Two Sessions! June 11th and 12th.
- An in-depth review of the 2014 Group renewal environment
- What to expect as a broker
- What should brokers be doing right now to be prepared for the 12/1-1/1 renewal season
Two Sessions! June 11th and 12th.
On November 14th, President Obama made an announcement that all
NON-GRANDFATHERED POLICIES that are being canceled as a result of the Affordable Care Act would get a one-year extension and in fact WOULD NOT be canceled as of 12/31/2013.
We have already been in touch with all our carriers. The carriers are aware of the development and are eagerly awaiting the formal regulations that will provide them the exact rules/regulations in order to be able to administer the new changes.
I would like to take a moment and educate the first round of premium taxes that are going to start in 2014 with the PPACA law. Obviously, the carriers are beginning to get their arms around the PPACA law, their responsibilities, processes and pricing implications. This article was written about a year ago but is as relevant today as it was then (PPACA: Business Groups Unite Against Health Insurance Tax).
Now that carriers are beginning to calculate the cost of the tax, it is turning out the article was way low in quoting the “approximate $500 cost over 10 years”. It is actually more like $630 for a single and FOUR TIMES THAT for a family of 4 meaning that a family will be paying $2,520 over 10 years (as the tax is a per head tax). This is just the beginning of the cost increases once the essential benefits, the removal of underwriting, riders, and the rate compression of 1:3 (from the current 1:6 in IL) are taken into account (in addition to the above referenced taxes). We are hearing rumblings of “approaching 100% increases” in the IL market for the under 30 crowd in the individual market (mind you the highest uninsured demographic). The highly trumpeted signature healthcare legislation is not going to turn out to be as rosy as the Obama administration is leading us to believe. We have gotten all the “goodies” upfront (coverage to age 26, no lifetime caps, promises of no riders and guaranteed issue); there will come a time when we begin to see the downside. I must hand it to the administration as they have done a great job of “hiding” these future inevitable developments (as the law is currently written), but I wanted to let you know what we are seeing, sitting across the table from senior management of the insurance companies. Do not forget the MLR (where insurance companies are required to pay out 80% of their premiums in claims for the individual or small group markets, otherwise they will have to refund them to the block of insureds). These numbers are projected to be straight claims/tax implications of the legislation. These are very real things to ponder as we consider who to vote for. The “Affordable Care Act” (as the administration has renamed the law) is clearly not making healthcare any more affordable once the “lion’s share of the mandates” start hitting home.
Click here for the latest review of America’s health: http://www.healthcarefinancenews.com/infographic/infographic-why-america-must-address-rising-costs-healthcare
Sometimes medical “pundits” miss the point. Healthcare is about choices. Many Americans are not making healthy choices, our sodas are getting larger, our lines in drive thru’s are getting longer (we don’t even get out of the car anymore) and there is a fast food place on every corner of every city. Our schools are cutting Physical Education to save money and our obesity rates (children as well as adults) are exploding in this country. If you did not know, click on this link (http://bunow.com/17082-american-obesity-rates-soar). Scroll to the bottom and take a look at the map of the United States. In short, in many states, 1 out of 5 people have a body mass index (BMI) of greater than 30! If you do not know what a BMI of 30 is, that is a CLINICAL DEFINITION of obese– which is two scales above “acceptable” (http://www-users.med.cornell.edu/~spon/picu/calc/bmicalc.htm).
Everybody should know that obesity dramatically raises your risk of diabetes, hypertension, high cholesterol, heart conditions, strokes, back and joint ailments and certain forms of cancer are all elevated exponentially. People also should know all of those conditions cost “the system” A LOT of money in terms of medications, doctor office visits and complications (for those that get real out of control). Studies show more than $1,152 PER PERSON (http://www.forbes.com/sites/rickungar/2012/04/30/obesity-now-costs-americans-more-in-healthcare-costs-than-smoking/), not to mention it shaves years off your life expectancy.
I always find it intriguing that the “pundits” sit down and bash our healthcare cost, quality and life expectancy with studies like this when they solely look at health utilzation/costs/life expectancy without taking into consideration the “beginning state” (or starting point) of the patient’s health status that our doctors are forced to treat. I would argue this entire exercise is a worthless, misleading endeavor. I sincerely hope our policy makers do not focus on “out of context graphs” like these to make the determinations as in reality we have a long way to go in this country as citizens, those personally accountable for our own health fate, before we start making Draconian cuts (or sweeping policy changes) to a system because our “results” do not match those of the other countries. I would love to see an average body index (just for starters) of the competing countries next to a study like this to see where these other countries match up against ours. I suspect the other countries listed have nowhere near 1 in 5 people and in a substantial portion of their country 1 in 4 people rated as clinically obese. I suspect none of them are having the issues which appear to be unique to the “super sizing of America”.
