Open enrollment for 2016 health coverage has begun, and people across New Mexico, Nevada, Oregon, Hawaii and other states are using HealthCare.gov to search for quality health coverage that they can afford. Already impacted by average rate increases of 11.4% in Nevada, 24% in Oregon, and 30% in Hawaii, HealthCare.gov is proposing to add a new user fee of 3% on top of existing premiums for these states.

Vendors failed to deliver, and four affected states used HealthCare.gov for free.

User fees charged on top of health plan premiums were expected to allow state marketplaces to be financially sustainable without additional federal support. But the original technology vendors in states like Oregon, Nevada and Hawaii never delivered functional exchange technology – and hundreds of millions in federal taxpayer dollars later, those states moved from their failed technology to using the HealthCare.gov platform – free of charge.

This new set of HealthCare.gov fees is likely just the beginning of new federal technology fees for states using HealthCare.gov – placing affordable plan premiums continually at risk.

HealthCare.gov user fees will need to be increased further because for the last three years, the federal government has been undercharging or not charging states at all for the costs of HealthCare.gov. Federal policy and a recent Supreme Court ruling confirm that Congress directed HealthCare.gov to be financially self-sustaining, just like state marketplaces. But the federal government has never made HealthCare.gov self-sustaining and in 2014, 2015, and 2016 has taken funding from other programs to recover its over $600 million deficit incurred from running HealthCare.gov at a loss. The only direction HealthCare.gov user fees and plan premiums can go is up.

New proposal for technology use fees in Nevada, Oregon, New Mexico and Hawaii.

Last month, hCentive sent warning letters to Insurance Commissioners in HealthCare.gov states alerting them that the federal government has declared that current fees charged to carriers do not fully support the costs of running the multibillion dollar federal healthcare exchange. Days later, the federal government announced it intends to levy hundreds of millions of dollars in new HealthCare.gov technology use fees on Oregon, Nevada, New Mexico and Hawaii – fees that could harm these states’ marketplaces. The proposed new fee – 3% of premiums – is on top of existing fees states need for local marketplace operations and will hamper states’ ability to ensure state specific rules and policies are enforced, and local community needs are met.

Looking to the private sector for HealthCare.gov alternatives that are better suited to states’ needs.

Given these new federal rules and responsibilities for states using HealthCare.gov, it should come as no surprise that states are realizing HealthCare.gov is going to continue to increase in price, was not built with states’ unique needs in mind, and therefore, many states are actively exploring other options. They are right to do so.

Technology firms like hCentive – with its State Exchange Lease offering – are well positioned to offer financially sustainable solutions to states as they consider alternatives to HealthCare.gov. Tell us what you think.

Josh Schultz (josh.schultz@hcentive.com) is the Senior Analyst for Government Solutions at hCentive. In this capacity, Josh coordinates all public policy and regulatory initiatives affecting hCentive’s public sector business and works to identify new avenues for states to benefit from hCentive’s financially sustainable state exchange technology. Before hCentive, Josh managed contracts with the New York State of Health Marketplace’s navigator and assister programs.
Michael Sasko (michael.sasko@hcentive.com) is the Vice President of Government Solutions and Commercial Products at hCentive. Mike brings extensive health insurance exchange experience having served in leadership roles on major government projects to include Covered California and the Federal Small Business Options Program (SHOP). On the commercial side, Mike brings a strong employer focus having served as a former Director of Strategy and Innovation and as a currently licensed agent/broker.

 

11 million enrollments and a successful second open enrollment later, the Obama administration should be happy. Enrollment numbers are higher than initial projections, and the signs of a working health reform are omnipresent in the system. Health insurance carriers are adapting to the new marketplace scenario, and are offering better plans at better prices to marketplace shoppers. In addition, citizens are embracing the health insurance marketplace. Collectively, both the providers and shoppers are maturing with the system, and all of this is fueling the success of the ACA.

Out of the shoppers this year, about 4.2 million are returning customers who have revisited the improved marketplace to check their existing plan, weigh available benefits, and upgrade their plans for better benefits. A noteworthy aspect of these shopping trends is the underlying shopper aggression for utilizing market competition to find better health plans with cheaper premiums. Let’s take a look at the behavior of returning and new shoppers, and how they interacted with the marketplace to find the plan that fits their requirements.

