Financial Impact – Health  Reform, Premiums, Taxes & Fees

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Breaking News

HHS will now pay 100 percent of claims costs between $45,000 and $250,000 — an increase from the previous rate of 80 percent. The Hill 6.17.2015

Resources & Links

Final Market Rules

This final rule sets forth payment parameters and provisions related to the risk adjustment, reinsurance, and risk corridors programs; cost sharing parameters and cost-sharing reductions; and user fees for Federally-facilitated Exchanges. It also finalizes additional standards for the individual market annual open enrollment period for the 2016 benefit year, essential health benefits, qualified health plans, network  adequacy, quality improvement strategies, the Small Business Health Options Program, guaranteed availability, guaranteed renewability, minimum essential coverage, the rate review program, the medical loss ratio program, and other related topics.

Final Market Rules 45 CFR Parts 144, 147, 153, 154, 155, 156 and 158

Facebook Comments 


  • Someone posted this article on Facebook about the Supreme Court case awarding 12 billion to insurance companies…
  • Why do you think your comment about people that don’t have coverage during this pandemic, is relevant?
    • I feel my comment about the uninsured on Facebook is relevant for several reasons:
      • 1 The critique of President Trump and his opposition to ACA/Obamacare
      • 2. “who had sicker customers than expected in the newly overhauled insurance marketplaces”
      • Where did these “sicker” customers come from, if not the uninsured?
      • Sure, there was COBRA and HIPAA but how many knew about it or actually applied?
      • There was also Mr. MIP, but at $50 one time write up fee, how could a Insurance Broker afford to sell it, without going on Medi Cal himself?
      • 3. lawsuits brought by three small insurers, including one that blamed the risk corridors shortfall for its collapse in 2016. Today’s decision will also benefit insurers who brought dozens of identical lawsuits in lower courts.
  • Many of these insurers, known as co-ops, shuttered in the law’s early years partly because they didn’t receive the risk corridor funds they expected.
  • which helped insurers pay poor customers’ medical bills.
  • Blue Cross pretty much went out of the market in CA in 2018
  • These companies apparently foresaw the problems and immediately withdrew!
    • Aetna
    • Assurant
    • CIGNA
    • United Health Care
      • Then to top it all off… Covered CA cancelled Grandfathered Plans that President Obama said you could keep, just so that they could get the previously insurance and healthy customers and bypass professional agents. biz
      • Covered California, which required insurers to cancel existing individual policies in order to qualify to participate in the federally subsidized exchange.
        • it assures a large and balanced risk pool of individual and family plan subscribers.”
        • potential deluge of sick people seeking coverage and not enough healthy ones to make the project actuarially sound.
        • Peter Lee, Covered California’s executive director, said this week that that as many as 800,000 to 900,000 people may be affected by the cancellations, and other estimates put the number closer to 1 million.

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#Cadillac Tax Repealed on Really Nice Employer Health Plans

  • Cadillac Tax repealed by President Trump in December 2019   CIGNA *  Very Well *
    • The Cadillac Tax, set to begin in 2018 – 2020 Word & Brown 8.20.2019 *  CA Health Line 12.21.2015 as part of the ACA, is a 40% tax on benefits over certain thresholds. HRAs, HSAs, Major Medical coverage and other items are included in the coverage that counts towards this tax.  The tax will hit insurance and related perks valued at more than $10,200 for singles and $27,500 for families. So for family benefits worth $30,000, the tax would apply to the $2,500 that’s above the limit.  The administration has long argued it is a modest step to get health care costs under control. It “will affect only a small portion of the very highest-cost health plans — a total of 3 percent of premiums in 2013,”  About one-third of employers will be hit by the tax in 2018 if they do nothing to change their plans   4.7.2015 Word & Brown from Politico  CIGNA * 
    • January 2017 – Senators Dean Heller (R-NV) and Martin Heinrich (D-NM) introduced S. 58, after Representatives Mike Kelly (R-PA) and Joe Courtney (D-CT) introduced H.R. 173legislation to repeal the ACA’s Cadillac/excise Tax, which will impose a 40% excise tax on health plans that exceed certain cost thresholds beginning in 2020

Cadillac Tax - Photo from Morgan & White

4.14.2016 Ways & Means Committee Hearing VIDEO – Transcripts Sound is missing for the 1st minute or two

you tube videos

What is the #risk corridor?  Adjustment? Reinsurance?

