As Americans die younger, corporations to reap billions in pension costs

By Kate Randall
11 August 2017

Life expectancy for Americans has stalled and reversed in recent years, ending decades of improvement. According to a new Bloomberg study, this grim reality has an upside for US corporations, saving them billions in pension and other retirement obligations owed to workers who are dying at younger ages.

In 2015, the American death rate rose slightly for the first time since 1999, according to data from the Centers for Disease Control and Prevention (CDC). Over the last two years, at least 12 large companies have reported that negative trends in mortality have led them to reduce their estimates for how much they could owe to retirees by a combined $9.7 billion, according to Bloomberg’s analysis of company filings.

It is highly unusual in modern times, except under epidemic or war conditions, for life expectancy in an industrial country to stop improving, let alone decline. Laudan Aron, a demographer at the Urban Institute, told Bloomberg that falling US life expectancy, especially when compared to other high-income countries, should be “as urgent a national issue as any other that’s on our national agenda.”

But this has not sounded alarm bells in Washington. In fact, shortened life expectancy in the 21st century is the result of deliberate government policy of both big business parties: to restrict access to affordable health care, resulting in increased disease, suffering and early death.

Those who stand to cash in on the shortened lifespans of workers include General Motors, Verizon and other giant corporations. Lockheed Martin, for instance, has reduced its estimated retirement obligations for 2015 and 2016 by a total of about $1.6 billion, according to a recent annual report.

Companies have reduced estimates of what they will owe future retirees. According to a Society of Actuaries (SOA) report, companies can expect to lower their pension obligations by about 1.5 to 2 percent, based on a 2016 update of mortality data.

Life expectancy for the US population was 78.8 in 2015, a decrease of 0.1 year from 2014, according to the CDC, with the age-adjusted death rate increasing 1.2 percent over the year. Since the introduction in 1965 of Medicare and Medicaid—the government insurance programs for the elderly, poor and disabled—US life expectancy has steadily increased.

Death rates for Americans over age 50 have improved by 1 percent on average each year since 1950, according the SOA. In 1970, a 65-year-old American could expect to live another 15.2 years, on average, until just past 80 years.

From 2000 to 2009, the death rates for Americans over age 50 decreased, with annual improvements of 1.5 to 2 percent. By 2010, a 65-year-old could expect to live to 84. But these increases have slowed in recent years, with life expectancy at 65 rising only about four months between 2010 and 2015.

The slowing in death rate improvements since 2010, and the actual lowering of life expectancy in 2015, have followed the global financial crash of 2007-2008. Despite the Obama administration’s declaration that the Great Recession ended mid-2009, millions of US workers and their families continue to suffer under the weight of unemployment, underemployment, and stagnant or falling wages.

Seven years after the Affordable Care Act was signed into law, a staggering 28 million Americans remain uninsured. Those who are insured have seen their premiums, deductibles and other out-of-pocket costs skyrocket. Families are saddled with billions of dollars in medical debt.

The lack of access to affordable health care is resulting in an unprecedented health crisis in the US. A 2015 study showed that mortality was rising for middle-aged white Americans, with deaths from suicides, drug overdoses and alcohol, collectively referred to as “ deaths of despair.” Both women and men have been affected by this phenomenon.

CDC data shows that more than 500,000 Americans have died of drug overdoses in the period between 2000 and 2015, now approaching an average of 60,000 a year.

The 10 leading causes of death in 2015 were heart disease, cancer, chronic lower respiratory diseases, unintentional injuries, stroke, Alzheimer’s disease, diabetes, influenza and pneumonia, kidney disease, and suicide, according the CDC. Despite scientific advances in medical treatment and the development of new drugs to treat these diseases and conditions, they still accounted for 74.3 of all US deaths in 2015.

Moreover, from 2014 to 2015, age-adjusted death rates increased 0.9 percent for heart disease, 2.7 percent for chronic lower respiratory diseases, 6.7 percent for unintentional injuries, 3 percent for stroke, 15.7 percent for Alzheimer’s disease, 1.9 percent for diabetes, 1.5 percent for kidney disease, and 2.3 percent for suicide. Only cancer saw a reduction, of 1.7 percent.

It is on the backs of workers dying earlier from these diseases, alongside “deaths of despair,” that US corporations now stand to save billions, increasing their bottom lines by not paying out pensions and retirement benefits.

This is by design. Obamacare was the first significant effort to reduce the trend of increasing life expectancy by shifting the costs of medical care from the corporations and government to the working class. The ACA was drafted in close consultation with the insurance industry, requiring those without insurance to purchase coverage from private insurers under the threat of tax penalty.

