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Why Obamacare Customers in Some States Might See Higher Rates in 2017

As insurance companies begin submitting their rates for health care coverage next year, consumers are seeing changes in the number of insurers selling plans on Obamacare’s exchanges.

And in some places, fewer choices on the exchanges can mean higher premiums.

So far, three states—Alabama, Alaska, and Wyoming—have just one insurer selling coverage on their Obamacare exchanges. And in Kansas, Insurance Commissioner Ken Selzer has been talking with carriers to convince them to sell coverage in his state. If Selzer isn’t successful in bringing other insurers on to the exchange in his state, Blue Cross and Blue Shield of Kansas will be the only option for consumers there.

Since Obamacare took effect in 2013, a number of studies have documented a decline in the number of insurers selling coverage on the exchanges.

A March report from The Heritage Foundation found that from 2015 to 2016, the number of insurers participating in Obamacare’s exchanges fell from 307 to 287. Additionally, prior to the Affordable Care Act’s rollout in 2013, 395 insurers sold individual-market coverage. In 2014, the number of insurance companies selling coverage on the exchanges fell to 253.

When comparing the number of insurers selling plans on the exchanges from 2015 to 2016, 22 states and the District of Columbia saw a decline in the number of carriers selling exchange coverage from 2015 to 2016, according to the report.

Just 10 states, meanwhile, have more insurers on the exchanges.

Additionally, a study conducted by the Kaiser Family Foundation found that more than 650 counties nationwide will have one insurance company on the exchanges next year. In states using the federal exchange, HealthCare.gov, 40 percent of counties will see just one or two insurers.

A Provider Monopoly

Insurer companies are in the midst of deciding whether to continue offering coverage on Obamacare’s exchanges, and some big players like Humana and UnitedHealthcare have already announced decisions to pull out of some exchanges.

These changes now have health policy experts warning that such a decline in insurer participation on Obamacare’s exchanges could impact how much consumers pay and how much providers charge.

“The focus has been on rural areas where you already have less insurer competition and are getting down to one or two [carriers],” Ed Haislmaier, a senior fellow in health policy at The Heritage Foundation, told The Daily Signal. “I think the effect, paradoxically, is somewhat less. The real issue isn’t the number of insurers. It’s the number of providers.”

In rural areas where there may be only one provider such as a hospital and two or three insurers, the provider could charge what it wants, causing insurers to post similar rates, he said.

“The competition issue in rural areas is more driven by provider monopolies than it is by insurers,” Haislmaier said.

Caroline Pearson, senior vice president of policy at Avalere Health, agreed that in rural areas, specifically, higher premiums from insurers can be tied to increased rates from providers.

“The two are sort of linked,” she told The Daily Signal. “The way that insurers have brought premiums down in some markets is by designing narrower networks where they’re including only a subset of providers with better negotiated rates.”

“In rural areas, there’s a dearth of providers,” she continued. “Plans are beholden to the physicians there, and they don’t have the leverage to drive rates down. I think the monopoly of providers is limiting plans’ ability to keep premiums low.”

Pearson said that though competition has “been effective” at lowering the cost of premiums, consumers can expect to see across-the-board rate increases for a variety of reasons and not just in areas where there is little to no choice of insurer on the exchange.

“People in the exchanges are sicker than insurers were expecting them to be, so it’s costing more to cover them,” she said. “Additionally, the fact that two of the risk mitigation programs [risk corridor and reinsurance] go away in 2017 will also increase rates. Those are the two primary drivers.”

A ‘Guiding Principle’

In a study from the American Journal of Health Economics released last year, Massachusetts Institute of Technology economist Jonathan Gruber and the study’s authors warned that a decline in competition among insurers leads to an increase in premium prices.

Using UnitedHealthcare’s decision not to sell insurance on Obamacare’s exchanges in 2014 as an indicator of how premium prices changed, the study’s authors found that had UnitedHealth decided to enter all markets, the cost for the second-lowest silver premium would’ve decreased by 5.4 percent.

The government calculates subsidies based on the cost of the second-lowest silver plan.

Additionally, had insurers sold coverage in all areas on the state’s exchange, the cost of premiums would’ve declined by 11.1 percent.

Gruber and the study’s authors further found that areas where Obamacare’s co-ops, or consumer operated and oriented plans, sold coverage had lower premiums than those that did not.

The co-ops launched in 26 states with $2.4 billion in startup and solvency loans from the Centers for Medicare and Medicaid Services and were intended to boost competition and choice in areas where few existed.

