UnitedHealth Group won’t pay brokers commissions on sales of individual health plans in most states where it participates in Obamacare exchanges, a move that will likely discourage market demand for its plans in those states. The News & Observer reports the Minnetonka-based insurance giant notified North Carolina brokers of the policy change Friday, not long after it announced plans to evaluate whether it would continue to serve the public exchange markets after 2016.
About 4,500 Medical University of South Carolina patients currently covered by Consumers’ Choice Health Plan need to pick a new policy by Tuesday to remain insured on Jan. 1. Medical University Hospital CEO Pat Cawley told the MUSC Board of Trustees on Thursday that the announcement created “an administrative nightmare.”
Only 35% of 67,000 Consumers’ Choice customers across the state have selected a new plan so far.
The lone health insurance cooperative to make money last year on the ObamaCare insurance exchanges is now losing millions and suspending individual enrollment for 2016. Maine’s Community Health Options lost more than $17 million in the first nine months of this year, after making $10.9 million in the same period last year. A spokesman said higher-than-expected medical costs have hurt the co-op. An Associated Press review of financial statements from 10 of the 11 surviving co-ops shows that they lost, on average, more than $21 million in the first nine months of this year.
Community Health Options, a not-for-profit co-op insurance company based in Maine that also sells health plans in New Hampshire, will limit individual enrollments later this month because of “higher-than-expected claims costs.”
It’s an inauspicious sign for the company, which was one of the few successful co-ops created by the Affordable Care Act. Twelve of the ACA’s 23 co-ops have folded or are in the process of closing down, all of which occurred this year.
“Woefully sloppy and willfully ignorant” is how Chairman Tim Murphy (R-PA) described the oversight of the state-run health insurance exchanges at an Energy & Commerce oversight hearing Tuesday.
Andy Slavitt, Acting Administrator for the Centers for Medicare & Medicaid Services (CMS), testified before the subcommittee on the use of federal funds provided to establish state-based marketplaces under the Affordable Care Act.
CMS doled out more than $5.5 billion in grant money to construct exchanges in 17 states, but lawmakers now question whether this money has been used properly. Chairman Murphy noted that every single state exchange faces significant budget shortfalls. For example, $733 million was given to establish state exchanges in Hawaii, Nevada, New Mexico, and Oregon. All four exchanges failed to become self-sustaining and were forced to transition consumers to the federal marketplace. It is increasingly unclear whether or not the money will be recouped.
Congresswoman Marsha Blackburn (R-TN) questioned Slavitt about a recent report from the Government Accountability Office which revealed that some state exchanges’ information technology systems were still functioning improperly. The report found that CMS “did not always clearly document, define, or communicate its oversight roles and responsibilities to states as called for by best practices for project management.” State administrators say communication with CMS has been poor, which “adversely affected states’ deadlines, increased uncertainty, and required additional work.”
CMS is charged with reviewing states’ funding requests and conducting audits to ensure all money is being spent legally. After January 1, 2015, states were not allowed to spend grant money on operation expenses such as rent, utilities, telecommunications, or software maintenance. Chairman Murphy cited a report from the Office of Inspector General revealing that Washington state may have used its grant money for operational costs, contrary to law.
Slavitt contended all current state marketplaces are sustainable despite these compelling challenges. When asked by Congressman David McKinley (R-WV) whether anyone has lost their job for giving erroneous advice to the state exchanges, Slavitt was unable to provide a single name.
Tuesday’s hearing was the second Energy & Commerce oversight hearing to address the tumultuous problems within the state marketplaces in an effort to ensure that taxpayer dollars are being spent wisely and in accordance with the law.
Sen. Marco Rubio’s efforts against the so-called risk corridor provision of the Affordable Care Act, which was intended to help insurance companies cope with the risks they assumed when participating in the health care law’s new marketplaces, has shown the effectiveness of quiet legislative sabotage. Because of Rubio’s efforts, the administration says it will pay only 13% of what insurance companies were expecting to receive this year.
There is a political duty to prevent the coming bailout of big health insurers if Congress is serious about achieving repeal of ObamaCare. Individual Americans who have been harmed by the health care law aren’t eligible for an administration-provided bailout. Nor did doctors get help with the increased costs of bureaucratic compliance. Instead, the administration gave top priority to the interests of its corporate friends and supporters. This is crony capitalism at its worst.
Federal officials said Monday that if uninsured people don’t obtain coverage within the health law’s official enrollment period, which ends Jan. 31, they won’t get an extension to avoid the law’s penalty for going without insurance this time around. Earlier this year, the Obama administration offered uninsured people a reprieve if they missed the sign-up deadline for 2015 coverage, originally set at Feb. 15. People were given through April to sign up if they said they had learned about the penalty for going uninsured only when they filed their taxes.
Cigna CEO David Cordani says the individual market created by the 2010 health law would be better off if insurers were given more flexibility in designing coverage, as well as a more compressed, focused open enrollment period. Just days after UnitedHealth Group’s CEO said their move into the new marketplace was a mistake, Cordani reaffirmed that Cigna remains committed for 2016, although the firm is so far losing money on that business.
Everyone knows ObamaCare subsidizes low-income individuals, but few are aware it also subsidizes big insurance companies. Corporate welfare payments to insurers under the risk corridor and reinsurance programs (both of which are slated to expire in 2017) amounted to $10.4 billion for the 2014 benefit year. In ObamaCare’s first year, “excess” losses outpaced “excess” gains by $2.5 billion. The White House wants taxpayers to make up the difference.