The most brilliant, gifted, efficient MD in the world cannot counteract the effects of a patient who does not accept accountability nor participate in the process of their care. For example, the smoker that has emphysema and refuses to quit (or at this point ANY smoker based on the wealth of information of the related smoking complications) or the diabetic that refuses to check their blood levels, start an exercise routine, or attempt to attain “clinically sound” body weights.
It is not the healthcare delivery system that is the entire problem–it is not the doctors’ faults–in many cases, it is our lifestyle! Until the “pundits” and the American people recognize their responsibility in the healthcare delivery system and, more importantly, do something about it to reverse this tragic trend, we can only look forward to higher premiums, higher admission/readmission rates and increasingly lower life expectancies.
There has been a great deal of conversation and interest from brokers, insurers and employers regarding the highly touted Summary of Benefits and Coverage paperwork that employers were required to start distributing on March 23, 2012 (according to PPACA). The closer we got to March, the more concern there was in the ranks as everyone needed direction on how/what they needed to do in order to comply. What were the documents to look like (i.e., what were the required contents)? What was the timeframe that they needed to be distributed?
On Thursday, November 17th, the U.S. Department of Labor quietly posted a FAQ on their website which brings a great deal of clarity to this requirement. It appears that the deadline has been delayed indefinitely until public comment and final regulations could be concluded. Most pleasing, of course, instead of the Obama administration’s prior track record of making many provisions of various laws RETRO thus forcing carriers and brokers great expense in going back to clients that were newly eligible for the requirement (like the COBRA subsidies contained in the original Stimulus Package [and subsequent extension of the program] and the creation of the term ‘grandfathering’ in the ACA legislation effective the date of the passage of the law even though guidance/regulations that were required to administer that provision of the law did not come out for several months afterwards), they eluded to the fact that once the regulations were created, they would give the carriers lead time to implement the requirements. Here is a link to the official release (http://www.dol.gov/ebsa/faqs/faq-aca7.html#pagecontent). We wanted to get this note of positive news out to the field as soon as it became available.
There is a great deal of uncertainty as to how the markets will react. Different entities have speculated that anywhere from 30% to as high as 57% of employers will drop their health plan (Study Sees Cuts to Health Plans; McKinzey&Company June 2011 Quarterly Report). That is a far cry from the Congressional Budget Office’s report (that was referenced by many when deciding how to vote on the law) which projected a mere 4% of the privately insured, employer sponsored healthplan population (equating to 6 or 7 million people) losing their employer sponsored plans (CBO Director’s Blog).
The dicotomies of the two projections are ironic and only time will tell, where the ultimate truth lies; however, I found the attached Forbes article which was an interesting perspective on why employers would want to continue to offer benefits into 2014 (Five Reasons Small Businesses Shouldn’t Dump Health Care Benefits).
In my last post, I explained the Minimum Loss Ratio (“MLR”) requirement. Today I am going to revisit the topic of “health insurance carrier profits” as, again, this seems to be an issue that is wildly misunderstood (even before the MLR came into play) and I think it is worth doing some more client education on the subject matter. Once again, the biggest disconnect between the “healthcare utilizing public” and the facts is that people do not seem to comprehend the cost of healthcare. People do not seem to understand or make the connection that health insurance premiums are expensive because THE UNDERLYING COST OF HEALTHCARE IS EXPENSIVE and it is getting more expensive everyday (new treatments, new medications coming to market, new technologies and our aging population–just to name a few). Since many plans have copays ranging from $20-$50 for doctor office visits (or Rx), people seem to think that equates to the cost of the visit but that is not the case. The insurance carrier is paying many multiples of the copay even after you have paid your “copay”. Since the average insured consumer usually has little idea what healthcare costs, the assumption is that because premiums are so expensive, the carriers must be wildly profitable. Large premiums=large profits. Although I cannot argue that premiums are quite high (and rising), I would like to dispel the myth of large profits. Truthfully, according to Fortune Magazine in 2009, “Health Care: Insurance and Managed Care” ranked 35th on the list of profitable industries (Top industries: Most profitable), and the level of profit was only 2.2% margin. Note that is well behind “Pharmaceuticals” (ranked 3rd at 19.3%), “Medical Products and Equipment” (ranked 4th at 16.3%) even behind “Health Care: Medical Facilities” themselves (ranked 34th at 3.4%). The products available in the marketplace also are indicative of this fact because the margins are so thin, many companies simply cannot make money and thus have left the market–and because the margins are so thin, no carriers are entering the market to replace them! If an industry was super profitable, wouldn’t you think that companies would be flocking to it in order to reap the profits? At the beginning of 2009, Illinois lost one of its largest insurers–UniCare–and since the legislation has passed, at least three of the longest term players have exited the health insurance market (The Principal®, Guardian, and Pekin). So the next time the conversation comes up about “the profit taking insurance companies”, hopefully you will be able to shed some light on the realities versus the myths.