HHS: Bailing out Obamacare insurers an ‘obligation’…

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Ominous signs for the future of Obamacare

The Department of Health and Human Services attempted to reassure private insurers on Thursday that they’ll be able to recover losses from participating in Obamacare by claiming it was an “obligation” of the U.S. government to bail them out.

At issue is a provision within the law known as the risk corridors program. Under the program, which runs from 2014 through 2016, the federal government is to collect money from health insurers doing better than expected and use those funds to provide a federal backstop to other insurers who incur larger than expected losses from rising medical claims. The idea was to provide training wheels to insurers in the first years of Obamacare’s implementation, and to take away any incentive for insurers to cherry pick only the healthiest customers.

Republicans, fearing that this could turn into an open-ended government bailout in the event of industry-wide losses, included a provision in last year’s spending bill that limited the program, requiring HHS to pay out only from the pool of money collected, rather than supplementing it with other sources of government funding. President Obama signed that bill.

Now that insurers have been able to look at medical claims, what they’ve found is that enrollees in Obamacare are disproportionately sicker, and losses are piling up. For the 2014 benefit year, insurers losing more than expected asked for $2.87 billion in government payments through the risk corridors program, but HHS only collected $362 million from insurers performing better than expected. Thus, the funds available to the federal government only amounts to 12.6 percent of what insurers argue that they’re owed.

So insurers are not happy. And now the industry lobbying group America’s Health Insurance Plans — which happens to be helmed by Marilyn Tavenner, who previously oversaw the implementation of Obamacare as head of the Centers for Medicare and Medicaid Services — is aggressively fighting for more money.

In a statement issued Thursday, the same day that the nation’s largest insurer, UnitedHealth announced it may exit Obamacare due to mounting losses, Tavenner said, “We’ve been very clear with the administration about the serious challenges facing consumers and health plans in this Exchange market. Most recently, nearly 800,000 Americans have faced coverage disruptions as a result of the significant and unexpected shortfall with the risk corridors program. When health plans cannot rely on the government to meet its obligations, individuals and families are harmed as a result. The administration must act to ensure this program works as intended and consumers are protected.”

In an effort to reassure the industry, CMS, the HHS agency Tavenner previously led, issued guidance reiterating that HHS would use money collected from insurers in 2015 and possibly 2016 to make up the $2.5 billion shortfall that exists in 2014.

But what happens if there still isn’t enough money, and after 2016, the program is taking in less than the money sought by insurers?

HHS said it, would “explore other sources of funding for risk corridors payments, subject to the availability of appropriations. This includes working with Congress on the necessary funding for outstanding risk corridors payments.”

The agency further added: “HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers, and HHS is recording those amounts that remain unpaid following our 12.6 percent payment this winter as fiscal year 2015 obligation of the United States government for which full payment is required.”

In reality, this doesn’t mean much at all. Risk corridor payments for 2016 won’t be due until mid-2017, and by that point, it will be an issue for a future Congress and future president. Nothing that a previous administration’s HHS said in 2015 will really matter.

That said, this is another demonstration that for all of Obama’s sanctimonious rhetoric about taking on insurance companies. In reality, his signature legislative achievement was to put government in bed with private insurers. And now that his pet project backfired, he wants taxpayers to take care of those very insurance companies he spent years railing against.

ObamaCare Death Spiral: America’s Largest Health Insurer Ready to Bail

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The departure of UnitedHealth Group could be the death blow not even ObamaCare’s most stubborn and dishonest defenders can spin away.

Watching one state co-op after another keel over from fiscal heart attacks was enough handwriting on the wall, as UnitedHealth CEO Stephen Hemsley specifically mentioned the failure of co-ops as one of the major factors making his board nervous.

As Forbes describes it, UnitedHealth basically dipped a toe in the ObamaCare waters but might be about to pull it back before they get frostbite:

UnitedHealth Group in a surprising announcement, said this morning it has revised its profit expectations for the rest of the year due to what it called a “deterioration” of its individual commercial insurance offerings on government-run exchanges under the Affordable Care Act and offered no commitment it would stay in the business beyond next year.

