Friday, December 13, 2013

Obamacare--Six Things to Watch for in 2014

We've been following a number of developments in the health insurance arena.  Here are some things to watch for as the Affordable Care Act (aka Obamacare) takes effect in 2014.  Given the delays and political maneuverings surrounding implementation, it's hard to be definitive.

1. Are there more uninsured Americans on January 30, 2014 than on January 1, 2013?

Obamacare imposes "minimum essential benefits" on every insurance policy--benefits that most policies don't have.  There are exceptions for "grandfathered" plans, but those exceptions are so narrow few policies meet them.  That is why we are seeing millions of people in the individual health insurance market lose their insurance.

Couple that phenomena with the chaotic rollout of Obamacare.  Some people have signed up for Medicaid and a few have signed up for Obamacare policies, but nowhere near as many that have lost their coverage.  Government figures are troubling, as they have an unhatched chickens problem--they assume everyone who "enrolls" online will actually buy a policy.  It's very hard to see what's going on. We won't know for sure until we see how many people actually pay for a policy or sign up for Medicaid.

Let's put is mathematically:

If:  Number of People Who Lose their Insurance > Number of People who Sign Up for Insurance

Then: The law is in big trouble.  The biggest selling point for the Affordable Care Act is that more people will have good health insurance.  If that proves false, then the argument to keep the law evaporates.

2. Will doctors and hospitals accept Obamacare policies?

Have you been to an emergency room lately?  The ones I've been in have little signs saying, basically, that the hospital will treat you for an emergency but if you are on Medicaid, you'll be sent somewhere else as soon as possible.  Why?  Because Medicaid work does not pay enough to make it worth it.  Also, few doctors take Medicaid.

If Obamacare policies become stigmatized like Medicaid, you probably won't want to have one if you can help it.  There are reports that 70% of the members of the California Medical Association are not going to accept Obamacare policies.  Hospitals are having trouble figuring out what the Obamacare policies will pay for and what they won't.  Some may just throw up their hands and say we won't deal with this.

Other major, high-end hospitals like Cedars-Sinai in Los Angeles, Memorial Sloan Kettering in Manhattan, and Anderson Cancer Center in Houston are either excluded or severely limited in what care they can provide to Obamacare policy holders.  If you need that high quality care, you might not be able to get it.

Our doctors advised us to check with both the insurance company and the healthcare providers' own staffs to make sure they would be in-network.  That proved good advice, as many doctors and hospitals are not in network.

In Insurancese, the phrase to look for is "narrow networks."  This means the network the policy covers has fewer doctors and hospitals and excludes more doctors and hospitals.  The strategy is twofold.  It's easier to negotiate with fewer doctors and hospitals and force them to make concessions.  Also, insurance companies exclude the most expensive hospitals and doctors to keep costs down.

If you start hearing a lot about narrow networks, that's not a good thing.

Want the straight story on healthcare reform?  Check out THE SMALL BUSINESS GUIDE TO OBAMACARE

3. Will healthcare.gov work?

At the heart of the crisis is a website that simply does not work.  Users have immense trouble signing in and worse, data transmitted to insurers is riddled with errors.  Indeed, parts of the website have not even been built yet.

If healthcare.gov does not work, and work soon, the whole project will implode.  A website that kind of works is worse for insurance companies than one that does not work at all.  Who is going to wait around for hours and try and try again to get health insurance?  People who really need it--meaning the sick, injured and old.  Who is most likely to try for 15 seconds and give up?  People who are healthy and have better things to do.

A bad insurance pool is far worse for insurance companies than no pool at all.  If insurance companies find themselves about to be wiped out, they will withdraw support for the project and seek to replace Obamacare with something else.

Look for that to start happening in the summer if the website is not fully functional by February or so.

If healthcare.gov fails to work properly, then that brings us to the next thing to watch out for.

4. Will the President suspend the individual mandate?

Obamacare requires that just about every American buy health insurance or pay a fine.  Suppose someone living in a state that does not expand Medicaid and cancels individual policies.  Further suppose that person tries and fails to sign up for insurance through healthcare.gov.  Let's also say this person does not have job-provided health insurance.  I would say that's not an outlandish or rare scenario.

How can the government fine that person for failing to obtain insurance?

My answer--it probably can't.  I suspect a court would find a way not to enforce the mandate.  This President, if he holds to form, would not allow a court to strike down the mandate.  That would just look bad.  He would suspend the mandate by decree, citing fairness and justice, for at least a year.

If I were handicapping whether the individual mandate applies in 2014, I'd say it's about 50-50.

5. Will the "essential benefits" rules wreck the employer-provided health insurance market?

Remember the Bible story where the prophet Nathan confronts King David?  David had knocked up his best general's wife and to cover it up, sent him to the front where he's killed in battle.  Nathan goes to David and tells him a story about a poor man with one little lamb that he loved very much--and a rich man who had everything.  The rich man takes the poor man's lamb and barbecues it.  David says such a man should die.  Nathan replies, "you're the man."

Those of with our little individual health policies, that gave us a bit of security, really liked them.  People with government or union negotiated gold-plated health plans sneered at those plans.  They took what little we had, because they said they weren't good enough.  Not everyone will be able to afford the replacement policies with their high premiums and astronomical deductibles.  Most people can't even go online to order a new policy because the exchanges don't work.

Mr. President--you're the man.

The same rules that made individual plans illegal apply equally to employer provided plans.  Very few employer provided plans meet the requirements.  So expect current plans to become illegal and replaced with vastly more expensive policies.

Remember, the employer mandate only applies to companies with more than 50 employees.  In addition, the President has decreed that the employer mandate won't apply in 2014.  No employer has to comply with the employer mandate in 2014.

Imagine you're a business owner facing vastly increased health insurance costs and no mandate to provide those benefits.  What would you do?  Exactly.

Watch for the government to try to head off loss of coverage for millions of American workers.  I don't know what they will do, but they'll hopefully do something.  It would be nice if they come up with something other than blaming the Republicans.

6. Hobby Lobby Supreme Court Case

The Supreme Court agreed to hear a pair of cases regarding Obamacare's requirement that insurance policies cover contraception, including the controversial morning after pill.  Some employers object to paying for contraception because their religion teaches that any kind of contraception is wrong.  Others object because some of the drugs kill a fertilized egg, which they believe is a human life.

