Obamacare protects insurers from high medical costs

Obama administration steps up efforts to encourage participation by sponsoring commercials featuring Magic Johnson, Alonzo Mourning and other celebrity sports figures.
TNS Regional News
Jan 21, 2014

 

Since the early days of the Affordable Care Act, the federal government has said that the young and healthy need to sign up for the insurance plan to balance out higher medical bills incurred by older, sicker Americans who tend to drive up health care costs.

The latest enrollment figures show a disproportionate number — of the nearly 2.2 million Americans who have enrolled in health plans through the ACA’s health care marketplaces created by the ACA — were middle-aged or older, raising concerns that insurers may have to raise premiums next year to keep up with medical claims.

But the health care law, President Barack Obama’s signature legislation, has built-in safeguards to offset the risk of high-cost enrollees, including a little-known provision of the health care law known as the Transitional Reinsurance Program.

The program requires individual health insurers and self-funded group health plans to pay a fee on most policies that will go back to insurers to help cover losses from higher-than-expected medical claims.

Under the program, health insurers inside and outside of the marketplaces will be required to pay an estimated $25 billion over the next three years to the U.S. Department of Health and Human Services, which will use the money to help pay claims from insurers who don’t sign enough young people to stabilize their risk pools.

So far, trending below goal

About 24 percent of those signing up for coverage through December were the target 18- to 34-year-olds needed to offset high-risk enrollees, according to data release Monday by HHS. In Ohio, only 19 percent of the nearly 40,000 residents who signed up for coverage were 18-34 — well below White House’s goal of about 40 percent enrolment from that age group.

Greg Lawson, an analyst at the The Buckeye Institute of Public Policy Solutions, described the reinsurance program as a “backdoor bailout” for insurance companies that could ultimately come back to haunt their customers if the government doesn’t reach its goals.

“This is a situation where the Obama administration is saying if the program starts to flail, we’ll just throw more money back into it to forestall the death spiral,” Lawson said. “But that only works if you don’t mind subsidizing the program continually.”

If too few young people enroll and insurance companies become dependent on the reinsurance program, the cost of the fees will eventually be passed on to consumers in the form of higher premiums, Lawson predicted.

The ACA also includes a provision for so-called “risk corridors,” which require taxpayers to more directly assume part of the risk to marketplace insurers. Risk corridors allow the government to set performance goals for each marketplace plan. If the plans miss those goals, the government will step in with taxpayer money to help offset losses. However, if a plan exceeds its goal, the insurer will have to share the extra revenue with the government.

“With either program, the taxpayer is potentially on the hook,” Lawson said. “It’s no surprise these programs weren’t widely publicized because the architects (of the health care law) were fully aware they might have a hard time passing the smell test.”

The need for the reinsurance program and risk corridors will ultimately depend on the health status of the people enrolling in marketplace plans, not necessarily their age, said Kev Coleman, head of research and data for HealthPocket.com, a website site that analyzes health care costs.

But the health profile of marketplace enrollees is hard to determine, because the ACA prohibits discrimination based on pre-existing health conditions, and the only health question on the application for marketplace coverage is whether the applicant is a smoker.

“We have really good information on age and gender, but we don’t have that information on health status,” Coleman said. “It’s really a blind spot now that medical underwriting is gone. We won’t know what their health status is until the medical claims start rolling in.”

Still, some assumptions can be made based on the pace of enrollment in the marketplaces and the overall numbers, according to Coleman, who said it’s not surprising that older Americans were the first to sign up for coverage because they were most likely to be denied health insurance in the past.

Demand seen in 40 and up

But if enrollment continues to grow at the pace that it has been, the mix of enrollees is likely to change, he said.

“When you start getting into the higher numbers of enrollment, you have a better chance of getting a more representative group of enrollees who look like the rest of America,” Coleman said.

Nationwide enrollment surged last month as the uninsured flooded the marketplaces to meet the deadline for coverage beginning on the first of the year. HHS officials said more than 80 percent of total enrollment, or nearly 1.8 million Americans, signed up for coverage from the end of November last year through Dec. 28.

And demand for coverage continues to grow, according to Dave Hickman, director of the Helping Hands Community Outreach Center’s ComCare program, which was    established to help local residents navigate Ohio’s health marketplace and facilitate enrollment.

So far, most of marketplace applicants have been older than 40, Hickman said. But he attributes the trend mostly to a lack of awareness and procrastination on the part of younger residents.

“A lot of young people just don’t realize how important this benefit could be for them, so it’s not an urgent situation for them,” Hickman said. “We’re having to go after the younger people because a lot of them just don’t have a clue.”

