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Health Insurers Prosper As COVID-19 Deflates Demand For Elective Treatments

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As doctors and consumers are forced to put most nonemergency procedures on hold, many health insurers foresee strong profits.

So why is the industry looking to Congress for help?

Insurers say that while that falloff in claims for non-COVID care is offsetting for now many insurers’ costs associated with the pandemic, the future is far more fraught.

Costs could remain modest or quickly outstrip savings. A recession could drive revenue down. Or the coronavirus could resurge next winter and spike treatment expenses.

All that uncertainty for the companies could trigger far higher premiums for consumers, if insurers hedge their bets. Then again, the current savings insurers are seeing — along with cautions from state regulators about pushing cost-sensitive customers away during an economic downturn — might result in minimal premium increases.

“Insurers are nervous, to be sure,” said Mike Kreidler, Washington state’s insurance commissioner. “But so far they are telling me they are in good shape. Coronavirus claims have not been that high — yet.”

Backing that assessment was a report out last week by credit rating agency Moody’s, which looked at a range of pandemic scenarios — from mild to severe — and concluded “U.S. health insurers will nonetheless remain profitable under the most likely scenarios.”

Earlier this month, UnitedHealth Group CEO David Wichmann told analysts that cost reductions so far are outstripping expenses for COVID-19 and that revenue is up compared with the previous year. He expects — barring a worsening situation — the rest of the year’s earnings to match projections. Other insurers, including Centene, Anthem, Humana and Cigna, are scheduled to release earnings reports this week.

If these results are repeated across the insurance industry, there will be pressure on insurers to hold down rate increases for next year and do more for policyholders, such as constrain the growth in deductibles and other out-of-pocket costs, said consumer advocates, regulators and policy experts.

“The last thing we need is insurers pricing their coverage unnecessarily high at a time like this,” said Peter Lee, executive director of Covered California, the health insurance marketplace in that state for people who buy their own coverage because they don’t get it through their job.

That prediction comes as tens of millions of Americans have lost their jobs — and often their health insurance.

Those thrown out of work may be able to stay on employer coverage through a federal law called COBRA, but it’s expensive and workers have to foot the bill. Insurers and employers have asked Congress for relief legislation to fully cover COBRA costs.

Losing a job is also a qualifying event to enroll in an Affordable Care Act plan — and, again, the industry has asked lawmakers to temporarily boost subsidies to help enrollees pay their premiums. Some states that run their own ACA marketplaces have reopened enrollment to help the uninsured get coverage.

The industry also wants Congress to authorize temporary financial support to help cover insurers that face “extraordinary, unplanned costs in 2020 and 2021,” according to a letter sent to lawmakers from America’s Health Insurance Plans and the Blue Cross Blue Shield Association.

To help, some states are giving insurers more time this year to submit their planned premium rates for 2021 — based on their expected costs — hoping things may be clearer by summer. California, for instance, is giving insurers until July to draw up their estimates.

One fear is that insurance actuaries, when faced with an unknown risk like the coronavirus, will price higher than needed, said Lee.

Setting premiums for next year is a balancing act. Insurers that calculate incorrectly and go too low will lose profits and may have to dig into their cash reserves to pay claims. If they set rates too high, they may run afoul of a provision in the ACA that requires insurers to issue rebates to policyholders if they don’t spend at least 80% of revenue on medical care.

And they don’t estimate well even in normal years. Early data for 2019 coverage shows insurers may owe a record amount in rebates, which will be paid out this year.

Insurers are not talking about next year’s premiums.

“We do not yet know the full scope, severity or duration of this outbreak. So we cannot know the ultimate cost of our members’ medical treatment or how long the postponement of non-urgent care will continue,” said Justine Handelman, senior vice president at the Blue Cross Blue Shield Association.

Early estimates, including a scary one from Covered California issued in late March, warned that costs associated with the coronavirus could drive premiums up 40% next year without federal help, based on initial models of the number of Americans who might fall seriously ill.

That report, though, did not take into account the effect of the sharp decline in elective care.

Thirty-one states have barred most elective surgeries, part of the effort by governors to promote social distancing to flatten the curve of the epidemic and to help prevent hospitals from being overwhelmed.

“The good news since we published that report is that it looks like efforts to flatten the curve are taking effect,” said Lee, so costs are more likely to be in the median rather than high end of the range.