Does an American employer have the right to say "I don't want to be involved with contraception or abortion?"  Does an American employee have the right to health insurance free from moralistic intrusion from the employer?  We're about to find out.

Arguments will likely take place in March.  I'd expect a decision at the end of the term, in late summer.

It seems politically that tying Obamacare to abortion is a recipe for strife in perpetuity.  It's already happening, with some states like Michigan banning abortion coverage in Obamacare policies.  It's just not a good way to get people to accept the law.

2014 is the big year for Obamacare.  We'll see what happens.  Thanks for stopping by.

Wednesday, November 27, 2013

Supreme Court to Hear Hobby Lobby Obamacare Abortion Mandate Case

Sorry, dear readers, for being out of commission for so long.  I've started up a new class I'm teaching and have found myself navigating the healthcare system myself.  Enough excuses, back to the action.

One of the aspects of the Affordable Care Act, popularly known as Obamacare, that erodes its popularity is that it seeks to do far more to transform America than to just provide universal health insurance coverage.  Most people would like to see sick people be able to get good health care and for people to have access to health insurance if they want it.  However, Obamacare seeks to do far more to advance the agenda of the left.  One example is the requirement that all health insurance cover contraceptives, including those that cause abortions.

Under Obamacare, the Secretary of Health and Human Services (HHS) has the power to define what benefits a health insurance policy must have.  If HHS determines that a policy does not have everything it is supposed to have, HHS has the power to assess huge penalties on both the employer and the insurance company.

Using that power, HHS requires that all health insurance policies cover contraceptives.  The Catholic Church condemns the use of any contraceptives, so a Catholic employer trying to follow church teachings could object to being forced to pay for contraceptives.  Even more troubling, the mandate requires coverage of abortificants, drugs that induce an abortion after conception.  Many Protestants and others who would have no problem with other kinds of contraceptives believe these kinds of drugs are wrong.  They don't want to be involved in paying for them, whether directly or indirectly.

Can businesspeople be forced to buy a product they find morally objectionable?  Or does the business simply have to leave their moral values behind when they go into business?  Or is the business merely a bystander to the decisions made between its employees and their doctors.

We're about to find out.

Yesterday, the Supreme Court agreed to hear two cases challenging Obamacare's requirement that companies provide health insurance covering contraceptives, including those that induce abortions.  The key issue is whether a private, for profit, corporation is a "person" within the meaning of federal law and under the Constitution and therefore has freedom of religion.  In other words, does a corporation have freedom of religion?  If so, does the contraceptive mandate violate that freedom of religion.  As my old bosses used to say, that's a toughie.

In one case, Sebelius v. Hobby Lobby Stores, Inc., the lower court held that Hobby Lobby does have constitutional and statutory religious rights and that the abortion mandate likely violates those rights.  The court returned the case to trial court for further proceedings.

In a second case, Conestoga Wood Products, Inc. v. Sebelius, the lower court held that a for-profit, secular corporation does not have any freedom of religion whatsoever and denied the company's claim. Although the court seems to believe that a church organized as a corporation would have freedom of religion because it is not for profit, or even a for profit religious publishing company would have freedom of religion and freedom of the press, a for profit business in the eyes of the court has no such rights.  Therefore, the company must comply with the mandate to provide abortion inducing drugs.

A third case, Autocam Corp. v. Sebelius, may also reach the Supreme Court.  In that case Catholic business owners object to the contraceptive mandate as well as the requirement that policies pay for sterilization procedures.  They lost in the lower court and recently appealed to the Supreme Court.  Don't be surprised if the Supreme Court takes up this case as well.

These are complicated cases, but here's the gist of the legal issues to be decided:

  • Is a for profit corporation a person entitled to protection of freedom of religion under federal law and the Constitution?  If not, the case is over and the companies lose.
  • If so, does the contraception mandate violate either federal law or the Constitution?  If yes, then the government can't enforce the mandate.  Such a ruling would open the door to other challenges as well.

Corporations have some constitutional rights that real people have, but not all of them.  For example, corporations can't vote.  They also have no right against self-incrimination under the 5th amendment.  However, corporations do have limited free speech rights.  For example, companies have a right to advertise their products but face limitations to prevent fraud or health dangers.  In addition, corporations have some rights to participate in the political process, most notably by spending money in political campaigns to support one side or the other.

It seems obvious that certain corporations have to have first amendment rights.  I don't think anyone would argue that The New York Times, Inc. lacks the protections of the freedom of the press.  In addition, it seems equally obvious that a local Baptist Church organized as a corporation would have freedom of religion.  If they don't, then the corporate form would become completely unworkable for these kinds of organizations.

What gets tougher is where the company's purpose is to sell a product that has nothing to do with religion but the owners want to follow their religious beliefs in running the company.  The problem for a court is that if we recognize that right, we have to measure whether the belief is genuine and the law violates the belief.  For example, could someone claim that their religion forbids the paying of taxes? The line-drawing exercises would become tedious and dangerous, requiring courts to determine what religious beliefs and are entitled to protection and which ones aren't. That's the reason the Court might hesitate to recognize a general freedom of religion for corporations.

Given the ethical lapses American business has had over the last decade or so, I applaud companies that  stick to their moral beliefs.  One of the things I always tell my students is that ethics are expensive.  It's easy to be moral when it's free, it gets a lot tougher when it costs money.  For the Court to send the message that business is a religion and morality-free zone could cause enormous amounts of harm.  "It's just business" has been an excuse for too long. We should laud companies that state their values and stick to them.

What if the corporations lose?  These companies might so strongly oppose the contraceptive mandate, especially the part that raises the abortion issue, that they would just drop coverage for their employees.  Given the financial incentives under the Affordable Care Act (aka Obamacare) to drop coverage, these moral objections would be just one more factor to let employees get their own coverage elsewhere.

We'll keep you posted as the case develops.  Observers say we should expect arguments in March 2014 with a decision later in 2014.

