The next great ObamaCare shock? Lapsed policies?

Yesterday, an insurance agent sent me the following email. He received it from a client whose new ObamaCare insurance policy had already lapsed. The agent sent him a notice to pay the premium.

  • I cannot pay $200 a month. It’s cutting into my other bills. This is unaffordable from the insurance company. If you can find me something in the same range for less. I was paying I think $150 now $200. If you can’t I guess I’ll take chances on Obama care. Fred (not his real name)

This agent/client dialogue seems to be springing up across the state. In this past week, a Central Minnesota agent reported that six of his client’s policies had lapsed. A Metro area agent reported that 20 percent of his new ObamaCare clients had let their policies lapse.

The lapsed payments reflect early fallout that throws some cold water on the celebration recently staged by leaders at MNsure (Minnesota’s government insurance distributor), HeatlhCare.gov, and various other government agencies.

During the extended open enrollment last fall and this spring, ObamaCare critics questioned how many of the new health insurance enrollees would actually pay their premium. Estimates ran from 10-25% of those who never pay premiums, therefore making moot the celebratory claims of exchange managers and politicians.

Now it appears more fallout is occurring. Maybe a small percentage, but it is a sure thing – just a sure as the IRS losing emails that incriminate their leaders – that thousands of ObamaCare enrollees are, right now, without coverage once again. They have let their policies lapse.

Remarkably, given the anti-private marketplace bias of ObamaCare officials, those know-it-alls who see professional insurance agents as nothing more than unwanted overhead, will now have to hope those agents can persuade the lapsers to pay up.

But did I mention that those who signed up during open enrollment, and have since let their policies lapse, are prohibited by law to purchase coverage again until November 15, 2014? The same is true for anyone who does not get coverage from their employers – the law will not let you sign up for insurance until the next open enrollment period. That is, unless your income is less than 200% of Federal Poverty Guideline income – then you can sign up anytime.

Minnesota is, by the way, the only state with a Basic Health Plan – MinnesotaCare. It covers adults up to 200 percent of federal poverty guideline income, and children to 275 percent. It also requires those individuals to pay a meager monthly premium. I’m betting a fair percentage of those health plans have already lapsed, just like Fred’s.

See if any of the major media do the hard work of writing the story of the ObamaCare health plans already lapsing.

ObamaCare exchanges and their anti-agent bias – In response, will agents provide the rope to hang themselves?

Mila Kofman, Director of the Washington, D.C., spoke to nearly 1,000 professional health insurance agents in February, 2014. She called the agents a “secret weapon,” and made it clear that without them, the exchanges would fail. Most of the other insurance exchanges had a different attitude.

The ObamaCare central planners looked down their noses at anything that challenged their belief that “If we build it, they will come.” Nowhere is this truer than in Minnesota, with MNsure. Up until a few weeks ago, MNsure walked in darkness concerning agents. Then MNsure hired Ken Harpell, a 20-year industry veteran, as its agent/broker liaison.

Since his appointment, Harpell has repeatedly come up against a deeply-entrenched anti-agent bias. He insists that attitude is changing now, and that Scott Leitz, the MNsure CEO, supports the mentality makeover. Good for Ken. He certainly has my support.

There is an irony in all this that could, in a few years, put agents out of business as a result of their concerted efforts to get individuals enrolled at MNsure – or any government insurance exchange.

I can’t speak for all of the states, but it is clear in Minnesota: MNsure believes that in three years it will write 100 percent of the individual enrollments in non-government, commercial health plans. All of them. Jonathan Gruber, the MIT-based uber-authority on all things related to exchanges, told MNsure it would enroll 300,000 individuals in private market plans.

Here’s the irony, as I see it. MNsure, and all the exchanges, now recognizing that their anti-agent bias hurts enrollments, will woo agents and work hard to service their clients going forward. Once MNsure has them, however, when renewals come up, who needs agents?

