That’s the best way to describe health insurance execs’ views on their business these days.  The massively-screwed-up-but-steadily-improving rollout of the federal exchange is the biggest reason for that uncertainty, but there’d be huge uncertainty even if things had gone flawlessly.

Health care providers are consolidating rapidly, increasing their negotiating leverage.  More and more physicians are working for health systems.  Some employers are dropping coverage, while others are moving to narrow-network based plans. All this against a backdrop of an aging population, increasing income inequality, major growth in Medicaid enrollment, reduced Medicare reimbursement for facilities and a possible “fix” to the fatally-flawed physician reimbursement system/mechanism.

And, the metrics they use to measure performance are in flux as well; the old measurements were fine when insurers could underwrite, adjust benefit designs, change deductibles and copays, and negotiate with providers from a position of strength.

Add to that the uncertainty over who is going to enroll via the exchanges – will there be enough “young immortals” to balance the older, sicker folks who sign up?  More importantly, how will that play out for individual health plans; Plan A isn’t concerned about the overall picture, but is very, very concerned about the demographics of their member group.

It’s no wonder senior management – and other stakeholders – are “uncertain” about the short-term, much less the longer-term.

Amongst all this confusion, there’s one thing that is clear – there isn’t going to be an “Obamacare death spiral”, at least not for three years.  The scaremongering about death spirals and adverse selection that might result from too many old folks and not enough young folks signing up is mis-informed.

There is a financial back-stop in the form of reinsurance that protects insurers from high cost claims for the next three years.  Bob Laszewski has an excellent description of the program and implications thereof here.  Funded by a tax on each insured, the program provides coverage for insurers “selling coverage on the state and federal health insurance exchanges as well as in the small group (less than 50 workers) market…”

By then, things will have settled down, insurers will have figured out what works, what doesn’t, and what they need to do to operate profitably.  Some will drop out of the exchange(s), while others will expand their service offerings and coverage areas.

What does this mean for you?

Lots of uncertainty means lots of opportunity for those aware, nimble, and stalwart enough to take advantage.  Not that there are many in this business that fit that description!


Obamacare is NOT just the Federal Exchange

Okay, deep breath here folks.

There’s no question the Federal Exchange is a mess.  And that’s the polite characterization.

But let’s not get too carried away, because the Federal Exchange is just a small part of PPACA/Obamacare.  In fact, the Exchange impacts just 7% – seven percent! – of the US population.  Thus, it is:

  1. Irrelevant for most Americans – specifically the 80% who get their insurance from their employer or are covered by Medicare or already covered by Medicaid.
  2. Not operating in 16 states plus DC, and that includes a couple of big ones – California and New York specifically.  In general, those exchanges are doing pretty well. Yes there are significant problems in Hawaii, Maryland and a couple other states, but overall they’re doing fine.
  3. Operating in states where 59% of today’s uninsured live.  Sure that’s a lot, but it isn’t everyone, not even close. And, a big chunk of that 59% are not eligible for coverage for various reasons (undocumented, state refused to expand Medicaid, etc.)

And, the Federal Exchange is just one part of Obamacare.

It is a means to an end, and that “end” is covering as many eligible people as possible, while fundamentally changing the competitive marketplace to force insurers to compete based on delivering the best outcomes at the lowest price.

Key components of Obamacare already implemented include:

  • Medicaid and CHIP expansion, providing coverage to the growing population of people who don’t make enough money to buy their own coverage, or who work for small companies that don’t provide insurance.  
  • Credits to help small businesses buy coverage
  • Elimination of medical underwriting, lifetime caps, and coverage of dependents to 26
  • Allocation of funds to Comparative Effectiveness Research to promote treatments that actually work.
  • Policy changes and funding for new delivery systems and reimbursement arrangements, funding which has generated explosive growth in Accountable Care Organizations and Medical Home-based models.

What does this mean for you?

Eventually, the federal exchange will be fixed.  Meanwhile, our health care “system” is going thru drastic change, change that will, over the long term, improve the health care we get and reduce the cost of that care.  

Of course, there’s going to be some well-deserved political fallout in the interim.




Healthcare.gov – shut it down till it is ready to go

It is increasingly clear that healthcare.gov is not working, and is not getting appreciably better. If it doesn’t get fixed – and I mean REALLY fixed – by the drop-dead date of December 1, the implementation will have to be delayed until it is.

