Why Obamacare rates are skyrocketing in Tennessee

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Health insurers are asking state officials for hefty premium increases for the federally run exchange in 2017, with BlueCross BlueShield of Tennessee topping the requests with an average 62 percent increase.

Cigna is asking state officials for an average 23 percent rate increase for its plans; Humana is seeking an average 29 percent increase.

The average rate requests, if approved, may come as a shock to some policyholders, but the double digit requests are in line with both expectations and rate requests from around the country.

For comparison, Humana of Georgia is asking for an average 65.2 percent increase. Highmark in Pennsylvania is requesting 34.4 percent.

The insurers’ filings with the Tennessee Department of Commerce and Insurance show that the volatility of the exchange – and the questions about the health of consumers – has not settled.

“We understand this has an impact on people’s wallets and their lives and so we don’t want to be at this place to have to make this request. We regret having to do that,” said Roy Vaughn, vice president of corporate communications at BCBST in Chattanooga. “At the same time we know we have to cover the costs for the medical services that our members need. That’s a promise we make to them when they get coverage and we need to be able to cover that.”

Comments from all three insurers about the future of the exchange used the word “sustainable.” Finding the right balance – where premiums are not wildly outpaced by medical claims – is proving challenging.

Insurance Commissioner Julie Mix McPeak told state senators in January that sheexpected 2017 requests to be high. BCBST has lost about $300 million in two yearsand is on track to post a loss of more than $100 million for 2016.

BCBST data shows that exchange members averaged 31 claims in 2015 versus a 24 claim average from people who have employer-sponsored coverage.

Holly Fletcher, hfletcher@tennessean.com7:27 p.m. CDT June 10, 2016

http://www.tennessean.com/story/money/industries/health-care/2016/06/10/tennessee-exchange-rate-requests-2017/85569454/

Newly Nonexempt May Embrace Overtime Rule

Updatepicd regulation could mean either more pay or fewer hours for millions of workers

For salaried professionals who will soon find themselves nonexempt under the U.S. Department of Labor’s revised overtime rule, will the news that they’ll now be paid overtime—or work fewer hours—be welcome?

It depends.

“Some will see it as a demotion, while others will see it as a windfall,” said Nathan Oleson, partner with Akin Gump in Washington, D.C.

The rule increases the salary threshold for employees who are exempt—and therefore not eligible for overtime—from $23,660 to $47,476. Employers can increase an exempt worker’s salary so the worker remains exempt, or reclassify him or her as nonexempt. Many are likely to do the latter.

“For the years since the overtime laws were changed [in 2004], companies have profited from massive productivity gains, with the increased value coming at workers’ expense,” said Paula Brantner, executive director of Workplace Fairness, a workers’ rights group in Silver Spring, Md. “The most vulnerable workers making the least money—and who are accordingly the least able to advocate for themselves—have been exploited to work longer and harder. [The revised] overtime laws will change the workplace dynamic, as exempt employees who gain additional work that they could have previously delegated to subordinates will either have to do it themselves [so as not to cause the subordinates to work overtime] or will have to advocate for more staffing.”

Reclassified workers will—perhaps for the first time in their careers—have to track their start times, end times, break times and meal times. They’ll have to limit their working hours if employers can’t afford to pay them overtime. And that could have negative repercussions for the newly nonexempt, those who remain exempt and managers who must continue to show that their teams are producing even if they’re working under very different circumstances.

A Welcome Change for Some

Edward F. Harold, a partner practicing employment litigation with Fisher & Phillips in New Orleans, said that exempt workers who feel that they work too hard and are being taken advantage of may welcome the change to nonexempt status.

“I would say the difference is often in how many hours a week an exempt employee typically works,” he said. “Exempt employees with lower requirements, from 35 to 45 hours, will not be happy. Exempt employees who work 50 to 60 hours a week probably will.”

Said Rusty Lindquist, vice president of human capital management strategy at Lindon, Utah-based online HR services company BambooHR: “There will be circumstances where this will result in a far more equitable exchange of value, where employees who were overworked and underpaid and who were not receiving adequate mitigating value from the employer will now be brought into market alignment, and this is likely to be healthy.”

