Texas Health Insurance Blog

Well, here we have the first of many court decisions that will be argued about for the next several years.  Today a Virginia Court ruled that the individual mandate of the Health Reform Act is unconstitutional.  Judge Henry Hudson found that the law exceeded Congress’ ability to use the Interstate Commerce Clause.

http://www.bloomberg.com/news/2010-12-13/u-s-health-care-law-requirement-thrown-out-by-judge.html

It is important to note that the judge did not place an injunction on the other parts of the Health Reform Acts’s provisions.  Clearly this decision will be appealed by the US government.  Ultimately this is headed to the US Supreme Court.

Overall, this is not a surprise as this was a challenge in Virginia by Virginians that had passed a state law preventing Virginians from being compelled to buy insurance.  This decision does simply set up the next step in a series of challenges that will be decided by 9 judges.  Once again the entire fate of a country is placed in the hands of just a few that can hand out or trash individual and state’s rights. 

Jason Bohmann

www.texashealthdesign.com

SKIP THE COST NOW, PAY MORE LATER!

In the new Bloomberg article by Pat Wechsler titled, Survey: Americans More Likely to Skip Health Care for Cost, we read that Americans are likely to skip going to the doctor, fill prescriptions, and delay or avoid treatments and procedures that are recommended due to high out of pocket costs.  As I read the article I am keenly aware that this “news” article simply scratches the surface regarding trends in health care and the amazing amount of influence one’s perspective has in this area.  Continuing to read the story we find that there are some comparisons between Western European statistics regarding total costs per citizen and patient habits regarding their prescription filling history.

What is interesting to me is that despite the difference in systems, we still find that Germans too are likely to defer their treatments during these times.  Why would 25% of German’s be defering treatment?  I wish the article would have drilled down on this.

The tone of the article is simply this.  American system bad, Western European system much better.  I am sick of this!  Of course it is better in Western Europe, it doesn’t cost the patient as much upfront to receive medical services!  These are state controlled enterprises.  We do not have that system.  When you begin having this discussion the first thing  you have to ask anyone is whether or not you think the government should run the entire medical system in a country.  If the answer is yes, you don’t need to go any further.

Has anyone been paying attention to the implosion of the Western European financial system?  A reason (not the only reason) that their citizens have access to low cost health care is that the system is unsustainable and not based on pricing in reality!  We will soon see how effective these systems will be at providing health care with no cost or little out of pocket cost when government budgets, pensions, and entitlements are cut.  I am not hammering Europe with the mindset that the US system is perfect, not at all!  I am hammering Europe with the idea that the European budget collapse and fiscal experience is our future if major changes are not made to our health care system including Medicare and Social Security!  More entitlement programs and unfunded benefits are not the answer. 

I maintain that one of the greatest inhibitors of efficient care in the US system is the lack of transparency of pricing for all services.  Specifically, if a person has insurance and pays a $25 copay, he has no idea what the true cost of that office visit really cost.  Where is the menu of prices on the doctor’s wall stating what the charges will be?  Oh yes, I know the receipt he is handed is printed up, but then again there are contracted rates for each specific network and even a cash price if a patient doesn’t have insurance or the means to pay.  Finally, add Medicare and Medicaid into the mix and the only resulting thing you have from this recipe is a disaster.  What a confusing system built to defraud consumers at every turn. 

Because there is no transparency amoung providers, there is no competition.  How can I make a rational decision about a procedure if I cannot determine the cost.  How can I make a good judgement about quality of care and weigh that against the additional price I would pay for choosing a specific practice or specialist?  It is quite impossible as the US system is structured.  I know of a couple of websites that have attempted to rationalize costs and make them available, but they are very location specific and are not user friendly.  If any readers have found great resources, please email me or post a comment, I’d love to review it!

Is it any wonder that Americans would defer costs in the teeth of a recession?  Of course not!  When more than 15% of Americans are unemployed, under-employed, or have simply given up looking for jobs why wouldn’t smart shoppers attempt to find anything that can be cut to ensure they can continue meeting their obligations?  I think the real concern here is that when Americans defer costs in key areas of treatment such as preventative care and wellness we ultimately see more serious and more expensive consequences down the road.  I have seen this all too often as families choose the high deductible health plans that didn’t offer preventative care without meeting the high deductible.  Fortunately (and one of the good enhancements of the PPA) the new health care law required all individual plans here in Texas to provide preventative care at no cost to the patient.  This hopefully will remove the hesitancy of clients to visit the doctor for annual check ups.

Please let me know your thoughts, I’ve enjoyed hearing from you!

