Health Carriers Thriving Under Stress

ViceGripThe health insurance industry has been going through a number of challenges including legislative and regulatory reform, demands from more price- and service-conscious consumers, fierce competition, shift of customer mix, and uncertain economic conditions in the United Stats and abroad. Yet the industry is thriving under stress, according to a report by Zacks Investment Research.

Big players, such as CIGNA, WellPoint, Humana, UnitedHealth, Molina Healthcare and others, have reported unfaltering growth in premium as well as fees and other income over the years. In the first quarter of 2014, these insurers had a combined 14% increase in revenues. So far, the carriers have handled some of the less onerous provisions of health care reform fairly well including MLR requirements, a ban on denial of coverage due to pre-existing ailments, dependent coverage up to the age of 26, and the annual rate review.

The question is how provisions of the law will affect the industry, such as those relating to insurance exchanges, the individual mandate, ICD-10 requirements, pre-existing conditions, Medicaid expansion, and an annual insurance industry assessment of $8 billion for 2014 with increasing annual amounts thereafter. Investor sentiment toward the reform this year and beyond will be the driving factor for managed care stocks.

Several health reform provisions are likely to increase insurers’ medical costs, such as the excise tax on medical devices, annual fees on prescription drug manufacturers, enhanced coverage requirements, and the prohibition of pre-existing condition exclusions. Also, the annual insurance industry assessment will increase insurers’ operating costs.

Confined to national boundaries until recently, the industry is flocking to international markets with fewer regulations, higher margins, greater demand, and lower competition. With a wide overseas presence, Cigna and Aetna view their international business as a positive differentiator and key driver of growth. Both companies intend to penetrate deeper into the emerging economies of Asia and the Middle East. In April 2014, Aetna bought U.K.-based InterGlobal, which offers private medical insurance to groups and individuals in the Middle East, Asia, Africa and Europe. UnitedHealth expanded its reach from Australia, the Middle East, and U.K. to Brazil with its buyout of AmilParticipacoes.

Data from Kaiser Family Foundation and the Congressional Budget Office indicates rapid growth in individual exchange markets, with approximately 22 million purchasing coverage online by 2016 and 24 million by 2023. The exchanges seem to have been well received. Moreover, 35% of new exchange insurers below age 35 led to a favorable mix. Insurers that were initially averse to participating on exchanges are planning to jump on the bandwagon for 2015 and beyond. However, with comparative shopping options and easy access to consumer information, the exchanges are likely to heighten competition among private insurers. For more information, visit

AMAC Applauds the SAVE Medicare Home Healthcare Act

The Association of Mature American Citizens (AMAC) is applauding the Securing Access Via Excellence (SAVE) Medicare Home Health Act, which was introduced in the House. It provides relief to American seniors who are at risk due to Medicare cuts of 14% to home health services. The Act achieves the same level of Medicare savings as the Obamacare cuts by creating a program to reduce hospital readmissions through incentives for positive patient outcomes. The goals is to allow mature Americans to remain in their homes. AMAC says that Obamacare’s Medicare home health cut will force thousands of small businesses to close, costing nearly 500,000 home health professionals to lose their jobs. AMAC says these cuts affect the Medicare population’s most vulnerable demographic — older, sicker and poorer mature Americans.  Some will be forced to seek care in an institutional setting, driving up patient and Medicare costs and putting patients at risk for poorer health outcomes. For more information, visit

The Uninsured Remain Underserved by Health Exchanges

Despite the goals of the Affordable Care Act, many U.S. citizens still are uninsured and underserved due to technical problems and lack of information from health insurance companies and health exchanges, according to a study by J.D. Power. However, cost is the key reason that shoppers wanted health insurance, but were unable to get it (89%). Other reasons include having pre-existing conditions (26%) and not knowing where to buy insurance (10%). (Shoppers were able to select multiple reasons during the survey.) Many shoppers had problems enrolling because of technical problems (40%); the application process taking too long (19%); and the website not having enough information about the plans (18%). Additionally, 49% of shoppers who did not complete enrollment had not decided on a plan. Rick Johnson, senior director of the healthcare practice at J.D. Power said, “For health insurance providers to thrive in this new environment, they will need to retool their marketing, information and enrollment efforts toward a new generation of uninsured to serve their needs.” Fifty-nine percent of enrollees cite monthly premiums as an important reason for their plan selection; 36% cite doctor visit co-pays, 32% cite out-of-pocket maximums, and 32% cite annual deductibles. The study does not find a significant difference in the enrollment experience for federal and state exchanges. Fifty percent of consumers say their top reason for shopping through an exchange is to comply with the law while 40% shop because they want health insurance but haven’t been able to get it. Fifty-five percent of shoppers first heard about the Marketplace through the news media while only 4% learned about it in a notification from a state or federal agency. For more information, visit

