“Happy” One Month Birthday To America’s Healthcare Reform?

November 1st marks the one month anniversary since America’s new health care reform laws began in earnest and, thus, it seems a good time to consider the status of this landmark new law and national undertaking. Before I provide you a ‘behind the scene’ update I want to emphasize that there are many good aspects of the new law that will help folks, including the fact that health insurers will no longer be able to ask applicants health questions and will be required to cover pre-existing conditions, as well as provide coverage without a maximum dollar limit among other benefits.

Since so much of what is taking place is brand new and evolving, a little background is likely useful. 36 states, including Florida, decided to not create or operate their own on-line Exchange Marketplaces so as to sell the required ‘Metal Plans’ (to learn more about the new Metal Plans, click here) and, instead, are relying on the Federal government to provide consumers and agents access to these programs. The other 14 states opted to take funding from the federal government and created their own state Exchange Marketplaces, state by state.

As of October 1st the Exchange Marketplaces ‘opened’ for business so insurance agents and consumers could shop on-line in addition to obtaining quotes directly from insurers. The on-line system has the intention of allowing us to review the various plans, obtain quotes, determine if you are eligible for a tax subsidy towards premiums and apply for coverage to be effective on or after January 1st 2013. All of this, of course, is taking place amidst the backdrop of American’s being required to have health insurance in 2014 via what’s called the ‘individual mandate’.

So where are we one month into the new programs and law?

  1. Exchange Marketplace Computers:What you read and hear about the new online system is true. In fact, it’s worse than you read. The computer system that the government created is, thus far, a disaster and, simply stated, does not work. There is finger pointing in every direction but the system is not functional and on the rare occasion when it works the answers it provides, whether related to rates or subsidy qualification or other important information is frequently wrong.

    CBS News is reporting that the new federal website, HealthCare.gov, was given approval to launch even “after the system failed repeatedly during those tests before its debut.” CBS reported that the site “failed with a small test pool of two to three hundred people that included employees from the government and insurance companies.” And that testers “were never able to successfully browse plans for cost estimates.” This marks a “stark contrast to recent testimony yesterday from Marilyn Tavenner, the head of CMS,” who testified that “she had no idea prior to October 1st that the problems were so bad.”

    Insurers are often reporting that the data that they have received in the first month is either incomplete or not accurate. About 30% of the initial applications show dependent children as the head of a household. A 10 year old child, for example, was shown on one application as having four dependent children. In other cases insurers have received multiple enrollments and cancellations for the same person at the same time. At best, the system appears to have been poorly designed and given limited to no-real world testing and while all of that is, we are told, being fixed, it’s unfortunate that the program was opened on 10/01 without being functional.

    Please keep in mind that Morris & Reynolds has access to the Federal Exchange Marketplace and that every one of our Agents and Underwriters are Certified Healthcare Reform Experts. As soon as the government fixes their systems we will have instant access both in person, as well as through our website and will be happy to help you. Please also keep in mind that we offer individual and group plans directly from every insurer in America and that their coverage and all else meet the new law’s requirements. To obtain quotes and shop for coverage directly from insurers today, just click here.

  2. Low Tech Challenges:Customer service numbers are not working and when they do many across America report being hung up on or speaking to people who do not have answers to their questions. We’ve had the same experiences ourselves. In other cases, community group volunteers and so called ‘navigators’ have signed up to enroll people but have not been trained. The Los Angeles Times reported that in California, of the 4,165 people that signed up to help enroll people, only 390 have been trained in that state.

  3. Applications & Enrollees:An estimated 48 Million Americans are uninsured. Keeping in mind that the White House has announced a goal of enrolling 7,000,000 people in the first year of the new law, the initial numbers after month one are rather low. An estimated 257,000 people signed up for new coverage, over ½ of those in New York state. Of those who have enrolled, thus far over the first month, two things are clear.

    First, those who have enrolled have done so via state Exchange Marketplaces in the 14 states that they exist, not via the Federal Exchange in the other 36 given the operational failures that define month one of that program.

    Secondly, most who have enrolled have done so into the expanded Medicaid program, a state-federal insurance program for the poor that’s free to those who qualify.

    The Federal government has mentioned that 700,000 people have enrolled on its site, but has refused to announce how many actually applied for coverage, how many from each state or what type of coverage (private or Medicaid) that they are seeking. That information is promised, but we are told that since the systems are not reliable the data that would be provided at this time is not accurate.

    Here are some examples from various states across America and their results from month one;

    California reports that 16,311 people are in the process of enrolling.

    Colorado, which has its own State Exchange Marketplace, has signed up 3,164 people. State officials report being ‘frustrated’ with the slow pace of applicants despite a computer system whose largest problems have all been fixed. As of mid-month 226 people had actually enrolled for coverage.

    District of Columbia reports that 164 people have enrolled.

    Kentucky, which has its own exchange, has seen about 70% of the estimated 26,174 people enrolling qualifying for subsidized Medicaid, not private insurance.

    Maryland reports 3,186 people have enrolled.

    Minnesota’s marketplace has had 2,500 sign up for Medicaid and about 400 for a private health plan.

    Rhode Island, reports 3,762 applications as of months end.

    North Dakota reports (and this is not a typo) that 20 people have thus far purchased insurance thus far in that state. North Dakota has about 68,000 uninsured people based on the U.S. Census estimates.

    Washington State reports that 49,000 have signed up for coverage in their State program, 42,000 of those being for subsidized Medicaid coverage.

