Why health insurance cancellations shouldn’t be a surprise

A former federal health official says consumers in the individual health-care market deserved more of a heads-up about what was coming under Obamacare

There seems to be no letup of bad news on the Affordable Care Act. Yesterday, Healthcare.gov, the problem-plagued federal health insurance marketplace, crashed again. And a pile of news reports focused on citizen anger over policy cancellations prompted by the law.

Last night, President Obama addressed the situation. Passing the act 2010 “was the easy part,” he said. Though he’s done campaigning for office, Obama said, "I’ve got one more campaign in me – the campaign to make sure that this law works for every single person in this country."

To get behind the headlines, we reached out to a leading expert on the law: Kip Piper, who advises large health care organizations on Medicare, Medicaid, and health reform policy, finance and business strategy.

Among other roles, Piper has worked as senior adviser to the administrator of the Centers for Medicare and Medicaid Services (CMS), Wisconsin state health administrator, director of the Wisconsin Medicaid program, a senior Medicare budget officer at the White House Office of Management and Budget.

"The fact that ACA would effectively nuke most of the existing commercial individual health insurance market was never in question," Piper told us.

In the interview below, which was edited for length and clarity, Piper discusses cancellations, the apparent surge in Medicaid enrollments under Obamacare and whether more transparency would have helped the rollout.

Q. What’s your take on the coverage cancellations arriving in mailboxes around the country?

A. It was always known that the ACA would outlaw millions of existing individual or non-group health insurance policies. From a policy wonk perspective, that was a no-brainer. It was self-evident in the law in March 2010 and confirmed in subsequent rules and analyses. Also obvious all along was that consumers would face a very different marketplace under the ACA, with some seeing lower premiums (including me), some seeing larger premiums, and most everyone seeing higher deductibles, higher co-pays, and a narrower choice of providers.

Quantifying the impact of ACA on the individual — estimating the number of people affected — was always tough. Whether it would cause 60 percent or 80 percent of individual plans to be cancelled was hard to estimate because data on individual coverage is hard to come by, rules and products varied by state, the ACA grandfathering rules came out slowly and in pieces, and even things like the essential health benefit package varies a bit by state. Also, not all these policies expire on December 31.

What’s frustrating is how it took three and a half years, the failed launch of the federal exchange, and the news media starting the question the administration’s core talking points for anyone to focus on this. Whether you like or dislike the ACA policies, the 19.4 million Americans in the various parts of individual market deserved a heads up.

Q. Could this have been prevented?

A. From a regulatory perspective, health insurers in the individual market have no choice but to discontinue non-compliant policies and, if they wish to keep business, offer new, compliant policies. Health insurance is a binding contract. Insurers can’t merely transfer people. They have to cancel policies that no longer meet federal and state law, give notice, and then try to sell people into the new one policies. Having said this, the new policies will generally be more expensive. The ACA requires people to buy a richer benefit package – it only permits sale of the richer benefit packages. You can argue that this is better for society but there is no free lunch and it does eliminate choices many consumers were fine with.

The higher cost sharing – deductibles and co-payments – that many are seeing (including me) is an inevitable byproduct of the ACA insurance market rules, the brave new actuarial risks of the post-ACA marketplace, and competition based on premiums and brand.

Q. Is Medicaid a success story here?

A. Medicaid enrollment data from the states with their own exchanges certainly suggests a surge in Medicaid. It’s still early but it appears that the surge is a combination of ACA Medicaid expansion and the woodwork effect – bringing in individuals already eligible but not enrolled. Medicaid rolls will also increase somewhat as individual commercial polices are cancelled, high-risk pools end, and some small and mid-size employers drop coverage.

Today, Medicaid covers about 74 million Americans. Given all the unknowns, including economic conditions, projected Medicaid enrollment by 2020 ranges from 85 million to 102 million. Regardless, the role of Medicaid in the marketplace and impact of Medicaid on federal and state budgets will only grow.

Q. Should the contractors behind healthcare.gov be penalized?

A. Determining accountability for the healthcare.gov mess is very tricky. Both the CMS and the multitude of contractors were responsible for the project, with a maze of interdependencies. Parsing out responsibility for the many failed parts of the federal systems for Obamacare will be difficult, will take months, and an independent party such as GAO or the Inspector General. Overall, it appears that there will be considerable finger pointing in all directions, with plenty of blame to go around.

