it is much more complicated than that. To understand the potential impact of any QSE HRA on premium subsidies, there will need to be an analysis of:
What is the net cost of coverage for the employee?
Is the employer’s benefit affordable by comparing the net cost vs. 9.69% of the household income?
If affordable, employee’s household is not eligible for premium subsidies
If unaffordable, then the subsidy amount would be reduced by the QSE HRA benefit, and the employee would still be responsible for paying their share of the cost of health insurance coverage.
The very good news about the QSE HRA: the plans are not subject to federal continuation (COBRA) or other ERISA rules such as plan and SPD requirements.
The IRS has released its adjusted figures for certain fees coming into the new year. The Patient-Centered Outcomes Research Institute (PCORI) fee being one of them. The fee was started under the ACA for advancements in comparative clinical effectiveness research, and while the fee increases have been nominal over the years PCORI has been in place, there is still an increase in the fee, which is based on per average number of lives that are covered by the plan or policy.
For both policies and plans ending on or after October 1, 2016 and before October 1, 2017, the fee has been adjusted to $2.26 per life. Compare that to the previous year’s $2.17 per life (2015/2016), $2.08 per for 2014/2015, and $2 per life for 2013/2014. That’s roughly an 8.5 cent increase each year since 2013. Said fee for the coming year must be paid by July 31, 2017 along with the filing of Form 720.
Another fee, the Transitional Reinsurance Fee, saw great decreases over the years before being ceased for 2017. Created in an effort to provide the marketplace exchanges with reinsurance, the Transitional Reinsurance Fee for 2016 was $27 per covered life. In 2015 it was $44, and in 2014 was $63. Per the Department of Health and Human Services (HHS), these records must be retained for a minimum of ten years despite the fee ending in 2017.
There are two options for payment including a lump sum due by January 17, 2017 or broken up into two payments: one at $21.60 per covered life due by January 17, 2017 and the second at $5.40 per covered life, due by November 15, 2017.
The failures of a dozen nonprofit health insurance plans created by the Affordable Care Act could cost the government up to $1.2 billion, according to a harsh new congressional report that concludes federal officials ignored early warnings about the plans’ fragility and moved in too late as problems arose.
The report, released by a Senate investigations panel, says that the bulk of those loans are unlikely to be recovered, with some plans unable to pay “a substantial amount of money” they still owe doctors and hospitals for members’ care.
Nearly three-quarters of a million people in 14 states were forced to scramble for new insurance coverage as the plans shut down last year, voluntarily or under regulators’ orders.
“These failed CO-OPs were a costly experiment gone wrong, and real people got hurt — including the more than 700,000 Americans who lost their health plans,” the panel’s chairman, Sen. Rob Portman (R-Ohio), said as he opened a hearing Thursday to review the problems.
The Consumer Oriented and Operated Plan program was a part of the health-care law intended to foster a new breed of coverage that would serve as an alternative to traditional insurers. Proponents said the co-ops never had a fair chance to compete, with funding for them cut up front. That blow was followed by federal health officials’ decision last fall to pay just 12.5 percent of what the plans and other insurers were owed under a different part of the law designed to balance the risk of covering healthy patients vs. sick ones.
The new report says the Department of Health and Human Services was told early by its outside financial consultant that the 12 co-ops’ business plans and financial forecasts were inadequate, incomplete or based on unsupported assumptions — and yet officials approved loans anyway.
Zenefits, the start-up firm that received $500 million in investor funds to revolutionize employee benefits administration and human resources, has a new CEO who hopes to end the HR nightmare.
In June, a company official sent an email to employees at its Silicon Valley headquarters that continued drinking, smoking and having sex in a stairwell could jeopardize the Zenefit’s home office lease.
Last month, then-CEO Parker Conrad was said to have resigned following allegations that the firm was unlicensed brokers to sell insurance in many states. Some reports allege Conrad was fired.
And now, the company has announced it is handing pink slips to 250 employees, 17% of its workforce.