Whether workers embrace their change in status will depend in large part on how each employer implements the new rule. Being reclassified may not necessarily translate into extra money for some workers, but it could mean fewer hours working and more time to spend with friends and family.

“Some people are going to say, ‘Great, now I only have to work 40 hours, or if I don’t, I’m going to actually get paid more now,’ ” said John A. Challenger, CEO of Illinois-based Challenger, Gray & Christmas. “But what many companies will do is create very strict guidelines for people who are nonexempt and say, ‘We just can’t have you work more than 40 hours.’ ”

Brantner said the new rules will force employers to become more creative about how work gets done.
“Is it possible for that worker who takes off Friday afternoon to do some work from home on Thursday evening or Saturday morning and still have a 40-hour workweek?” she asked. “Would some salaried exempt employees prefer to adjust their schedule to supervise some of the newly nonexempt workers at a different time of day or night? Instead of focusing on how it won’t work, the employers who focus on how the work gets done—as opposed to having it done the same way it always has been—are the employers who will thrive.”

To keep costs down, employers may adjust a newly nonexempt worker’s hourly rate of pay so that the worker’s weekly compensation—from both regular and overtime hours—adds up to the same amount that he or she was making before being reclassified.

In those cases, then during those weeks when nonexempt workers don’t need to work overtime, they will actually take home less money than they did before losing their exempt status, said Jeffrey W. Brecher, head of the wage and hour practice group with Jackson Lewis in Melville, N.Y., which on Monday hosted a webinar on the implications of the overtime rule.

“Now it’s not so good anymore, is it?” Brecher asked.

Newly nonexempt workers may also lose the flexibility they once had.

“Before, if the worker needed to attend a kid’s graduation, they could work 30 hours one week and make up for it with 50 hours the next,” Brecher said. “But now, the employer may say, ‘Gee, I’d love to help you out, but if you work extra hours that second week, I have to pay you overtime.”

Load-Shifting

Formerly exempt employees who were accustomed to working as many hours as needed to finish a job may find that they can’t get all their work done in a 40-hour week. The work that’s left undone, then, may fall to those who remain exempt.

“Employers and managers are in an especially precarious situation here,” Lindquist said. “They’ll still be held accountable for maintaining prior work output without a material impact on cost. So it’s likely that work shifts to those who can do it without extra pay. That’s likely to result in animosity, but the victims of that animosity probably won’t be the newly made nonexempt employees, but rather the organization. People tend to criminalize the faceless organization, rather than the person they sit next to.”

Brantner said managers will simply have to start making choices.

“Employers will have to figure out whether it’s better to burn out their exempt staff, pay some current nonexempt workers overtime, or hire new exempt or nonexempt workers,” she said. “The companies that figure out this mix to empower their employees … will thrive. Those that shift unreasonable work burdens to a different set of humans will not.”

Mitchell W. Quick, an attorney with Michael Best & Friedrich LLP in Milwaukee, Wisc.,  said managers should consider rewarding exempt workers who pick up extra work, perhaps with small raises, productivity bonuses, more time off or recognition.

“If exempt workers are clearly working more hours due to the company not wanting non-exempt workers to work overtime, then the company could offer exempt employees bonuses or other additional compensation on top of their salary,” he said. “As long the company pays the required minimum weekly salary, then paying additional compensation does not cause an exempt employees to lose their exempt status.”

Dana Wilkie is an online editor/manager for SHRM.

Most Obamacare enrollees are satisfied with coverage, but worries over costs are rising

HealthCare.govMost Americans enrolled in health plans through the Affordable Care Act are happy with their coverage, despite persistent attacks on the health law by Republicans, including presumptive presidential nominee Donald Trump.

But consumers are increasingly concerned about their monthly premiums and deductibles, reflecting rising anxiety among all Americans about their medical and insurance bills, a new national survey found.