Jason Bohmann

Texas Health Design

info@texashealthdesign.com

713-422-2935

The Connecticut State Department of Insurance approved massive price increases for Blue Cross Blue Shield Anthem Health as of October 1st 2010.  While this is not a shock to those that have been reading our blog over the last few months, the posters leaving comments on the story are livid and act as though they never knew this type of increase was possible.

http://www.nbcconnecticut.com/news/local-beat/Health-Care-Reform-Blamed-for-Huge-Hike-in-Premiums-105041674.html

We’ll hear more of these stories, or perhaps more likely, we won’t hear about them at all as this puts the current administration’s policies in poor light.  When the main stream media supports an agenda we rarely hear much about the negative impact that others will suffer.  As I’ve written often, this legislation will create terrible burdens on folks that are responsible enough to have obtained insurance while it will encourage others to drop coverage and rely on the support of the government.

In other news, a federal court did uphold the legality of the challenge of 20 states to test the constitutionality of the Patient Protection and Affordability act.  Of course this will be appealed and the case it on its steady march to the US Supreme Court.  Unfortunately that will take 3 or 4 years.

http://www.reuters.com/article/idUSTRE69D5CO20101014

Jason Bohmann

www.texashealthdesign.com

KIDS RECEIVE NO BENEFITS FROM THE NEW LAW CHANGES

I wanted to convey a few thoughts on the recent changes on health care options for children since October 1st.  It is often a difficult task to look in the future and try to anticipate the implications of new policies or changes.  As readers have known, I was fearful of the legislation changes in the Health Care Reform Act, and it is beginning to be clear that those concerns were well founded.

EVERY CHILD LEFT BEHIND

Since the establishment of rules requiring children with ANY condition to be covered, health insurance companies starting with Blue Cross Blue Shield of Texas dropped the ability for children to obtain child-only policies.  In other words, if you have your own coverage at work and you just want to obtain health insurance coverage for your child with a health carrier in Texas, you are now out of luck!  If your child is healthy or sick, it doesn’t matter you can’t even apply.  If you don’t believe me, just try running a quote for your child under the age of 19 on our site – www.texashealthdesign.com .   You won’t be able to do it, in fact, we now get two to three calls a day asking why parents can’t run quotes for their children.

EVERYONE CAN GET COVERAGE, BUT NO ONE CAN AFFORD IT!

The government is just trying to do a good thing right?  Who can blame them, they are simply trying to get coverage for the uninsurable children, so despite the fact that kids can’t have their own policy isn’t it a great thing that they now have access to health coverage?  The answer here is yes, but really, what is the cost?  In my experience each child that we’ve encountered that did have a pre-existing condition could not obtain coverage anyway.  Why?  Unfortunately, because a policy is available, doesn’t mean that it is affordable.  After October 1st of this year, we’ve seen an amazing thing happen.  Parents with a child with a pre-existing condition were slapped with huge rate ups on the base premium on the child portion of the policy.  We are not talking about a 50% rate up or even a 100% rate up, we are seeing 300% rate ups over the base rate in at least two different cases.  Let’s do the math so it is even more clear.

Our child applicant’s portion of the coverage was going to be $120 a month at the time of application.  Once we received the decision, we found that the new premium would now be $480!  Remember, we didn’t just attempt to obtain coverage for the child, there was another health premium of $350 a month for the parent.  So given the new legislation, we now have the opportunity to obtain coverage for just two people at a cost of $830 a month.  Needless to say, our clients did not take the most generous offer.

COMPLIANCE WITHOUT COMPLIANCE

Effectively, the insurance companies have managed to comply with the rules of the legislation, but make it so unaffordable that no one in fact will insure their child.  In addition, by removing the option to have child only policies, I am guessing that they have also shed a block of business that didn’t richly reward them anyway since premiums were often pretty low and children actually go to the doctor quite often.  (This is my guess, I have not seen any facts related to the profitability of that block of business for that demographic group).  In a sense, the insurance companies have gone out of their way to comply with the letter of the law, but certainly have not kept the spirit of the intention of the law.  But before we hammer them for being terrible and unjust and focused on the almighty dollar, remember that they are simply maximizing their return on their capital.  The reality is that given the structure of the system, these companies would certainly go under if they kept their policies in line with the spirit of the law.  The federal government is simply creating sweeping legislation that addresses none of the structural issues related to cost increases of medical services.  In fact, in my opinion the law changes just add to the drain on resources and the government looks to add demands on the system without adding any more resources.

NO WHERE TO GO

Let’s go further.  We’ve written in past posts about two other options for health coverage for those with pre-existing conditions, perhaps those would provide more affordable coverage options now?  The Texas High Risk Pool and the Federal PCIP plan essentially both require an applicant to have been declined to be admitted to their insurance program.  (Yes the Texas High Risk Pool will take an agent certification so no actual decline is required).  Unfortunately though, neither plan allows an applicant into their health insurance program if the coverage is “too expensive”.  So where are these children that can get coverage but can’t afford it going to get coverage?  CHIPS (Children’s Health Insurance Program) may be a resource as there is a mechanism that tests the cost of insurance relative to the income of the household.  Perhaps that is where all of these kids will obtain health insurance coverage?  If a family does have financial resources that are greater than CHIPS allows, what are they do to?  Unfortunately there are no easy answers.  I guess they’ll need to wait a few more years for the “Patient Protection and Affordability” portion of the bill to kick in.

