Category News

Indiana Health Insurance Obamacare update

As we wrap up the end of 2017’s open enrollment, the ACA will change, as we know it. The new administration is in the process of developing the next health care reform.

medic-hospital-laboratory-medical-40559Regardless of the new administration, the ACA was/is imploding on its own. Most of the national carriers have left the individual exchange markets. There is multiple reasons why and they are all valid. The ACA contained punitive fees to carriers if they managed their business better than expected. This lead to the exiting of Aetna. There are smaller carriers that have gamed this area of the law and made money off of it. The overall health of the individual market is far worse than what anyone knew. Which creates much greater losses. Then there is the issue of dealing with the federal marketplace, which has created significant obstacles, which leads to additional administration costs.  What the ACA failed to realize, is that there are only about 20 million people in the individual market, where there is 160 million in the group market. Carriers are allocating most of their resources to the individual market when it represents a small segment of their overall business.

Indiana Health Insurance Plans for 2017

The health plans for 2017 had either skyrocketed in price or are offering extremely limited networks. Under the ACA, we have seen the reemergence of managed care (HMO). We have also seen the traditional Medicaid companies enter the exchange market with similar product offerings. For people with experience with Medicaid, these plans do not seem out of the ordinary. For people who use PPO plans, this experience can be frustrating and impact care. With guaranteed issue, managed care is the only option to try to control cost. Managed care plans will continue in the individual market as long as guaranteed issued exists.

Out of pockets have reached levels that most people cannot afford. $7,150 out of pocket max is not a realistic expense, unfortunately that is the out of pocket maximum for 2017. On the exchange, some have qualified for cost sharing reductions, which has reduced the out of pocket. To qualify, income must be under 250% of the federal poverty level. The families that don’t qualify for the reduction are left paying the out of pockets.

If you are not eligible for tax credits on the exchange, you have seen a huge increase in monthly premiums. For 2017, a couple in their early 60’s can easily be paying $2,000 a month. When you add the out of pocket expense on top of that and we are looking at $30,000+ in health care costs.

No matter what happens during the election, this system is imploding. There is a slight chance we could see an exit of the individual carriers that are left. That leads us to one safe option for health insurance; group coverage.

As it stands right now, group coverage is the only platform that could be considered stable. If you are a small company that has dropped group coverage for individual, you may want to consider moving back to group. There have been indications from carriers, they may drop out of the individual market in 2018.

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Packs of pills

Indiana Health Insurance updates on Speciality Drugs

Specialty pharmaceuticals are drugs created to treat patients with complex diseases.

In the last 12 months, there has been alarming trends on prescription drug costs. It is now estimated, that specialty RX is closing in on 30% of the medical spend. A group could have just 4% of membership utilizing specialty medications, that could represent 26% of the medical spend. The cost of these medications is having huge impacts.

What is being done to control these costs?

Insurance companies have started to address this issue for both fully insured and self-funded.

Drug formulary changes:

  • Carriers have already started to optimize their preferred drugs.
  • Anxiety drugs like Ativan that cost $1,572 a month have generic drugs in the same class cost $8-$52 a month.
  • Diabetes drugs like Fortamet cost $2,061 a month and there are drugs in the same class from $4 – $600 a month.
  • Carriers have already started removing the high costing drugs, but providing the lower costing alternatives.
  • Carriers are also getting creative with drug manufactures. They have created cost effectiveness programs, essentially a pay for performance agreement based on health outcomes.
  • If a diabetes drug can reach a A1c goal for patients.
  • If a multiple sclerosis drug lowers the rate of hospitalization.
  • High cholesterol drug reduces bad cholesterol levels.
  • Heart drugs to lower heart failure rate.
  • Hepatitis C drug cures Hepatitis.

Indiana Health Insurance Pharmaceutical Costs

These are real life examples of trying to control pharmaceutical costs. The fact that some drugs are not meeting performance benchmarks, should be alarming to everyone.

We are just now seeing the insurance industry start to manage these costs. Though responsible management programs RX cost should be controlled and we could even see medical costs also reduced.

