Healthcare Insurers Lose in Court Over Risk Corridor Funds

I have written a couple of times about Sessions, Upton, Kingston, and Republicans sabotaging the ACA Risk Corridor Program with the insertion of Section 227 in the CRomnibus Bill signed in December 2014. Not only did Senator Sessions, Representative Upton (MI), and Representative Kingston (CO) block the funding of the Risk Corridor Program; with the insertion of Section 227 by Representative Kington, they blocked any transfer of funding from other programs as well. A rehash of the results of Republican sabotage shows, it caused a rise in premiums for the unsubsidized (others were picked up), Coops to go bankrupt, and insurance companies to withdraw from the healthcare exchanges.

Today a Federal Appeals Court ruled; “the U.S. government does not owe health insurers $billions in unpaid risk-corridor funds meant to offset losses during the early years (3 years) of the Affordable Care Act exchanges.

More than three dozen insurers claimed the federal government owed them more than $8 billion in risk corridor payments. Ruling 2-1 the COA determined the payments were not necessary since Congress deemed the program had to be budget neutral after the legislation was passed.”

In other words, the court decided a different Congress and/or the administration made up of different political interests can change the intent of another Congress or Administration.

A similar Risk Corridor Program exists in the Medicare Part D program for drugs which has no life time limit and was put in place by Republicans and Bush to cover any risk which may occur from getting too many higher cost insured.

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This will be short and sweet, consider it a Health Care Open Thread.

‘Repeal and Replace’ is a pipe dream. Because all the good parts of ACA including guaranteed issue, coverage of pre-existing conditions and inclusions of young people on their parents’ policy actually cost money. At least up front. Which has to come from somewhere. And that ‘where’ tends to come from the pockets of Republican leaning constituencies including medical equipment manufacturers, insurance companies, and medical providers generally. For example a huge part of projected ACA savings comes from reduction of payments for Medicare Advantage, originally billed as a way to leverage the ‘efficiency’ of private (and profit making) economic entities to public ones. Which efficiency calculation has proved problematic even before you calculate the ‘profit’ thingee. With the result that Medicare reimburses Medicare Advantage providing insurance companies with a 14% surcharge over traditional Medicare. Or I should say “reimbursed”, because most of the much ballyhooed “cuts” to Medicare trumpeted by Republicans have come from elimination of the surcharge. Itself rather problematic given that there seems to be no evidence of actual “efficiencies” in MA.

Republicans have no answer for this dilemna. Just about every specific item they oppose about ACA serves as an offset to the increased costs of guaranteed issue and coverage of pre-exisitng conditions. Including their so-called ‘death panels’ which after all are simply cost-benefit analyses of current provision of medical care. Or the same thing that private corporations spend millions on hiring consultants to address. Because when it comes right down to it ‘efficiency’ in the private corporative sense boils down to cost controls.

As a result Republicans are flailing. Their ‘solutions’ such as they are, including cross state border insurance sales and tort reform do little to nothing to having negative consequences on the actual provision of medical care to end-users (aka ‘patients’) but instead reduce burdens on insurance company and provider bottom lines. The same for repeal of the medical device tax and employer mandates and individual mandates. All increase cost while providing bubkis on the ‘available’ and ‘affordable’ fronts.

Those of us who followed health care reform on a daily basis back in 2009 saw that it was at times the rawest form of legislative sausage making. In order to enjoy the nice juiciness of the Bratwurst of Affordable Health Care you had to stomach the knowledge of the nasty bits that actually saved money on the price of the resulting Sausage Dog. And Republicans have no recipe to provide that same Red Hot that doesn’t decrease the quality or increase the sawdust component.

Hoisted by their own Weinar, err Petard.

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Reader Alex Bollinger posted this this morning in the Comments thread to this post of mine from yesterday:

Not only would low-info voters benefit from actually knowing that the ACA is doing good, but a few lefties could use a reminder that it’s not just a neoliberal gift to the insurance industry.

