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CMS announced on May 15th that they would end the Small Business Health Options (SHOP) program, effectively on November 15th 2017.

The SHOP program allowed small business to purchase group health insurance through the Federal Facilitated Exchange. The goal, was to allow small business to offer multiple plan design and received a tax credit for a portion of the employer contribution.

The program never met its goals in Indiana or the rest of the country.  The architects of the SHOP did not understand the small group market.

1st.  Small groups providers did not have the technology for integrating multiple carriers, nor were there multiple carriers to offer.

2nd.  The enrollment process through the marketplace, was extremely frustrating to both employer and employee.

3rd. The exchange plans being offered, had less network access than group plans off the exchange.

4th. Employer tax credits, were based on the average income of the company. This devalued the tax company tax credit.

5th. For companies that have low wage employees, they were better off not offering a group health plan. Then those employees could get on Medicaid or were highly subsidized on the marketplace.

For Indiana, we had less than 100 companies elect coverage through SHOP. Nationwide there was less than 30K.

We were one of the first agencies to be certified to offer the SHOP plans in Indiana. Having quoted multiple small companies on the SHOP, there was little to no value with that option. It was a good idea.

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downloadOur Indiana Health Insurance Company Talks about the American Health Care Act Bill

A lot of commentators, journalists & health care experts are voicing their views on the American Health Care Act. The reality is, the changes the senate are going to make will determine the true impact to health coverage.

The supporters of the Obamacare, are giving little support to any ideas of new healthcare reform. The biggest impact of Obamacare has been the expansion of Medicaid. Here in Indiana, we now have close to 500,000 people on the HIP 2.0.  We have less than 170,000 on exchange plans.

The AHCA will change how Medicaid is funded and slowly remove the expansion as we know it. This will force medical providers to change their fee structure. This may be an underlying goal to move the country away from a fee for service health care model.

There are a lot of views on who wins and who loses under the AHCA.

If you purchase individual health insurance (without subsidies) you can’t lose. Current market conditions under the ACA are imploding. Premiums are at an all-time high, along with out of pockets. Then we add the lack of network access. There will not be an individual market in 2018 without reform.

If no individual plans exist or just one, anything will be better than Obamacare.

The predicted losers would have to be the poor. If Medicaid expansion is eventually phased out, what will happen to this segment of the population. State officials and leaders will have access to federal grants. These federal dollars can be used to reach health care goals of helping the working poor. Every state leader is going to have to work towards compromise to put a solution in place. The health care providers will have to be open to compromise.

Employers will win, they will no longer be required to provide all the reporting requirements under the ACA. Companies have allocated huge amount of resources to be compliant under the ACA. New industries have been created to provide the administration needed.

Group health plans will go down in cost. Right off the bat, we will see the taxes from the ACA removed. That is almost 5% of the cost.

No more employer mandate will be in effect. The employer mandate devastated certain industries. Those industries, had never built their business model on providing health benefits.

To sum up the current bill, the poor will need state leadership to redevelop programs of health care. Federal dollars will be available to them.

The middle class and above, will have more options in plan choices, less government requirements, great plan designs, carrier competition, which will lower premiums.

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medicine, age, health care and people concept - senior woman, man and doctor with tablet pc computer at hospital ward

The new health care reform bill, (American Health Care Act (AHCA)) was just introduced. Eventually we should see analysis of the bill and potential impacts on the health care & health insurance markets. Here are our views on the how the bill may impact Hoosiers.

Indiana Health Insurance Company Tips for Hoosiers

The repeal of the ACA actuarial values for health plans: This will allow for health insurance companies to have more flexibility with plan design, thus it could reduce premiums. It would also create a variety of health insurance plan options in the market.

Increase Tax Credits for 2018 & 2019: Young & old would receive larger tax credits to offset premiums. These tax credits would apply towards off exchange health plans. This is an attempt to stabilize the current individual markets and would have a positive impact on Hoosiers.

Retain Guaranteed Issue: No one can be denied for pre-existing conditions.