Monday, November 11, 2013

The Same Rules Wiping Out the Individual Healthcare Market Apply to the Employer Market

People are finally awaking to the fact that comprehensive health insurance reform impacts them directly.  Millions of people in the private, individual market are losing their coverage.  PPACA, or Obamaare, requires every policy to have certain minimum essential benefits.  A very narrowly written and interpreted grandfather clause allows a few people to keep their insurance even without the new required coverage.

"My employer provides insurance coverage, I don't have to worry because Obamacare does not affect me."  Wrong.  Because the President suspended enforcement of the employer mandate, 2014 employer-provided policies do not have to have the minimum essential benefits.  But in 2015, barring major changes in the law or a continued promise not to follow the law, they will.  Here's what an employer-provided plan has to have:


  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services 
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

Many employer-provided plans lack maternity coverage, mental health and substance abuse coverage, and prescription drug coverage.  Many policies may fail for failing to provide pediatric dental and vision care.  If your policy lacks even one of the things on that list, it's likely illegal under Obamacare.  Maybe the grandfather clause will save you, but so far it has saved few people in the individual market.

TIRED OF BEING SURPRISED BY OBAMACARE?  CHECK OUT THE SMALL BUSINESS GUIDE TO OBAMACARE TODAY!

Recent soothing words from the government may lead people to believe that only a few people are impacted and will lose their current policies and provider networks.  Barring major changes, that's not true.  Take steps to protect yourself now, or better yet, contact your members of Congress and ask them to repeal or fix the law.

Now for Today's Obamacare Headlines.

Rightwing Rants

Obamacare is an "old" "new program"

This is what betrayal looks like

Obamacare not worth the cost to young people

Leftwing Cheerleading

Where things stand after the big Obamacare apology

Hard News

Obamacare enrollment data to be released

Republicans blast cancellations

For Industry Insiders

5 states where Obamacare subsidies matter most

Medicare beneficiaries confused about enrollment

Actuary analyzes risky PPACA policies

Friday, November 1, 2013

Obamacare's Pediatric Dental Requirement--A Trap for the Unwary

Well, we did it, we successfully filed an application with Blue Cross Blue Shield of Michigan for my wife's health insurance for 2014.  She was among approximately 140,000 BCBSM members who had their individual policies canceled in Michigan.

No, we were not able to order the insurance through healthcare.gov.  We bypassed the government's dysfunctional site and ordered directly from the insurance company.  BCBSM's website seems to work really well, basically how healthcare.gov was supposed to work.

The downside of this approach is that it's not clear whether a policy purchased directly from the insurance company is eligible for tax credits to help pay for it.  In other words, if you buy direct you're probably going to pay full-price.

Our income, like many small businesspeople, is extremely hard to predict.  We have no way of knowing whether our income will fall within the tax credit range.  However, given our situation, we are not in a position to risk having her go without coverage for even a short time.  As badly as healthcare.gov has functioned so far, it's not clear that if it does start working the insurance companies will be able to process a flood of applications in late November and December.  So for us, the best choice was to get a policy in place now.


At the end of the application, we encountered an odd warning.


"Under the health care reform law, every health insurance plan must cover pediatric dental care.  If you select the Blue Dental PPO Personal Pediatric plan, you will only be charged for children under 19 on your contract and only your children will have dental benefits.  If you do not have children under the age of 19, you can still meet the pediatric dental benefit requirement at no additional cost by selecting this plan."

Let's translate that to English.  PPACA, aka Obamcare, mandates 10 categories of coverage every health insurance policy must have (Essential Health Benefits).  If a policy lacks one of these coverages, it's not legal unless some exemption or exception applies.  From the standpoint of the individual, if a policy lacks the coverage, a person could buy the policy AND still owe the individual mandate penalty.  In other words, a person could buy an insurance policy but still be liable for the penalty because the policy was "not good enough" by the government's standards.

One "essential benefit" getting some attention lately is the requirement for every policy to have maternity coverage.  Therefore, men must have coverage in case they get pregnant.  In addition, women beyond child bearing age also have to buy maternity coverage.  Mandatory but useless coverage, of course, makes the policy more expensive.  In another irony, low cost Obamacare-apprroved catastrophic coverage available to Americans under the age of 30 does not have to have maternity coverage.  So a 60 year old man must have maternity coverage, but a 25 year old woman does not.  Oh well, call me sexist.

Back to pediatric dental coverage.  Pediatric dental coverage is also mandatory under Obamacare.  Arguably, having health insurance without it could subject a person to the individual mandate penalty, even if the person has no kids.  To avoid this trap, at least with BCBSM you have to make sure you add a pediatric dental policy to the health policy.  It doesn't cost anything if you don't have kids, but could potentially cause problems down the road if you don't have it.

You don't want to buy an expensive health insurance policy just to find out you're getting fined anyway.

Let's check out some of Today's Obamacare Headlines.

Rightwing Rants

Legal challenges could shut down the exchanges.

Obama's 2009 promises come back to haunt him.

Does anyone still listen to Obama on healthcare?

Why grandfathered plans are going extinct.


Leftwing Cheerleading/Apologetics

Republicans don't want to fix Obamacare.

Medicaid enrollment surges and we love it.

Hard News

How Obamacare could raise your premiums at work.

Healthcare.gov tests indicated it would not work.

Few believe PPACA has helped their health insurance situation.

Lawmakers scramble to push aides into Obamacare exchanges (or not).

Bye bye glitch girl.

For Industry Insiders


Challenges to subsidies finds its way through the courts.

HHS eases deadline conflicts.

Insiders not surprised by plan cancellations.

Thursday, October 24, 2013

Progress at Healthcare.gov

I've been blogging about my experiences on healthcare.gov.  I know that there are other families out there where getting health insurance is absolutely critical to both physical health and financial security.  I'm hoping our experience can help others do better.

And making fun of it helps me feel better.

Tuesday night, I made some progress on healthcare.gov.  I made it farther than I thought possible, so maybe there is some hope for the thing.  However, I found myself in a corner I could not get out of.

About 11:30 PM on Tuesday, I bopped over to healthcare.gov.  My old user name and password continue to not work, so I opened a new account.  Surprisingly, I received my confirmation email right away and was able to access the site.

It asked for information on where I live, my birthday, whether I smoke, and my social security number.  I hope I won't regret it, but I supplied the information.  I also went through the same set of questions for my wife.

