WTF’s with LA?

That’s Los Angeles, not Louisiana.

I ask that question, dear reader, because the latest report from the fine folk at CWCI raises yet another question about why LA is so different from the rest of California.

The latest information (available here for purchase; free to CWCI members) indicates cumulative trauma claims happen way more frequently in the LA Basin than elsewhere in the Golden State.

Whaaaat?

Are there millions of Angelenos doing manual data entry and getting carpal tunnel?

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Getting wrist injuries from turning keys like those guards at the Illinois prison?

Hurting their hands clapping for all the Hollywood crowd?

Twisting their necks from constantly looking up at the gorgeous blue sky? (no, that can’t be it)

Too many botox injections? (that’s kinda cumulative trauma, right?)

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Too much yoga?

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It can’t be crooked physicians…right?

 

 

ACA Deathwatch: What “repeal” means to you

Here are questions you may want to ask about what a “repeal” and “replacement” will do.

  1. What will happen to your premiums?
    If more young people sign up, premiums for us older folks go down. If there is no mandate to buy insurance (and the continuous coverage requirement is far weaker than a mandate), insurance premiums for the 50+ crowd are going to go up – a lot. That’s because healthy seniors will decide the premiums are too high, so the only folks that will buy insurance will be the sick ones.  Insurers know this, so they will either a) exit the market; b) raise premiums to the moon; c) drastically limit coverage for specific medical conditions like heart disease or cancer; or d) go bankrupt.
  2. Is your medical condition still covered?
    ACA requires almost all insurance plans cover all physical and mental health conditions under the essential health benefits requirement. Replacement plans under consideration have no such requirements, allowing insurance companies to exclude specific types of treatment, specific conditions, types of providers, etc.
  3. Is addiction treatment covered?
    Currently mental health coverage is required for most employee and individual plans. Given the huge problems we face with opioid and crystal meth addiction, will a replacement plan require coverage for those seeking to end their addiction? Before ACA, about a third of individual insurance plans didn’t cover addiction treatment. And you can bet your house “replacement” insurance plans wouldn’t offer coverage…
  4. Can insurers limit coverage for medical diagnoses or conditions?
    Under ACA, there are NO lifetime or annual caps for specific medical conditions. The “replacement” plans allow insurers to set arbitrary caps for any diagnosis – cancer, heart disease, orthopedic injuries, or any other category they define.
  5. What happens if you lose your job and can’t afford to pay for individual health insurance while you are looking for work?
    Under the replacement plans, if you have a “gap in coverage” where you don’t have health insurance, when you apply for new coverage your insurer doesn’t have to cover your pre-existing medical conditions, and/or they can charge you higher rates.
  6. Who pays for emergency care for those without health insurance?
    Before ACA family insurance premiums included about $1000 for the additional cost of indigent care due to cost-shifting.  If the number of uninsureds grows – as it most certainly will – they will get care at hospital emergency rooms (hospitals are required to care for anyone presenting with emergent needs regardless of insurance status). So, this “hidden tax” will almost certainly increase your premiums.
  7. Will you be able to buy cheaper insurance from out-of-state health insurers?
    No.  There are three states that allow that today – and NO out-of-state insurers are selling across state lines.

 

ACA Deathwatch – The GOP repeal bill is out

Late Friday the Republican Study Committee released its ACA Repeal Bill.

No word on a replacement plan as of this writing.

Key points

  • A tax credit of $7,500 (individuals) or $20,500 (families) which will apply to income and payroll taxes, and will be indexed for inflation at the same rate as CPI-U. The credit does NOT vary by a person’s income level, so folks making $10,000 a year get the same amount as multi-millionnaires.
  • Fund high-risk pools at $2.5 billion a year for 10 years for those people who can’t get insurance on the open market (note high risk pools have historically not worked over the long term due to state budget limits and increasing costs due to adverse selection)
  • Requirement that individuals MUST stay continuously insured to avoid pre-existing condition limits. Lots of problems with this…
  • Allow sale of insurance across state lines – an initiative that is already in place in three states – and no insurer has EVER done this because it doesn’t work.

For several reasons outlined succinctly in a piece in Health Affairs last week, repeal without replace is problematic. Best guess is the final repeal legislation will call for a replacement within 3 years.

Finally, there is still no consensus among Republicans on a strategy re replacement, much less what a replacement bill would involve.