2015 Obamacare Rate Filings Reveal Out-of-Pocket Cost Changes

A recent HealthPocket study finds that deductibles and other out-of-pocket costs are changing inconsistently among the four categories of Obamacare plans: bronze, silver, gold, and platinum plans. Bronze plans had a decrease in deductible with an increase in specialist copayments, and a higher maximum for annual out-of-pocket costs. Silver plans had decreases in deductibles, doctor copayments, specialist copayments, and maximum annual out-of-pocket costs. Gold plans had decreases in deductible, doctor copayments, and specialist copayments, but an increase in maximum for annual out-of-pocket costs. Platinum plans had increases in deductible, doctor copayments, and specialist copayments, but a decrease in maximum annual out-of-pocket costs. Actuarial values requirements for the different categories plans have not simplified the health plan shopping process as originally intended. While the actuarial value changes evenly among the different categories of Obamacare plans, the resulting changes in deductibles and physician copayments did not change proportionally with the actuarial value changes. “Early media attention of the 2015 Obamacare plans has focused on premiums, but out-of-pocket costs are just as important…they can represent thousands of dollars in annual expenses for a consumer who uses healthcare services regularly,” said Kev Coleman, Head of Research & Data at HealthPocket For more information, visit

HSA Accounts Provide Financial Flexibility

An HSA plan is a valuable financial tool for consumers, providing flexibility to cover immediate medical expenses and save for health care costs, according to a study by the American Bankers Association (ABA) and America’s Health Insurance Plans (AHIP.) Fifty-five percent of HSAs received personal contributions during 2012. Roughly 80% of accounts had a positive balance that could be carried over to the next year. “This study confirms that HSAs are being used as they were designed: to pay for routine health care needs and to save towards future medical expenses. HSAs have the advantage of offering consumers greater choice and control over their health care,” said Kevin McKechnie of the ABA. The study also reveals the following: • 44% of the accounts received employer contributions. Of those accounts, the average personal contribution was $2,337, and the average contribution from employers was $1,142. • 58% of accounts had withdrawals during the year. Of those accounts, the average withdrawal during 2012 was $2,081. • 19% of accounts had $0 available at the end of the year; 31% had $1 to $499; 11% had $500 to $999; 12% had $1,000 to $1,999; 14% had $2,000 to $4,999; and 12% had at least $5,000. For more information, visit

The Uninsured State-by-State

A report by WalletHub projects uninsured rates by state post-Obamacare. The following are these states with the   States with Lowest Uninsured Rate Post-Obamacare:

Uninsured Rank

State Name

Uninsured Rate Pre-Obamacare

Projected Uninsured Rate Post-Obamacare

Difference Before and After

1 Massachusetts 4.35% 1.20% -3.16%
2 Rhode Island 14.34% 5.60% -8.73%
3 District of Columbia 9.09% 6.29% -2.80%
4 Hawaii 9.11% 6.35% -2.75%
5 Oregon 16.91% 6.38% -10.54%
6 West Virginia 17.34% 6.59% -10.74%
7 Minnesota 10.07% 6.61% -3.47%
8 Iowa 11.58% 7.47% -4.11%
9 Washington 16.01% 8.27% -7.73%
10 Kentucky 17.30% 8.95% -8.35%
11 Colorado 16.54% 9.02% -7.52%
12 Maryland 14.91% 9.13% -5.77%
13 Wisconsin 11.64% 9.75% -1.89%
14 New York 13.39% 10.16% -3.23%
15 Pennsylvania 13.27% 11.05% -2.22%
16 Ohio 15.19% 11.27% -3.92%
17 Virginia 14.91% 12.45% -2.46%
18 Tennessee 15.70% 12.46% -3.24%
19 Indiana 14.80% 12.78% -2.02%
20 Kansas 15.46% 12.91% -2.55%
21 Missouri 16.49% 12.95% -3.55%
22 New Jersey 16.83% 13.54% -3.29%
23 Utah 15.96% 13.57% -2.38%
24 Nebraska 14.71% 13.69% -1.02%
25 Arkansas 20.87% 13.77% -7.10%
26 South Carolina 19.25% 13.97% -5.28%
27 Illinois 16.16% 14.16% -2.01%
28 California 21.00% 14.26% -6.74%
29 Idaho 19.12% 14.41% -4.72%
30 South Dakota 15.88% 14.71% -1.17%
31 Alabama 15.97% 15.44% -0.53%
32 Arizona 20.13% 16.38% -3.74%
33 North Carolina 19.64% 16.68% -2.96%
34 Montana 21.98% 17.65% -4.34%
35 Georgia 21.66% 18.16% -3.50%
36 Wyoming 18.92% 18.29% -0.63%
37 Oklahoma 19.76% 18.33% -1.43%
38 Alaska 20.48% 18.96% -1.52%
39 Nevada 26.52% 19.58% -6.94%
40 New Mexico 24.29% 19.59% -4.69%
41 Florida 24.73% 19.61% -5.12%
42 Louisiana 22.41% 20.91% -1.50%
43 Mississippi 18.11% 21.46% 3.34%
44 Texas 26.80% 24.81% -1.99%
N/A Connecticut 9.50% N/A N/A
N/A Delaware 12.22% N/A N/A
N/A Maine 11.53% N/A N/A
N/A Michigan 13.46% N/A N/A
N/A New Hampshire 14.16% N/A N/A
N/A North Dakota 11.80% N/A N/A
N/A Vermont 9.28% N/A N/A
NATIONAL 17.87% 14.22% -3.66%