I got to the part where it asks about subsidies.  It asks for no detail, but just asks how much we make.  That's a tough number to derive for us, so I made my best guess.  Keep in mind that if you do this for yourself, to get a good idea of the amount of subsidy it's not just your wages that count, it's any investments, capital gains, interest, and even social security payments that count.

After all that, I got this report.


How do you make a question mark in a box symbol?  I don't know, but this website is good at it.

It did tell us what our tax credit should be at the estimated income level.  Who knows if it's right.

We were also able to get a bunch of family plan quotes.  My own policy is a grandfathered, high deductible, HSA compatible plan.  If it were an exchange policy, it would be better than a silver and almost as good as a gold plan, but a lot cheaper than either.  So I'm thinking I will keep it.  My wife's BCBSM plan however will be cancelled as of the end of this year, so we have to replace it.

Crashola time!  You apparently can't go back and rerun a family plan application as an individual application.  I think we'll probably just buy directly from the insurance company.  That means we'll be ineligible for the tax credit, but we can survive without it and even though we'll miss the money, at least we'll know we're covered.

I reviewed the plan details for BCBSM from both healthcare.gov and their own site and was disturbed to find that some of the plan details did not match up.  In other words, the benefits listed in one place did not match those in the other.  Oh well, I guess that's good for insurance lawyers.  And generally speaking, what's good for insurance lawyers is good for me.

I just don't have confidence in this system.  And when you buy insurance, that's what you're buying.  You want to be able to sleep at night knowing everything will be OK.  This system does not create those feelings, it just breeds anxiety.

Anyway, here are some top Obamacare Headlines.

Rightwing Rants

Foolish pro-Obamacare ad features two enrollees.

Leftwing Cheerleading

Obamacare off to great start in Kentucky and Washington.

Hard News

Obamacare truth and myths.

Obamacare security contractors had past security lapses.

Delaware's first Obamacare enrollee receives invitation to White House.  (I guess that's kind of like winning the Super Bowl or being the first man on the moon).

Obamacare health co-ops struggle with regulations.

Website problems blinded Obama according to Sebelius.

For Industry Insiders

PPACA and exchange information not reaching employees.

Self Insurance Institute of America vows to fight on in stop-loss battle.

Tuesday, October 22, 2013

Conflict in Deadlines and What it Means to You

It recently came to the attention of the government that the deadlines for signing up for health insurance does not match up with the deadlines for the imposition of penalties under the individual mandates.  In other words, a person could sign up for an insurance policy within the open enrollment period but still be subject to a penalty for at least part of 2014.

Here's the schedule:

  • October 1. Open enrollment on exchanges opens.
  • December 15. Deadline for enrolling to be covered by January 1.
  • January 1. First day of coverage.
  • February 15.  According to some experts, the last day to apply for insurance to meet March 31 deadline.
  • March 31. Open enrollment ends.  Deadline for avoiding individual mandate penalty.
  • October 15-December 7, 2014. New open enrollment period.
The problem arises for someone who enrolls after mid-February.  Because of the processing time, it is unlikely that someone who signs up toward the end of the open enrollment period will be insured by the March 31 deadline.  Confusion will reign when people who think they are enrolled but have only applied get hit with the individual mandate penalty, even though they believe they timely purchased insurance.

So what does that mean to you?  If you do not have insurance, sign up sooner rather than later.  Just because you have applied does not mean you are covered.  Also, there's a chance you become sick or get injured before your policy is in place.  So the best thing to do is to apply by December 15, and preferably earlier, to make sure you have coverage come January 1, 2014.

Of course, so long as the insurance exchange websites are not working properly, this might not be possible.  However, don't hesitate to contact an insurance broker in your area for help in signing up even if the website for your state is not working.

Now for some Today's Obamacare headlines:

Rightwing Rants


Leftwing Cheerleading


Hard News


Friday, October 18, 2013

Book Signing on Saturday

I will be at Charlin's Book Nook at River Place in Frankenmuth for a book signing tomorrow (Saturday, Oct. 19).  Planned hours are noon to 3 pm.  Please stop by and pick up a signed copy in person.

Wednesday, October 16, 2013

What if Healthcare.gov Does Not Work by January?

We saw the headline in the Sunday Detroit Free Press that 146,000 Michigan residents will lose their health insurance coverage come January.    This includes about 140,000 Blue Cross Blue Shield of Michigan members, including my wife.  If you've been following along here at obamacareguide.us, you would have known about this back in August.

I was at a seminar yesterday put on by the Saginaw Chamber of Commerce featuring an excellent panel.  Once again, I found myself surrounded by baffled and scared businesspeople.  They really don't know what they are going to do.  Also, given that the healthcare.gov just does not work, they will face obtaining insurance and complying with the law without the options the law envisions.

Some Republicans have called for a delay of the individual mandate in light of the fact that the President suspended the employer mandated.  I think there is a good chance a court would not enforce the penalties against someone who does not obtain insurance next year, especially if the exchanges don't work.  That's doubly true in states without the Medicaid expansion.  But it misses an important point.

For people who are losing coverage through their employers or are being dropped by their current insurers in the individual market, will coverage be available if the technical challenges facing the exchanges can't be overcome by January.  Some Democrats have pointed out that open enrollment goes through March, but what if you get sick or injured in January or February?  Also, for people who could buy insurance but decide to go without for part of 2014 will have to pay a penalty for the months they go without coverage.


I spoke with a representative of BCBSM and it is possible to buy a policy through a broker or directly from them, bypassing the exchange.  She said that the subsidies and tax credits would not be available and I believe that is correct.  It's not clear to me whether one can similarly go through a navigator and obtain a policy outside of the exchange and still get assistance to pay for the policy.

If you can afford to pay full price, it appears that coverage will be available despite the problematic rollout.  But this will cost a pretty penny as the premiums are high and the deductibles outrageous.  Perhaps a partial solution would be to allow people to buy the approved policies directly outside the exchanges and then allow them to claim the tax credit on next year's tax return.  That won't work for many who will not be able to front the money for the premiums, but it would help some.

Time for Today's Obamacare Headlines.