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As we get ready for the repeal or potential defunding of the Affordable Care Act, the debate on healthcare reform will top news. From Washington DC to kitchen tables across America, everyone will be more involved this go around.

Both the critics and supporters of “Obamacare” really have very little knowledge of the realities of the law.  It takes more than bullet points or a few people’s experience to truly understand the law’s impact.

First off, premiums have more than doubled since the passing of the ACA. This is on both the individual and small group health plans.  With the premium increase, we also have a much higher out-of-pocket cost to the insured, from the ACA.

The ACA did waive medical underwriting for small groups and individual plans; which was a true game changer. People who had been declined individual coverage because of preexisting health conditions could not get coverage. Therefore, more individuals found they had increased premiums.

The advanced tax credits also changed the landscape that made health insurance affordable. If you qualified for the tax credit, then you would not pay more than 9% of your household income towards health insurance. Due to the tax credits,  many Hoosiers could finally afford to get health insurance, even when they had been priced out of the market previously.

Unfortunately, there is a direct correlation with low income and health issues.  More often than not, if you have a condition that needs significant amount of medical attention, it’s difficult to be productive in job market. The need for better health to be competitive within a person’s market led to higher premiums in ACA, and carriers exiting the individual market.

Under the ACA, aged based premiums/cost could not have a difference of more than a 3 to 1 ratio.  This created a problem for attracting young people to buy health insurance. The premiums were too high, if a 64-year old’s premium is $900 a month, the 21 year is $300.  20 somethings will not buy, even if they qualified for tax credits (remember it goes back to the 9% rules).  They qualify for a tax credit of $30 a month, most will not pay $270 a month, unless they have had long term health conditions. This rule created adverse selection, only the sick purchase which increase premiums.

Medicaid Expansion has also been a big issue under the law! In Indiana, HIP 2.0 went from 60K a member to 360K. It is predicted to hit over 500K in 2017.  Think about that, 60K to 500K in less than 3 years. To qualify for this plan, household income must be under 150% of the federal poverty level.   If there is a direct correlation with sick and low income, the cost must be astronomical.

These are some of the realities of the ACA.

First, the markets need to stabilize, otherwise the carriers that are left will exit. How can this be done?  Remove the Insurance tax, Risk Adjustment Programs, and the medical loss ratio for the individual market; Allow the carriers to go back to premium vs claims to be profitable;  Reinstate the gov. reinsurance programs on large claimants.

The conservative companies proved they could make a profit in this scenario.  Keep current tax credit system in place with adjustments.  Leave the Medicaid expansion plan in place.

If these things were done, just this year, Insurance companies would see a clear path to making a profit.

Once markets are stabilized, then debate can truly start.  We will need compromise on both sides. There needs to be a guaranteed issue market, no preexisting conditions exclusions.

Insurance companies need the flexibility to create and develop plans which allow the market to determine if they are bought. They need to give incentives to insurance companies to enter new markets, create competition.

Keeping Medicaid expansion program, there may be no other option with this segment of the population. If they are added in the private market, they would not be able to afford premiums or cost sharing. The individuals that do stay insured may have very high claims.

They need to create a new premium assistance program for people that are priced out of the market. If you have a family of 4 with $60K in household income, it’s very difficult if not impossible for them to pay $1,200 a month, especially if they had problems with the premium was $600 a month.

Obviously this is a snap shot, but this is based on market reality.

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This being our 4th open enrollment under the Affordable Care Act (Obamacare), we have experienced health care reform from a unique view point.

I have enrolled Hoosiers from every walk of life, in almost every county in the state of Indiana. Being a top producer for the health insurance companies, this allowed us to become a broker advisor. A broker advisor has some influence, the carriers will listen to some of our suggestions. More importantly, the carriers will reveal interworking’s of operations.

The Affordable Care Act has some features that can be built upon, while other negative aspects should be removed.

Guaranteed issue is where one cannot be denied for preexisting conditions. This is the best feature of the ACA and should continue under the next round of health care reform.

With guaranteed issue, there needs to be cost controlling measures for the insurance companies. The first few years of the ACA, there was a government reinsurance program. This is where if claims reached a certain point, the re insurance would kick to stop the losses. Reinsurance should be included in the next round of reforms.

