As of the end of the third open enrollment under the Affordable Care Act, 12.7 million people had signed up for coverage in the health insurance marketplaces, up from 11.7 million last year and 8.0 million in 2014.
Actual enrollment will end up somewhat lower than this because some people will not pay their premiums or will have their coverage terminated due to inconsistencies on their applications, and there is typically additional attrition as the year progresses (e.g., as some enrollees get jobs with health benefits).
While enrollment is in line with the HHS target announced in advance of this year’s open enrollment, it is short of earlier projections by the Congressional Budget Office, which became an implicit yardstick for judging the law. In March 2015, CBO projected average monthly marketplace enrollment of 21 million in calendar year 2016, though recently lowered that forecast to 13 million.
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Health Care Service Corp. improved its net loss in 2015, but the Blue Cross and Blue Shield conglomerate continues to hemorrhage money in the Affordable Care Act’s nascent marketplaces.
HCSC, which owns the Blue Cross and Blue Shield affiliates in Illinois, Montana, New Mexico, Oklahoma and Texas, lost $1.5 billion on its individual ACA-compliant plans in 2015, according to financial filings. After factoring in a premium deficiency reserve, an accounting measure that predicts future losses, the insurer lost $866 million last year on its ACA plans, said Ken Avner, HCSC’s chief financial officer.
According to the GAO report, billions of dollars in Obamacare subsidies were paid out in 2014 to individuals with “unresolved inconsistencies” regarding their eligibility for coverage:
• As of April 2015, more than 431,000 applications — amounting to $1.7 billion in taxpayer subsidies — had unresolved paperwork discrepancies dating to 2014.
• Roughly 22,000 applications that may (or may not) have been filed by people serving prison sentences added up to another $68 million in subsidies. (Prisoners are not eligible for Obamacare coverage.) The Centers for Medicare and Medicaid is required to check a national database to verify an applicant is not incarcerated, but since the CMS learned that the data in the database wasn’t up to date, CMS’ new official policy is to — get this — take the applicant’s word as to his or her incarceration status.
• Another 35,000 applications with varying forms of inconsistency with their Social Security numbers received subsidies worth $154 million.
The Obama administration, responding to consumer complaints, says it will begin rating health insurance plans based on how many doctors and hospitals they include in their networks.
At the same time, the maximum out-of-pocket costs for consumers under the Affordable Care Act will increase next year to $7,150 for an individual and $14,300 for a family, the administration said. Consumer advocates said those costs could be a significant burden for middle-income people who need a substantial amount of care.
Under new rules to be published Tuesday in the Federal Register, insurers will still be allowed to sell health plans with narrow networks of providers. But consumers will know in advance what they are getting because the government will attach a label indicating the breadth of the network for each plan sold on HealthCare.gov.
The insurance industry must be kicking itself for backing ObamaCare. Several have since posted big losses and it looks like Blue Cross Blue Shield got the losing end of the stick, too.
Fitch Ratings looked at nearly three dozen BCBS companies and found that 23 saw a decline in earnings that totaled $1.9 billion in the first nine months of last year, while 16 had net losses.
Blue Cross Blue Shield of Michigan lost $622 million from January through September last year. Blue Cross plans in Texas, Oklahoma, New Mexico and Montana lost $442 billion. And those in Pennsylvania, Delaware and West Virginia lost $266 million.
The reason is ObamaCare.
Or as Fitch puts it: “Cost and utilization trends from state insurance exchanges from the Affordable Care Act have been higher than anticipated and are the primary drivers of declining earnings.”
Co-ops created under ObamaCare reported net assets despite losing millions because they used an accounting trick approved by the Centers for Medicare and Medicaid Services.
Tax filings for 18 co-ops, including nine that collapsed in 2015, also revealed that co-op CEOs were paid handsomely before many had to shut down.
In July 2015, the Centers for Medicare and Medicaid Services amended its agreement with co-ops, allowing them to list $2.4 billion in loans they received from taxpayers as assets.
Political uncertainty isn’t the only threat to the Affordable Care Act’s future. Cracks also are spreading through a major pillar supporting the law
Health insurance exchanges created to help millions of people find coverage are turning into money-losing ventures for many insurers.
The nation’s largest, UnitedHealth Group Inc., could lose as much as $475 million on its exchange business this year and may not participate in 2017. Another major insurer, Aetna, has questioned the viability of the exchanges. And a dozen nonprofit insurance cooperatives created by the law have already closed, forcing around 750,000 people to find new plans.
More insurer defections would lead to fewer coverage choices on the exchanges and could eventually undermine the law, provided the next president wants to keep it.
The recent lawsuit filed by the Health Republic Insurance Company of Oregon regarding ObamaCare’s “risk corridor” program raises the question: Does the federal government have a duty to defend the lawsuit? Could they confess that the plaintiffs are right, or, better still, settle the case for the face value? Nicholas Bagley of the University Of Michigan School Of Law does not think the feds will do that while they can still argue that the claims are unripe. But if the case gets past the initial procedural hurdles, they’ll be sorely tempted to cut a deal.
Consumers who try to sign up for insurance after the Obamacare open enrollment period will soon need to submit proof that they are eligible for most special enrollment periods, federal health officials announced Wednesday.
This new confirmation process, which is expected to start in the next few months, will only affect those living in the 38 states that use the federal Healthcare.gov site.
It addresses complaints from insurance companies that the Centers for Medicare and Medicaid Services was allowing too many people to buy insurance after the open enrollment deadline passed. This, insurers said, left them with many consumers who waited until they were sick to sign up and then dropped coverage after they received treatment. And the companies claim that created a sicker-than-expected pool of customers that was contributing to the losses on Affordable Care Act exchange plans.
Leaders of some health cooperatives set up under the Affordable Care Act said it would be hard for the Obama administration to recoup more than $1 billion in federal loans made to some of the organizations that are now defunct, because most of the money has been spent.
A group representing existing co-ops, as well as leaders of some of the organizations, said there is little of the federal loan money remaining and some of what is left is needed to pay providers whose bills have yet to be paid. Obama administration officials have said they plan to use every available tool to recoup the federal loans, including legal action.
Thousands of doctors, hospitals and other providers in some states still haven’t been paid for health services they provided to members insured by the co-ops, which are organizations set up under the health law to offer health insurance to consumers and cut costs by giving established insurers more competition.