Monthly Archives: December 2014

CoOportunity Health Isn’t An Obamacare Problem

CoOportunity Health Isn’t An Obamacare Problem, It’s A Cooperative Problem – Forbes.

Where does a Coop go when it needs additional funding?

That’s the problem with getting rid of the capitalist, The Man. For what the capitalist provides is capital. And if you’re a coop and you’ve not got enough capital then where do you go and get it from? Your customers (in this case) aren’t really all that likely to be willing to cough up a capital issue to support the organisation. But they’re, nominally and legally, the owners of it. So they’re the only people who can cough up that needed capital.

As I say, this isn’t a problem with Obamacare as such. Rather, it’s a problem with a certain romanticism about cooperatives. They’re really not very suited to an industry that has large capital requirements. Because neither the consumers (customers) or the workers, the people who dependent upon flavour of coop own it, have much if any capital to put into a capital intensive business. Sure, as here this can be covered by loans at the start but once losses occur there’s no possibility of having a rights issue or the like in order to repair the legally necessary capital ratios.

Coops are lovely things and, ardent free marketeer that I am, I’m all in favour of a market in forms of business organisation just as much as I’m in favour of any other form of market. But it would be useful if people thought a little about which business sectors might be appropriate for an organisation without deep access to capital to enter and which might be inappropriate. And a market that requires substantial amount of regulatory capital really might not be one of those business sectors that are really suited to coops.

Yes, I do know that there are coops in all of these sorts of areas, insurance companies, banking institutions (at least in my native UK there are) and in health insurance as well as other insurances. But they are all organisations that started small and have grown over time (decades at least) and been able to retain earned capital to meet those various legal requirements. The idea that a new market entrant, needing in excess of $100 million in capital even without the possibility of calling for more if there are losses is a good market for a coop to enter seems to be odd, most odd.

What Mr. Worstall doesn’t address is why did/does CoOportunity need more capital?

The answer is quite simple, they mispriced their policies. The question is, did they do this on purpose or due to incompetence? Also, can we detect this category of error in other Health Insurance Cooperatives before they waste any more of the publics money?


High deductibles and skipped care

Skipped care a side effect of high-deductible health plans | Local News | The Seattle Times.

Cammi Chase was thrilled to think she had solved the conundrum that is individual health insurance. Thanks to the Affordable Care Act and federal subsidies, last December Chase moved her family from an $800-a-month plan to one that cost about $240.

“I felt like we hit the jackpot,” she said.

But last spring when Chase was struck with an unexpected illness, the Seattle woman was shocked to realize how little her new health insurance plan — a Health Savings Account (HSA) with a deductible of roughly $5,000 — would cover.

Sorry, I’m confused. Why was she shocked? Does she not understand that a plan with a $5000 deductible means that the first $5000 is coming out of her pocket? Does she not realize that $5000 is a large amount of money?

The problem is that most clients can’t or won’t allow themselves to imagine that their health can take a turn for the worse, either via an accident, an unexpected illness or the development of a chronic condition. It just happens to other people. They see the low premium, which of course is a fixed cost, get an insurance card, avoid the penalty and they’re happy. They either believe they won’t become seriously ill or injured in an accident OR they think the insurance plan will change into a better plan if something happens to them.

Reading on, we see that Cammi was “banking that her health would be good”…

“I heard from the rumor mill that an HSA was the way to go because I’m self-insured,” Chase said. “I was really banking that my health would be good.” (emphasis added)

In the spring, after experiencing memory problems and swollen joints, Chase was diagnosed with latent Lyme disease.

“Immediately it included a lot of [doctor’s] visits and a lot of medication and monthly tests and lab work,” Chase said. And most of it wasn’t covered by her plan. “Every time I walk in I pay for the office visit, which is $165 each month.”

Let’s stop a moment here and note she said “most of it wasn’t covered by her plan.” Most likely that is not technically correct. I suspect the following occurred:

  • She received a network discount for the cost of her treatment
  • The amount she paid was applied towards her $5000 deductible

Of course, this situation could have been further complicated if she was seeing out of network doctors, but that’s an issue for another day.

For 2015, she used an agent, which is a path that I (of course) endorse and the result…

A financial person at her doctor’s office referred Chase to Sarah Freeman, a Seattle insurance broker who helped her find a new plan for next year. At $325 a month, the Premera Blue Cross plan she found costs a little more than her current plan, but it will pay more of her bills.

For now the family can afford the higher premiums, Chase said, but “I just hope it doesn’t continue to rise.”

A different broker mentioned in the article comments…

Despite the risks, Feltzs predicted the cheaper plans with higher deductibles will still be popular.

