Tuesday, April 26, 2016

"Figures Don't Lie But Liars Figure": The Disingenuous Obama Administration's Report That Claims Obamacare's Average Premiums Rose by Only 8% in 2015

The Obama administration is out with a report that the average 2015 Obamacare exchange premium increased by only 8% last year.

As best I can tell, that is a true statement.

It is also an incredibly disingenuous statement.

There is an old actuarial saying about how numbers can be manipulated to suite the author's agenda: "Figures don't lie but liars figure." That the 2015 Obamacare exchange rates rose by 8% is as close to a prefect example of this old adage that I can think of.

And, from all the press stories that went out with this as the lead, it appears lots of reporters bought it hook line and sinker.

Here is the operative statement in the report:
"Two thirds (67%) of HealthCare.gov consumers selected a new plan in 2016: all new consumers plus 43% of returning customers. Taking into account shopping, the increase in the average premium was 8% between 2015 and 2016."
Here's the catch: The administration mentions nothing about what kinds of health plans these 43% of returning consumers gave up to lower their increases.

Let me illustrate. Let's say a consumer had a 2015 Silver Plan with a $2,000 deductible in 2015 that was going to increase in cost by 20% for 2016. Because of the big 2016 rate increase, that consumer moved to a much cheaper 2016 Silver Plan that produced only a 5% increase but to accomplish that the consumer had to accept a $3,000 deductible. As a result, and according to the administration's logic, the final rate increase this consumer would have gotten was 5% instead of 20%. To get a cheaper plan consumers might have had to accept a much narrower provider network and/or a much bigger deductible and other out-of-pocket costs.

The consumer in my example did manage to get themselves a lower cost plan and avoid the big rate increase. But here it is important to remember that rate increases come in three forms:
  1. Higher premiums.
  2. Narrower networks, and or
  3. Higher out-of-pocket costs.
A more truthful analysis of what really happened in 2016 would have looked at what those 43% of returning consumers gave up to keep their average rate increase at only 8%. How many of these folks ended up with much worse plans in order to keep their premiums affordable?

And such an analysis is already common in the employee benefits industry. Look at the various reports issued by the benefits consulting firms each year that report the higher average rate increases before benefit "buy downs" and the lower increases after the benefit "buy downs."

The Obama administration document also points out that the average rate increase was only 4% when government subsidies that cap exchange participants' premiums are taken into account.

Again a technically correct but disingenuous statement because:
  1. The document says nothing about what happened to those participants' networks or out-of-pocket costs. Again, how many people moved to plans that had less in the way of benefits or networks or just had their plans' benefits cut? An RWJ report found that "two-thirds of the insurance companies" that offered PPO plans in the exchanges in 2015 "reduced the number of PPO plans they offered or stopped offering PPO plans altogether for 2016."
  2. Eleven million people buying Obamacare compliant individual health insurance don't get a subsidy. As the administration points out, the 4% increase only applies to the 85% of people getting subsidies in the marketplace. Again, two correct figures. But what have they left out? According to the most recent CBO estimate, 9 million people in the individual insurance market buy outside the Obamacare exchanges and don't get a subsidy in addition to the 15% in the exchanges (another almost 2 million) that aren't subsidized. The administration has once again all but forgotten the substantial off-exchange market and made no attempt to evaluate the impact of the 2016 rate increases on almost half of the market that is not eligible for any subsidies––these are the people that pay the full price for their coverage.
And, what about the consumers that saw those big rate increases and dropped their coverage?

Another fact the Obama administration report does not mention is how many of the 2015 Marketplace enrollees dropped out for 2016 at the time they saw their new prices and benefits. The administration's report says that 9.6 million people bought health insurance on the federal exchanges for 2015. This report also says that 4 million were new indicating 5.6 million were holdover customers from 2015. But in their December 31 "Snap Shot" report, the administration said there were 6.3 million enrolled on the federal exchanges on December 31, 2015. What happened to the 700,000 that apparently did not renew on the federal exchanges on the same January 1 the rate increases became effective? Lots of people leave Obamacare every month for good reasons. But not 700,000 on the first of a typical month.

What is this Obama administration report all about?

The administration is scared stiff the 2017 rate increases, about to be made public, will be even worse than last year.

