New HHS Guidelines Released - EHB / Premiums / Wellness

[Yagents]

Here's the "Actuarial Value" wording webpage that Blue Cross-IL referenced in this morning's newsletter.
Essential Health Benefits, Actuarial Value, and Accreditation Standards: Ensuring Meaningful, Affordable Coverage | HealthCare.gov

I couldn't open the "AV Calculator" on my laptop. Apparently, it will give you the data you're looking for, YAgents?

Maybe when you get a moment, you can explain why the Actuarial Value calculation is so important. I understand what the 60% (Bronze), 70% (Silver), etc. is referring to, but not why the underlying calculation of these percentages is so important.
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The AV calculator is an excel spreadsheet. When asked for a password, there is none, so just hit "enter" on keyboard. I ran $5000 than 100% = OOP of 5k, and it came out to 63% AV value. Very complicated table, I'll leave it up to the insurers to figure out their plan make ups and then roll with what's dished out.

My concern with AV value, is that most of my clients own $5000-$10,000 type plans (mostly 5k HSA's), and cover most of the EHB's already except maternity, and mental health. So, those upgrades shouldn't impact the price as much. The AV value though, requires lower out of pocket risk then my clients are currently in, and we both know that anything below $5000 type deductibles, the price starts to skyrocket. (I haven't sold a sub $3000 deductible to someone over age 40 in years). (Most of my clients are in the 50-65 age group.). With the AV value, the clients will be required to buy lower OOP plans which will, in my belief, cause a higher jump in rates than the mandated EHB's will. Think of free preventative care, it added about 1-2% to the costs. Unlimited lifetime max, about 1% (if I recall). Maternity? normal delivery only costs about 4k, and the plans already cover complications of pregnancy (the bigger costs). It's the mandate to buy lower OOP, in my opinion, looking at the differences in today's market, that will cause a huge rate spike.

Ex: in AZ, 43 yr old male:

BCBS 10k plan = $66/mo, a 5k plan $115, and 3k plan $172 (double and triple the prices for going down in deductible)

Goldenrule = 10k = $90, a 5k is $152 and 3k $194/mo.
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The bigger question above ehb's is do they have to also conform to AV values?
Yes all males will have maternity benefits. No gender differences or pricing differences allowed. Only tobacco will pay 50 percent more which could be over$200/mo. Now that's a tax that will make u quit or lie on the app. Cant prove it or not and plan must cover pre-ex

OR don't lie, and go see a hypnotist, or take a Chantix drug, which insurance must pay for.

HHS points out that "the law permits insurers to set their premiums for tobacco users 1.5 times higher than those for non-smokers," but "insurers wouldn't be allowed to impose the surcharge on smokers enrolled in smoking-cessation programs."

 

[Ann H]

Young males will be hit the hardest with premium hikes to cover the upgraded benefits. They will get a 1:3 age band ratio, plus the cost for maternity for their age bracket (the very age bracket where maternity costs are highest). If they smoke, it's worse. The young males are the "invincibles" that make up one of the largest segments of the uninsured right now. With these prices, they might not enroll. Fortunately, they may qualify for a subsidy, or might remain on their parent's plan. Change you can believe in.

 

[AllenChicago]

HHS points out that "the law permits insurers to set their premiums for tobacco users 1.5 times higher than those for non-smokers," but "insurers wouldn't be allowed to impose the surcharge on smokers enrolled in smoking-cessation programs."

That 50% rate-up (or in govt-speak, "surcharge") is higher than smoker ratings I've ever seen in a private plan before. I wonder if that 50%, or some part of it, goes to the FEDS to help pay the subsidies and other aspects of the ACA? I just can't see Sebelius gifting a whopping 50% in additional $$$ to the evil insurance companies.

 

[Yagents]

You tax something so you get less consumption of the item. Kind of like raising taxes on citizens, so they get less spending/economic growth.

Or, maybe it's to make up for the paltry penalty.

 

[Ann H]

That 50% rate-up (or in govt-speak, "surcharge") is higher than smoker ratings I've ever seen in a private plan before. I wonder if that 50%, or some part of it, goes to the FEDS to help pay the subsidies and other aspects of the ACA? I just can't see Sebelius gifting a whopping 50% in additional $$$ to the evil insurance companies.

I've been stymied by that 50% smoker surcharge, too. If those who receive a subsidy do not need to pay more than 9.5% of their income toward their health insurance, than smokers would get subsidized greater than non-smokers. Considering the fact that more poor people smoke than upper-middle class and upper class, then more of our tax dollars will be spent subsidizing the premium of poor people who smoke. Backfire?

 

[Yagents]

Had time to read through the AV value document, here is what I came away with:

1. All non GF plans will be required to upgrade to match EHB and AV requirements in the law. Expect your clients premiums to go up on all plans sold after 3/23/10. Think about those clients that have 7500-10k deductibles, oh nelly

2. I read it as the maximum deductible for individuals is $2000, and family $4000 (on page 39) for small group. But no mention of IFP maximum deductibles. Someone please confirm that I'm reading this legal jargon correctly. I come across a lot of group clients on cobra where their deductibles are 5k, so group plans prices may go up also.

3. HRA/HSA employer contributions in a group plan will be considered in the AV value, but NOT individual employee contributions. (on page 47). FSA/HSA employee contributions will NOT count. With this, HSA's in the IFP market may have difficulty surviving. But when I use the calculator at 5500 deductible 100% coinsurance with no ER contributions, it came out at 61% (bronze), so maybe they will survive.

4. State mandated benefits enacted before 12/2011 will be considered part of the EHB's in that state. BUT, any new state mandate after that date and the cost associated with it, must be paid for by the state to the enrollee or the issuer. (Page 14)

5. I could not find the AV value for what they are calling "catastrophic" plans for young people under 30 or whoever else may qualify based on income.

Please volunteer if I'm reading this incorrectly.
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I just read they are allowed to go above 2k deductible, if done in a reasonable manner to create a bronze type plan.

Here is an age band chart, the 3 to 1 is only for 64 year olds. It's 2 to 1 for a 53 yr old. Ages up to age 21 will all be the same rate. Kaboom!
http://www.washingtonpost.com/blogs/wonkblog/files/2012/11/age-bands.jpg

Insurers will now be allowed to go above the $2,000 threshold if they cannot "reasonably" build a benefit package at any metal level without doing so.

Three ways Obamacare changed Tuesday
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More insight into the AV calculator methodology and use:

http://cciio.cms.gov/resources/EHBBenchmark/av-calculator-methodology.pdf