And that may not happen until late next year.

There are two problems – the front end enrollment process, and the back end information distribution process. On the front end, a handful of people are successfully enrolling in health insurance on healthcare.gov but a handful is nowhere near enough to get the program up and running successfully.  However, that’s just as well, and may actually be intentional.

If tens of thousands of people were successfully enrolling every day, the back end – where all the things happen that make health insurance actually work – would not be able to handle the volume.  That is a very polite way of saying it would be an unmitigated disaster.

Once you’re signed up, (among other things) your bank account has to be debited, subsidy calculated and applied (if there is one) and enrollment and eligibility information catalogued and prepared for distribution.  This process relies heavily on an EDI  process using an industry standard known as the “834”.

The problem is that each insurer has their own slightly-different version of the 834, so each health plan’s 834 has to be programmed, tested, and then tested each month to ensure the right data in the right format is getting to the right computer databases.  The best discussion of the issue was on Bob Laszewski’s interview with Daryl Chapman last week. Here’s an excerpt:

 There are lots of data elements and a lot of field variables. Because of this complexity, no one takes a file straight into a production system––too risky. There are variations on the process but every company has some type of validation process. Generally, the 834 goes through an acceptance process, which scans the file and checks for errors. If it passes the data check it uploads to some kind of “model office” where it is tested again and then, if it passes, it goes to production. Although most of that is automatic there are several chances for the file to “error out.” Once in production, the file drives the payment system, claim system, and is the source for the list of doctors and hospitals they need to confirm the person is eligible for benefits.

Files still have lots of opportunity to trigger false reports in each of these systems if they aren’t accurate.

For example, member data is not the same as payment or cash data (member payments in this case come from two sources; the subscriber and the government). Poor quality data can lead to lots of problems trying to reconcile who the health plan was paid for and who they have on their eligibility system. Very few systems ever connect cash to belly-buttons and even fewer have debit and credit carry forward accounting capability making reconciliation on the fly very difficult.

If the member data is a mess then the cash becomes a mess. When the subsidy cash goes to the carrier from the federal government, the carrier doesn’t just get you; they get thousands of member cash files. If there isn’t a match, the claim paying process has to be suspended until people with green eyeshades figure it out.

And out in the world where doctors and hospitals live if the data isn’t clean doctors and hospitals may not treat you if the carrier file doesn’t say you are covered. They may demand payment upfront from the patient until things are straightened out or balance bill if claims aren’t reimbursed. That is a particular problem here because so many of these people will presumably be low-income.

This is where the biggest problem lies, and the hinge on which the success or failure of Obamacare rests.  I do not understand why the Administration doesn’t bite the proverbial bullet and shut down the Exchanges until they are absolutely ready to go.  Sure, there’d be a lot of political fallout, but that would last for a few news cycles, and then they’d be off to some new celebrity scandal.

Instead, the President and his proxies are telling people to get on to the site and sign up.  A site that isn’t working, and is much harder to fix because the White House appears to want to avoid some political damage. That is unconscionable.

What we need now is Lyndon Johnson.  He’d get the right people in the room, beat them mercilessly, make the tough decision and move on.  Instead we have millions of people who desperately want and need health insurance spending hours trying fruitlessly to enroll on a site that is fundamentally broken.

 What does this mean for you?

An aphorism is appropriate – If you don’t have time to do it right in the first place, what makes you think you’ll have time to fix it?



The time to fix the federal Exchange is now

The rollout of the federal Exchanges has been a disaster.

There’s no way to sugar coat it; whether it’s a design, technology, or communications problem (more likely all three), they are NOT working. And yes, there’s a clear management/leadership failure here; the Obama Administration failed twice;

  • first – designing the right development process (it appears that among other things, political decisions caused them to hold back on issuing detailed guidance to key stakeholders, i.e. health insurers)
  • second – encouraging Americans to use the Exchanges on day One, when they should have known they were not ready.

While the feds and their contractors are working feverishly to fix things on the fly, I’m hearing from my tech expert colleagues that they’d be far better off taking the Exchange off line, fixing the problems, then re-starting it.

Among the issues/problems, there’s:

  • a requirement that enrollees enter all their personal info before they can look at and compare plans
  • a lack of server capacity to handle the traffic volume
  • a lack of communication between the Exchange and the various health plans (this may be the most critical problem over the next few months as folks get cancellation notices from their current insurers and are required to sign up via the Exchanges)
  • erstwhile enrollees can’t find out if their doctors are in any of the plans available to them.