  4. More Delays:In light of the initial problems the Obama Administration has ‘granted a six week extension until March 31st for American’s to sign up for coverage next year and avoid new tax penalties under the Affordable Care Act. While some are still calling for a delay of the individual mandate (that being the requirement that everyone have coverage in 2014) the White House has stated that while they will allow a bit more time to enroll they will not delay this provision. A number of provisions have already been delayed including the small business SHOP program, the large employer ‘pay or play’ mandate and others.

  5. Cancellations & Sticker Shock:One of the biggest stories over the first month is the recent news that an estimated 2,000,000 people may lose their current coverage as individual health insurers announce that they will cancel millions of existing policies. Yesterday the story was front page news in the Miami Herald in a story entitled Floridians Stung By Rate Shock. Last week Florida’s largest health insurer, Blue Cross Blue Shield of Florida (now known as Florida Blue) announced that they will terminate 300,000 current policies and that news was central to the Miami Herald article. The insurer has explained that it will offer replacement coverage, but will do so based on the new required benefits (some of which may be broader than current policies), but also at new 2014 rates (some of which are likely higher and some, perhaps, lower).

    Blue Cross is not alone. Every insurer across America is updating its coverage to comply with the law, but these cancellations have made many people angry. On Tuesday the 29th Time Magazine had this to say about the cancellations now taking place all over America;

    President Obama has broken his promise that Americans who like their health insurance plans can keep them under the Affordable Care Act. Citing the new law, insurers have recently mailed policy cancellation notices to hundreds of thousands of people across the country, providing more ammunition to critics who say the law is bad for consumers. And that number may grow. NBC News reported on Monday that half or more of those who buy coverage independently may be forced to switch plans in 2014.

    On Monday, CBS News broadcast a report about a 56-year-old Florida woman whose BlueCross policy is being cancelled due to the new law. According to the report, the lady pays $54 per month for her current policy and was offered a replacement plan costing $591 per month. Another recently reported example is of a California woman now paying $98.00 a month whose coverage is being cancelled and that the least costly replacement premium she’s found is $238.00 a month.

    Earlier this week NBC’s Peter Alexander reported on what it called ‘Sticker Shock’ and went on to explain that “one of President Obama’s key selling points for the new healthcare law” was that, “If you’ve got health insurance, it doesn’t mean a government takeover. You keep your own insurance. Keep your own doctor. If you like your plan you can keep your plan.” Alexander went on to report, though, that many are finding that’s not the case. Moreover, the fact that “millions will lose or will have to change their individual policies is not a surprise to the Administration.” As NBC News Senior Investigative Correspondent Lisa Myers found, “buried in the 2010 ObamaCare regulations,” was “language predicting ‘A reasonable range for the percentage of individual policies would terminate is 40% to 67%.’’

    The Washington Times, this past Tuesday reported that the ‘White House “admitted” Monday that President Obama’s “oft-repeated promise that everyone can keep their health-insurance plans under ObamaCare just isn’t true.”

    The reason for the cancellations? Insurer’s must comply with the laws’ required coverage including its 10 Essential Health Benefits (click here for a newsletter that explains this coverage and other aspects of the new law), as well as the fact that they must accept everyone that applies for coverage without health questions. As such, insurers have re-tooled their plans to comply with the law and in many states have increased their rates given the added risk they perceive taking by being required to cover pre-existing conditions. Some states, such as Florida, estimate that rates will increase 35% to 45% due to the new law’s requirements while other states, such as New York, are projecting slight decreases in some cases from current rates.

  6. Data Security Concerns:The government unit charged with operating the healthcare reform law, the Department of Health & Human Services (HHS), has, in recent months, told the public that the new system was functional, ready and that American’s highly private personal data in it was safe. As the first month ends we are learning that security, in addition to the website woes, was and remains a major concern to many who built and tested the site and that based on a September 27th HHS memo government officials knew about in the days prior to launching the program on 10/01.

    The Associated Press, for example, reported this week “a newly surfaced government memo pointed to security concerns that were laid out just days before” the website launched October 1. The memo said “incomplete testing created uncertainties that posed a potentially high security risk for the website.” It also “called for a six-month ‘mitigation’ program, including ongoing monitoring and testing.” CBS News has reported that The Washington Post reported yesterday that the “internal HHS memo” warned that the website “had not been sufficiently tested,” thereby “exposing a level of uncertainty that can be deemed high risk.”

  7. Insurer Delays:Another recent phenomenon of late is the fact that insurers have dramatically slowed their workflow as they continue to work to comply with the new law. Renewal quotes are weeks-to-months later than we seen historically. And when quotes are issued the plan details and documents have often not yet been finalized or approved by insurer’s legal departments or regulators given the many changes that must be included in coverage starting in 2014.

A new law of this size (it’s over 20,000 pages and counting) and scope should be expected to have some road bumps along the way and that’s certainly the case here with ObamaCare. Other socialized programs such as Social Security and Medicare certainly had their issues early on, but in time things got better as will, we believe, happen here with healthcare reform. Rest assured that the agents and underwriters at Morris & Reynolds are ready, willing and able to assist you and that we will keep you informed as this important law continues to evolve.

Speaking of help, for those who want and need a detailed update of the law, what is happening in 2014 and 2015, as well as what you need to do to be prepared, Morris & Reynolds is hosting its next Live Webinar on Healthcare Reform next Thursday, the 7th, at 10 AM. If you want more information on the webinar including how to register click here for all of the details. As always, thanks for allowing us to provide your protection.

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