Category News

Right now the state has taken the federal grant to explore setting up a state base exchange vs a federal exchange.

This is very important on the future of health insurance and health care in the state of Indianapolis.

If it is a state based exchange then we should see competition within the carriers operating inside of the exchange maybe. We would also see the agents role with assisting people on obtaining the best plan.  We are fortunate to have a department of Insurance that works towards finding the best possible option for an exchange. Currently two models are being analyzed. That would be Utah and Massachusetts exchanges. Utah has developed their exchange with lean towards employer based plans. This is where small groups can participate in the exchange. They have had major problems with keeping the exchanges competitive. They also have run into problems with employers being able to admin a small group plan. The Massachusetts exchange is more of a universal health plan with state mandated coverage.  Premiums are very high where a Family of 4 costing $17,000 a year.  The Mass. exchange has major problems because the carriers are losing money and can not stay solvent long term.

If the DOI decides that a state based exchange has really no chance to help Indy residents they will shift it to a Federal Exchange. A federal exchange might have little success in helping Indianapolis residents. Right now the federal government might not see the role of the agent/broker as important. They might establish federal employees that are called health navigator to help people on health insurance. The navigators would not be licensed or be held accoutable for advise that they give. It is also thought that a federal employee will not work as hard a broker/agent that is paid on commission.  The federal exchange might have problem with recruiting carries to participate in it.  In fact we might see carriers that decide to compete against the exchange.

One of the big issues of the health care reform law that must be clarified. Is the tax credit or subsidy for the exchange. If there is a tax credit that mean people will still have to pay the full premium and wait to get the tax credit back. $17,000 could be difficult for most families to pay and then wait for the credit. If its a subsidy then the federal gov. could pay a portion of the premium towards the carriers which would no doubt lead to a higher premiums.

Its going to be very interesting to see what happens on the exchange.

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New Rule for Grandfathered Plans

Under the Patient Protection and Affordable Care Act (PPACA), health plans that existed on March 23, 2010 are generally considered “grandfathered plans.” Grandfathered plans are exempt from some of the health care reform requirements, including coverage of preventive care services with no cost-sharing and patient protections such as guaranteed access to OB-GYNs and pediatricians.

Regulations were issued on June 17, 2010 regarding grandfathered plans. These regulations provided that certain changes to an existing plan could cause the plan to lose its grandfathered status. For example, plans could lose grandfathered status by significantly increasing costs or reducing benefits under the plan. Under the initial rule, plans would also lose grandfathered status by changing insurance policies, even if no other prohibited changes were made to the plan.

The Departments of Labor, Health and Human Services and Treasury (the Departments) have now amended the grandfathered plan regulations to permit insured group health plans to change insurance policies or carriers.

Under the amended rule, group health plans will no longer automatically lose their grandfathered status merely because of a change in the plan’s insurance policy, certificate or contract of insurance. However, making any other prohibited change will still cause a loss of grandfathered status.

Reasons for the Amendment

The Departments stated the following reasons for reversing their position on this rule:

  •  The initial rule treated insured group health plans differently than self-funded group health plans. Insured group health plans were not able to change issuers or policies without  losing grandfathered status, while self-funded plans could change their third-party administrators (TPAs), as long as they did not make any other prohibited change. The amended rule allows all group health plans to keep their grandfathered status when changing insurance companies or TPAs.
  • A group health plan may not have a choice about changing its insurance issuer; for example, if the issuer withdraws from the market. Under the new rule, the plan sponsor can maintain grandfathered status if it has to contract with a new issuer.
  • The initial rule unnecessarily restricted the ability of issuers to reissue policies to current plan sponsors for administrative reasons not related to the underlying terms of the plan. Issuers can now transition policies to a subsidiary or consolidate policies without losing grandfathered plan status.
  • The initial rule potentially gave issuers undue and unfair leverage in negotiating the price of coverage renewals with grandfathered plan sponsors, which could interfere with competition and cost containment
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This will be the 7th year since Health Savings Accounts have been available.  We have seen a few different plan designs since inception but the principles have stayed the same.

The Health Savings Accounts in Indiana have been much more popular than other states. There are few theories on why this is but I think it has alotto do with price. When Health Savings Accounts were first introduced they had savings in 30% -45% range from a traditional plan. Now one has to realize just 7 years ago lower deductible type plans were much more common. So switching to an H.S.A and then using the savings from the old plan to fund your H.S.A custodial account was a easy decisions.