The ACA set into motion the rationing of health care for ordinary Americans, making vitally needed treatments and medicines increasingly inaccessible for millions. This has now borne fruit in the first reduction in US life expectancy in more than half a century.

Following the Republicans’ failure to “repeal and replace” Obamacare, the Democrats have responded by offering to work with the Republicans to “repair” the ACA. But they do not mean reducing the number of uninsured or further expanding Medicaid.

Instead they have offered a five-point plan to shore up the insurance companies by setting up a “stability fund” for companies to insure high-risk enrollees, and guaranteeing they receive $8 billion in government cost-sharing payments to the insurance firms that the Trump administration has threatened to cut off.

Such measures, along with savings from unpaid retirement benefits, will further bloat corporate profits along with those of the private insurance companies and health care industry as a whole.



Latest Republican health care tactic: A sneak attack on people with pre-existing conditions

In the fine print, GOP bill guts coverage of “essential health care benefits,” with devastating consequences

It’s becoming clear that Senate Majority Leader Mitch McConnell’s plan to decimate the American health care system is to tinker around the edges of his bill until, as Charles Pierce of Esquire argued, “you get a CBO score you can plausibly use to con the country, the elite political press, and the mind of Susan Collins into thinking you’re ‘moderating’ the bill.” McConnell is counting on the fact that the press is easily bored and always eager to move onto the next new thing — often meaning whatever President Trump has just said on Twitter — and all he needs is a week of such distractions to pass this stinker under the cover of darkness.

But don’t let the tinkering or assurances that the health care bill is somehow becoming more moderate fool you. Republicans still plan on passing a bill that will lay waste to the protections offered ordinary Americans in the Affordable Care Act, leaving people vulnerable to financial ruin or even death from illnesses or conditions that are covered under existing law.

One of the ways Republicans plan to do this is to gut the part of the Affordable Care Act that guarantees coverage of what are deemed “essential health care benefits.” That sounds like a minor bureaucratic adjustment, but in reality it’s a back-door way to deny coverage to people with pre-existing conditions, limit important and life-saving health services, and force people with expensive conditions to go bankrupt rather than rely on insurance to cover them.

The essential benefits that the Affordable Care Act delineated include 10 categories of care that every insurance plan has to cover. Some of these categories are straightforward things that most insurance plans, whether purchased on the individual market or provided by employers, already covered, such as hospitalization or doctor’s visits. But, as Timothy Jost, a professor at the Washington and Lee University School of Law and an expert on health care law, explained in an interview, prior to the passage of the Affordable Care Act many individually purchased plans skipped major categories of coverage.

“What they didn’t cover was maternity care, mental health and substance use disorder care — and often prescription drug coverage was quite limited,” Jost said. “The ACA also added habilitation care for special needs children.”

Under various versions of the Republican plan, states would be able to apply for waivers to exempt plans sold in their state from this mandated list of essential health care benefits. Republicans have repeatedly insisted that their bill bars discrimination against patients with pre-existing conditions. But as Jost explained, ending essential health care benefits creates a mechanism that allows insurance companies to deny coverage of those pre-existing conditions. You’d be allowed to buy insurance, but it might not pay for the things you really need it for.

“So you got a mental health problem, sorry, we’re happy to insure you, but we don’t cover mental health problems,” Jost said, describing the logic. “You’ve got cancer? We’re happy to insure you. We don’t cover any chemotherapy drugs or we don’t cover radiation therapy.”

Presumably, the reason Republicans want to cut essential health benefits is to lower premiums — which is why we get to hear Republican politicians making cracks about how men don’t need maternity care — but Jost said he believes the mandatory benefits “are really a very small part of the total cost of coverage.”

For instance, as Jost has argued on the Health Affairs blog, ending mandatory maternity coverage “might lower premiums by $8 to $14 per month,” but would force women who are giving birth to pay as much as $30,000 to $50,000 in out-of-pocket expenses.

Most of these effects would be felt by people who buy insurance on the individual market, or who work for small companies employers that offer less expensive plans with skimpier coverage. As Matthew Fiedler, a fellow with the Center for Health Policy in the Brookings Institution’s Economic Studies Program, explained, there’s a poison pill buried in the bill that would also affect people who work for large employers that offer more generous health insurance packages. Repealing mandatory essential health care benefits would mean reintroducing lifetime limits or annual coverage caps for many people on those plans. Which means that a lot of people who thought they had generous, comprehensive insurance plans could still face bankruptcy in the event of a serious illness or accident.

