Author Anthony Nefouse

This is a very important provision that can give states more flexibility to do things differently than the way they are specifically addressed in the legislation. With a waiver, if states can demonstrate the ability achieve an objective in a different way, the waiver is approved. For example, in the case of tax credits only being available through the exchange, if a state could demonstrate the ability to administer the tax credits both through the exchange and outside the exchange, it could be approved.

This is a huge tool for health care reform.  Insurance plans could accomplish the goal of reform without the federal gov.


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The White House on Monday will issue new rules that strongly discourage employers from cutting health insurance benefits or increasing the costs of coverage to employees.

The administration said this was just one goal of the legislation, allowing people to “keep their current coverage if they like it.” It acknowledged that some people, especially those who work at smaller businesses, might face significant changes in the terms of their coverage, and it said they should be able to “reap the benefits of additional consumer protections.”

Many employers would benefit from the grandfather status because it would allow them to keep a less costly plan in place. It would cost less because the plan is not covering every aspect of the health care reform.  Once the white house gives an official ruling on the Grandfather Status we will have a much clearing picture but at this point its not looking too good.

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Mark Farrah Associates (MFA), a leading provider of market data and intelligence solutions to the health care industry reported a huge decline in member ship among eight top health insurers: Aetna, CIGNA, Health Care Service Corporation (HCSC), Health Net, Humana, Kaiser Permanente, UnitedHealth Group and WellPoint.

Enrollment declines continued for most of the nation’s leading health insurers through 2009. Between December 2008 and December 2009 top plans saw an aggregate decline of 2.2 million members. Losses continue to be experienced in both the fully-insured and administrative services only (ASO) segments. The difficult economy continues to take a toll in terms of rising medical expenses and declining membership for most plans.

This kind of reduction can lead to price increases to health plans.


When the employees are laid off there is a higher probability that the un healthy employees will elect Cobra. The healthy employee can go out to market and find lower cost alternatives. Now within the group plan we have adverse selection. Without the additional premium to offset the claims this could lead higher cost.

When we add the COBRA subsidy to the equation the group plan is now picking up claims that might not have been there if the Gov was not paying 65% of the premium.  Those claims can have a large impact on loss ratios which can lead to the plan costing more.

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Right now there are a lot of people predicting that if the Medicare cuts are not fixed then health care providers will cost shift to private carriers. This means that if the 21% reduction in Medicare reimbursement is not fixed the hospitals will charge private insurance more money.

I find this hard to believe. Hospitals can try to renegotiate their PPO contracts with the private carriers. When we look at carriers that have huge market share it will be very difficult for a hospital to increase their reimbursement. If they just loss 21% of Medicare fee they will not want to loss a private contract because that private contract could be paying 31% higher than Medicare.

The long term issue with the Medicare Cuts is that most PPO plans negotiate off the Medicare reimbursement. So some PPO plans might have a contract in place with a hospital that pays 20% higher than Medicare. So we could a huge reduction on what Hospitals and Doctors can charge in both the private and Medicare markets. This might be a good thing for the country.  The only way to bring down premiums is to reduce the cost of care.

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The White house is getting ready to launch a new campaign to sell the public on health care reform that was passed.  This is going to be a difficult sell.

Being a health insurance broker dealing  with all types of health plans and I have major concerns about the reform.

As of right now, I don’t know how you can sell the health care reform when we do not have explanations or interpretations of the entire bill. One of the biggest issues of right now is Grandfathered plans. Obama said that if you wanted to keep your health plan  you could. Well its not looking that way now. Right know the Gov. is unable to give an a clear view of what a grandfathered plan is. There should be explanations by now.

There are positive about the health care reform. The guaranteed issue is going to be huge for people suffering from disease. The only problem is are they going to be able to afford the premium or will the Gov. have to subsidize it?

When it comes to the exchanges that are going into place 2014. What carriers are going to participate?  The White house has demonized the health insurance industry so much how will they get them to cooperate?

I am very interested to see how the current adminstration can sell the public on why this is such a great bill.