 

Why is work comp wage replacement capped, part 2

There are some differing opinions on this issue; I heard from several colleagues with different views on wage replacement caps; two somewhat different perspectives are provided below. [original post and reader comments are here]

From Bruce Wood – former Vice President and Associate General Counsel at AIA; retired after 27 years, currently consulting (AIA is a client):

The amount of the maximum weekly benefit amount (WBA) is a major cost element in workers’ compensation. Industry (surely, AIA) policy has always deferred to business and labor on the amount of the maximum WBA, lest the insurance industry be accused of seeking to inflate insurance premiums by supporting more generous benefits. It would be interesting to see if many others in the business community go along with increasing the maximum, much less completely eliminating it even for workers with annual incomes of hundreds of thousands of dollars, who typically have alternative sources of income support.   I would expect policyholders to be reluctant to accept this increased expense.  

All states have a maximum WBA, in nearly all instances indexed to a percentage of the statewide average weekly wage (SAWW). Most – 36 — today cap benefits at 100 percent of SAWW.  Sixteen states exceed 100 percent, with one at 200 percent.  Eleven states fall below 100 percent; and the maximum temporary total disability benefit in two states is a fixed dollar amount that can be changed only by the legislature.  In the early 1970s, when the National Commission issued its report, many states did not use a maximum WBA equal to even two-thirds of SAWW.  The Commission recommended an immediate step-up to two-thirds, with a phased increase thereafter, to 100 percent (by 1975), 133 1/3 percent (by 1977), 166 2/3 percent (by 1979), and 200 percent (1981); and it further recommended the maximum be indexed annually (for new injuries) to the state’s current average weekly wage.  After the Commission report, the states all raised their maximums, but as noted few were willing to go above 100% because a higher maximum is very costly. Nowhere in the Commission’s narrative is there consideration for eliminating any cap.  Thus, the Commission seems to have accepted the premise that some cap on benefit levels was essential in balancing overall system costs and in lending greater actuarial predictability to those costs. Public policymakers need to obtain actuarially credible pricing estimates before reaching any conclusions about raising, let alone eliminating, any cap.

It should be noted that any serious consideration to significantly increasing benefit caps should necessarily include examination of the wage replacement rate (typically 2/3 of gross pay) as well as using net pay rather than gross pay as the wage base. The National Commission recommended that states adopt a net pay basis for benefits, at 80 percent of “spendable income.” The Commission’s recommendation took cognizance that workers’ compensation indemnity benefits are not subject to income and payroll taxes, and thus a more generous WBA for higher income individuals may reduce return to work incentives by replacing a higher percentage of pre-injury net pay, or in some cases, exceeding it. Replacing a percentage of net pay would better-preserve return-to-work incentives and more equitably pay benefits to workers in different income tax brackets.     

As with everything in comp, it is all more complex than might appear.

From a current C-suite Executive and former Chief Claims Officer:

I’ve been asking this question [why is there a limit pegged to AWW] since I was a 22 year old claim trainee and have pissed off a number of insurance executives and mid-level managers in the process of simply being honestly curious.   The pricing argument is a red herring – with loss data and payroll data available to the level of detail it is, I don’t buy it.   I’ll take the question a step further…why do some states limit the number of weeks of indemnity for someone who remains off work and is legitimately disabled?  Seems to be against the concept of equity and the ‘grand bargain’ that was originally intended.

Wonder why we as an industry have the reputation we do????

What does this mean for you?

It’s always helpful to hear different opinions from folks with deep, relevant experience.

ACA Deathwatch UPDATE: Three problems for the GOP

Republicans have three problems with their promise to “repeal and replace” ACA.

The net – Republicans’ risk – and it is a very real one – is their efforts may blow up the entire healthcare system as it tries to address one narrow slice of the insurance market.

The first problem is internal division.  

Republican Representatives and Senators have committed to “repeal” ACA, but haven’t reached any consensus, agreement, or framework about what the “replacement” is going to be. And there is no indication they are making any progress.

As the Democrats found when constructing ACA six years ago, reaching consensus about healthcare is incredibly difficult as each “wing” in the party wants its own version to prevail. The GOP is learning once again it is MUCH easier to tear down than to build.

