Monthly Archives: August 2013

Delta Airlines letter to the Obama Adminstration: Obamacare NOT Business as Usual

Delta Air Lines letter to the Obama administration

June 13, 2013

I want to thank you for the opportunity to meet with you at Grady Hospital in Atlanta recently to discuss the impact of the Affordable Care Act (ACA) on Delta Air Lines. The small group setting allowed for a good exchange of ideas that I found very valuable. As you know, I and the other large employer representatives in attendance did not agree with your initial assessment that the ACA means “business as usual” for large employers. Since you committed to share our concerns with Secretary Sebelius and the President, I thought it might be helpful to summarize the major points for you here.

As you heard from many of us, the ACA will result in increasing costs, for both our companies and our employees, and will also reduce the benefits provided. Here are some of the major drivers of these effects:

  • The Reinsurance Fee — The ACA requires large employers to pay an annual fee of $63 per covered participant in 2014. For Delta’s roughly 160,000 enrolled active and retired employees and their family members, this represents more than $10 million added to the cost of providing health care next year. As we discussed, this fee, which is meant to help stabilize the state exchanges as they get started, provides absolutely zero direct benefit to our participants. It is, essentially, a direct subsidy form us and our employees to those who participate in the exchanges.
  • Covering Children Until Age 26 – There is no doubt that this has been a popular provision nationwide and at Delta we have seen more than 8,000 children added to our rolls resulting in a permanent increase in our overall costs of about $14 million per year. We are required to charge the same for these children as we do for any other children covered by our plan. However, our experience shows that, on average, these children are consuming considerably more health care than other children we cover. In essence, we are experiencing adverse selection in this population and that is having an impact on the costs that we and our employees pay for coverage.
  • The Individual Mandate – As you know, in 2014, the individual mandate under the ACA kicks in and those not currently covered under any plan must enroll or pay a penalty to the Federal government. Our actuaries have estimated how many of those who currently opt out of our coverage will now opt in. Their estimates are that this requirement will add another $14 Million in costs to our plan each year, net of the premiums paid by these individuals.
  • Thirty Hour Rule – As you heard at the meeting, many employers are planning to reduce employees’ hours to less than thirty per week in order to avoid the requirements to either provide health coverage or pay fees for those employees. Delta is not one of those employers, and we do not plan to force employees to work fewer hours as a result of the ACA. For others, however, this represents one of the negative unintended consequences of the ACA and we support efforts to raise the limit to 40 hours per week rather than thirty.
  • Pay or Play Penalties – The group health coverage Delta provides to its full time employees more than meets the definition of “affordable coverage” as defined by the ACA. However, the proposed regulations that implement this provision of the law are very complex and, when finalized, may unnecessarily impose HR information systems changes that will be costly to build and maintain. In addition, there are many unsettled principles surrounding this provision of ACA and based on the fact that it is already June, employers will not have time to react should final regulations be issued this year. This puts employers at risk of being assessed these penalties in innocent situations (such as when employees take voluntary leaves of absences) and imposes additional costs, even in those situations where the vast majority of employees are offered affordable, comprehensive coverage.
  • Cadillac Tax – Recent data released is evidence of what you heard in the meeting–employers are reducing or eliminating rich plan designs in order to ensure they do not pay the tax, since doing so would represent a significant waste of money. At Delta, we did that last year as we eliminated one of the plan designs available to our pilot group specifically because it would have risked being subject to the Cadillac tax. However, keep in mind that, eventually, it is not just the “rich” plan designs that will be affected. Essentially, the Cadillac tax level represents a “ceiling” on the value of benefits provided in health plans. However, that ceiling rises each year only at the rate of the consumer price index (CPI). On the other hand, medical inflation is rising at a higher rate than CPI. The way the math works, given enough years, all plans will eventually risk being subject to the Cadillac Tax and as they do, the natural reaction will be to continually reduce benefits provided in order to avoid the tax.