Rightwing Rants









Leftwing Cheerleading




Hard News


For Industry Insiders

Tuesday, October 8, 2013

Getting a Feel for Obamacare Premium Rates

I, like many people, went on healthcare.gov on October 1 and found that it doesn't work.  However, I had much better luck at Blue Cross Blue Shield of Michigan.  Today, I'll show you what I found out about my own situation at Blue Cross Blue Shield of Michigan's website.

Hit the "Get a Quote" button at the lower left and then select 2014.  The following rate information assume no eligibility for a subsidy.  However, if you estimate your 2014 income you can compute the discount you'll receive on the rate.  The rates shown are full price with no discount based on income.

PPACA (aka Obamacare) severely limits what insurance companies can consider when setting rates.  They can consider geography (e.g. if you live in an expensive city vs. a less expensive rural area), age, and whether you smoke.  BCBSM asks for gender, but when I run the numbers changing to M to F the rates appear to be the same.

Here's a summary of my results:


Here's a key:

Ded = Deductible
CoIns = Coinsurance
OofP Max + Out of Pocket Maximum
Prem = Monthly Premium, including state and federal taxes and fees

I played around a little bit with the assumptions.  As I said earlier, changing my gender does not change my premium.  However, a county line runs through my zip code.  If I lived 2 miles east in Tuscola County, for the most part my rates would be higher but some plans are actually cheaper.  Also, plan availability varies depending on where you live in Michigan.

One other thing.  A family plan for two adults seems to cost the same as two separate individual policies.  To get an idea of what a family plan for two costs if the couple are the same age, just double the deductible, out of pocket maximum and premium.

I think where most people will have sticker shock is when they figure out that a $5950 deductible means they will pay almost $6000 before the policy pays for anything (with few exceptions).  If I understand the calculation correctly, the lowest cost Bronze Plan would cost about $2600 per year ($216 * 12).  The policyholder would pay 100% of costs, up to the deductible.  After the deductible is met, the policyholder pays 40%, up to the out of pocket maximum.

Example 1 (Minor Costs of $1000, Bronze Blue Cross Select Plan)


  • Premium = $216 / month * 12 months = $2592
  • Below Deductible, So Policyholder pays 100% = $1000
  • Total Paid = $3592


Example 2 (Short Hospital Stay of $10,000, Bronze Blue Cross Select Plan)


  • Premium = $2592
  • Deductible = $5950
  • Coinsurance = $4050 * 40% = $1602
  • Deductible + Coinsurance = $7552
  • However, we've exceeded the out of pocket maximum of $6350.
  • So Total Paid = Out of Pocket Maximum + Premium = $6350 + $2592 = $8942
  • Insurance company pays the rest ($3650 is their share).

For someone without subsidies, this is not cheap insurance.  The bulk of the cost falls on the policyholder.  However, in a catastrophic situation, the most the policyholder would be out is $8942, on the assumptions above.

Here's another thing to consider.  HMO networks are much narrower than PPO networks.  A PPO will give you access to more providers.  Also, with an HMO there is no coverage for non-emergency visits to providers outside the network (generally speaking).  In BCBSM's scheme, you pay a higher rate to see a doctor outside the network.  If you have a favorite doctor and you are worried about whether he or she will be in network, a PPO would allow you to see that doctor even out of network if you're willing to pay more.  That could prove important if the Obamacare policies become stigmatized like Medicaid with doctors refusing to participate in the networks.

I hope that helps some of you out there.  For more examples, check out my book The Small Business Guide to Obamacare: Solutions to the Looming Health Law (Without the Politics).

Here are my favorite of Today's Obamacare Headlines:

Rightwing Rants

Republicans should just let Obamacare fail of its own accord.

Obamacare epiphanies: someone has to pay for all this free stuff.

Glitches, glitches, everywhere.


Leftwing Cheerleading

Obamacare does not cause part time hiring.

Sen. Cruz is crazy.

Hard News

Sen. Cruz argues for swapping debt ceiling for Obamacare reforms.

Lawmakers signal willingness to compromise.



Thursday, October 3, 2013

A Little Progress on Healthcare.gov and Great Success at BCBSM

Tuesday, I detailed my Day 1 misadventure through the healthcare.gov exchange.  Today, I have a bit of good news.

I tried to get onto healthcare.gov early this morning.  I got the now familiar "too many visitors" screen.  I have to admit, I think this is about as pretty a wait screen as I've ever seen.




It said to wait, so I went about my daily routine.  I had forgotten I had even tried to log in, but noticed that the browser was still open.  I was able to login, set up a user name, and get to the security questions.  On Day 1, the dropdown menus did not work, just showing blank entries.  However, I got this today.



After recovering from feeling sad that I don't know either of my grandmother's nicknames, I filled in a couple of questions.  The site accepted my answers and sent me an email.  I received a confirmation email, hit the link there, and got the "Success" page.


Now we're cooking!  I hit the green "continue" button in the lower right corner, but that was the end of the line.


So access denied was the end today.  I was not able to log in with my new, hard won user name and password.

I went over to Blue Cross Blue Shield of Michigan's website.  It turns out that you can enter the information there to find out how much their policies cost and what the coverages will be.  I was able to confirm which of our doctor's are in their networks.  In addition, they have a calculator that computes the subsidies based on income.  In short, it does the kinds of things healthcare.gov was supposed to do. The only downside is that you only get their policies, whereas healthcare.gov is supposed to give competitive options from many companies.

So kudos to Blue Cross Blue Shield of Michigan.  If you live in Michigan, you should be able to get a good idea of where you stand by going there.

Let's have a few Obamacare headlines:

Rightwing Rants





Hard News







Wednesday, October 2, 2013

Delay of the Obamacare Individual Mandate May be Necessary

As the partial government shutdown continues, one compromise proposal is to fund the government including Obamacare but to delay enforcement of the individual mandate requiring most everyone to buy insurance next year.  The House in fact sent such a bill to the Senate but the Senate rejected it.

The logic behind the Republican proposal to delay the individual mandate is straightforward.  The Obama administration has already delayed enforcement of the employer mandate, the requirement that large businesses to provide insurance to full-time employees by one year.  The President did this without Congressional approval, but apparently as a matter of discretion not to collect the penalties.  What drove that decision was not politics, but according to the government was because they are not ready to collect, process and act on information from employers as to whether they are in compliance or not.  Republicans say that if the government can give a break to big business, it should give a break to everyone.