In a statement, current CEO David Sacks, former executive at Microsoft who joined Zenefits as COO several years ago, said the reduction in force will allow Zenefits to regain its footing.
“This reduction enables us to refocus our strategy, rebuild in line with our new company values and grow in a controlled way that will be strategic for our business and beneficial for our customers,” Sacks said in a statement.
As part of his first actions at Zenefits, Sacks has banned alcohol from its headquarters, and is seeking to regain the trust of regulators by emphasizing legal compliance.
Zenefits had anticipated revenue of $100 million for 2015, but instead ended the year closer to $60 million.
Bosses Find Part-Time Workers Can Come With Full-Time Headaches
Skimping on health insurance carries a hidden price for some fast-food restaurants.
Paula Connelly/Getty Images
Starting in 2016, the federal health law requires small employers to offer their full-time workers health insurance. In anticipation of the change, some fast-food restaurants looked to get around the law by making more workers part time. Now some owners are rethinking that approach.
At a Burger King off Highway 99 in California’s Central Valley, a half-dozen workers in black uniforms scurry around, grabbing packets of ketchup and stuffing paper bags with french fries.
Tiana Mua has worked here part time for almost a year. She’d like to be full time, but at this Burger King only the managers are full time. (The company didn’t respond to an interview request.)
Mua says that’s the situation at fast-food joints all over town. “They’re cutting back on all the jobs, and a lot of people have been let go and everything already,” Mua says.
One reason: The local economy is bad. People aren’t eating out as much, and sales are down. But there’s another reason that might explain why fast-food employees aren’t getting more hours: Obamacare.
Starting Jan. 1, businesses with 50 or more full-time employees must offer health insurance to all full-time staff or pay a hefty fine. Employers with 100 or more workers had to start offering coverage last year. But smaller businesses that operate on lower margins, especially restaurants, complained loudly about the cost.
And some fast-food franchise owners figured out a way to avoid paying for coverage: Just make as many workers as possible part time. A U.S. Chamber of Commercesurvey found nearly 60 percent of small franchise businesses said they would make personnel changes like this.
“The ones that did it successfully did it three or four years ago,” says Kaya Bromley, an attorney who helps employers comply with the Affordable Care Act. But, Bromley says, some of the restaurant owners who cut hours to sidestep the health law now regret it.
“A lot of the fast-food franchisees that did this,” she says, “are now coming back and saying, ‘it was a great idea for reducing the number of people that I have to offer benefits, but now I can’t run my restaurants.’ ”
They tell her it has been a nightmare trying to manage a part-time staff.
“Because you’ve got people who are less loyal, you’ve got people who are less skilled — who don’t understand the business,” she says. There’s also more employee turnover.
Bromley has seen many of those restaurants reverse course. “Employers think that there’s a shortcut here or there, and then they realize, yeah, that shortcut really hurt me more than it helped me,” she says.
The people hurt most by all the workforce management gymnastics are the people at the bottom of the restaurant pecking order who want to advance, but can’t, says Angelo Amador, vice president of labor and workforce policy for the National Restaurant Association.
“Someone who’s working part time, but wants more hours so they can move up the ladder, they can’t get the hours,” he says. “It ends up taking out that middle rung of employees.”
Obamacare has made restaurants less flexible, he says, mainly because it defines full-time work as 30 hours a week or more. Amador says most other laws restaurants have to comply with, like overtime pay, define full time as 40 hours. He thinks the Affordable Care Act should be changed for consistency.
“It would be much easier if we could have one definition of full time,” he says.
At the Carl’s Junior in Chowchilla, Calif., manager Silvia Campos tries to keep as many workers full time as possible. She says it makes her job easier. “It’s a small town,” she says. “For me, it’s hard to find a really good employee.”
But some workers don’t want more hours. Their part-time salary is low enough that they’re eligible for government coverage in California through Medicaid.
Some workers say they’re better off making less money and getting their coverage free from the state.