The cost to insurers “all depends on the severity” of the continuing pandemic, said Dean Ungar, a vice president and senior credit officer at Moody’s. “On the lower side, the industry will do quite well, and also even in a more median scenario, especially when you factor in the offsetting benefit of delayed procedures.”

Moody’s estimates that deferred elective procedures may account for as much as 20% to 40% savings on medical costs per month for many insurers as long as elective procedures are barred or patients are unwilling to seek nonemergency care.

Even so, “I don’t think the insurance industry as a whole has any intention of making money off this,” Ungar said. “There will be rebates or other things to help. Partly that’s the right thing to do and partly it’s good business.”

Former Cigna executive turned industry critic Wendell Potter disagreed. He tweeted earlier this month that UnitedHealth spent $1.7 billion during the first quarter to buy back its own stock — a move that helps the company. “In other words, they’re thriving during a pandemic,” Potter tweeted. Instead, he said, the insurer should plow that money into premium reductions or other help for policyholders.

For its part, UnitedHealth said it has waived patient cost sharing for COVID care — as have most other insurers — as well as accelerated payments for what it owes to doctors, and is helping provide loans to some clinics.

Some physician groups fear they are being left out, saying some of the savings seen by insurers and self-insured employers should be directed to those struggling after seeing their practices dry up as people avoid medical care or governors bar elective procedures.

“It’s a huge hit,” said Tom Banning, CEO and executive vice president of the Texas Academy of Family Physicians.

Lee agreed, warning that struggling front-line physicians, and especially family and primary care doctors, will need financial help.

“A bad outcome of all this will be if thousands of providers can’t make it financially and their practices get bought up by hospitals or private entities — creating more consolidation in health care, which is already driving costs up,” said Lee. “Lawmakers should be thinking about helping primary providers out.”

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By: Julie Appleby, Kaiser Health News and Steven Findlay
Title: Health Insurers Prosper As COVID-19 Deflates Demand For Elective Treatments
Sourced From: khn.org/news/health-insurers-prosper-as-covid-19-deflates-demand-for-elective-treatments/
Published Date: Thu, 30 Apr 2020 09:00:07 +0000

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Retirement Planning

At Least 1.7M Americans Use Health Sharing Arrangements, Despite Lack of Protections

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A new report has provided the first national count of Americans who rely on health care sharing plans — arrangements through which people agree to pay one another’s medical bills — and the number is higher than previously realized.

The report from the Colorado Division of Insurance found that more than 1.7 million Americans rely on sharing plans and that many of the plans require members to ask for charity care before submitting their bills.

The total membership numbers are likely even higher. The state agency collected data from 16 sharing plans across the U.S. but identified five other plans that did not report their data.

“These plans cover more people than we had previously known,” said JoAnn Volk, co-director of the Center on Health Insurance Reforms at Georgetown University.

Under the arrangements, members, who usually share some religious beliefs, agree to send money each month to cover other members’ health care bills. At least 11 of the sharing plans that reported data operated in or advertised plans in all 50 states in 2021.

Sharing plans do not guarantee payment for health services and are not held to the same standards and consumer protections as health insurance plans. Sharing plans are not required to cover preexisting conditions or provide the minimum health benefits mandated by the Affordable Care Act. And unlike health insurance, sharing plans can place annual or lifetime caps on payments. A single catastrophic health event can easily exceed a sharing plan’s limits.

In Colorado, at least 67,000 people were members of sharing plans in 2021, representing about 1 in 4 Coloradans purchasing health care coverage on their own. That rate concerns Kate Harris, a chief deputy commissioner of the Colorado Division of Insurance, which she said regularly receives complaints from sharing plan enrollees.

“What we hear from consumers is that when they purchase one of these, they do think there is some guarantee of coverage, for the most part, despite the disclaimers on many of the organizations’ websites,” Harris said.

The Colorado report found that health sharing arrangements often require their members to seek charity care or assistance from providers, governments, or consumer support organizations before submitting sharing requests. Those costs are then shifted to other public or private health plans.

Katy Talento, executive director of the Alliance of Health Care Sharing Ministries, which represents five of the largest and longest-operating sharing plans in the country, said sharing ministries encourage members to act like the uninsured people they are. Such requirements to seek charity care reflect a desire to be good stewards of their members’ money, Talento said.

“Think about it like a soup kitchen,” she said.