When we start hearing about the big increases the administration will just roll this report out once again and make the point that the latest 10% or 20% or 30% rate increases being reported really aren't 10% or 20% or 30% rate increases––after all those 2016 rate increases that were supposed to be so huge only averaged 8%!

If the press once again takes a pass on digging into all of these convenient facts, the Obama administration should have a lot of success with that spin.

Thursday, April 21, 2016

United Healthcare Leaving the Obamacare Exchanges Is Not the Point––What's Happening to the People Who Have No Choice But to Buy Their Health Insurance Under Obamacare Is

Comments in a recent Politico article over United HealthCare's pullout from the Obamacare exchanges because of $1 billion in losses have me scratching my head.

"It's a nothingburger in terms of market impact, said insurance industry consultant John Gorman. But symbolically and politically, it's huge" He went on, "We're only about halfway through the drama of stabilizing these marketplaces. We've got another two or three years to go, and it's going to be a bloody two or three years."

Sunday, February 28, 2016

Selling Health Insurance Across State Lines––A Really Dumb Idea

Any candidate that suggests such a scheme only shows how unsophisticated he and his advisers are when it comes to understanding how the insurance markets really work––or could work.


I gave a speech to 750 health insurance brokers and consultants in DC last week.

When selling health insurance across state lines, something Trump and a number of other Republican presidential candidates have been pushing, was mentioned the audience literally laughed. That's what health insurance professionals who spend their days in the market think of it!

This is about as dumb an insurance "reform" idea as has ever been proposed.

Tuesday, February 16, 2016

John Kasich's Ohio Health Care Record: Making Lemons Into Lemonade

It's easy to be critical of Obamacare.

But from the time The Affordable Care Act was passed until a new President and Congress have a chance to change things in 2017, America's governors haven't had the luxury of just complaining about it. They have had to govern.

Governor Kasich and his team have made big health care change a reality by collaborating with the key stakeholders in Ohio. On that score they have made lots of Obamacare lemons into lemonade.

Read my op-ed today at the National Review.

And, my post last fall at Forbes regarding Kasich's Medicaid expansion in Ohio. 

Thursday, February 4, 2016

Obamacare Hits 12.7 Million Enrollments––But Only Grows 8.5%

Today the administration announced that 12.7 million people signed up for coverage in the Affordable Care Act's insurance exchanges.

Said the HealthCare.gov CEO, "We knocked the lights out this year. We did a great job."

Let's take a closer look.

Monday, February 1, 2016

Why the Obamacare 2016 Open Enrollment Stalled: The Big Unwritten Story About Obamacare––How Unaffordable It Is For the Working and Middle Class

Back on December 22nd when the President triumphantly announced 6 million enrollments on HealthCare.gov and the administration pointed to "unprecedented demand" on the exchanges, I was the skunk at the garden party arguing in the Washington Post that it was all just churn as existing customers were only trying to escape all of the big rate increases.

Well guess what? It was all churn.

The administration will shortly announce the total number of people who signed up for Obamacare under the Affordable Care Act.

The number signing up in 2016 will turn out to be not much more than the number who signed up last year after those who don't pay are netted out––no sizeable gain in enrollment has been accomplished on a national basis. [February 4 Update: The increase was 8.5% over 2015.]

Tuesday, January 5, 2016

2016 Obamacare Outlook

One of the more Obamacare fluent reporters just emailed me a set of questions regarding the 2016 outlook for Obamacare.

I thought I would share my responses with you:

Thursday, November 19, 2015

UnitedHealth Group Losing Big Money and Threatening to Leave the Obamacare Exchanges--Because the Obamacare Insurance Business Model Does Not Work

It's official. The Obamacare insurance company business model does not work.

UnitedHealth Group just announced they expect to lose $700 million in the Obamacare exchanges and are seriously considering withdrawing from the program in the coming year.

This morning, the Wall Street Journal reported just about everybody else is losing their shirts in Obamacare as well:
Several other big publicly traded insurers also flagged problems with their exchange business in their third-quarter earnings Anthem Inc. said enrollment is less than expected, though it is making a profit. Aetna Inc. said it expects to lose money on its exchange business this year, but hopes to improve the result in 2016. Humana Inc. and Cigna Corp. also flagged challenges...

There are signs that broad pattern has continued--and in some cases worsened--this year. A Goldman Sachs Group Inc. analysis of state filings for 30 not-for-profit Blue Cross and Blue Shield insurers found that their overall company wide results were "barely break-even" for the first half of 2015.

