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The Hill

Under the new health care reform law, if an employer’s group health insurance is considered unaffordable — a cost to the employee of more than 9.5% of household income —  the employee would be eligible for tax subsidies through a health insurance exchange. 

As the law was originally interpreted, if the employee was also purchasing coverage for his or her dependents, the employee’s dependents would be eligible for subsidies if 20% of household income went toward the cost.  Congress’s Joint Committee on Taxation now views the law differently and has determined the subsidies are for the employee only. 

Here’s an example of what could happen: An employee purchases insurance through his employer. The employer pays 88% of the employee portion of the premium, but the employee also needs to pay to cover his dependents. The employee cost is less than the 9.5% of household income. Yet the cost of adding his dependents to the plan is unaffordable. Under the new interpretation, the employee’s dependents would not qualify for tax subsidies.

The change to the law’s interpretation is a huge blow for affordable health insurance. As a result, some experts predict a 95% increase in the cost of health insurance in the individual market, in addition to current rate increases.  A healthy person currently getting a good deal in the individual market could suffer because of cost redistribution. An increase of this size could have a crushing effect on the middle class, especially for those who are self-employed.

Have you seen a substantial increase in the cost of your health insurance? Are you aware of your options?

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The state of Indianapolis recently lost five individual health carriers from the market. For those working in the health insurance industry, this comes as no surprise. Below are the five companies that exited and the reasons for their departures:

American Community Mutual Insurance Co.

American Community left Indianapolis due to insolvency. The company had struggled for years to be profitable because of poor company leadership. Michigan’s Department of Insurance took over the company last year.


Pekin Insurance

 Though still practicing, especially in Illinois, Pekin Insurance is no longer active in the under-65 individual health market.

Guardian Life Insurance Co.

Guardian is a large, New York based insurance carrier. The individual health market in Indianapolis wasn’t a good fit for the company.

Cigna Corp

Cigna is a large group carrier that never offered significant individual health product in Indianapolis.

Aetna Inc

The loss of Aetna is a substantial blow to competition in Indianapolis’s individual health market.  Aetna offered a number of competitive products that were beginning to gain traction.  Recent statistics indicate the company still has more than 700 active policies in the state. 

Indianapolis’s health insurance market suffers from decreased competition. But the introduction of the Medical Loss Ratio (MLR) has made the reward in the individual market too risky for these companies.  The MLR is the percentage of your premium dollars an insurance company spends on providing you with health care, as opposed to what is spent on overhead and administrative costs.

Anthem and United Health Care are the most competitive carriers in the state, followed by a few small carriers like Humana, Assurant, and Medical Mutual of Ohio.

Have you been affected by any of these changes?


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Government Accountability Office
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Forbes reported on the Government Accountability Office study children on Medicaid have lower access to health care and quality.

The study showed that Medicaid patients are 13% more likely to die than uninsured patients in a hospital. 66% of children covered by Medicaid were denied appointment with a specialist for an urgent medical condition.  The physicians do not want to deal with Medicaid.

With health care reform government is expecting 25 million people to join the Medicaid ranks.  This is going to lead to the rationing of care and two classes of health care.

Residents will be faced with tough decisions when it comes to the future of health care. Under the health reform law, if your house hold income is under $64,000 then you will qualify for Medicaid.  If you choose not to pay and take Medicaid the level of care will be much lower than an insured with private insurance.  There are now studies proving this. Most parents will never see the results of these studies because they will be suppressed.

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Chicago Tribune

Accountable Care Organizations are starting gain traction.. Chicago looks like they have cut a deal with Anthem Blue Cross of Illinois to the ACO model in place.

The ACO model is going to have physicians accountable for care. The physician will be rewarded for positive outcomes with patients. This is a huge jump from the fee for service model that is in place today.

Some of the smaller medical practices have major concerns with the how the ACO model is being set up.

The ACO could impact  health insurance not only in the Medicare field but in the health insurance exchange also.   Blue Cross of Illinois stated that the only way they can deliver savings in the exchange model is with the ACO approach.  If the ACO model reduces medical costs then we will see it in the state bases exchanges.

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The Medical Loss Ratio of the Health care Reform law is having a negative effect on carriers entering or staying in new markets.

What has happen is a carrier will go into a new market and that block of business is profitable.  So let’s say they are operating at a 70% loss ratio. Under the new law they have to be at 80% or they have to rebate the difference to the insured’s.  

The carriers are now trying to figure out how they can operate at the 80%. So until the figure out that equation they are pulling out of certain markets.  So for now the MLR is reducing competition in the Individual and small group health markets.

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The Hill

Health and Human Services have canceled their “Mystery Shopper” program. This program was to give HHS information on getting Doctor Appointments. They wanted information on how long someone would have to wait to be seen. They would call a medical practice and state they had Medicare, Medicaid, & Private Insurance to see if waiting times were different.  They could have been trying to make a case that Doctors will treat patients faster if they have an insurance policy that pays more.

The New York Times broke the story and soon after that there was pressure to end it from both politicians and medical providers.

This kind of information could be used to determine rationing, but HHS needs to go about collecting it in more transparent way.

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Image via Wikipedia released a study showing a trend for small groups to shift towards a self funded health insurance. The report stated groups with as few as 50 employees could find savings in the self insured market.

We could see in the very near future where small employers entertaining taking on their employees medical risk in order to save money on health insurance premiums.

Stop-Loss Reinsurance products are being developed for small groups. This could create valuable options which would result in more choices for small group health plans.

The national carriers will not allow Third Party Administrators to get a market segment advantage. The national carrier will developed and market products to these groups. National carrier will develop administration only plans for small group.

Employers then will be able to weigh the pros and cons of a self funded health plan.  The self funded approach would give a small group an entirely new perspective on health care.

There are current self funded plans in the market.

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My News

Reported a positive view of the Accountable Care Organization (ACO) The ACO is one of the main programs to reduce health care cost in the new health care law. This is really the 1st publication that states this type of approach to health care can be successful.  The Gov. is developing this platform for Medicare but there seems to be a huge investment by the health insurance industry in this model. The health insurance industry is suggesting this could save 40%.

If this approach works for Medicare then we will see it in the private insurance markets. This could have a huge impact on health insurance.

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Huffington Post

National Journal

It looks like under the new health law if you have house hold income of $64,000 you will qualify for Medicaid benefits.  For Indiana and other states this would allow a lot of people the option of Medicaid. This could devastate health insurance markets over night and add a huge burden on the state in the forms of claims.  We could also see many doctor restrict the treatment of medicaid patients because of low reimbursement rates.

It is expected that 20 million additional people could qualify for Medicaid in 2014.

The people that wrote this law might have had good intentions but the consequences are going to be massive. Right now states are already struggling with how to pay for Medicaid services and now by law there is going to be a huge influx of new Medicaid recipients.

I have been following health care reform since the inception and I did not know about this. What else is in the law that we don’t

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The Indianapolis insurance Commissioner is asking for a waiver of Patient Protection and Affordable Care Act’s (ACA) 80 percent minimum medical loss ratio (MLR).

The commissioner states that 10% of the health insurance companies have left Indianapolis. If the waiver is granted that would encourage companies to stay in the individual health market. The commission is only asking the wavier on Consumer driven health plans.

There is a real problem in the health insurance market with a lack of competition. There is serious concern that we could lose another large individual carrier.

Aetna recently left the individual market here locally. The risk of loss was not worth the reward. What average people don’t see is that the individual market is not that profitable for the carriers. So now we have new laws on the medical loss ratio that could create even more risk for the carriers to offset individual loses.

I do believe the Commission is acting in the best interest of Hoosiers.

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