Could a delay work?  One of the key promises of Obamacare is that people with pre-existing conditions  will be able to obtain insurance at the same rates as everyone else.  This is a bit like waiting until your house is on fire to buy homeowners insurance.  If people wait until they get sick to get insurance, the whole system will go bankrupt.  Insurance necessarily depends on most people paying in and not having losses.  Insurance is there for the few who have something go wrong.

That's why there's an individual mandate.  Because the government fears people will wait until they are sick to get insurance, they must be forced to buy insurance.

One of the weaknesses of Obamacare is that the penalties are small compared to the likely cost of insurance.  Here's a chart from the Small Business Guide to Obamacare showing the approximate penalties for 2014.

The penalties aren't enough to force people to buy insurance.  Delaying ineffective penalties may have little to no effect.  If that is the case, people could be allowed a year to see how the exchanges function, what their employees will do, and what the individual market looks like after implementation.  This seems like a winner all around.  If Obamacare works, the President wins because people won't feel like they are being forced into something.  If Obamacare doesn't work, the Republicans will be able to claim that they saved people from a bad system.

Given the total failure of the exchanges to function in many states, perhaps taking a year to get them up and running might be a good idea.  It's just not fair to penalize people for failing to get insurance when the system does not work.  Moreover, it's not fair to penalize those who have concerns that the security and other features won't work on the exchange sites.  Perhaps this is something where waiting to get it right will be worth the wait.

It seems like a fair compromise to me.  What do you think?

Now for Today's Obamacare Headlines:

Leftwing Cheerleading

How Oregon's exchange actually works.

Hard News

Enrollment encounters glitches.

Glitches and high traffic lead to exchange malfunctions.

Obamacare quiz results.

What small business needs to know about the exchanges.

Healthcare.gov crashes.

Tough choices for small business under Obamacare.

PPACA burdens entertainment industry.

Tuesday, October 1, 2013

Obamacare Glitches--A Michigan Resident's October 1 Misadventure

Today is the day and as expected, the Obamacare exchange rollout has been problematic at best.  President Obama himself said we should expect some glitches in the first few months the exchanges are open.  Twitchy has a great summary of people reporting their experiences with the exchanges.

Let's start with the definition of glitch.  I found this definition:

"A minor malfunction, mishap, or technical problem; a snag."

Here's my experience this morning, which appears to be typical.  You can decide for yourself whether "total failure to function" counts as "a minor malfunction, mishap or technical problem."

Michigan has no exchange of its own, so that means you go to the federal site www.healthcare.gov.  The welcome page looks like this.  I suppose if I were as young and happy as this model, I'd be smiling too.

"I'm as famous today as I'm ever going to get."

After hitting "Apply Now" I got to the "what state are you from?" page.  It looks like this:

"We're happy, you'll be happy."
For most people, what you get is the dreaded "Health Insurance Marketplace: Please wait" screen.

D'oh!
Early this morning, I did get a bit farther.  From here, I was able to get to the next screen.  It asks for an email address, user name, and password.  I did get that to work after a couple tries.  Unfortunately, I did not make a screenshot and can't seem to get back to that point as of the time of writing.

After the user name page, you get to set up a series of security questions in case you forget your password.  For me, each question had a drop down menu but there was no text.  There was no way to put in a question to be answered.  I gave up at that point.

Others have been having similar experiences.  Even an MSNBC anchor said she reached the point where she would have given up.  She reached that point after long fruitless waits on the help line.  The funniest part is the end of the video.  She said NBC News contacted the White House and were told they are aware of the issues and are working on them.

Normal people can't even get that far.

UPDATE!  1:23 PM ET, Oct. 1.

I just got redirected to the sign up page.

Healthcare.gov Create a Marketplace Account


That worked.  Then I got the "put in the user name and password page."  Got through that, but I don't want to show you.  Gitcherown password and user name.  That takes us to the previously dysfunctional security questions page.

Healthcare.gov Security Questions

Once again, the drop down messages don't work.  I've tried them in both Safari and Firefox with the same results.  So I put in nonsense answers without knowing the questions.  Some people are reporting that the questions are things like "What's your favorite radio station to watch?"  They say there's no such thing as a stupid question, but I think they are wrong on that.

Here's the moment of truth.  I hit the "Create Account" button.  It whirs around, and then:

Healthcare.gov Your account couldn't be created.
From the "your account couldn't be created" I hit the "Return to Create Account Page" green button.  It sent me back to the start, with everything missing except it remembered I'm from Michigan.  So from there, I give up and hope to live to fight another day.

HHS Secretary Kathleen Sebelius, head of the agency chiefly responsible for regulating the health industry and arguably the most powerful woman in the world stated:  “Everyone just assumes, There’s a problem, they’ll fix it, let’s move on,’” she told reporters. “Hopefully, they’ll give us the same slack as they give Apple.”  The President this afternoon echoed this "Apple has problems too" theme.

Here's the difference between Obamacare and a new Apple product.  Apple cannot shut down Google, Motorola, Blackberry and Microsoft because their products are "not good enough," as Obamacare's rules make many insurance policies illegal as not having enough benefits.  Apple cannot pass a law forcing you to buy their product as Obamacare does.  If you don't have insurance coverage next year, you'll get fined.  If Apple's rollout is bad enough, you can always go somewhere else.  That's not true when the federal government screws up, short of moving to another country.

We'll see how it goes, but I'm not optimistic.  Setting up accounts is easy.  Calculating rates and subsidies is hard.  Securing credit card information and health history information is hard.  If they can't do the easy part, it sure does not creative confidence they can do the hard part.  I may be wrong, but I don't think so this time.

There are so many Obamacare headlines today that I'm going to skip them until tomorrow.  By the way, if you find Obamacare confusing, please check out my book.  Just clink the link at the right to check it out at Amazon.  Cheers!

