Real Life ObamaCare@ Consequences: Buckeye Edition

At the risk of beating a dead horse, here's the current state of Ohio's individual health insurance market:

Aetna, Assurant, Anthem, Humana and Medical Mutual of Ohio (MMO) will no longer write any child-only policies (where "child" is defined as "under age 19"). MMO had not made this decision final until after the 23rd, so any such applications submitted have been returned. In addition, MMO is opening itself up to major adverse selection, er, uh....has announced that "dependents under the age of 19 who apply as new business and part of a family plan will be eligible for coverage year-round." In other words, no "Open Enrollment" necessary.

It actually gets a bit more convoluted, but that's the gist.

Anthem also addressed the grandfathering issue pretty much head-on, as well. Parents with grandfathered plans will be able to add their under-19 aged kids; they'll still need to submit an application for underwriting (to assign the proper risk category and price), but won't be subject to decline for medical reasons, and (disclosed) pre-existing conditions will be covered.

I predict that's going to be the next major battle-ground (or at least one of them), by the way. The new rescission rules are pretty clear-cut, so carriers are going to have a very real incentive to pay close attention to these "minor" apps.

How's that, you ask?

Simple:

"Rescission is permitted only for an act, practice, or omission that constitutes fraud, or an intentional misrepresentation of a material fact, as prohibited by the terms of the plan or coverage. Rescission is not permitted in the case of inadvertent misstatements of fact." [emphasis added]

Who makes the call as to what was "inadvertent" and what was "deliberate?" Methinks that the application will be even more important for carriers going forward. This is another example of why having to "pass the bill to learn what's in it" is so fraught with danger.

[Hat Tip: FoIB T Shook]

Post This, Obamacare!

Retiree's of 3M, makers of Post-It Notes and Scotch tape will see their retiree health insurance go away courtesy of Obamacare. As more companies weigh the cost of providing health insurance against the predicted rise in health insurance premiums and additional government reporting requirements, dropping health insurance becomes a foregone conclusion.

When it is less expensive and less painful to drop health insurance benefits than it is to maintain, companies large and small, as well as individuals, will make the obvious choice.

Problem is, the drafters of Obamacrap anticipated most people who get health insurance through their employer would continue to do so.

Given that almost no one in Washington, from Obama on down through the Cabinet and Congress have no clue how the business world works, it is not surprising that they did not anticipate the backlash of resistance to more government interference in the private sector.

"Health care options in the market under the health care reform law became better," said spokeswoman Jackie Berry, adding that taking retirees off the 3M group plan would save money for both 3M and retirees.

The move is part of a longer-term trend by employers to get a grip on the ballooning costs of retiree benefits. Most employers already have done away with the rich pension plans of the past and switched to 401(k) plans, under which they limit their exposure to future costs.

When ERISA imposed new rules on retirement plans in 1974 almost no one in government anticipated the mass cancellation of traditional retirement plans that followed. 

Just like Obamacrap, the idea behind ERISA was to impose "consumer protection" rules on businesses that offered retirement plans. Employers dropped defined benefit plans like a hot potato in the years immediately after ERISA and never looked back. The PBGC which was created to provide insurance for underfunded retirement plans has struggled ever since to cover benefits from terminated retirement plans that were underfunded.

The recent recession would have most likely torpedoed the PBGC if not for the fact very few publicly traded companies offer traditional retirement plans.

3M may be one of the first large employers to take this step in response to health reform, but it's not likely to be the last.

"I suspect they're ahead of the game in terms of arriving at this decision," said Henry Van Dellen, who heads the health and benefits practice at Aon Consulting. "Practically speaking, this likely will happen with a lot of employers."

Will Obamacrap transform employer group health insurance into a sequel to ERISA?

If Obamacrap is not repealed or gutted you can count on it.

Medicare Advantage Plans Go Poof!