Retain coverage under parents plan to age 26: Modify age bands for premium determination: This would allow cost for oldest to youngest to be moved from 3x to 5x. For Hoosiers in their 20’s, this would lower the cost and may increase enrollment. This could help stabilize the market by adding healthy members to the pool.

Keep current open enrollments and special enrollment guide lines: Everyone would obtain health insurance in December, for the following year. This does put a strain on all parties involved. You have 7% of insured populations applying for coverage at the same time. For Special Enrollment Periods (SEP), you will have to provide documentation before being enrolled in a plan. Hoosiers and the rest of country have been able to game the ACA, by getting medical services prior to proving the SEP. This has led to higher premiums.

Impose late Enrollee penalty: If you have not had continuous coverage, not paying into the system, you will be charged a penalty. This will force Hoosiers to maintain continuous coverage. Trust me when I say, there will be a huge learning curve on this issue. The bill states there would be a 30% increase cost penalty if you go without coverage for more than 63 days. That penalty would be applied for a 12 month period. If you look at current premiums, that would be a huge, unaffordable penalty for most Hoosiers. Here is some grey area, the bill states Medicaid companies are not required to provide a certificate of prior coverage, insurance companies are. This could lead to a penalty being imposed for a Hoosier coming off of Medicaid.

Create a State Grant Program: States would be eligible for block grants and that money could be used for health care goals. Examples may be creating cost sharing reductions for at risk Hoosiers. Innovative disease management programs. Every state would be challenged to create health care reform programs to better serve their residents.

Promote Health Saving Accounts: Give more tax incentives for Hoosiers to purchase these plans. This will help Indiana middle class and upper middle class. Under that ACA, this segment of the market has been negatively impacted by cost.

Change Medicaid expansion & funding: Essentially end the Medicaid expansion by 2020, which would have a huge impact on Hoosiers making 138% of federal poverty level. Right HIP 2.0 is insuring around 400,000 Hoosiers. In my experience, these people cannot afford health insurance premiums over $50 a month, nor out of pocket maxes.   Indiana would have a challenge to obtain federal grant money to provide health insurance to these folks.  The bill would change Medicaid funding to per capital basis. Indiana would have to change it’s current program to be more cost efficient. To do that, there may have to be the development of more narrow networks and lower reimbursement to Medicaid providers.

The repeal of the ACA taxes: This should help to lower insurance premiums and reduce the tax burden on durable medical manufactures. Companies that manufacture medical equipment should free up resources to invest back in their business. We doubt the tax relief would have an impact on what is charged, but if a company could open a new plant more employees create more competition, which could be a good thing.

Cut federal funding to Planned Parenthood: Not sure how many Hoosiers are receiving services from Planned Parenthood, obviously that origination ability to operate would be severely impacted.

Tax Credit Determination: The new system would be based on income and age. The tax credit would be a set amount.

  • $2,000 per individual up to age 29 for income up to $75k on single, then phased out to $95k.
  • $2,500 per individual age 30-39
  • $3,000 per individual age 40-49
  • $3,500 per individual age 50-59
  • $4,000 per individual age 60 and older For income up to $115k and phased out at $150K

Families can claim credits for up to 5 oldest members, up to limit of $14,000 per year. Income would determine the eligibility and amount.

The tax credits could be applied to short term policies, on and off exchange and Cobra premiums. There is mention to apply the credit towards small companies with non-group health products. The tax credit would be reduced, but still eligible. This could have a large impact on small Indiana companies offering group health.

Excess tax credits: If you don’t use the entire tax credit, you could place the remainder in health saving account. Assuming individual premium are reduced, this could be a huge benefit.

There will be changes to the current bill, just announced was 43 pages of changes to the tax credit and Medicaid funding. This bill if passed, will look very different from it’s original draft.

Tony Nefouse
Indiana Health Insurance Company

 

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The Centers for Medicare & Medicaid Services announced the extension of grand mothered plans through 2018. If you purchase a group health plan prior to the affordable care act, you know have another year you can extent that coverage.

Indiana Health Insurance Company Updates

For Indiana, there are a lot of small companies that have been able to benefit by keeping those plans in place. They cost anywhere from 10%-25% less than ACA plans. These plans were ordinary underwritten, which leads to lower risks and better rates. They also do not have to follow the guidelines on age bands, no more than 3 x difference in cost from the oldest to the youngest. If you have younger employees, not having the age band restriction could be 40% lower than ACA plans.