The first segment of people is returning customers who automatically reenrolled with their previous plan. Roughly 2 million people chose to stay with their existing plan, and none of them revisited the exchange to weigh available options. Of the remaining shoppers in the 4.2 million returning customers, a little more than half went for new insurance plan this year, while the other segment continued with their existing plan. Nearly 1.2 million people enrolled with a different plan in the second enrollment. While this might not seem like a big number in comparison to the enrolled 11 million, past health insurance industry trends say that this is a pretty big number.

According to CMS, a lot of insured are actively and aggressively seeking better insurance options, and this high number of active consumers is surprising for the health insurance industry. At a preliminary stage, there are two possible reasons why revisiting shoppers looked for new health insurance. The primary reason is cost. Owing to entry of new insurers in the market and adjustment of last year’s premium prices on the basis of available data, a lot of insurance plans offered cheaper health insurance with nearly similar coverage. Another factor that boosted plan switching on cost basis was the subsidy averaging, which considers the cheapest plan available in a consumer’s area while issuing premium tax credits to consumers. So, people who had the option to retain their older plan were likely to be subject to a higher cost as a cheaper plan was available in the region, and the subsidies were to be calculated accordingly. Naturally, a lot of people decided to switch.

The second probable reason for shopping is coverage quality. To retain profitability and market edge, a lot of insurance plans have limited their physician networks. A lot of plans have also included high out of pocket costs. It is possible that a lot of people changed their plans because they wanted access to a wider network or limited burden of deductibles, co-payments and the works. Add the remaining number of 4 million plus people who were using the exchanges for the first time, and you will have considerable shopper movement across the marketplace.

While it is still early to stay exactly what factors contributed to this aggressive shopping surge on the health insurance marketplace, one thing is certain – as the insurers and shoppers mature in the ACA model, a lot of streamlining will automatically happen in terms of coverage options, competitive pricing, and physician networks. Both these forces are still moving to a state of equilibrium, and in the next couple of years, the nature of shoppers will change to reflect that stability. For now, health insurance shoppers are working to make sense of the marketplace and aggressively switching health plans for arriving at their desired combination of price, coverage, and network.

Like it or not, King v. Burwell is moving ahead, and the U.S. Supreme Court heard arguments from both  sides on earlier this month. A lot of attention has been devoted to the case, with each side presenting its case. So much attention for six words – the ACA is comprised of 381,517 words and, if you count the additional regulations the word count jumps to 11,588,500. So this is a real life example of the power of words.

As per the plaintiffs in King v. Burwell, the language of the ACA only allows those states that have their own exchange to provide premium tax credits to citizens shopping through the exchange. For 37 states who are using the FFM, the law does not state anything about the insurance subsidies, and as a corollary, the ACA is illegally providing insurance subsidies to those shopping through the Federal Marketplace. If the Supreme Court rules in favor of the plaintiffs, all these people will lose their insurance subsidies unless their state builds an exchange and has it live by November 1, 2015.

It’s even more ironic when you consider the size and impact these subsidies have on people and what would happen if all these subsidies were taken away, all because of six little words that make up the ‘controversial’ language of the law. Millions of people stand to lose their subsidies in near two third states, all because of six words. Since all of this is based on the pretext of words, what do linguists have to say on the matter? Do the plaintiffs have a strong case or are they simply making a mountain out of a molehill?

Linguists might be the most interesting to participate in the debate and unravel the linguistic applications of those six words that have launched this controversy. As per the language in the law, linguists think that the Obama administration has the upper hand in the case because of some simple rules of the English language.

As per the language of the controversial text, the law presumes that each state will have its own exchange. If a citizen shops through that state exchange, the state is legally allowed to issue premium tax credits on the basis of conditions laid out in the ACA. If, however, the state does not have an established exchange marketplace, the law does not explicitly state anything about the premium tax credits, it only talks about the case where the state does have an exchange. In simpler words, the federal government is neither mandated nor prohibited from providing premium tax credits to the state’s citizens. It is a matter of choice, and the administration can go any way about it. However, if the administration is providing tax credits in one state, it is obligated to offer the same in all states as per equal protection for all.