“I sell them all day because those plans do work for people who say they don’t go to the doctor or they rarely go,” said the broker. “They say, ‘I want to avoid the penalty [for being uninsured] and in the event that something does happen, I don’t want to break the bank.’?”

Which is a story I hear everyday as well. In the future I’m going to send this article to clients that are looking at bare bones plans.

One final note, it may seem that I’m being harsh on Cammi. I wish her nothing but the best, especially since Lyme disease can be a very serious condition with expensive medications. She is a very good example of an issue I encounter many times a week.


ALERT: Obamacare Trifecta: Subsidy, Penalties and Taxes

Affordable Care Act’s Tax Effects Now Loom for Filers.

For most taxpayers, this will simply mean checking a box on a tax return indicating they had insurance for the full year. But millions of others will have to grapple with new tax forms and calculations that may generate unexpected results.

For instance, most of the 6.7 million people who bought insurance through the exchanges received subsidies, which reduced their monthly premiums. But those subsidies were based on previous years’ income — so people whose incomes have changed will inevitably have to pay some of that money back, while others may receive fatter refunds.

I’m not sure why they say a subsidy was based on someone’s previous years income. The subsidy is based on the applicant’s ESTIMATE of his income for the tax year in question. Also, it’s not clear to me that “most” of the 6.7 million people received subsidies on a monthly basis or received subsidies at all.

The subsidy you receive is reconciled on your tax return to determine if you receive too much, too little or if the account was just right….

RECONCILING People who bought subsidized insurance on the exchanges received what is actually an advance on a tax credit. Since the amount of help taxpayers received was based on 2012 income (Ed note – simply not true), it will need to be reconciled against what they actually earned in 2014 — particularly if they earned more or less and did not update their income data on the exchange.

Some people will be surprised that they must pay some of that money back, or at least have it deducted from what they would have received in a refund. Conversely, people who earned less money in 2014 — and who received subsidies that were too small — may receive money back. Changes in life circumstances — a divorce, marriage, a new child — can also affect those numbers.

“This is the part that can be very complex,” said Kathy Pickering, executive director of the Tax Institute at H&R Block. “People think of the tax credit as a discount on their premium. But realizing it can be something you repay a portion of is going to be a surprise.” (emphasis added)

Let me get this straight, we have a very complex tax return for the lower income portion of the population. Can you spell “RECIPE FOR DISASTER?”

The article also discussed the Obamacare penalty for not having compliant coverage.


Connect for Health 1st month open enrollment statistics

Connect for Health recently (Dec 17) released enrollment statistics for the 1st month of the 2015 open enrollment period (Nov 15 – Dec 15). They are as follows:

  • Total enrollment: 136,315
  • Medicaid: 7,306   27,306 (corrected 12/29 @ 18:24p)
  • CHP+: 932 (Medicaid for Children)
  • Connect for health (Commercial insurance): 108,077

Although beside the point, I sure wish I know why Connect for Health Colorado calls private individual insurance “commercial” insurance. Never once have I ever told a client I am selling them “commercial” insurance.

Moving on…

I call out the CHP+ enrollment number as bogus. Why? Because the discrepancy between Medicaid and CHP+ is too large. For an adult to qualify for Medicaid, the family (or individual) income must be < 133% of the Federal Poverty Level (FPL). However, for children to qualify for CHP+, the family income only has to be less than 250% of the FPL. Thus it is substantially easier for children to qualify for CHP+ then it is for adults to qualify for Medicaid. In the real world what occurs for families with income between 133% and 250% of the FPL is the children are enrolled in CHP+ and the adults receive a subsidy and select coverage through Connect for Health Colorado.

If the CHP+ enrollment numbers are “bogus” that places the validity of the other enrollment numbers into question as well.



Warning, Medicaid payment cuts may affect access to healthcare

As Medicaid Rolls Swell, Cuts in Payments to Doctors Threaten Access to Care –

 The Affordable Care Act provided a big increase in Medicaid payments for primary care in 2013 and 2014. But the increase expires on Thursday — just weeks after the Obama administration told the Supreme Court that doctors and other providers had no legal right to challenge the adequacy of payments they received from Medicaid.

The impact will vary by state, but a study by the Urban Institute, a nonpartisan research organization, estimates that doctors who have been receiving the enhanced payments will see their fees for primary care cut by 43 percent, on average.

Medicaid works fine as long as everyone is healthy. Color me cynical, but somehow I don’t believe my daughter would have received the same level of care at Children’s Hospital for her 7 admissions if she had been on Medicaid.