At Delta we are doing a lot of positive things to provide a platform for our employees to live healthier, more productive lives. We offer free preventive coverage, we offer telemedicine services, a concierge nurse line and great tools that provide vital data (such as it exists) on quality and cost among the provider community. We provide incentives that reward employees for doing the things that help lead to better long-term health. But make no mistake—the costs imposed on Delta and our employees are very real and they are escalating. The costs mentioned above, when combined with normal medical inflation and the end of the [Early Retiree Reinsurance] program mean that the cost of providing health care to our employees will increase by nearly $100,000,000 next year. Delta will have to absorb the vast majority of that increase in costs so that we continue providing a high value, high quality health plan, but some of it will have to be shared with our employees as well. And of course, the balance that the company pays simply means less left over for other investments that make our business stronger.

In closing, the ACA is anything but business as usual for large employers like Delta. It represents real and significant changes that provide real challenges for both our company and our employees. Thank you for the opportunity to provide this input. If I can be of assistance in any other way, please do not hesitate to contact me.

Respectfully,

Robert L. Kight

Vice President, Global HR Services & Labor Relations

Delta Air Lines

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Employers dropping coverage for thousands of spouses over ObamaCare costs

Employers dropping coverage for thousands of spouses over ObamaCare costs | Fox News.

Both the University of Virginia and UPS told their employees recently they are no longer offering spousal coverage to those able to obtain insurance elsewhere; meaning thousands of Americans will no longer be able to choose the benefits they prefer.

UVA said Wednesday this is only one of many “major changes” coming to their health plans as a result of ObamaCare. The university says the changes are necessary because the law is projected to add $7.3 million to the cost of the university’s health plan in 2014 alone.

When do employers stop offering spousal coverage at all? Oh, not to mention, but I will anyway, I thought you could keep your plan!?

Prediction: Chaos

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Rocky Mountain Health Plans blogs on the Family Glitch

Premium Assistance and the Family Glitch

The problem…

This creates a situation where some families cannot afford to pay for employer sponsored coverage. However, if the employee contribution for “self-only” coverage is less than 9.5% of household income, family members are not eligible for premium assistance. This applies even if the employee has to contribute more than 9.5% for family coverage. (emphasis added)

 

The solution to the family glitch? Well there is no good solution…

At this point, it seems the only way to fix the situation is through legislation. Given the climate in Washington, this may not be possible.

As a result, these families are stuck in limbo. They are eligible for employer sponsored insurance. Thus, they are not eligible for premium assistance even though they may not be able to pay for their health coverage. (emphasis added)

Just to make sure you understand…

  1. The employee is offered coverage by his employer
  2. The coverage offered to the employee by himself is deemed affordabe (less than 9.5% of household income).
  3. The family is NOT eligible for a subsidy due to the family glitch. It does not MATTER how much more more it costs for them to join the employee’s group plan. It also does NOT matter if the employee refuses coverage from his employer, the STILL offered him affordable coverage.
  4. The family has two options for major medical coverage:  Join the employees group plan and pay whaterver the cost is OR purchase a qualified plan either ON or OFF the exchange. There is no need to purchase ON the exchange since they are not eligible for a subsidy.

NOTE: This emphasizes the point that the only place you can purchase a plan and receive a subsidy is on the exchange (better known as a marketplace).

Guess they should have read the bill before they passed it?

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UPS drops spousal coverage, teachers get hours cut due to ObamaCare

UPS drops spousal coverage, teachers get hours cut due to ObamaCare « Hot Air.

Finally someone discusses the “family glitch” issue. The only way around the family glitch is for the employer NOT to offer benefits. It’s not as simple as the employee declining benefits, if that’s even an option. Ed Morrisey comments…

As I pointed out a couple of weeks ago, the law requires employers to subsidize health-insurance costs for employees, but not for dependent children (meaning the employee has to pay full price), and they don’t have to cover spouses at all — even if the spouses don’t have their own jobs. Under that scenario, employees with children and stay-at-home spouses are better off going into the exchanges and getting taxpayer-fueled subsidies to buy their own family insurance — even though a mass migration into those exchanges will create an avalanche of unforeseen cost to ObamaCare.