Excuse me, but why would insurance agents, who earn their living helping individuals enroll in health insurance plans, ever want to turn them over to a health insurance exchange? I know agents always want to do what is best for their clients, and the reality is that if their client qualifies for a taxpayer subsidy to buy health insurance, the agent feels constrained to recommend an exchange health plan. Well, I wonder if in so doing, the agent is giving the exchange the rope by which agents will hang themselves?

Maybe I worry too much.

MNsure claims to have enrolled about 225,000 individuals into taxpayer-subsidized health plans. Most of these are adults, eligible to vote. It’s going to be tough to roll back the exchanges with all these folks so heavily invested in spending other peoples’ money to pay for their health care.

I know; I worry too much.

Cancer gets your attention about U.S. healthcare

No stronger motivation to pay attention to the U.S. healthcare system exists than having a life-threatening condition. Like cancer.

I paid rapt attention to every detail from my increasing PSA scores, biopsy results, and last week, laparoscopic surgery to remove my cancerous prostate gland. It took until Monday to hear the doctor say, “No more cancer. We got it all.”

Unlike most patients, though, I paid attention to a lot more than the medical procedures. I wanted to see how ObamaCare had affected the healthcare providers whom God used to bring this cure to me.

Given my age – 66.5 – I am fortunate to go through this procedure today, in 2014. I do not believe that those not so far behind me, in their late 50s, will fare so well when it’s their turn. Why? Because science tells us that I could have lived with prostate cancer for several years and done nothing. Except we know human bodies don’t always bend to science, but Medicare budgets do.

At a retail cost of $50,000 to $75,000 for the surgery, I can see the Centers for Medicare and Medicaid Services refusing to pay for it within a few years. The exceptions will be for younger men on Medicaid, people with influence – politicians for example – or those still covered by private health insurance.

It begs the question, of course, that if 80 percent of men by age 80 have prostate cancer, and if only a small rate of those will die from its affects, why should I have had the procedure in 2014? Obvious answer – I really don’t want to walk around knowing I harbor “cancer cells with teeth” (my doctor’s description) in my body. Neither do I want to chance a breakout of those cancer cells, which happened to my good friend Richard.

What if, however, Medicare had already decided that 66.5 year old men with “soft 7” Gleason Scores didn’t need surgery? The law would prohibit me from paying for it myself, and besides, I don’t have $50,000 to $75,000. I would have the option of traveling to Costa Rico, Bermuda, Thailand, India, and elsewhere to get care, and the cost would be a fraction of the price here in Minnesota. Truth is, if Medicare decides to quit paying for prostatectomies for fellows like me, many will travel outside the country to get it done – as Canadians do today with a myriad of serious medical conditions.

It’s also instructional that my biopsy results, which I received in early April could have led to an early May surgery. I, however, had a full schedule up until the night of June 3. If I lived in the healthcare socialist nation of Sweden, however, I would have waited an average of 222 days before getting care. This, too, is on the horizon for Americans going forward under ObamaCare – think Veterans’ Admin hospitals in recent news reports.

Remind me to tell you about the all new Electronic Medical Records system launched three days before my surgery, and the funny folks running around the hospital in their green fluorescent jackets.

Addictive Nature of ObamaCare

“Heroin is a highly addictive drug derived from morphine, which is obtained from the opium poppy. It is a ‘downer’ or depressant that affects the brain’s pleasure systems and interferes with the brain’s ability to perceive pain.”

OPM, likewise, can act like a highly addictive drug. OPM is Other Peoples’ Money which is obtained by the taxes levied in the Affordable Care Act. A great deal of money, earned at others’ expense, can produce a high followed by a low that affects the brain’s ability to think rationally, and to perceive long term danger.

