TOM MURPHY

Government health insurance markets barely holding up

Enough insurers are planning to sell coverage on the Affordable Care Act’s insurance exchanges next year to keep them working — if only barely — in most parts of the country. Competition in many markets has dwindled to one insurer — or none in some cases — and another round of steep price hikes is expected to squeeze consumers who don’t receive big income-based tax credits to help pay their bill. “What we’re seeing is a deterioration in these markets, but the markets haven’t imploded, they haven’t gone into a rapid downward decline,” said Dan Mendelson, president of the consulting firm Avalere. Health insurers had until Wednesday to declare whether they planned to sell coverage next year on exchanges in most states. Actual participation and final rates won’t be set until late summer or closer to the Nov. 1 start of enrollment for next year’s coverage. Early plans filed by many insurers for next year include premium increases well over 20 percent, and Avalere expects more than 40 percent of U.S. counties to have only one insurer selling coverage on the exchange, the only place where shoppers can get tax credits to help pay the bill. Some counties in Missouri, Ohio, Indiana and Washington will have none if another insurer fails to step in. The early picture for 2018 looks much like it did for previous years: Insurers are retreating from some markets or charging a lot more to stay in others. The Blue Cross-Blue Shield insurer Anthem said Wednesday that it will leave exchanges in Wisconsin and its home state of Indiana. This comes a few weeks after the nation’s second-largest insurer also said it was pulling out of Ohio’s exchange. The health insurer Medica recently said it will return to Iowa next year, a move that saves most of that state’s counties from having no exchange options. But Medica anticipates hiking rates more than 43 percent on average. Nationwide, prices for individual insurance could rise between 28 and 40 percent on average, according to a prediction by Oliver Wyman Actuarial Consulting. Most of that expected increase reflects concerns over how President Donald Trump’s administration will manage the program, the consulting firm said. It may stop enforcing a mandate that most Americans buy coverage or it may halt cost-sharing payments that soften expenses for people with modest incomes. The mandate is seen as crucial to encouraging healthy people to enroll and balance the costs an insurer incurs from people who use their insurance. Trump and other administration officials have said that the Affordable Care Act is collapsing, and they are trying to marshal a replacement plan through Congress. The Senate is weighing a new plan and may vote on it next week. Insurers have been gouged by steep losses on this kind of coverage since they started paying claims in 2014, and big companies like Humana, Aetna and UnitedHealth Group have either left entirely or retreated to just a few states. Those that remain have been raising premiums by 10 percent or more since. Heading into 2018, insurers are still worried about attracting enough healthy people to balance claims from the sick. But repeated price hikes can fuel that problem because they make insurance less attractive to healthy people. Despite all those concerns, more than two dozen insurers have said they are making plans to continue selling coverage on the exchanges. Some, like Centene and Oscar are expanding into new markets. These insurers have decided to stay or expand despite the uncertainty for a few reasons. Some, nonprofit Blue Cross-Blue Shield plans in particular, have spent decades in their markets and are reluctant to end such long-standing presences. They see themselves as the “insurer of last resort,” which means they make sure a market has at least one coverage option. Others want to protect investments they have made into setting up networks of providers, hoping they can eventually make money. And others have already found ways to make the business profitable. Centene, for instance, uses what it has learned managing state and federally funded Medicaid program for the poor to market insurance on the exchanges to low-income customers in areas where it has already formed networks of providers for that business. Insurers also get an assist from the government. They know that the income-based tax credits that pay most of the insurance bill for some customers shield those people from big price hikes, said Robert Laszewski, a health care consultant and former insurance executive. That means companies can raise their premiums high enough to avoid losses and not worry about hurting the individual or family with the coverage. “The taxpayer is going to pay for it,” Laszewski said. ^ AP data journalist Meghan Hoyer contributed to this report.