Nearly 6 in 10 working-age Americans who have a health plan through one of the marketplaces created by the law said they are satisfied with their monthly premiums, and just over half say they are satisfied with their deductibles.

That is a pronounced decline from previous years. In 2014, the year the marketplaces opened, nearly 7 in 10 consumers said they were satisfied with their premiums, and 59% said they were satisfied with their deductibles.

“These trends also could affect the potential for marketplaces to attract new enrollees — particularly people who are currently healthy — and (to) retain existing consumers.”

The law, commonly called Obamacare, allows Americans who don’t get health benefits at work to shop among plans on state-based marketplaces operated by the federal government or by the states themselves.

Consumers making less than four times the federal poverty level — about $47,000 for a single adult or $97,000 for a family of four — qualify for subsidies. And insurers must provide a basic set of benefits and cannot turn away consumers, even if they are sick.

Enrollment in the marketplaces has been increasing, but at a slower rate than initially forecast; there are about 12 million people in a marketplace plan.

And many insurers are seeking significant premium increases next year, in part because enrollees are sicker and more expensive than they anticipated.

The warnings are fueling a new round of attacks on the health law by critics who say the marketplaces aren’t sustainable and should be repealed.

The new Kaiser survey suggests that some of the criticism is overblown.

While Americans who get a health plan through an employer — the dominant form of health insurance in the U.S. — are happier with their coverage, consumers in the marketplaces remain generally satisfied.

Two-thirds of people with marketplace plans rated their coverage “excellent” or “good” in 2016.

By comparison, more than three-quarters of people with employer-based coverage said their coverage was “excellent” or “good.”

Additionally, despite much media coverage of health plans that are narrowing their networks to exclude more hospitals and physicians, large majorities said they were satisfied with their choice of providers.

But the increasing prevalence of high-deductible plans that require consumers to pay thousands of dollars out of pocket for their medical care before coverage kicks in is fueling mounting consumer anxiety, as is the case with employer-provided coverage.

Just a third of people in a high-deductible plan that they purchased themselves through a marketplace or directly said they have benefited from the health law.

In contrast, more than half of consumers in lower-deductible plans said they have benefited.

The Kaiser survey was conducted between Feb. 9 through March 26, among a nationally representative random sample of 786 adults ages 18-64 who purchase their own insurance, including 512 with marketplace plans.

The margin of sampling error is plus or minus 5 percentage points for those in marketplace plans, and higher for subgroups.

by Noam N. Levey- Los Angeles Times

 

 

Why Some Obamacare Insurers Are Making Money, But Many Are Losing Big

The health care plan is a work in progress, and will be for a while.
05/16/2016 05:54 pm ET
Jonathan Cohn
Senior National Correspondent, The Huffington Post

The U.S. health insurance industry has lost a few billion dollars selling policies on Affordable Care Act exchanges. It’s why many carriers are seeking large premium increases next year and why at least one major carrier is dropping policies in most states.

But some insurance companies are making money and looking to expand. A new report helps explain why their strategies are working — and why the health care law as a whole is not in danger of collapse, as some of its critics frequently suggest.

The report, from the consulting firm McKinsey and Company, focuses on the exchanges that approximately 12.7 million people used to sign up for insurance before the end of this year’s open enrollment. Based on public filings, McKinsey’s researchers determined that losses on those policies totaled more than $2.7 billion in 2014 and were probably even bigger last year.

Those figures are just one more sign that the exchanges, which have helped bring the proportion of uninsured Americans to an all-time low, remain works in progress. On the same day as the McKinsey report, for example, The Arizona Republic reported that Humana and UnitedHealth Group were dropping their plans for Arizona, which means that eight of the state’s rural counties will have just one provider. And in Florida, according to state officials, insurers are seeking average rate increases of more than 17 percent in order to cover losses from their newly insured populations, although those requests are subject to review by regulators.

“The individual market faces continued challenges,” the report says, noting that many insurers had expected or at least hoped the exchanges would be more stable by now.