Recently, I spoke with an incredibly fine, upstanding, moral – and politically conservative – licensed professional insurance agent about the ObamaCare insurance exchange. Let’s call him Fred. This agent is not alone as he responded, “Never worked so many hours in my life, nor ever before so frustrated.” Stress, like heroin, produces its own kind of morbidity. Stress, however, in this context, could be assuaged with the perfect elixir – money (OPM).

The agents, who have managed to overcome the major obstacles of the ObamaCare exchanges, and use these incredibly expensive and unnecessary websites to actually get people enrolled, should be commended. Their commitment to serving clients is evident. I offer no criticism to agents who did what agents are trained to do – insure people. Nor do I criticize the income this produces for the agent, who labors long and hard to master his/her craft, and fight off competition to provide quality counsel to clients.

Fred said he had enrolled in excess of 400 individuals into new health plans leading up to the final weekend of open enrollment (open enrollment closed on March 31, 2014, at 11:59 PM, unless you could prove you tried at least a little bit to get enrolled). Most agents with whom I have spoken during the past six months are still waiting for their first commission checks. Fred, however, received his first commission checks in February, totaling more than $5,000. The commissions will continue and will grow each month through the end of the 2015 open enrollment period – and on into the future, as long as the politicians keep the system going; as long as OPM continues to flow.

Two factors alarm me, however, about the hundreds of thousands of transactions in which agents worked to enroll clients in these tax-subsidized insurance policies. First, the individuals who now receive government largesse to purchase insurance will quickly come to see it as a right – and beware the politician that tinkers with their right to OPM to buy over-priced insurance.

Second, the agents who have gained significant income by enrolling these individuals will be very quick to protect their pocketbooks when politicians threaten to cut back the unaffordable tax subsidies that pay for their client’s coverage. Both the agent and the client will be addicted to OPM.

Medicare gives us a glimpse of the political future. Most folks, as they age, become more politically cautious – even conservative. Beware the politician who tries to touch their Medicare benefits, or raise their Part B premium (it’s supposed to fund 75 percent of its cost, but instead, it’s only 25 percent, with taxpayers paying the rest). There is a reason Social Security and Medicare are considered the third rail of politics – touch it and you are politically dead. More than 45 million of us – me, included – are covered by Medicare and we vote. We do not, however, as a general rule, perceive the long term damage we are doing to our grandchildren.

The unfunded liability of Medicare and Social Security is estimated to be as much as $100 Trillion (with a T). We have saddled every American 30 years old or younger today with an $800,000 bill just to pay this liability. And to fix it, to give those children a better life, we are unwilling to use our money and assets to pay our own way – like the addict, we see it as someone else’s problem.

Hence, my long term concern that ObamaCare is creating millions more who are addicted to other peoples’ money (OPM) and will refuse to support any political candidate who prefers sobriety.

Thirteen years ago I stood at the casket of my best friend, who, at age 54, succumbed to the ravages of drug and alcohol addiction. How many years will the United States be able to survive our addiction to OPM to pay our health care bills? How will the OPM addicted react when denied necessary care, or long lines to get basic care? And when will we witness the death of our liberty and freedom?

March 31, 2014: Last chance for health insurance coverage until 2015

This is a guest post from two of my good buddies. Some great and necessary info here.

By Chris Schneeman and Alycia Riedl*

The Affordable Care Act closes the door on enrollment in health insurance at 5 PM on March 31, 2014. If you do not enroll by then, you will not be able to gain coverage again until January 1, 2015 unless you experience a “qualifying event” (i.e. change in marital status, job change, moving to a new area, loss of employer coverage, etc.) .

Knowing the facts about closed enrollment after March 31, you might feel rushed to purchase coverage, any coverage, just to beat the deadline. We urge you to choose carefully. The wrong coverage could end up costing you a lot of money, or leave you without coverage for critical medical needs. There is a way to get trained, professional advice so you can make the wisest choice. This is the kind of help that could save you money, and even save your life.