Fourteen sharing plans reported that Colorado members submitted a cumulative $362 million in health bills in 2021, and nearly $132 million of those requests were approved. The remainder, sharing plan executives told the division, reflected duplicative bills, ineligible charges, negotiated discounts, and the members’ agreed-upon portion of medical bills.

“It’s not like every claim line on a health care sharing request is going to be eligible for sharing,” Talento said. “They have to submit the whole bill. They can’t just pull out a piece of it.”

But consumer complaints to the Division of Insurance and to consumer assistance programs, such as the Colorado Consumer Health Initiative, show that members do not always realize what sharing plans will cover.

“We have seen firsthand the risks that people face when they sign up for these arrangements without recognizing the magnitude of the risk that they’re assuming for their health care costs,” said Isabel Cruz, the initiative’s policy director.

Talento disputed the notion that members don’t know the parameters of their sharing plans.

“That’s just suggesting that our members are dumb,” she said. “Is it likely that somehow our people are going to be willy-nilly jumping blindly into something?”

Theresa Brilli, a small-business owner in Longmont, Colorado, said she and her partner signed up for a direct primary care plan in 2017 that covered primary care visits for $179 a month. Direct primary care plans are payment arrangements between patients and providers for receiving health services without billing insurance. The plan had an arrangement with Liberty HealthShare, a Canton, Ohio-based sharing plan with more than 131,000 members nationwide, to cover additional services like preventive screenings, emergency room care, and hospitalizations for $349 a month with a $1,000 deductible. The rates increased to $499 a month, with a $1,750 deductible, in 2020, Brilli said.

But Brilli said getting payments was a major hassle.

“It took about four to eight months to get reimbursed,” she said. “It was a fight, every bill.”

When she heard about enhanced subsidies for ACA marketplace plans in 2022, she decided the hassle was no longer worth it and switched to a Kaiser Permanente plan for $397 a month.

“I will never go back to Liberty Health or a health care sharing plan,” she said. “I didn’t agree with the whole ministry thing. They made you sign off saying you believed in God, which was like, ‘Whoa, I guess that’s what I have to do to get my health insurance.’”

Laura Murray, 49, of Aurora, Colorado, said she signed up for a Liberty HealthShare plan in 2017 as a more affordable alternative to her husband’s employer-based plan.

“We kind of felt we were cutting out the middleman in a way, and it was a helping-out-your-neighbor sort of deal,” she said.

But when she became pregnant unexpectedly, she had trouble getting her health bills paid. Initially, Liberty paid only a portion of the tab, and her bills got sent to a collection agency. It was only through multiple calls that she learned she needed to send the bills to a third party that would negotiate with the providers.

“It took years to get it cleared up,” she said.

Timothy Bryan, Liberty’s vice president of marketing and communication, disputed many of the details of Brilli’s account and attributed some of the delay in payment to her “failure to submit the required supporting documentation.” Murray’s payments, he said, were delayed more than 10 months because she had failed to provide the required pre-notification.

Mike Quinlan, 42, of Denver, turned to a health sharing ministry in 2014 after the birth of his first child cost him more than $17,000 out-of-pocket, on top of nearly $24,000 in premiums that year, under an employer-sponsored health plan. He said the births of his three youngest children were covered in full by Samaritan Ministries International, a Peoria, Illinois-based sharing plan with 359,000 members, to which he contributes $600 a month. When he incurs large health expenses, he receives a slew of $600 checks from other members, he said.

Every year, Quinlan attests that he is a Christian and identifies the church he attends.

“This is a group of like-minded people who have said voluntarily we’re going to trust each other to cover each other’s health costs,” he said.

The rules differ from plan to plan. Some sharing plans require members to pledge to abide by Christian principles, and some exclude payment for out-of-wedlock births or health issues that arise from drug use. Many sharing plans exclude coverage of contraception, mental health services, and abortion, often with no exceptions for rape or safety of the mother.

Regulators in Colorado and other states have also expressed concerns that health sharing arrangements are paying brokers much higher commissions for signing up members than health plans do. That could create financial incentives to push sharing plans over health insurance without adequately educating consumers about the differences.

In 2019, Covered California, the Golden State’s ACA marketplace, instituted a requirement that its certified agents who sell both sharing plans and health insurance provide consumers with a list of disclosures about sharing plans and show them the subsidies they could receive for buying traditional health insurance coverage.

“It’s really important that consumers understand what these arrangements are, and what they are not,” said Jessica Altman, executive director of Covered California.

