A new Obama administration rule could drive out of the market the low-cost, high deductible plans that are supposed to be available under ObamaCare [HR 3590]. That would likely mean a sharp jump in taxpayer subsidies.

The problem stems in large part from contradictions in the hastily written health care overhaul.

Starting in 2012, ObamaCare requires insurers in the individual or small group (small business) market to spend at least 80% of premiums on medical costs, leaving 20% for salaries, advertising, fraud prevention, profit, etc. For large groups, this medical loss ratio (MLR) must be 85%.

Read the whole article: New HHS Regulation Will Endanger HSA, High-Deductible Plans, Make ObamaCare More Costly – Investors.com.

Via the Galen Institute.

Now, the state of Massachusetts is grinding [Lauren and Nick Destito] into the dirt. The reason: the health insurance the Destitos bought, paid $750 monthly premiums on and repeatedly used at doctor visits apparently does not pass muster with the state’s mandatory universal health insurance law. Now the Destitos, both 50 and already on the brink of financial ruin, are facing a $3,000 state fine. …

“The stress will kill me before anything else,” Lauren Destito joked nervously yesterday just before her appeal hearing with the state’s Health Connector. She was so worried she asked her state representative, Dan Winslow, to listen in on the conference call. With hearing officer Irene Herman’s knowledge, I listened in, too.

“I would just like to say that we did make the effort and purchased a plan,” Destito told Herman. “I don’t understand why we’re in this situation at all.”

Because, Herman explained, the state must establish if her family could afford other, better insurance, and that affordability is determined “not, unfortunately, from your perspective but from the state agency’s view.”

In other words, the state decides how much health insurance you can afford — not you.

Read more: Health-care agency sick – BostonHerald.com.

(Via Galen.org)

According to the [Massachusetts] AG’s complaint, U.S. Life sold health insurance policies in Massachusetts that were not authorized for sale and did not cover health services required by Massachusetts law. The mandated services at issue included mental health, maternity healthcare, infertility care, pap test screening, mammography and preventive care for children up to age six. Through these actions, U.S. Life violated the state’s Consumer Protection Act.

Read more: Insurance company to pay Massachusetts $760K for selling illegal products.

So the state’s Consumer Protection Act (sic) protects consumers from buying products they might actually want?  Isn’t it possible that the people who bought these policies wouldn’t have wanted to pay the increased premiums associated with the mandated benefits listed above?

Jared Rhodes of the Lucidicus Project tweeted: “MA AG to insurance company: ‘STOP SELLING INSURANCE POLICIES THAT PEOPLE WANT!’”

(via FIRM)

a new survey by Hewitt Associates, a global human resources consulting and outsourcing company, shows that almost all now believe they will not. Ninety percent of companies said they anticipate losing grandfathered status by 2014, with the majority expecting to do so in the next two years.

Under the “grandfather” provision of the U.S. Patient Protection and Affordable Care Act, companies can maintain many of their current health care coverage provisions and are required to make fewer changes to plan documents and administrative procedures in order to comply with the new law. Companies can lose their grandfather status if they take certain steps such as reducing benefits, significantly raising co-payment charges, significantly raising deductibles or changing insurance carriers.

Read the whole article: Nine out of 10 U.S. Companies Anticipate Losing Grandfather Status Under Health Care Reform, According to New Hewitt Survey.

(via David Catron)

Internal administration documents reveal that up to 51% of employers may have to relinquish their current health care coverage because of ObamaCare.

Small firms will be even likelier to lose existing plans.

Read the whole article: Keep Your Health Plan Under Overhaul? Probably Not, Gov’t Analysis Concludes.

For more details and a link to the report, see John Goodman’s post: It’s Official: 51% Won’t Be Able to Stay in Their Employer Health Plan.

See also Scott Gottleib’s You’re losing your plan in the New York Post.

(Via State House Call, FIRM, and & the web monkey.)

Part of the health care overhaul due to kick in this September could strip more than 1 million people of their insurance coverage, violating a key goal of President Barack Obama’s reforms.

Under the provision, insurance companies will no longer be able to apply broad annual caps on the amount of money they pay out on health policies. Employer groups say the ban could essentially wipe out a niche insurance market that many part-time workers and retail and restaurant employees have come to rely on.

This market’s limited-benefit plans, also called mini-med plans, are priced low because they can, among other things, restrict the number of covered doctor visits or impose a maximum on insurance payouts in a year. The plans are commonly offered by retail or restaurant companies to low-wage workers who cannot afford more expensive, comprehensive coverage.

Depending on how strictly the administration implements the provision, the ban could in effect outlaw the plans or make them so restrictive that insurance companies would raise rates to the point they become unaffordable.

Read the whole article.

See commentary by Investor’s Business Daily and Daniel Foster at National Review.

The hotly debated healthcare reform bill signed into law in March has killed a local insurance company.

At least that’s according to a brief letter Richmond-based nHealth sent to insurance agents explaining the reason behind the shuttering of the once promising local startup. …

The letter explained that “considerable uncertainties” in the health insurance market caused by the recent federal healthcare legislation made the two year-old company’s business model unsustainable.

“Despite a product that was gaining increasing acceptance among companies throughout the Commonwealth, the uncertainties in the regulatory climate coupled with new demands imposed by national healthcare reforms have made it challenging to sustain the level of sales required to remain viable over the long run,” Slabaugh said in the letter. …

“People got skittish about writing any more checks,” Nezi said. …

“The most prudent and sensible conclusion for us is to discontinue the sale of healthcare policies and withdraw from the healthcare business,” Slabaugh wrote in the letter.