Employers shift health bills to workers

A growing number of U.S. workers are covered by health insurance that sticks them with a bigger share of the medical bill but also softens that blow by providing a special account to help with the expense. Companies are turning more to these so-called consumer-directed health plans, which push patients to shop around for the best prices for care, because they can cost less than other types of coverage and help hold down future increases. Nearly 3 out of 10 employees have this kind of coverage, up from 2 out of 10 in 2014, according to an annual study of private insurance trends from the Kaiser Family Foundation released Sept. 14. A decade ago, these plans were almost unheard of. In them, patients and employers generally pay less toward the premium, or cost of the coverage itself. But then patients have to pay higher amounts out of their own pockets for most care, up to a certain level known as the deductible. The idea is that customers will make smart financial decisions because more of their own money is on the line. To help patients deal with potentially higher out-of-pocket costs — and entice workers to sign on to the plans — employers often set up an account and stock it with money that can be used to cover these expenses. “Most employers want to continue offering insurance but they just want to pay less,” said Dan Mendelson, president of the consulting firm Avalere Health. Mendelson, who reviewed the Kaiser study, said insurers have developed better tools for helping people compare cost and quality. That might make companies more comfortable with sending their employees out to shop for something as complicated as health care. Kaiser researchers say rising deductibles from plans like this are helping to restrain premiums. Overall, the cost of employer-sponsored health insurance, the most common type of coverage in the country, is still growing modestly like it has for the past five years, according to Kaiser. The average annual premium for family coverage, shared by employer and worker, rose 3 percent this year to $18,142. That’s more than double what coverage cost in 1999, even after adjusting for inflation. Kaiser released its survey while companies are preparing to tell their employees about coverage options for next year. The annual window in which employees can enroll in their company’s insurance for 2017 or make changes to their coverage begins in November for many companies. Here are some other highlights from the survey, which Kaiser conducted with the Health Research and Educational Trust. • Despite modest increases in recent years, health insurance costs are still climbing faster than wages and inflation for many plans. Family coverage premiums have climbed a total of 20 percent over the last five years, while worker earnings have risen 11 percent and inflation has climbed 6 percent, Kaiser reported. This means that employers may be holding back on raises because they have to spend more on health insurance for each worker. • Employers still pick up most of the bill for coverage. Workers paid, on average, 18 percent of the premium for individual coverage and 30 percent for family coverage. That’s the amount usually taken out of a paycheck before taxes. • Deductibles are on the rise for many types of coverage. For the first time, the survey found that more than half of all covered workers face deductibles of at least $1,000 a year for individual coverage. • The benefits consultant Mercer found in a separate survey that employers expect insurance costs to rise about 4 percent next year. That’s after employers make adjustments like raising deductibles or shopping for a new insurer for better prices.    

Aetna exits exchanges in all but four states

Aetna has become the latest health insurer to retreat from the Affordable Care Act’s public exchanges by announcing a pullback that will further deplete customer choices in many pockets of the country. The nation’s third largest insurer says it plans to leave nearly 70 percent of the counties in which it currently sells coverage as it trims exchange participation to four states in 2017, down from 15 this year. The insurer’s late Monday announcement comes after UnitedHealth and Humana detailed their own exchange pull backs for 2017 and after more than a dozen nonprofit insurance co-ops have shut down in the past couple years. Dwindling exchange participation from insurers is becoming a concern because competition is supposed to help control insurance price increases, and many carriers have already announced plans to seek price hikes of around 10 percent or more for 2017. Some states like Alaska and Oklahoma will be left with only one participant selling individual coverage in 2017. Urban markets or places with higher populations should still have plenty of health insurance choices on their exchanges for 2017, said Sabrina Corlette, a research professor with the Georgetown Health Policy Institute. But that may not be the case in many rural markets. They can be less attractive to insurers because there are fewer customers over which an insurer can spread costs, and hospitals and other health care providers can build dominating market positions, making them formidable negotiating foes over rates. Health insurers have been finalizing their exchange plans over the past several weeks, ahead of the Nov. 1 start of enrollment for 2017 coverage. Corlette said it may still make take a few more years for insurer exchange participation to settle out, and the government may have to step in to tweak the market for insurers, “but I don’t think the market places are crashing and burning by any means.” Aetna had said earlier this month it was canceling expansion plans for its exchange business in 2017, and it promised a hard look at its current participation. The company covered about 838,000 people through the individual exchanges at the end of the second quarter. The cuts mean it will sell coverage on exchanges in 242 counties next year, down from 778. The Hartford, Connecticut-based insurer will sell on exchanges in Delaware, Iowa, Nebraska and Virginia next year. The exchanges have helped millions of people gain health coverage, most with help from income-based tax credits. But insurers say this relatively small slice of business has generated huge losses since they started paying claims in 2014. Insurers have struggled to enroll enough healthy people to balance the claims they pay from high-cost customers, and they have complained about steep shortfalls in support from government programs designed to help them. The nation’s largest insurer, UnitedHealth Group Inc., had expanded rapidly into the public exchanges and sold coverage in 34 states this year. But it only plans to offer policies in three states next year, Nevada, Virginia and New York. Aetna has said it has been swamped with higher than expected costs, particularly from pricey specialty drugs. The nation’s third-largest insurer said a second-quarter pre-tax loss of $200 million from its individual insurance coverage helped it decide to limit exposure to the exchanges. Aetna hasn’t ruled out a future expansion on the exchanges “should there be meaningful exchange-related policy improvements,” Chairman and CEO Mark Bertolini said in a statement. Government officials say the exchanges are improving and healthier people are signing up, which helps insurers balance the claims they get from sicker customers. “Aetna’s decision to alter its Marketplace participation does not change the fundamental fact that the Health Insurance Marketplace will continue to bring quality coverage to millions of Americans next year and every year after that,” said Kevin Counihan, CEO of the federal exchange operator HealthCare.gov, in an emailed statement. Some insurers are expanding on the exchanges. Cigna Corp., which offers coverage in seven states, plans to add some new markets next year. Those include Chicago, Raleigh, North Carolina, and Northern Virginia. Molina HealthCare also is expanding its business, and Health Care Service Corp., which sells Blue Cross-Blue Shield coverage on exchanges in four states, will add New Mexico in 2017. Insurers like Molina that have reported success so far on the exchanges say they have focused on covering low-income customers in markets where they already have an established presence in Medicaid, the state-federal program that covers the poor. But even Molina has scaled back its growth plans. The Long Beach, California, insurer sells coverage on exchanges in nine states and was considering adding two more for next year. But it decided instead to add counties in states where they already have a presence.

