Sunday, January 17, 2016

The Amerian way

Obamacare customers are gaming the system, buying coverage only after they find out they’re ill and need expensive care — a trend insurers warn is destabilizing the fledgling health law marketplaces and spiking premiums for everyone.

Insurers blame the problem on lax rules that allow more than 900,000 people to sign up for coverage outside the standard enrollment season — for instance, when they change jobs or move — without sufficient proof they are eligible. No one knows precisely how many might be manipulating the system, but the plans say they run up much higher medical bills and then jump ship, contributing to double-digit rate increases and financial losses.

Health plans also complain some customers are exploiting a three-month "grace period" — when they can keep getting subsidized coverage even if they’ve stopped paying their share of premiums.
Both those trends make the risk pools skew toward sicker, costlier customers — and under Obamacare, plans can no longer deny coverage to those with expensive medical conditions. That problem has been exacerbated by the large numbers of healthier people who are choosing to stay uninsured rather than shell out money for coverage.

The issue represents a huge challenge for the Obama administration, which faces a delicate balancing act in regulating the exchanges. On the one hand, it wants as many people as possible to sign up for coverage since that's the main goal of the Affordable Care Act. But it also needs to make sure that the insurance companies see the exchanges as worthwhile markets in which to compete.
In a speech Monday night, Andy Slavitt, acting administrator for the Centers for Medicare & Medicaid Services, which oversees the exchanges, acknowledged the problems and said the administration would tighten the rules for special enrollments — and terminate coverage for those who found to have signed up improperly.

"There are some [special enrollment periods] that we need to clarify because they're subject frankly to abuse," Slavitt said at the J.P. Morgan Healthcare Conference in San Francisco. "There may be bad actors and others out there who are abusing those." He said the administration would spell out its plans in the next week, and stressed that people who want coverage need to get it by the Jan. 31 deadline for the regular signup period.

The stakes couldn't be larger: UnitedHealth Group, the country’s largest insurer is threatening to pull out if the problems aren’t addressed. Others are demanding that loopholes be limited or closed, saying they fear the marketplaces could unravel.

"Unless some fundamental flaws are corrected, we believe there is a grave risk that the federal exchange will not operate as a viable, competitive market in 2017," Aetna wrote to the Obama administration about proposed marketplace rules for 2017.

The Blue Cross Blue Shield Association, whose members dominate many of the exchanges, offered a stark warning. "Current rules and procedures allow millions of consumers who enroll through [special enrollment periods] to have an adverse effect on the overall market stability because they can purchase coverage only when they need medical care,” the trade group wrote the administration.
BCBSA calculates that exchange customers who sign up during special enrollment periods are 55 percent more expensive than their counterparts who enroll during the regular season. Aetna estimates that 25 percent of its enrollments last year came through special enrollments and those members have “unusually high claims generation” and remain on the rolls for less than four months on average — less than half the time of other Obamacare consumers.
UnitedHealth Group said last year that it expected 30 percent of its exchange enrollments to come outside the normal sign-up window — and that those customers were 20 percent more expensive than other Obamacare enrollees.

On Friday, Humana became the latest insurer to anticipate losses from its Obamacare business. The health plan announced in an SEC filing that it is unlikely to collect enough money to cover costs for some customers who bought individual Obamacare plans and is setting aside what’s known as a premium deficiency reserve to cover losses.

Some are skeptical the numbers are as bleak as health plans say. Through June of last year, about 10 percent of total enrollees through, or about 940,000 individuals, had signed up for coverage through special enrollments, according to administration figures. But there's no obvious reason why certain insurers would attract a disproportionate share of those enrollees.
"It's still a small minority of enrollees," said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, a nonpartisan research group. "It's overstating it to say people can simply sign up whenever they want."

Special enrollments are supposed to be limited to big life events that necessitate a change in coverage. About half of those enrolling in plans outside the standard window say they’ve lost health coverage, typically because of a job change.

