Obamacare Funding Troubles
Download the PDF here
high deductibles, $3000-$5000 - NY Times....."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."....."degradation of health insurance.".....
Big shortfall in Obamacare risk program could hurt insurers........A key federal program designed to cushion health insurers' risks in the Obamacare exchanges has a massive shortfall, which could throw some insurers into financial turmoil......Insurers requested $2.87 billion in so-called "risk corridors" payments for 2014, but will only receive $362 million, or 12.6%, said the Centers for Medicare & Medicaid Services, which oversees Obamacare.........http://money.cnn.com/2015/10/02/news/economy/obamacare-insurers/........http://www.cnbc.com/2015/11/19/big-bad-day-for-obamacare-as-unitedhealth-considers-exit.html
Rubio budget win is dealing heavy blow to ObamaCare...."insurers pulling out of exchanges.....Most of the companies lost money......The Obama administration disclosed it could only afford to pay 13 cents of every dollar owed to the insurance companies - after insurers had already locked in their rates for the upcoming year......Essentially what is happening now, and why you're seeing all of these plans reevaluate their participation [in ObamaCare], they have to rely on their reserves over the next two years......Rubio....policy rider.....Under the provision, which is still in effect, the Department of Health and Human Services (HHS) could no longer tap other accounts - such as its overall appropriations or its Medicare funding - to fund the risk corridors program.....Republicans are seeking to renew the policy rider - or repeal risk corridors altogether - in the year-end budget bill that Congress must pass by Dec. 11 to avoid a government shutdown......UnitedHealthCare, specifically mentioned the specter of a funding shortfall last week when it threatened to end its participation in the exchanges after 2016.....[United Healthcare says it is facing major financial losses and may have to exit the Affordable Care Act's Exchange Program.....s scaling back the marketing of their exchange programs, and will evaluate their Obamacare offerings by next year, possibly forcing millions of Americans to find coverage elsewhere.]......The Obama administration has tried to reassure companies that it would "explore other sources of funding" - including working with Congress - in case of another shortfall in 2016.....there still the hope that were would be more money from people paying into it"......"What is happening is states are figuring out the money is running out," said Jim Wadleigh, the director of Connecticut's exchange, hailed as one of the most successful in the country. "At the end of 2016, everyone has to be self-sustaining."
By Sarah Ferris - 11/24/15
Sen. Marco Rubio may have dealt the biggest blow in the GOP's five-year war against ObamaCare.
A 2014 budget measure inspired by the Florida Republican and presidential hopeful is pushing some insurers to drop out of the ObamaCare exchanges, experts say.
"I think this is one of the most effective things they've done so far in terms of trying to undermine the Affordable Care Act," Tim Jost, a healthcare law professor at Washington and Lee University, said of Republicans in Congress.
This fall, more than a dozen health insurers representing 800,000 people have dropped out of the ObamaCare exchanges, many out of fear that the administration no longer has the cash to cushion their losses in the costly early years of the marketplace.
The nation's largest insurer, UnitedHealthCare, specifically mentioned the specter of a funding shortfall last week when it threatened to end its participation in the exchanges after 2016.
The angst in the industry centers on an obscure program in the healthcare law known as "risk corridors" that was designed to shield insurers against losses.
Rubio in 2013 went on the warpath against the program, decrying it as a "taxpayer bailout." He penned op-eds against it, testified about it as the star witness at a House Oversight Committee hearing and even made his case to top House Republicans including then-Speaker John Boehner (R-Ohio).
"There is a problem with the way [ObamaCare] exchanges are now designed that have not yet received the attention they deserve, but I promise you're going to be hearing a lot about it in the days to come," Rubio said in a Senate floor speech in early 2014.
While Rubio's attempt to scrap risk corridors altogether was unsuccessful, his push contributed to a policy rider that was inserted into a 1,603-page spending bill passed at the end of 2014.
Under the provision, which is still in effect, the Department of Health and Human Services (HHS) could no longer tap other accounts - such as its overall appropriations or its Medicare funding - to fund the risk corridors program.
Now Rubio is taking his crusade against the "bailout" program to the presidential campaign trail.
The senator and dozens of other Republicans are seeking to renew the policy rider - or repeal risk corridors altogether - in the year-end budget bill that Congress must pass by Dec. 11 to avoid a government shutdown.