Goldman analysts projected the group would post an aggregate loss for the full year--the first since the late 1980s. The analysis said the health-law exchanges appeared to be a "key driver" for the faltering corporate results, and the medical-loss ratio for the Blue insurers' individual business was 99% in the first half of 2015--up from 91% at that point in 2014, and 82% for the first six months of 2013.
Every health plan I talk to tells me that they don't expect their Obamacare business to be profitable even in 2016 after their big rate increases. That does not bode well for the rate increases we can expect to be announced in the middle of next year's elections.

Monday, October 26, 2015

Crocodile Tears Over the Failing Obamacare Co-Ops--The Canaries in the Obamacare Coal Mine

I can't believe what I've been hearing recently from Obamacare defenders over the failing Obamacare co-ops--the most recent count has eight of them going bust.

The biggest complaint seems to be that those mean Republicans forced these co-ops out of business because of a provision they included in the last budget.
Read my post at Forbes

Sunday, October 18, 2015

Flat Enrollment Estimates For 2016--Has the Obama Administration Given Up on Obamacare?

On Thursday, the Obama administration said they expect to have 10 million people enrolled on the Obamacare insurance exchanges in 2016. They further said they expect to sign-up only one in four of those still uninsured and eligible during the 2016 open enrollment scheduled to begin on November 1.

These are astonishing admissions.

In 2013 the Congressional Budget Office (CBO) estimated that the Obamacare insurance exchanges would enroll an average of 22 million people during 2016.

Given the original expectations how can we now not say this program is a terrible failure?

Read my post at Forbes




Wednesday, October 14, 2015

Ohio Governor John Kasich's Medicaid Expansion: Successful Governance is Very Hard Work

Presidential candidate John Kasich (R-Ohio) has taken a lot of criticism on the campaign trail for expanding Medicaid under Obamacare. But if his Medicaid expansion isn’t an extraordinary example of successful conservative governance I don’t know what would be.

See My Post at Forbes

Monday, August 17, 2015

Has Obamacare Really Reduced The Uninsured By 16 Million And Continued To Show Strong Growth?

Recent reports have touted a significant drop in the number of uninsured and generally credited Obamacare for it. And, other reports have recently highlighted about 950,000 more people signing up for Obamacare since the 2015 open enrollment closed but haven’t said anything about the number of people who dropped their coverage during the same period.

Many of these reports may be technically correct but hardly give an accurate picture.
See my post at Forbes

Monday, July 27, 2015

Health Insurer Merger Mania -- Muscle-Bound Competitors And A New Cold War In Health Care

It is doubtful that the dramatically escalating consolidation in both the health insurance industry and among hospitals and doctors will make our health care system either more efficient or more competitive.

This reminds me of the Cold War. Each side gets more powerful so that the other side can’t come to dominate it. The two sides finally get so big and powerful they reach a point of détente—let’s just agree to get along. Or, in the case of the Cold War, one side just ultimately spends the other side into submission.

That kind of environment doesn’t create more efficiency or innovation but undermines real competition just like you would expect one oligopoly facing off against another to do. We just end up with a few muscle bound players creating sizable barriers for new innovative and disruptive players to enter.
Read more on my Post at Forbes

Tuesday, July 21, 2015

California Senate Votes To Open Up Obamacare To 2.5 Million Illegal Residents

King V. Burwell Opponents Said Killing Subsidies Would Blow Up Obamacare­­––Now They Want To Open Up Unsubsidized Care To Illegal Californians

And consider this. Passage of the California legislation that has already cleared the Senate (SB 4) could be a real boon to the business of health care delivery in California. California’s impressive medical system could be the leader in international medical tourism. SB 4 would also make it clear that a foreign person could land at LAX, give Covered California a call and sign up for an almost full pay Platinum plan for a few hundred dollars a month, on the first of the following month when their coverage became effective show up at Cedars-Sinai Medical Center and have thousands of dollars of treatment, get back on the plane and go home, and then drop the coverage.

See my post at Forbes

Monday, June 29, 2015

Why The Affordable Care Act Isn't 'Here to Stay'­­­­--In One Picture

Why is Obamacare still so unpopular? Why aren’t the working class and middle-class signing up for it? Why is the Obamacare population sicker and causing so many big rate increases a year earlier than expected? Is Obamacare financially sustainable in its present form? Is it politically sustainable as it is?