The HSA plan was the 2nd step towards developing consumer driven insurance products. The first was the Medical Saving Account.  The HSA plan is a major medical policy which promotes consumerism be informing insured what the cost of medical services are. Since the insured is responsible for the deductible one becomes very aware of the cost of an office vistit, Brand name drugs, a trip to the ER and so on. These plans have really taken the first step in price war with health care provider. The best example of this is the drug prices between the pharmcies. When Walmart came out with the $4 generic its threatned the all the  major pharmacies. The pharmacies have started to compete from a price standpoint. Another huge step for consumerism is when Anthem and United HealthCare came out with their own version of the price shoper for the HSA clients. This tool truly has show the cost difference from what a hospital charges and what an outpatient facilty charges.

As we enter the 4th quarter of 2010 the HSA is still a very popular choice with individual & small groups. These plans are even gaining traction with large companies.

For the individual health plan its by the far the best option. Why pay for benefits like a co pays that you  might not use.  A lot of people still say I don’t want to lose my co pays. The truth of the matter is when you see that primary care doctor you are still getting the network discount. That means those services are discounted anywhere from 35%-50%. So if you have a $100 office visit you might owe $50. When you compare the premium savings on an HSA it makes sense to go with that plan.  The RX benefit is where there can be real issues. If you are on a brand name drug and there is no generic then you end up paying for the cost of that drug and it chips a way at the deductible.  What people fail to realize is if you qualify for a individual plan with RX coverage the carrier will rate you up for that condition so you end up paying a much higher premium. When we compare the higher premium plan with the HSA plan and the cost of the drug there is a good chance the HSA makes more sense.   The fact of the matter no mater what individual plan you are on the premiums are going to go up at renewal but you have a much better chance of getting a single digit rate increase on a HSA.

The HSA for the small group is still a very good option. If a group is going that route its very important to include a min wellness program and price comparison tools  so that the employee can take an active role in their health care. Now in the small group market we have seen some problems with the H.S.A approach from cost stand point. 9 times out of 10 an HSA plan is a better plan than the current plan design. This is because the out of pocket for the employee can be much less than the traditional plan that has co insurance. So now an owner/controller is only seeing a 10% reduction in premium compared to the co pay plan that has 3 times the out of pocket.  The other reason why we are not seeing huge savings on the small group HSA plans is claims. Once an insured meets their deductible they now feel all treatments are free.  Even with this said the HSA is by far the best option for a small group health plan. Its one way that an owner can try to educate the employees on true health care cost while still proving the best coverage.

Large groups are starting to really entertain the HSA approach because of the consumer driven principles.  Many large groups are now adding an HSA option to their cafeteria plan. Data that has been collected over the last 6 year on these type of plan are showing a significant savings from a claims standpoint.

If you are looking for a new health insurance plan you have to entertain the health savings account.

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A new estimate has lowered the expected cost of the federal health care overhaul to Indiana’s state government to perhaps $2.6 billion over the next decade — $1 billion less than an initial projection made last spring.

With health care reform we are going to see an expansion of medicaid. This expansion is going to cost the state a lot more money. So our governor is trying to to estimate the cost of health care reform as it pertains to Medicaid.

Robert Damler of the actuarial consulting firm Milliman Inc. told the state’s Medicaid oversight commission on Monday that new information provided by the federal government will drop the possible costs an additional $330 million. The firm in May had lowered its initial estimate to $2.9 billion. The initial estimate of $3.6 billion in a 10 year time period.

When Medicaid is expanded we are going to see a huge cost to the state. As it stand right now there are no incentives to get off of a Medicaid health plan. These plans have very rich benefits to where it cost the insured almost nothing for services.

The  health care reform creates a huge expansion of Medicaid and how are the states going to pay for it?

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Workers are expected to pay more for health care coverage in 2011 than in 2010 as part of the steepening rise in premiums and employees’ share of the cost. Experts say that increase could keep workers from getting the care they need.

The average cost of group health insurance coverage is expected to rise 8.8% from 2010 to 2011, the highest increase since 2005, when premiums rose by about 9.2%, according to research from Hewitt.

Workers are bearing a bigger portion of that cost than a few years ago.
Hewitt projected that the average annual health care premium will rise from $4,083 in 2001 to $9,821 in 2011. In that period, employees’ annual insurance premium contributions and out-of-pocket costs will more than triple, from $1,229 to $4,386. The employees’ percentage of costs has risen from 35% in 2001 to an expected 45% in 2011.

Hewitt’s data, released Sept. 27, are based on polling of 350 large U.S. employers, which represent 14.4 million people.

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The Obama administration has granted dozens of waivers to companies so they do not have to comply to the health care reform.