But plans say that people don't have to document they've changed jobs or lost insurance through work. America's Health Insurance Plans, the industry’s main lobbying group, has identified 41 reasons consumers can use to sign up for coverage outside of the standard window, including natural disasters and a change in immigration status.

Those enrollees are "incurring extremely higher costs over the rest of the ACA risk pool," AHIP wrote in comments on the 2017 payment rule.

Greg Scott, who oversees Deloitte's health plans practice, says it isn't surprising that consumers are finding and exploiting opportunities to save money. He compares it to how they maximize tax deductions.

"We should expect to see similar behavior in the world of public health insurance exchanges," Scott said. "I would think there is a potential to become somewhat more specific and restrictive in defining and administering [special enrollment periods]."

Besides limiting the reasons individuals may sign up outside the typical window and tougher verification rules, health plans want the administration to shorten the 90-day grace period in which consumers with subsidized plans can continue to receive coverage. They note many people have figured out they need pay for only nine months to get a full year of coverage. An enrollee might buy an ACA policy, get their health needs addressed and then let their coverage lapse — without having to pay the penalty for being uninsured.

Levitt said it's not surprising that individuals signing up for coverage off-season are more expensive than others. People who need medical care are more likely to invest the time and energy to figure out how to sign up outside the normal enrollment window.

"The trick is to limit these special-enrollment periods to people who truly find themselves in unforeseen circumstances, but without making the burden of documentation so great that it discourages people who really qualify," he said


  1. Imagine that, people gaming a Federal system. Who could have predicted that?

  2. General thoughts-
    medical coverage is not like food stamps. It's not a benefit that can be used to buy lobster or liquor and it can't be converted to currency. These are people who are sick, who IMO, can't afford the care. The plan we created, that catered to the insurance companies, addressed a need of insurance companies to get more payment streams. I think very poor people, however, still cannot afford the insurance. But, this is same ol same ol, what I see is a flaw in design, what you guys see is that ANYTHING connected with government will be a failure.

    This article doesn't highlight anything that I don't believe was already happening. IE, when people are sick and can't afford health care, they still skip seeing a provider until they are very sick, and then they go to the ER, and they never pay their bill. Whereas hospitals previously ate that bill, now insurance companies are. I'm inferring here that this apparently isn't a problem when hospitals get stuck with the bill, but it is a problem when it cuts into profit.

    there is indeed an attitude of the American way here, IE conservatives are not the only ones who want to believe everything can be ala carte in life. It's just kinda funny that some people, who want to act exactly like the people who rack up bills and split, believe that they are somehow different. Everybody in this country wants a free lunch.

    news flash- health care is expensive and there are a variety of reasons for this. I don't believe changing the law to tell anyone they will get no more than 10k if they are wonged by the system will make it cheaper. This article though kind of highlights my thinking, it's all about risk pools. Some people, which one source in the article believes is a smaller number than insurance companies are claiming, are gaming the system to get as much care as possible without paying premiums all year. I believe we could fix that, but I can see the appeal to flat earth types to just say, "SEE, we were right along! End it now"

    1. Another centrally planned cess pool. Matter of fact, it's the biggest one ever dug in our country.

      ""Just two hours before the fourth Democratic debate kicked off, presidential hopeful Bernie Sanders released a proposal to create a new single-payer health care system in the United States.

      Clinton continued to rebuke Sanders for the proposal, defending the Affordable Care Act as “one of the greatest accomplishments of president Obama, of the democratic party, and of our country.”"

    2. "The 2010 medical law is a template for the ruling class's economic modus operandi: the government taxes citizens to pay for medical care and requires citizens to purchase health insurance. The money thus taken and directed is money that the citizens themselves might have used to pay for medical care. In exchange for the money, the government promises to provide care through its "system." But then all the boards, commissions, guidelines, procedures, and "best practices" that constitute "the system" become the arbiters of what any citizen ends up getting. The citizen might end up dissatisfied with what "the system" offers. But when he gave up his money, he gave up the power to choose, and became dependent on all the boards and commissions that his money also pays for and that raise the cost of care. Similarly, in 2008 the House Ways and Means Committee began considering a plan to force citizens who own Individual Retirement Accounts (IRAs) to transfer those funds into government-run "guaranteed retirement accounts." If the government may force citizens to buy health insurance, by what logic can it not force them to trade private ownership and control of retirement money for a guarantee as sound as the government itself? Is it not clear that the government knows more about managing retirement income than individuals?"