Most of these plans will renew in December, remember these plans are being rated based on the groups actual claims. Rate increase can vary from single digit up to the 30% market for small group. These plans do allow for brokers to negotiate the rate increase.

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A draft of a bill that could replace the Obamacare was “leaked” on February 16th.

ObamaCare Concept

The plan would use the tax code to create subsidies/tax credits for people to purchase health insurance plans in their state. The tax credits are not going to be based on household income, but on age.  The draft gives insight on the amount of subsidies, which goes from $2,000 -$4,000 a year.

  • Under age 30 would be eligible for $2,000 a year.
  • Age 30-39 would be eligible for $2,500 a year.
  • Age 40-49 would be eligible for $3,000 a year.
  • Age 50-59 would be eligible for $3,500 a year.
  • Age 60+ would be eligible for $4,000 a year

With health insurance premiums based on age, this looks to be a fairer subsidies system. For people with incomes in the 200%-300% of FPL, premiums would need to come down to insure it’s affordable. Changing the age bands, which plans are rated on, could help with affordability.

The draft also increases the benefit of health savings accounts. Essentially, it would allow the insured to save the health plans out of pocket max on a tax-free basis.

There is interesting information on grants for high risk pools. It looks like states would have flexibility with federal grant money, state could develop high risk pools or any health insurance purpose they wish. States would have a great deal of control on what health reform solutions they develop.

The draft, goes into Medicaid reform. The Federal government will fund 60% of the cost. This is a big difference from the 90%, the fed paid for the Medicaid expansion. The states that did not expand Medicaid are not losing federal dollars.

With the repeal of the ACA, there must be funding for this reform. The bill intends on tax employee benefits that exceed the 90th percentile in value. This may be difficult to get approved. The employee benefit industry, is fully aware of what will happen if group benefits become taxable. It will cause the erosion of employer sponsored health plans.

Anthony Nefouse

Indiana Health Insurance Company

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Updates From Your Indiana Health Insurance Company

On February 16th House Republicans release a 16-page power point on replacing the Obamacare.

The first couple pages are examples of how the ACA has failed to deliver it’s intended goals. The examples give a snap shot of a loss of network access, increasing premiums and increasing out of pocket expensive. These examples are accurate and true.

The power point quoted the CEO of Aetna on the death spiral that is occurring in the individual market. Also mentioned is Humana’s exit from the individual market. Both of these statements are true.

Page 6 shows the premium increase in 2017 for all the states. One thing to note for Indiana, the Department of Insurance states that the -3% was not accurate. They publicly state that Indiana’s increase was closer to 30%. Which beg the question on what methodology did the government use to determine the individual rate increase.

The next slide touches on the lack of health insurance choices. The slide states that in 2016, there were 225 counties with only one individual health insurance choice. In 2017, that increased to 1,022 counties with only one choice. For Indiana, this has also been an issue. Anthem is the only carrier offering coverage in all of Indiana’s counties. Some rural Indiana counties have been deeply impacted, but the lack of competition and lack of network access.

On page 8 we start to see the outline of what House Republicans want to deliver. These are bullet points or talking points with little information on implementation.

The next slide outlines removing Obamacare taxes and the elimination of the Individual & employer mandate. It also states the removal of Medicaid expansion, which might be the biggest insurer of the ACA. Just in Indiana, HIP 2.0 now insures over 400K members under the ACA.   Also mentioned is open-ended subsidies, which is a very interesting concept.

The GOP stresses protecting patients with pre-existing conditions and allowing for adults to stay on their parents policy until age 26. The GOP is also addressing the traditional Medicaid and the need to modernize it. There is some info on allowing Medicaid expansion enrollees to keep that coverage for a period of time.

There is a push to transfer healthcare reform back to the state level. Each state, would be responsible or required to repair the damage that Obamacare has created. There seem to be an emphasis on going back to high risk pools. Indiana had one of the more successful high risk pools compared to other states. That risk pool was subsidized by the health insurance industry. At the time, those premiums were considered unaffordable for most. Now those premiums are below current individual markets.