Friday, September 27, 2013

Hats off to Senator Cruz

Agree with him or not, you have to admire that he's willing to take a stand.  In law school,  they had us watch Mr. Smith Goes to Washington during orientation.  They wanted us to remember that sometimes the lost causes are the only ones worth fighting for.  Here's a guy that's actually living that philosophy.  And as agitated as his opponents among the Democratic left and Republican establishment seems to be, maybe this cause isn't lost yet.

We also had another Obamacare delay since my last post.  One of the innovations that's supposed to be in the exchanges is called SHOP.  Basically, SHOP allows small businesses to purchase insurance for their employees.  The online exchange would allow employees to choose among several competitive health plans.

A few months ago, it was announced that SHOP would have only one insurer, that competition was not going to be possible.  Now, the government has announced SHOP will not be ready for enrollment on October 1.  They believe it will be ready some time in November.

The administration claims that this delay is no big deal and in a way they are right.  Enrollment was supposed to open on October 1, but even someone who enrolls on October 1 does not get coverage until January 1.  However, business people will not be able to get their health insurance affairs in order in October so that they can get back to their businesses.

This is just more chaos.  And businesses don't like chaos, especially when it comes to mundane things like employee benefits.

The Small Business Guide to Obamacare made it onto MLive.  If you're really confused about all this, hit the link at the left and pick up a copy of my book.

Anyway, here are Today's Obamacare headlines:

Leftwing Cheerleading

Entrepreneurs should love Obamacare.

Americans don't like shutdown circus.

Frenemies Clinton and Obama unite over PPACA.


Hard News

Affordable policies not affordable to all.

12 biggest Obamacare questions answered.

What you need to know for October 1.

Hollywood Casino in Pennsylvania cuts workers under 30 hours.

Arkansas releases PPACA exchange rates.

What you need to know about the California health exchange and health reform.

Exchange costs revealed.

Sen. Manchin (D, W.Va) says he'll go along with individual mandate delay.

Californians will pay 10th highest rates in country.

For Industry Insiders

Short term coverage an option for some uninsureds.

Delay of individual mandate not possible.

PPACA has many small business incentives.

Agents sign up to sell exchange policies.

13 things employers must do to be PPACA ready.

Tuesday, September 24, 2013

A Handy Checklist for PPACA Compliance

I came across this handy checklist for Obamacare compliance from Amy Gallager of the Cornerstone Group.  If you are an employer you could do worse than printing out her list and taking it with you to see your advisors would be a good idea.  You can then run down that list and address each item.  It won't guarantee you won't get in trouble, but you can greatly increase your odds of success.

If you want more detail on the new Obamacare law, you should check out The Small Business Guide to Obamacare.  I try to give the rules to you as straight as I can, without political posturing or whining.  If you just want to figure out what you can and can't do under the new health law, please read my book.

Now for Today's Obamacare headlines:

Rightwing Rants

Republicans seek end game to Obamacare showdown.

Obamacare is killing employer provided health insurance.

Pelosi looks forward to Obamacare liberation.


Leftwing Cheerleading

Republicans could have healed Obamacare.

Despite the technical glitches, Obamacare will be great.

Plenty of reasons to delay Obamacare.

Hard News

Obamacare divides Republican contenders.


For Industry Insiders

U.S. Territories face PPACA risks.

Monday, September 23, 2013

Legal Theory to Take Out Individual Mandate?

It has been more than a year since Chief Justice Roberts' 4-1-4 decision in National Federation of Independent Business v. Sebelius saved Obamacare's individual mandate.  Since then, I've been pondering whether some other legal theory could cripple Obamacare.

Some lines of attack go against particular problems with how Obamacare is being implemented.  For example, various religious employers have filed suit challenging the requirement to pay for coverage for contraceptions and abortion inducing drugs.  Are those decisions between solely the patient and doctor?  If so, what influence should government or the employer paying the bill have?  Given the split in the circuit appellate courts on the issue, it seems highly likely the Supreme Court will accept a case soon.

A couple other lines of attack are Pacific Legal Foundation's challenge arguing that because the Constitution requires tax bills to originate in the House but Obamacare originated in the Senate, it must necessarily fail.  That case is pending in the D.C. Circuit, one level below the Supreme Court.

In addition, what I see as the most serious threat to the entire scheme, is Oklahoma's argument that exchange subsidies are not allowed in states with a federal exchange (as opposed to a state-run exchange).  Because the penalties under the employer mandate are only triggered when a large company fails to offer insurance AND an employee obtains a subsidized policy on the exchange, the employer mandate is unenforceable in states without a state-run exchange.  No subsidy, no employer mandate penalty.

Supporters of Obamacare argue that there was a drafting error that led to the omission of subsidies in states without their own exchanges.  It seems just as likely, however, that Congress offered the subsidies as an incentive for states to create exchanges.  The lack of subsidies is a penalty on states that don't adopt exchanges.  The IRS has taken the position it can "clarify" the problem by handing out subsidies on the federal exchange.  It seems a stretch that IRS now has the ability not only to collect taxes but to spend treasury dollars.  The Constitution's separation of powers put the power to spend in the legislature, not the executive.  That's why I think it's a big problem for the entire system of penalties on business.

That brings us to an idea I've been considering.  The individual mandate requires nearly everyone in America to obtain health insurance in 2014.  Every year, we will be required to file a piece of paper verifying we have insurance.  If we don't have insurance, we pay a "penalty tax."  In the first few years, the penalties are fairly small but in later years they become greater and greater.

How are we supposed to get insurance?  First, the government expects most people will continue to get employer-provided insurance.  Business will continue to offer insurance because they are forced to do so by the employer mandate.  Some small employers were expected to obtain exchange-based insurance for their employees through a program called SHOP.  Second, people without employer-based insurance can go to an online exchange and choose among private plans.  Depending on income, some people will obtain subsidies.  Third, the federal government is sponsoring an expansion to Medicaid.  States will accept federal dollars to provide free coverage to people below a certain income threshold.  (133% or 138% of poverty level, depending on how you count it).

So what't the problem?  The Obama administration has unilaterally suspended the employer mandate in 2014.  Employers therefore have less incentive to offer insurance.  In addition, the government has limited SHOP to only one offering, rather than the competitive plans that were supposed to be offered.