I responded:

Yes, Alex.  Exactly.  It surprises me that the insurance industry hasn’t been sponsoring pro-ACA, anti-AFP-disinformation ads.  I realize that it would involve implicitly acknowledging that their past policies–e.g., denying individual-market coverage to anyone who had even a minor preexisting condition–but they’re in real danger of losing the single-payer war (or at least the public-option) war.

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Here’s our offer.  It’s a very good offer.  And a serious one.  Seriously.

(Yeah, I’m venting my frustration.)

Who, the HELL, is running the House and Senate Campaign committees? My guess: People who have some personal or financial connection to the usual-suspect Dem consulting firms. Or who just can’t even imagine that, y’know, maybe it’s time to look elsewhere.

So, folks, let’s start a protest movement, right here at AB, and demand a change.

—-

UPDATE: Reader Alex Bollinger posted this in the Comments thread this morning:

Not only would low-info voters benefit from actually knowing that the ACA is doing good, but a few lefties could use a reminder that it’s not just a neoliberal gift to the insurance industry.

I responded:

Yes, Alex.  Exactly.  It surprises me that the insurance industry hasn’t been sponsoring pro-ACA, anti-AFP-disinformation ads.  I realize that it would involve implicitly acknowledging that their past policies–e.g., denying individual-market coverage to anyone who had even a minor preexisting condition–but they’re in real danger of losing the single-payer war (or at least the public-option) war.

Back last December, after it had become clear that many of the state Blue Cross companies–which had by far the largest market share of the individual market in many, many states–was taking obscene advantage of the ACA (and then the healthcare.com debacle) to imply to policyholders of canceled plans that their only option was a very high-priced plan, I wrote here in AB that they were presuming that single-payer or at least the public option could not become a real possibility as a result. And by the very end of the year, after several pundits began making the same point, and it looked like the issue could really take off, the industry apparently did recognize it; it did stop the deceit.

What everyone seems to forget is that until last fall, the wingnut argument, including in the court challenges, was “Freedom! Liberty!”  You never hear that anymore.  Now all you hear is that premiums and out-of-pocket caps are too high and provider networks are too narrow.

Um.  Single-payer would take care of those things.  So maybe sometime before November the industry will realize that it’s very much in its interest to counter the AFP with a massive ad campaign.  Call it survival instinct.

And, who knows?  Maybe by the time the insurance industry realizes that the AFP ads need to be countered with an ad campaign of hard-hitting refutations and real-people  stories, the Dems will have figured that out, too. I never got this idea of addressing the ACA with generic we-need-to-fix-rather-than-repeal it, and hope that that nullifies the law’s unpopularity as a political problem.

The way to nullify the law’s unpopularity as a political problem is to make the law popular.  And all that would take is a good ad campaign.

Please, no more generic keep-and-fix. Please, now, specific refutations and explanations from actual real people .  And, fix?  A public option, maybe?

Seriously, Dems.  Go for it. There’s nothing to lose but loss itself.

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Just when I thought I’d written my last post on Julie Boonstra, I read Kenneth Thomas’s post below, from Sunday.  The only comment to that post–mine, which I just posted–reads:

How very, very, very sad that there was no ACA during his years of leukemia treatments and hospitalizations, and that we still do not have single-payer.

And how ironic that he had the very same fatal illness that Julie Boonstra has.  I’d like to shove your post in her face, Kenneth.

I’d also like to see Rep. Gary Peters use this family’s situation in his Senate campaign ads in Michigan, and ask whether Julie Boonstra has any idea of what “unaffordable” means with respect to medical care for leukemia.

When she cut the first of her two ads for AFP in mid-February, Boonstra apparently was genuinely unaware of the full terms of her new Blue Cross plan and of the out-of-pocket-costs limitations legislated in the ACA.  And part of the reason why was the failure of healthcare.com to work in October and November and, apparently at least for Michigan’s exchanges, during early December–coupled with Michigan’s decision to not provide its exchange system through a webstie and run and operated by the state.