TRAPPED WITH NO CHOICE

Finally, I want to highlight one other issue I’ve seen related to the changes in health care.  I have another client that can barely afford the health insurance plan they obtained for their child two years ago.  This child is covered with a child only plan with a $1,000 deductible.  On November 1st, the policy premium increases like it does almost every year.  Unfortunately, this client cannot afford the $20 a month increase that will be charged, so we need to examine her coverage choices.  Since the changes in the law, this child is in more of a predicament than ever.  Since there are no other child-only policy options available with other carriers, we only have one choice, which is to increase the plan deductible to attempt to drive down the monthly premium.  The net impact here is that this child is now facing higher premiums, higher deductibles, AND the loss of choice related to the implementation of the Health Reform Act.  Ultimately, if the parent’s don’t earn more money, this child’s parents will drop coverage or seek to enter the CHIPS plan as the premium on this existing policy continues to rise.

To wrap this up, I have to say that this is just another perfect example of how the market is impacted with greater involvement by government.  We were promised more coverage, more choice, and more affordability.  I have yet to see any of those promises materialize.  If you are inclined to suggest that we will see these things happen in 2014, I can only say that based on the things I am seeing now, that is simply wishful thinking.  In the meantime, children will be suffering from the impact of poorly thought out laws.

Jason W Bohmann

Texas Health Design

www.texashealthdesign.com

FALLOUT

The 9/23/2010 date has come and all newly issued plans after (essentially October 1st 2010 plans) now offer unlimited preventative care, inability to deny coverage to children under 19 with pre-existing conditions, and all caps to benefit amounts have been removed.  Clearly old plans or grandfathered plans don’t have to change, but they do complicate the landscape for insurers and agents as we now need to keep track of the effective dates to understand what types of plans we’re dealing with.

The Patient Protection and Affordability Act was sold to us as a way to make health insurance available and affordable to all of those in the US.  What we were led to believe was that there would be more plan choice, more benefits, more competition, and affordability!  Unfortunately, what we are seeing is that the promises made are not being kept and that the product results in higher prices and less choice.  In particular, I want to point out the impact resulting from the Health Reform Act.  This weekend, Principal Financial released a statement that it is now getting out of the business of group health benefits. 

As a health broker, our firm has a few groups that are placed with Principal and so this does directly affect several of our clients.  Principal has arranged with United Health Care (who else?) to take over these plans.  Principal stated that as a small insurer with 840,000 insureds that it would be too costly to make the significant changes to remain in the business of health insurance.  It is also important to note that the firm taking over the plans often has the highest priced quotes of all carriers.  It isn’t an accident that UHC would be acquiring this block of business.

We need to be paying attention to these events and be aware of this as more insurers make this type of decision.  Principal’s comments essentially say that they don’t have the size and scale to be able to compete in this market place.  The concern I have is that we’ll end up with only one or two insurers in every market rather than many carriers with their own unique products, capabilities, and value.

I look at this release and am disappointed as I believe that this is just a first step in consolidation of the industry and and concentration of power in the hands of a few companies.  The “federalization” of the health insurance market has already shown us that there are consequences to the growing involvement of the “invisible hand” and those consequences limit accessibility and choice.

Jason Bohmann

www.texashealthdesign.com

NEW PROGRAMS MAKE THE DECISON AS CLEAR AS MUD

As I learn more about the new developments related to the Healthcare Reform Act, – now called the Patient Protection and Affordability Act (Is that great marketing spin or what?),  I continue to shake my head and wonder if the intent of the entire bill was to destroy the existing infrastructure of medicine and make insurance unaffordable to everyone that currently has it to protect their family.  If that was the intent congratulations should be bestowed upon the crafters of this fine legislation!

One area that we should be watching is the new federally sponsored PCIP health plan.  PCIP is short for the Pre-Existing Condition Insurance Plan.  This plan is essentially a health insurance backstop plan for those US citizens with no health insurance as a result of their medical conditions.  As of 8/1/2010 this program began offering coverage.  As with all well run government sponsored organizations, the program began in fine fashion.  When I started researching the program on 7/15/2010 the website and the call centers could provide no details on the cost to insureds or even provide a summary of benefits!  That didn’t keep the lady at the phone bank representing the plan from suggesting that I send in an application anyway!  Perhaps it is just me, but I like to know what I’m going to get for my money when I apply for programs and also like to know how much it will cost!

As mentioned above, the plan did actually roll out on 8/1/2010 though and it seems as though the plan did get final pricing and a plan summary description.  I will highlight those costs and benefits below as they are really the focus of this post.  Once I was able to obtain the pricing for the plan, it became all too clear that the Texas High Risk pool was going to get a run for its money in covering Texans.  As a result of this analysis we all need to be aware that the rich offerings in the PCIP plan may mean the demise of the High Risk Pool and the abuse of the federal plan at taxpayer cost. 