Risk Adjustment is a key feature of the ACA, that was supposed to help companies that took higher levels of risk. It turned into a very negative program. Carriers had to predict what level of risk they were taking prior to open enrollment. Then if they managed their risk better than what they predicted they were forced to pay. This created huge losses for companies. A carrier could look positive with premium vs claims but then they would end up owing the Government $22 million dollars. Essentially a company would be penalized. This needs to go away immediately.

Removal of ACA taxes:
Some of the taxes have resulted in higher premiums for consumers. Tax on medical device manufactures, Tax on Charitable hospitals, Tax on Drug Companies, Annual tax on Health Insurance companies, these all have lead directly or indirectly into health insurance premiums increases.

The Federal/State Exchanges
Under the ACA, the government forced all insurance companies to offer plan on the marketplace. Which sounds like a great idea until you see how the marketplaces are set up. Health insurance policies are confusing for most people to begin with, but now add the Gov. versions and it’s a true mess. The Idea of having all the plan in one place had good intentions but the result has been negative.

The market place create their own summery of benefit snap shots for each company. Most of that information was presented in a way only to confuse consumers. Best example is single & Family deductibles. The platform show family deductible and it appears to be the single deductible. It’s is obvious that architect of these snap shot does not under embedded and non-embedded deductible. The ACA law does not allow for embedded deductibles, meaning the family deductible must be met first.

Most of the states that set up their own exchanges, quickly realized that it was unaffordable to operate them. Most states dropped their state based exchange to go to the federal exchange.
Going forward market places should be determined by market conditions.

Tax Credits to make insurance affordable
Under this rule, if your income was under 400% of the federal poverty level, you would not pay more than 9.5% of income towards a policy. This gave access to a lot of people that were forces out of the health insurance markets. The process to apply and maintain these tax credits were flawed. The tax credit would be based off of the following years income, which you had to estimate. Many people had to pay back tax credits because they made more than expect. Commission sales, Overtime, Bonus and so.
With any health reform with guaranteed issued, health insurance premiums will remain high. Having a tax credit system of some kind may be essential. The tax credit should be based off previous year income, that way there is no surprise when one files their taxes. This would also eliminate most of the income verification request. I’m sure there could was of adding the ability to increase tax credits if income when down during the plan year.

May 31st of the last 3 years, 50% of the on-exchange policy holders dropped coverage. This is because they did not submit verification documents to the marketplace. This is a huge problem for carriers and members. Using previous year’s tax return may be the answer.

Specific health plans for certain markets
The government, should allow carriers to develop specific plans for the subsidized markets. These plans could have more of a managed care approach to them. If you are eligible for assistance, great, but maybe the plan should force the member to choose a primary care doctor and form a relationship with them. Along these lines, carriers should have flexibility with plan designs. There should be actuarially values the plans must meet but give each state the authority to enforce those plans.

For health plans that are not subsidized, carriers should have much more freedom on plan design. The market will determine which plan are purchased by consumers. As long as they cover pre-x but we could see the market get creative which would lower premium.

Medical Loss Ratio
Under the ACA, 80% of premium dollars has to go to claims for small group and individual health plan. This % should be adjusted for Individual plans. It is now proven the individual market has higher claims than expected. IF an insurance company can make manages their business better, they should be rewarded but have stipulations about premium increase and plan designs.

As for group health insurance, the MLR maybe helping to reduce rate increases but it should be adjusted.
All agent commissions should be removed from the 20% MLR. The agent community has suffered under the ACA, which has resulted in less young people coming into the industry. Which may have created navigators and enrollers, who are not liable for they say during enrollments.

Once the new administration takes office, their priority is repealing the ACA. This issue they will have, is under the ACA, carriers have to submit next year’s plans by May. The new healthcare law may will take 1 to 2 years to be fully implemented.

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Indiana Health Insurance Company 03a56050

We are now three weeks in the Affordable Care Act’s 4th open enrollment. It is fair to say this will be the last open enrollment under “Obamacare”. A new system of health insurance for the individual market will be developed for 2018 and beyond.