For understanding this, another linguist put forward a popular example of definite description problem to explain the situation. The problem states “the present King of France is not bald,” but this statement is ambiguous because the presumption of the statement, that there is a King of France, is not true as France is a Republic. Hence, the statement holds no value. Similarly, in King v. Burwell, the statement presumes that the state has an established exchange, and if that is not true, the subsidy clause is meaningless. The language of the law itself holds no restriction on the subsidies. On the other hand, if the lawmakers explicitly wanted to restrict the scope of subsidies to only those states who have their own exchange, they could have used ‘only when’ to limit the subsidies to those who shopped through the state exchange. Since the lawmakers did not do that, the federal government can choose to give subsidies or not, without any restriction. Naturally, no one can force the federal government to discriminate between two states over subsidies, and under equal protection, they need to provide subsidies for all.

It will be interesting to see how this plays out. All eyes are already looking toward June/July timeframe when the court is expected to issue its decision. Until then, I expect these aforementioned six words to be continuously debated.

Completing your tax return this year will be harder for most due to the requirements of the ACA. For the majority of Americans, the process will only require minor changes that can be covered by simply a checkmark on the filing form, nothing more. For others, however, health insurance reporting will require a whole range of forms that cover their insurance coverage status, Premium Tax Credits and reconciliation of availed tax credits with their actual annual income.

Things will be even more convoluted for people who did not have minimum essential coverage for the year. These people will be required to pay penalties under the new setup. Even then, there is a range of conditions attached to what qualifies as ‘minimum essential coverage.

With all these variables, it gets a little hard to move through the process. For ease, I am listing below the 3 paths that checks all Obamacare requirements in your tax filing and guides you through the confusion.

Path #1

This is the simplest path and, fortunately, applies to nearly 80 percent. If you and each member of your family had health insurance throughout the year, then you simply need to check the box titled ‘Full-year coverage’ in one of 1040A, 1040Z, and 1040EZ forms. That’s it. You do not even have to include any proof of insurance as the government should be able to pull that from your records. Done and dusted.

Path #2

This is where it gets trickier. For the 6% of people who bought health insurance off of a marketplace, there are a couple of things to check. File the 8962 form, show the Premium Tax Credits you qualify for according to your annual income and reconcile this number with the tax credits paid toward their health plan in the course of the year. Once you have done that, there are two forks in this path. The first fork will come into play when you made less money than projected or had a life event, such as the addition of a new member to your family, marriage, etc. In that case, entitled premium tax credits will be more than the advance payments made to your health plan, and you will receive the remaining amount as a tax refund.

The second alternative path comes into action when you had more income or fewer family members as noted at the beginning of the year. In that case, you might have to pay some of those tax credits back to the government in your tax filing. For both these alternate sub-paths, you need to use the 8962 form for reconciliation.

Path #3

This is where the penalties come into the picture. If you or any of your dependents did not have health insurance for each month of the year, you will be required to pay penalties. Unless you are exempt from the health insurance penalty, you will have to pay according to the slab you fit in. The penalty ranges from $95 per uninsured adult to $2,448 per uninsured adult, depending upon the family income. On the other hand, if you qualify for exemptions, then you need to have an Exemption Certificate Number that you can submit along with your tax filing.

The ECN has its own share of formalities and processes, and you need to have it handy for completing the filing process. An ECN is available from the marketplace that issued the exemption and is a mandatory document for completing the exemption formalities. This path is the most convoluted of all, with Form 8965 requiring myriad proofs and documents to process your penalties or exemptions.

Among these three paths, you will find that at least one of these leads to complete tax filing. While Path 1 is pretty straightforward, Path 2 and Path 3 can confuse the most seasoned of tax payers. If you are stuck with either second or third, it makes sense to take the help of tax consultants who can help you with forms, procedures, alternatives, and more.

It was just announced that on March 4, 2015, the United States Supreme Court will hear augments regarding a controversial piece of text in the Patient Protection and Affordable Care Act that could remove the availability of subsidies in states which decided to go with a federally facilitated marketplace.