COVERAGE FOR THE UNINSURABLE

Let’s dispel a few myths right here and now.  During the public debate on health care (of course no specifics about what we’d get or how we’d pay for it were ever discussed) we all heard that we didn’t have health insurance for so many US citizens, especially those people with pre-existing conditions.  Every time I heard that statement I wanted to scream at the radio and TV.  In Texas we’ve had something called the High Risk Pool (for those with resources and a pre-existing condition), Medicaid (for the poor), Medicare (for the disabled), and the county hospital system for the procrastinator (lazy) or those in between rich and poor.  We also have laws that require emergency rooms and fire stations to treat you if you are in need of medical attention.  So with my last statement, you should have a clear understanding that if you believe that health care is a “right”, then you had your rights met here in Texas.  The Texas High Risk pool is a state sponsored plan that is managed by Blue Cross Blue Shield of Texas.  If an applicant had been declined (or would have been declined) by an individual carrier for a medical condition, a person could use the High Risk Pool to obtain insurance as long as that person could afford the expensive prices.  The only complaint I ever hear about the high risk pool is that it so expensive.

LET’S TALK MONEY

I’ve examined a few of the options for coverage so we are all on the same page.  I’ll use a 39 year-old male, non-smoker, living in zip code 77057 for a date beginning 10/1/2010.

Traditional coverage – Blue Cross Blue Shield of Texas Select Choice – $2,500 Deductible – $186 / month.   This plan has unlimited office visits with a $25 co-pay and a $3,000 max for this insured’s portion of co-insurance which is an 80/20 split.  It offers a prescription drug plan with a separate $200 deductible. 

Texas High Risk Pool – $2,500 Deductible – $532 / month  This plan has 6 office visits with a $30 co-pay and a $3,000 max for this insured’s portion of co-insurance which is an 80/20 split.  It offers a prescription drug plan with a separate $200 deductible.  (Pretty similar right?)

Federal PCIP Rates for Texas – $2,500 Deductible Plan – $387 / month  This plan offers $25 co-pays for office visits and a $3,450 max for this insured’s portion of co-insurance which is an 80/20 split.  It offers a prescription drug plan however it only kicks in after the $2,500 deductible has been met.  (This is about the only poor thing you can say about this plan).  (Make sure you scroll to the end to see the strict requirements to obtain this plan, not everyone can apply for it!)

BENEFIT COMPARISON

INDIVIDUAL PLAN WITH BLUE CROSS – It’s actually sad to say it, but the plan with the worst benefits is actually the individual plan offered by Blue Cross (the Select Choice Plan).  While this plan is solid, it lacks some specific benefits like mental health care that are covered under the High Risk Pool.   Of course, there is no coverage for maternity on individual or family plans in Texas.

HIGH RISK POOL – Although this plan is the most expensive, it does offer more benefits than the individual plan with Blue Cross.  Mental health benefits are included here and the benefits are quite robust.  In the high risk pool there are no maternity benefits.   

PCIP PLAN – The PCIP plan offers the most generous plan benefits, but as usual you must foot the bill to receive the benefits.  While the plan construction is a bit different with the need to meet the $2,500 deductible for any non-office visit services (prescriptions) it does provide an interesting set of benefits that are clearly not offered in traditional individual plan.  Again, benefits like mental health are covered, but also we find that the federal government’s version of a health plan includes maternity coverage. 

As I weigh the benefits for all of these plans there are several factors to consider.  First we examine premium cost, second, I consider the benefits that a person receives without having to pay large sums out of pocket (office visits and prescription drug deductibles and co-pays), and finally I consider the benefits for special circumstances.  Clearly if a client had a special health issue that was covered in one plan, but not another we’d overweight that benefit in the analysis.  Finally, we have to examine the total cost or risk in a worst case event or maxed-out case where we have to pay the maximum for the plan annually. 

Since we’re looking at a person that has a serious pre-existing medical condition the maximum out of pocket amount for them would be the following;

Texas High Risk Pool – $2,500 Deductible + $3,000 Co-Insurance Max = $5,500 Annual Max Total

PCIP Plan – $2,500 Deductible + $3,450 Co – Insurance Max = $5,950 Annual Max Total

At first glance you might think that the High Risk Pool is the winner, and it is making a strong case, but let us also look at the costs when we add the difference in premiums since the Federal PCIP plan is cheaper by $145 per month.  When we examine this, the High Risk Pool is still the clear overall winner.

High Risk Pool annual premium plus maximum out of pocket = $11,884  (one other difference all co-pays paid in the pool for office visits and prescriptions do not go toward meeting the maximum out of pocket)

PCIP annual premium plus maximum out of pocket costs = $10,594  (all co-pays for office visits and prescription drugs are counted toward meeting the maximum out of pocket).

