A few weeks ago, the administration issued new regulations in a last-ditch attempt to save the few remaining CO-OP organizations.
Articles on the implementation of ObamaCare.
The first change would limit the restriction on people with health insurance experience to those who have been “an officer, director, or trustee,” and it limits “pre-existing insurer” to those to who were active in the individual or small-group markets prior to July 16, 2009. This would open up the field of potential CO-OP board members to people who had (a) worked for health insurers active only in the large-group market, or (b) worked for any insurer, but in a lower-level capacity.
According to a legal opinion letter by former White House Counsel C. Boyden Gray, the answer is YES.
In this recording of a May 26, 2016 media conference call, experts describe the Obama administration’s decision to pay health insurers generous reinsurance subsidies while stiffing taxpayers, despite a statutory requirement that fixed sums must go to the U.S. Treasury.
Mr. Gray’s letter reinforces the conclusion of experts at the nonpartisan Congressional Research Service, who also found that the administration’s actions “would appear to be in conflict with the plain text” of the ACA regarding the Transitional Reinsurance Program.
Speakers on the call:
- Doug Badger, Senior Fellow, Galen Institute
- Derek Lyons, Counsel, Boyden Gray & Associates
- Tom Miller, Resident Fellow, American Enterprise Institute
For more on this issue, read our column at Forbes. The media call was sponsored by the Galen Institute, which also commissioned the legal opinion letter from Mr. Gray. (The recording starts about two minutes into the call with Doug Badger speaking.)
Obamacare is entering a new stage. The recent announcement by United Health Care that it will stop selling insurance to individuals and families through most health insurance exchanges marks the transition. In the next stage, federal and state policy makers must decide how to use broad regulatory powers they have under the Affordable Care Act to stabilize, expand, and diversify risk pools, improve local market competition, encourage insurers to compete on product quality rather than premium alone, and promote effective risk management. In addition, insurance companies must master rate setting, plan design, and network management and effectively manage the health risk of their enrollees in order to stay profitable, and consumers must learn how to choose and use the best plan for their circumstances.
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Smaller insurers with experience in Medicaid, such as Centene Corp. and Molina Healthcare, are outperforming the broader insurance industry on the federal health exchanges. Their success is putting a spotlight on their business model as the Obama administration and other insurers seek to stabilize the fledgling individual market.
If Medicaid-like plan features become the norm, consumers and medical providers would be substantially affected. Such plans are often popular in the exchanges for their low premiums, but consumers have criticized limits on their access to medical providers such as doctors. And physicians fault the plans for low reimbursement rates.
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Rushing to enact the giant Obamacare bill in March 2010, Congress voted itself out of its own employer-sponsored health insurance coverage—the Federal Employees Health Benefits Program. Section 1312(d)(3)(D) required members of Congress and staff to enroll in the new health insurance exchange system. But in pulling out of the Federal Employees Health Benefits Program, they also cut themselves off from their employer-based insurance contributions.
Obamacare’s insurance subsidies for ordinary Americans are generous, but capped by income. No one with an annual income over $47,080 gets a subsidy. That’s well below typical Capitol Hill salaries. Members of Congress make $174,000 annually, and many on their staff have impressive, upper-middle-class paychecks.
Maybe the lawmakers didn’t understand what they were doing, but The New York Times’ perspicacious Robert Pear certainly did. On April 12, 2010, Pear wryly wrote, “If they did not know exactly what they were doing to themselves, did lawmakers who wrote and passed the bill fully grasp the details of how it would influence the lives of other Americans?”
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Health insurers have not had much to cheer about lately, when it comes to Obamacare. They have been losing money on exchanges, and there is little hope that will change. So, a large health plan in Pittsburgh has asked judges to give it Obamacare money the Administration promised, but Congress declined to appropriate.
As reported by Wes Venteicher and Brian Bowling of the Pittsburgh Tribune-Review, Highmark lost $260 million on Obamacare exchanges in 2014, and claims it is owed $223 million by taxpayers. Unfortunately, it received only about $27 million. And things are getting worse. To date, Highmark has lost $773 million on Obamacare exchanges.
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Enrollment in individual health care plans, now dominated by the Affordable Care Act exchanges, fell 15.4 percent in the first quarter for the parent of Blue Cross and Blue Shield of Illinois.
At the end of March, Chicago-based Health Care Service Corp. had 1.39 million individual members, compared with 1.64 million as of Dec. 31.
The decline in individual members is even greater when compared with the first quarter of 2015. A year ago, HCSC had nearly 1.9 million individual market members.
Despite the decline in individual enrollment, the insurer set aside $431.5 million in reserves during in the first quarter to account for losses expected in its 2016 ACA business, according to first-quarter financial statements filed this week with the Illinois Department of Insurance.
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Though it was more a TKO than a straight-up ruling, the Little Sisters of the Poor prevailed at the Supreme Court on Monday in their fight against the ObamaCare contraceptive mandate.
True, the justices made clear that they were not ruling on the merits, which is why so many headlines speak of the court’s having “punted” on the case. Even so, in a unanimous decision they made the path forward much easier for the sisters and much more difficult for the Obama administration.
To begin with, the justices vacated the lower-court rulings the sisters were fighting. The parties, the court said, should have another opportunity to work out a way to deliver contraceptives that doesn’t violate the religious objections of the Little Sisters and their co-plaintiffs.
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The third open enrollment period (OEP) for the public exchanges concluded in January. Many carriers—both early-OEP entrants and “wait-and-see” latecomers—believed this new market would achieve stability and sustainable margins in its third year. However, recent events— including carrier turnover (both entrances and exits), plan terminations, and pricing volatility—suggest the market is still in flux.
One reason for the flux is the variability of individual market financial performance many carriers have disclosed publicly. For some carriers, significant losses are causing marked changes in enterprise-level capital, cost structures, and strategy. Early indications of 2015 performance suggest aggregate negative margins may have doubled; to date, however, only 86% of carriers have released preliminary data publicly. We anticipate that our estimates will evolve as more information is released, such as final 3R results and rebates, as well as 2015 claim run-out and adjustments. Whether carriers’ performance in the individual market will improve in 2016 remains unclear.
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District Court Judge Rosemary Collyer has ruled for Congress in House v. Burwell, a case challenging the authority of the executive branch to pay Obamacare subsidies for which no money has been appropriated.
These are not the highest-profile subsidies; they’re something called the cost-sharing reduction, which lowers the deductibles and out-of-pocket expenses for families buying silver plans who make less than 250 percent of the poverty line. The federal government has paid the insurers a lot of money that wasn’t appropriated, and the House has sued to stop that.
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