The case is based on a selective piece of text in the Act highlighting the availability of insurance subsidies in only those states which established their own state exchanges. In case the United States Supreme Court rules in favor of the challengers, as many as 4 million people could lose health insurance subsidies across 37 states which opted for the federal marketplace.

In response to this, the Obama administration has made it clear that it was never their intention to limit the health insurance subsidies to only those who were shopping through state exchanges. The CBO, too, established that the tax credits will be available nationwide, and inculcated this cost while estimating the overall impact ACA will have on the federal budget. The appellants, on the other hand, are fixated on a four-word phrase ‘established by the state’ for exchanges that allow subsidies in the form of tax credits to people buying a health plan off that exchange. As the Court hears the case and prepares to pass a verdict, some states are already working to circumvent this situation and, thus, keep their subsidies intact.

States like Delaware and Illinois are already leading the way with a complete response plan. The state of Delaware plans to implement a technical workaround that will prevent them from losing their insurance subsidies. Illinois, on the other hand, is trying for a legislative fix that would connect them to the subsidies.

Delaware’s Workaround

Out of all other states, Delaware’s case is pretty interesting. Back in 2010, Delaware decided that its small size would hinder its ability to build a state exchange. Delaware did side with the federal insurance exchange, but state officials are confident that they will not lose the subsidies as they are in control of a ‘Delaware version’ of the federal insurance exchange, which is almost like having a contractor managing the state run health insurance exchange. If the court agrees with this definition of the state-based marketplace, Delaware will be in a favorable position and will be allowed to retain its subsidies.

If this option works out for Delaware, it will set a precedent for other states to follow suit. However, having this legislative change in their favor will be a tough nut to crack, and Delaware might not be able to make this technical workaround.

State Partnerships with Federal Insurance Marketplace

Aligned with the definition of state insurance marketplaces, some other states have a ray of hope that will allow them to retain the subsidies. Six states, other than Delaware, are in control of some aspects of the federal insurance marketplace for their state, such as controlling the available health plans. In such situations, the states can be said to be in a partnership with the federally run marketplace, and hence might help them retain the subsidies through a legislative fix that recognizes these partnerships as state managed marketplaces. Illinois is one such state.

However, the problem with this legislative fix is that out of these six states, Illinois, Iowa, Michigan, and Arkansas will have Republican governors next term, and they are highly likely to shoot down this partnership theory. To avoid that, these states will need to make their move under the current administration.

Road Ahead

The road ahead is wrought with challenges, as even the fixes at hand have a low probability of working out. In case the United States Supreme Court removes the availability of these subsidies, states will be left with only the option of creating a state-based marketplace. States like Virginia, Pennsylvania and Mississippi are disgruntled over the fact that they are about to lose subsidies, while Delaware and Illinois are contending that their partnership with the federal marketplace should be enough for qualifying them for subsidies. The best possible outcome of the whole case would be a resounding rebuttal of Appellants arguments and retention of Obamacare subsidies across the federal exchange participant states.

More than 1 million people enrolled through the Obamacare marketplaces in the first half of the second enrollment. This strong surge extends from a functional exchange marketplace and a strong belief in the potency of the law. However, there still are some aspects of the law that are confounding shoppers in their search for the health plan. For instance, people with chronic diseases are still being discriminated against in a subtle way, the very thing ACA was created to avoid right from the beginning. This discrimination comes through inadequate information and barriers to care that health plans are erecting for people with preexisting medical conditions.

However with a new CMS rule, things are about to change. The new CMS rule toughens the standards for health plans participating in the exchanges by requiring them to present all crucial information about their plans. The new requirement is targeted at making health plans more transparent, medications more accessible and healthcare barriers more ineffectual. Let’s take a look at the three improvements this new rule brings.

1)  More information about the plans – When people are shopping for health plans, they are frequently frustrated by the lack of easy access to most important information about the plans, including information about medications, doctors and hospitals. With the new rule, insurance firms will have to provide all this critical information, on separate website if needed, to give completely accurate drug information and provider network details. CMS might also take this a step further by requiring health plans to fill a standard template of information that exposes all the necessary loopholes in the information and requires health plans to provide all of that information in a single, handy format that can be read by machines for processing through consumer specific tools that assist decision making.

