Republicans on Capitol Hill say the Obama administration is trying to regulate or prevent small companies from providing self-funded insurance for their employees because self-funded insurance plans could be the “Achilles heel” for Obamacare implementation.
The majority of U.S. employers now offer self-funded insurance plans, in which companies finance employee health plans from their own funds. Many of the companies purchase stop-loss insurance plans from insurance providers. These companies would therefore avoid many Obamacare regulations when the law takes full effect in 2014. The practice of self-funded insurance, which was outright banned in early drafts of Obamacare, represents the “Achilles heel” for Obamacare implementation, according to insiders.
What a laughable attempt at attribution – and those same “insiders” tell us the following…
Phyllis Borzi, the Obama administration’s assistant secretary for employee benefits security in the Department of Labor, is a well-known opponent of stop-loss insurance and is suspected of making behind-the-scenes moves to prevent small companies from providing it…
I would say that that’s a pretty defamatory accusation and could be a real problem if it were actually true; I’d be inclined to believe, though, that Patrick Howley of The Daily Tucker doesn’t know what the hell he’s talking about (“according to insiders,” naturally).
If the Obama Administration hates “stop/loss” insurance so much, then how come the following is true (from an article by Matthew Buettgens and Linda J. Blumberg of The Urban Institute dated November 2012 – sorry, but I’m unable to link to a URL or a .pdf)…
The Affordable Care Act changes the small-group insurance market substantially beginning in 2014, but most changes do not apply to self-insured plans. This exemption provides an opening for small employers with healthier workers to avoid broader sharing of health care risk, isolating higher-cost groups in the fully insured market. Private stop-loss or reinsurance plans can mediate the risk of self-insurance for small employers, facilitating the decision to self-insure. We simulate small-employer coverage decisions under the law and find that low-risk stop-loss policies lead to higher premiums in the fully insured small-group market. Average single premiums would be up to 25 percent higher, if stop-loss insurance with no additional risk to employers than fully insuring is allowed—an option available in most states absent further government action. Regulation of stop-loss at the federal or state level can, however, prevent such adverse selection and increase stability in small-group insurance coverage.
So it looks like “stop/loss” in insurance could be further regulated, but Number 44 isn’t trying to go that route.
Oh, and by the way, I checked the CAP article by John Podesta mentioned by Howley, and I learned the following (here)…
There are two types of stop-loss insurance: specific, or individual, stop-loss insurance, which protects an employer from a single, unusually high claim from any one employee; and aggregate stop-loss insurance, which limits the total amount the employer must pay each year for all employee health-care claims. In both types, the point at which stop-loss coverage begins is called the “attachment point.” Lower attachment points minimize the employer’s financial risk, and if they are particularly low, they blur the line between self-insured plans and self-funded plans entirely. A self-insured plan with a specific attachment point of $5,000, for example, functions in the same way as a plan with a $5,000 deductible.
Insurers may also structure stop-loss policies to protect employers from unpredictably high claims that might cause cash-flow issues. Stop-loss policies that limit liability exposure in a single month, for example, or provide immediate reimbursement for claims above the attachment point eliminate this risk.
Little data exist, however, about the use of stop-loss policies. One survey found that nearly 60 percent of all self-insured firms also have stop-loss insurance. Even less data are available on the type of stop-loss policies and the level of attachment points purchased by self-insured employers. Although survey data suggest that the average individual attachment point for businesses with 5,000 employees or more is about $340,000, similar data for smaller firms are unreliable due to a much smaller sample size.
The Affordable Care Act requires a study on self-insurance policies used by employers in the large-group market. The U.S. Department of Health and Human Services, Department of Labor, and Department of the Treasury also issued a joint request for information about the use of stop-loss insurance in 2012, asking specifically about stop-loss policies with low attachment points. This data collection and analysis is ongoing.
So, though it could potentially represent an “Achilles Heel” of sorts to HCR if “stop-loss” policies started popping up all over the place, I would consider that to be highly unlikely, if for no other reason than the fact that large companies would have to start shelling out more and more money to cover their employees just to get out of coverage requirements of the Affordable Care Act.
And as far as small businesses are concerned – well, if all the employees are comparatively young and fit with minimal health care needs aside from preventive care, you’re may be fine with a stop-loss plan. However (again, from CAP)…
…once the group’s health status declines, self-funding becomes far more risky and expensive. Stop-loss plans, for example, can raise premiums or refuse to renew coverage once a group becomes less healthy or more expensive to cover. In this case small employers could either drop coverage or return to the fully insured small-group market, adding its less healthy employees to that risk pool.
