After Expanding Under Obamacare, This 123-Year-Old Insurance Company Is Closing Its Doors

After Expanding Under Obamacare, This 123-Year-Old Insurance Company Is Closing Its Doors–23ih.,b13.14

After expanding to do business on the Affordable Care Act’s exchanges last year, a Wisconsin-based health insurance company founded in 1892 has announced it will close its doors.

Assurant Inc. announced last week one of its subsidiaries, Assurant Health, an insurance company, will either be sold or shuttered after losing tens of millions of dollars this year. The decision comes 18 months after the implementation of the Affordable Care Act, and industry watchers argue Assurant Health’s end can be attributed to the new health care law.

“The health and employee benefits business segments possess differentiated capabilities in their respective markets, but we do not believe they can meet our return targets at the pace we require,” Alan Colberg, president of Assurant Inc., said in a statement. “While this is a difficult decision, we believe they would be strong assets for new owners that are focused more exclusively on health care and employee benefits.”

In a letter to its shareholders, Assurant Health said it lost money because of a reduction in recoveries under Obamacare’s risk mitigation programs and increased claims on the health care law’s 2015 policies.

Before Obamacare’s implementation, Assurant Health would underwrite its customer’s policies, which gave the company a competitive edge. The process involves adjusting the cost of a consumer’s premium based on factors such as medical history and age.

The Affordable Care Act, though, prohibited medical underwriting, and advocates touted the law as easing access to health insurance for people with pre-existing conditions.

“With respect to the Affordable Care Act, the skill set that an insurer needs to thrive in the Obamacare exchange market is different than the skill sets needed to thrive prior to the Affordable Care Act or in markets outside the exchange,” Ed Haislmaier, health policy expert at The Heritage Foundation, told The Daily Signal. “Most of the insurers offering coverage in the exchanges are used to operating in the individual and employer group markets. However, the exchange coverage design is a lot closer to Medicaid managed care than to traditional employer group coverage.”

Obamacare was implemented in October 2013, and during the first open enrollment period, Assurant Health opted not to offer coverage through the law’s marketplaces. In November, though, the company announced it would sell plans on exchanges in 16 states during the second open enrollment period.

Despite the company’s efforts to reach more consumers, Assurant Health saw a $64 million loss in 2014. During the first three months of 2015, the company reported operating losses of $80 million to $90 million.

Haislmaier, meanwhile, contends that the government’s intervention in the health insurance industry pushed companies out of the market.

“When the government standardizes any product, you’re going to end up with fewer producers,” Haislmaier said. “That’s because the effect of government standardization is to turn the product into commodity, which leaves little room for the supplier to show how its version is better than those of its competitors.”

Aiden Hill’s introduction to the secretive culture at Covered California came in his first days on the job. He had just been hired to head up the agency’s $120 million call center effort when he emailed a superior April 18, 2013, and got a text message in reply:

Please refrain from writing a lot of draft contract language in government email … And don’t clarify via email … No email.

Later, concerned about contractor performance, Hill conducted an Internet search for “best practices” information to forward a superior. Afterward he got this text:

Aiden—Please stop using government email for your searches.

Aiden Hill’s introduction to the secretive culture at Covered California came in his first days on the job. He had just been hired to head up the agency’s $120 million call center effort when he emailed a superior April 18, 2013, and got a text message in reply:

Please refrain from writing a lot of draft contract language in government email … And don’t clarify via email … No email.

The officials allege it was conflicts of interest that led some executives to tolerate “egregious taxpayer waste.”

“None of us wants to see … pockets lined of contractors that didn’t do what they were supposed to do but got paid every dime,” says a third Covered California official who still works at the agency.

An Associated Press report in 2013 found that millions in no-bid Covered California contracts went to firms with professional ties to agency Executive Director Peter Lee. At the time, a spokesman told AP that Covered California “was under pressure to move fast” to meet tight federal deadlines and “needed specialized skills.” Covered California would not answer our questions about potential conflicts of interest.

AP also found Covered California uniquely positioned to keep its spending details secret—“the most restrictive” among the 16 state exchanges with “authority to conceal spending on contractors performing most of its functions … potentially shielding the public from seeing how hundreds of millions of dollars are spent.”

