All we know is that UnitedHealth has threatened to pull out of exchanges in 2017.
It’s a curious situation that illustrates how Obama and the federal government might have outsmarted themselves when it comes to the future of Obamacare by failing to adhere to the effective date provisions of the Act, arguing and winning the right to pay MORE PEOPLE PREMIUM ASSISTANCE under the Act (King v. Burwell) and the government’s utter failure to recognize that the cost of NEEDED healthcare services was and remains a major issue in our ongoing healthcare crisis.
First, the federal government’s failure to adhere to effective date provisions of the Act. You can look these up, but likely you know some of the changes to effective dates including extension of payments to Medicare Advantage plans in 2011, delay in the employer mandate, 2015, delaying sign-up deadline, the list goes on and on.
What would that mean to an insurer who’s threatening not to participate for the 2017 benefits year? Well, look no further than the Affordable Care Act that provides for the EXPIRATION, the stop of money for risk reassurance and risk corridor payments as of 2016.
These two sources of money (the third risk adjustment which uses no federal funds but shifts money from one health insurer to another continues) STOP under the Act in 2016…For the 2017 benefits year. Probably not coincidentally, the date UnitedHealth threatens to no longer participate in the exchanges.
RISK REINSURANCE is where insurers get money if an enrollee’s costs exceed a certain amount—they get paid money for people who make more claims under their health insurance and RISK CORRIDORS limit overall LOSSES AND GAINS that an insurance company has and LOSSES are paid by the government, HHS (CMS).
OK, so put the two together. The federal government has shown ongoing willingness to ignore statutorily provided deadlines and effective dates, so if you’re an insurer what would you do with a date of “after 2016” that threatened to remove these payments to you? Yep, you’d give the heads up that you’re “considering” pulling out of the program.
I believe the UnitedHealth is angling for extension of the Risk Reinsurance and Risk Corridor programs. After all the feds have played fast and loose with dates all along.
There’s an additional twist and that’s in the reports (for example see, “Health Law’s Program to Ease Insurers’ Risk Has Shortfall,” October 1, 2015, by Anna Wilde Mathews and Stephanie Armour, THE WALL STREET JOURNAL) that explains that CMS has delayed full payment of what insurers thought they were getting under the RISK CORRIDOR provisions.
Sure, they’ll get paid, eventually, according to the feds, but again, the payments are delayed. Because there are no hard-and-fast rules regarding which company gets paid first or by when, UnitedHealth may be looking for some special treatment in the form of a guarantee that they’ll get their money first—A priority. The program, remember is set to expire after 2016 at which point any back amounts owed will depend on money from a different source.
Second, the feds wanted to pay more people not more money. In King v. Burwell, the Federal government won the right to pay premium assistance to all enrollees through exchanges.
Here’s the next way the Feds may have shot themselves in the foot. Remember King v. Burwell which gave us the situation of the federal government arguing to pay MORE PEOPLE PREMIUM ASSISTANCE? Yep, and they won, too. They WON the right to PAY more individuals premium assistance. It’s the Obamacare hyper-focus on enrollment at all costs philosophy.
Focused on “enrollment,” the feds were petrified about anything that might limit the less than stellar enrollment they’ve achieved and limiting premium assistance in accordance with the statute would have done just that. But that PREMIUM ASSISTANCE AMOUNT is not endless and relies on the Feds paying it. The Congressional Budget Office warns:
“The ACA specifies that if total exchange subsidies exceed a certain threshold in any year after 2017—a condition that CBO and JCT expect may be satisfied in some years—people will be required to pay a larger share of premiums in the following year than would otherwise be the case, thus restraining the amount that the federal government pays in subsidies,”(CBO, 2015, page 3).
OK, so if those payments get too high and they’re dependent on the regional costs of the second lowest level silver plan in any state, then CONSUMERS will be charged a greater share. Therefore, the Federal government is hopelessly trying to keep prices of second level silver plans down (hopelessly, just look at Obamacare increases this year).
So, the exit of UnitedHealth that has been acknowledged as one of the insurers offering cheaper rather than more expensive plans [According to MarketWatch, (11/19/2015, Steve Goldstein, “UnitedHealth Suggests Obamacare is Being Gamed”) UnitedHealth was “…one of the lowest-cost providers,” according to Cynthia Cox of Kaiser Family Foundation], increases fed payout and likely accelerates the warning of the Congressional Budget Office that the “threshold” is met sooner rather than later.
Finally, the deception of Obamacare is that it’s health “reform.” Before, during and after Obamacare, the cost of NEEDED medical services is not only world-high in the US but continues to rise.
As the Congressional Budget Office explained the rise in Obamacare plans this year (see CBO January and March 2015) one of the way that was achieved was the old insurance trick of narrow networks. However, that situation has gotten much criticism and predicting 2016’s jump in Obamacare premiums, the fact that broader networks would have to be provided was specifically addressed by the CBO.
UnitedHealth’s CEO Stephen Hemsley confessed the same strategy, that his company had “…kept costs down by selling plans with small doctor networks,” December 1, 2015, Reuters, “UnitedHealth CEO defends possible exit of Obamacare exchanges.”
But, naturally, as pointed out by the CBO, UnitedHealth is not alone in its regret that it actually has to provide broader networks so that people can actually see providers for needed healthcare services, so that can’t be the problem UNLESS UnitedHealth is looking to somehow be exempt from current and anticipated legal changes designed to protect consumers from these narrow networks. (See Modern Healthcare, “Network squeeze: Controversies continue over narrow health plans,” Bob Herman, 3/28/2015).
The truth of Obamacare, that it’s not a reform that’s workable faces nothing but trouble with the withdrawal of UnitedHealth from exchanges and that’s why I believe the Obamacare has shot itself in the foot with its deceptive sale of the law to the American public and why UnitedHealth is trying to gain advantage by “threatening” to leave the exchanges.