Under the ACA, Fiedler explained, “Insurers can’t put lifetime or annual limits on types of care that are considered essential health benefits. But they can put lifetime or annual limits on things that aren’t essential health benefits. What that means is that when the definition of essential health benefits changes, that can substantially change the scope of the protection against annual or lifetime limits.”

Even if you live in a state that sticks with the old Affordable Care Act definition of essential health benefits, you may not be protected if you work for a large employer, defined as any company or entity with 50 or more employees. That’s because, according to Fielder, a large employer can choose any state’s definition of “essential health benefits.” It doesn’t have to stick to the state where it does most of its business, or where its employees actually live.

“Employers could choose a state that had implemented a very lax definition of essential health benefits and thereby have fairly broad latitude to impose these kinds of limits,” he explained.

So a worker in a state like California or Massachusetts, which is likely to continue to protect essential health care benefits, might find that her employer has instead chosen define essential health care benefits under the terms set by Texas or Mississippi. So while that person’s policy might still cover cancer treatments or maternity care or mental health services, she might find out that in practice her insurance company will not cover nearly as much of the cost as it would have under the ACA.

Because of the ban on lifetime and annual limits, the cap on out-of-pocket spending for patients, and the ban on discrimination based on pre-existing conditions, the Affordable Care Act was able to cut the number of personal bankruptcy filings in the United States by half between 2010 and 2016. By drafting a way for states to opt out of the essential health care benefits mandate, the Republican bill will potentially allow insurance companies to dump those costs back onto the consumer. The number of medical-related bankruptcies could well soar back to pre-Obama levels — if Mitch McConnell can find a moment when we stop paying attention and ram this bill through the Senate.

Amanda Marcotte is a politics writer for Salon. She’s on Twitter @AmandaMarcotte

Republican health care plan guts Medicaid, shifts funds from poor to rich


By Kate Randall
18 February 2017

House Republican leaders on Thursday briefed rank-and-file members on the outlines of their plan to replace the Affordable Care Act (ACA). Speaker Paul Ryan, Health and Human Services Secretary Tom Price and two House committee chairmen reported to the press on the “talking points” presented at a meeting in the House basement.

Though short in details on how the proposals would be paid for, the plan takes aim at Medicaid, the government health care program for the poor and disabled jointly administered by the federal government and the states. It would also shift the burden of health care costs even more heavily on the working class. Republican leaders provided no estimates of the number of people who might gain or lose insurance under their proposals.

Donald Trump met at the White House Thursday with House Republicans who backed his presidential bid who were looking for his support in repealing and replacing the 2010 legislation commonly known as Obamacare. At a news conference following the meeting, the president said, “We should be submitting the initial plan in March, early March,” appearing to refer to a House bill that could move forward by then.

From its inception, the ACA’s aim has been to cut costs for corporations and the government, while shifting the US to an even more heavily class-based health care system than what previously existed. Obamacare’s key component, the “individual mandate,” compelled those without insurance to purchase it from private insurance companies under threat of a tax penalty.

Outlines of the Republicans’ replacement plan would further boost health insurers’ profits. The ACA’s modest government subsidies to low and middle income people would be replaced with tax and other mechanisms that would favor the wealthy and provide little to no assistance to the vast majority of health care consumers.

The Republican plan would repeal the individual mandate and penalty, but it would also eliminate fines on employers for not providing their workers with insurance coverage. Sources familiar with the proposal told the AP that a new tax might be imposed on individuals receiving health care from their employers valued above $12,000 for an individual or $30,000 for families. That is, it would penalize those receiving decent employer-sponsored health insurance.

It would also roll back the Medicaid expansion under the ACA, which has newly insured an estimated 10 million people. Republicans have long eyed the program—which provides vital health coverage to families, seniors and people with disabilities—for destruction. This attack on Medicaid would go a long way toward this aim, and it is among the most vicious of the Republicans’ proposals.

While providing no dollar amounts or details, the House outline calls for converting Medicaid to either a per capita cap or a block grant to the states. All past Republican plans, including those of Ryan and Price, have featured deep cuts that would grow steeply over time. It would be impossible for states to absorb these cuts without cutting coverage for people who should qualify for benefits.

Currently, Medicaid funding adjusts to meet need, whether from a public health emergency like the opioid crisis or the Zika virus, or the growing health care needs of aging baby-boomers. A block grant or per capita cap would deliberately stop this automatic response to increased need, forcing states to decide who should be denied benefits, or how benefits should be rationed among the most needy.

The Republicans’ “talking points” also confirm that “Obamacare’s Medicaid expansion for able-bodied adults [sic] enrollees would be repealed in its current form.” Their proposal would end the ACA’s enhanced federal matching funds for the currently enrolled Medicaid expansion population after a limited period of time.