For 2017, it’s important to realize that the health insurance decision you make, is only for one year.

Indiana Health Insurance Company Individual Rates

2017 individual rates are very confusing. There are some carriers that took a rate reduction, others took a 35% rate increase and there are others that left the market completely. From the outside looking in, it makes no sense, even from the inside it’s hard to understand.

The carriers that have low premiums, built their networks based off their Medicaid business models. This does not mean medical providers are providing a lower level of care! It is about the insurance contracts and the amount of money being reimbursed to the doctors.

We have had a chance to go through some of these insurance contracts. There are a couple areas of “shadiness’” that appeared. Most if not all procedures, have a prior authorization. This is not that unusual, but when the contract states, “even if authorization is approved, that does not guarantee payment”, this is shady! The insurance company approves the procedure, but then can decide not to cover it. The entire point of a prior authorization is confirming the services are going to be covered.

Under the current law, all emergency rooms must be covered as in network. The contract language is stating that coverage will only be paid at the Medicare reimbursement rates and you could get balanced billed.  Again, shady contract language.

The premiums are low vs an Anthem, that pays claims.

Indiana Health Insurance Company Exchanges

On exchange, some of the carriers have specific built plans to receive cost sharing reductions (CSR). CSR is when the out of pocket is reduced based on income. If you are eligible for the CSR, these plans look great. They have $1 co pays for office visits and no deductible plans.

In full disclosure, we are an agency that makes commission paid by the insurance companies.

The reason I bring this up is because, there looks to be a direct correlation with level of complaints insurance companies and if they use a broker distribution channel.

Indiana Department of Insurance Complaint Index for 2015

Individual health insurance companies with no broker distribution

  • CareSource                         11.21%
  • Coordinated Care Corp   18.53%
  • MD Wise Marketplace    10.86%

Individual health insurance companies with broker distribution

  • IU Health Plans        3.39%
  • All savers Ins Co       9.4%
  • Anthem                      0.78%
  • Golden Rule             0.80%
  • Humana                   1.33%
  • UHC                         1.90%

The companies that do not use brokers to educate Hoosiers on what they are buying, has double digit complaint ratio! Why is that?

Allsavers, has a high complaint ratio, this could be contributed by the fact this was their first year on the marketplace and they were not prepared to service the block of business they picked up. They made a mistake on which platforms to administer this individual block, they used a small group platform that was not integrated with the customer service.

Indiana Health Insurance Company Options

Bottom line for 2017, there are no good options. You must pick the best of the bad options based on your situation.

If you are healthy, you could go with one of the low-cost plans on the exchange. Another option is to go with a plan that does not have your current doctors in network.

If you have health conditions that are needing a high level of care, look at the carrier contract before enrolling. Look up your current drugs to see if they are covered and if they are doing what they require prior authorization? Look at network access, because plans no longer have out of network benefits.

Remember this is only for one year.

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Insurance word cloud

2017 rates and plan designs have been approved for Indiana. November 1st will be the start of another open enrollment under the Affordable Care Act.

There will only be a handful of carriers on and off the exchange. Anthem will be the only state wide individual carrier for on and off. IU health plans, will only be offering off exchange plans. Then you have a handful of Medicaid type carriers offer coverage on with what I would call suspect networks.

Network Access or Lack of

2017, will bring the death of Individual PPO plan for Indiana. UnitedHealthcare was the last PPO option in Indiana and they are exiting the individual market completely. Current UHC plans on and off exchange, were actually using a commercial network for access. That network allowed Hoosiers to use St. Vincent, St Francis, Community, IU and regionals for health care. With that option gone, people both on and off will have to decided which medical group they value more. They will choose a plan that allows access to that group.

The astronomical disruption to care is coming from Franciscan network. As it stands there are no individual carriers that have access to those medical providers. Franciscan did claim they had individual network access with one of the Medicaid type carriers. Yet, they could explain it if that was true Medicaid, HIP 2.0, off exchange, or on exchange. So what happens to these patients?

Anthem is offering the most network access across the state with St. Vincent’s and Community providers. Anthem is really the only option for someone with a larger network to choose from. They have an HMO/POS, which means you do not need a referral, as long as you stay in network.