Roughly 21,000 seniors will lose their Medicare Advantage Plans (Medicare Part C) in 2011. According to the Chicago Tribune:

A state agency says insurers have notified about 21,000 Iowans that they will no longer provide the Medicare Advantage plans in 2011.

Under the plan, Iowa seniors get their health care insurance through a private company, not the government Medicare program. The plans provide prescription drug coverage as well as medical and hospital coverage.

Seniors in Georgia will be facing similar issues. Cut backs in funding under Obamacare plus restrictive rules CMS has applied to insurance companies offering Medicare Advantage and PDP's have resulted in many companies opting to withdraw from the market rather than deal with government bureaucracy.

People who lose their Medicare Advantage Plan have the option of returning to traditional Medicare and picking up a Medigap (Medicare supplement) plan to pay for things not covered by Medicare.

Grand Rounds: Minimalist Edition

Sharp Brains blogger Alvaro Fernandez hosts this week's roundup of interesting medblog posts. It's done list-style; each entry is a helpful summary.

Obamacare Delivers Silent Tax Increases

[Welcome NRO readers!]

The Patient Protection and Unaffordable Care Act (Obamacrap) is delivering silent tax increases to fund this mess. In truth, the $1 trillion law is a giant tax increase and that figure doesn't include hidden taxes or those that will follow at the state level to fund Medicaid coverage for roughly 15 million people over the next few years.

The snake oil peddlers sold the public on the idea that their elixir would cure all your ailments.

The folks at Kiplinger report "13 Tax Changes are on the Way". Sounds like politician speak.

Tax changes.

Not tax increases, changes.

Tax number 1 on tanning services is obvious. Unless you are John Boehner it probably doesn't affect you.

Tax number 2, a small business tax credit sounds nice but very few companies will actually qualify. Even left wing NPR acknowledged few businesses will ever see a dime of the tax credit.

Most of the taxes listed in Kiplinger numbered 4 - 13 are sneaky unless you think about them.

Elimination of a deduction employers now take for providing Medicare Part D prescription drug coverage to their retirees to the extent that the federal government subsidizes the coverage

Doesn't sound like much but it is. Many large employers have already announced they will be dropping the Part D benefit for retirees. When that happens, those who want to continue Part D coverage must secure coverage from the few health insurance companies that are still offering the plan.

While not a direct tax, it does mean retirees will have to use their own money (which for many is limited any way) to purchase coverage on their own. Factor in the closing of the donut hole in Medicare Part D which will result in higher premiums for Part D, seniors get a double whammy.

Corporations that drop that benefit will pay more in taxes unless they find another write off.

6. A limit on the amount that employees can contribute to health care flexible spending accounts to $2,500 a year, but the cap won’t take effect until 2013. This was previously left to the employer's discretion, with many firms choosing a limit of $4,000 to $5,000 or so

7. A ban on using funds from flexible spending accounts, health reimbursement arrangements or health savings accounts for the cost of over-the-counter medications, starting in 2011.

If you have an FSA or HSA the new limits mean you can shelter less income from taxation. The result is higher taxes. Item number 7 fails to inform readers they can still use FSA/HSA/HRA funds to pay for OTC meds but only if they have a doctors prescription.

That means a trip to the doc that is a hidden tax because it is money you would not have spent if not for Obamacrap.

Beginning in 2013 if you don't have health insurance and/or and HRA/HSA/FSA to cover out of pocket medical expenses you will have to spend 10% of your AGI before you can claim a partial write off on Schedule A of your income tax form.

10. A new 40% excise tax, beginning in 2018, on high-cost health plans, levied on the portion that exceeds $10,200 for individuals and $27,500 for families. The provision is aimed mostly at gold-plated plans offered by employers, although it can affect individual policies

11. A new tax on individuals who don't obtain adequate health coverage by 2014 -- this is often referred to as the individual mandate.. The tax is to be phased in over three years, starting at the greater of $95, or 1% of income, in 2014, and rising to the greater of $695, or 2.5% of gross income, in 2016.