While states would be “free” to continue to cover the 10 million people, plus those who would become eligible in the future, under Obamacare’s Medicaid expansion, by a set date they would have to pay between 2.5 and 5 times as much per person to do so, according to the Center on Budget and Policy Priorities (CBPP). The massive cut in federal funding would force states to choose between covering low-income adults and covering children, seniors and the disabled.

The savings from the cuts to Medicaid would likely go toward “relief from all the Obamacare tax increases,” as outlined by the House Republicans. According to CBPP, based on previous plans, these savings would “go to help fill the hole created by cutting Medicare taxes for high earners and eliminating drug company, insurer, and other fees” that helped finance Obamacare’s coverage expansion.

The resulting tax cuts would average $50,000 per year for households with incomes over $1 million, according the Urban-Brookings Tax Policy Center.

In place of the ACA’s refundable premium tax credits (subsidies) that are currently helping more than 9 million people afford coverage, the Republican proposal would offer a flat credit determined by age, regardless of income, with the biggest financial benefits going to older Americans.

This would mean that a 25-year-old earning $25,000 a year would receive less of a tax credit than a 65-year-old multimillionaire. The end result would be that many low- and middle-income people would be unable to come up with the money to pay the gap between their fixed tax credit and the cost of a health insurance plan.

The Republican proposals would also expand Health Savings Accounts (HSAs), which allow people to put aside money tax-free to pay for out-of-pocket health care expenses. These HSAs are obviously of little help to families struggling to pay rent, utilities and put food on the table and have nothing to set aside. The tax benefits for the wealthy, on the other hand, would be substantial.

The House Republicans’ plan calls for the creation of unspecified “State Innovation Grants” to supposedly aid states in covering costs for diversifying the risk pool and covering people with pre-existing conditions. CBPP notes that previous “high risk pools” have failed to provide affordable, quality health coverage for sicker individuals.



Obamacare health insurers seek double-digit rate hikes for 2016


By Kate Randall
7 September 2015

A recent poll found that people enrolled for health insurance through the Affordable Care Act (ACA) exchanges are more dissatisfied than any other group of insured Americans, mainly due to cost. A new study now reveals that enrollees insured under what is popularly known as Obamacare have even more reason to be dissatisfied.

The study released last week by AgileHealthInsurance shows that premiums for plans sold on the ACA federal exchange are expected to increase substantially in 2016, with many insurers requesting double-digit rate hikes. A statewide analysis showed that in three states—Delaware, South Dakota and West Virginia—insurers are seeking double-digit increases for 100 percent of Obamacare plans.

Under the ACA, signed into law by President Obama in 2010, people without insurance through their employer or a government program such as Medicare or Medicaid must obtain insurance or pay a tax penalty. The health insurance exchanges set up under the ACA offer insurance for sale from private, for-profit insurers.

For 2015, the penalty for not adhering to the Obamacare “individual mandate” rises to 2 percent of household income above $10,150, or $325 percent per adult and $162.50 per child, whichever is higher.

It should be noted that AgileHealthInsurance has not compiled its data in an effort to push back against the proposed rate hikes, but to peddle their own insurance products. The company is a leader in the sale of Term (or Short-Term) Health Insurance, temporary insurance sold for periods of less than a year, which can be purchased outside of the Obamacare open enrollment period.

The company’s Advantage plans come with deductibles as high as $7,500, with the policyholder responsible for as much as 50 percent of subsequent “eligible medical expenses.” A 61-year-old male in California could pay $507 per month for a plan with a $7,500 deductible and 20 percent coinsurance.

Since term coverage is generally bought to cover catastrophic medical events, and does not have to offer the essential services mandated by the ACA, purchasing such a policy does not qualify as obtaining health coverage, and an individual or family can still be slapped with the Obamacare penalty for not obtaining coverage.

The AgileHealth data shows that 31 percent of all plans on the federal ACA exchange had double-digit rate hikes proposed for 2016. Fourteen percent of Obamacare plans have proposed rate hikes of at least 20 percent, while 7 percent have proposed hikes of at least 30 percent. The study did not cover the 12 states plus the District of Columbia that run their own exchanges.

The largest insurers are making the biggest premium hike requests for 2016. For example, Blue Cross and Blue Shield of North Carolina proposed an overall rate hike of 26 percent in June, and then two months later raised the increase request to 35 percent.