After losing $1B+, UnitedHealth exits Obamacare exchanges

UnitedHealth, the nation's biggest health insurer, will cut its participation in public health insurance exchanges to only a handful of states next year after expanding to nearly three dozen for this year. CEO Stephen Hemsley said Tuesday that the company expects losses from its exchange business to total more than $1 billion for this year and last. He added that the company cannot continue to broadly serve the market created by the Affordable Care Act's coverage expansion due partly to the higher risk that comes with its customers. 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. UnitedHealth Group Inc. said it now expects to lose $650 million this year on its exchange business, up from its previous projection for $525 million. The insurer lost $475 million in 2015, a spokesman said. 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 will not carry financial exposure from the exchanges into 2017. "We continue to remain an advocate for more stable and sustainable approaches to serving this market," he said. UnitedHealth moved slowly into this newly created market by participating in only 4 exchanges in their first year, 2014. But the company then expanded to two dozen exchanges last year and said in October it would add to that total. It currently participates in exchanges in 34 states and covers 795,000 people A month after announcing its latest exchange expansion, UnitedHealth started voicing second thoughts. The insurer said in November that it would decide by the first half of this year whether to even participate in the market for 2017. Insurers say they have struggled, in particular, with customers who have signed up for coverage outside regular enrollment windows and then dumped expensive claims on their books, a problem the government has said it would address. A dozen nonprofit health insurance cooperatives created by the ACA to sell coverage on the exchanges have already folded, and the survivors all lost millions last year. Other publicly traded insurers like Aetna have said that they have lost money on this business as well. But some companies, like Molina Healthcare, have said they have managed to turn a profit from the exchanges. Analysts expect other insurers to also trim their exchange participation in 2017, especially if they continue to struggle with high costs. UnitedHealth shares jumped 2.2 percent, or $2.79, to $130.60 in morning trading Tuesday. The company also raised its forecast for 2016 and announced first-quarter results that beat expectations.  

