Evergreen Health Cooperative must pay $24.2 million to its biggest competitor because of an Affordable Care Act program that aims to level the playing field for insurers taking on riskier customers from state health insurance exchanges.
Evergreen, an innovative insurer established under the new law by former Baltimore Health Commissioner Peter Beilenson, is not alone in having to pay for its healthier clients. Kaiser Permanente of the Mid-Atlantic States owes $14.7 million and Aetna will shell out $11.8 million.
An organization representing state health insurance co-ops criticized the Affordable Care Act’s risk adjustment formula as a failure causing difficulties for the nonprofit insurers created under the law.
The announcement from the National Alliance of State Health Co-Ops came a day after HealthyCT, the Connecticut co-op, was put under an order of suspension, signaling the co-op would start taking steps to shut down. Kelly Crowe, the group’s CEO, said the case was not a “one-off example.”
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The Obama administration suffered a setback in its efforts to strengthen the individual insurance market when a federal appeals court last week struck down an HHS rule barring the sale of certain limited-benefit plans as stand-alone products.
In Central United Life v. Burwell, the U.S. Court of Appeals for the District of Columbia Circuit overturned a 2014 HHS rule restricting the sale of fixed-indemnity insurance plans that pay policyholders fixed dollar amounts to cover medical services regardless of how much the provider bills. These plans, which are cheaper to buy than comprehensive plans but exclude pre-existing conditions, do not comply with Affordable Care Act provisions on minimum essential benefits or guaranteed issue.
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A nearly $150 million bill from the federal government has taxpayer-funded Obamacare plans angry, with some experts wondering if more co-ops could shut down in the coming months.
When the Obama administration last week announced payments under the risk adjustment program for the 2015 benefit year, the news wasn’t good for the 10 Obamacare consumer oriented and operated plans, or co-ops, that remain out of the 23 original plans, which owe more than $150 million to the government.
On Tuesday, the payments claimed one victim, as Connecticut’s insurance regulator shut down the HealthyCT co-op after it learned it owed $13.4 million in risk adjustment payments.
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A federal appeals court has ruled that consumers must be allowed to buy certain types of health insurance that do not meet the stringent standards of the Affordable Care Act, deciding that the administration had gone beyond the terms of federal law.
The court struck down a rule issued by the Obama administration that barred the sale of such insurance as a separate stand-alone product. “Disagreeing with Congress’s expressly codified policy choices isn’t a luxury administrative agencies enjoy,” the United States Court of Appeals for the District of Columbia Circuit said on Friday in a decision that criticized “administrative overreach” by the Department of Health and Human Services.
At issue is a type of insurance that pays consumers a fixed dollar amount, such as $500 a day for hospital care or $50 for a doctor’s visit, regardless of how much is actually owed to the provider.
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Health insurance premiums have risen rapidly in the three years since the launch of ObamaCare’s exchanges, despite the law’s multibillion-dollar efforts to keep a lid on them. ObamaCare created three mechanisms for bailing out insurers if they lost too much money through the exchanges — the so-called risk corridor, risk adjustment and reinsurance programs. The hope was that the prospect of federal cash to cover potential losses would yield lower premiums.
Cash has indeed been flowing from the federal Treasury — but it hasn’t done much good. According to a new report from the Mercatus Center at George Mason University, the Obama administration has given health insurers 40% more in bailout funds under the reinsurance program than originally planned. Yet premiums still rose by as much as 50% in some parts of the country.
Things will only grow worse. Next year, the reinsurance program will end. Insurers will likely respond by hiking premiums even more or withdrawing from the exchanges. Many have already opted for the latter course because of significant losses.
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With insurers struggling to make money and access to plans severely limited, top South Carolina health officials warn the Obamacare health insurance marketplace is on the verge of collapse.
Obamacare was supposed to create a competitive platform for customers to shop for coverage. But in most South Carolina counties, HealthCare.gov more closely resembles a monopoly dominated by the largest private health insurance company in the state — BlueCross BlueShield.
Next year, access to Obamacare in South Carolina will likely become even more limited. United Healthcare, which sells Affordable Care Act plans in five counties and in several other states, has announced it will leave most markets in 2017. The company estimates it lost $475 million on Obamacare customers across the country last year.
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Last week, the Department of Health and Human Services (HHS) released the payment amounts that some insurers owe and some insurers will receive through the Affordable Care Act (ACA) risk adjustment program. As the law’s implementation moves forward, it is increasingly clear that the controversial risk adjustment program presents a fundamental trap, a sort of “damned if you do, damned if you don’t” scenario. To the degree that risk adjustment works, insurers individually lack the incentive to enroll the young and healthy people needed for the ACA’s complicated structure to survive. To the degree that risk adjustment doesn’t work, large arbitrary transfers between insurers occur that produce significant uncertainty in the market.
The risk adjustment program is budget neutral—within each state insurers with healthier enrollees pay the aggregate amount that insurers with less healthy enrollees receive—and is intended to make insurers more-or-less indifferent to the health status of their enrollees. The Obama administration appears to recognize the importance of risk adjustment for the ACA’s future as HHS recently convened a day-long conference and released a 130-page paper on the subject. This conference was partially motivated by the strong complaints, particularly by newer and smaller insurers, that the program unfairly benefits large, established insurers.
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This refrain may sound familiar: If you qualify for Medicaid but you like your “Obamacare” plan, you can keep it … unless you can’t.
That’s the confusing and mixed message residents are getting from the state and insurance companies now that Louisiana has become the 31st state to expand Medicaid coverage under the Affordable Care Act.
About 375,000 people — mostly the working poor — are expected to get free health insurance coverage through the expanded program, which is mostly subsidized by the federal government.
Tens of thousands of those Louisiana residents — the total is not known — already have health insurance policies through what is called the federal marketplace, an Obamacare program that pays most of their insurance premiums.
The state says people who bought individual policies through the federal marketplace but now qualify for Medicaid under the state expansion can keep their Obamacare plans if they prefer them over Medicaid. They just have to keep paying their share of the premiums.
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Last week, the GOP kept a promise to the American people by delivering a replacement plan for Obamacare.
The plan — part of the party’s “A Better Way” campaign — was unveiled by House Speaker Paul Ryan, R-Wisc. “What we are laying out today is a first-time-in-six-years consensus by the Republicans in the House on what we replace Obamacare with,” he said.
The plan is a good one. House Republicans have laid out several core reform proposals their party can rally around. As I note in my new book The Way Out of Obamacare, a plan like this one would be a vast improvement over the unmitigated disaster that is Obamacare.
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