Financial Impact – Health Reform, Premiums, Taxes & Fees
Major sources of deficit reduction include:
higher Medicare taxes on the wealthy;
new annual fees on health insurance providers;
revenue from mandate penalty payments;
and spending offsets such as a reduction in Medicare reimbursements to insurers and drug companies for private Medicare Advantage policies that the Government Accountability Office and Medicare Payment Advisory Commission found to be overpaid (relative to government Medicare);
and reductions in Medicare reimbursements to hospitals that do not meet standards of efficiency and care. Learn More Wikipedia
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
States being forced to pick up ACA Insurer Fee CA Health Line 5.18.2015
Health Insurer Taxes Flyer Blue Shield Rev 5.2013
The limit of $6,350 for an Individual and $12,700 for a family out of pocket costs has been postponed for 1 year for some insurers. New York Times DOL FAQ’s Part of the justification is that some insurers have different parts of the coverage like Mental Health or Rx Drugs covered by other Insurance Companies. On the other hand CA has AB 639 pending to put limits in.
President Barack Obama’s proposed 2015 budget contains $5.5 billion slated to be paid to insurers who suffer significant losses on plans sold through the state and federal insurance exchanges. The risk-corridor program has been pilloried by congressional Republicans as a bailout for the insurance companies, even as experts have said it would produce a net surplus.
But the president’s budget also includes $5.5 billion in anticipated revenues from insurers who profit on plans sold through the government-run online marketplaces. That means Obama is counting on the risk-corridor program to be budget neutral, contrary to a Bloomberg News report that said the program would be a money-loser for the government. modernhealthcare.com
Final Market Rules
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. 173, legislation 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
Health Net Update 1.19.2016
Why Employers are really cutting benefits?
Not the Cadillac Tax Los Angeles Times 8.27.2015
Next Big ObamaCare Battle – Cadillac Tax CA Health Line 9.17.2015
Check out Group Supplemental Plans to avoid the tax!
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 report, Business 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
Risk Corridor Litigation
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 *
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
That 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.
“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 terms. actual 48 page ruling
Child, Related Pages & Site Map
Health Coverage #Guide .org
- What Is Group Coverage?
- Is Insurance Required?
- Is Your Business Eligible for Group Coverage?
- Who Is Eligible for Coverage?
- What Do Employers Have to Pay?