HSA Eligibility and the Marketplace – Yet another Reason why COBRA may be the Better Choice
Employees losing employer group health coverage may be surprised to learn that selecting a Marketplace or individual plan with an extremely high deductible will render them ineligible to contribute to their Health Savings Account (HSA).
HSAs are marketed as the 401(k) plans of the health world. If you have a qualifying high deductible health plan (HDHP), you can contribute a certain amount to an HSA. The money that you contribute to your HSA is yours and you can take it with you if you change employers or retire. You can even invest your HSA money in the same manner as your 401(k) account.
Common sense would imply that HSAs are available with high deductible health plans as a means to compensate for the requirement to pay all medical costs out of pocket until the high deductible is satisfied. What defies common sense is that an HDHP can have a deductible that is too high.
The Affordable Care Act sets maximum out of pocket costs for health plans ($6,850 individual/ $13,700 family). The Internal Revenue Code sets maximum out of pocket costs for HSA qualifying high deductible health plans ($6,450 individual/ $12,900 family). Unfortunately, the two maximums are not the same. An individual that selects the Marketplace plan with the highest out of pocket costs is actually ineligible to make an HSA contribution because the Marketplace plan exceeds the HSA out of pocket limits.
An employee comparing COBRA with Marketplace plans should factor in the tax savings created by the ability to make an HSA contribution. A slightly higher COBRA premium may be offset by the tax savings of making a pre-tax HSA contribution.
There are many factors to consider when deciding between COBRA or an individual plan such as networks, previously satisfied deductibles……and now, HSA eligibility.
To learn more about ACA compliance, COBRA administration and other employee benefit topics, subscribe to the COBRAGuard blog in the upper right hand corner of this screen.
Employers, for better or worse, are investing in more in health care for their employees, according to a new survey commissioned by the Transamerica Center for Health Studies and conducted by Harris Poll in August.
The survey, which included 1,500 business executives across the country found that the percentage of companies that do not provide any health benefit to employees is at an-all time low — 18 percent. That’s up from 21 percent two years ago, before the Patient Protection and Affordable Care Act was implemented.
Virtually all firms (99 percent) with more than 50 employees provide their full-time workers with health care, compared to only 61 percent of businesses with fewer than 50 employees.
The survey found that half of business executives believe the cost of health care will remain stable over the next two to three years. A significant minority — 44 percent — believe costs will increase, while a negligible 5 percent expect costs to go down.
According to new research from the Kaiser Family Foundation, the cost of PPO health plans are less and less common…
Similarly, half of employers said they believe the quality of health care will stay the same in the coming years, compared to 40 percent who say it will improve and 10 percent who expect it to get worse.
Most employers say that they plan to keep health costsconstant across the board. That means they are not envisioning raising the amount spent by the company or employees on premiums, deductibles or co-pays.
Thirty percent of employers said they were looking to maximize employee contributions to premiums and 27 percent said they hoped to maximize workers’ contributions to deductibles, while 26 percent said they were looking to maximize their own contribution to insurance premiums. However, far fewer expressed interest in “minimizing” either employer or employee contributions to insurance.
Employers also are offering more health plans to employees, often adding high-deductible plans and consumer-driven options in addition to traditional PPO or HMO options. However, employers that only offer one plan are much more likely to offer aPPO.
There does not appear to be much of a difference between mid-size businesses (between 50 and 500 workers) and larger ones. But small employers are far less likely to offer high-deductible plans, consumer-driven plans and health savings accounts. Half of large companies offer HSAs and a third offer consumer-driven plans, while only 28 percent of small employers offer HSAs and only 17 percent offer consumer-driven plans.
Forty-five percent of employers worry they’ll be hit with the Cadillac tax because of their generous health care benefits, and few of them appear resigned to forking over more money to Uncle Sam. In fact, 84 percent of employers that anticipate being subject to the tax are planning to avoid it by paring down benefits.
Since 1954 Hiller Inusrance has focused on providing legal services related to healthcare reform and employee benefits.