Obamacare Health Insurance Coop blows through almost $145 million

Insurer That Got $145 Million Loan Under Obamacare Is Almost Broke  – Bloomberg.

A startup insurance company loaned $145 million by the U.S. government under Obamacare is running out of money and being taken over by state officials in Iowa. (emphasis added)

The company, CoOportunity Health, which also serves Nebraska, was placed under Iowa Insurance Commissioner Nick Gerhart’s supervision this week and is no longer accepting new enrollees, according to a statement from his office. While Gerhart’s agency will operate the company for the time being, it’s urging policyholders to seek a new insurer.

CoOportunity Health is a co-op, or Consumer Operated and Oriented Plan, one of 23 nonprofit health insurers providing coverage in 26 states. They were created under the Patient Protection and Affordable Care Act to increase competition. The fate of CoOportunity provides new fodder for Obamacare opponents who argue that the law wastes government money.

How many insured’s does this affect?

CoOportunity now has 96,350 enrollees, up from 63,000 at the end of March, according to its website. The Centers for Medicare and Medicaid Services provided the insurer $130.6 million in funding for solvency and $15.4 million for operations, according to a legal filing by Gerhart. CMS told CoOportunity Dec. 16 it couldn’t provide more funds. The insurer lost $45.7 million from January to October, according to the petition.

Apparently economies of scale did CoOportunity little good. Inquiring minds want to know how a company with any business sense at all could run through so much cash in so little time? Perhaps the answer is in the question.

One thing will happen for sure, more scrutiny of the Co-op model.


Well, management’s resume’s propaganda sure look good. Either they believed their own bullsh*t or someone’s lying. If above link will work until CoOpportunity changes their website, which I imagine won’t be long!


Obamacare doctor networks to stay limited in 2015

Obamacare doctor networks to stay limited in 2015 – LA Times.

“This is part of the Affordable Care Act that doesn’t quite work yet,” Edwards said. “This game of who’s in and who’s out is tiresome.”

Thankfully, network participation is not a big issue in Coloraodo except for the CoHealthOp plans with the EPO (Exclusive Provider Organization) network. That said, there is no easy way to look up network participation. Connect for Health Colorado has a doctor lookup tool, but it is unreliable and that’s being kind. I go to each provider website and look up doctors for my clients.


From Plantiff’s supreme court filing

I took just a few moments to scan the Summary section of the lawsuit and found the opening and closing paragraphs of interest.

From the opening paragraph:

As statutory construction cases go, this one is extraordinarily straightforward. There is no legitimate way to construe the phrase “an Exchange established by the State under section 1311” to include one “established by HHS under section 1321.” Congress expressly contemplated both state established Exchanges (in the first instance) and HHS-established Exchanges (if states refused to establish their own); because it specifically singled out for subsidies one type, and only one type, courts must give effect to that plain language.

From the closing paragraph:

If the rule of law means anything, it is that text is not infinitely malleable, and that agencies must follow the law as written—not revise it to “better” achieve what they assume to have been Congress’s purposes. This case may be socially consequential and politically sensitive, but that only heightens the importance of judicial fidelity to the rule of law and well-established interpretive principles. Under those principles, it is clear that the IRS Rule must fall. (emphasis added)

It comes down to “do words mean things.” Unfortunately, in this day and age, it appears that words ARE becoming infinitely malleable.



The Supremes to hear Obamacare case in March

Supreme Court to hear ObamaCare subsidy challenge in March | TheHill.

Justices will hear arguments in King v. Burwell in just under three months, according to the court’s schedule posted Monday afternoon.

The case, led by conservative groups, questions whether the federal government can legally hand out healthcare subsidies in 34 states that have opted out of creating their own exchanges.

View the plantiffs opening brief against the Obamacare subsidy.

From a common sense point of view, we are going to find out if “words mean things.” Color me skeptical.


ObamaCare fines loom for uninsured

ObamaCare fines loom for uninsured | TheHill.

Consumers face a Feb. 15, 2015, deadline to buy insurance, after which those without coverage could be hit with fines of $325 per adult or 2 percent of family income, whichever is higher.

Uninsured people looking to escape the penalties are turning to the exchanges before they close, while insurance companies and tax preparers are seizing on the looming tax hit as a business opportunity.

There is no doubt that There can be little doubt Obamacare is good for the tax preparation business:

Firms are also offering to help current enrollees understand how changes in income can affect their tax credits to buy coverage. In some cases, they can also help the uninsured select health plans.

In promotional materials, H&R Block and Jackson Hewitt Tax Service say they can provide consumers relief, arguing that healthcare reform is making tax planning more difficult.