"So far, we've succeeded in stopping the Obama administration from bailing out healthcare companies under ObamaCare, and it's critical that Congress once again stand with taxpayers to stop any taxpayer bailout of health insurers from happening," Rubio wrote in a letter to GOP leaders of both chambers on Tuesday.
Defunding the program has also become a top issue for groups on the right.
On Tuesday, conservative groups such as Americans for Tax Reform and Heritage Action for America endorsed a letter to Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) urging them to keep the risk corridor restrictions in place.
Without them, the groups warned, the administration could have spent more than $2.5 billion of taxpayer money "to bailout insurers for their poor business decisions."
"Taxpayers should not be on the hook for any more of Obamacare's failures," the letter said.
The risk corridors program was designed to be a temporary stopgap against high insurance claims during the first three years of the new federal program.
If an insurer had more expenses than it planned, the federal government would cover the remaining balance using cash collected from companies that paid out fewer claims than expected.
The program was almost certain to need extra money in the first few years, when there were fewer healthier customers signing up. But Rubio's provision in 2014 severely limited any new spending by requiring the program to become budget neutral.
The damaging effects of the budget-neutral requirement became clear in October.
The Obama administration disclosed it could only afford to pay 13 cents of every dollar owed to the insurance companies - after insurers had already locked in their rates for the upcoming year.
"Obviously what happened was exactly what we thought would happen - there'd be an imbalance. Most of the companies lost money," said Joseph Marinucci, a senior analyst with Standard & Poor.
"You have to be able to deal with unanticipated events, such as the legislation that would restrict the funding of its corridors," he said.
Within weeks, about a dozen start-up insurers known as co-ops announced they'd be shutting their doors, in most cases because they lacked the cash flow to stay solvent. And at least two other insurers - WinHealth Partners in Wyoming and Moda Health in Washington state - pulled out of the exchanges.
Then came the shocking announcement from the insurance giant, UnitedHealthCare, that it might cut its losses as well.
"Essentially what is happening now, and why you're seeing all of these plans reevaluate their participation [in ObamaCare], they have to rely on their reserves over the next two years," one industry source said. "It's caused everyone to reevaluate and consider what changes they have to make to remain viable and stay in the market."
The Obama administration has tried to reassure companies that it would "explore other sources of funding" - including working with Congress - in case of another shortfall in 2016.
In her first public interview since UnitedHealthCare's shareholder meeting, HHS Secretary Sylvia Mathews Burwell pointed to companies such as Aetna and Kaiser Permanente that are remaining "solidly in the marketplace" even after UnitedHealth's announcement.
"We feel that, as we move forward, we have a product that the consumer wants and is satisfied with, and that it's a place where issuers want to come and grow their business," she said in an interview with Bloomberg TV.
But Jost, the healthcare professor, said big funding questions still lie ahead.
"Unless the administration does a really good job of negotiating the budget, I don't see much can be done there," he said. "Plans have known now for a number of years there wasn't going to be new money for that program, but I think there still the hope that were would be more money from people paying into it."
Exclusive: States quietly consider ObamaCare exchange mergers
A number of states are quietly considering merging their healthcare exchanges under ObamaCare amid big questions about their cost and viability.
Many of the 13 state-run ObamaCare exchanges are worried about how they'll survive once federal dollars supporting them run dry next year.
Others are contemplating creating multi-state exchanges as a contingency plan for a looming Supreme Court ruling expected next month that could prevent people from getting subsidies to buy ObamaCare on the federal exchange.
The idea is still only in the infancy stage. It's unclear whether a California-Oregon or New York-Connecticut health exchange is on the horizon.
But a shared marketplace - an option buried in a little-known clause of the Affordable Care Act - has become an increasingly attractive option for states desperate to slash costs. If state exchanges are not financially self-sufficient by 2016, they will be forced to join the federal system, HealthCare.gov.
"What is happening is states are figuring out the money is running out," said Jim Wadleigh, the director of Connecticut's exchange, hailed as one of the most successful in the country. "At the end of 2016, everyone has to be self-sustaining."
Other states are being driven to consider the idea by the King v. Burwell case, in which the Supreme Court will decide whether subsidies are allowed in states that didn't set up their own health exchanges.