Tags: ACA, Barack Obama, BartCop, Emilie Lamb, Julie Boonstra, Kenneth Thomas, Obamacare, Paul Waldman, Rep. Gary Peters, Terry Coppage, The Washington Post Comments (2) | Digg Facebook Twitter |

Boonstra is the ex-wife of Mark Boonstra, the former Washtenaw County GOP chairman whom Gov. Rick Snyder appointed to the Michigan Court of Appeals in 2012. Julie Boonstra said she’s never been a political person beyond advocating for lower-cost oral chemotherapy treatment in Washington. [My boldface.]

— Dexter cancer patient who called health care ‘unaffordable’ will save more than $1K, Marisa Schultz, Detroit News, Mar. 10

Boonstra famously was quoted in that article as saying when told the details of her new Blue Cross plan that it  “can’t be true” that that plan is cheaper, by a minimum of $1,200 for the year, than her old plan. “I personally do not believe that,” Boonstra told Ms. Schultz.   Schultz continued:

She said she still fears her costs will be unaffordable because she could be hit with large out-of-pocket bills in the early months when she wouldn’t have the money to pay. She also said her out-of-pocket maximum could be higher than advertised because there’s one prescription that was previously covered by her old plan that isn’t and she now buys with a separate prescription discount card.

An interesting comment thread developed here during the last few days in response to my post on Tuesday about the Detroit News article.  I titled that post “Julie Boonstra Tells the Detroit News Why Her New Healthcare Plan Doesn’t Work for Her: It Requires Her to Read the Policy or Ask Blue Cross a Few Basic Questions In Order to Learn What the Plan Actually Covers and What Her Expense Cap Is.”  One subject of the discussion concerned her statement that there’s one prescription that was previously covered by her old plan that isn’t and she now buys with a separate prescription discount card.  I pointed out that she does not say that that prescription is part of her cancer treatments, and that according to a Blue Cross spokesperson Ms. Schultz contacted for the article, it is not; all her cancer drugs are covered.

I also noted that Boonstra has not said that her old plan covered all medications.  She just said it covered all of her current medications.  And since I happen to know, having shopped there many times, that there is a Rite Aid pharmacy on the far west side of Ann Arbor, just east of Dexter, a village that is a small bedroom community mainly for people who work in Ann Arbor, I posted this from Rite Aid’s website:

Rite Aid, 500 generic-brand prescriptions available: $9 for a 30-day prescription; $16 for a 90-day one.

I also said in that comment something that, surprisingly, no one else (to my knowledge) has mentioned:

She also, by the way, has not said–because she doesn’t know, and either does Blue Cross–what her old plan would have cost in monthly premiums and out-of-pocket expenses and co-pays THIS YEAR, had the plan not been discontinued. But it sure as hell would be interesting to know how her old plan differed in costs and coverage last year from the year before, and how much her premiums and out-of-pocket and co-pay costs went up in, say, the last five years on that plan.

But there’s an even more fundamental question about Boonstra’s comments to Ms. Schultz: Why was Boonstra advocating for lower-cost oral chemotherapy treatment in Washington during a period when she was paying set, low monthly out-of-pocket costs and was happy with her plan?

When I first read the article it seemed strange to me that this anti-federal government Republican was advocating in Washington for federal regulation of the cost of a particular medical prescription.  But only after reading through the comments to my post on the article, in which I did not mention that statement of hers, but a commenter to the post did, did it occur to me that there was something more, something fundamental, wrong with this picture.

This clearly is someone who is locked deep inside the Fox News/Rush Limbaugh sphere of reality.  She seems to want a single-payer, Medicare-for-all type of healthcare insurance system, and wants the actual benefits of the ACA, including, apparently–no, undoubtedly–the removal of annual and lifetime caps on coverage. And it’s a safe bet that she personally does not believe that the ACA includes these bars, and that that is why her old plan was cancelled.  It can’t be true, because Fox News and Rush Limbaugh haven’t mentioned it.