    3. Again William, here is a problem that the rational thinkers like yourself refuse to acknowledge. These fabulous philosophical posts are written in blissful ignorance of the fact that if there is no ACA, poor people who cannot afford insurance go to the ER. They go there in part because your boy Reagan made it law that they must be treated.

      We will always have poor people, and that is reality. We will always have people who cannot afford health care and that is also reality. What philosophical basis gave Reagan the right to declare that hospital ER's must treat sick people? Based on your logic here, he had no right and he put a gun to the head of hospitals and doctors and said "You will give your services for free to this poor person". For as long as hospitals must treat the indigent, these philosophical ramblings are meaningless.

    4. MAx.

      Perhaps the only way to go is single payer. The only problem is how to pay for it.

      VAT Tax??
      National Sales Tax as in Canada

      Any new tax will be viewed from the right as to much. Any Tax will be viewed from the left as regressive to the poor people.

      Wonder what Bernie had in mind for his plan to pay for it?

    5. By Sanders' accounting, the plan would actually put more money into the pockets of all but the very richest Americans.

      That's because the planned tax increases would be more than offset by a decline in how much most Americans pay for their health care — their premiums, their deductibles, their co-pays, all of it — per Sanders' math.

      There are still lots of questions about how the middle class would fare under his new plan. But it's clear they would definitely do better than the rich.

      Employers would put up about half of what Sanders’ staff think the campaign would cost. They’d pay a new payroll tax of 6.2 percent, equal to the amount employers already pay to Social Security. That tax would raise $630 billion a year, the campaign projects. Washington Post

    6. I'm honestly sympathetic to that point Lou and I have to admit, there is no answer that squares with freedom. This is not meant to dodge, but I feel like before we can even consider how to pay, I feel like we need to have as many people as possible get to the same starting point, and we are no where near that. Without that common ground, I kinda think any solution is just going to be another version of the ACA, which is to say a plan that is only put forth by one party and utterly and angrily rejected by the other.

      Don't mean to be long winded, but I think these points generally need to be acknowledged before even starting. 1) Free market means free market. If we are going to offer charity care, then we dont' have a free market. If we aren't going to end charity, crisis care, we should not pretend or argue that there is a potential free market solution. 2) Employer insurance is anti market 3) This is the crucial one, we all, already pay for each others care. Just because there ISNT a national sales tax, doesn't mean we arent paying through the nose for the care of the indigent. I know it's tiring I keep beating this drum, but I feel like enormous energy is being spent on denying these and other truths. The payment mechanism is NOT going to contain costs, and that is another issue that people need to accept. Even if people grudgingly accept these points, it still provides a better starting point than what we have now, which is two very opposed forces.

    7. There is no way to contain the cost of healthcare as long as people do not take responsibility for themselves. Why should a morbidly obese person pay the same rate as you? Why should a drinking, smoking drug user pay the same rates as you?

      The reality is cost should reflect risk.

      We certainly need to help those that cannot help them selves. Do we owe the same to a person who decides to let the government take care of them? Illegals have children and immediately sign them up for food benefits, medicaid. And people wonder why our welfare costs explode.

      The reality is no one wants to pay for anything. I certainly don;t want to pay more as most people follow the same logic. Why? We see the list of taxes grow yearly and see little in return.

    8. But, if you had to pick just one thing to focus on from your comment Lou, what would you choose? Making sure taxes aren't raised? Making sure the truly needy get care? Making sure people take responsibility for their health? This is kind of what I was getting at, there is a lot of energy pointed into different directions, and little energy focused inward on trying to fix........anything.