If the court rules against the Obama administration, millions of people in states across the country will lose subsidies.
Some of those states could be interested in joining with other states that have their own ObamaCare exchanges.
"It's absolutely being driven by the court case," said Joel Ario, the former director of the federal government's Office of Health Insurance Exchanges.
Most Republican state leaders have avoided talking about how they would respond to a decision against the use of subsidies on the federal exchange. Behind the scenes, however, many are anxiously contacting states that run their own exchanges.
"In the last seven business days, I've probably had seven to 10 states contact me about contingency plans," Wadleigh said, though he declined to disclose the names of states he's been talking to. "You can imagine the political backlash that would be if the names got out."
Wadleigh, who became the CEO of Connecticut's exchange last fall, said he has been in conversations with many states - some using the federal exchange and some running their own exchanges - about possible partnerships.
"Clearly, we can't sell the code, which was paid for by federal dollars, but what we can do is have collaborations like joining exchanges, if that's feasible," Wadleigh said.
His office met recently with officials from Vermont and Rhode Island to talk about ways to collaborate. A few weeks earlier, the directors of all state marketplaces met in Denver to discuss ways to share services.
That same group will come together again in late July at a conference hosted by the Centers for Medicare and Medicaid Services (CMS).
By most accounts, creating a multi-state marketplace would be a logistical nightmare.
It's unlikely that states could ever merge the full responsibilities of a marketplace, such as regulating plans and managing risk pools.
But even with a simpler model, like a shared call center or website platform, there are big questions about how states could share those costs and duties.
Jennifer Tolbert, a state health expert with the Kaiser Family Foundation, said "one of the trickiest issues" would be determining a governing structure for multi-state exchanges.
"I don't know how that would be resolved," she said.
These hurdles have been big enough to thwart multiple states from moving forward with their plans. Delaware, Maryland and West Virginia, which commissioned a study on the option in June 2013, have all dropped the idea.
What is more feasible, experts believe, is a technology-sharing system, where multiple states all hire the same private contractor. States could also create a regional call center or outreach team.
"There's lot of states that are trying to crack this sustainability problem, and there have been times when they've talked about regional solutions, but it's really been very early on in those discussions," said Pat Kelly, the director of Idaho's health exchange, Your Health Idaho.
He said sharing some services, particularly technology, could bring big benefits to states, though his own state couldn't do so because it used federal dollars for the contract.
"Is it possible and is it a good idea? Absolutely," he said. "Every time you can share the costs, it's going to be more efficient."
Eventually, it could also involve states that are already on the federal exchange, though that kind of transition would likely take years, said Ario, who has served as the state insurance commissioner for both Oregon and Pennsylvania.
"I think if King goes against the government, there will be a flurry of activity," added Ario, who is now the managing director at Manatt Health Solutions. "Otherwise, it will be more of a gradual transition."
He said it could be possible for states in some regions - like the Great Plains, where the politics and populations are similar - to leave HealthCare.govin favor of their own, more autonomous system.
"You can imagine an SEC exchange," he said, referring to states participating in the Southeastern Conference college football league. "Maybe they could run an exchange really well."
The idea is becoming more attractive as more and more states are facing dwindling budgets.
Already, Oregon and Nevada have been forced to scrap their own systems and move to the federal exchange. Hawaii is now nearing a shutdown of its program after lawmakers rejected a last-ditch $10 million funding request.
The costs of running Vermont's ObamaCare exchange are expected to rise to $200 million this year, while California has made major cutbacks after seeing lower-than-expected enrollment figures. Its latest budget, released last week, scales down the budget for advertising, outreach budget and technology services.
For all states, technology is the biggest cost item and the biggest barrier for states to set up their own exchanges.
The Obama administration, which has given $5 billion in grants to help launch exchanges, has already pushed back the deadline for state marketplaces. Exchanges were initially told to be self-sufficient by 2015.
Still, while forming larger exchanges could make financial sense for the states, it could risk a political backlash.
The state-based exchanges were included in the Affordable Care Act to calm fears that the law would lead to a new, national system for obtaining insurance similar to a "public option."
Kevin Counihan, the CEO of HealthCare.gov, said earlier this month that he has been encouraging to share "best practices" among state marketplaces that are struggling.