Right now is the time to start researching your current physicians for next year. If you wait for open enrollment, network searches will move slow because everyone will be scrambling to see if their doctors are in network.

For those Hoosier that use the IU network, the only off exchange plan will be IU health plans. The good news is that premium will be a lower premium than Anthem.

Medicaid Type Companies

These are companies whose primary business is providing Medicaid benefits. What this means is if you seek medical services from a specialist, they may not be accepting new patients with this coverage. If you go to insurance web sites and the first thing you see is“How to File a Complaint” tab, this is a good indication they are a Medicaid type company. From a price standpoint, Hoosiers will have no choice but to elect coverage with them.

“If you like your plan, you can keep it” and “If you like your doctor, you can keep them”

These statements now are official wrong for Indiana.

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Group Health Insurance Guidelines

These guidelines are state specific to Indiana.

healthcare word abstract - isolated text in letterpress wood type

We have been receiving a lot of inquiries, about how a small group can qualify for group health coverage.

Here in Indiana and the rest of the country, there are a lot of independent consultants in the work force. With the passing of the Affordable Care Act, this allowed for a lot of seasoned professionals to start up small businesses or consulting firms. The ACA allowed people to get guaranteed health insurance, which really fueled this growth.

Now that individual market is unstable, along with narrow networks, small 2 & 3 life companies are looking to go back to Group Health Insurance. Here is a guideline on how to qualify for Group Health Insurance.

The first question is what is common law employees? “Under common-law rules, anyone who performs services for you is your employee if you can control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.” IRS 

Group Health Insurance  Categories

One Life Groups    

  • C Corporations
    • Eligible if the group has other common law employee(s) who work 30+ hours/week
    • A spouse may be considered a common law employee if the group is a C- corp
    • Standard participation rules apply – 75% net eligible
  • All others (S Corp, LLC etc.)
    • Eligible if the group has other common law employee(s) who work 30+ hours/week
    • Spouses are not considered common law employees
    • Standard participation rules apply – 75% net eligible
  • Husband/wife groups?
    • C Corporations
      • Eligible if both spouses work 30+ hours/week
    • All others (S Corp, LLC etc)
      • Eligible if group has other common law employees who work 30+ hours/week
      • Spouses are not considered common law employees
      • If there are other common law employees, standard participation rules apply – 75% net eligible
    • Partnerships
      • A general partnership is a relationship between two or more persons who join together to carry on a trade or business. For the purpose of group insurance eligibility, Anthem recognizes only legal partnerships in which a written partnership agreement exists.
      • Must meet participation guidelines, 75% net eligible
      • Additional W2 employees not required
      • K1 paperwork accepted in lieu of UC1
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doctor-medical-medicine-health-42273-largeWith this year’s open enrollment getting closer, one thing has become very clear, the individual health insurance market is near complete collapse.

For Indiana, we have seen Humana, Assurant, UnitedHealthcare, & now Physicians Health Plans all exit the individual market. Every carrier has had different situations for leaving, but one thing in common between all is financial loss.

The medical claims from the individual market, have been higher than anyone could have ever projected. After 3 years of claims data, carriers are now seeing just how difficult it is to break even in this market. Then we add government programs that make it advantageous to manage risk by forcing those companies to pay; when they do a better job than expected. This all leads to an individual market that is very different than what the authors of the ACA thought it would be.

For 2017, there will only be one individual carrier operating in all Indiana counties, Anthem. They will have plans both on and off the exchange. If you are eligible for a tax credit, that may be the plan that will give you network access. The other companies patriating on the exchange, are Medicaid carriers that have developed extremely narrow networks. Those carriers are an extension of Medicaid.

With Anthem taking on the entire states individual risk, who knows where the rates will go. This year they filed for a average of a 28% rate increase. That was prior to the exiting of PHP & now IU from the exchange plans.

The current individual market is not sustainable for anyone that is not eligible for a tax credit. Premiums have skyrocketed and will continue to rise. The out of pocket maximum are beyond affordability for most Americans.