The risk-corridor program was established under the Affordable Care Act to help stabilize the individual and small-group markets by offsetting insurer losses during the first three years of the insurance exchanges. The program, which expired at the end of 2016, was designed to discourage insurers from raising premiums because of uncertainty over who would enroll in their plans.The program works by collecting funds from profitable insurers, and paying out funds to health plans with losses that exceed a certain threshold. A similar program exists in Medicare Part D, which was created by Republican President George W. Bush.

But in 2014, Congress passed a provision in the 2015 federal budget requiring risk corridors to be revenue-neutral. That meant that the CMS could only pay out what it takes in from health plans. That change led to a massive shortfall in the risk-corridor program. In October 2015, the CMS said it would pay just 12.6% of the risk-corridor requests for 2014, with the rest of the payments being pulled from 2015 and 2016 collections.    Modern Health Care 11.14.2017

California insurers have received nearly $1.2 billion through the Affordable Care Act’s reinsurance program, according to a Covered California analysis of a recent CMS reportBusiness Insurance reports (Geisel, Business Insurance, 7/6).   The program requires insurers that offer exchange coverage to pay into a pool that can be used to reimburse them if they incur claims that exceed a certain threshold.   In June, HHS said it will reimburse 100% of such costs between $45,000 and $250,000, up from 80% previously (California Healthline, 6/18).  CA HealthLine 7.7.2015

ACA risk adjustment payments are on the rise: CMS

Risk Corridor Litigation

  • Risk corridor program” is an odd term that may be unfamiliar to those outside of the federal healthcare field. Essentially, the “risk corridor” concept is a way to share the risks between insurers and the Government when embarking upon a new health insurance endeavor. By sharing the risks, the Government intended to encourage more insurers to participate in the new ACA endeavor. The Government’s promise to reimburse certain revenue losses to insurers would allow the insurers to maintain health insurance premiums for consumers at a lower and more reasonable rate. The insurance companies voluntarily entered the program based upon the Government’s promised termsactual 48 page ruling
  • Maine Community Health Options v. United States
  • The Supreme Court  ruled 8-1 that the federal government has an obligation to pay insurers funds $12 Billion  owed under the ACA temporary risk-corridor program. It reversed the judgments of the lower court and remanded the consolidated cases brought by four insurers for further proceedings. Modern Health Care *
  • Appeals court rules that Trump violated the law when the Feds stopped paying the subsidies, however insurers are not entitled to the full amount as they raised premiums to cover the loss.  Maine Community Health Options v. United States  Modern Health Care *
  • Trump freezes Risk Adjustment payments per July 7th 2018 announcement.  The New Mexico ruling found fault with the formula used by the government to calculate the payments, saying it was “arbitrary and capricious.” But another district court in Massachusetts upheld the formula. * Modern Health Insurance * NPR *  Larger Insurance Companies to be hurt the worst Modern Health  *
  • Payments started again! Modern Health Care 7.24.2018  *
  • In Litigation  12.10.2019
  • Blue Shield states in their 2017 Broker Cycle Guide that the loss of the reinsurance program alone adds 5% to the premiums!
  • Worse than that, the Federal Government owes 12.3B!
  • Court Rules $$$ not owed as ACA is supposed to be budget neutral.  Modern Health Care 6.14.2018    
  • hat figure includes roughly $3.95 billion in payments to cover insurers’ losses in 2016 alone. The agency also owes insurers $5.8 billion in risk-corridor payments for 2015. That’s on top of the $2.5 billion shortfall for 2014 losses.
  • olina won a judgement on 8.4.2017 for $52M from a federal court in Washington, DC  actual 48 page ruling  based on the ACA Risk Corridor program. Los Angeles Times

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