Harris said the Colorado Division of Insurance is investigating multiple health sharing arrangements based on consumer complaints but declined to name them.

Colorado officials are also concerned that health sharing arrangements might appeal primarily to people who don’t expect to use many health services. That could increase the proportion of sicker and more expensive patients among enrollees in traditional health insurance plans, driving up premiums.

Harris said many consumers can get a health plan for less than the cost of a sharing plan, particularly with increased federal and state subsidies put in place in recent years. State officials are also working to inform consumers of the financial risks associated with health sharing arrangements, some of which have gone bankrupt in recent years.

“It might look cheaper on its face, month to month,” Harris said. “But if they do really actually need their costs covered, there’s a real risk that they may not be.”

KFF Health News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about KFF.

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—————–

By: Markian Hawryluk
Title: At Least 1.7M Americans Use Health Sharing Arrangements, Despite Lack of Protections
Sourced From: kffhealthnews.org/news/article/health-sharing-arrangements-ministries-protections-risks/
Published Date: Wed, 14 Jun 2023 09:00:00 +0000

 

 

 

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Retirement Planning

Give Yourself the Perfect Retirement Gift

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Give Yourself the Perfect Retirement Gift

From day one, everyone looks forward to retirement, that day where they can finally let go of the stresses of the daily grind and spend their leisurely days traveling, reading and basically having fun. As compared to previous generations, we have longer life spans so we all expect our golden years to be fulfilling and rewarding.

Instead of waiting for people to help you plan your retirement, you should do it yourself. Although retirement planning is probably one of the most draining activities where one spends loads of time perusing over financial and brokerage statements, benefits brochures and insurance policies. One does this in terms of the benefits of long term planning: if one retires earlier, he/she will think and anticipate less on government-funded plans which only gives a pittance of a pension and focus more on the beauty of life.

Why Retirement Planning is Necessary

Obviously, retirement planning isn’t all about numerous hours of stress by chugging down numbers and analyzing mutual funds: it’s about fixing and deciding how you will live the final years of your life. If one can balance financially and plan fully on a retirement plan, rest assured that your future is secure.

But remember that retirement planning isn’t a singular activity. It is something that stretches forth to decades, spanning your 30s, 40s and 50s. In every decade, one must rethink their strategies since you are inching closer and closer to retirement, thus one must forgo risky investments and go to bonds and reliable mutual funds as the years pass by.

Build the Right Retirement Plan

A retirement plan must be suited to your risk tolerance and apparent need for cash when retirement comes. If you prefer a general 401(k) that has a good balance of everything, you may go for equal amounts of low-risk bonds and riskier stocks or you may also opt for an assortment of mutual funds that both have high-risk and low-risk funds.

Generally, risk tolerance is congruent to one’s age. If you are on your 20s or early 30s, you may opt for a more stock-saturated mutual fund in the hope of getting a good return because of the added risk stocks give. If ever the worst comes and you face some declines in the stock market, you still have a good 20 to 30 years to compensate for the losses.

On the other hand, if one is teetering on the 40s or 50s, it is necessary that one must go low-risk in his/her investments. One’s mutual funds must now be concentrated more on low-risk government bonds, which virtually assure no losses and minimum gain, if there will be no huge political crisis, of course.

If one follows this general age/risk rule, then one has better chance that one has an ample amount of cash to spend on the pleasures of life when retirement age finally comes.

Conclusion

One has always dreamt of traveling the world, playing golf all day and enjoying the best life can give. But one cannot do all that while working away in the office. Therefore one must give importance to the rising necessity of building a retirement plan.

It is probably as stressful as work itself, but if you can carry all that heap of information and mix it into the delicacy that is a finely tailored retirement plan, then rest assured that your dream of tasting and relishing the best of life is definitely reachable by 65.

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Retirement Planning

Ends-of-the-World Every Year Since 1970

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There always has been and always will be a reason not to invest or not to stay invested. This is all the mainstream media reports to us. Below you will find a list of some of the worst global events each year since 1970. I have some commentary to follow.