The nation’s largest health insurer said it was “evaluating the viability of the insurance exchange product segment,” pulling back on its marketing efforts for individual exchange products for next year and “will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017.” The insurer sells individual plans on public exchanges in 24 states and covers more than a half million Americans in these plans.

UnitedHealth had been among the more cautious in offering coverage to individuals on the exchanges, entering only a handful of markets in 2014, the first year such coverage became available. The company expanded for this year and only recently said it would expand its offerings in nearly a dozen more states for 2016. But this morning, it said the business has deteriorated and it expects a reduction in earnings for the fourth quarter of this year of $425 million, or 26 cents per share “driven by 2015 and 2016 exchange product pressure.”

This is portrayed as a stunning reversal from what the company was saying just a month ago:

Just last month, UnitedHealth president and chief financial officer David Wichmann touted growth for the individual commercial business, saying “we continue to expect exchanges to develop and mature over time into a strong viable growth market for us.”

But UnitedHealth and other insurers need more Americans to come into the public exchanges because the patients that are signing up for coverage are sicker, making a “higher overall risk pool,” insurance executives say. It’s a key reason many Americans are seeing rate increases of 10 percent or more across the country on public exchanges.

That’s how the death spiral works: young healthy suckers who were supposed to get their pockets picked to fund this idiotic scheme are taking a pass, depriving the insurance companies of the easy money Obama promised them, and their bailout mechanisms have been disabled.

The Washington Examiner notes that “several programs designed to mitigate risk for insurers through federal backstops go away” in 2017, essentially pulling the “training wheels” off the Affordable Care Act and leaving insurers to “thrive on their own.” Great – it’s a battered, rusty bicycle pedaled by a kid already covered in cuts and bruises, and the training wheels are coming off.

The departure of such a big player would probably scare some of the remaining smaller fish out of the pool. (Frankly, hearing them talk about getting out is going to rattle a lot of cages.) It will also lower the poor quality of ObamaCare insurance even further, leaving consumers with fewer options and less competition… and, as the Washington Examiner points out, dumping even more expensive high-risk enrollees on the surviving providers.

Maybe UnitedHealth is floating this story because they want to rattle the government’s cage, threatening a blockbuster walkout unless some mixture of taxpayer loot and regulatory benevolence is offered to keep them on board. One suspects the Democrat Party doesn’t want headlines about the biggest player in health insurance cashing out of ObamaCare in the heat of a presidential election year.

Another thing that will scare more people away from ObamaCare, and make the death spiral steeper, is the growing realization that Obamacare’s crappy health insurance is virtually useless, because the out-of-pocket expenses are so high.

This was a very deliberate part of the ObamaCare scam – the true costs were hidden from consumers for as long as possible by turning them into financial bear traps that hapless customers wouldn’t really notice until they tried to use their “benefits.” The resulting complaints would be anecdotal evidence of failure, and the ObamaCare con artists believe, with good reason, that their control of the media would immunize them against anecdotal evidence. When was the last time you saw a major media organization publish a roundup of sob stories from dejected ObamaCare customers?

It looks like ObamaCare’s inoculation against media viruses is running out, because just such a litany of complaints was published this week… by the New York Times. And the title of the piece was “Many Say High Deductibles Make Their Health Law Insurance All but Useless.”

Ouch. The only favor the NYT could do for the rotten scheme it helped to force down our throats was keep the word “ObamaCare” out of the headline. “Health law insurance?”Really, guys?

Actually, the Times does another favor by uncritically relaying the hilariously false claim by the Administration that “low premiums” are available on the marketplaces – premium sticker shock from ObamaCare is a major crisis in most markets – but at least the body of the story proceeds honestly, with the devastating revelation that ACA insurance gets far more expensive if the buyer tries to, you know, use it:

“The deductible, $3,000 a year, makes it impossible to actually go to the doctor,” said David R. Reines, 60, of Jefferson Township, N.J., a former hardware salesman with chronic knee pain. “We have insurance, but can’t afford to use it.”

