Tag: affordable care act

Good riddance: United finally gives up on ACA marketplaces

April 27th, 2016 by
United we hardly knew ye

United Healthcare announced that it’s exiting most of the Obamacare insurance marketplaces (aka exchanges) next year. Sound like a familiar story? In fact all the recent news coverage is just a rehash of last November’s announcement that United was probably going to exit.

As I wrote at the time (United pulls out of ACA exchanges: Should we care?), United’s exit is not a huge deal. The company specializes in selling high-priced plans to corporate accounts. In the price-sensitive world of the exchanges that’s a losing proposition. No surprise — United wasn’t getting traction.

In January (Like I said: United’s ACA exchange departure is no big deal) I reported on a study that showed that the name brand, high priced commercial players like United were losing out to insurers with a Medicaid managed care background and to mission-oriented Blues plans. United’s departure represents the failure of United, not the failure of the marketplaces. If United says otherwise it’s a sore loser.

Health plans thinking of competing in the marketplaces should say this to themselves a few times before diving in: “Exchange business is price sensitive business. If we can’t compete on price we might as well stay home.”

Now, if United were a little more clever and capable it actually could make a play for the exchange business, in a way that would boost its success in the commercial market as well. In particular, there are opportunities to better manage the way specialty care is delivered and paid for, by emulating the approaches used by the most efficient and innovative specialists. This would drive down the overall cost of insurance and improve care for patients. Some astute players in the bundled payments space are starting to figure it out. Somehow I don’t think United will be the one to make it happen.

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

By healthcare business consultant David E. Williams, president of Health Business Group.


Do health plans have a future?

January 29th, 2015 by

Not to be cynical but in the insurance business the best way to make money is to discourage risky people from becoming policyholders and to exclude from coverage anything that a policyholder is likely to file a claim for.

In the real world, insurance regulations temper these strategies, but don’t eliminate them completely. Health insurers in particular now have to operate within a narrow corridor. Under the Affordable Care Act they can’t discriminate against people with pre-existing conditions and must offer a fairly standardized set of benefits. Their profitability is also capped by the minimum Medical Loss Ratio (MLR) rules.

Theoretically that still gives health plans the opportunity to compete on other facets, such as provider networks, quality, disease management, and customer service. Some of this competition is taking place and benefits the consumer.

However, it remains tempting for plans to try to avoid costly patients even though the rules would seem to preclude that.  A New England Journal of Medicine article (Using Drugs to Discriminate — Adverse Selection in the Insurance Marketplace) describes a common tactic: using the drug formulary to scare away pricey patients. For example, many health plans on the ObamaCare exchanges make drugs for HIV expensive by putting all of them –including generics– in the highest tier.

This type of strategy, if not stopped, will undermine the Affordable Care Act’s goals. And therefore the authors propose some regulatory fixes to further micromanage the insurance market. But insurers are pretty clever and can be expected to look for other, similar opportunities. And such creative approaches are not new. A couple decades ago, when Medicare managed care plans were first introduced, I knew of a company that offered great benefits but placed its enrollment center on the 3rd floor of a non-elevator building. That way only the fit could make it up the stairs to sign up.

At some point the insurance market becomes so regulated and micromanaged that we have to ask the question: are the benefits of competition worth all the hassle and administrative costs? The jury is out on that one.

By healthcare business consultant David E. Williams, president of Health Business Group.

Small ball with no leverage: GOP's 40-hour workweek folly

January 8th, 2015 by
The allure of 40
The allure of 40

The Cato Institute’s Michael F. Cannon is a foe of the Affordable Care Act, which means I disagree with him most of the time. But he’s right on the money with his ten-point teardown of the Republican Congress’ first salvo against Obamacare.

The bill would redefine a full-time worker as someone who works 40 hours per week, rather than 30. That makes it easier for employers to meet the mandate to offer health insurance to full-time workers. It’s essentially a loosening of the mandate, which will benefit low-wage service companies.

Cannon thinks this move is a bad idea. I strongly agree with his first and last points:

  • The legislation would increase government spending by pushing more people onto the exchanges and Medicaid
  • It would create an incentive to reduce employees’ hours to just under 40 per week. A whole ton of people would be affected by that maneuver; orders of magnitude more than the number near the current 30 hour threshold

His other eight points are about why the 40-hour bill weakens the overall Republican attempt to dump Obamacare. (At one point he writes, “House Republicans are playing small ball with no leverage. How is that strategically smart?”) I agree with his analysis, but unlike him I’m not bothered that the GOP continues to flail.

photo credit: quinn.anya via photopin cc

By healthcare business consultant David E. Williams, president of Health Business Group.