You can add another problem brought on by the government's enthusiasm.  Many people had so-called mini-med plans.  These were bare-bones plans for people who work at low paying jobs.  Those kinds of plans are largely illegal.  In addition, the Obamacare mandates dramatically increase the cost of private insurance, making them unaffordable or even unavailable for many people.  For example, we received notice that Blue Cross Blue Shield of Michigan will not be renewing its current individual policyholders under the current terms.

The exchanges are due to open October 1, but it's not clear that will happen on time.  If Oklahoma somehow succeeds in its suit and federal subsidies are not available in states without their own exchanges (which is most of them), another attractive path to coverage will close to many people.

Lastly, many states have refused to expand Medicaid.  Under a strict reading of the rules, a person eligible for Medicaid is not eligible for exchange subsidies, even in states without the Medicaid expansion.  In other words, if your income is so low you are eligible for Medicaid, you do not make enough to get an Obamacare subsidy on the exchanges.  IRS has promised not to enforce that rule and will allow lower income people to keep their subsidies, but I don't know that we can rely on that?

Here's where we come out of that funnel--it's not fair.  The individual mandate penalties assume lots of ways to get coverage which should be affordable to everyone.  In practice, that's not true.  The government has failed to make good on its promises that underly the justification for penalizing people without insurance.

Turning that notion of injustice into a legal theory is difficult.  I think the best approach may be to argue either under due process or equal protection that the individual mandate penalties lack a rational basis tied to a legitimate legislative goal.  Certainly, expanding insurance coverage to make the system run better would count as at least a legitimate goal.  People do get sick and injured and there needs to be a way to pay for their care.  Although there might be better ways of achieving that goal, "legitimate" does not mean best, it more or less means "not crazy."

But penalizing someone for failing to obtain insurance rational when the ways to obtain insurance contemplated by the legislation don't exist is not just unfair, it's "irrational" and just plain crazy.  How does the government advance the cause of universal coverage by penalizing people for failing to buy insurance that's no longer available.  It's as if the government mandated public transportation but banned railways and buses.

Who's the ideal plaintiff?  Someone who is eligible for Medicaid, lives in a state without the Medicaid expansion, and once had coverage through work but lost it thanks to PPACA's mandates.  Here is someone who really cannot afford coverage at full price and the avenues to coverage are blocked.  Importantly, the impediments to coverage are not the fault of the individual but rather arise from conscious decisions of people in power.  Certainly, this kind of plaintiff would elicit sympathy from anyone.

Maybe someone will bring such a suit.  The basic idea is simple--if the government decides not to enforce the employer mandate to provide insurance it cannot enforce the individual mandate.  The one assumes the existence of the other.

Now, for Today's Obamacare Headlines:

Rightwing Rants

Obamacare's supporters live in the past.

Obama confuses legislative voting as "messin' with me."

Obamacare?  No thanks, I'll pay the penalties.


Leftwing Cheerleading

Obamacare stars as villain in Alabama special election ad.

CNN panel loves Obamacare.

Republicans pick the wrong fight with defunding.

What GOP could learn from Obamacare.

Obama slams Republicans over defunding fight.

USA Today sees opposition to Obamacare as "hostage taking."

Obamacare is GOP's Waterloo.  (I guess she assumes the Republicans are the French).


Hard News

Senators say Obamcare defunding DOA.

Q&A on Obamacare.

Ten things you need to know about Obamacare.

Rand Paul says we probably can't defund Obamacare.

How to pick an Obamacare policy from the Motley Fool.

Gov. Snyder signs Medicaid expansion for Michigan.

Obamacare defunding fight tests GOP resolve.

Friday, September 20, 2013

Layoffs in Medical Community a Disturbing Trend

Two stories about major medical providers announcing massive layoffs caught our eye.  If nothing else, the expansion of coverage under Obamacare should increase demand for healthcare services.  However, at least two major health systems announced they are laying off hundreds of people.

Vanderbilt University Medical Center announced that it will be laying off hundreds of people with a goal of cutting 1000 by the end of the year.  They hope to cut $250m out of a $3b budget.  Vanderbilt is the largest employer in its region with over 20,000 employees, so the announced layoffs are a major hit.

The Tennesseean reports that Vanderbilt blames financial pressures caused by:

  •  An aging population, 
  • Lower reimbursement rates from insurance companies, 
  • A lack of Medicaid expansion in Tennessee and; 
  • A reduction in National Institutes of Health grant funding.

I'm not sure how an aging population hurts a healthcare provider, that should increase demand.  Lower reimbursement rates and the failure to expand Medicaid are probably the big drivers.

It's also frightening that an elite research university cannot get enough funding to keep its people.  It's not looking good for the folks down in Tennessee.

A similar story involves the Cleveland Clinic, the largest employer in that region.  The Cleveland Clinic will cut $300m from its budget likely resulting in layoffs.  3000 employees will be offered early retirement in October.  The Cleveland Clinic specifically blames healthcare reform for increasing its costs and driving it to make serious cuts.

Ohio, with a Republican governor and legislature, have not accepted the expansion of Medicaid. Governor Kaisich supports Medicaid expansion but the legislature has not acted.  Part of Obamacare calls for states to expand Medicaid to millions of low income Americans with most of the money coming from the federal government, but the Supreme Court in the Sebelius case ruled that states can reject the money if they want.  Some Ohioans have started a petition drive to force lawmakers to consider the issue and is the first step toward a voter referendum.

The people who get the worst treatment under Obamacare will be the ones who are Medicaid eligible but live in states that don't expand Medicaid.  Those people will be subject to the penalty tax of the individual mandate but won't get the help the Obamacare scheme assumes they will get from Medicaid. Once people start to figure this out, I'd expect a lot of pressure on states to expand Medicaid whether they like it or not.

Now for Today's Obamacare Headlines:

Rightwing Rants

Affordability rules may lead to children not being able to afford coverage.

Leftwing Cheerleading

Obamacare is misunderstood.

Republicans like "PPACA" better than "Obamacare."

Tea party wants to sabotage Obamacare.

Hard News

Obamacare leads to cuts in worker benefits.

Obamacare defunding vote to take place.

6th Circuit denies standing to company objecting to contraception mandate.

For Industry Insiders
PPACA may help with claims data.

Study shows hospitals not ready for Obamacare.

Ordinary HRAs are safe.