However, since their roll out in 2013, 12 of the 23 co-ops have since closed their doors.

In a speech before a joint session of Congress in September 2009, President Barack Obama warned about how decreased competition among insurers can impact consumers.

“My guiding principle is, and always has been, that consumers do better when there is choice and competition. That’s how the market works,” Obama told lawmakers. “Unfortunately, in 34 states, 75 percent of the insurance market is controlled by five or fewer companies. In Alabama, almost 90 percent is controlled by just one company. And without competition, the price of insurance goes up and quality goes down.”

While consumes in Alabama, Alaska and Wyoming will have just one insurer to select coverage from during next year’s open enrollment period, states have yet to encounter a situation where no insurer will sell on the exchange.

In 2013, before Obamacare’s launch, 34 counties in Mississippi were almost left with no carrier selling on its exchange, according to Vox. However, Humana decided to offer coverage to consumers in those 34 counties—albeit at a price, as premiums in the state were among the highest in the country.

“With only one plan, [insurers] certainly have pricing flexibility to make it work for them financially,” John McDonough, a professor of public health at Harvard University told Vox.

Having no insurers selling on an exchange doesn’t mean a consumer will go without coverage, Haislmaier said. Instead, carriers can and do sell plans off of the exchange.

In Mississippi and South Dakota, for example, Blue Cross and Blue Shield carriers are the largest insurers in those states. Neither, though, sell coverage on the exchanges.

“The key thing here is whether there’s an insurer willing to sell on the exchange,” Haislmaier said. “That’s important because that doesn’t necessarily mean there may not be coverage available off the exchange. But those with subsidies will be affected because they then have to pay full price.” (For more from the author of “Why Obamacare Customers in Some States Might See Higher Rates in 2017” please click HERE)

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House Republicans Win Court Fight over Obamacare

A major section of Obamacare that allows the federal government to subsidize costs for insurance plan enrollees has been struck down by a federal judge.

U.S. District Judge Rosemary Collyer ruled Thursday that the administration does not, on its own, have the power to spend money on what are termed “cost sharing reduction” payments without an appropriation from Congress. The administration is expected to appeal.

In light of that, the judge allowed Obamacare’s operation to continue unchanged until the appeal process ends.

House Republicans had filed suit, claiming subsidies paid to insurance companies so they, in turn, lower costs for people enrolled under Obamacare, were unconstitutional. House Republicans claimed that because Congress never authorized the expenditure, the executive branch could not spend the money.

In the court case, the administration said a section of law that funds tax credits to help people pay for coverage also was the legal source for paying the subsidies.

However, the judge ruled that cost-sharing reductions require a separate congressional appropriation. Congress has made no such appropriation.

“Such an appropriation cannot be inferred,” Collyer wrote. “None of Secretaries’ extra-textual arguments — whether based on economics, ‘unintended’ results, or legislative history — is persuasive. The Court will enter judgment in favor of the House of Representatives …”

“Authorization and appropriation by Congress are non-negotiable prerequisites to government spending,” she wrote.

In September, Collyer had ruled in favor of House Republicans in rejecting an attempt by the Obama administration to say House GOP members lacked standing to bring the suit.

“The House sues, as an institutional plaintiff, to preserve its power of the purse and to maintain constitutional equilibrium between the executive and the legislature,” Collyer said then. “If its non-appropriation claims have merit … the House has been injured in a concrete and particular way.” (For more from the author of “House Republicans Win Court Fight over Obamacare” please click HERE)

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Further Down the Spiral: How Much Longer Can Obamacare Last?

hqdefaultAs United Health Care, one of the nation’s largest insurers, announced it would withdraw from the Obamacare exchanges, the insurance industry as a whole seems to be falling apart. A number of high profile insurers, including Blue Cross Blue Shield, have been laying the groundwork for sizable premium increases next year. A study released last month found that costs for insurers had risen by 22 percent, a clear indicator that consumer prices are going to have to go up to prevent more companies from following United Health’s lead.

None of this is especially surprising. Back when Obamacare was first proposed, smart people who understood how insurance worked looked at the model and, with eyebrows raised, pointed out the obvious flaw that would prevent the program from working: the insurance death spiral. The death spiral works like this: When the pool of people who sign up for health insurance is older and sicker than insurance companies expect, costs end up being higher than projected. Companies have to raise their prices (premiums) in order to make a profit. Higher prices cause some people to drop their plans as being too expensive, and the people most likely to do this are the ones who need insurance the least. This makes the remaining pool still more costly than before, and the cycle begins again, until nobody can afford insurance anymore.