FUNERAL DIRGE IS BEING PLAYED FOR THE HIGH RISK POOL

There you have it, we’ve established that it is clearly better to be healthy in Texas and for that great health you are rewarded with lower health premiums.  If you aren’t so fortunate and you are a Texan with a pre-existing health condition you now have two choices.  You may choose the Federal PCIP plan or the existing Texas High Risk Pool.  As long as funding exists a person with a pre-existing conditions that meet the program requirements should consider opting for the federal plan. 

Due to the analysis above, it is hard for me to recommend the state sponsored High Risk Pool.  Monthly costs savings and the maxed-out scenario make it difficult to argue for the existing state plan.

A TEXAS SIZED LOOP HOLE – MATERNITY

As you can probably tell from my writing above, I emphasized that both the individual health plan for the healthy person and the Texas High Risk Pool do not offer maternity coverage.  If there is any complaint I have about the current system in Texas is that there is no state mandate that carriers offer maternity coverage!  What a joke and shame on our legislature and insurance commission for allowing such a poor lapse in leadership to happen on their watch.  I speak with men and women every day that are desperately looking for a health option for maternity coverage.  

Several years ago there were two reputable carriers that actually offered maternity riders.  (United Health’s Golden Rule and Humana).  In the last two years, both insurance companies stopped offering those riders.  Now, no matter if a person has insurance or is without individual insurance coverage in Texas, they are left to pay cash for the delivery of their children!  Can you imagine how bad I feel as an agent telling them that they are looking at expenses of $7,500 to $15,000 or more to deliver a child?  (We disclose on every document that maternity is not covered by any individual policy!)  So why am I droning on about this subject?  The point I’m try make is that the Federal PCIP program does earn high marks in my book because it does offer maternity coverage.  In addition, this may be the solution for so many women that need coverage.

In the scenario where a woman has a child she’d pay the $2,500 deductible for the delivery, and then 20% of the costs until she had paid another $5,950 more.  Let’s break down the cost to her further using a hypothetical $15,000 delivery charge (physicians, hospital, and nurse’s total charges).

$15,000 – $2,500 deductible = $12,500

20% of the $12,500 = $2,500

The total delivery cost would be in the PCIP for delivery would be $5,000.  (Remember those $387 a month premiums too though!) 

This solution looks pretty good for the mother.  One other consideration to keep in mind is that the baby will automatically be covered for 30 days under the PCIP plan (not sure about the cost) but after that, the child will need to be covered under another policy.  (Call us at 713-422-2935!)

In this situation, I highly advocate the use of the PCIP plan for this specific application because it offers benefits where the other plans don’t.

GOVERNMENT INTERVENTION BREEDS COST MINIMIZING AND BAD INSURED BEHAVIOR

You have to be wondering where I’m going with this, but hang on; I’m an analyst at heart if you couldn’t tell.  So readers that are pregnant or planning to be pregnant have to be saying to themselves, “this PCIP plan sounds like a good deal (the only deal in Texas if you don’t have employer provided health care with maternity), but why would I pay an entire 10 months of coverage, why don’t I only participate in this coverage for 2 or 3 months?  I think I’ll wait to get coverage so I’ll limit my premiums!”  Well, this is the exact type of thinking that this plan fosters.  Since this plan requires that the applicant cannot have had insurance or the option for insurance (COBRA) in the last 6 months, it sets up the plan for maximum abuse by very healthy mothers that are simply being turned away from other carriers because they are pregnant.  These expectant mothers can obtain coverage when they most need coverage at the end of their pregnancies, use the benefits of the plan to their fullest, and then move on to other coverage upon delivery.  This type of thinking is exactly the opposite of what you want as an insurance plan provider.  You actually want high levels of participation, for long periods of time, from those that are less likely to make claims.  In this scenario, you reward smart mothers that limit their time paying premiums, have a defined short period of time in the plan, and have a 100% chance of a claim.

In my opinion, this is where government intervention and best intentions end up bankrupting our country.  Individuals make economic decisions that maximize their own benefit rather than playing along with the herd like a government expects.  The type of abuse or decision maximization that I highlighted will be the very thing that destroys many of the dollars allocated toward the program.  I believe we are going to hear very shortly that the plan is out of money and in need of serious cash injections.  While this PCIP plan is only set up to be a bridge between now and the rollout of the 2014 final health plan it still is offering pregnant Texans a Texas sized loop-hole.

RESTRICTIONS FOR PARTICIPATING IN THE PCIP PROGRAM

Before I go, I want to highlight the restrictions that the federal government has placed on participation in the PCIP program.  In order to qualify for this coverage a person needs to have been;

1)  Declined for a pre-existing medical condition (must have a written decline letter)

2)  Be a US Citizen (some other folks can participate too, but mostly those from US territories) – or a legal resident.

3)  Not have been covered under creditable health coverage (as defined by Section 201(c)(1) of the Public Health Service Act) for the previous six months before applying for coverage.