For more information, visit



PacifiCare Files Suit to Overturn A Huge Fine

PacifiCare sued California Insurance Commissioner Dave Jones, seeking to overturn what it says is an egregious, overreaching action stemming from a series of long-resolved administrative errors. The lawsuit, filed by PacifiCare in Orange County Superior Court, seeks judicial review of the Commissioner’s decision to impose a fine of $173.6 million against the company. That decision ignored the state administrative law judge’s August 2013 finding that  the penalty should be $11.5 million, sharply lower than the Commissioner’s proposal. Stephen Scheneman, president of PacifiCare said, “By treating errors in standard health insurance paperwork more severely than errors directly affecting patient health or the integrity of their policies, the Commissioner threatens to make California’s health care system slower, less efficient, more bureaucratic and more expensive. PacifiCare says that the case involved largely technical and administrative issues that arose in 2007, which PacifiCare self-disclosed to the CDI. These issues caused no harm to members or providers, and were resolved within months. The Commissioner’s unprecedented decision to pursue an enforcement action even though all of the issues had been resolved resulted in more than three years of hearings on the matter, hearings that included hundreds of hours of testimony, the review of thousands of pages of exhibits, and more than $10 million in Californians’ tax money spent by CDI on outside lawyers. After all that, even the Commissioner acknowledged there is no basis for paying restitution to members or providers, according to PacifiCare. The Commissioner, who did not attend one day of the three-year hearing, has not explained why he waited nearly a year – until June 9, 2014 – to issue a fine fifteen times what the California administrative law judge determined. This ruling threatens to paralyze the health care system in the state, resulting in more costs and bureaucracy for Californians. We are taking this action to protect the interests of our customers who depend on the availability of affordable health insurance. Access to affordable health care depends on balanced regulation that does not impose irrational costs [and is not] potentially disruptive to the market. As we have done since 2008, we plan to continue to vigorously defend ourselves and our members in this matter.” For more information, visit

Covered California to Offer Grants for Navigator Program

Covered California will award up to $16.9 million in grants for the launch of its Navigator Program, the next phase in the agency’s outreach, education, and enrollment efforts. Covered California will award grants for programs that educate consumers about Covered California health insurance plans and about how to get financial assistance to help pay for them. Navigator activities will also include informing consumers about the benefits of getting health care coverage, motivating consumers to act, helping consumers shop for and compare plans, and helping consumers in enrollment and renewals. The goal of the Navigator Program is to enroll more than 130,000 subsidy-eligible consumers during the second open-enrollment period from November 15, 2014 to February 15, 2015. Navigators also will help enrollees renew their health insurance coverage. Covered California is seeking proposals from grant applicants with a statewide and regional scope. Covered California seeks organizations that have experience providing outreach to California’s diverse populations and proven success enrolling consumers in health care programs. As many as 135 organizations could get grants, which will be based on recipients enrolling a predetermined number of consumers. Grants will cover the period of Oct. 1, 2014, through June 30, 2015.  The grant application deadline is July 28, 2014. Awards will be made starting August 27, 2014. Organizations will be selected through a competitive grant application process. Applications will be evaluated based on the best value and most effective enrollment strategies. Grant applicants must comply with the Enrollment Assistance Program regulations. For more information, visit

CAHU Health Care Summit

CAHU’s Health Care Summit will be held in Universal City on October 7 and 8. For more information, visit