At no cost to you, you can get help from one of an army of licensed professional health insurance agents all across the state. They are ready to help you sort through the complicated choices, and advise you on choosing the plan that best fits your needs. How can agents provide this service at no charge to you?

Except for Medicaid Medical Assistance, or MinnesotaCare, government programs for low-income individuals, all health insurance is provided by insurance companies. Depending on where you live, up to five insurance companies may offer you policies from which to choose. When you purchase coverage with the help of a licensed insurance agent, the insurance company compensates the agent, and the premium you pay is the same whether you use an agent or not.

Agents earn income only when they successfully enroll a client in a health plan. This is one reason why they become your advocate, and are diligent to recommend the best health plan to meet your needs. Agents are motivated to make sure your information is entered correctly the first time. Your agent keeps tabs on your application to ensure your coverage is in place on time and in the manner for which you planned.

Perhaps you plan to go to MNsure, Minnesota’s government insurance exchange, to buy your coverage. MNsure, however, has been overwhelmed trying to help everyone. MNsure’s call center employees are quite good at solving problems with the website. They are not, however, trained to answer insurance questions – agents are. MNsure’s helpers lack the years of experience and the volume of training common to licensed insurance agents.

Individuals who have struggled enrolling through MNsure have learned that buying health insurance is far more complex than buying an airline ticket, a book at Amazon.com, or downloading a song from iTunes. Why try to buy something so complex without good advice, especially when there is no additional cost to you?

You can, of course, attempt to purchase online at MNsure without the help of an agent. This, however, limits your choices only to the plans offered on the MNsure website. The insurance agent is able to show you a variety of health plans, both at MNsure and outside of MNsure, to best meet your needs.

Professional health insurance agents are ready to help you.  Our agent members believe we can triple the current enrollment of individuals into appropriate health plans by March 31, 2014, including you.

To find a health insurance agent near you, the Agents Coalition has set up a website at http://healthymnagents.org. By simply entering your zip code, you will usually find at least a few agents from which to choose.

You do not have to worry about going without insurance after April 1. You do not have to worry about fighting delays at MNsure, or making the right decision about coverage. Neither do you have to worry about receiving an IRS notice demanding you to pay the penalty for not purchasing coverage. Agents are ready to help you today.

* Chris Schneeman is the President of SevenHills Benefits in St Paul, and Chair of the Agents Coalition for Health Care Reform. Alycia Riedl is President of the Minnesota Association of Health Underwriters (MAHU). The coalition is made up of MAHU, the Minnesota Chapter of the National Association of Insurance and Financial Advisors (NAIFA), and the Minnesota Chapter of Professional Insurance Agents (PIA).  Contact Alycia Riedl or Chris Schneeman at dgrcom@comcast.net

Startling Stats at Washington DC Exchange

The average age of enrollees on the Washington DC insurance exchange is 36. Too bad it’s the only place where young people have enrolled — and DC has a special advantage (see below).

If too many older, less healthy folks sign up for the new ObamaCare policies the premiums will skyrocket in the future. Put another way, if too few young healthy people sign up for ObamaCare policies the premiums will skyrocket in the future.

Clearly, to keep premiums affordable for older folks, healthy young folks need to enroll. Younger, healthier people, however, would rather buy a house, cars, education for their children, clothes, or food. As of February 1, only 25 percent of enrollees are aged 18-34.

Minnesota’s average enrollee age is more like 50, and this bodes ill for insurance rates for 2015. But why 50 in Minnesota, and 36 in Washington, DC?

The Affordable Care Act requires most members of Congress – the House and Senate – to purchase insurance on the exchange. Likewise, most staff members are required to use the exchange. The dirty secret is that unlike you and me, the federal government – you and me – is paying 74 percent of the premium. This, like many other steps taken by the president, is probably not technically exactly perfectly legal. It certainly is unethical.

In any event, because Congress and it’s staff members purchase through the DC exchange, and because most staff members are young and very young, the average age is just 36.