“I’m here to tell the board and the public that Covered California executives have been engaging in a cover up,” declared Hill at the Feb. 20, 2014, meeting, speaking from the audience during a question-and-answer period.

“They knew back in August of 2013 that there were serious readiness issues with Covered California. … When I and others persisted in challenging these contractor performance issues, our own contracts were prematurely terminated and we were threatened with legal action if we spoke out.”

After that public display, Covered California hired a law firm to conduct an independent investigation into allegations that management “engaged in a cover-up” and “knowingly allowed two contractors to engage in waste, fraud and abuse.”

The firm conducted 45 interviews with 25 witnesses. Last December, Covered California notified Hill that the independent probe concluded “the evidence did not support” any of his claims.

Hill calls the inquiry a sham and says investigators failed to interview key witnesses he suggested. Covered California declined to answer our questions on this topic, or any other.

Since then, he has seen many success stories. One is a San Francisco graduate student with AIDS who had trouble getting insured until Obamacare. In December 2013, he not only was able to get a policy on the Covered California exchange, but he also got a tax dollar subsidy to help buy it. The very first week the policy took effect, he ended up with a two-week emergency hospital stay.

He still had to pay the deductible, but he would have ended up owing a lot more money without insurance,” says Knauss. “And San Francisco General Hospital got paid.”

But Knauss has also seen a flip side. He’s been shocked by the amount of time he’s spent helping weary Covered California consumers.

“Early on, it wasn’t unusual to spend four hours during the day on hold with Covered California just trying to resolve minor issues,” he says.

Today, there’s less hold time but daily examples of confusion.

“I’ve got one family … their Covered California account shows three different effective dates.” In another case, “I found out a woman’s plan had been terminated, but they couldn’t tell me why.”

To some degree, state health insurance exchanges are forced to market themselves. After starting up using over a billion federal tax dollars, the law requires them to be self-supporting this year. To do so, Covered California collects commissions.

Design flaws involving the $454 million computer system are responsible for giant backlogs, misinformation and poor interface with California’s version of Medicaid coverage for the poor.

one family 18 notices in one–14 they were covered–4 they not

And when tax season rolled around, 100,000 customers got inaccurate tax forms—or none at all. That mirrored similar problems at HealthCare.gov, which sent 800,000 incorrect tax statements.

Covered California wouldn’t answer our questions about various computer snafus. A spokesman previously told reporters, “We are dealing with a multitude of information that is going back and forth. … There can be discrepancies between what’s on our record and what is on the health plans’ records.”

The Big Picture

We asked Covered California to describe its accomplished goals, but the agency declined to do so. In a recent press release, the agency said that 800,000 households received federal subsidies last year to make health care more affordable. Subsidies averaged $436 per month.

“The assistance provided through the Affordable Care Act helped bring health coverage within reach for more than a million people, and it changed lives across the state,” Executive Director Lee said in a statement.

There’s little doubt that Covered California has improved circumstances for many formerly uninsured, like the graduate student with AIDS. But few predicted that would come at the expense of so many others now paying more for fewer choices and less coverage.

800,000 got subsidies

More rate increases are ahead. A recent study found the vast majority of Covered California customers—84 percent—face premium hikes this year.

However, like a lot of Covered California’s statements, it’s a good dose of spin. In fact, 35% of Covered California’s 2014 customers dropped their Covered California policies in 2015. That’s one of the worst retention rates among states.

84% of CA will get a premiun increase

“I think it’s too big,” says insurance agent Knauss. “Health care reform is not addressing doctors and hospitals and the games they play. And health insurance companies are 10 steps ahead of anything the government is doing … Maybe we just can’t do this.” Covered California is proud that it has been the portal for nearly four million people to find coverage through one of our participating health plans or through low cost/no cost Medi-Cal; is helping more than a million people access financial assistance to lower their monthly health insurance premiums; through the Affordable Care Act has reduced the number of uninsured in California by half.

source-the daily signal, melissa quinn, andrew edelsberg, am best, ed haislmaier, heritage,ncharlesnsteele, aiden hill, sharyl attkisson, kevin knauss,

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s