Covered California Hires Blue Shield Exec

Covered California appointed Anne Price as director of the Plan Management Division and James D. Lombard as chief financial officer. Price recently joined Covered California from Blue Shield of California. She has more than 20 years of financial and management experience in the health care industry, including commercial insurance, Medicare and Medicaid. At Blue Shield, she was director of finance and strategic partnerships with the California Public Employees’ Retirement System. Lombard has 20 years of public finance experience, including budgeting and policy analysis, administration and program operations. He most recently was chief administrative officer in the California State Controller’s Office, where he supervised human resources, budgets, accounting, facilities and information technology. He will start his new job in the coming weeks. For more information, visit

Heffernan Insurance Brokers Hires Assistant Vice President

Heffernan Insurance Brokers, one of the largest full-service, independent insurance brokerage firms in the United States, recently hired Lawrence Thomas as assistant vice president for its Orange County branch. Thomas will focus on building the nonprofit, entertainment and fashion apparel manufacturing niches for Heffernan in Southern California. Thomas has spent over seven years in major market development throughout southern California, including direct sales for a multi-national document management corporation.  His duties at Heffernan will include new business development and client service. Heffernan provides insurance and financial services products to a range of businesses and individuals. Headquartered in Walnut Creek, Calif., Heffernan has offices in San Francisco, Petaluma, Menlo Park, Los Angeles and Orange County, CA; Portland, OR; St. Louis, MO and New York, NY. For more information, visit or call 800-234-6787.



Fixed Deferred Annuity

Guardian Life introduced the Guardian Fixed Target Annuity. It allows customers to select from multiple guaranteed interest periods and provides flexible renewal and withdrawal options to help generate income for retirement. Unlike many fixed annuities, it does not have market value adjustments on withdrawals made before maturity. This lets customers know what to expect from their retirement income stream. For more information, visit



Life Insurance Sales Were Flat in June

Year-over-year, applications for individually underwritten life insurance were flat at 0.3% in June, according to the MIB Life Index. The first six months of 2014 have shown progressively lower monthly losses. U.S. life insurance application activity was flat (0%) in the second quarter copared to a negative first quarter, which was down 5.4%. At the close of second quarter 2014, applications were down 2.7%. However, in June the number of applications increases 1.2% from the previous May, which is consistent with seasonal averages. Applications by age group were mixed in June. Applications ages birth to 44 were down 1.7%; ages 45 to 59 were flat at 0.3%; and ages 60 plus were up 2.8%. Second quarter activity, by age group, mirrored the improvements in the composite index: ages birth to 44 were down 1.2%; ages 45 to 59 were down 0.5%; and ages 60 plus were up 2.9%. For the first six months of 2014, ages birth to 44 are down 3.8%; ages 45-59 are down 2.8%; and ages 60 plus are up 0.6%, compared to the same period last year. For more information, visit



Study Unveils Small Businesses’ Approach to Benefits

Small-business are concerned about taking care of employees and continuing their benefit options, according to a recent Aflac study. Businesses with to 99 employees took these actions in 2013: • 45% of small businesses hired full-time workers, compared to 71% of mid-sized companies, and 60% of large organizations. • 12% changed employee hours from full-time to part-time. • 34% gave employees smaller raises than in previous years, but only 24% plan to do the same this year, and only 18% plan to eliminate or delay raises in 2014. Only 12% of employees at small businesses are extremely satisfied with their benefits, and only 14% say their benefit package meets their family needs extremely well. Fifty percent of employees at small companies saying they’re likely to look for new jobs in the next 12 months; 57% say they’re likely to accept jobs with slightly lower compensation, but better benefits; and 47% say improving their benefit packages is one thing their employers could do to keep them in their job. Thirty-eight percent of small-business employees say that maintaining their health care benefits is their most important benefit concern. Eighty-five percent of small-business employees consider voluntary benefits to be part of a comprehensive benefit program. In fact, 62% of workers at small companies see a growing need for voluntary insurance benefits compared to year’s past, driven by these trends: • Rising medical costs (71%). • Increasing price of medical coverage (63%). • Increasing deductibles and copays (58%). • Reduced number of benefits and/or amount of coverage by their employers (29%). For more information, visit

Videos Are Highly Effective Enrollment

A report by Flimp Media finds that employee benefit video communication campaigns had exceptionally high employee engagement and response rates. Seventy-nine percent of employee recipients watched the digital video postcard content. The average employee spent 3.5 minutes engaged with their video postcard message. For more information, visit



Webcast on Annuity Sales

The National Association for Fixed Annuities is holding a Webcast on Thursday, July 24 on annuity sales secrets. It will be held 8:30 a.m. PT. For more information, visit

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