This woman is among those who cannot be reached with facts.  But they are in the minority among the electorate. It’s deeply unfortunate that our Democratic president won’t educate the public about the actual specifics of the plan.  He doesn’t do specifics in speaking to the public, and doesn’t do facts and explanations at all. And he certainly doesn’t do refutations of misinformation.

We know by now that hell will freeze over before he refutes Boonstra, Emilie Lamb and the others in the AFP ads, and I guess that’s okay, because everyone’s tuned him out anyway.  But why has it taken so very, very long for the Dems to begin to take over this slack?  Their failure to do do this because Obama is unpopular is a key reason why Obama is so unpopular. Or at least a key reason why Obamacare is unpopular.  Which, apparently more than anything else, is what matters this election cycle.

As for Boonstra, reader Alex Bollinger posted this comment this morning to my earlier post:

Yes, we should feel compassion for this woman. And our blame should be mostly on the political consultants who are taking advantage of her loyalty to movement conservatism (I don’t think she’s stupid at all because I’ve seen very intelligent people really, really want to believe something is true so much that they believe their rightthink).

But her comments are intended to rescind the ACA, which has already insured over 12 million people. I’m sure there are people who either have or will get cancer among those 12 million. Just because they don’t have TV ads doesn’t mean that their lives aren’t important as well, and Boonstra has the ability to temper her ideological fervor with, you know, having a basic understanding of her plan before going on national TV to talk about it.

Exactly.

Tags: ACA, AFP, Alex Bollinger, Americans for Prosperity, Barack Obama, Emilie Lamb, Julie Boonstra, Marisa Schultz, Obamacare, Rep. Gary Peters, The Detroit News Comments (27) | Digg Facebook Twitter |

When millions of health-insurance plans were canceled last fall, the Obama administration tried to be reassuring, saying the terminations affected only the small minority of Americans who bought individual policies.

But according to industry analysts, insurers and state regulators, the disruption will be far greater, potentially affecting millions of people who receive insurance through small employers by the end of 2014.

— Second wave of health-insurance disruption affects small businesses, Ariana Eunjung Cha, Washington Post, today

[W]ith the single exception of the disastrous rollout of Healthcare.com, which is purely a technology issue, the high-profile issues concerning Obamacare since Oct. 1 highlight not generic problems with government involvement in healthcare insurance but instead the problems of a system that piggybacks on the for-profit private insurance industry and neo-federalism-structured federal programs that rely heavily or entirely upon cooperation of state governments.

— What to Do When a High-Profile U.Chicago Economist Says the Airline, Telephone and Package-Shipping Industries Prohibit Use by Preexisting Flyers, Callers and Shippers: If you’re a liberal, take this ball and run with it!, Me, Angry Bear, Dec. 26

The Washington Post article goes on to say that many of the small-business cancellations are occurring not because the current policies are substandard under the ACA, but instead are only indirectly related to the statute. Insurers, the article explains, want to “move customers to new plans designed to offset the financial and administrative risks associated with the health-care overhaul.” To that end, “they are consolidating their plan offerings to maximize profits and streamline how they manage them.”

To which I say: Go for it, insurance industry. Please do.  In my Dec. 26 post, I wrote:

[W]hat’s happening, suddenly, is something I predicted in recent posts here: That the individual-market insurance industry’s fall-of-living-dangerously, during which (led apparently by the various Blue Cross companies) it drastically overplayed its hand in the last three months by, for example, telling premium-holders, falsely, that their cancelled policies could be replaced only by vastly-more-expensive policies, would trigger reinvigorated calls for a “public option for the single-payer market and maybe even for a single-payer option across the board.