Rate hikes must be approved by insurance regulators. But if past practicesare any indication of future action, the insurers have little to worry about. State regulators have generally approved the rate hike requests, either accepting them, marginally reducing them or in some cases approving increases in excess of the insurance companies’ requests.

In Oregon, for example, Health Net requested rate increases averaging 9 percent and was granted hikes averaging 34.8 percent. Another insurer in the state, Health Co-op, requested a 5.3 percent increase and the state approved a 19.9 percent hike.

In four states, insurance companies were requesting premium rate hikes in excess of 50 percent for one of their products. Alabama had the product with the largest proposed rate hike: 71 percent. This was followed by New Mexico, 65 percent; Pennsylvania, 58 percent; and New Hampshire, 51 percent.

A study published last month on showed that from 2014 to 2015 the largest insurance companies in each of the states covered by had a 75 percent higher premium increase compared to other same-state insurers. The largest insurers hiked rates on average by 23.9 percent, while the other insurers raised rates by an average of 13.7 percent.

Authors Eugene Wang and Grace Gee write: “Our findings suggest that even after the Affordable Care Act, the largest on-exchange issuers [insurance companies] may be in a better position to practice anti-competitive pricing compared to their same-state counterparts.” In other words, the ACA has emboldened the largest insurers to utilize their near-monopoly of the insurance market to raise premiums to unheard of levels.

Both of the recent studies on insurance rate hikes are further demonstration that the Affordable Care Act has been crafted in the interests of the insurance companies to boost their profits. They expose the reality that that Obama’s signature legislation is aimed not at expanding the availability of affordable, quality health care for ordinary Americans, but at enriching the giant insurers while cutting costs for corporations and the government.

Obamacare drug benefits block access to vital medicines


By Kate Randall

8 July 2014

An estimated eight million people have signed up for health care insurance under the Affordable Care Act (ACA). The Obama administration has touted this figure as proof that significant numbers of Americans now have access to “affordable,” “high quality,” health care. A look behind the numbers, however—examining the actual content of the plans offered through what is commonly known as Obamacare—reveals a different story.

Many of those enrolling have been shocked to find that many of the more affordable plans offered by private insurers on the ACA health care exchanges come with narrow networks, severely restricting their choices of doctors, hospitals and drugs. Those stepping outside of these networks can face massive deductibles and other out-of-pocket costs.

Many of the Obamacare plans are specifically designed to restrict provider networks and drug benefits. While the ACA mandates that certain “essential” benefits must be covered, such as preventive care, and that those with preexisting conditions cannot be excluded, the insurance companies have set premiums and trimmed benefits to make sure their bottom lines are not adversely affected.

Most of the least expensive ACA plans have “closed” drug formularies—a list of allowable prescription drugs, both generic and brand name, that are allowed through the policy. When vital drugs to treat chronic diseases are excluded from the formularies, patients can be saddled with the full cost of theses medications. Making matters worse, these out-of-network costs do not count against deductibles or out-of-pocket maximums.

An article by Dr. Scott Gottlieb at Forbes looked at drugs to treat two chronic conditions: rheumatoid arthritis (RA) and multiple sclerosis (MS). It examined the drug coverage for these conditions offered through the lower-cost, mid-range “silver” ACA plans in the most populous counties in ten states, and found that “none of the plans provided coverage for all of the drugs, or covered any of them without significant cost sharing.”

If paid for outright, the cost of these disease-modifying drugs can run into the tens of thousands of dollars annually. According to the Forbes examination, three drugs used to treat MS were each excluded from two of the ten plans. Estimated annual retail costs for these drugs were staggering: $53,000 for Aubagio, $57,660 for Avonex, and $55,500 for Extavia. Another MS drug—Tecfidera, which costs $62,508 annually—was left off of six of the ten plans.

Of the ten plans studied, similar results were found for drugs to treat RA:

* Xeljanz, annual cost $29,820, excluded from four plans.

* Orencia, annual cost $32,076, excluded from two plans.

* Kineret, annual cost $35,736, excluded from two plans.

* Remicade, annual cost $21,552, excluded from three plans.

* Actemra, annual cost $37,320, excluded from four plans.

Adding to the nightmare for consumers, the precise drug formularies are often difficult to determine before selecting a plan. According to a study by Avalere Health, this formulary information is difficult or impossible to access in almost half of plans sold on the federal site and the state-run sites. On 38 percent of sites the formulary is not accessible at all, while it was very difficult to access on four percent of sites, and difficult on seven percent.

This means that an individual or family facing a medical diagnosis such as rheumatoid arthritis or multiple sclerosis may sign up for a plan through one of the exchanges, only to find that the drug they need to treat the disease will either not be available, or will have to be obtained outside the plan network at a steep cost.