ComCare’s outreach includes holding informational seminars and sign-up events at public libraries, community centers and college campuses.

“Most college students have access to clinics on campus, and as far as they’re concerned, that’s enough for them,” Hickman said. “But when we start talking to them, we’re always surprised at how engaged they become and how much they want to know about Obamacare.”

Federal health officials are quick to point out that in Massachusetts — whose 2006 health reform law was the model for national health care reform — most young people waited until the last month of enrollment to sign up for coverage.

Gary Cohen of the Centers for Medicare and Medicaid Services — the division of HHS responsible for the marketplaces — told reporters in conference Jan. 13 call that he expects national enrollment, which ends March 31, to be in line with what Massachusetts experienced.

“Many of them may have applied and not chosen a plan because they want to think about it, they want to shop around, they haven’t been insured before,” Cohen said, referring to the 18-34 age group.

The Obama administration has also stepped up its efforts to encourage their participation by sponsoring commercials featuring former NBA players Magic Johnson and Alonzo Mourning and other celebrity sports figures pushing young adults to sign up for coverage.

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By Randy Tucker - Dayton Daily News, Ohio (MCT)

©2014 the Dayton Daily News (Dayton, Ohio)

Visit the Dayton Daily News (Dayton, Ohio) at www.daytondailynews.com

Distributed by MCT Information Services

Comments

rbenn

whatever, and quit spending my tax dollars on your stupid commercials

Estrella Damm

Obama is a liar. Fact.

Windy

I think what you meant to say is "Obama is a liar. PERIOD."
LOL

JACKEL

Yea,and I am The Liar in Chief. These guys just signed up for The Diamond Plan with just a $50,000 deductible !

Truth2u

This is pure BULL ! This isn't a news related article but pure propaganda which has strong liberal bias of misinformation! My families rates have already increased and our deductibles have more than doubles.

I'm almost at the point of not buying this rag paper any longer, its getting pathetic that its turning into nothing more than the same style reporting that the Nazi's used to propagate their false rhetoric, the difference being opposite ends of the political lines.

Shannon2

Do you even BUY this so-called rag paper? Cause if you did, you'd know they publish practically ZERO McClatchy Tribune stories. The Reflector posts these kind of stories only on their website, which is free. So I'm thinking you don't buy the paper. Or you just don't read it. I look at both, and I LOVE my Reflector. The website is a lot more edgy, and I'd prefer to see less child molester stories from Toledo. We have enough of them around here. But I like seeing different stories here than what I pay for with the paper.
And as for McClatchy being bias, Google all you want. This story is from the Dayton Daily News. Says that right above here, at the end of the story. So your beef with bias should be directed there, not the syndicate. And I've read plenty of negative Obama stories from other papers that use McClatchy on the Reflector website. It's called balance. I think the Reflector editors know which stories will get us all fired up, and they post those here on the website. I hate the costs with health care, but what are the solutions? Let's talk about those, rather than just slam our government and compare them to, umm, the Nazis?

Truth2u

How strange that people ask questions that they believe they know the answer to. We know you work for the Reflector/Register, Shannon, and to answer your question, Yes, I do read it.
To further answer your question I use to walk the halls of the Register probably before you were born, helped boil the printer plates, I have several retired relatives who worked there, loaded carriers their daily ration plus two extra papers per vehicle in Sandusky and saw the transition from papers being wrapped with paper to plastic.
I do suggest however that you at least research the items people mention before assuming you have the answers. Just because this came from the Dayton Daily doesn't mean it is not connected to Mc Clatchy! The Register and Reflector has sided with MCT News which IS BIAS, but of course you would rather white wash this fact and cleverly try to change what I discussed about. I spoke about the article, and I say its bias and BS, you then say posts should be about solutions etc. How about the Reflector producing REAL facts so solutions can be found! NOT ONCE has this paper printed about the 80 million people who lost their health care, or how about sending people out to Target, Home Depot and ask those who lost their insurance what they think the 'solution' is? Instead you manipulate the forum to save face.

As to the Nazis, please re-read my post, I didn't call you or this Paper or MCI Nazi's, I reference the tactics they used, the distortion of the press where they wished to mold society into thinking their way. This article from the "DAYTON" news is just that, liberal/progressive propaganda.

Truth2u

Google

MCT Regional News media bias
MCT Information Services media bias.

You will see just how slanted this agency, which the Reflector uses, has become.

Ben Crazy

A pig is a pig! call it like it is !!!!

oldsquare1

I think all the unecessary "statistics" have clouded what this article is actually revealing. What I got from it is the participating insurance companies have been given a guarantee not to lose money...which equates to profits will be guaranteed...at taxpayer expense.