“The ACA [Affordable Care Act] has changed the landscape of both healthcare and tax,” H&R Block states online, inviting consumers to calculate their mandate penalty or receive a “tax impact analysis” when they become a client.

Jackson Hewitt urges consumers to stop by one of its locations, promising that their employees “work harder to keep up with the latest tax law changes to protect you from possible penalties — not everyone else does.”

There’s no KISS (Keep it Simple Stupid) within a light year of Obamacare.


Medicaid “Gravy Train” Comes to an End

Doctors face steep Medicaid cuts as fee boost ends – Yahoo Finance.

To improve access for the poor, the health law increased Medicaid fees for frontline primary care doctors for two years, 2013 and 2014, with Washington paying the full cost. The goal was to bring rates up to what Medicare pays for similar services. But that boost expires Jan. 1, and efforts to secure even a temporary extension from Congress appear thwarted by the politically toxic debate over “Obamacare.”

Not that it was much of a gravy train, but it’s a lot less going forward.


Colorado Exchange struggles with both Consumers and Insurers

Health insurers owed $20 million, worker warns of ‘very low’ 2015 exchange sign-ups | Health News Colorado.

On the consumer front…

“Our enrollments are very, very low because of system issues,” said Jackie Sievers, a director of enrollment for four assistance sites in western Colorado.

She called in to an exchange board meeting and said she only has been able to complete about one in five applications.

“Other sites in my region are reporting 1 percent (completion rates) or even lower. My concern is that our open enrollment period is much shorter this year and we have some pretty significant issues and are having trouble getting people signed up,” Sievers said.

She said the system incorrectly calculates federal tax credits, known as APTC — which stands for advanced premium tax credits. The credits come from the federal government and are designed to make health insurance more affordable. On top of problems with the tax credits, Sievers said anyone seeking coverage through the small business portal, known as SHOP, can’t complete applications. (SHOP is for small group coverage – Ed)

On the insurance company front…

While workers are struggling to help people sign up for 2015, board member Steve ErkenBrack called attention Monday to the fact that exchange system problems have left insurance companies waiting for millions in payments for customers who qualified for federal tax credits this year.

ErkenBrack is president of Rocky Mountain Health Plans, a large insurance carrier. He asked Connect for Health’s interim CEO Gary Drews to do a better job of updating board members on problems the exchange is facing, rather than focusing primarily on rosy updates.

ErkenBrack cited problems with the APTC reimbursements that could cost carriers millions and drive them away from Colorado’s exchange. And he said that Colorado’s systems continue to enroll some customers simultaneously in private plans and Medicaid. So far, about 3,300 people have been caught in the “simultaneous enrollment” snafu. While the customers have double coverage, it’s unclear who will pay their claims: taxpayers or private insurance companies. Furthermore, they are not allowed to receive both Medicaid and federal tax credits. Earlier this year, insurance industry representatives warned that some of the individual claims could reach $1 million each.

“Both of these are critical issues,” ErkenBrack said on Monday.

And let’s pile on while were at it…

Dr. Mike Fallon, another board member, said insurance carriers are “our customers also and if they are not being paid tens of millions,” that’s a significant problem.

“We take this incredibly seriously. This is a big risk for us,” Work said.

Sue Birch, director of Colorado’s Medicaid programs and a non-voting board member, questioned whether the exchange should consider insuring itself in case carriers suffer losses as a result of problems accounting for tax credits.

“There’s enormous potential for liability,” Birch said.

You really can’t make this stuff up. I believe that Connect for Health Colorado has the best of intentions and works very hard. I personally like all the people I’ve met from that organization. All that said, color me “doubtful” they are on the road to success.



Obamacare ‘Family Glitch’ Puts Subsidies Out Of Reach

Obamacare ‘Glitch’ Puts Subsidies Out Of Reach For Many Families : Shots – Health News : NPR.

The Affordable Care Act is expected to provide around $10 billion in subsidies this year to make health insurance affordable for low- and middle-income people. But a quirk in the law is denying subsidies to a significant number of low-income people, especially those with families.

Benfield has run up against this quirk. To cover only himself, Benfield would have to pay a little more than $2,200 a year. He says he can’t afford that, but that’s an affordable amount, according to Obamacare regulations, and that means Benfield could not get subsidies if he tried to get coverage on the Obamacare exchange.

To be clear, the glitch is related to the employer offering affordable coverage to the employee. If that happens and the employer will allow adding the employees dependents, the dependents are disqualified from being eligible for a subsidy regardless of the cost of the employer offered coverage.