2)  Access to affordable medication – Other than lack of complete information about plan coverage, enrollees with chronic diseases are also perplexed with the problem of finding affordable medication. Currently, most health plans partake in the practice of designing a drug formulary that keeps specialty drugs required by people with chronic diseases at the highest cost sharing level. This practice is currently gathering more steam across health plans, with as many as 41 percent of the Silver plans doing this in 2015, as compared to only 27 percent in 2014. Under this new rule, the states will be required to review these changes to check if the health plans are providing affordable care as they should be. The Department of Health and Human Services will also be participating in this review. Under the rule, health insurers will also be prohibited from changing this drug level design in the middle of the year, thereby preventing health plans from denying coverage to people who purchased health insurance precisely to cover these drug costs.

3)  Extended support to patients who switch health plans – Currently, when patients change their health plans, they are faced with cost and health challenges as they are unable to continue their treatment routine and meet costs while searching for a new provider who will take over their health coverage. This new rule from CMS makes sure that when patients move from one plan to another, the new insurer covers all care and medication cost for 30 days, even if the prescription drugs do not fall under the plan’s drug formulary. This new concept, called ‘transition care’, is gaining ground, with the administration pushing for as long as 90 days of complete cover. For people with chronic conditions, these cost sharing mechanisms are an impediment to quality healthcare access, and the CMS wants to complete do away with it.

With this proposed rule, the Obama administration is sticking to its original commitment of making healthcare affordable for people with preexisting conditions. Although the rule is not finalized yet, it is set to make an ocean of difference in the quality of healthcare and associated costs for people with chronic conditions under ACA. The health plans might show some resistance to the passing of this rule, but once done, the rule will bolster the continued support Obamacare is receiving from people with chronic medical conditions.

As the first segment of the second enrollment draws to a close, a lot of people are asking the standard question – what happens to me if I don’t have health insurance throughout 2014? Most people know that the individual mandate requires them to have health insurance in 2014, failing which they will be subject to tax penalties, but not everyone knows how much those penalties will cost. Contrary to what people believe, Obamacare penalties are not going to be tlight for families, and they are set to triple in the next financial year. So if you still don’t have health insurance, let’s see how Obamacare penalties can affect you at tax filing this year. Read more

Non-citizens are three times more likely to be uninsured than U.S. residents. With nearly 10 million legal immigrants living in the country, the high percentage of uninsured among them means a bigger target for Obamacare. During rollout last year, the Obama administration was extremely concerned about the health insurance status of this section, and implemented some methods to make sure that sufficient enrollments came through immigrants. As per the Affordable Care Act, legal immigrants are mandated to get health insurance under the Obamacare marketplaces or face tax penalties for non-compliance. Although enrollments have come through, the majority of immigrants have no idea of how their health insurance works, and how are they supposed to make use of it. Read more

Immigrants have long been a matter of concern for the Obama Administration. From the unknown number of undocumented immigrants in the country to the high number of uninsured in the immigrant population, the Obama Administration has been thinking of finding a way to handle both of these issues. A little earlier this year, the Obama Administration issued a notice to people who had not submitted sufficient documentation to qualify for subsidies and health insurance through the federal marketplace. Now in a big decision, the administration has decided that immigrants who are connected to U.S. citizens or permanent residents in a filial relationship and living in the country for at least five years will be allowed to work and pay taxes. However, the same ruling says that these immigrants will not be eligible for any kind of federal subsidies, whether it is ACA subsidies, Medicare or food stamps. Read more

In the first part of this post, we discussed how public vs private enrollment is progressing, and private exchange enrollment is set to out-enroll public exchanges by a decent margin. In the scheme of things, small businesses are being left out. Small businesses lack the bulk power of large businesses, and that’s why traditional health plans have never truly focused on small businesses. With Obamacare SHOP exchanges, however, enrollment for small businesses is going to change. Before we begin with an analysis of SHOP exchange data, let’s take a look at how health insurance has traditionally worked in small and large employers. Read more