The solution is to have the employer end health-care coverage so that workers then qualify for the exchanges. The business will have to pay a penalty, but that’s far below the cost of providing subsidized health insurance, so they win, too. The only losers in this scenario are taxpayers who have to fork over billions more than anticipated in exchange subsidies.

Single payer makes a complicated thing simple…. until it doesn’t. Of course, it will be too late by then.

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Health plans drop working spouses or add surcharges

Health plans drop working spouses | TribLIVE.

A growing number of companies are looking to clamp down on rising health care costs by dumping coverage for their employees’ working spouses.

Others are requiring their workers to pay extra money to cover a spouse who could get health insurance elsewhere. And some may even consider making employees pay the full cost of insuring their children.

This is happening, not only because of cost but due to Obamacare itself…

More employers are taking a look at the strategy because Obamacare doesn’t specify that family health plans cover spouses, said James McTiernan, health care consultant with Triad Gallagher, a Downtown benefits firm.

A couple of points. Paying full cost for very young children is very expensive. That’s sure to cause some pushback. Also, I thought you could keep your plan!?

Another item not m

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5 Things to Know About the Cost of Obamacare Coverage | The Exchange – Yahoo! Finance

5 Things to Know About the Cost of Obamacare Coverage | The Exchange – Yahoo! Finance.

  1. The “sticker price” is not what most people will pay.
  2. Old coverage vs. new coverage makes it hard to compare plans.
  3. Premiums on the exchanges won’t affect most consumers.
  4. Rates within individual tiers vary widely.
  5. Some consumers may get hit with large out-of-pocket health costs next year.

Prediction: Chaos

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Low cost health plans in New Jersey being dismantled

Thanks to Obamacare: Over 100K New Jersey Residents to Lose Their Affordable Health Plans under Obamacare | National Review Online.

The Star-Ledger warns that B&E customers who don’t qualify for a federal tax credit to purchase insurance can likely expect an three or fourfold increase in the cost of their next plan. According to Rutgers University’s Center for State Health Policy director Joel Cantor, the monthly plans of $150 for a 25-year-old male or $1,100 for a family with parents in their 40s will “easily” be three or four times more for a standard policy on the individual market. (B&E is basic and essential coverage)

One would think that people who don’t qualify for tax credits due to higher income would select a plan with more benefits than a B&E plan. The flip side is why pay for more coverage than you need? I’m sure there’s a socialogical term that refers to people suspending their belief that serious illnesses can possibly happen to them.

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Obamacare targets “Young Invincibles” demographic

Obamacare targets “Young Invincibles” demographic – CBS News.

Jordan Zavaleta’s insurance through the exchange will cost him less than $200 a month.

“I just paid off my student loans and that was $200 a month,” he said. “Now that will be health insurance.”

Jordan Zavaleta is 26. Less than $200 a month and that’s a good thing!??? Wonder what his rates would have been a year ago. I guarantee you the coverage this young invincible could have purchased a year ago would have been a lot less expensive than what he’ll buy through the exchange.

Jordan Zavaleta, you’ve been suckered. In the meantime, I suggest your purchase an accident plan for $20 to $30 per month since that appears to be your biggest concern. At least you’ll have something.

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There IS a Republican plan to replace Obamacare

Tom Price’s Plan to Replace Obamacare | National Review Online.

Either way, the notion that Republicans have no plan to replace Obamacare is news to Representative Tom Price (R., Ga.), who in June introduced a comprehensive alternative health-care plan — for the third time since 2009. It was originally introduced as the Obamacare alternative from the conservative Republican Study Committee (RSC), which Price chaired at the time.

