Over the last few months we have seen the news announcing failures regarding the Affordable Care Act’s exchanges. Congressional lawmakers have been raising alarm over the rapid collapse of several so-called ObamaCare “co-ops” — government-backed alternative health plans — that are failing, leaving tens of thousands of customers scrambling for coverage, and billions in taxpayer-funded startup loans at risk. To date, nearly half of the 23 co-ops established under the Affordable Care Act have gone or are expected to go under by the end of the year. The latest to be barred from selling insurance on the official marketplace is in Arizona. In a letter to the head of the Centers for Medicare & Medicaid Services, Sens. Orrin Hatch, R-Utah, and Lamar Alexander, R-Tenn., pressed the Obama administration for answers on what is being done to address the crisis — and recoup some of the federal taxpayer loan money that has gone to the failing start-ups. The senators said nearly 870,000 people nationwide have enrolled in the co-ops, and noted they originally were intended to boost competition and provide more affordable options. “The CO-OPs are not living up to these expectations,” they wrote. “To date, eleven ACA CO-Ops — in Arizona, Colorado, Iowa, Kentucky, Louisiana, New York, Nevada, Tennessee, Oregon, South Carolina and Utah — have collapsed. “As a result, hundreds of thousands of Americans will lose their health insurance plans and will have to scramble to find new plans, most likely with higher premiums and deductibles.” Asked about the letter, an HHS spokeswoman stressed that the start-ups “face a number of challenges, from building a provider network to pricing premiums in a new market, and unfortunately, not all will succeed.” She said in a statement that when regulators make the decision to close a co-op, “we work with local officials to do everything possible to make sure consumers stay covered.” HHS Secretary Sylvia Mathews Burwell last week said the administration is looking at ways to help the remaining co-ops. The co-ops — or Consumer Operated and Oriented Plans — were created within ObamaCare as a compromise for liberals unable to secure the creation of a government-run insurance program. Under the plan, taxpayers provided $2.4 billion in loans to set up the nonprofit co-ops as alternatives to major insurers. The loans were used as start-up money and as reserve funds to meet solvency standards set by state regulators — but, the alternative insurers have struggled to get off the ground. An inspector general audit released over the summer found that in 2014, only one — Maine’s — of the 23 made money that year. And it found half of them lagged far behind their enrollment projections. James Donelon, Louisiana insurance commissioner, said the co-op in his state was established with the good intention of increasing competition, but quickly found itself in a dire financial situation. He likened it to “learning how to sail in a hurricane.” Over the last several months, many of those co-ops have failed. In Arizona, the state Department of Insurance last week filed an order against Meritus Health Partners and Meritus Mutual Health Partners, as CMS removed it from the insurance marketplace. The co-op’s ability to write and renew policies was in turn suspended, meaning roughly 59,000 Arizonans covered by Meritus now have to find new coverage during open enrollment, which started Sunday. A similar situation is playing out in New York, where state and federal authorities say the shutdown of Health Republic Insurance of New York should accelerate after they found it is in worse financial shape than they knew when it was ordered to stop writing new policies a month ago. New York’s Department of Financial Services initially said coverage for about 100,000 individuals should continue through Dec. 31. Now it says it’s in consumers’ best interest to end policies Nov. 30. The department says the same applies to Health Republic’s small group plans, which covered 101,500 people. The issue flared at a hearing Tuesday before the House Ways and Means Committee. “Only in Washington would a group of bureaucrats think they knew how to micromanage `competition’ instead of letting consumers and markets do what they do best,” said Rep. Kevin Brady, R-Texas, who chairs the health subcommittee. But Mandy Cohen, chief operating officer with CMS, told lawmakers that co-ops have played an important role in fostering competition and choice in the law’s health insurance markets, now in their third year. “There have been successful co-ops which have provided consumers in their states an additional choice of health insurance and have improved competition,” Cohen said in written testimony. “And there also have been Co-ops that for a number of reasons have faced compliance, technical, operational, or financial difficulties.” Aside from concerns over the future of other co-ops, Hatch and Alexander questioned what could be done to recoup taxpayer loans. They voiced concerns that federal officials might be allowing “creative accounting” by the co-ops to make them look more profitable than they actually are. They asked CMS to provide information on possible “remedies for the recovery of funds from terminated co-ops,” on “enhanced oversight” for the insurers, and on other details. Hatch is chairman of the Senate Finance Committee; Alexander is chairman of the Senate Health, Education, Labor and Pensions Committee. According to the House Energy and Commerce Committee, the 11 co-ops in question represent a total cost to taxpayers of $1.1 billion. And now we hear that certain insurance companies are considering opting out of the ACA exchanges. So surprising?? Not really. First consider that on November 19, 2015 the Center for Consumer Information & Insurance Oversight (CCIIO), Centers for Medicare & Medicaid Services (CMS) put out the following addition to the Affordable Care Act about the Risk Corridors Payments for the 2014 Benefit Year . “On October 1, 2015, the Centers for Medicare & Medicaid Services (CMS) announced that for the first year of the three year risk corridors program, qualified health plan (QHP) issuers will pay charges of approximately $362 million, and QHP issuers have requested Consistent with prior guidance, assuming full collections of risk corridors charges for the 2014 benefit year, insurers will be paid an amount that reflects a proration rate of 12.6% corridors payments will be made from 2015 risk corridors collections, and if necessary, 2016 collections. In the event of a shortfall for the 2016 program year, the Department of Health and Human Services (HHS) will explore other sources of funding for risk corridors payments, subject to the availability of appropriations. This includes working with Congress on the necessary funding for outstanding risk corridors payments. HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers, and HHS is recording those amounts that remain unpaid following our 12.6% payment this winter as fiscal year 2015 obligation of the United States Government for which full payment is required.” This is again interesting especially with the latest announcement from United Health Care. Jim Zarroli reported that UnitedHealth Group, the nation’s largest health insurance company, says it’s considering dropping out of the public exchanges that are an integral part of the Affordable Care Act, because it’s losing money on them. “We cannot sustain these losses,” CEO Stephen Hemsley said in an investor call Thursday morning. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.” The company also said it will “pull back” on marketing of the products it sells on the exchanges, while it decides what to do. It also said it was lowering its earnings forecast for the year as a whole. UnitedHealth’s comments represent a sharp turnaround from just last month, when the company said it expected business in the exchanges to improve in 2016 and planned to expand into more exchanges. The announcement comes at a time of increasing concern about the public exchanges, where customers shop for insurance policies, often receiving federal subsidies to do so. Several nonprofit insurance cooperatives that were supposed to compete for customers on the exchanges have folded. Meanwhile, some big publicly traded insurance companies, including Anthem, Aetna, Cigna and Humana, say they are enrolling fewer people than expected or even losing money. A recent report by McKinsey & Co. found that the industry lost a total of $2.5 billion, or $163 per customer, in the individual market. Insurance companies have had trouble attracting healthy customers to the exchanges to purchase their insurance products, many of which have deductibles of thousands of dollars. The industry’s troubles are reflected in the insurance products being offered on the exchanges during the current enrollment period, reports The Wall Street Journal: “For these plans, which will take effect in 2016, many insurers have raised premiums in order to cover the medical costs of enrollees, which have run higher than many companies originally projected, fueling this year’s losses. Insurers have also shifted to offering more limited choices of health-care providers” Still, no other big insurer has signaled its intention to leave the exchanges. Aetna Inc. CEO Mark Bertolini said last month that it was “way too early to call it quits.” But consider how United Health Care has been dealing with their physicians. Consider the following report “Doctors In Network Leave United Healthcare–Tired of Getting Paid At Rates 12% Less Than Medicare…” This problem has been expanding into Kentucky and other states. It has been suspected for years in California with different doctors groups over and over complaining that their net reimbursement from United Healthcare is less than Medicare. The question is therefore, why buy insurance plans from the exchanges, in many areas where United pays somewhere between Medicare and Medicaid. In California, complex contracts are used as part of the tools to keep the compensation low. We keep reading all the time about the expense of doctors and a while back there was a study that came out, which said doctors are not that expensive compared to all the other costs in healthcare. So if you do find your doctor not in network with United, this could be part of the problem, being paid at rates that are 12% average less than what Medicare pays. Of course, our current CMS head, Andy Slavitt drove this payment factorization to pay doctors less during his time at United Healthcare, so if confirmed at Head of CMS, that’s what’s there for those who are members, paying doctors even less and dumping more cost to the consumer. The doctors in this group said they have not had a raise in 6 years with United. Sometimes doctors are accepting less than Medicare and still get fired from United if the algorithmic formulas United uses says no, so they get fired by the algorithms as well. United Healthcare Extending Narrow Networks in California–More Secret Scoring of Doctors in the US–Telling The Doctors If They Are “Allowed” To Be In Network… “The Secret Scoring of America’s Physicians” – Algorithmic Math Models For Insurance Network Contractual Exclusions, Relating to MDs Who See Medicare Advantage Patients.. The company also has a law firm in New York looking into the reimbursement issues. Law Firm Investigating UnitedHealthCare Claim Payments in New York Stating Under-Reimbursement By Manipulating Algorithmic Benefit Calculations… A couple years ago the American Academy of Family Practice doctors took up this issue as well with United paying doctors at rates less than Medicare, so it’s all over the US as an issue. We shouldn’t be fooled anymore and think that commercial insurers make up for the low payments of Medicare as they don’t always anymore. There’s enough here in this post to substantiate that. AAFP Says We’re Not Going To Take It Anymore With Optimization of Provider Networks – Specifically United Healthcare’s Doctor Dumping That Disrupts Continuity of Care Is there any reason why doctors are not really happy with United? Here a couple years ago they put out an article telling the Feds to aggressively manage seniors and they are trying not only manage seniors but everyone else it seems. United HealthCare Issues Another Study, This One Telling Government To Aggressively Manage Medical Care For Seniors-An Area Where A Large Chunk of Their Revenue Comes From Today, Managing Care It’s really not fair to the other insurers as well to have this United/Optum monopoly at HHS and CMS that exists today and has been around for years. CMS now is stuck with a lot of the mentored United models that are not working so well as that’s all they do is numbers when it comes to insurance. It proves one thing that we all knew….One of the real problems is the insurance industry. They always make a profit and can opt out of laws that apply to the rest of us all. We shouldn’t be fooled! Physicians and patients lose and will eventually pay for the bad decisions of our politicians who design a flawed health care system and the insurance industry who will always find ways around the ACA and always find a way to make big profits, which we the common men and women will pay for. But consider, if all of the insurance companies opt out of the ACA exchanges, the ACA may be non-sustainable and then the GOP will not be to blame. What then will we have for a health care system? Local doctors who are part of Highland District Hospital’s Professional Services Corporation will no longer be part of the United Healthcare network because they say United’s reimbursement rates have not been increased in six years. The doctors say the rates have remained unchanged even after three years of negotiations, and that current rates are, on average, 12 percent lower than even Medicare rates as well as the rates paid by most other commercial health insurance carriers. Happy Thanksgiving to all!