HHS bears a lot of responsibility for this, and perhaps Sec. Sibelius should be fired.  However, that would require the President to nominate a new Secretary, and given the hyper-partisan approval process, any new Secretary would face uncertain-at best-chances of approval by the Senate. And yes, President Obama is ultimately responsible, and therefore it is incumbent upon him that this gets fixed now, and gets fixed correctly.

Better to shut down the Exchanges now, get them fixed, test the heck out of them using feedback from early users, and get them back up when they are really ready..

If that requires delaying the mandate for a few months, so be it.

What does this mean for you?

A very big, and very painful, lesson on how not to do big IT projects, and an equally big and painful lesson on the perils of allowing politics to trump common sense.




Someone please explain this…

If the medical device tax isn’t repealed, a few dozen Congresspeople are willing to default on our debt, potentially causing international financial turmoil and a major recession.

That’s reality, or at least what passes for reality these days.

Here’s the path we’ve trod to get to this point.

  1. A few dozen Congresspeople refused to pass a budget by October 1 because they wanted PPACA killed.  The Speaker of the House, averse to violating the “Hastert Rule”, went along with their demands.
  2. The Senate refused to comply, and anyway, the President would not have agreed.
  3. As public opinion turned increasingly against the few dozen, and their increasingly untenable position became increasingly obvious they changed their demands, from a delay to:
    • a delay of PPACA implementation, then
    • a repeal of the medical device tax, then
    • a delay of the enrollment mandate, then
    • a demand that Congresspeople and their staffers would have to pay all their premiums themselves; then
    • a delay of the employer reinsurance tax…
    • now PPACA appears to be off the table, and instead there’s a demand for some budget talks around addressing the sequester and long-term entitlement cuts.

Sure, some of these were mixed in together, and others were sorta kinda coupled, but you get the picture.

As some readers have pointed out, the Congresspeople’s actions are, in fact, legal.

They are also mystifying.  Sure, the most vocal come from very safe districts where their actions seem to reflect the current will of their voters, but is delaying the medical device tax really worth defaulting on the national debt – and the all-too-likely consequences of a default?

Medical device tax or… world-wide financial meltdown, immediate return to 2008 recession…

Of course, now that the GOP is on the run and desperate for a deal, any deal that allows them to declare victory (maybe changing PPACA’s health plan colors from bronze silver and gold to red, white, and blue?), Senate Majority Leader Reid is playing his own brinksmanship game, demanding a roll-back of the sequester.

The GOP won’t agree to that, so we’ll likely get just what we would have had if this whole stupid pointless embarrassing mess hadn’t even happened – a short-term deal late on October 16 (that’s tomorrow!) with some nice words about negotiations over long-term entitlement reform and revenue generation.

What does this mean for you?

Elections have consequences.


Status report: Obamacare implementation

Here’s where things are.

Briefly, my best guess is less than a hundred thousand folks have enrolled in insurance via the Exchanges so far.  That’s based on reports I’ve seen from several sources identified below.

And, there are a lot of health plans participating, with 2/3 of states offering 4 or more health plans, each with multiple benefit plans.

Not surprising, as Massachusetts’ experience with their “exchange’ indicates people accessed their system about 18 times before actually enrolling.

Those shopping for coverage are finding lots of options, as 2/3 of the states have four or more health plans selling thru the Exchanges, while eleven of the most populous states have ten or more plans participating.

Carrier Participation Map - Final

Of course, PPACA implementation started back in 2010, with the elimination of lifetime caps on medical expenses, extension of coverage to dependents up to age 26, increased reimbursement for primary care under Medicare and other interim actions.

What does this mean for you?

Not surprisingly, there’s far more shopping than buying, and a raft of technical and capacity problems on the Exchange servers.  As the tech issues get fixed, we’ll see more traffic and more enrollees, especially in late November.

Until then this will quickly become yesterday’s news.


Exchanges open tomorrow – what does this mean?

Come hell or high water – or even a government shutdown, the Exchanges are going to open tomorrow.  Here’s what it means.