Patients and their families will be faced with the difficult decision of obtaining the drug at an exorbitant cost, plunging them into debt or personal bankruptcy. Others unable to secure the finances to pay for the drugs will be forced to go without, spelling undue suffering and possible premature death.

As with other aspects of the Affordable Care Act, the restrictive drug policies reflect trends in the health care system overall, as well as serving as a launching pad for instituting even deeper cuts to patient care and treatments. Unlike Medicare, the national insurance program for the elderly and disabled, the ACA offers insurance for sale on the exchanges directly from private insurers, with modest subsidies available for low-income people.

Obamacare’s “individual mandate” requires individuals and families without insurance through their employer or a government program such as Medicare or Medicaid to obtain coverage or pay a fine. These penalties will rise to 2.5 percent of taxable income by 2016, guaranteeing a steady stream of cash-paying customers to the for-profit insurers.

Outside of the ACA exchanges, drug manufacturers and the pharmacy benefit management (PBM) organizations are currently sparring over drug prices, particularly for so-called specialty drugs to treat conditions such as asthma, diabetes, cancer and multiple sclerosis. The battle has nothing to do with providing access to these valuable medicines and everything to do with boosting the companies’ profit margins.

More than 210 million Americans nationwide currently receive drug benefits administered by PBMs, which are responsible for processing and paying prescription drug claims as well as developing drug formularies and negotiating prices with pharmaceutical companies. The largest PBM is Express Scripts, a Fortune 100 company with 2013 revenues of $104.62 billion.

In an effort to get the drug companies to lower their prices on certain drugs, Express Scripts recently removed 48 drugs or medical products from a formulary covering more than 25 million people that went into effect in January. One of these was the respiratory drug Advair, produced by GlaxoSmithKline. Advair sales in the US fell 30 percent in the first quarter as a result, while sales of Symbicort, a drug made by rival AstraZeneca that remained on the formulary, rose by 20 percent.

Dr. Steven Miller, chief medical officer of Express Scripts, told the New York Times that the PBM’s new formulary would save the clients who adopt it about $700 million this year, or about 2 to 3 percent of their spending on drugs. These clients are in the main corporate customers looking to reduce health care costs by restricting provider networks and increasing out-of-pocket costs.

David Lassen, chief clinical officer at Prime Therapeutics, a PBM owned by various Blue Cross and Blue Shield plans, told the Times, “We are seeing an increased request for these narrower formularies and excluded drugs.”

Patients who rely on these drugs to treat debilitating and life-threatening medical conditions are often forced to stop using the prescription drug recommended by their doctors, with the decision left up to the bureaucrats at Express Scripts, CVS Caremark and the other big PBM’s as they wheel and deal over prices with the profit-gouging pharmaceutical giants.

A report last year by the research and consulting firm GlobalDate of London projected that the pharmaceutical industry will reap between “$10 billion and $35 billion in additional profits over the next decade” as a result of the new plans sold under the Affordable Care Act. This means the US drug industry’s market value would mushroom overall by 33 percent, from $359 billion in 2012 to $476 billion in 2020.

More private insurers to hop on Obamacare gravy train


By Kate Randall
28 May 2014

A number of private insurance companies that have not yet sold policies on the Affordable Care Act (ACA) exchanges plan to do so in the coming year. The reason is simple: the health care overhaul popularly known as Obamacare offers a virtually risk-free opportunity for insurers to increase their profits.

Insurance giants such as UnitedHealth Group and Cigna, as well as smaller companies, plan to enter the Obamacare market in 2015 and beyond. “Insurers continue to see this as a good business opportunity,” Larry Levitt of the Kaiser Family Foundation told the New York Times. “They see it as an attractive market, with enrollment expected to ramp up in the second year.”

The ACA was designed from the start as a pro-corporate piece of legislation, boosting the bottom line of the insurance industry. The law’s core component, the so-called individual mandate, requires those without insurance from a government program such as Medicare or Medicaid to purchase coverage from a private insurer in the Obamacare “marketplace” or pay a penalty.

New changes to the legislation by the Obama administration virtually guarantee the insurance companies that any dent in their profits will be offset by a complex system of government funds. The Department of Health and Human Services (HHS) has assured the private insurers that ACA mechanisms already in place will be made fully available to them, if need be at taxpayer expense.

The tweaks were buried in ACA regulations issued late last month andreported May 21 by the Los Angeles Times. Adjustments to key provisions of the legislation, largely unreported in the press, will potentially make billions of additional taxpayer dollars available to the insurance companies if they lose money on the exchanges.