The ACA has given coverage to Hoosiers that were denied policies prior to the ACA. The marketplaces have also made it’s more “premium” affordable for Hoosiers to get access to health policies.

At what price?

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Aetna had filed with the Indiana department of Insurance to offer individual plans for 2017. Aetna was to be a welcomed option for individual policies, especially because it looked like they were going to the Franciscan Alliance as their network.

Recently, Aetna announced that they were withdrawing their filling, from Indiana and 4 other states. This came on the news that company had lost up to $300 million operating on the federal exchange.

This is a huge blow to Indiana, there will be no individual policy that will have access to the Franciscan network (that could change).  This will lead many Hoosier in a serious dilemma, they will no longer have access to their doctors. For people current insured through United Healthcare, on or off the exchange, those networks have access to Franciscan.  As it stands, these people will lose access in 2017.

For Hoosiers that live South of Indianapolis, this is going to be a problem. If your health insurance is an individual plan, in 2017 Community Hospital South will be your only option for care outside of emergency.  If you are located inside 465, then IU Methodist may be your only option.

This going to cause a huge disruption if things stand. This is not to say that Franciscan could join another network before Jan. 1st.

How can a national company like Aetna, spend all the time and resources to offer coverage, and then just pull out? 

It’s called the Risk Adjustment and it was one of the key factors in the Affordable Care Act.  If a company does a better job handling risk, then they have to pay. That money is then given to the company that did not handle risk well. With Aetna announcing the $300 million loss in the federal exchange market, lead most health insurance insiders to believe they had to pay a large sum to the Risk Adjustment program.

This may appear to be a knee jerk decision, but it is more calculated than it looks.

The ACA is penalizing companies who are better at controlling risk, their intentions were to create a more level playing field but it’s the exact opposite.  It’s driving companies out of the market.

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healthFor companies with less than 50 employees and that have a ACA compliant group plan, renewals are difficult to understand.

Pre ACA group plans, renewals were based on claims and medical trend. Renewal rates were easy to understand, if you had a bad claim year, then you saw a significant rate increase. If you had 22 employees on the health plan, someone had cancer treatment, this led to a 34% rate increase. The majority of owners and controllers could understand that. That does not mean they were happy, but it made some kind of sense.

Small group plans under the affordable care act, are renewing under a different equation. No longer can an insurance company base rate increases off of a groups claim history. The health insurance companies are determining the rate increase under a different set of guidelines.

Claims Pooling

An insurance company is using the claims data from the state pool of small group health plans. They take the claims data from all of their groups covered in the state, then equate a % of increase based off those loss ratios. In Indiana, United HealthCare Small Group is adding about 7% based on claims pooling.

Medical Trend

Medical trends have always been included in rate increases for both small and large group. There is a big disparity on each insurance company medical trend. Anthem may have a medical trend at 8% and United Healthcare may have 5%. The Indiana department of insurance has challenged carriers on how they are determining medical trends, but that info was never made public. Anywhere from 5%-8% of your renewal is based on medical trends.

Just off claims pooling and medical trend, we are at 13% increase. It’s getting ugly!

Plan Design

The carriers are looking at utilization they have on any particular plan design. If any particular plan design is incurring large losses, they remove it for the following year. Then the next closest plan design has a couple % increase, which is around a 2% increase.

Age

If you are running composite rates on your group plan, which most groups do over 10 lives, age has always impacted rate renewals. Pre ACA, we had age brackets so there was not an increase until the next bracket. If an employee turned 35, that creates a rate increase, but if they turned 34, that did not impact. Now under the ACA, every birth date has an increase in rates. Right now, we estimate that every year a small group is receiving a 2% increase because of age. Where this is having a huge impact is if the group adds new employees that increases the average of the group. If the group goes from an average age of 45 to an average age of 50, this increases the premium 10%. On a group of 20 lives, it’s very easy to have this type of age increase by adding a couple of older employees.

Under the ACA, fully insured small group health insurance, could be going up an avgerage of 17% a year. For those companies that recruit new employees that are older, you could very easily be looking at a 25% rate increase.

Here at Nefouse & Associates, we developed strategies to reduce this burden on small companies.

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