The 250-page legislation, known as the Empowering Patients First Act, has yet to receive a vote in the House, but currently has 32 co-sponsors, including Representatives Michele Bachmann (R., Minn.), Tim Huelskamp (R., Kans.), Jeb Hensarling (R., Texas), and Tom Cotton (R., Ark.).

The bill is a comprehensive alternative, notes Price, who has more than 20 years of experience as a practicing orthopedic surgeon. His policy proposals, which conservative experts have praised, will probably be familiar to those who have closely followed the ongoing health-care debate.

The bill aims to provide affordable coverage for all through a series of tax credits and deductions designed to entice individuals into the insurance market with positive incentives, as opposed to Obamacare’s solution of fining those who refuse to purchase health insurance. “It’s a carrot instead of a two-by-four,” Price says. “Regardless of where one fits in the economic spectrum, there is a financial incentive to purchase health coverage that the individual wants, not that the government forces them to buy.”

The law would allow individuals to opt out of Medicare, Medicaid, and other federal health-care-benefit programs in favor of receiving a tax credit; an individual’s health coverage would be “portable” — no longer tied to an employer — so losing a job wouldn’t also mean losing insurance; individuals and small businessed would be able to access insurance pools that reduce risk for those with pre-existing conditions, and they could purchase plans across state lines. Tort reforms would cut down on physicians’ practicing “defensive medicine” and driving up costs by ordering unnecessary procedures in an effort to avoid lawsuits.

The plan is based on six principles: affordability, accessibility, quality, responsiveness, innovation, and choice. “All of those principles are violated by the Affordable Care Act,” Price says. “When you step back and look at those principles, it guides you to a system that allows patients and families and doctors to be in charge.” (emphasis added)

And yet when Republicans talk about health care, few actually point to Price’s bill as an alternative plan, which only reinforces the perception that the GOP has no plan beyond repealing Obamacare. “No,” Price laughs when asked if his plan has gotten the attention it deserves. Why not?

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A Risk to High: Why One Insurer Quit Covered California

Why One Insurer Quit Covered California – California Healthline.

In subsequent months, VCHCP (Ventura County Health Care Plan) staffed up to prepare for the exchange; had its proposed rates checked and approved; and returned to the board of supervisors to ask for additional resources to help with its exchange participation.

But behind the scenes, the plan’s leaders kept coming back to their concerns about the number of potential enrollees next year, and whether VCHCP could truly handle the influx — especially if it turned out to be more than the original predictions.

“When you’re looking at having to invest $3.8 million in various new systems,” Ventura County’s Fisher said ruefully, “the option of delaying entry into [Covered California]” to further prepare for the expansion and exchange became increasingly appealing.

And unlike some of the other participants in Covered California, VCHCP has significantly smaller operations and margins — which translates to less margin for error.

“The big plans don’t have some of the things that we have to worry about,” said Fisher. For example, the larger health care insurers already have agreements in place with brokers and can easily afford the new technology systems they’ll need for next year.

“We feel that we can compete with them,” Fisher added. “Looking at the rates we were right in there with them.”

But when going through the final calculus, “we [had] to look hard at where we stand in the marketplace.”

Venture simply didn’t have the systems and financial strength in place to make the leap. Don’t forget, this is a big experiment. No company really knows that they can accurately predict the claims history of the many new enrollees into the health insurance system. For a small company like Ventura, it appeared to be the better part of valor to stand back, at least until next  year.

Colorado has a number of small insurance companies as well. One wonders if they will have problems with “A Risk to High”?

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Health insurers to limit medical choices under ObamaCare?

Health insurers to limit medical choices under ObamaCare? | Fox News Video.

 

We’re living this in Colorado. Take a look at the analysis of the Silver plans filed in Colorado done by CCHI. Six of the ten plans have the word HMO in them and another plan is a “cooperative”. Three plans have the words PPO in them and I fairly certain the Cigna plan is a PPO as well. Not surprisingly, the PPO plans, which are the typical large network plans that most insureds expect, are a minority of the plans and substantially more expensive.