CMS made several significant strategic blunders, most notably the decision to manage the project in-house rather than hiring a systems integrator. Hiring a systems integrator to honcho the project, serve as a super general contractor, make the disparate pieces work together, and oversee testing and problem solving was essential. CMS simply does not have the experience or capabilities to do this in-house. Retaining an integrator would have been expensive, probably at least $75 million on a project this size. Perhaps they didn’t have the budget, but otherwise the decision to handle system integration in-house is inexplicable and proved disastrous.

The Obama administration decided to avoid making decisions during the 2012 election year. Given the nature of elections and the array of winners and losers under the ACA – most of whom still are unaware they are winners or losers – this is perhaps understandable. However, CMS had no choice but to follow orders and avoid making decisions or revealing information about the controversial law during the election. That meant countless critical decisions that should have been made in 2011 and 2012 were not made until well into 2013, leaving little time for problem solving, system integration, and testing. To this day, nearly 44 months since the law was signed, not all ACA-related decisions have been made, with many less critical rules deferred.

In the end, whether in the form of reasons or excuses, the contractors have plenty to point in minimizing their share of responsibility. It appears they have covered themselves with a paper trail of warnings to CMS.

Q. You’ve been particularly critical of the administration’s transparency and follow-through on its own rules.

A. Presidential executive orders have long required cost estimates and impact analyses for every major proposed or final rule. In Executive Order 13563, President Obama reiterated the longstanding requirement and further directed each federal agency “… to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” A Regulatory Impact Analysis (RIA) must be prepared for rules with economically significant effects — anything with an impact of $100 million or more in any one year. Obviously, every ACA rule had an impact of over $100 million.

However, early on CMS stopped providing cost estimates for rules implementing the Affordable Care Act. Most were omitted entirely, others watered down to be meaningless statements the analytical equivalent of saying, “The hell if we know what will happen.” They even started explicitly saying in ACA rules — including the massive Medicaid expansion rule — that the rule didn’t have an impact of over $100 million because, in effect, everybody expected it.

My understanding is that CMS was directed by the White House Office of Management and Budget (OMB) to stop publishing the cost estimates and impact analyses with the ACA rules. They were concerned the information, coming from the CMS Office of the Actuary, would be used as ammunition by the House and other critics of Obamacare. That is certainly true but no excuse for ignoring 30 years of executive orders and the President’s own stated commitment to open government.

Read more of Kip Piper’s exchange with ProPublica’s Charles Ornstein here.

Courtesy: ProPublica.org


Sensex, Nifty on a short downtrend

Nifty has to close above 6,270 for the uptrend to resume

The Sensex and the Nifty hit their record highs on Sunday, when a special trading session was held on account of Diwali Muhurat trading, to mark the beginning of the new Samavat Year 2070. On Tuesday, for the entire session, the indices traded below Sunday’s close. Both the indices gave up all the gains of the past three trading session in just one day.


Market today waited for the HSBC Markit Economics survey on the performance of India's services sector for October 2013. Indian services firms recovered slightly last month from the worst slump in over four years in September but activity still shrank and a shortage of new orders means a rebound looks some way off. The HSBC Markit services Purchasing Managers' Index (PMI) rose to 47.1 in October from 44.6 in September, which was the weakest reading since April 2009. But the PMI still lingered below the 50 mark that divides growth and contraction, for the fourth consecutive month.


The market opened lower and in the early noon session they hit their respective high. After which the indices resumed the fall and the by the end of the session the hit their lows and closed barely off the lows. The Sensex opened at 21,134 and moved down to the level of 20,952 from the high of 21,159 and closed at 20,975 (down 265 or 1.25%). While the Nifty opened at 6,282 and hit a high of 6,305 from where it moved down to the level of 6,244 and closed at 6,253 (down 64 or 1.02%). The National Stock Exchange (NSE) recorded a volume of 79.44 crore shares.


Out of the 1,213 stocks on the NSE, 629 advanced, 539 fell while 45 remained unchanged.