In many states, more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more, a New York Times review has found. Those deductibles are causing concern among Democrats — and some Republican detractors of the health law, who once pushed high-deductible health plans in the belief that consumers would be more cost-conscious if they had more of a financial stake or skin in the game.

“We could not afford the deductible,” said Kevin Fanning, 59, who lives in North Texas, near Wichita Falls. “Basically I was paying for insurance I could not afford to use.”

He dropped his policy.

[…] “Our deductible is so high, we practically pay for all of our medical expenses out of pocket,” said Wendy Kaplan, 50, of Evanston, Ill. “So our policy is really there for emergencies only, and basic wellness appointments.”

Her family of four pays premiums of $1,200 a month for coverage with an annual deductible of $12,700.

In Miami, the median deductible, according to HealthCare.gov, is $5,000. (Half of the plans are above the median, and half below it.) In Jackson, Miss., the comparable figure is $5,500. In Chicago, the median deductible is $3,400. In Phoenix, it is $4,000; in Houston and Des Moines, $3,000.

Democrat spinners are still spinning, but no one can make an honest case that this absurdly low-quality insurance is worth anything close to the billions of dollars poured into ObamaCare, never mind the damage to our constitutional rule of law. Defending this failed program is like telling someone to be happy with a lemon automobile he just paid $250,000 for because the radio sounds okay, and the air conditioning sort of works. Just ignore that it gets 4 gallons to the mile and can’t go faster than ten miles an hour, and accept that it’s what you deserve.

Don’t believe any of that for a second. America can do a lot better than ObamaCare. At this point, if Republicans win the White House and repeal it in 2017, hardly anyone will notice it’s gone, because there isn’t much left… and what’s left is not worth another stolen dollar of taxpayer money. The insurance companies certainly don’t seem to think it’s worth their money.

Obamacare Threatens ‘Bigger Fines’ if You Don’t Sign Up



The Obama administration is sending a new message to people on the Obamacare e-mail list. Sign up for health insurance by December 15 or face big fines.

“Important,” the new email warns subscribers. “The penalty for not having health insurance is increasing. If you don’t sign up for coverage, you’ll risk having to pay $695 per person or more for the year.”

Since the new enrollment period is in session, email messages from the Obamacare website have increased urging more people to sign up for coverage or face fines. When asked about the fines faced by Americans without insurance, White House Press Secretary Josh Earnest said that he was unaware of any plans to reduce the penalties.

“I’m not aware of any plans to change the penalties that would be levied,” Earnest said, during the daily press briefing reminding reporters that some people would be fined more for not having health insurance than the actual the cost of health insurance itself.

“I think we’re going to continue to be creative … we’re going to be aggressive about making sure we get the word out,” he said.

Another Obamacare Co-Op Shuts Down




Consumers Mutual Insurance of Michigan has announced it will be winding down its operation prior to 2016, making it the twelfth Obamacare co-op to fail this year.

An FAQ on the insurer’s website reads, “[You] will need to purchase health insurance from another company prior to December 15, 2015 in order to have coverage on January 1, 2016.” Consumers are also told that, as long as they continue to pay their premiums, the co-op will handle their claims through the end of the year.

The closure of Consumers Mutual represents a grim milestone for the Obamacare co-ops, as more than half of the 23 original co-ops have now failed. Previous closures include the co-ops in Arizona, Utah, South Carolina, Colorado, Iowa/Nebraska, Louisiana, New York,Nevada, Tennessee, Oregon, and Kentucky.

The Obamacare co-ops are non-profit insurers created to offer lower cost options to consumers on the exchange. Their rates were often among the lowest in a given state. However, those low rates turned out to be a problem when enrollment did not meet expectations or when healthcare claims exceeded expectations. An Inspector General’s report published this summer found that 22 of the 23 co-ops lost money in 2014. Nineteen had claims that exceeded premiums.

No statement about the closure has, so far, been released by the Michigan Department of Insurance and Financial Services. Several of the co-ops that have failed in the last month cited an announcement by the Centers for Medicare and Medicaid Services (CMS) on October 1 that it would only pay 12.6% of requests made under the so-called risk corridors program.