There is a big emphasis on the Health Savings Accounts for individual and family plans. They want to open up the H.S.A contribution levels to the out of pocket maximum and give a wider range of medical services that the money can be used for on a tax deferred basis.

Tax credits for All!

This is very interesting and we hope there is more information released. Instead of tax credits being based on income, they would be based on age. Older members would receive a higher tax credit to offset the increased cost. There is even mention, that if you don’t use the tax credit, you can place it into to your H.S.A custodial account. This would have a huge impact.

As we come to the end of the power point, we see the buying insurance across state lines. This option would create major obstacles and could really destabilize the individual market. Each state has their own set up which mandates what individual health plans must cover. For example, Indiana has an autism mandate, while Illinois has a fertility mandate. If you are an Indiana resident that needs fertility coverage or vice versa, you would purchase a plan with that that coverage. This would cause the insurance companies to set up shop in the state with the lowest amount of mandates. The other issue is contracted reimbursement rates. A policy in Indiana, may only pay up to a certain amount for a procedure. That procedure in another state could be much higher and thus the member would be billed the difference.

All in all, this power point is the first step towards what the GOP wants to deliver for the replacement of the ACA. I think it’s obvious, there is a lack of insight from experts active in the individual markets. That is not to say that on a state level, we could develop healthcare reform that gives all parties what they need.

Anthony Nefouse
Indiana Health Insurance Company

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healthOn February 15, 2017, the department of Health & Humana Services issued rules to try to stabilize the individual health insurance markets. This is the first step by the Secretary of HHS on reducing the economic burden of the ACA, as proposed by the Jan. 20th executive order.

These new policy rules are intended to help the insurance companies. The goal is to keep them in the individual market. People have been able to game the ACA in multiple ways; these new rules will prevent most of that from continuing. And they are also intended to keep carriers in the individual market for 2018.

Policy and Operational Changes:

  • Special Enrollment Period (SEP)
  • Increase verification of eligibility for obtaining a policy outsider open enrollment. Before a policy will be issued, a member must submit supporting documents.Use of Special Enrollment Periods:
  • Members will be limited on making plan changes with the use of the SEP

Back premium collections:

  • Unpaid premiums must be paid before a new policy will be issued.

Greater Actuarial Value:

  • Carriers will have more flexibility will plan designs, which should create more plan options.

Network Adequacy:

  • To help members have access to medical providers, states will be given the authority to review carrier’s networks.

Qualified Health Plan Certification:

  • Allow carriers more time to develop plans for the following year.
  • Open enrollment shortened
  • Individual open enrollment will be from November 1st to December 15th.
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Syringe icon, medical and healthcare concept, illustration vector design EPS10.

Indiana Health Insurance Company Updates

Humana has announced that they will exit the individual health insurance markets in 2018.  They had exited Indiana 2 years ago, so this announcement comes as no surprise.

Humana at one time had a strong national presence in the individual and group health insurance markets. Over the last 10 years, they have reduced that footprint. Humana’s focus is the medical senior markets. That segment may make up over 75% of their business. They have been competitive in ancillary products for small companies.

The decision to exit the individual markets, will impact 11 states. This includes any grandfather policies that were purchased prior to March 23, 2010.

Almost all the major health insurance companies, have experienced significant losses in federal exchanges. 2018 may be a difficult year for the individual health insurance markets. There is a high probability we could see the carriers that are left, also leave the individual market.

With this kind of risk, the safest place for health coverage is through a group health plan.

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January 20th 2017, President Trump signed an executive order to waive, defer, grant exemption, or delay the requirements of the ACA, that would impose a burden on individuals or families, medical providers, or purchasers of health care. The executive order gives the Secretary of the Department of Health and Human Services the power to enforce or not enforce the laws requirements.

As it stands, the executive order has not had an immediate impact on health plans or coverages.

The order does confirm that the administration is going to repeal, replace or refine the current law. There is reason to believe that health care reform may be passed down to a state level.  This would give states the power to develop their own health care reform.

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