The last item really makes me angry.  I understand that the legislators wanted to keep people from jumping ship from high risk pools to this plan by sticking in the 6 month rule, however these are the very folks that have not utilized the High Risk Pool here in Texas.  Why give these same people rewards for not taking action already?!  It is never a good thing to reward bad behavior and I believe strongly that this program does just that.

SOURCES AND LINKS

For more details on these plans go to the following links -

PCIP PLAN — http://www.pciplan.com/

Texas High Risk Pool – http://www.txhealthpool.org/

Final Note- I wrote this post to inform readers of the options out there for folks with pre-existing conditions.  I am heartbroken daily when I speak to men and women that call our agency desperately wanting insurance only to find that they don’t have many options.  I am excited to be able to offer them another choice in the form of the PCIP program.  Of note though, I have also seen a very troubling trend in that when a family member is declined for coverage (usually the father) they suddenly abandon the thought of coverage for the rest of the family!  I can’t tell you how many angry men I’ve spoken with over the years that are frustrated by insurance companies and then refuse to obtain health insurance for their wives and children because they were offended that a health company made a decision about his health issue.  My hope is that families will have the wisdom to obtain health insurance for all members of the family even if it means that a member must obtain coverage through the PCIP plan or the High Risk Pool. 

If you have questions please call us at 713-422-2935 or you can obtain a quote directly from this site for traditional health plans and HSA plans by clicking here QUOTE.

Agents do not sell the PCIP plan, so you will need to go to their site to learn more.  We can help you obtain coverage for the High Risk Pool if you need assistance.

Also, I want to give a hat tip to one of our readers – Tracy.  Tracy, thanks for the clarification of co-insurance data, you were right on.  We confirmed this information directly with a conversation and the outline of coverage – where the summary documentation was quite unclear.  Second, we neglected to add the “legal resident” aspect of the qualifications, but have added that item to provide the entire bulletpoint. 

I appreciate your comments and clarifications to keep us on track!

Jason Bohmann

CHANGE IT IS A-COMIN’…..

On 10/1/2010 the new Texas health insurance plans will be issued by Texas health insurance providers.  New enhancements to insurance plans are mandated by the Health Reform Act, most notably they must now provide unlimited preventative care benefits paid for at 100% by the insurance firms.  Other changes are that insurance companies must now operate with at least an 80% MLR (Medical Loss Ratio).  The MLR requirement states that 80% of each dollar received in the form of premiums must be used to pay health claims for their members.  Many view the MLR rule an attempt by the government to reduce profit margins and also administration costs of the insurers.

THERE IS ALWAYS A CONSEQUENCE FOR EVERY ACTION

I have been dreading the coming of this date for several months for a major reason, and that is simply that the consumer was going to foot the bill for these improved benefits.  Don’t get me wrong, I like the added coverage and the provision will drive patients to obtain preventative or wellness checkups.  In the past we have noted that many of our clients did not see the doctor for these important visits because they feared they might need to pay out of pocket for their exams.  On 10/1/2010 this problem will be resolved.  Now that we are nearing the deadline and we have new plan descriptions and pricing information available, we can now evaluate the consequences of the legislation. 

NOTHING IS EVER FREE

As of 8/24/2010, many of the plan summaries became available.  These summaries highlight the benefits that each plans offer.  We can now confirm that all of the carriers we use will offer the preventative care benefit at no cost to their members.  What has been the impact on pricing?

Based on a very small sample size (two clients) I have done some analysis to examine the pricing changes and we do find a few interesting results.  No matter how granular we get, the quick and easy answer is that everyone will pay more for every plan.

As you might expect, there are varying degrees of price increases.  These increases are based upon who is applying, which plan they are selecting, and finally which company is offering the insurance.

WHO -

The greatest price increases are coming to applicants that have children.  As we discussed in a previous blog post this month, kids now must be accepted even if they are extremely ill.  The effect of requiring carriers to take on this added risk is that every child under 19 now is going to bear the financial burden and will cost more to insure.

FAMILY RESULTS-

I requoted a family that I am working with now and ran the quote for a 9/1/2010 start and also a 10/1/2010 start.  The resulting price increases ranged from a mild 2.3% increase for an HSA policy with United Health One (UHC) all the way to an amazing 26.7% increase for a Blue Cross Blue Shield policy.

SINGLE MALE AGE 38 RESULTS

The single male quote I ran for the same dates produced a range of price changes.  This client saw an increase of only 1.4% with Humana and a staggering 21.2% hike with Blue Cross.

IT’S ALL ABOUT THE CHILDREN

I think there are several factors at work in the pricing hikes.  First as I mentioned, families with children under 19 are going to get hammered!  There is not any chance to escape this, so much of the pricing changes are related to the requirement to issue coverage to children with pre-existing conditions.