Like clockwork, this is what we have seen under Obamacare. Every year since the law’s enactment, the Department of Health and Human Services has fallen short of its enrollment goals, despite increasing penalties for those who choose not to be insured. Premiums have risen predictably and deductibles are soaring as well. In 2015, the average deductible for a Bronze plan obtained on the exchanges was $5,181. In 2016, it was $6,850. That’s an increase of more than 25 percent in just one year. That’s not going to be a sustainable model, especially since a third of people signed up for Obamacare don’t have the money to cover their deductibles now.

As for premiums, according to a project by the Manhattan Institute, at least eight states have seen their premiums double under the Affordable Care Act since 2013. Meanwhile, median weekly earnings have only increased about seven percent since 2013, so it’s not as if people are going to be able to shoulder these costs with ease.

The obvious question is: How much longer can this go on? It’s impossible to know for sure, but what is certain is that the insurance law destined to shape Barack Obama’s legacy is collapsing faster than anyone ever imagined. United Health will not be the last insurer to cut and run from a clear money-losing situation. Others will follow, and this will only accelerate the death spiral. But the even more important question is: What happens next? Will the Left be able to leverage Obamcare’s unravelling into a single payer system, as they have always wanted to do, or will the folly of government planning be evident enough to the average person that we are able to implement some market based solutions to the nation’s health care woes? Given that the frontrunners for president in both parties support universal health care, it’s going to be an uphill battle. (For more from the author of “Further Down the Spiral: How Much Longer Can Obamacare Last?” please click HERE)

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Deserting ObamaCare: UnitedHealth, Nation’s Largest Health Insurer, Bolts, Fears Huge Losses

maxresdefault (98)UnitedHealth has already decided to pull out of Arkansas, Georgia and Michigan in 2017, and Hemsley told analysts during a Tuesday morning conference call that his company does not want to take the financial risk from the exchanges into 2017 . . .

The state-based exchanges are a key element behind the Affordable Care Act’s push to expand insurance coverage. But insurers have struggled with higher-than-expected claims from that business.

A recent study by the Blue Cross Blue Shield Association detailed how many new customers nationwide under ObamaCare are higher-risk. It found new enrollees in individual health plans in 2014 and 2015 had higher rates of hypertension, diabetes, depression, coronary artery disease, HIV and Hepatitis C than those enrolled before ObamaCare.

On the heels of Tuesday’s announcement, Sen. Ben Sasse, R-Neb., said in a statement it’s a sign of “the President’s broken promise that families would have more choices under ObamaCare.”

The Kaiser Family Foundation, in an analysis on the prospect of United’s exit, said “the effect on insurer competition could be significant in some markets – particularly in rural areas and southern states” if it is not replaced. (Read more from “Deserting ObamaCare: UnitedHealth, Nation’s Largest Health Insurer, Bolts, Fears Huge Losses” HERE)

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Exposed: Obama Admin Caught Making Illegal Move That Makes Obamacare Look Even Worse

By Randy DeSoto. The Obama administration has been caught — once again — seeking to circumvent the law related to Obamacare by diverting billions in funds intended for the U.S. Treasury to cover private insurance companies’ losses.

In 2014, Sen. Marco Rubio inserted language into the omnibus spending bill which specifically barred the Department of Health and Human Services from dipping into the general funds of the Treasury to bailout failing insurance companies, the Washington Post reported.

Marc Thiessen, writing for the Post, observed that the provision is “quietly killing” Obamacare, while the New York Times headlined in December, “Marco Rubio Quietly Undermines Affordable Care Act.” The Hill called the provision, “the biggest blow in the GOP’s five-year war against Obamacare.”

Both the Post and the Times pointed out that private insurers have been taking heavy losses participating in the healthcare exchanges, and to entice them to stay, the Obama administration had been subsidizing the companies with taxpayer dollars.

According to the Times, in 2014 “insurers lost $2.9 billion more than expected on Obamacare…Thanks to Rubio’s provision, the administration was allowed to pay only 13 cents of every dollar insurers requested. Without the taxpayer bailouts, more than half of the Obamacare insurance cooperatives created under the law failed.”