      I don't think we can get everything done in one shot. No matter what we do, there will be people who will be seen as taking advantage. Whether it's the people paying premiums and then quitting after getting health care, or whether its people have work sponsored insurance who don't do a damn thing to be healthy. If you are concerned about cost and irresponsibility, is there really any difference between these two people?

    9. Number 1 and foremost is we take responsibility for ourselves. Until that happens we will always be searching for the magic cure.

      Imagine how many fewer would have obesity related diseases. How many fewer would have high blood pressure issues?
      Would that reduce the cost of healthcare?

      One of the functions of taxes is to force behavior changes on people. Should we have a fat tax? Should we go back to the day of the food bank where government provided peanut butter, eggs and staples instead of allowing people to buy crap food with our tax dollars? Maybe go back to the days of STAMPS instead of giving people a pseudo credit card so people are not embarrassed. People object to paying more in taxes as they see the waste created by government.

      Number 1 is also taking care of those that cannot take care of themselves.

      This society enables the behavior we see today.

    10. I would agree on taking responsibility, but that's part of the rub with democracy, people are free to do what they want. In my limited experience in the primary care office last year, I saw quite a few people who, once they got insurance, followed the advice my preceptor gave them and made changes in their lives. On the other hand, I also saw people who said, "Yeah, I know what to do, I just don't feel like doing it". I think there are more of the former than the latter, but that's anecdotal. I think that people still generally respect doctors and nurses, and i'm optimistic that if people have access to a doctor and are presented good information, they will make use of it. For whatever that's worth.

      I would agree that one function of taxation is to force behavior changes, but to use them for that reason is mental treason to the anarchists I mean libertarians who believe that there basically should be no rules for anything. There is a lot of enabling behavior embedded in society, sometimes I feel like an enabler working in healthcare.

    11. I'm optimistic that if people have access to a doctor and are presented good information, they will make use of it.

      Unfortunately 60% of Americans who are either over weight or obese would prove you wrong.

    12. Lou, here is a link to something I had to read for a school project It's long, but I think it highlights a lot of the problem. Undoubtedly there are those who are obese because of a simple formula, stuffing your pie hole + lack of exercise = obesity. However, I think there are also millions of people who aren't stupid who just don't understand why they are fat despite eating foods that are labeled, "Natural" "healthy" and so on.

      In a past discussion I had with William where he lost his mind about labeling foods, his response was an angry, "DO YOUR OWN FUCKING HOMEWORK", which seemingly was to say that he was offended to his core that we would make like easy for someone by demanding truth in labeling. I have to concede that if we do make labels more clear cut, like we did with cigarette labels, we are engaging in some mommy state shit. that said, we are paying a price, like over 10 billion a year just for diabetes treatment. On the personal responsibility side, we are coddling people if we make extra effort to educate them to make better choices. On the practical side, it seems like it's in my interest to do so to avoid higher healthcare costs.

      Culturally, we eat a high fat, high salt diet, high sugar diet in this country. There has been a lot of effort invested in getting us to eat foods that are literally kind of like drugs. IE you eat them and feel better, and then feel shitty a few hours later. People are busy, and it's easier to just eat out or use processed food. Surely some are just lazy, but I also believe a lot of people want to be healthy but honestly don't know how, and it's not because they are stupid.

  3. The Supreme Court has just rejected the latest Obamacare appeal, guaranteeing that Obamacare will still be alive for the upcoming Presidential election. Will the Republicans come up with a viable plan to replace it?

    1. Why should they? No matter what they propose it will be trashed by the democrats, Obama as well as the media.

      The costs alone will eventually overwhelm the program effectively ending it. Let it die a long painful death to ensure everyone knows it was brought to you by Reid, Pelosi and Obama with full support of the democratic party.

    2. It all depends on who the next president is doesn't it. And if the pubs can retain a.working majority in the senate. If HRC makes it and drags along a few dem senators then the ACA will be entrenched and our country will continue our slow and steady decline.