Risk corridors is a pool of money which insurers who earn more than anticipated pay into so that those who earn less than needed to cover expenses can draw from it. In 2014, only $362 million was paid into the pool, and $2.87 billion was requested from it. Because HHS is prevented by law from supplementing the pool with additional funds, it could only pay out 12.6% of claims.


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This year the comparable numbers are $325 or 2 percent of income

The math is harsh: The federal penalty for having no health insurance is set to jump to $695, and the Obama administration is being urged to highlight that cold fact in its new pitch for health law sign-ups.

That means the 2016 sign-up season starting Nov. 1 could see penalties become a bigger focus for millions of people who have remained eligible for coverage but uninsured. They’re said to be squeezed for money and skeptical about spending what they have on health insurance.

Until now, health overhaul supporters have stressed the benefits: taxpayer subsidies that pay roughly 70 percent of the monthly premium, financial protection against sudden illness or an accident, and access to regular preventive and follow-up medical care.

But in 2016, the penalty for being uninsured will rise to the greater of either $695 or 2.5 percent of taxable income. That’s for someone without coverage for a full 12 months. This year the comparable numbers are $325 or 2 percent of income.

Marketing usually involves stressing the positive. Rising penalties meet no one’s definition of good news. Still, that may create a new pitch:

The math is pretty clear. A consumer would be able to get six months or more of coverage for $695, instead of owing that amount to the IRS as a tax penalty. (That example is based on subsidized customers now putting in an average of about $100 a month of their own money.)

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Obamacare Exchanges Fail to Detect Counterfeit Documents…



Obamacare exchanges are failing to verify key enrollment information, according to a new report by the Government Accountability Office (GAO). This new report is the latest in a long line finding that controls on federal and state Obamacare exchanges are abysmal.

As part of its review, GAO tested application and enrollment controls on the federal exchange and two state exchanges (California and Kentucky). Ten fictitious applicants were created to test whether verification steps including validating an applicant’s Social Security number, verifying citizenship, and verifying household income were completed properly.

In order to test these controls, GAO’s test applications provided fraudulent documentation:

“For each of the 10 undercover applications where we obtained qualified health-plan coverage, the respective marketplace directed that our applicants submit supplementary documentation… we provided counterfeit follow-up documentation, such as fictitious Social Security cards with impossible Social Security numbers, for all 10 undercover applications.”

As the report notes, all ten applications remained enrolled on Obamacare even though fraudulent or insufficient documentation was provided:

“For all 10 of these undercover applications, we maintained subsidized coverage beyond the period during which applicants may file supporting documentation to resolve inconsistencies.”

As a result, each applicant received the Obamacare premium tax credit and cost-sharing reduction subsidies, without being properly verified. The ten applicants received a total of $2,300 in tax credits per month.

This is not the first time that watchdog groups have found Obamacare exchanges have failed to properly verify enrollment and eligibility. At least four other reports released this year have raised alarms about existing Obamacare controls:

  • An August 10, 2015 report by the Health and Human Services Office of the Inspector General (HHS OIG) found that the federal Healthcare.gov is failing to verify applicant’s Social Security numbers, citizenship, and household income in order to properly distribute tax credits.
  • A July 16, 2015 audit released by GAO found that 11 of 12 fictitious applicants received coverage for the entire 2014 coverage period despite many using fraudulent documents, and others providing no documentation at all. From these 11 test applicants alone, erroneously Healthcare.gov paid $30,000 in tax credits.
  • A June 16, 2015 report released by HHS OIG found that $2.8 billion worth of subsidies and payments had been made in 2014 without verification.
  • A May 11, 2015 report by the Treasury Inspector General for Tax Administration found that the IRS was failing to verify whether individuals had even bought health insurance before distributing tax credits.

ORead more: http://www.atr.org/watchdog-obamacare-exchanges-fail-detect-counterfeit-documents#ixzz3pQmXlPhq
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