On Armstrong and Getty with a Diagnosis and Prognosis on Obamacare

You can also listen here. 

1) Costs and Obamacare Premiums

• Total Obamacare price tag is still around $1.75 T - will be larger if the law is to survive.
• When we last spoke in mid-August I told you employer plans were up 7% while Obamacare plans were up 18% to 23%. Well the final results are in and it is the higher end of my projection. 23 to 25% for most Exchange plans in 2017.

     Why?

• Obamacare enrollees are 22% more costly than people covered through employer plans.
• Medicaid expansion enrollees are 50% more expensive than originally projected.

2) How Many Are Covered?

We really don’t know. The CBO, Gallup, CDC and Census Bureau all ask different questions and come up with different answers. Even Covered CA simply takes the number of policies sold and multiplies by 1.7 for their “estimate.”

1. Are you uninsured right now?
2. Have you been uninsured for all of the last year?
3. Have you been uninsured at any point in the last year?

We are likely somewhere north of 10 million now but probably well less than 20 million total – and that includes the folks who have gained coverage due to the Medicaid expansion. CBO projects that 9 million were covered under Exchanges in 2016 (up from 8M in 2015).

3) Why it’s Failing

4) What needs to be done for a Governmental System like this to work? There are only two options to make Obamacare work at this point:

• Turn on a firehose of money by increasing the individual and Employer Mandates by about three times and doubling subsidies to all entrants thereby running up another Trillion and an half dollars in costs. Or
• Push to a centralized single-payer, Medicare for all type of system and force all of our healthcare workers to be paid substantially less – like European healthcare workers.

        Both of these are politically impossible, especially in our current climate.

5) Faith in Bureaucrats to Guard Your Tax Dollars?

• In 2015 the Gov. Accountability Office conducted an audit of Obamacare Exchange safeguards by creating 18 fictitious applicants and applying for Obamacare with fake Social Securities (some starting with 000) or wholly fictitious people, created from thin air. 17 of 18 of them skated through with coverage.
• Of course, HHS and the Exchanges said they’d do better in 2016. They didn’t. This year 16 of 16 made it through. This year GAO was able to befuddle Obamacare with expired IDs, partial documentation and fake people.

  

Friday Benefit Clips: New PPACA Enforcement; 25% Exchange Rate Increases; New FSA Limits and More

It was a particularly news-filled week in benefits, here are the highlights:  

Health Care Reform News:

Average premiums for popular ACA plans rising 25 percent
October 24, 2016 – The Washington Post
Excerpt: “The 25 percent spike is the average increase, among 38 states that rely on the federal insurance exchange, for the health plans on which the tax credits are based — the policy in each part of the country that has the second-lowest rate among plans offering a “silver” tier of coverage…Among the states relying on HealthCare.gov, the typical number of plans available is declining by more than one-third, from 47 to 30. Competition is falling in all but four of those states, though the decrease varies significantly. In Florida, the average marketplace customer will actually have three more plan choices. In Arizona, however, the number of plans will plummet from 65 to four. And 21 percent of the customers shopping in the federal exchange will find only one insurance company, compared with just 2 percent for 2016.”

Health Care Information Reporting: Seven Things Employers Can Think About Now
October 26, 2016 – The Internal Revenue Service
Excerpt: “The ACA Assurance Testing System opens November 7, 2016 for tax year 2016 testing. Software developers – including employers and issuers who passed AATS for tax year 2015 – will not have to retest for tax year 2016; the Tax Year Software Packages will be moved into Production status. New participants need to comply with test requirements for tax year 2016.”

Another Party Enters ACA Enforcement and HIPAA Privacy and Security Enforcement Expands
October 25, 2016 – Winstead PC.
Excerpt: “Effective on and after October 13, 2016, employers need to watch their mail from the Occupational Safety and Health Administration (“OSHA”) for notices related to ACA retaliation claims under the new regulatory framework for the retaliation claims. An individual can claim that there was an adverse employment action (discrimination up to and including termination) in retaliation for the individual’s claiming a right under Title I of the Affordable Care Act (“ACA”) or being a whistleblower complaining of a violation of Title I of the ACA.”