Experts expect corporate tax inversions to survive new rules

President Obama scored a victory this week when Pfizer scrapped a $160-billion overseas deal that would have kept a chunk of the drugmaker’s profits beyond the U.S. tax man’s reach. But recent, aggressive federal actions that discouraged Pfizer Inc.’s combination with another drugmaker, Allergan PLC, won’t stop all so-called inversions, or deals that end with a company relocating to another country — at least on paper — and trimming its U.S. tax bill in the process. Tax and legal experts say these deals, which have come under growing criticism from politicians, will remain attractive to some companies until the U.S. pursues a massive tax law overhaul. “There may be a temporary respite from inversions, but the large financial benefits ... are still there,” said Bret Wells, a tax lawyer and law professor at the University of Houston. Even the Obama administration, which has taken several steps to discourage inversions in recent years, says Congress ultimately must step into this fight. In an inversion, a U.S. corporation and a foreign company combine into a parent company based in the foreign country. For tax purposes, the U.S. company becomes foreign-owned, even if all the executives and operations stay in the U.S. Inversions have become particularly popular in health care. They allow companies to avoid paying additional taxes that the U.S. government would impose on money earned overseas and then transferred back to the parent. They can reduce corporate tax liability in other ways, and they provide some relief from the U.S. corporate tax rate of 35 percent, which is the highest in the industrialized world. But Obama and others have said these deals shortchange the country because corporations fail to pay their fair share of taxes. Earlier this week, the Treasury Department announced a third round of regulations designed to limit the practice and make it less lucrative for companies. The new regulations seek, among other things, to limit inversion benefits like tax deductions that can stem from internal corporate borrowings. Pfizer cited the new regulations in scuttling its deal. These rules will make it harder for U.S. companies to find a foreign deal partner, said Donald Goldman, a professor at Arizona State University’s W.P. Carey School of Business. He added that the regulations “will definitely have a chilling effect on inversions.” They actually will come close to killing the practice, according to Robert Willens, president of a New York-based tax and accounting service and a former Lehman Brothers managing director. But he said some narrowly tailored deals that have the right balance of U.S. and foreign ownership should survive. He cited as an example the pending $14.6 billion combination of Milwaukee-based Johnson Controls Inc. and Ireland’s Tyco International, companies that make security and other building control systems. Johnson Controls spokesman Fraser Engerman said the company was reviewing the new Treasury regulations and wouldn’t speculate on what impact they might have on the Tyco deal. At least one company that has already completed an inversion isn’t having second thoughts. Medical device maker Medtronic PLC, which completed a nearly $43 billion combination with Ireland’s Covidien last year, said April 6 that it has done a preliminary review of the Treasury rules and concluded that they do not have a material financial impact on the company. Treasury Secretary Jacob Lew has said the new rules are designed to make inversions less economically beneficial for companies, but only anti-inversion legislation from Congress can stop the transactions. Leaders in the Republican-controlled Congress say the issue underscores the need for comprehensive tax reform, but such a massive undertaking is unlikely in an election year that also is the last year of Obama’s presidency. “We really need to scrub the whole code,” Senate Majority Leader Mitch McConnell, R-Ky., told reporters on April 5. “The chances of doing a tax reform this year are pretty slim.” AP writer Andrew Taylor contributed to this report from Washington, D.C. Murphy reported from Indianapolis.  

Aetna lays out concerns about ACA exchange business

Aetna has joined other major health insurers in sounding a warning about the Affordable Care Act’s public insurance exchanges. The nation’s third-largest insurer said Monday that it has been struggling with customers who sign up for coverage outside the ACA’s annual enrollment window and then use a lot of care. This dumps claims on the insurer without providing enough premium revenue to counter those costs. The ACA provides an annual enrollment window that gives people several weeks starting every fall in which they can buy coverage for the next year. The law established that window to prevent people from waiting until they become sick to buy insurance. But insurers say it has become too easy for customers to sign up outside of this window. Customers are allowed to buy coverage outside that time frame if they lose a job, get divorced or have a child, among other reasons. Insurers want the federal government, which processes coverage applications in 38 states, to take a closer look at whether people actually qualify for these special enrollment periods when they apply for coverage. Both Aetna and UnitedHealth Group Inc. said the exchange customers they get outside the annual enrollment window use more health care than those who sign up within it. This includes some cases where it appears that a customer bought coverage, used it and then dropped it. “Insurance systems tend to get stressed when people can buy coverage when they know they need it and then drop it when they know they don’t,” Chief Financial Officer Shawn Guertin told The Associated Press. The Centers for Medicare and Medicaid Services recently outlined several changes it said it was making to help shore up exchange enrollment windows. Aetna is a big player in the ACA’s state-based exchanges. It has enrolled about 750,000 people and is selling coverage in 15 states this year. It lost more than $100 million last year on its exchange business, which makes up a small part of its overall enrollment. “We continue to have serious concerns about the sustainability of the public exchanges,” Aetna Chairman and CEO Mark Bertolini said Monday. Blue Cross-Blue Shield insurer Anthem Inc. also is paying close attention to how the government deals with special enrollment periods as it judges how sustainable the exchange business will be in the future, CEO Joseph Swedish said recently. UnitedHealth Group has said it will decide this year whether to participate in the public exchanges in 2017. Aetna leaders, who have publicly supported the exchanges in the past, say they are still committed and not ready yet to make that kind of call. “It would be premature frankly to declare victory or defeat at this stage in the process,” Guertin said. Federal officials announced last month that they would end several narrow special enrollment windows that focused on consumers like non-citizens with incomes below the federal poverty level who experienced processing delays. Customers will still be able to use special enrollment periods to shop for coverage if they lose their insurance for more common reasons like a move, a marriage or divorce or the loss of a job. But the government plans to clarify guidelines on those remaining windows so customers understand them better. That includes clarifying that an enrollment period cannot be used for a temporary move, and people who do not provide accurate information on their insurance application could be penalized. HealthCare.gov CEO Kevin Counihan said in a Jan. 19 blog post that special enrollment periods will not be available for “the vast majority of consumers.” HealthCare.Gov operates public insurance exchanges in 38 states. “For example, special enrollment periods are not allowed for people who choose to remain uninsured and then decide they need health insurance when they get sick,” he wrote. Insurers are also making adjustments. Aetna has left exchanges in markets like Kansas where it incurred high costs. It also has raised rates and done other things to shore up a business that only contributes about 5 percent of its total enrollment. Guertin said the company hopes its exchange business will move closer to breaking even next year.