An expensive $25

December 2nd, 2014 by

One of the most visible benefits of the Affordable Care Act is that preventive services are covered with no out-of-pocket cost. So I was happy not to be charged a co-pay when I visited my doctor’s office for my routine physical in April. Not that $25 is a lot of money in comparison with my premium, but hey I’ll take it.

So I was unhappy when I started getting bills for a $25 co-pay from the doctor. I used the patient portal to send an administrative note in May, which was ignored. After a lot of back and forth with the office and my health plan the charge was finally dropped yesterday. But it makes me wonder just how much money the physician’s office and health plan spent to push this $25 around.

This is just one small example of the administrative costs imposed by the US’s convoluted healthcare financing system. Here’s the play by play from my case:

August 29, 2014

Dear [Physician Practice]:

I keep receiving bills for a $25 co-pay for 4/4/14 date of service. This was a routine physical. Under the ACA I am not supposed to be charged a co-pay for this preventive service, which I confirmed with BCBS MA. I sent a message about this months ago on the provider portal but have never received a reply, just more bills.

Please reverse the charge.

Thank you,



September 2, 2014

Good Morning Mr. Williams,

Thank you for your email inquiry regarding the balance of $25, for service date 4.4.14.  Upon review of the account, I confirmed Dr. X billed a medical office visit in conjunction with the annual physical.  Per the Affordable Care Act, you may still be required by your insurance company to pay a copayment if the physician treats you for any new medical issues discussed during the physical, or if she needs to change medication, order tests, or refer you to a specialist to deal with a pre-existing issue.  I have attached the ACA for your review.

 I have taken the liberty of asking our Medical Coder to review Dr. X’s medical notes for your visit on 4.4.14.  She will determine if the documentation supports the charge of the office visit.  If it does not, then and only then, will we reverse the charge.  This may take up to 7 business days.  I will email you as soon as I receive this back.  Please let me know if I can be of further assistance at this time.

Kind regards,

[Practice Administrator]


December 1, 2014

Good Morning Mr. Williams.

This email is in follow up to my email sent on 9/2/14, regarding the balance of $25, for the service date 4/4/14.  Our medical coder determined Dr. X’s notes do not support the office visit.  Therefore, we are refunding your insurance company and reversing the charge.  You may disregard the statement.  Please let me know if you have any further questions.

Kind regards,

[Practice Administrator}

By healthcare business consultant David E. Williams, president of Health Business Group.

Republican dominated states swallowing their pride on Medicaid expansion

September 15th, 2014 by
Time to swallow it, fellas, and expand Medicaid
Time to swallow it, fellas, and expand Medicaid

Pennsylvania and now Utah are joining other Republican-run states that have decided to say yes to the expansion of Medicaid under the Affordable Care Act after all, after obstinately deciding to say no after the Supreme Court effectively made expansion optional more than two years ago.

It makes perfect sense. As I’ve described repeatedly (see Texas cuts off its nose to spite its face… and On Medicaid expansion, poor states are subsidizing rich ones) refusing Medicaid expansion is self-defeating for a state. With elections coming up in November, some Republican leaders have realized it might be self-defeating for them in a very personal sense!

All of this is treated as news, but fact is it was predictable at the time, and in fact it was predicted right here on the Health Business Blog. The only surprise is that it’s taking this long. I discussed the ruling with Dan Mendelson, CEO of Avalere Health on June 29, 2012, the day after the  Supreme Court’s decision. Here’s how the discussion went:

Williams: So does [the ruling] mean that there will be a hodgepodge with some states doing the expansion and some not, or is it more nuanced than that?

Mendelson: I think in reality most states, or I would even venture a guess that all states will be compelled to take the expansion, because remember that the federal government pays for the entire expansion until 2017 and then thereafter the subsidy rate is around 90%, so you’d really have to be a rogue state to refuse that.

Or put slightly differently, if you’re the governor of the state, how are you going to stand up in front of your electorate and say, ‘I’m not going to cover people near poverty because I’m worried about the out-year liability that we might incur, and therefore I’m going to turn down the federal government’s largesse.’ I think it would be very difficult for a state to do that.

Williams: So essentially the Court was saying that a stick should come out of the hands of the federal government, but the fact that the Affordable Care Act includes pretty significant carrots, it means that from a practical standpoint this is not a lot of change?

Mendelson: That’s right, and that’s how we did the Children’s Health Insurance Program back in ’97 and ’98. There was a generous subsidy that was put on the table and the states decided that they wanted to cover children or that they had to cover children and it wasn’t long before 50 states had adopted that expansion.

And I think that in this case as well, it is quite likely that unless someone really wants to make an unabashed political statement that states will go ahead and cover these folks who are near poverty.

So far the South is solid in its rejection of Medicaid expansion, except for Arkansas. Look for that to change in 2015, even if the GOP takes the Senate.

photo credit: hragv via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group