But something else is happening, as well: The right is recognizing that the problems with Obamacare, rather than broadening the appeal of a return to the status quo, is instead more likely to dramatically broaden the appeal of a public option.  And, because employers that provide healthcare coverage are scapegoating Obamacare for their unrelated decisions to further limit their already-increasingly-limited premium contributions and the like, the formerly unthinkable–a single-payer-for-all option–may well soon become the very thinkable.

The “right,” in that last paragraph, refers to U.Chicago Business School economist John Cochrane and a recent article of his that my post’s title summarizes. Cochrane’s piece, an op-ed published in the Wall Street Journal titled “What to Do When Obamacare Unravels,” struck me as bearing the earmarks of rightwing desperation.

Late this month in his State of the Union address, Obama will discuss Obamacare.  He will use the tired-but-by-now-obligatory tactic of having real Americans in the audience, whom he will name and whose family is benefiting tremendously from the law. He may even be astute enough–although I doubt this, since astuteness is not his thing–to include among those Americans people who panicked after receiving cancellation notices from one of the Blue Cross affiliates (it’s virtually always one of the Blue Cross affiliates, usually but not always an AnthemBlueCross affiliate) and was profiled in some news article as being told in the cancellation letter that the only option henceforth was some poorer-coverage or wildly-more-expense (or both) policy, only to learn later about the actual options.

What he won’t do, though, is what most he should do: Explain, in actual detail, using genuine specific data depicted in charts, that for decades now the unremitting and rapidly-accelerating trends in healthcare insurance have been ever-narrowing provider networks and large increases in premiums and out-of-pocket costs in both the individual market and the employer-based group-insurance market.  And to say that it soon will be clear whether or not the private for-profit healthcare-insurance market can meet the needs of the general public or whether instead those needs can be met only through a government-run single-payer insurance system or some other non-profit system similar to one or another approach that works so well in, say, Australia, France, or Germany. And then propose a public option, not just for the individual market but also for employer-based group insurance.

No, Obama himself won’t propose this.  But progressive Democratic congressional candidates should, and soon. Obama, like most Washington pols and almost all political pundits, is always incredibly late to the change-in-progressive-and-mainstream-political-winds party. If he ever arrives at the party at all. (He’s still appointing federal judges whose main credential is a history as a prosecutor or some other tough-on-crime, pro-police background–he hasn’t noticed that this no longer appeals even to Republicans, at least not those of the libertarian variety–but that’s a subject for a later post.) The Washington Post piece notes that most of the small-business-group policy cancellation notices will be sent in October, near the start of the open-enrollment period and also just before the midterm elections.  This, the writer points out, “could be difficult for Democrats who are already fending off Republican attacks about the Affordable Care Act and its troubled rollout.”

Then again … maybe not so difficult, after all. The political winds are moving forward, not backward. All the Dems need is a coherent progressive policy proposal.  And a few coherent messengers for it, who no longer need fear that they will be killed.

Tags: ACA, Ariana Eunjung Cha, John Cochrane, Obamacare, public-option healthcare insurance, The Washington Post Comments (2) | Digg Facebook Twitter |

 by Maggie Mahar

Under Obamacare, Will You Receive a Subsidy to Help You Buy Your Own Insurance? We Now Have Real Numbers That Will Let You Calculate How Much You Will Receive

Note to Readers: A longer version of this post appeared yesterday on HealthInsurance.org.

Up until now, when Obamacare’s supporters and reform’s opponents squabbled over what insurance will cost in 2014, they had to rely on estimates and national averages. But now we have real numbers.

Eleven states have announced the rates that insurers will be charging in their Exchanges-marketplaces where individuals who don’t have employer-sponsored coverage can shop for their own insurance.

Subsidies Will Be Based On the Cost Of A Silver Plan Where You Live,

Middle-income as well as low-income people buying coverage in the Exchanges will be eligible for government subsidies that will come in the form of tax credits. Anyone earning between 100 and 400 percent of the federal poverty level (FPL) (now $11,490 to $45,960 for a single person, and up to $126, 360 for a family of six) will qualify.