  • Some will not be “fully operational” – Spanish language options won’t be on-line in Nevada for some weeks; Medicaid and subsidy eligibility can only be accessed via phone in some states; small businesses can’t buy coverage till November.
  • Estimates are that only about 7 percent of the population will obtain coverage thru the Exchanges – or about 23 million people.  The rest will be covered via Medicare, Medicaid, and employer plans, and other means.
  • The open enrollment period is six months; don’t expect all 23 million to sign up tomorrow, or even this time around.  This is especially true as enrollees have to pay their first month’s premium within 30 days of enrollment; I wouldn’t expect a lot of folks to sign up tomorrow and pay a month’s premium on coverage that won’t kick in for 90 days.
  • Coverage begins January 1, 2014.
  • By the end of the initial enrollment period an estimated 7 million will haver purchased coverage thru the Exchanges.


Limited provider networks…that’s the point, folks!

There’s a good bit of hand-wringing and wailing by physicians and their support groups over healthplans limiting their networks to relatively small subsets of the entire provider community.

As if this was somehow a bad thing.

Health plans are contracting with smaller groups of providers to

  • a) drive more patient volume to those providers in return for
  • b) better financial terms and
  • c) tighter integration between the healthplan and the selected providers.

I find it darkly funny that the AMA and other groups are moaning about the potential impact on patient access to health care of these smaller networks; one of the primary reasons many don’t have health care is because physician services COST SO MUCH.

Instead of whining about the injustice of it all, the AMA – and the provider groups who aren’t part of the smaller networks – could decide to, oh, I dunno, maybe reduce their fees, agree to strict evidence-based medical guidelines, implement system-wide electronic health records and EDI for billing and encounter data…

After all, I’m quite sure the health plans with small network options would love to have bigger networks – but only if the cost of care makes the health plans’ product offerings cost-competitive.

It would be easy to miss the real significance of this tempest-in-a-teapot, and that would be this – By leveling the playing field, ACA and the Exchanges enable consumers to quickly and efficiently compare health plan offerings.

THE key decision criterion is price.

These health plans understand it, have gotten some providers to agree to help them reduce their “cost of goods sold”, and therefore are going to win more business.

Big networks work when HR people are the buyers; they don’t want to hear from employees and spouses complaining that their pediatrician or ob/gyn or cardiologist is not in-network.  When consumers and small business people are doing the buying, they are much less likely to be concerned about every Dr Tom, Dr Dick, and Dr Mary being in-network; they are choosing between a plan they can afford and one they can’t.

What does this mean for you?

You can have a huge network or a reasonably priced health plan, but you can’t have both.


Implementing health reform, random report 1

Today brings another in our random reports on progress and stumbles in implementing reform, starting and running Exchanges, and sussing out the reality from the BS.

It looks like there will be more competition for individual insurance come 2014 than there is in today’s market – “the number of carriers offering non-group insurance plans [in the 10 states where data is available] will increase substantially, from 52 to 70–an increase of 35 percent. Six of the 10 states will see more insurers operating on the non-group exchange compared to the number of significant competitors pre-reform.” Four will see no change.

One example is Colorado, where there are 243 individual and group plans available come October.  Rates are in, and while they aren’t lower than current rates, the additional benefits and (in some cases MUCH) lower out-of-pocket maximums make for much better coverage.  Individual rates for lower-end plans range from around $200 for young’uns to $250 or so for 40 year olds, and that’s BEFORE any subsidy, which about 466 thousand Coloradans qualify for.  The folks who know waaaaay more than I do about Colorado health plans are Louise and Jay; they’ve done quite a bit of research into costs, benefits, and the balance between the two.

Louise notes that the demise of medical underwriting makes it impossible for insurers to keep individual insurance rates much below small group premiums; on the other hand, many more individuals will be able to get coverage who can’t today.  And, those unfortunates who are stuck in one job because they need the insurance will be able to move, start a new job, or a new business after 1/1/14.

Gotta love that free market!

Moving a thousand miles plus to the east, data on insurance premiums from the D.C. Exchange are in; rates for the four insurers filing to date are “in line with current rates”; a bronze plan for youngsters can be had for $124, the older folks can get one for $296 on the individual market, with group rates somewhat higher.

Finally, there is growing evidence that the ACOs working in Medicare are beginning to have a measurable impact on outcomes; readmissions fell by one percentage point last year, the first drop in five years. Anecdotally, some hospitals participating in ACOs are reporting decreases in ER visits for Medicare recipients enrolled in ACOs.