Wednesday, February 27, 2013

First Health Plan Throws In The Towel!

Which plan is giving up? Anthem BC/BS...CIGNA...Rocky Mt Health Plans? Nope, its the Federal Gov't  Pre-Existing Coverage Insurance Plan (PCIP). I guess to be fair the proper language here is the plan has "suspended acceptance of new applications until further notice" effective February 16, 2013. Since about half of these plans were directed by states, some state plans are still accepting enrollment. Colorado is not one of them.

PCIP was established under The Affordable Care Act (ACA) and began enrollment in August 2010 to provide coverage for people that had been turned down for health insurance because of significant pre-existing conditions. Initial estimates from the Gov't expected this plan to reach 375,000 people. Actual enrollment has amounted to just over 100,000 people, 2227 were from Colorado.

This is not " Free Obamacare:" People are responsible to pay premiums for the coverage. In addition to the premiums paid, 5 billion dollars was set aside by the Gov't for claims and plan administration to fund the plan until January 1, 2014. After that the major provisions of The ACA will be in effect and all these folks could be covered by a guarantee issue plan in the insurance exchange. So the plan was designed to go away. Maybe not quite this soon though.

What went wrong? People were REAL sick. A review of the 2012 annual report provides the data to back that up. The average cost per enrollee was $32,108 per year and varied by state, from a  low of $4,276 per enrolled member to a high of $171,909 per enrollee. Not chump change for sure. In one year, 4.4 percent of the PCIP enrollees accounted for over 50 percent of the claims paid from the plan.

The report also went on to say that under the federally administered programs, the Gov't tried to reduce claims exposure by finding a new network provider that accepted a lower reimbursement schedule. They also changed the coverage for specialty drugs to allow only those pharmacies and providers that were most cost effective. Lastly, they reduced the plans offered from three plans to one and increased the consumer out of pocket costs from $4,000 to $6,250 annually.

At the end of the day the PCIP was a victim of its own success. It is unlikely that enrollment will be opened up again. The plan needs to remain solvent to provide benefits to all those currently enrolled through the end of this year. The Gov't should breathe a sigh of relief that it never came close to the 375,000 people it expected. Had enrollment been greater, the plan may not have survived past the first year.

Keep in mind ALL plans will be guarantee issue and cover pre-existing conditions just like the PCIP starting January 1,2014. When you factor in the addition of HEALTHY people along side of the sick people in the insurance pool we should expect a better result. Nobody wants the short history of the PCIP plan to be repeated in the future.


Thursday, February 14, 2013

Under 30? Obamacare Needs You

Oh to be young again...Well maybe not where health insurance premiums are concerned. As I had mentioned in a previous post, health insurance premiums are certainly going to be increasing for a number of people. Those under the age of 30 are potentially going to endure the brunt of that.

One of the reasons will be the change in ratios that are used by insurance carriers for  premium costs. Insurance carriers use age tables to determine premium. The highest premium is for the oldest person, and the lowest premium for the youngest person. Currently, premiums run at about a 6 to 1 ratio, meaning that the oldest age bracket's premium is six times that of the youngest age bracket. As a simple example, using a 6 to 1 ratio: The top premium (highest age bracket) is $600, and the low premium (youngest age bracket) will be $100.

Under the Affordable Care Act that ratio is reduced to 3 to 1. So now, the top premium will be $450 for those older folks and the low premium will be $150 for those young folks. This example is hypothetical of course until we actually know what the real rates will be. But if you do the math here, it clearly is a 50% increase in the lowest age tier. Unpleasant to say the least.

The good news is for those under 30 and folks with proven hardships there will be a catastrophic health plan available that will probably be your lowest price option. In addition the income qualifications are in place for subsidized government (taxpayer) paid premiums as well as cost share reductions for health plan out of pocket costs for those that qualify.

The younger American is truly needed in the overall scheme of the health plan. Without enough of them enrolled in the program the premiums will see significant increases as those with dire health problems strain the system for payment of claims. As the President would say, "We all need to pitch in and pay our fair share". Uncle Sam Needs You !

REALLY...its the only way this will work. Until next time.


Thursday, February 7, 2013

The "Calm" Before The Storm?

 I just returned from Denver after a large gathering of stake holders in the health care business. Calm was not the best description but it will work for a topic of discussion at least. More information continues to surface  regarding the implementation of The Affordable Care Act. Five of the top insurance providers in the State of Colorado were there to provide updates and take questions regarding their progress in compliance with the ACA  It is VERY clear that storm clouds are building that are going to rain down on many people with individual/family health plans.

One of the areas of concern in the meeting was the size of rate increases that are expected in the individual/family health insurance market starting 01/01/2014. Speculation was that those plans could see a 20% increase in new business prices at the beginning of next year. One insurance carrier's response was "20% would be great". "Great" I believe was to try and make us feel good about 20%. It may be higher than that.  To compound that concern was the fact that I just received March renewals for some of my individual/family clients that will see their rates go up 27%. When you add that to the expected 20% for 01/01/2014 it begins to sound like REAL money. 

 What is going on here? For the past couple of years in the Grand Junction area, group insurance plans for the most part have seen very small if any rate increases at all. That's been some good news for sure. The individual/family market however has been priced well below the group market for some time. The reason is those individual/family policies were subject to full medical screening. The insurance company could make those rates more affordable since they were able to see your entire medical history and determine you or a family member were NOT about to blow a gasket and cost a pile of money to treat. Group insurance policies have not had that luxury for sometime. Enter the Affordable Care Act. Now ALL policies are guarantee issue. No medical screening what so ever. The only exception will be tobacco use (even higher rates). 

 Those folks that have  not been covered by an employer sponsored plan will see their rates climb to meet the rates of group insurance policies in the near future.

Get out your umbrellas...Premium showers are ahead.