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by Kenneth Thomas
 
Conservative roots of Obamacare

The pile-on continues. As I discussed in February, Stuart Butler of the Heritage Foundation wrote a breath-taking op-ed in USA Today (via Don Taylor) denying that he fathered the individual mandate. In fact, his revised 140-page research paper was published January 2, 1989, before President George HW Bush came into office, let alone President Clinton, whose proposals Butler says his research was directed against. Two conservatives, Avik Roy of Forbes and James Taranto of the Wall Street Journal, played strong roles in locking down the point that Butler was the first to propose the mandate.
 
Today, J.D. Kleinke of the American Enterprise Institute goes straight to that 1989 report in a New York Times opinion piece to once again lay the mandate at the feet of Heritage. And why not? According to him, the Affordable Care Act is a conservative’s dream.

The rationalization and extension of the current market is financed by the other linchpin of the law: the mandate that we all carry health insurance, an idea forged not by liberal social engineers at the Brookings Institution but by conservative economists at the Heritage Foundation. The individual mandate recognizes that millions of Americans who could buy health insurance choose not to, because it requires trading away today’s wants for tomorrow’s needs. The mandate is about personal responsibility — a hallmark of conservative thought.

Kleinke argues that Romney’s incoherence on health care stems precisely from rejecting his accomplishment in Massachusetts. Romney can’t offer anything better than the ACA because it is the only conservative way to overcome the problems of the health care market while remaining based on the market and individual responsibility. With no single payer and no public option, it is not surprising that, as he puts it, “the health insurance industry has been quietly supporting the plan all along.”
 
Aside from his odd notion that single payer represents a “government takeover of health care” (Canada’s Medicare is not the United Kingdom’s National Health Service), Kleinke’s column is on the money: historically, the mandate was developed by Heritage economists, the ACA more broadly relies on conservative rather than liberal principles, and many liberals have been unenthusiastic for just that reason.

Heck, I’m unenthusiastic (single payer!). But it’s a big improvement over the status quo that is already providing benefits to millions of people, whether for young adults, the millions of consumers getting rebates due to the medical loss ratio rule, or for seniors getting rid of the donut hole and gaining free preventive care.

crossposted with Middle Class Political Economist

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Jason Shafrin over at the Healthcare Economist points to this recent paper over at the RWJF. Interestingly the authors find that hospital consolidation increases prices and could decrease quality. Something that many of us have considered in the past.

In concentrated markets, the effects were even more pronounced with price increases over 20% noted.

Competition was noted to increase quality under an “administered” pricing system, ala the NHS in the UK. The evidence for competition increasing quality in a market system was much more mixed.

I have thought this for some time, and have even wrote about the concepts of leverage in the past. For example, I have cited a BNET article before. When one examines the the health markets in Milwaukee and Chicago, which are both midwestern cities, and geographically close to each other, one finds higher prices in Milwaukee, with providers not accepting less than 200% of Medicare. Which does not seem intuitive, as there is far more market competition in the health insurance industry there. In Chicago, one insurer, BC-BS, is rather dominant and prices are lower, with providers accepting 112% of Medicare on average. It would seem to make sense that increasing the leverage of the hospitals and providers through the mechanism of consolidation will increase prices. The same thing happens in Milwaukee, which has no dominant insurer, and therefore is unable to exert leverage over the hospital systems in Milwaukee.

The ACO models as proscribed by the ACA will increase consolidation. By developing an accountable model of care delivery, providers will attempt to consolidate to increase quality and minimize risk exposure in the sense of decreasing reimbursements.

The problem with the RWJF paper, as it rightly notes, is that the study does not really examine integrated health care systems. When you look at consolidation with true vertical and horizontal integration, it is my belief that quality improves even in the absence of competition. True integration in the case of Mayo Clinic and Kaiser also lowers prices.

In essence, I don’t think the problem is consolidation…..I think the problem is consolidation in the absence of integration.

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