Insurer Aetna lays out concerns about ACA exchange business

Aetna has joined other major health insurers in sounding a warning about the Affordable Care Act's public insurance exchanges. The nation's third-largest insurer said Monday that it has been struggling with customers who sign up for coverage outside the ACA's annual enrollment window and then use a lot of care. This dumps claims on the insurer without providing enough premium revenue to counter those costs. The ACA provides an annual enrollment window that gives people several weeks starting every fall in which they can buy coverage for the next year. The law established that window to prevent people from waiting until they become sick to buy insurance. But insurers say it has become too easy for customers to sign up outside of this window. Customers are allowed to buy coverage outside that time frame if they lose a job, get divorced or have a child, among other reasons. Insurers want the federal government, which processes coverage applications in 38 states, to take a closer look at whether people actually qualify for these special enrollment periods when they apply for coverage. Both Aetna and UnitedHealth Group Inc. said the exchange customers they get outside the annual enrollment window use more health care than those who sign up within it. This includes some cases where it appears that a customer bought coverage, used it and then dropped it. "Insurance systems tend to get stressed when people can buy coverage when they know they need it and then drop it when they know they don't," Chief Financial Officer Shawn Guertin told The Associated Press. The Centers for Medicare and Medicaid Services recently outlined several changes it said it was making to help shore up exchange enrollment windows. Aetna is a big player in the ACA's state-based exchanges. It has enrolled about 750,000 people and is selling coverage in 15 states this year. It lost more than $100 million last year on its exchange business, which makes up a small part of its overall enrollment. "We continue to have serious concerns about the sustainability of the public exchanges," Aetna Chairman and CEO Mark Bertolini said Monday. Blue Cross-Blue Shield insurer Anthem Inc. also is paying close attention to how the government deals with special enrollment periods as it judges how sustainable the exchange business will be in the future, CEO Joseph Swedish said recently. UnitedHealth Group has said it will decide this year whether to participate in the public exchanges in 2017. Aetna leaders, who have publicly supported the exchanges in the past, say they are still committed and not ready yet to make that kind of call. "It would be premature frankly to declare victory or defeat at this stage in the process," Guertin said. Federal officials announced last month that they would end several narrow special enrollment windows that focused on consumers like non-citizens with incomes below the federal poverty level who experienced processing delays. Customers will still be able to use special enrollment periods to shop for coverage if they lose their insurance for more common reasons like a move, a marriage or divorce or the loss of a job. But the government plans to clarify guidelines on those remaining windows so customers understand them better. That includes clarifying that an enrollment period cannot be used for a temporary move, and people who do not provide accurate information on their insurance application could be penalized. HealthCare.gov CEO Kevin Counihan said in a Jan. 19 blog post that special enrollment periods will not be available for "the vast majority of consumers." HealthCare.Gov operates public insurance exchanges in 38 states. "For example, special enrollment periods are not allowed for people who choose to remain uninsured and then decide they need health insurance when they get sick," he wrote. Insurers are also making adjustments. Aetna has left exchanges in markets like Kansas where it incurred high costs. It also has raised rates and done other things to shore up a business that only contributes about 5 percent of its total enrollment. Guertin said the company hopes its exchange business will move closer to breaking even next year.  
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