IN SOME CASES IT’S ALL ABOUT THE PLAN CHOICE

In a deeper review within each quote I noticed that almost every carrier tried to apply a rate up that was pretty uniform across all plans.  I am suggesting that they often charge the same increase for plans that have $5000 deductibles along with those that had $500 deductibles.  Blue Cross Blue Shield of Texas was the lone exception to this observation.  Blue Cross tended to punish buyers of plans that were cheaper and offered fewer benefits while raising rates less on more expensive plans.  The plans that received the greatest pricing increases  were the Blue Cross Saver plans.  In almost every case the higher deductible plans were hit with 16% or greater rate increase (for both the single male and the family).  Going further, we can guess that they need to get compensated for the enhanced benefits and must offset those costs.  I think another way to state this is that those Saver plans probably operated with less margin than the other plans like the Select Choice plans and therefore needed premium increases to offset the higher anticipated claims cost.

IT IS ALSO ABOUT THE COMPANY

Finally, I wanted to highlight that several companies didn’t really increase their pricing much.  United Health One (UHC) and Humana provided the lowest increases ranging from 1.4% to 6% in both examples.  Cigna increased rates in the range of 10%-12% and Blue Cross averaged around 15% to 20% increases.

Why would Humana and United Health increase their premiums less than the competition?  I think this is pretty straightforward.  Humana and UHC didn’t need to raise rates because they were already significantly more expensive than the other carriers.  While our agency has sold many policies at all of the companies I’ve mentioned, Blue Cross and Cigna have earned a significant amount of those polices in past years simply because they were more affordable.  Humana and UHC were often priced so high they could not even be considered.  Finally, Humana and UHC had to do small tweaks to their plan offerings to accommodate the mandate to offer unlimited preventative care services.  Their changes were small because their previous plan offerings were much more generous and provided more comprehensive benefits than Blue Cross.  Clients with Blue Cross were saving because they were not receiving the same level of plan coverage.  Due to the price increases there will be a narrowing of the gap between firms.

OTHER IMPACTS

In closing, I’ll bring up one last idea that many health brokerages and agents typically won’t discuss with their clients.  In an effort to control costs and meet the 80% MLR targets, all carriers have announced that they are slashing commissions on most health products, with the cuts to new compensation as deep as 50%.  What this means is that while your premiums are increasing, your agent is facing an important decision regarding the viability of his health insurance business.  Many agents we speak with have suggested that they may simply stop selling policies due to the reduction in income and the unknown circumstances regarding the implementation of the final provisions of the Health Reform Act in 2014.  Other agents are beginning to diversify their practices to home and auto coverage sales, or attempting to focus on life insurance. 

Our firm represents a significant number of Texans each year and we know that our clients need our guidance, expertise, and commitment to serving them.  If you find that your agent no longer is concentrating on your needs, providing on-going service, or participating in the health business please call us, we’ll be here to help even after 10/1/2010! 

Please click here to connect with us or ask questions – http://www.texashealthdesign.com/contact.htm

Jason Bohmann

As of the publishing of this article, Aetna had not updated its plan summaries and pricing.  We did not include their plans in the analysis.

Once again you’ll need to file this in the —- ooops, I didn’t foresee that happening…. Government utopians hopeful that healthcare reform would get those darn insurance companies to take care of everyone and be good citizens are waking up to find that corporations are reacting in unexpected ways.

Let’s review what just happened.  As we’ve shared with many, as of September 1st, insurance companies in Texas will be REQUIRED to take children with any pre-existing condition.  Now clearly we all want children to be covered and so this is a good thing.  As usual though, the blunt instrument of federal legislation is probably not the best tool.  Obviously, children with pre-existing conditions (think cancer and other diseases) will cost much more than a typical healthy child to provide services. 

So, as a business owner, what would you do?  Well, you’d probably raise rates on ALL children because you can’t discriminate between sick ones and health ones in pricing.  In addition, you might try to think of ways to limit how many children with illnesses you must take.  Well, Blue Cross Blue Shield of Texas is acting just as any smart business owner would do.  They are in fact, raising premiums on all children.  And sadly, they have taken the approach as of 9/1/2010 to stop offering policies to children on a stand-alone basis.

Why is this a bad thing?  Well, think about this.  You are a divorced mother of one child that has severe medical issues.  You have a good job and a generous employer that pays 100% of your own health insurance, but the employer does not pay for health coverage for spouses or children.  Your child’s insurance coverage through your work policy would be $500-$600 a month AND if the child was added to the group policy with your small company, everyone else’s premiums would go up as well.  The bottom line is that you can’t afford the extra cost.  Since April of 2010 you’ve been excited to know that once September rolls around you’ll have the opportunity to insure your child in Texas despite the medical condition because insurers will be required to cover the child.  Well, now that September is rolling around you’re discovering that you cannot apply for this coverage because you already have great coverage and aren’t going to be the primary insured on the policy.

What is more ironic is that Blue Cross Blue Shield of Texas is a non-profit organization!  These guys are not the evil for profit insurance company, they are the good guys!  What do you expect them to do?