Several insurers have pulled out of the remaining exchanges. United Healthcare and Aetna, two of the nation’s largest providers, have indicated they are considering pulling out of Obamacare altogether, due to the billions in losses they have sustained. (Read more from “Exposed: Obama Admin Caught Making Illegal Move That Makes Obamacare Look Even Worse” HERE)

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Surviving Obamacare Co-Ops Facing Failure

By Richard Pollock. Eight of the 11 remaining Obamacare health insurance co-ops are in serious financial trouble and could collapse by the end of the year, Mandy Cohen, a top federal health official told Congress Thursday in testimony before a House oversight panel.

Cohen, the chief operating officer for the Centers for Medicare and Medicaid Services, generally stonewalled the House Oversight Subcommittee on Health Care, Benefits and Administrative Rules during a hearing focused on the status of the surviving Obamacare health insurance co-ops and the additional costs taxpayers could face in the event of more failures.

Twenty three of the non-profit co-ops were established under Obamacare in 2012 to compete with commercial for-profit insurance companies. But so far half — or 12 — have closed their doors after only two years of operation. A thirteenth co-op in Vermont was never licensed to operate.

Cohen stubbornly refused to disclose which of the remaining 11 are struggling, but conceded that eight now face either federal “enhanced oversight” or are operating under a federal “corrective action plan.”

Cohen refused to guarantee any of the three co-ops not presently operating under a corrective plan would survive the year. “Too early to tell in the year,” Cohen said. “As new information comes up, if we need to, we will put more folks up on corrective action plans.” (Read more from “Surviving Obamacare Co-Ops Facing Failure” HERE)

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Barack Obama in Dresden

House Fails to Override President’s Veto of Obamacare Repeal

The House on Tuesday failed to override President Obama’s veto of a bill that would have repealed key provisions of Obamacare and stripped federal funding from Planned Parenthood.

The 241-186 vote to override the veto fell short of the two-thirds needed, ensuring that the Affordable Care Act will remain in place at least through the final year of Obama’s term. Republican leaders, who have been criticized by Democrats for failing to come up with an alternative to Obamacare, said they plan to craft a replacement plan this year as a kind of preview for what they hope to do in the next Congress.

The vote came just hours after the president met with House Speaker Paul Ryan, R-Wis., and Senate Majority Leader Mitch McConnell, R-Ky., to talk about issues where the White House and Congress might be able to work together. Those issues include criminal justice and mental health reform, the Trans-Pacific Trade Partnership, Puerto Rico’s financial crisis, the opioid epidemic, the Zika virus and efforts to cure cancer . . .

The House voted 240-181 on Jan. 6 to gut Obamacare and cut off federal funding for Planned Parenthood for a year. The Senate approved the legislation in December by using a special budget procedure that required only a simple majority rather than the 60 votes typically needed to approve major legislation. Obama vetoed the bill on Jan. 8. (Read more from “House Fails to Override President’s Veto of Obamacare Repeal” HERE)

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Enrollment Growth in Obamacare Health Insurance Slower Than Expected

Reflecting slower than anticipated enrollment growth in health insurance purchased through the Affordable Care Act, the nonpartisan Congressional Budget Office has lowered its estimate of how many people will get coverage through the law in 2016.

In any given month this year, about 13 million people on average are now expected to be enrolled in a health plan purchased on a marketplace created by the law, often called Obamacare.

That is down from 21 million people previously estimated by the budget office, whose projections about the impact of legislation are closely watched by both parties in Washington. The lower enrollment number brings the budget office closer in line with the Obama administration, which scaled back its own enrollment targets for 2016, citing the difficulty of reaching new consumers who have not so far taken advantage of the marketplaces.

The lower enrollment number brings the budget office closer in line with the Obama administration, which scaled back its own enrollment targets for 2016, citing the difficulty of reaching new consumers who have not so far taken advantage of the marketplaces.

The insurance marketplaces, a key pillar of the health law, allow people who do not get coverage through an employer to shop among plans that must meet basic standards and cannot turn away customers with preexisting medical conditions. (Read more from “Enrollment Growth in Obamacare Health Insurance Slower Than Expected” HERE)

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UnitedHealth Says Obamacare Is Costing It Billions

UnitedHealth Group warned nearly two months ago that new customers from the Affordable Care Act exchanges would hurt the insurer’s bottom line, but it looks like it misestimated by how much as enrollments exceeded expectations.

UnitedHealth, the U.S.’s largest insurer, says it will incur as much as $100 million more in losses associated with 2016 ACA plans than previously forecast. That brings total ACA plan loss projections for its new fiscal year to more than $500 million, up from previous estimates of $400 million to $425 million.