And I think the following should also be noted from here (the .pdf should open the viewer, but it’s fussy)…
Self-insured employers have an increasing cost to control: that of high-dollar medical claims. Just how much healthcare reform will impact those claims is still up to debate. According to an Aon report1, healthcare reform so far has had a .08% to 1.5% impact, depending on the size of the group. That percentage can continue to increase as more provisions go into effect.
So basically, nobody really has any idea how much self-insured plans will be affected by the Affordable Care Act.
But then again, to expect anything close to serious journalism from Patrick Howley based on this (in which Howley tried to egg on antiwar protestors at the Smithsonian Institution to make them look bad, something typical of James O’Keefe) is a delusional notion anyway.
Under 340B, eligible hospitals are allowed to buy drugs from drug companies at forced discounts of 25% to 50%. The hospitals can then bill government and private insurers for the full cost of the drugs, pocketing the spread. The arrangement gives 340B-qualified hospitals a big incentive to search for patients and prescribe lots of drugs. The costlier the drugs, the bigger the spread. So expensive cancer drugs are especially appealing.
The original legislation creating 340B envisioned that only about 90 hospitals that care for a “disproportionate share” of indigent patients would qualify. But remember, this is a well-intentioned government program handing out money, with the usual result: By 2011, 1,675 hospitals, or a third of all hospitals in the country, were 340B-qualified.
Call me a filthy, unkempt liberal blogger, but could the expansion actually be due to the fact that more and more hospitals are seeing more and more indigent cases?
To quote Steve Martin, “Naaaaahhhhh!”
Of course this has to be another Obama “scandal” where insurers and drug companies are seeing a financial hit, with more and more hospitals “pocketing the spread.” How silly of me not to realize it! All Hail Rush, Sean Hannity and Falafel Bill! And by the way, BENGHAZI!!!
OK, I’ll stop (and I love the demagoguery about “a well-intentioned government program handing out money,” of course).
Gottlieb also laments the likelihood that more patients will be treated at hospitals or outpatient facilities than doctor’s offices. Well, suppose we’re talking about a population with easier access to the former than the latter? Or are they invisible as far as the Journal is concerned?
And this excerpt was a bit of a head-scratcher also…
Even flourishing hospitals like the Hospital of the University of Pennsylvania and Duke University Health System feed off the subsidies. In 2011, Duke bought $54.8 million in drugs from the discount program and sold them to patients for $131.8 million, for a profit of $76.9 million—a substantial portion of the health system’s 2011 operating profit of $190 million. Only one in 20 patients served by Duke’s 340B pharmacy is uninsured. The rest have their prescription costs covered by Medicare, Medicaid or commercial insurers.
Now ObamaCare is encouraging even wider 340B abuses.
Sooo…as far as Gottlieb is concerned, it’s “abuse” for a population of probably poor and elderly individuals to qualify for the 340B drug discount if they already are covered under Medicare or Medicaid? Has Gottlieb tried to price drugs lately for people living on fixed incomes?
And I’m sorry, but as far as I’m concerned, the “operating profit” of a medical institution is secondary to me versus how effective they are at providing patient care.
The regulatory loosening has led to a proliferation of abuse. The Health Resources and Services Administration, the federal agency that (nominally) oversees the program, recently audited 340B-eligible hospitals. The agency found “adverse findings” (like discounted drugs diverted or dispensed to ineligible patients) with almost half of the 34 institutions the agency examined.
Didn’t Gottlieb say earlier that, as of 2011, 1,675 hospitals were covered under 340B? So, out of that total, the HSA reported on 34 institutions (and let’s say that “almost half” of 34 is 16, of the total institutions that were examined; those were the ones with “adverse findings”).
So what percentage of 1,675 is 34? Well, that would be 0.020 percent (maybe not much of a sample, but then again, not much of a reason to carry on about alleged wrongdoing either).
But of course Gottlieb is no stranger to propagandizing on this issue (this link takes us to a post where he claimed that the individual market for health care would be eliminated outside of the health care exchanges – if I were Politifact, I would rate that as a “pants on fire” claim).