What worries some of us is that the DC exchange actually sort of works somewhat well. We figure those members of congress, although bothered by having to order coverage like the rest of us, believe the DC-exchange experience is the norm.

Too bad congressional members didn’t have to buy coverage in Oregon or even Massachusetts – or Minnesota, or just about anywhere else. Alas, the DC crowd may believer we’re all having the same great success as they are, but we, of course, have to pay a far greater percentage of our own premium than the members of Congress and their staff pay.

This past Monday I heard Mila Kofman, the CEO at the DC exchange explain her system. One thing she said that burned into my brain is that professional insurance agents are the secret army – without agents engaging in exchanges they will surely fail. To which I add, exchanges have so alienated agents that, well, good luck stirring up that secret army.

And the beat goes on….

Millionaires on Medicaid

“I donated two hours Friday to confirm a determination for and questions about a family, who used to be clients, but now qualify for Medicaid/Medical Assistance. [After the appointment,] I walked her out to her vehicle, passing my parked Honda CRV w/250K miles. She got into her Cadillac Escalade, and drove away. I thought to myself, “I pay $1,100.00/mo. for a $4000 deductible plan for my family. She pays nothing.” (A frustrated Central Minnesota licensed insurance agent wrote this report this past weekend.)

We call this new phenomenon “Millionaires on Medicaid.” The Affordable Care Act (ACA),  in its zeal to provide free government health care to low-income people created a new category of freeloaders – “folks” with large estates who creatively limit their income to qualify for Medicaid at taxpayer expense.

I first learned of this crazed concept three years ago. A member of Minnesota Governor Tim Pawlenty’s cabinet called me, exasperated that the new federal law empowered the 1% to get health care at the expense of the 99%. It works like this:

The individual or couple park a large portion of their investments in liquid assets, such as low interest bearing savings accounts; or stick thousands of dollars in the bedroom wall-safe. Then they make sure to limit their reportable taxable income. The ACA allows individuals with less than about $16,100 or couples earning about $21,700 to enroll in Medicaid. Yet, the law ignores their assets.

Health insurance agents are reporting stories about these new enrollees in the government health insurance exchanges, the millionaires now eligible for free health care. Did the Democrats in Congress and President Obama intend to do this? No one can know their motives, but I explain why I believe it happened at the end of this article.

How could a wealthy person that reports income of less than $21,700 manage to survive on such a paltry sum? Easy enough. Each time there is a spending need, open the home safe and take out a wad of cash, or write a check from a low- or even no-interest bearing checking account. The plan is to keep enough of one’s assets liquid in a way to avoid earning income on it and be able to live the high life. Like so much else about the ACA, the incentive to reduce investment income makes no sense, except when you compare it to thousands of dollars saved by not paying health insurance premiums.

Minnesota millionaires get an extra chance to live off taxpayers because of MinnesotaCare, the state’s tax-subsidized program for low-income people earning between 138-200% of federal poverty guideline income. This true story demonstrates its lure for millionaires:

  • The clients, a 62-year old attorney who had recently sold her practice, and her 59-year old self-employed husband, both decided to retire. They had amassed about $900,000 in their retirement accounts, and owned two homes free and clear, each valued at $600,000. And they had many other assets – some difficult to sell, and others quite liquid. They planned their retirement income so it did not exceed $31,000 and thereby qualified for MinnesotaCare – with a combined monthly premium of $100.

Why would the government create a program that would pay the health care cost of millionaires without first adding up assets to see if the millionaires can afford to pay their own way? Adding an asset test to determine eligibility for free health care would have sent the government computers on a digital journey from which they would never return. It would have created complications beyond imagination. Those government software programs would spin out of control. The abject failure of healthcare.gov would have been multiplied geometrically if it included an asset test.

Next time you think about all the good government is doing by paying for the health care of low-income people, watch for a Cadillac Escalade and wonder aloud: another millionaire on Medicaid?