UPDATE – Politico reported this today...

disagreements spilled over Wednesday at a closed-door meeting with Vice President-elect Mike Pence that had been intended to unify the Senate GOP. Instead, multiple senators stood up to express concern that the party’s plans to repeal and replace the law could blow massive holes in the budget ... Newly ascendant Republicans are reckoning with the reality that dismantling a nearly seven-year-old law that reshaped a $3 trillion health sector and covers millions of Americans is more daunting than simply campaigning against it.” [emphasis added]

Especially when the “problem” the GOP publicly committed to fix – the individual insurance market – is a relatively small part of the healthcare market – and ACA itself.

Second, without a credible replacement, those individual insurance markets will implode as carriers leave the market. Cost shifting to privately insured patients from hospitals that a) agreed to lower Medicare payments and b) have more uncompensated care will increase dramatically.

Any major problems in the insurance or healthcare provider markets that come after a repeal are going to cost the GOP dearly.  There is no question those people who lose coverage – and there will be millions under ANY of the scenarios now under consideration – will be really, really angry. (Pre-ex is just one issue the GOP has no real solution for)

Third, a repeal and replacement is going to cost hundreds of billions of dollars.

Under the best case scenario, repealing ACA increases the deficit by $350 billion over ten years.  That’s causing major heartburn among GOP deficit hawks, and is a big reason there’s no consensus on what to do. (thanks Brandon Miller for correcting my mistake!)

What’s the net?

Republicans’ pledge to immediately repeal ACA was a winning campaign promise. It may well be a loser in the next election.

 

Why is work comp wage replacement capped?

That’s a question that’s been bouncing around between my neurons for some years.

These neurons finally fired intelligently when I got an email from good friend Todd Brown. Todd is Medata’s Compliance and Regulatory Affairs Practice Leader and he tracks pretty much everything and anything going on in work comp regulatory and legislative affairs around the country.

Todd’s latest summary included news that several states just re-set the maximum wage replacement payout for workers comp patients who are not working.

I don’t understand, or more accurately, don’t “get” why workers who make more than a certain arbitrarily set amount don’t get adequate wage replacement when injured and out of work. If you make more than the “AWW” (average weekly wage) you likely have expenses higher than folks who make less than the AWW, expenses that won’t be covered by even the maximum payout in most states.

So, Todd being way smarter than me on this, I asked him for his take.  Here’s what he said:

In fact in my 30 years in this business I have never seen serious discussion regarding the capping issue except for the number of weeks for certain benefit types.  As far back as I can research I have not come across the reasoning behind it.  My supposition is that it makes the pricing of policies easier for actuaries.  But that is just a guess.  Years ago it wasn’t much of an issue as the gap between the high wage earners (excluding corporate officers) and low wage earners was not what it is today. 

In 1970 a senior level professional made 3.6 times what the entry level person made.  Today the senior level professional makes 6.6 times

In 1970 mid level professional made 1.9 time what entry level person made.  Today the mid level makes 4.3 times

As the wage gap continues to widen between professionals and unskilled the situation will continue.  For those at the bottom rung the statewide cap based on AWW will not affect them but for those midway and up the statewide cap based on AWW will be adversely affected.  

Unless I’m missing something this seems eminently unfair.

ACA Deathwatch – The Problem with Pre-Ex

Back in the bad-old pre-ACA days the 27% of us who have pre-existing medical conditions often found it hard if not impossible to get insurance coverage in the individual and small group insurance markets.

As a result;

  • people didn’t leave their job to try something new – aka job lock
  • small employers’ costs went up dramatically if workers got sick or had specific conditions

For those not deep into the health insurance world, think of pre-existing medical conditions as:

  • houses that just had a fire,
  • people with dogs that just bit neighbors,
  • businesses that just had someone slip and fall on their premises, or
  • cars that just hit pedestrians.

No way you’d insure that house/person/business/car.

That’s the problem with requiring health insurers to cover people with heart disease, high blood pressure, bad knees, obesity, or any other condition. You’re insuring the car just after it crashed.

When considering ACA replacements, there are three general approaches.

1. Require everyone have health insurance – the so-called “mandate”.  That way the healthy people help pay for those with pre-ex conditions. Yes, this is a “subsidy”, using money from some to pay for services for others.  It’s spreading the cost across a larger population, while ensuring the currently-healthy are protected from bankruptcy if they get hurt or sick.

The GOP seems averse to this requirement.

Issue – people may not like paying insurance costs when they are at lower risk – which is why there are “age bands” that keep younger folks’ premiums substantially lower than we old folks.