Here is one picture that tells you just about everything you need to know to understand where Obamacare stands--politically and financially.

See my post at Forbes



Thursday, June 25, 2015

The King V. Burwell Decision

First, as any of us who know the market can appreciate, the Court just saved the Republicans from themselves. They were in no way ready to avoid the crisis that would have engulfed the individual market––half of those people on the exchange who would have lost their subsidies and the other half off-exchange that would have seen 30% to 50% rate increases––on top of the big increases already announced––without a quick fix.

Does this mean that Obamacare has cleared its last major hurdle?

Not a chance.

Obamacare has only enrolled about 40% of the subsidy eligible market in two years worth of open enrollments. That level of consumer support does not make Obamacare either financially sustainable or politically sustainable. The surveys say the 40% who have enrolled like their plans. Of course they do, they are the poorest with the biggest subsidies and the lowest deductibles. The working and middle-class have most often not signed up for Obamacare because it costs too much and delivers too little.

That Obamacare is not financially sustainable is evidenced by the first wave of big 2016 rate increases by so many large market share insurers. The next wave of rate increases a year from now will also be large and will be in the middle of the 2016 election.

These rate increases will further undermine the political sustainability of the law that has been reflected in five years of polling.

The attempt to scuttle the law through the Supreme Court was ill conceived and Republicans are very lucky it did not happen.

Now Obamacare has to stand on its own going into the 2016 elections and the growing evidence is that won't be any easier.

Thursday, June 18, 2015

The Republican Proposals to Extend the Obamacare Subsidies If the Supreme Court Ends Them Would Create a Huge Market Mess

While both the House and Senate plans would create a means for people to continue to be covered in the wake of any Supreme Court finding that ended the subsidies in the federally run states, what we so far know about these proposals is clearly unworkable in the market and would lead to very big and unfortunate unintended consequences.

See my post at Forbes

Wednesday, June 10, 2015

Why Are the Proposed 2016 Obamacare Rate Increases So Large?

Why The Big Obamacare Rate Increases Have Begun a Year Early?


One state after another is reporting big Obamacare rate increases––particularly from many high market share health insurers who have the best claim data.

Where are the rates going up and by how much?

Will regulators cut these rate increases back as they often did last year?

What is causing this a full year before the insurance company "3Rs" claim and risk corridor support payments are set to go away?

Are carriers just being conservative worried about the upcoming Supreme Court decision?

I tried to answer these questions and more in my latest post at Forbes.

Monday, June 1, 2015

The Eye Popping 2016 Obamacare Rate Increases Are Out

The Big Rate Increases Are Coming a Year Early


The Obama administration has posted the 2016 rate increases in excess of 10% that the Obamacare health plans are requesting.

There are a lot of them.

All of the federally run states have been posted and some for the state exchanges as well. Both California and New York do not have their rates on this site yet.

Some will quickly argue that many of these rate increases are subject to regulatory approval and can be rolled back. That's right. But this year the health plans have hard claim data to show the regulators and a 35% rate increase is hardly going to be rolled back to 5%.

Big rate increases like this are driven by a lot of claims experience––a lot of really lousy claim experience.

You will also notice that this list most often includes the big market share players, such as the Blues plans, in each of these states. These are the players with the best data.

That these big rate increases are coming a year before the "3Rs" reinsurance program is to end, that was supposed to subsidize the health plan's high claims experience, is not good news.

You can access the administration's website and look at all of them by state here.

To quickly see all of the 10%+ rate increases in a particular state just click on the state and enter a date range of 01/01/2016 to 01/01/2016. Leave the company field blank.

If you leave the dates blank, you can see the carriers' rate submission history since 2013. It's interesting to see what a particular carrier increased rates at the time of Obamacare's original launch and what they have layered on to costs since.

If you click on the company name on the left side, you will see a brief description of their justification for the rates.

For example, Blue Cross of Texas commented that it covered 730,833 individuals in 2014 with premium of $2.1 billion and claims totaling $2.5 billion––for a medical loss ratio of 119%. The plan further commented that, after the "3Rs" reinsurance adjustments, they lost 17% to 20% of premium in 2014––that would be more than $400 million. And, they are only asking for a 20% rate increase.
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