January 1st is Quickly Approaching – Have you Reviewed your Health Plan for Section 1557 Compliance?
October 24, 2016 – Jackson Lewis PC
Excerpt: “As we previously noted, the regulations may not directly apply to many employee health plans because neither the sponsoring employer nor the plan receives HHS funding. However, HHS has noted that it may refer discriminatory plans and employers to other government agencies (such as the EEOC), so it is a good idea for all plan sponsors to review their plans to see if any discriminatory provisions need to be amended or removed.”

In Other News:

Health FSA Limit Will Increase for 2017
October 26, 2016 – BB&T Insurance Services
Excerpt: “On October 25, 2016, the Internal Revenue Service (IRS) released…the FSA dollar limit on employee salary reduction contributions to $2,600 for taxable years beginning in 2017.”

EEOC’s 2016 Wellness Program Regulations, The Saga Continues…
October 26, 2016 – Jackson Lewis PC
Excerpt: “This suit is the first to specifically challenge the EEOC’s 2016 ADA Rule and GINA Rule. AARP, which is a nonprofit organization dedicated to addressing the needs and interests of people age fifty and older, is concerned that older workers will be disproportionately affected by these regulations because older workers are more likely to have medical issues that would be disclosed to employers by medical questionnaires and could potentially expose these employee to discrimination by their employer.”

IRS adjusts 2017 LTCI and FSA limits
October 25, 2016 – LifeHealthPRO
Excerpt: “The new long-term care insurance deduction caps are given in IRS Revenue Procedure 2016-55, which gives the inflation-adjusted 2017 amounts for many different tax provisions. The 2016 amounts are in IRS Revenue Procedure 2015-53. The maximum amount an employee can contribute to a flexible spending arrangement will increase to $2,600, up 2 percent from the current flexible spending account contribution limit.”

Bay Area Employers Requirement to Offer Commuter Benefits Extended Indefinitely
October 25, 2016 – Wage Works
Excerpt: “On September 22, 2016, Governor Jerry Brown signed SB-1128 making the pilot program, with slight changes, permanent, meaning it DOES NOT expire on December 31, 2016…A Covered Employer is an employer that has 50 or more full-time employees (worked an average of at least 30 hours per week during the previous calendar month) who work within the nine San Francisco Bay Area counties of Alameda, Contra Costa, Napa, Solano, Sonoma, Marin, Santa Clara, San Mateo, and San Francisco.”

  

Friday Compliance Clips: What if an Employer Cannot Pay Its Obamacare Penalties and Final Forms for 2016 ACA Reporting Now Released

Section 4980H Penalties Are Looming – What if an Employer Cannot Pay, from Health Care Attorneys P.C.:

We are entering the last quarter of the 2016 calendar year which means the penalties related to section 4980H for 2015 will soon be assessed against employers. At the latest, the 2015 section 4980H penalties will be assessed in the first quarter of 2017. Whenever the penalties are assessed, the government will be presented, perhaps for the first time in history, with an interesting conundrum....

---

And from BB&T's Compliance Team: Final Forms for ACA Reporting Released. On Sept. 30, 2016, the Internal Revenue Service (IRS) released the final 2016 Forms 1094-C and 1095-C used by applicable large employers (ALEs) to report under Internal Revenue Code (Code) Sections 6055 and 6056. The newly released forms finalized changes that were reflected in the 2016 draft forms, released on July 6, 2016.

As a reminder, ALEs will not have the extension to file they had in 2016 for 2015 forms. 2016 forms are due to employees/covered individuals by Jan. 31, 2017, and must be filed with the IRS by Feb. 28, 2017 (or March 31, 2017, if filing electronically).

Final instructions for the forms were also released and provide employers with a few clarifications, including the following:

• Transition Relief: Certain transition relief was available to ALEs for 2015 under Section 4980H and Section 6056, but only limited transition relief remains for 2016. Any references to transition relief that applied to calendar year 2015 only have been removed and descriptions of the remaining forms of transition relief have been amended to clarify for which months in 2016 the transition relief applies.  
• Aggregated ALE Groups: The final instructions provide employers with clarifying information on how filings by ALEs that are part of an Aggregated ALE Group, including clarification that each member of the group must file regarding its own full-time employees. The instructions also include an example on how to file for employees who work for more than one member of an Aggregated ALE Group.
• COBRA (and other post-employment coverage): Clarifying language was added on how to report offers of COBRA and other post-employment (non-COBRA) coverage. Offers of COBRA or other post-employment coverage to former employees and their family members should not be entered as offers of coverage on Line 14. However, an offer of COBRA coverage to a current employee who remains employed should be entered as an offer of coverage.
• Qualifying Offer Method: The instructions clarify ALEs using the Qualifying Offer Method may, but are not required to, enter a safe harbor code on Line 16 when using Code 1A on Line 14.
• Code 1G: The instructions clarify Code 1G applies for the entire year or not at all. If Code 1G applies, an ALE should enter Code 1G on Line 14 of the 1095-C in the "All 12 Months" column or in each separate monthly box for all 12 months.
• Affordability Safe Harbor Codes: The instructions clarify the affordability safe harbor codes should not be used on Line 16 of Form 1095-C for any month the ALE did not offer minimum essential coverage (MEC) to at least 95% of its full-time employees and their dependents.

For a detailed discussion of both the finalized forms and their accompanying instructions, please see our legislative alert here.
 

New Employment Laws in California in 2017 | Summaries from Three Top Firms

From the Miller Law Group: (Hat tip to Jennifer Moore for the pointer.)

The 2015-16 California legislative session has come to a close, and of the hundreds of bills Governor Brown has signed, there are a number of important measures that will impact employers. Here is an overview of new workplace-related laws, organized by bill number. Unless otherwise specified, these laws take effect on January 1, 2017. ...

Here is Proskauer's take on the Golden State's new laws.

And this is from Carothers DiSante & Freudenberger LLP covering all employment-related bills signed and vetoed by the governor.

For solely a summary on the newly signed Health Laws, see the California Healthline summary.
 

President Clinton Blasts Obamacare and Pushes for Medicare / Medicaid for All

It begins at the 26 minute mark and is done by 28:24.

Best of the Web Digested, Benefits & Compensation: Illegal Salary History Questions; ACA Reporting Error Actions; & Poor Insurance the Young Aren't Buying

Employers may be Restricted from Asking About Salary History:  "U.S. Department of Labor would be able to assess fines up to $10,000 against employers who violate the law by asking questions about an applicant's salary history."

How to Respond When ACA Electronic Reporting Triggers Notification of an Incorrect TIN

So few young, healthy people are buying insurance may not only mean that the number of uninsured people stops going down. It could mean that that figure starts going up again.

With major insurers retreating from the federal health law’s marketplaces, California’s insurance commissioner said he supports a public option at the state level that could bolster competition and potentially serve as a test for the controversial idea nationwide.

I realized: That’s actually just insurance for my insurance,” she said, laughing.  Gap plans, used to cover out-of-pocket expenses like high deductibles, are becoming increasingly popular among consumers and businesses.

GAO: PPACA and Medicaid are Epic Failures in Guarding Taxpayer Dollars

Full story from Allison Bell over at LifeHealthPro is absolutely worth reading, hat tip to Dr. Ryan Kennedy:

Investigators got either Medicaid coverage or the ACA exchange advanced premium tax credit premium subsidy for 17 out of 18 fake people in 2015, and they lost coverage for one when the investigator representing that fake person decided not to provide a fake Social Security number over the phone.  

Investigators got coverage approval for 15 out of 15 fake people this year, but ended up having trouble making premium payments for three of the fake people.
  

New California Law: Forcing Insurers to Get Doctor Lists Right

This is from Kaiser Health News: 

... [State Senator Ed] Hernandez, who chairs the California Senate Health Committee, is author of a newly enacted state law that aims to improve provider directories, long riddled with out-of-date and inaccurate information. 

Under the law, insurance companies — and health care providers ... must comply with new requirements to keep directories updated at least every quarter. 

The law, which took effect July 1, also provides patients with some firepower to fight surprise medical bills that result from directory errors. 

The law’s reach is broad: It applies to Covered California and private market plans, as well as Medi-Cal managed care and most job-based insurance policies. 

The inaccuracy of directories, Hernandez says, “has been and … seems to continue to be a problem that needs to be rectified.” 