Founded in 2008, nHealth was built around a high deductible insurance plan model that utilized health savings accounts and kept costs down making consumers more involved in their healthcare decisions. …

The linchpin within the legislation for nHealth, Kitchen said, was related to pending requirements that would raise loss ratios for insurance companies, a ratio related to premiums versus claims.

Kitchen said the quick decision was based on a long-term outlook that showed healthcare reform would have a fatal effect on nHealth.

Read the whole article: Startup health insurer shutting.

nHealth’s CEO Paul Kitchen wrote an excellent op-ed last year about what’s wrong with the current unfree market in health insurance, and how free-market reforms would empower patients as both consumers and customers.

This might be a trend. As Michael Cannon of the Cato Institute has noted, ObamaCare’s Price Controls Threaten HSAs.

Also check out the commentary in Investor’s Business Daily on nHealth’s closing: Road to Single Payer.

(via the Galen Institute)

Twenty-seven percent of Colorado and Wyoming employers surveyed by MSEC recently said they now offer Health Spending Accounts as an option for their employee benefit plans, up from 21 percent in 2009, 18 percent in 2008, 15 percent in 2007 and 7 percent in 2006.

President Obama guaranteed Americans that after health reform became law they could keep their insurance plans and their doctors. It’s clear that this promise cannot be kept. Insurers and physicians are already reshaping their businesses as a result of Mr. Obama’s plan.

The health-reform law caps how much insurers can spend on expenses and take for profits. Starting next year, health plans will have a regulated “floor” on their medical-loss ratios, which is the amount of revenue they spend on medical claims. Insurers can only spend 20% of their premiums on running their plans if they offer policies directly to consumers or to small employers. The spending cap is 15% for policies sold to large employers. …

Restrictions on how insurers can spend money are compounded by simultaneous constraints on how they can manage their costs. Beginning in 2014, a new federal agency will standardize insurance benefits, placing minimum actuarial values on medical policies. There are also mandates forcing insurers to cover a lot of expensive primary-care services in full. At the same time, insurers are being blocked from raising premiums—for now by political jawboning, but the threat of legislative restrictions looms.

Read his whole article:
No, You Can’t Keep Your Health Plan – Insurers and doctors are already consolidating their businesses in the wake of ObamaCare’s passage.

Under any system of mandatory insurance, the government must necessarily determine what constitutes an “acceptable” plan. The health insurance czar would be in charge of a new bureaucracy called the “Health Choice Administration,” which would regulate what prices insurance companies could charge for policies, who they must cover, and what benefits they must offer. …

To add insult to injury, President Obama has repeatedly promised:

If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.

It turns out what he really meant was: “If you like your health care plan, you will be able to keep it — but only if my czar lets you.” …

When an insurance czar requires everyone to purchase health insurance, then sets the prices and benefits independent of a free market, it turns insurance from a system of voluntarily shared risk into a thinly disguised form of government welfare.

Read the whole article at Pajamas Media: America Doesn’t Need a Health Insurance ‘Czar’.

Update: Here’s another good article about the Health Care Choices Administration (sounds Orwellian, no):

A czar to drive doctor-patient decisions (Expect the best medicine that bureaucracy will allow).

On January 9, the AP reported that:

House Democrats want to require insurers to spend a minimum amount of premium income on benefits, thereby limiting what is available for salaries, bonuses, advertising and other items. The House bill sets the floor at 85 percent; the Senate-passed measure lowers it to 80 percent for policies sold to small groups and individuals.

Depending on how actuarial value is calculated, HSA-qualified plans (those with high deductibles) may become illegal.  This is especially true if the calculation does not include contributions to an HSA.

Some background: A high-deductible insurance plan combined with a tax-free health savings accounts (HSAs) allow you to save money to spend on future medical costs, rather than throwing your money “down the premium hole” on a more expensive insurance plan that you may not want.

Democrats have tried to kill this insurance option before (e.g., here).  Last fall the Wall Street Journal reviewed how the Senate Health Care Bill (HR 3590) & House health bill (HR 3962) aim to restrict both HSAs and Flexible Spending Accounts (FSAs) – both are ways to buy medical care with tax-free income.  Note that HSA-qualified high-deductible insurance plans have been successful in keeping premiums low and encouraging patients to seek proper care.

So what’s the latest?  Well, there are lots of details. Over at John Goodman’s blog, Roy Ramthun reviews what the House and Senate Bills say about HSAs and FSAs.  Lots of details and differences between the House and Senate Bill, but in general, expect:

• “As of 2011, expenses incurred for over-the-counter (OTC) medications and products will no longer be eligible for payment or reimbursement from any of the health care accounts.”
• FSA contribution limits: “Both the House and Senate versions of health reform legislation would limit [FSA] contributions to no more than $2,500 annually. The limit would be indexed to inflation for future years.”
• preventive care:”…all insurance policies will be required to provide first dollar coverage for preventive care services”
• minimum actuarial value for the benefits covered: This could kill HSA-qualified accounts, depending on what value set the minimum to be, and how to compute “actuarial value.”
• limits on out-of-pocket expenses: Again, politicians want to limit how much of your own money you can spend on medical care, and hence dictate that you spend more on insurance!

Read the whole post: Status of HSAs and Consumer-Driven Health Care in Health Reform.