Finally, I’ve been meaning to follow up on this item concerning our wet noodle U.S. House rep, so I guess I’d better get to it…
I expected (The American College of Physicians) Leadership Day to be inspiring, empowering, and a way for me to share my thoughts on health reform with our lawmakers. However, the meeting with my Congressman this past June exceeded all of my expectations. Not only was I able to advocate for patients and physicians, but I also discovered an incredible opportunity in my hometown of Bensalem, Pennsylvania.
As a constituent of the 8th district of Pennsylvania, I am represented by Congressman Michael Fitzpatrick. On Leadership Day, other members of the Pennsylvania delegation and I were able to speak to the Congressman directly about key ACP issues. Currently, I am a fourth-year medical student at Philadelphia College of Osteopathic Medicine and am planning to pursue a career in primary care. I told Congressman Fitzpatrick about my passion for public health, community health, and working in underserved communities, and how important it was to expand federal health programs and GME funding for primary care programs. The Congressman was thoughtful and listened—and then asked if I knew about the BCHIP clinic. BCHIP, or the Bucks County Health Improvement Partnership, is the largest free clinic serving uninsured, low-income adults in Bucks County, PA. Founded in 1993 and located in Bensalem, PA, it is locally driven and provides care to over 2,000 adults every year. I was immediately interested in learning more. And then, Congressman Fitzpatrick suggested that we visit the clinic together so I could get a closer look at community health in my own community.
The article is generally complimentary towards Fitzpatrick, and that’s fine. Any means of providing care to people who otherwise wouldn’t get it is a worthy goal.
However, here is my concern – suppose you run into complications?
Because, as a friend of mine pointed out, if you have, say, cancer, you may get a referral to a specialist at a clinic, but that may not necessarily lead to care (suppose the referral doesn’t take your insurance? Suppose you don’t have insurance?). Suppose further that the clinic cannot perform a colonoscopy? And suppose even further that the clinic cannot provide OB/GYN care for women, including pre-natal care and/or pap screens?
Nope…as good as the free clinic is, it often isn’t a “one-stop shop” for health care, nor can it be that in all cases. In the event of the circumstances I noted above, Planned Parenthood (which Mikey and his pals want to defund) would be needed, as well as the legally mandated provisions of the Affordable Care Act (same thing).
Congressman Fitzpatrick has established his opposition to the Affordable Care Act (ACA) aka Obamacare and he has spoken consistently against “government control” of health care. In his letter printed June 17 he bemoaned the “army of bureaucrats implementing regulations” under (HHS) Secretary (Kathleen) Sebelius for not being bound by the Hippocratic Oath. He said if they were, “regulations would not exist denying a 10-year-old child a life saving operation.” Fact is, the role of the Department of Health and Human Services is to protect the citizens from harm, all 350 million of us.
Secretary Sebelius, a politically appointed bureaucrat, was asked by Sen. Pat Toomey, a politician, not a doctor, to alter the transplant rules in a singular independent act. It would defy years of scientific and medical findings and regulations created by medical experts, scientists, doctors, surgeons, and ethicists.
Fitzpatrick denied that asking Sebelius to alter the regulations was asking for interference when, in my view, that is exactly what it was. He is attempting to connect those “regulations” to Sebelius and eventually the ACA. In a June 17th letter to the newspaper, he condemned a federal bureaucrat for not making a medical decision while saying a federal agency should not be evaluating patients, which is contradictory. At a town hall meeting, he seemed to reserve the right to tell millions of people that if they need a doctor go find a free clinic or charity, when he told a questioner without insurance to do just that.
Those regulations are not hers to alter; they are hers to administer. There is a deliberate and complicated process in procuring organs and selecting candidates that seeks to ensure fairness. Sadly, because of a finite supply of organs when a patient gets a transplant another will die waiting and that includes mothers and fathers of 10 year old children.
Fitzpatrick knows the facts, but used the 10 year old child to attack the ACA by saying Sebelius’ action “is an indication of government takeover of healthcare and the ACA exacerbates the situation”. There it is, his real agenda, the continued attack on the ACA.
It’s nice that Mikey has advocated on behalf of free clinics so those who might not otherwise obtain any care at all would receive it. But his continued intransigence and opposition to the Affordable Care Act is beyond a joke at this point. And using the life-endangering circumstances of a 10-year-old girl in furtherance of this unholy goal is a new low, even for him.