The company said it would reconsider its participation in the government-mandated exchanges, according to statements made during UnitedHealths earnings Tuesday . . .

UnitedHealth reported losses of $720 million last year related to exchange enrollees, including $245 million for advance recognition of 2016 losses that aren’t included in the total estimated losses for this year. That means that UnitedHealth is expected to lose up to $745 million due to its 2016 ACA enrollees. (Read more from “UnitedHealth Says Obamacare Is Costing It Billions” HERE)

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Congress Sends Health Law Repeal to Obama for First Time

The GOP-led Congress sent legislation to President Barack Obama Wednesday repealing his signature health law, fulfilling a promise to Republican voters in a presidential election year but inviting a certain veto.

The nearly party-line vote in the House was 240-181. The legislation already passed the Senate last year under special rules protecting it from Democratic obstruction, so it goes straight to the White House.

Republicans boasted of a signal achievement, saying they were forcing Obama to face up to the failures of his law while illustrating stark political choices in an election year. (Read more from “Congress Sends Health Law Repeal to Obama for First Time” HERE)

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Taxpayers on Hook Again After New Obamacare Failure

A new report examining the collapse of Health Republic of New York, Obamacare’s largest co-op, said its failure—which may lead to a $265-million loss of taxpayer dollars—can be attributed in part to heightened regulatory control by the state.

According to the analysis from the Albany, New York-based Empire Center, a “breakdown” in oversight from the state Department of Financial Services and artificial cuts in Health Republic’s premiums may have led to the ultimate failure of the consumer operated and oriented plan, or co-op.

Of the 23 co-ops created under the health care law, just 12 remain.

“The rapid rise and costly fall of Health Republic Insurance of New York … is a cautionary tale for policymakers in Albany as well as in Washington,” the report’s author, Bill Hammond, wrote. “Despite heavy federal subsidies and robust enrollment growth, Health Republic lost money at such a clip that state regulators forced it to shut down as of Nov. 30, on barely two months’ notice.”

Health Republic, one of 23 co-ops implemented under Obamacare, sold the cheapest plans available on New York’s state-run exchange and enrolled more than 200,000 customers in coverage. According to the Empire Center, Health Republic offered consumers broad networks, and its plans were significantly cheaper than those sold by competitors like UnitedHealthcare and Aetna.

As a result of its low premiums, Health Republic experienced significant losses in 2014, as its customers’ medical claims and administrative costs outpaced the revenue it was bringing in through premiums.

To remedy its losses, Health Republic requested a 15.4 percent increase in rates for individuals and 5.9 percent increase in rates for small group plans in 2015. The state Department of Financial Services, though, approved lower rate-hikes, which the Empire Center said squeezed the market.

“Although Health Republic’s premiums were already among the very lowest in the state—and though its financial report showed it was losing money—the fledgling company did not escape the state’s rate-setting knife,” the report said.

Health Republic did not immediately return The Daily Signal’s request for comment.

For 2016 coverage, Health Republic requested a 14.4 percent rate hike for individual plans and a 20 percent increase for small group plans. The state lessened the hike for individuals to 14 percent, and approved Health Republic’s request for small group plans.

Like many of the other 23 co-ops—which received a total of $2.5 billion from the federal government—Health Republic relied on money from Obamacare’s risk corridor program to boost its bottom line. The risk corridor program sought to limit the risk for insurers in the market.

According to the Empire Center, Health Republic requested $243 million from the risk corridor program. However, the Centers for Medicare and Medicaid Services announced in October it would pay just 12.6 percent of the requested payments.

As a result, Health Republic, along with seven other co-ops, announced it would be closing its doors after experiencing significant losses and receiving lower-than-expected payments from the risk corridor program.

“Had New York’s regulators ordered higher rates for Health Republic from the beginning, the company could have avoided some of the steep losses that made it so dependent on risk-corridor funding,” Hammond wrote. “While it’s unclear that such action would have been enough to save the company, DFS’s rate-cutting, in retrospect, was unquestionably productive.”

Health Republic closed its doors Nov. 30, leaving some of its 215,000 customers to find coverage for a month—or go without—and secure new insurance for 2016 through the state-run exchange.

“If the goal is making health coverage more affordable, the surest way to achieve that objective is not for the state to impose price controls, but for it to roll back its own high taxes and costly coverage mandates,” the report said. (For more from the author of “Taxpayers on Hook Again After New Obamacare Failure” HERE)

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