But volatile markets with large rate increases were, if anything, more common before Obamacare. An adjustment period to the new law was inevitable. And McKinsey’s findings echo what a broad, if not quite unanimous, chorus of insurance industry officials and experts have been saying for a while — that while premiums are likely to keep bouncing around, with carriers entering and exiting the market, the new system is likely to endure in the long run.

The main reason for this confidence is the law’s tax credits, which discount premiums by hundreds or sometimes thousands of dollars a year. They insulate the majority of consumers from rising premiums and are likely to keep enrollment from dwindling to the point where insurers must constantly raise premiums to cover their losses.

“The individual market has little risk of entering a classic insurance ‘death spiral’ as long as the federal government continues to offer subsidies,” the report concludes.

The McKinsey report also offers insights into what kinds of insurance plans are already succeeding in the new marketplaces, potentially offering a roadmap to carriers looking to avoid the kinds of losses they experienced in the first two years.

Generally speaking, the carriers that do the most aggressive managing of care — either by emphasizing prevention and coordination, or simply limiting beneficiaries to very small sets of providers — are the ones most likely to be making profits, the report finds. Meanwhile, the carriers that have historically thrived in other markets, like administering employer plans or offering private insurance to Medicare beneficiaries, are the ones struggling to adapt — and, in a handful of cases, leaving the business altogether.

It isn’t a huge shock that some insurers are facing these problems. The health care law’s most dramatic impact has been on the nongroup market — that is, on insurance for people who don’t have access to coverage through employers or government programs like Medicare. Previously, insurers could deny coverage or charge higher premiums to these people when they had pre-existing conditions. Insurers could also sell plans without maternity care, mental health treatment and other services that employer policies typically cover. The law prohibits these practices.

But insurers in most states had little experience selling coverage under these conditions. They had to make a bunch of guesses about the kinds of people who would buy their policies and the prices they’d be willing to pay, and many simply guessed wrong. These insurers ended up with sicker-than-expected enrollees who incurred bigger-than-expected medical bills, producing the losses that McKinsey’s analysts document in the new report. It’s why these many of these firms say they need bigger premium increases next year.

“Once insurance became accessible to people with pre-existing health conditions, no one, including insurers, really knew how many sick people and how many healthy people would sign up,” said Larry Levitt, senior vice president at the Henry J. Kaiser Family Foundation.

“It’s only now that insurers are catching up to some of the bad guesses they made,” he added. “Big premium increases are bad news in the short term, but they should help to make the marketplaces financially profitable and sustainable for insurers.”

Some insurers made more accurate predictions, though. Overall, 30 percent of the carriers representing 40 percent of the market made money in 2014. And looking over the data, McKinsey researchers detected a few patterns.

Plans like Centene that had experience running managed care policies for Medicaid, the government-run program for the poor, have done well overall — perhaps because those carriers are accustomed to running plans that have smaller networks of doctors and hospitals who are willing to accept much lower reimbursement for services.

Doctors and hospitals that run their own insurance plans by offering care within their systems also seemed to perform well — although mostly because of one specific plan, Kaiser Permanente of California, which dominates the state’s market. (The insurer has no relationship to the Kaiser Family Foundation.)

How consumers feel about these plans is another matter entirely. Kaiser Permanente is extremely popular, and experts consider its style of care a model of high-quality efficiency — but narrow networks in the Medicaid-style plans have become an increasing source of frustration, particularly for people who have long-standing relationships with doctors who won’t accept the payments in their new plans. In some cases, people have gotten care at hospitals in their networks, only to receive huge bills because the doctors working in the hospitals were out of network.

Some states have responded by imposing regulations that protect consumers from such surprise bills, while some of the law’s supporters have called for additional steps, like requiring insurers to maintain bigger networks. Of course, in competitive markets of private insurers, bigger networks can also mean higher premiums — or extra out-of-pocket costs. That’s one reason even many the law’s supporters, like Democratic presidential front-runner Hillary Clinton, have also proposed providing enrollees with more financial assistance.

Whether any of these specific proposals become reality remains to be seen. Regardless, the process of identifying the Affordable Care Act’s shortcomings and trying to fix them is likely to continue for a long time.

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