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The Internal Revenue Service has released a new summary of tax credits created by recent legislation that impact small businesses, including the new Patient Protection and Affordable Care Act (PPACA) small business health insurance premium tax credit and the federal COBRA subsidies. The new summary Web page consolidates many of the IRS’ tax credit resources in one convenient location.

Most businesses are having problem understanding the tax credit. The fine print is making it difficult for most small business to qualify for the tax credit. A very big exclusion is a small group cannot take the tax credit for family members that are employees. As we learn more and more about the tax credit it becomes less and less.,,id=223909,00.html

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  As of June 1st 2010 the COBRA Subsidy has expired.

The program provided individuals who involuntarily lost their employer-sponsored health insurance benefits with a 15-month 65% subsidy of their COBRA health insurance premium.

Going forward all new COBRA Eligible people will have to pay the entire premium. All eligible individuals that are still in their 15  month period will still continue to receive the subsidy.Without the subsidy we should see a huge drop off of COBRA participants. The reason is most people will be able to go out to the individual market and pick up polices that have much lower premium. Some people will have to take the COBRA if they have major ongoing health conditions.  Even with ongoing conditions there are options available.

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This is the first result of a carrier telling the Federal Government we just won’t sell that product anymore.  As of Sept 23rd 2010 of this year all Children under 19 will be eligible for guaranteed Issue on a stand alone health plan. This means they can not be declined or pre-x.

Golden Rule which is owned by United Healthcare has pulled out of the of that market. This is a negative thing because now we have less carriers competingfor that market.  When we have less carriers that is a reduction of competition and choices. Anytime we have less competition that leads to higher prices.

This is the first big response from a national carrier to  health care reform and it has gotten almost zero press.

If you are reading this and you  have a dependent children under 19 I would advise you to lock into an individual policy for them. If your able to get them on their own policy that contract could be grand fathered in and could save you thousands of dollars in premium.

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A report from Bloomberg Business week reveals that on page 737 of the Health Care Bill approved by Congress there are 3 paragraphs that have nothing to do with health Care.

The provision inserted by Democrats on the Senate Finance Committee to help offset the cost of the bill, requires companies to report to the IRS payments of more than $600 years to any vendor. The intent is to capture $2 billion a year in taxes that goes unreported by contractors and small business.

In 2012 we Hoosiers businesses will need to get tax ID numbers and file forms for almost all suppliers and track all expenses to see which vendors meet the threshold.  Spend $600 with any business and now you will have to have a tax ID number from that vendor.  Local Gas station, Cell phone, FedEx and so on you will have to file a 1099.

The National Small Business Association estimates that a company will have to file an additional 75 forms with the IRS.

Representative Dan Lungren (R-Calif.), with the support of small business advocates, has introduced a bill to roll back the provision. It might be a good idea to send a email to our Representative to repeal this aspect of the bill.

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The  Milliman Medical Index has been released for 2010. This is a very good study of healthcare costs and the effects that they have.  2010 marks the 6th year that the study has been performed. The top 100 leading insurers read this report to estimate future health insurance claims costs.  You would think that our government officials would all take this study into consideration when they are making laws that effect healthcare.

The topics that are discussed in the Study:

Key Findings

The total medical cost for a typical family of four in 2009 was $16,771. In 2010 the study shows an increase of 7.8% to $18,074. Employers and Employee alike shared the increase in cost this year.

Employers cost at an average of $10,744 surpasses $10,000 for the very first time.

Geographic Differences in Healthcare Costs

The study shows that Miami, New York and Chicago continue to have costs at leasts 10% higher than the national average.

Dissecting HealthCare Costs

In this section the $18,074 is broken down into components of spending.

15% Rx+ 33% Physician +17% outpatient+ 31% inpatient +4% other

Employee’s Share of Healthcare Costs

In 2010 the employer is picking up $10,744 of the $18,074 of total healthcare cost to a family of four.

Economic Effects on Healthcare for People with Insurance

This section is addresses the effects of unemployment and health insurance. The study addresses the effects layoffs have on people who continue to be insured under the employer plan.

Cost Implications of Healthcare Reform on a Family of Four

The study states the cost implications are unclear.

Technical Appedix_Milliman Medical Index

This section discuses how the Index is formed.

2010 Milliman Medical Index

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