"Our role is to do everything we can ... to help those states succeed," Counihan told a group at the Health Insurance Exchange Summit earlier this month.
Wadleigh, who will speak at the CMS-sponsored July conference, said officials have been "very supportive" about his discussions with other states, including multi-state partnerships.
A spokesperson from the CMS declined to answer questions about the exchanges.
ObamaCare supporters see wall of resistance cracking in South
By Peter Sullivan - 11/21/15 09:14 AM EST
Supporters of ObamaCare are increasingly hopeful that Medicaid expansion could sweep through the deep-red South.
Not a single state in the lower south has accepted the standing offer under ObamaCare to expand Medicaid to people living up to 138 percent of the poverty line, which is about $33,000 for a family of four.
But that could soon change.
Sen. David Vitter (R-La.) has expressed openness to Medicaid expansion if he is elected governor of Louisiana on Saturday, and his Democratic opponent, John Bel Edwards, has been an enthusiastic supporter of expansion as well.
More recently, there was surprising news out of Alabama, as a commission appointed by Republican governor Robert Bentley recommended expansion. Bentley said earlier this month that he is "looking" at the possibility of broadening Medicaid.
"What is going to happen is that support for Medicaid expansion will continue to build," Secretary of Health and Human Services Sylvia Burwell told Atlanta Magazine in an article published Monday. "You hear the Alabama governor. You've heard conversations in Louisiana."
Supporters of Medicaid expansion hope that if they can get a foothold in the South, other states will follow.
"I do think that if we have some states in that belt in the South then that will put pressure on the states around them," said Dee Mahan, Medicaid program director at the liberal healthcare advocacy group Families USA.
Alabama is unlikely to simply expand the healthcare program as ObamaCare envisioned, but instead would likely negotiate with the administration to put a conservative twist on the program, as other Republican-led states have done.
One option is the Arkansas model, where the expansion enrolls people in private health insurance plans instead of government-run Medicaid.
Jim Carnes, policy director at Alabama Arise, a non-profit aiming to help low-income people and a member of the governor's commission, said that something along the lines of the Arkansas model is possible. Some sort of provision related to encouraging enrollees to work is also possible, he said, though the Obama administration has so far rejected full-on work requirements.
The commission as a whole, which included state legislators from both parties, likewise proposed an "Alabama-driven solution," indicating that some modifications to the Medicaid program could be necessary.
While those details are still to be worked out, Carnes says he sees positive signs from the governor about agreeing to some form of Medicaid expansion.
"I think he's really been pointing in that direction and will make his move in the near future," Carnes said.
In Louisiana, Vitter has also pointed to private coverage and work-related provisions.
"Where we are now is facing a law that's on the books and the issue of Medicaid expansion," Vitter said last week, according to the Associated Press. "I said from the beginning of the campaign, I would not rule it out. But I would only do it on solid, sound Louisiana-terms, not on the federal government's terms."
One of the things pushing states towards expansion, despite the divisive politics of ObamaCare, is the infusion of federal money it provides.
Hospitals have also been strong advocates for expansion, as coverage for more people reduces the amount of care they have to provide to the uninsured without compensation.
The Alabama commission described expansion as a "win for the state budget" and noted that five rural hospitals in the state have already closed since 2011.
The clock is also ticking to take full advantage of federal funds, as 2016 is the final year that the federal government will pay for the entire cost of expansion.
In addition to the economic arguments, Bentley has also acknowledged a changed political reality.
"I was personally against the Affordable Care Act," he said last month, according to the Alabama Media Group. "I never called it ObamaCare because it's not a person, it was a philosophy."
"But we lost folks. We lost. And we lost in court," he added. "So what we have to do now is move past that, take the resources we have available and try to improve the quality of life for the people of Alabama, and that's exactly what I'm going to do."
Thirty states have taken the Medicaid expansion so far, but in some of the remaining states, including Tennessee and Utah, Republican governors are on board, but not the legislatures.
Some Republicans still have objections, often voicing concerns about the cost.
Still, in Alabama, Carnes said he hoped that Democrats and more moderate Republicans "can develop a new alliance that can overcome that hardcore opposition."
Burwell said she has high expectations for Alabama and the rest of the country.
Asked by Atlanta Magazine whether she thought it was "just a matter of time" before all states expanded Medicaid, Burwell replied, "Yes."