Several other states, from Georgia to Maryland, have passed similar legislation or are considering doing so, says Claire McAndrew, private insurance program director for Families USA, a national health care consumer advocacy group. In some states, insurance commissioners have adopted new rules through the regulatory process. 

But California’s law “is the most comprehensive,” she says. “The level of detail in California goes beyond any other state.” Federal officials also instituted a rule this year requiring directories be updated monthly for all plans sold on the 37 state marketplaces run by the federal government. 

And they set new rules for Medicare Advantage plans, requiring that the companies contact doctors every three months and update their online directories within 30 days. A recent study in the journal Health Affairs found that provider directories for some health plans sold through Covered California and in the private market are so inaccurate that they create a “disheartening” situation for consumers trying to find doctors. 

That finding was confirmed this month when the state Department of Managed Health Care (DMHC) announced that Anthem Blue Cross and Blue Shield of California — which were previously fined for inaccuracies in their Covered California provider directories — still had “disappointing” directory problems. 

“We are optimistic and hopeful that the law … will help,” says department director Shelley Rouillard. 

Among the law’s new rules:

• Health plans must update their printed directories at least every quarter and their online directories at least every week if providers report changes.
• Provider directories must be posted online and be available to anyone, not just enrollees. Print directories must be available upon request.
• The directories must “prominently” display directions for consumers who want to report inaccuracies. Upon receiving complaints, plans have 30 business days to makes changes, if necessary.
• Providers must inform plans within five business days if they are no longer accepting new patients — or, alternately, if they will start accepting them.
• Health plans can delay payments to providers who fail to respond to attempts to verify information.

The California law also gives consumers recourse. Let’s say you use a provider directory to find a doctor but you’re billed the out-of-network price because the directory was wrong. In that case, health plans must reimburse you the amount beyond what you would have paid to see an in-network doctor.

If you find yourself in this situation, first take your complaint to your plan, advises DMHC’s Rouillard. You will have at least 180 days from the date you received the bill to file a grievance. ...

 

Oof, Now Even the New York Times is Saying Obamacare Looks Like Medicaid

Hardly a ringing endorsement!

From Margaret Sanger-Katz writing at the New York Times, "Think Your Obamacare Plan Will Be Like Employer Coverage? Think Again":

[S]ix years into the health law, the reality is that a typical Obamacare plan looks more like Medicaid, only with a high deductible. The typical marketplace plan covers a small number of low-cost doctors and hospitals, and offers fewer frills than employer plans. The recent high-profile exits of many of the national insurers from markets around the country will only heighten the shift. ... 

When the first Obamacare plans were released for 2014, many experts and customers were surprised at how many featured very limited numbers of doctors and hospitals.

Three years later, and the trend has only intensified. Many of the companies providing employer-based coverage, like UnitedHealth Group, Aetna and Humana, which tended to offer broad networks, have been exiting the markets. ...

   

UCLA Study: The Golden State's Healthcare is 70% Socialized

This is from California Healthline:

This year, taxpayers will cover about 70 percent of what is spent on health care in California, according to a new analysis released Wednesday by the UCLA Center for Health Policy Research.

Many people assume that the U.S. health care system is primarily supported by private dollars, such as insurance premiums from employer-based coverage, said Gerald Kominski, director of the UCLA Center for Health Policy Research and the study’s lead author.

But that’s no longer the case, at least in California — mostly because of its massive expansion of Medi-Cal, the state’s version of Medicaid, he said.

“There’s this myth that we have a mostly privately funded health care system, but we’re approaching a point in which almost three quarters of this system is funded by public money,” Kominski said. “Now a question to ask ourselves is: when do we reach the tipping point and say ‘this is essentially a public system?’”

Of $367 billion estimated to be spent on health care in the state in 2016, $260 billion will be from taxpayer money, according to the research.

Nationwide, public funds paid for about 45 percent of the country’s $3 trillion in health care expenditures in 2014 through public insurance programs such as Medicaid, Medicare and programs for low-income children, according to federal data. But that estimate may be too low — it’s probably closer to 65 percent as suggested in a separate national study, according to Kominski.

In California, Medicare and Medi-Cal alone account for roughly 47 percent of health care expenditures. ...