This is what you call damned if you do, damned if you don't.

If you purchase health insurance that meets Obamacrap guidelines most everyone will be subject to the 40% excise tax, but if you don't buy health insurance you will pay a tax.

They've got you coming or going.

A tax Kiplinger missed is the one imposed on anyone in business that spends more than $600 with a vendor in 2011 and later. Business owners are required to generate a 1099 for any vendor where they purchase more than $600 in goods or services. That means if you own a business and buy more than $600 in gasoline, electricity, telephone, internet, cell phone, natural gas or water you must generate a 1099 for those businesses. Buy more than $600 from Office Depot or Staples?

Generate a 1099.

Do you pay a cleaning service to empty the trash in your business? Pay a landscaper? Provide a coffee service for employees and guests?

1099. 1099, 1099.

It will cost you money to generate those 1099's. Money that could have been used to create jobs.

This is one of the most ill conceived pieces of legislation to come down the pike in a long time and it is a jobs killer that will further stall the recovery.

Just another stupid government trick from the folks who gave us Government Motors.

Monday morning "Told ya so!"

As we've previously pointed out, ObamaCare©'s impact on the delivery of health care is likely to get ugly, and here's another piece of evidence supporting this:

"The U.S. healthcare reform law will worsen a shortage of physicians as millions of newly insured patients seek care"

Says whom?

Says the Association of American Medical Colleges in a statement released late last week. And they don't mean "someday," they mean "right around the corner:"

"While previous projections showed a baseline shortage of 39,600 doctors in 2015, current estimates bring that number closer to 63,000, with a worsening of shortages through 2025"

Ooops.

And it's not just those wing-nut doctors. Left-of-center NPR reports that:

"In the latest episode, Obama's health officials published a sweeping amount of information on 4,000 individual insurance plans ... The data include plans' prices, descriptions of benefits, and — to insurers' consternation — estimates of how many applicants each plan rejects. It's all on HealthCare.gov."

Bob's already pointed out just how drain-bramaged this "tool" actually is, but the folks at NPR tell us that the information it kicks out is, at best, misleading. For example, the site tells prospective applicants the percent of applicants a given insurer rejects, without explaining the basis for the rejections (e.g. incomplete forms, mismatched identification information ,etc).

So not only don't we (or they) know what's in the bill (cf: McDonald's) but they can't even implement a simple website.

[Hat Tip for the NPR link to FoIB Holly R]

Principal Out, UHC in... [UPDATED!]

[Scroll down for update]

From today's email (9/30/10):

"UnitedHealthcare has entered into an agreement to renew medical insurance coverage for The Principal®'s commercial medical plan customers."

The $64,000 Question, of course, is why? They've scheduled a conference call for tomorrow (Friday) afternoon, from which I hope to learn whether or not ObamaCare© played any role in this. While it's tempting to believe so, the nHealth kerfluffle demonstrated that it's not necessarily the case.

We'll keep you posted.

UPDATE [Oct 1]: Well that was interesting. Just got off a conference call with "teams" from Principal and UHC, and have several pages of notes. Here are some first impressions:

Principal's apparently been shedding medical business for a while; that line currently makes up something like 15% of its business. So this is not exactly "unexpected." As a result, they're transitioning their health business to UHC; this process is anticipated to be complete within the next 36 months.

Second, the Principal's team was adament that this decision was not driven primarily by ObamaCare©; if one accepts the prior point, this makes sense. They did acknowledge that, again due to their diminishing book of business, they are ill-equipped to handle the onslaught of ObamaCare©-driven changes.

Another key point is that as a result, all of their groups will (eventually) be "un-grandfathered." While both teams acknowledged this reality, they did try very hard to downplay its significance. Make of that what you will.

Finally, and consider this an IB "scoop," we were told that the Mayo Clinic will be in-network with UHC as of November 1.

I'll be happy to share more, just ask away in the comments.