1970: War: US troops invade Cambodia.
1971: Civil Unrest: Anti-war militants march on Washington.
1972: Political: Start of Watergate Scandal.
1973: Economic: OPEC raises oil prices in response to US involvement abroad.
1974: Political: Nixon resigns as President of the United States.
1975: Political: Multiple assassination attempts on President Ford.
1976: World: Ebola virus.
1977: Political: Government shutdowns.
1978: Market: U.S. Dollar plunges to record low against many European currencies.
1979: World: Iranian militants seize the U.S. embassy in Teheran and hold hostages.
1980: Economic: Inflation spiked to a high of 14.76%.
1981: Political: President Reagan assassination attempt.
1982: Economic: Recession continues in the U.S. with nationwide unemployment of 10.8%.
1983: Economic: Unemployment in the U.S. reaches 12 million.
1984: Economic: 70 U.S. banks fail during the year.
1985: World: Multiple airplane hijackings around the world.
1986: World: Chernobyl Nuclear Power Station explodes.
1987: Market: DOW drops by 22.6% on October 22.
1988: Environment: Awareness of global warming and the greenhouse effect grows.
1989: Environment: Exxon Valdez dumps 11 million gallons of crude oil into Prince William Sound.
1990: World: Persian Gulf War starts.
1991: World: Mass shooting in Killeen, TX.
1992: Human Rights: Los Angeles riots following the death of Rodney King.
1993: Terrorism: World Trade Center bombing.
1994: World: Mass genocide in Rwanda.
1995: Terrorism: Oklahoma City bombing.
1996: Terrorism: Olympic Park bombing.
1997: World: Bird flu.
1998: World: Multiple U.S. embassy bombings.
1999: World: Columbine shooting.
2000: Economic: Start of the Dotcom Market Crash.
2001: Terrorism: Terrorist Attacks in NYC, DC & PA.
2002: Economic: Nasdaq bottomed after a 76.81% drop.
2003: World: The U.S. invades Iraq.
2004: World: The U.S. launches an attack on Falluja.
2005: World: Hurricane Katrina
2006: World: Bird flu.
2007: Economic: Start of the Great Recession.
2008: Economic: Great Recession continues.
2009: Economic: S&P bottomed after a 56.8% drop.
2010: Market: Flash crash.
2011: Market: Occupy Wall Street and S&P downgrades U.S. Debt.
2012: Political: Fiscal cliff.
2013: Political: Taper tantrum.
2014: World: Ebola virus.
2015: World: Multiple mass shootings.
2016: Political: Divided U.S. Presidential election.
2017: World: North Korea testing nuclear weapons.
2018: Economic: U.S. & China trade war.
2019: Economic: Student loan debt reaches an all-time high of $1.4 trillion.
2020: World: COVID-19.

While many of these events were undoubtedly terrible (and there are certainly others not named here that were worse), most of these were broadcast as end-of-the-world events for the stock market. Despite that attention, it is worth noting that these were, for the most part, one-time events. In other words, most faded into the newspapers of history. We moved on.

Obviously, some caused monumental shifts in the way the world works. Just think about how much air travel continues to be impacted by the events of 9/11. But, outside of the resulting inconveniences (if we want to call safety protocols inconveniences) associated with air travel, flying is safer than ever before.

Take a look at just about any of the events and you will find there are many that people will hardly remember. My point here isn’t that these events are to be ignored or that they were easy to stomach at the time, but that they have become a distant memory.

I want to also make the point that we should expect these types of negative events. As investors, we know these types of crises, economic catastrophes, and global phenomena are going to happen.

But in almost all cases, here is what we can say in the next breath – this too shall pass.

Will there be legal, humanitarian, economic, or some other aid required as a result of these events? Almost certainly the answer is yes, but that doesn’t mean it they won’t eventually fade into history.

Lastly, what’s worth noting is how the market has performed over these last 50 years despite the continual advertisements of the world crashing down around us. On January 2, 1970, the Dow Jones stood at 809 and the S&P at 90 -> those are not typos. These same indexes have grown (not including dividends) to 26,387 and 3,232 respectively. Amazing, no?

Perhaps what gets overlooked more than anything else is what separates the above one-time negative events from the positive stories that go largely ignored over our lifetimes. And that is a story worth telling. See the companion post below:

Unheralded Positive Events Every Year Since 1970

Stay the Course,
Ashby


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The post Ends-of-the-World Every Year Since 1970 appeared first on Retirement Field Guide.

—————–

By: Ashby Daniels, CFP®
Title: Ends-of-the-World Every Year Since 1970
Sourced From: retirementfieldguide.com/ends-of-the-world-every-year-since-1970/?utm_source=rss&utm_medium=rss&utm_campaign=ends-of-the-world-every-year-since-1970
Published Date: Tue, 04 Aug 2020 13:26:19 +0000

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