So What's Really Going to Happen to the Group Market

[Dave020]

Dave - I'm only going by the language contained in the actual bill that was passed into law. It states that coverage purchased outside of the exchange is called "exempted" coverage which does not quality for a subsidy and does not count towards satisfying coverage to avoid a fine.

It this all a huge clusterf**k? You betcha.

CA covered it under SB 900 and AB 1602. Only precious metals plans out here inside or out. No price fixing outside, must match price for same plan inside for plans sold outside. Inside gets subsidy, outside does not. All precious metals qualify inside or out. GF plans qualify no matter because they are covered under the GF provision.

 

[Crabcake Johnny]

Unlike Massachussettes, the PPACA states that anyone purchasing qualifying coverage outside the exchange is not subject to the IRS penalty. "Qualifying" coverage means it must be at least essential benefits, and have the same pricing as plans inside the exchange.

The law is very, very confusing, and as you can see even agents like us have to revisit the law to remind ourselves about the confusing issues. I certainly appreciate it when one of you guides me in the correct direction and/or corrects my mistakes. I hope nobody takes offense at the "back and forth" over issues in the law, and correction of misinformation.

This isn't way the the clause reads from the law I'm looking at, but I'm going to do more research today and make sure the copy I'm reading is the most current.

Carrier are allowed to offer plans outside of the exchange only if that carrier is admitted to sell inside the exchange. The plans sold outside out the exchange are referred to in the legislation as "exempted coverage." No subsidy and I did not read where there are any coverage guidelines - I'm guessing so carriers can still sell CAT plans.

If you can buy a plan outside the exchange, have it "count" and get the same pricing as a plan inside the exchange but not be eligible for a subsidy then it doesn't matter since estimates are that 85% of all Americans will quality for some type of subsidy.
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CA covered it under SB 900 and AB 1602. Only precious metals plans out here inside or out. No price fixing outside, must match price for same plan inside for plans sold outside. Inside gets subsidy, outside does not. All precious metals qualify inside or out. GF plans qualify no matter because they are covered under the GF provision.

When 85% of all Americans will quality for some level of subsidy, it basically renders talking all plans sold outside of any exchange a mute point.

 

[Ann H]

This isn't way the the clause reads from the law I'm looking at, but I'm going to do more research today and make sure the copy I'm reading is the most current.

Carrier are allowed to offer plans outside of the exchange only if that carrier is admitted to sell inside the exchange. The plans sold outside out the exchange are referred to in the legislation as "exempted coverage." No subsidy and I did not read where there are any coverage guidelines - I'm guessing so carriers can still sell CAT plans.

If you can buy a plan outside the exchange, have it "count" and get the same pricing as a plan inside the exchange but not be eligible for a subsidy then it doesn't matter since estimates are that 85% of all Americans will quality for some type of subsidy.
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When 85% of all Americans will quality for some level of subsidy, it basically renders talking all plans sold outside of any exchange a mute point.

I appreciate your answer, and I'll try to find a reputable source too. the CBO estimated that 20 million households would qualify. I'm not sure who estimates it would be 85% of all Americans. That sounds drastically overstated. Just looking at a quick survey of my family (a very LARGE extended family) and my friends I would say about 10% would qualify and that's all.

 

[HealthGuy]

Ok, this is all good discussion, helps the cobwebs in my brain, but I'm still confused.

1. I suspect exchange plans will be more expensive than non exchange plans? But my assumption is incorrect? Do they have to be priced the same: exchange plans and non exchange plans?

2. If exchange plans are twice as expensive, who cares whos gets a subsidy purchasing them, they will still cost more? Again, I think my assumptions are incorrect?

HELP me sort this out forum members!

 

[STIBROKER]

If you can buy a plan outside the exchange, have it "count" and get the same pricing as a plan inside the exchange but not be eligible for a subsidy then it doesn't matter since estimates are that 85% of all Americans will quality for some type of subsidy.

still trying to figure how this subsidy is going to work....who is it going to get paid to and when.....and were is the money coming from......if it is going to cost $1500 a month to get the subsidy back at the end of the year or take a plan out side for $500 and tell them to stick the subsidy.......

 

[Crabcake Johnny]

People qualify who earn 400% of less of FLP:

Families: $88,000

That's the 1.25% percentile but as you know Anne, that's very confusing. Exactly what percentage of households earn $88,000 or less? I'll have to look it up.
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still trying to figure how this subsidy is going to work....who is it going to get paid to and when.....and were is the money coming from......if it is going to cost $1500 a month to get the subsidy back at the end of the year or take a plan out side for $500 and tell them to stick the subsidy.......

It'll work just like it does in Massachusetts. People pay the rate with the subsidy included. So for easy math, if it's a $1,000 a month plan with a 70% subsidy, they pay $300. The carrier gets paid directly by the government.

 

[VolAgent]

People qualify who earn 400% of less of FLP:

Families: $88,000

That's the 1.25% percentile but as you know Anne, that's very confusing. Exactly what percentage of households earn $88,000 or less? I'll have to look it up.
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It'll work just like it does in Massachusetts. People pay the rate with the subsidy included. So for easy math, if it's a $1,000 a month plan with a 70% subsidy, they pay $300. The carrier gets paid directly by the government.

According to the US Census, the median household income is about $52,000. So, well over half of American households will qualify for a subsidy.

USA QuickFacts from the US Census Bureau

This appears to be some sort of average over 5 years.

 

[STIBROKER]

It'll work just like it does in Massachusetts. People pay the rate with the subsidy included. So for easy math, if it's a $1,000 a month plan with a 70% subsidy, they pay $300. The carrier gets paid directly by the government.

and then what happens when the govt runs out of money to pay the insurance company's.....has cash for clunkers written all over it......

 

[Crabcake Johnny]

One fiasco is it raises Medicaid eligibility from 100% to 133% of FPL. This will crush states that are already financially struggling.
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and then what happens when the govt runs out of money to pay the insurance company's.....has cash for clunkers written all over it......

Scott. You nailed it. Exactly like cash for clunkers, the dealerships ate it at the time of sale, then waited to get reimbursed. You follow any of those articles? They near bankrupted some dealerships.

No small players will remotely be able to survive in the exchange. They'll need countless millions of cash on hand to eat the subsides and pay claims while the government gets around to cutting them a check.

 

[Dave020]

I think it is important to bear in mind that a lot of the specific implementation will be state-specific. We may see quite a few variations of "reform" implemented and likely without an individual mandate (SCOTUS).

HealthGuy - I can only speak for CA but out here carriers can only sell Gold, Silver, Platinum, Bronze and Catastrophic (5 plan choices) both inside and outside, and the plans outside cannot be priced lower than the plans inside.

I expect to see a huge move in and out to the Bronze plan. I don't think Gold and Platinum (and maybe even Silver) will be price-friendly for most people even with a subsidy.

BTW, to qualify for catastrophic level in CA an individual has to be under 30 years old and have a valid mandate waiver from HHS.