McDonald’s released a statement that their current health plan to the hour employees would  not meet the health care reform requirements. So the administration granted them a one year wavier reported by the New York Times. This is just one of dozen of waiver that have bee granted.

Limited benefit plans have granted waiver because there is no way they can be compliant with reform. I think the administration did not take these types of plans into consideration when they past health care reform. To the surprise of the current administration these type of plans have a lot of membership in this country. The health care reform basically does a way with these type of plans. Limited benefits plan can not comply with any aspect of health care reform.

We are also seeing waivers granted to certain Union groups. The speculation on why they are being granted waivers is that health care reform actually reduces some of their benefits. Durable medical is unlimited under essential benefits but could apply towards some cost share. Under some current plan designs durable medical is covered at 100% but capped. So by shifting the cost on to the insured could be view as a reduction in benefits thus losing any grandfather status. With that kind of shifting it could also be a labor contract violation. Lots of red tape to where it might be easier for the administration to give a one year waiver.

As the first major aspect of health care reform takes place we are already seeing difficult implementation in all areas. States are already seeing smaller carriers pull out of certain markets. In the next couple of months the Medical Loss Ratio will be released. This is the law that carriers must spend 80% or 85% of premium on claims.  This law will have a huge impact on small group and individual markets. The fear in the industry that carriers will just exit these markets thus reducing competition.

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UnitedHealthcare has entered into an agreement to renew medical insurance coverage for The Principals commercial medical plan customers. Here is the news release about the agreement and The Principal’s plans to exit the medical insurance business. UnitedHealthcare will offer The Principal’s customers broad access to quality care with one of the largest local and national care provider networks, highly integrated clinical programs and a full range of affordable products.

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As we enter the 6 month mark of the passing of the health care reform we are witnessing the first negative impacts. 

This week, almost every big insurance company in America—including Aetna, Cigna, UnitedHealth Group, WellPoint, Humana, Coventry, some Blue Cross Blue Shield affiliates and others—stopped writing “child-only” policies in the individual market. This is a niche product that parents typically buy when their employer health plan doesn’t pay for dependents. The exact plans vary company to company and state to state, and the insurers will still offer family policies and make good on the child-only policies that they’ve already sold. But most won’t be writing new ones.

The reason is a regulation that President Obama mentions every time he talks about health care, as he did recently in Falls Church, Virginia: “Children who have pre-existing conditions are going to be covered.” Insurers are now required to cover everyone under 19 when their parents apply for coverage, regardless of health status. The problem with this kind of “guaranteed issue” is that it encourages people, in this case parents, to wait until their kids are sick before seeking coverage.

This drives up premiums for the healthy, encouraging consumers in turn to drop coverage, and eventually it leads to what’s known as a “death spiral,” the industry term for an insurer with rapidly increasing costs as a result of population changes in its coverage pool. The child-only market is a particular death-spiral risk because it is so small and unstable, which explains why so many insurers left in a stroke.

The collapse of the child-only market is a preview of what will happen when guaranteed issue and the rest of ObamaCare comes on line in 2014 for adults, except then insurers will have nowhere to flee. Exiting the market will mean going out of business.

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Below are a list of key points that have gone into effect. The new coverages will increase the premium for everyone but may benefit % of policy holders.

YOUR HEALTH COVERAGE CANNOT BE ARBITRARILY CANCELLED IF YOU BECOME SICK

Under the new law, health plans are now prohibited from rescinding coverage except in cases involving fraud or an intentional misrepresentation of facts.

YOUR CHILD CANNOT BE DENIED COVERAGE DUE TO A PRE-EXISTING CONDITION

The new law prohibits insurance plans both from denying coverage and limiting benefits for children based on a pre-existing condition. This protection applies to all health plans, except “grandfathered” plans in the individual market. These protections will be extended to Americans of all ages starting in 2014.

YOUR CHILD UP TO AGE 26 CAN STAY ON YOUR HEALTH PLAN

Under the new law, insurance companies are required to allow young people up to their 26th birthday to remain on their parents’ insurance plan, at the parent’s choice. This provision applies to all health plans.

YOUR HEALTH PLAN CANNOT PUT A LIFETIME LIMIT ON YOUR HEALTH COVERAGE

Millions of Americans who suffer from costly medical conditions are in danger of having their health insurance coverage vanish when the costs of their treatment hit lifetime limits. These limits can cause the loss of coverage at the very moment when patients need it most.

YOUR HEALTH PLAN’S ANNUAL LIMITS ARE PHASED OUT OVER THREE YEARS

The new law phases out the use of annual limits over the next three years. For plan years beginning on September 23, 2010, the minimum level for the annual limit will be set at $750,000. This minimum is raised to $1.25 million in a year and $2 million in two years. In 2014, all annual limits are prohibited. The protection applies to all plans, except “grandfathered” plans in the individual market.