 

How the 2016 Presidential Election Could Impact Healthcare in America

This presidential election could bring some changes to the U.S. healthcare system.  As with all candidates in recent history, both of the two major party nominees have given lip service to controlling health care spending and reducing out-of-pocket expenses. 

Clearly, the Cadillac Tax appears to be doomed as both Hillary Clinton (D) and Donald Trump (R) support its repeal.  Even President Obama and our current congress have no desire to actually unleash that tax on Americans as evidenced by its original start date in 2018 (a full eight years after Obamacare was signed into law) and the recent delay to 2020.

The chart below provides a brief overview of each candidate’s proposed healthcare solutions:

Issue	Hillary Clinton (D)	Donald Trump (R)
PPACA (Health Reform Law)	Wants to expand PPACA	Wants to repeal PPACA
Cadillac Tax	Wants to repeal it	Wants to repeal it
Prescription Drugs	Supports elimination of tax breaks drug makers receive for direct-to-consumer advertising and supports allowing consumers to buy Rx from other countries	Supports freeing-up the market in prescription drugs with a reduction in some regulation and favors allowing consumers to buy Rx from other countries
Undocumented persons’ access to taxpayer subsidized healthcare	Would allow undocumented persons’ to buy healthcare in the PPACA Exchanges	Wants potential immigrants to prove they can pay for their own healthcare
Medicare for all	Would allow persons as young as 55 to buy into Medicare coverage	Has not stated support for this concept at this time
Coverage Across State Lines	Is open to allowing the sale of insurance policies across state lines but that is not officially part of the Democratic party platform	Would allow the sale of health insurance policies across state lines for both individuals and businesses
End of Tax Deduction Discrimination against Individuals (in favor of Businesses)	Unknown, but not currently part of the Democratic party platform	Would allow individuals who buy health insurance plans to deduct those costs, a provision that is solely reserved for businesses
Consumer Driven Healthplans (HRAs and HSAs)	Supports more transparency in healthcare but not necessarily greater use of consumer driven plans	Encourages the expansion of transparency and consumerism in healthcare via greater use of HSAs and HRAs
Medicaid	Would further expand Medicaid by having the federal government cover 100% of a state’s cost for such expansion over the next three years	Would not expand Medicaid, but instead would block grant federal Medicaid dollars to the states to allow them to manage each of their programs and budgets as they see fit
Expansion of PPACA “Affordability” Test for Dependents	Has expressed revisiting this issue to possibility redefine employer plan “affordability” to include some form of employer contribution for an employee’s dependents	Does not support the expansion of PPACA affordability standards for employers
Expansion of PPACA “Affordability” Test for Individuals	Would increase tax subsidies by lowering the maximum percentage of income that makes persons eligible for premium subsidies to 8.5%, from the current 9.5%	Does not support the expansion of PPACA affordability standards for individuals
Premium Price Controls	Would empower the Secretary of Health and Human Services to block or modify health insurance premium rate increases HHS finds unreasonable	Would not empower the federal government to block or modify carrier premium increases

Of course, whether these platforms are achieved once one of the candidates is in office remains to be seen. Despite similar ambitions no president from either party has achieved goal of healthcare cost containment in modern history. At least with this chart, however, you can better understand how each candidate will attempt to tackle the problem.
  

Insurers Likely Lost $6 Billion in 2015 Individual Health Losses; Analysis

Ouch.  This is from Allison Bell over at LifeHealthPro:

...[B]ased on a review of statutory financial statements, ...[insurers]... lost money on individual health coverage in 41 states and the District of Columbia, and that they made money in nine states. 

Issuers in Texas, the state with the worst individual health losses, lost about $717 million, the analysts estimate. The analysts did not give premium revenue figures. ...

The analysts found 2015 Supplemental Health Care Exhibit filings for 194 companies. Of those, 133 reported losing money in the individual health market. 

The figures include both Affordable Care Act public exchange plans and off-exchange plans. 

The figures do not include retroactive adjustments the companies may have to make to reflect the cash received from or paid into the ACA reinsurance, risk adjustment and risk corridors programs. 

The analysts also estimate, based on data from statutory filings, public exchange enrollment reports and state regulators, that off-exchange policies are covering 7.5 million of the people with individual health coverage, and that ACA exchange plans are covering 12.7 million of the individual health insureds. ...