Among the other indices on the NSE, the top gainers were Media (0.96%); Nifty Midcap 50 (0.92%); Smallcap (0.71%); Midcap (0.6%) and PSU Bank (0.42%). The top five losers were FMCG (2.61%); Pharma (1.84%); MNC (1.44%); IT (1.13%) and Consumption (1.01%).


Of the 50 stocks on the Nifty, 18 ended in the green. The top five gainers were BPCL (2.47%); NMDC (2.34%); DLF (2.10%); Asian Paints (2.02%) and Jaiprakash Associates (1.64%). While the top five losers were ITC (3.51%); ICICI Bank (3.29%); Power Grid (3.20%); Dr Reddy (3.03%) and Sun Pharma (2.81%).


Goldman Sachs upgrades its view on India to "marketweight", with a target for the Nifty of 6,900 points. The optimism is supported by the hope that the opposition Bharatiya Janata Party, led by prime minister candidate Narendra Modi, could prevail in parliamentary elections due by May 2014. Goldman also notes that external capital account pressures have moderated for now, and cites signs of a cyclical pick-up and structural improvements in the economy.


US indices closed marginally in the positive on Monday. "Monetary policy is likely to need to remain accommodative for some time so that we can achieve full employment within a reasonable forecast horizon. The economy remains challenged," Boston Fed President Eric Rosengren, who votes on monetary policy this year, said in a speech in Boston on Monday, 4 November 2013. Richmond Fed President Jeffrey Lacker gives a speech on the labour market in Charlotte, North Carolina today, 5 November 2013. Earlier this month he said the probability of another recession is "bigger than we thought.


The US government will release non-farm payrolls figures for October 2013 on Friday, 8 November 2013. The job data is a key economic indicator that has been watched closely in recent months to see whether the US Federal Reserve will roll back its bond-buying program.


Asian indices had a mixed performance. NZSE 50 was the top gainer, up 0.57% while Taiwan Weighted was the top loser, down 1.10%.


China's leaders will meet in Beijing Nov. 9-12 to map out economic policies as the country heads for its slowest annual growth in more than two decades. Speculation are making round that meeting of China's top party officials this weekend may struggle to meet market expectations for economic reforms in the world's second biggest economy. Premier Li Keqiang said in speech published in full late on Monday that adding extra stimulus would be more difficult since printing new money would cause inflation.


European indices were trading in the red, the US Futures were also trading lower. UK retail sales rose only modestly in October, an industry group said Tuesday, raising doubts about the ability of consumers to support the economy at a time when Britons' incomes are falling in real terms. The British Retail Consortium said sales in shops that have been open at least a year rose 0.8% in October from the comparable month of 2012. That is only a very slight rebound from September, when growth stalled to 0.7% from 1.8% in August.


Passport Seva mobile app now on Windows, Apple phones

mPassport Seva mobile apps that provides a variety of services such as status tracking, locating a passport office and other general information is now available for Windows phones and Apple iPhones

Encouraged by the public response to its Passport Seva mobile app for Android phones, the Ministry of External Affairs (MEA) has now launched the application for Windows and Apple iOS platforms. Earlier in March, the MEA had released Android version of the app, which provides passport-related information on smart phones.


This is an extended service of the Passport Seva Project, executed in the public-private-partnership mode with IT services major Tata Consultancy Services (TCS).


In a release, TCS said mPassport Seva provides a variety of services such as status tracking, locating a passport office and other general information.


The application provides information on the various steps involved in obtaining a passport-related service and related phone numbers in case of queries or concerns, it added.


Users will also be able to search for a Passport Seva Kendra (PSK) or District Passport Cell (DPC) in a district where a passport application can be submitted. This can also be searched based on a PIN code. For certain States and districts, users can search for police stations as well.


Citizens residing overseas, who apply for a passport service in Indian Missions/Posts abroad, can also utilise this facility for searching addresses and other relevant information.


The fee calculator feature of the app enables users to find out the applicable fee based on the service and mode of submission.


Users can track the status of their passport applications by providing the file number and date of birth. In case the passport has been dispatched, delivery status can also be tracked.


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