If you believe that these insurance companies can take on these sick children and adults and still survive in the future you are sadly mistaken.  If you believe that you are not going to pay significantly more in insurance premiums in the future, you are missing the early warning signs of a rude awakening to come.  Healthy and sick alike will pay much more and you can bet that companies will continue to avoid the cost and risk of these policies, leading to unintended consequences and victims in the name of healthcare reform.

Jason

www.texashealthdesign.com

Almost every week we receive calls from friends and new clients that have left their jobs and are provided information about COBRA.  In this post we want to share some information about COBRA and make sure you can make a great decision about your health insurance coverage.

What is COBRA?

COBRA or the Consolidated Omnibus Budget Reconciliation Act (COBRA) was a law enacted in 1986 with the intent of amending the Employee Retirement Income Security Act (ERISA). COBRA’s purpose was to provide health coverage to employees and beneficiaries when coverage would otherwise be terminated, also called a qualifying event.

How do I qualify for COBRA?

A qualifying event could be one of the following; the death of the employee, termination of employment, divorce or legal separation of a covered employee and their spouse, the covered employee becomes eligible for Medicare benefits.

How long does COBRA cover my family and why is it so expensive?

COBRA entitles the recipient access to medical benefits. This generally means that the health plan that the employer provides is made available for up to 18 months to the terminated employee and his or her family. The medical benefits made available are generally perceived to be very expensive. The price of the medical plan is considered high because the employer is no longer required to make contributions on behalf of the terminated employee or family. Because the employer does not make contributions, the COBRA recipient must pay the full cost of the plan.

What companies are required to offer COBRA benefits?

COBRA usually applies to employer sponsored plans or group plans that have 20 or more employees. Some employers are not required to offer COBRA. Employers that are not required to offer COBRA include the Federal government and also some church groups.

How long do individuals have to participate in COBRA?

The individual has 60 days to decide whether to elect COBRA continuation coverage. The person has 45 days after electing coverage to pay the initial premium. 

I qualify for COBRA, do I have any alternatives?
You may have the opportunity to choose other health insurance coverage during this time. An individual or family health insurance plan may be a good option for your family. You must scrutinize the individual plan and its plan outline or summary to fully understand the limitations and exclusions of any health insurance plan you consider.

I’m self employed and I’m almost through the 18 months of COBRA coverage. What should I do?

You should begin examining health insurance plans immediately. You should apply for individual coverage immediately to avoid losing health coverage. Underwriting for medical plans can take up to 4 to 6 weeks. Starting early will allow you to make informed decisions to protect you and your family.

When should I consider health plans other than COBRA?

• You and your family have no pre-existing conditions and don’t have any medical conditions. In addition, you have never been advised to have a medical procedure in the future.
• You are not taking any prescription medications.
• You want to reduce your monthly health care costs.

When should I stay with COBRA, even if it is more expensive?

• You are not concerned about paying a bit more for health benefits and you like having comprehensive health benefits that may include vision and dental.
• You don’t want to potentially change doctors or learn a new plan.
• You have earned a new position at a new firm and the company does not offer a group health plan.
• You have developed health problems or have been involved in an accident during the first 60 days of your qualifying event.
• You have previous medical problems, are taking medications currently, or have been advised to complete a medical procedure in the future.
• You have ever been declined by insurance providers for health, life, or disability coverage.
• You are currently pregnant or currently planning to have a child. Most individual plans in Texas do not offer maternity benefits and will not offer you any coverage if you or your spouse is pregnant. Do not opt out of COBRA if this applies to you.

COBRA subsidies and extensions - what are they and how do you get them?

During the great recession the Congress and Administration attempted to assist laid off workers by supplying them with additional time under COBRA and also monetary assistance to pay up to 67% of their COBRA costs.  The COBRA assistance has been extended serveral times however recently in July of this year did not receive an extension.  If you have been receiving a COBRA subsidy, please make sure to speak with your former HR department and look at all material provided to you from the insurance company to ensure that you are aware if the benefits will terminate or if your portion of costs will increase.

Interested in learning more about your individual and family health insurance choices?

Click here for a health insurance quote today.

Jason Bohmann – 713-422-2935

Hello Texas!  This is our first post for the Texas Health Insurance Blog.  Our intent in publishing this material is to provide information about health insurance in Texas.  Obviously we desire to serve our friends, clients, and fellow citizens, but it is truly important to provide a resource to them where they can find real information about the changes to health care that are happening now and those that will occur in the next 4 years.

Texas Health Design is a health insurance brokerage agency that serves the Texas market.  It is clear to us that many Texans are misinformed about what health care reform means and how it will impact their family.  There are wonderful provisions in the legislation that will help many families, although we are also sure that the cost of these laws and changes are not understood nor anticipated by the government, insurance companies, and most of all consumers and taxpayers.

I look forward to having great discussions and providing helpful information that will benefit your businesses and families.

Sincerely,

Jason W Bohmann

Owner – Texas Health Design