At all costs, the White House wants to avoid the political fallout for Democrats in the midterm elections if insurers significantly increase their premiums. As with all things Obamacare, there is no expectation by President Obama and his supporters that the insurance companies should sacrifice any of their profits in the course of doing business on the exchanges.

And while business is booming for the insurers, there are new signs that health costs—both on the government exchanges and in private workplaces—are being increasingly shifted to workers and their families, threatening the availability and quality of medical services.

The ACA set up a complex system of funds to dole out to insurers if they lose money through selling Obamacare coverage. This includes the Temporary Risk Corridors Program, which collects money from insurers that have attracted healthier, more profitable customers and transfers it to those with sicker, more costly enrollees.

The system was supposed to be self-contained and pay for itself. But insurers, wary that any portion of their profits might be threatened, have pressured the Obama administration to guarantee they will be paid. As has been the case with virtually every demand made by the health care industry related to the design of the ACA, the White House has acquiesced. With the new changes, if insurers lose money as a result of keeping rate increases moderate over the next few years, the government will tap federal funds to cover shortfalls.

“In the unlikely event of a shortfall for the 2015 program year, HHS recognizes that the Affordable Care Act requires the secretary to make full payments to insurers,” the government regulation published May 16 notes. “In that event, HHS will use other sources of funding for the risk corridor payments, subject to the availability of appropriations.”

Insurers in most states are only beginning to submit their premium rate increases for 2015, so it is unclear how much they will be seeking to tap from the risk corridors and federal funds to cover shortfalls. However, one insurer, Humana Inc., announced in February that it expected to access three Obamacare risk-adjustment mechanisms for 2014 of between $250 million and $450 million. Humana, a for-profit managed health care company with over 11 million customers in 50 states, brings in $36.5 billion in annual revenue.

The Obama administration’s new “no-risk” guarantee is but one of the factors influencing private insurers, big and small, to enter the ACA exchanges. UnitedHealth Group, which was cautious about participating last year, is one of four new insurers informing regulators in the state of Washington of their interest in offering Obamacare plans. Harvard Pilgrim Health Care, the nominally nonprofit Massachusetts insurer, has indicated it will participate in exchanges in New Hampshire and Maine in 2015, and Connecticut in 2016.

The insurance companies and employers are not expected to absorb any of the costs associated with the implementation of Obamacare. On the government exchanges, if an inadequate proportion of healthy, young people fail to purchase coverage, the insurers will tap the government “risk corridor” funds. One factor contributing to this phenomenon is President Obama’s decision to allow those privately insured in substandard plans to keep them, in an effort to live up to his pledge, “If you like your plan, you can keep your plan.”

Large employers, who are now required to cover 100 percent of certain preventive care services such as immunizations and contraceptive care, will pass these costs onto employees through higher deductibles and other out-of-pocket costs. A recent Mercer study found that 80 percent of employers are either considering raising deductibles or have already done so.

A recent study by the American Health Policy Institute (AHPI) projects that the ACA will save US businesses $3.25 trillion through 2025, largely by shifting health insurance costs to workers and their families, through increasing cost-sharing, forcing employees onto the Obamacare and private exchanges, or ending insurance coverage altogether.

The excise tax set to go into effect in 2018 on “lavish” health plans—those with premiums greater than $10,200 for individuals and $27,500 for families—will levy a 40 percent penalty on corporations. As with the other features of Obamacare, companies are expected to dodge the financial impact of this “Cadillac tax” through gutting their health coverage or passing the costs on to workers in the form of decreased wages and other benefit cuts.

A calculation by executive pay research firm Equilar and the Associated Press found that executive pay in the health care industry last year topped all other industries for the fifth time in six years. Median health care CEO pay in 2013 stood at $12.3 million, up 3 percent over 2012. Through the implementation of the Affordable Care Act, the Obama administration continually consents to the enrichment of this parasitic layer at the expense of the health and very lives of the vast majority of Americans.

Insurance CEO: Obamacare consumers need to break the “choice habit”


By Kate Randall
16 May 2014

One of the harsh realities of the health care overhaul is becoming clearer as people enrolled under the Affordable Care Act (ACA) begin to utilize their coverage: virtually every policy covers only a narrow range of doctors and hospitals, or charges steep premiums for the right to go to any provider.

Such “narrow networks” have become the norm of Obamacare coverage, and are taking hold as well in employer-sponsored coverage and Medicaid Advantage. They feature a limited group of providers, excluding doctors and hospitals that patients may have relied upon for years.