If you are purchasing a new plan, you will have the following additional protections:

YOU HAVE THE RIGHT TO KEY PREVENTIVE SERVICES WITHOUT DEDUCTIBLE OR CO-PAYMENTS

Under the new law, insurance companies must cover recommended preventive services, including mammograms, colonoscopies, immunizations, and pre-natal and new baby care, without charging deductibles, co-payments or co-insurance.

YOU HAVE THE RIGHT TO BOTH AN INTERNAL AND EXTERNAL APPEAL

The new law guarantees the right to an “internal appeal.” Also, insurance companies will be prohibited from denying coverage for needed care without a chance to appeal to an independent third party.

YOU HAVE THE RIGHT TO CHOOSE YOUR OWN DOCTOR

The new law: 1) guarantees you get to choose your primary care doctor; 2) allows you to choose a pediatrician as your child’s primary care doctor; and 3) gives women the right to see an OB-GYN without having to obtain a referral first.

YOU HAVE THE RIGHT TO ACCESS TO OUT-OF-NETWORK EMERGENCY ROOM CARE AT IN-NETWORK COST-SHARING RATES

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Anthem Blue Cross and Blue Shield Individual Business to Suspend Child-Only Coverage Effective 9/23/10

Anthem Blue Cross and Blue Shield is committed to offering a broad range of products and services that meet customer needs in the changing health insurance market, and to implementing the new health care reform legislation in a way that benefits our customers and members.

We have reviewed the rules regarding the provisions of the Patient Protection and Affordability Care Act (PPACA) limiting the application of pre-existing condition exclusions for children under 19. Unfortunately, there remains a great deal of uncertainty as to how the rules will be implemented and what the impacts might be on participating insurers. 

While some carriers may continue to offer child-only policies, other carriers have dealt with this lack of clarity by choosing to discontinue new business sales of their child-only policies.  Some have cited the lack of an effective mandate for individuals to obtain coverage, as well as ongoing market uncertainty.  Unfortunately,  this has created an unlevel competitive environment.  As a result, Anthem has decided to suspend the sale of child-only policies indefinitely, beginning  September 17, 2010.

We will continue to monitor the situation and provide additional details on any changes to our process and policies as they become available.

Please Note: This decision has no impact on any existing child-only policies.  In addition, we will continue to accept children on family policies as long as the primary subscriber is 19 or older.

Why is Anthem suspending the sale of new child-only policies?

Anthem is committed to offering a broad range of products and services that meet customer needs in the changing health insurance market, and to implementing the new health care reform legislation in a way that benefits our customers and members.

We have reviewed the rules regarding the provisions of the Patient Protection and Affordability Care Act (PPACA) limiting the application of pre-existing condition exclusions for children under 19. Unfortunately, there remains a great deal of uncertainty as to how the rules will be implemented and what the impacts might be on participating insurers. 

While some carriers may continue to offer child-only policies, other carriers have dealt with this lack of clarity by choosing to discontinue new business sales of their child-only policies.  Some have cited the lack of an effective mandate for individuals to obtain coverage, as well as ongoing market uncertainty.  Unfortunately,  this has created an unlevel competitive environment.  As a result, Anthem has decided to suspend the sale of child-only policies indefinitely, beginning  September 17, 2010.

When will Anthem stop selling these polices?

Due to ongoing uncertainty, Anthem  has made the decision to suspend the sale of child-only policies and policies where the primary subscriber is under 19 years of age, for effective dates of 9/23 or later. Quoting capability for child-only policies will begin being removed on September 17, 2010.

Will Anthem’s family plans be offered to children 18 and under?

Anthem will continue to offer family policies that have dependent coverage to subscribers who are 19 years of age or older. 

Will Anthem participate in an “open-enrollment period” for child only plans? 

No, Anthem has made the decision to suspend the sale of child-only policies and policies where the primary subscriber is under 19 years of age, for effective dates of 9/23 or later.

Will this impact all states in which Anthem’s affiliated health plans are currently providing Individual Child-only plans?

The suspension of child-only plans will apply to all states unless a particular state requires the offering of child-only policies.  Based on state specific requirements, we will continue to offer Child-only plans in Maine and New York, and in open enrollment periods in Ohio and Virginia. Child-only plans will also be offered in those states requiring such policies for conversion and HIPAA eligible individuals.  Existing policyholders will not be impacted by this action and they may continue in their current coverage.

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