2.  Require insurers to cover anyone who has had “continuous coverage.” That is, the person switches from one insurer to another with NO gaps in coverage. The idea is people will keep their insurance up out fo fear they will need it one day.

Issues:

  • if you lose your job, you have to pay the entire cost of insurance for you and your family yourself.  This is typically more than $1000 a month for a family.  Many people just can’t afford to pay this while they are between jobs.
  • if your job doesn’t offer insurance, you have to buy it – and pay for it – on your own. With wage stagnation affecting many, it’s just not affordable. 

3.  High risk pools – a few states used to have high risk pools; these ended with ACA. These pools were intended to cover people with major diseases or conditions who could not get insurance elsewhere and weren’t eligible for Medicaid or Medicare.

While a good idea, in reality these pools were a financial disaster.  They were very expensive and had a really small political constituency. Legislators continuously cut funding or restricted coverage to ever-smaller groups of patients.

The issue is simple – 1% of the population accounts for almost a quarter of health care costs.  Put another way, about 3.3 million people spend $800 Billion annually.

What does this mean for you?

Pay attention to ACA replacement plans if you or a loved one has a pre-existing condition. Or, for that matter, if you may have one some day…

If you aren’t sure, here’s a list.

ACA Deathwatch – UPDATE on budgetary block

UPDATE – There’s some confusion about what the pending vote to defund ACA will mean

  • defunding essentially repeals a big chunk of ACA by ending funding for key components
  • “repeal” will NOT go into effect for at least 2, and perhaps 4 years.
  • there is NO replacement legislation ready to go – don’t expect to see legislation for months

As reported last week, public and private sources indicate the new Congress will start the push to defund ACA as early as this week as part of the Fiscal Year (FY) 2017 budget.  The Federal government has been funded under continuing resolutions, with the latest set to expire in late April.  The FY runs from October 1 to September 30.

Here’s how this would work. (caveat – as noted last week, this is way more complicated than one might think, and there is NO consensus within the GOP on how to handle critical “details”)

House passes new rules next week that will allow it to defund ACA.  There’s some complex stuff involved here which may well make this a difficult and protracted process.

Late in January the House and Senate will work on a bill to repeal much of ACA – including:

  • eliminating premium support and cost-sharing subsidies (helping lower-income people buy insurance and pay deductibles and copays)
  • ending Medicaid expansion
  • eliminating ACA taxes (medical device, surcharge on very high incomes, etc)
  • increasing Medicare and Medicaid reimbursement

This is where things may well fall apart.  A key problem is a repeal will increase the Federal deficit, a major issue for many Republicans.  Also, there’s a real fear among some Republicans that changing ACA will cause major market disruption – and Republicans will own that.  That’s why the GOP will delay implementing the “repeal” for several years.

I spoke with friend and colleague Bob Laszewski on this – here’s his take:

they will vote budget instructions early Jan. Some may claim that is the vote to repeal but it’s just a procedural vote with budget instructions for the committees with jurisdiction—Senate HELP and Finance. Then HELP and Finance pass a 2016 budget with ACA defunded. The House is the easy part but they will have to reconcile any differences in the 2016 budget with Senate. Then both houses pass the final. Then Trump signs that. The timeline is about 6 weeks from reconvening to actually defunding.

Here’s where it gets really messy.  Laszewski:

they [the GOP] only have 50%+1 for defund (repeal). They have no consensus for anything thereafter. Some have talked about don’t defund unless they have the replace deal in place.

Replace will take 60 in the Senate. They have 52 seats. They don’t have 52 Senate votes or even a simple majority in the House for any replacement plan right now—or likely anytime soon.

I think we are headed to one hell of a “cliff” as time ticks down on the two or three year extension of the current system.

The summer and fall of 2017 will be frantic to get a deal of some sort. Odds are not great with a few on the right in the Republican Party, and the Dems closing ranks [and] not motivated to cooperate.

Key issues:

  1. don’t buy into press reports sure to come next week that will describe these preliminary rule-change steps as a “repeal”.  ACA repeal will take 60 votes in the Senate, and that is NOT going to happen anytime soon.
  2. IF a defunding bill is rammed thru via reconciliation and signed it will happen quickly. But there are major issues with that – market disruption and voter backlash the two most critical.

What does this mean?

Opposing an administration is easy and has no risk; actually passing legislation that will directly affect people and business is hard and very risky.

Oh, and there’s this…