The private insurance companies that sell policies on the insurance exchanges set up under the ACA are embracing this shift to the leaner and meaner networks, and telling customers that they need to shed their dependence on “lavish” health plans and wake up to the new reality.

“We have to break people away from the choice habit that everyone has,” Marcus Merz, CEO of PreferredOne, an insurer in Golden Valley, Minnesota, told the New York Times. “We’re all trying to break away from this fixation on open access and broad networks.” Mr. Merz and PreferredOne stand to profit handsomely from the cost-savings from shrinking networks, as the insurer has grabbed about 60 percent of the market on the Minnesota Obamacare exchange.

Insurance companies have long sought to restrict patient choices in provider networks, and Obamacare is proving to be the vehicle to make it happen. In the early 1990s, similar attempts to streamline networks and restrict choices ran into resistance. Under the ACA’s individual mandate, however, people who are not insured through their employer or a government program such as Medicare or Medicaid are required to obtain insurance or pay a penalty.

This pool of new customers is a captive audience for the private insurers offering coverage on the exchanges. Many are choosing the least expensive “bronze” plans—which most severely restrict provider networks—because they are the only policies they can afford. The private insurers, however, are presenting the selection and purchase of these cut-rate, narrow network plans as a demonstration of smart patient choice.

Karen Ignagni, chief executive of America’s Health Insurance Plans, an industry trade group, told the Times that people “are weighing affordability and breadth of network.” She said, “What we’re finding is individuals are experiencing a preference for affordability.” It is unlikely that Ms. Ignagni, who took home $1,647,861 in salary in 2011, would have a personal preference for coverage that severely restricts her health care choices.

The size of the Obamacare networks vary from state to state, but many of them exclude at least some large hospitals or doctors’ groups. In New Hampshire, for example, Anthem Blue Cross Blue Shield is the only insurer offered on the exchange, and Anthem has excluded 10 hospitals in the state from its network.

In an appearance before the American Medical Association in 2009, Barack Obama pledged, “If you like your doctor, you will be able to keep your doctor.” This is now clearly proving not to be the case. Compounding the problem, it is often unclear to those signing up for coverage precisely which doctors and hospitals are included.

Obamacare “navigators” are also receiving complaints that insurers are dropping doctors and hospitals from their networks outside of the open enrollment period, stranding people who thought their preferred providers were included in their plans.

The Georgetown University Center on Health Insurance Reforms noted a case in Georgia where an individual selected a plan because it covered local doctors and a hospital. But when he tried to use his coverage, he discovered that his preferred provider was no longer in the network. “In fact,” the center noted, “the community hospital that acquired all the medical practices in the county withdrew from the network. Now he has a plan that he cannot use without traveling a long distance to see a provider.”

Proponents of President Obama’s signature domestic policy have often hyped as a selling point the guarantee that those suddenly stricken with cancer or another serious disease will not be caught unprepared if they have ACA coverage. As it turns out, many of the most prestigious cancer care centers are excluded from states’ Obamacare insurance networks.

An Associated Press survey found that only four of the nation’s 19 top comprehensive cancer centers are included in the Obamacare networks in the states where they are located. In Washington, Seattle Cancer Care Alliance is not covered by the networks of five of the eight insurance companies participating in the state’s exchange. MD Anderson Cancer Center reported that it was included in less than half of the Houston-area exchange plans.

In New York, Memorial Sloan-Kettering Cancer Center is only fully covered by two of nine New York City insurers. While in Buffalo, the Roswell Park Cancer Institute is only covered by five of the 16 statewide insurance plans.

The case of a cancer patient in New Jersey highlights the nightmares awaiting many as they navigate the Obamacare system. After some careful consideration, Fred Rosamilia and his wife Lynn signed up on January 1 for a “gold” plan with Horizon Blue Cross and Blue Shield for $800 a month. They also qualified for an $800 a month government subsidy due to their low income.

The couple believed they would qualify for low co-pays for the many doctor’s visits Fred would be making. He told WPIX, “When we told our doctors we were going to be sticking with the Horizon plan through Obamacare they said, ‘great,’ we participate with Horizon.” So we said ‘home run!’”

But as Fred was recovering post-transplant, Lynn found out that Horizon only participated with her husband’s doctors on the less expensive, higher co-pay “silver plan.” Lynn said, “I overheard nurses say to each other they can’t touch Fred till we talk to billing. That put me in tears,” she recounted.

The Rosamilias were facing bills for two months of cancer treatment with virtually no coverage. After petitioning through the Affordable Care Act hotline, the couple was finally allowed to switch to the “silver” coverage. Other Obamacare policyholders facing similar predicaments may not be so “lucky.”