Can you keep your doctor? A distinct “maybe” if you go with an HMO style plan. “Most likely” if you select a more expensive PPO style plan.

Just another surprise courtesy of Obamacare.

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Businesses, Unions, Colleges all say employee hours being cut over Obamacare but WH says “no evidence”

NBC NEWS: Businesses, Unions, Colleges all say employee hours being cut over Obamacare but WH says “no evidence” » The Right Scoop –. Video at link.

But the White House, NBC News reports, says that there is no systematic evidence that this is because of Obamacare and dismisses the report as anecdotal.

You can elect to believe the White House or your own eyes and ears.

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Lawsuit Challenging Obamacare Subsidies Moves Forward

Lawsuit Challenging Obamacare Subsidies Moves Forward | Washington Free Beacon.

The judge in Oklahoma ruled that the state of Oklahoma has the legal standing to sue the federal government over federal subsidies in federally run health insurance exchanges.

The Affordable Care Act, or Obamacare, requires that each state has its own exchange where individuals can buy health insurance. If a state refuses to set up its own exchange, the federal government steps in and sets up the exchange for it.

Oklahoma Attorney General Scott Pruitt argues in the suit that the Affordable Care Act only provides federal subsidies for exchanges set up by the states, as opposed to the federal government. The subsidies allow the federal government to enforce the employer mandate in states that refused to set up their own exchanges.

Potential consequences…

The suit threatens to undermine the individual mandate as well as the employer mandate, Matthews said. If the federal government cannot legally subsidize insurance on the exchanges it runs, then insurance could become unaffordable for many individuals. If they cannot afford the insurance, then they do not have to buy it, reducing the pool of the insured.

If the suit is successful and the federal government is barred from providing subsidies for the exchanges it runs, the viability of the exchanges could be in trouble, some experts predicted.

“That will just be a huge blow to the exchanges being able to operate,” said Sally Pipes, president of the Pacific Research Institute.

If the suit were to succeed, the Federal Government would use every tool in its arsenal to “make” the states take over the exchanges.

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Latest Obamacare Carve Out a Boon to Big Insurance

Latest Obamacare Carve Out a Boon to Big Insurance | Fox News.

One of the key selling points in Obama’s populist push was that the bill would set annual caps on out-of-pocket expenses demanded by insurers. Starting in 2014, the law sets the limit at $6,350 for individual policies and $12,700 for family plans.

But through a regulatory re-write slipped into the rule book in February, but first publicized in today’s New York Times, the administration has given big insurance companies a one-year delay on the caps.

The reason cited is a technical problem in getting new and existing computer systems in synch. But the move will also help prevent more rate shocks. Insurance premiums are set to rise precipitously next year as insurers are required to begin accepting patients with pre-existing conditions.

It’s my understanding that this only affects group plans. As the dust clears on this latest Obamacare delay it will become clearer.

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Most support higher premiums for smokers

Most support higher premiums for smokers | LifeHealthPro.

A decade ago, the survey showed that 65 percent thought smokers should pay more. Now, that’s down to 58 percent. The Gallup folks shrugged off the drop, saying it was “down modestly.”

Yet people’s attitudes about obesity and insurance rates haven’t really budged. In 2003, 43 percent thought “significantly overweight” people should pay more, and now, 41 percent say they should.

This more tolerant attitude toward the obese could be partly because there a lot more overweight Americans than smoking Americans. Of those surveyed, 45 percent self identified as being significantly overweight. Only 19 percent said they were smokers.

Then there were the “tell-me-something-I-didn’t-know” stats from the survey. Smokers by a wide margin (70 percent to 28 percent) said it was unjustified to charge higher rates for smokers, while for nonsmokers, it was just about the reverse (65 percent justified).

People who were overweight weren’t quite so opposed to higher rates — 63 percent of them felt they shouldn’t have to pay more for insurance.

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