If you're looking for cheaper health insurance, a whole host of new options will hit the market starting Tuesday.
But buyer beware!
If you get sick, the new plans – known as short-term, limited duration insurance — may not pay for the medical care you need.
"These are a niche product, always have been," says Doug Badger, a visiting fellow at the conservative Heritage Foundation in Washington, and a senior fellow with the Galen Institute. "It's simply another choice for consumers that for many is more affordable than the other products available," he says.
Short-term health insurance isn't entirely new. But the Obama Administration issued regulations that limited them to just three months, and they couldn't be renewed.
The Trump Administration has changed that. Now people in some states will be able to buy policies that last a year, and consumers can renew them twice, for a total of three years' coverage.
The administration says that Affordable Care Act insurance is too expensive for some people and this provides people a way to buy a less expensive health insurance policy.
"They give people an additional option. Instead of remaining uninsured, they have a product that makes sense for them, a product that they can afford," Badger says. "It is something that in my view ought to be available to them."
But if you're considering one of these plans there's a few things to keep in mind. Short-term policies are regulated by the states, so they don't have to comply with the consumer protections laid out in the Affordable Care Act. This means insurers can refuse to offer these policies to people with pre-existing health problems, or charge people more who are likely to need medications and health care.
They also don't have to cover all the of the 10 essential health benefits that must be included in Affordable Care Act policies. Those benefits include maternity coverage and mental health care.
The average monthly premium for a benchmark Affordable Care Act policy was $481 this year, according to the Kaiser Family Foundation. But most people don't pay that much. Eighty-three percent of people who bought a plan during the open-enrollment period for 2018 qualified for subsidies from the government to help lower that cost.
You can find out what an ACA plan would cost, and if you qualify for a subsidy, by going to HealthCare.gov.
For those who don't qualify for subsidies, Badger says these short-term plans could help them.
But Allison K. Hoffman, a professor at the University of Pennsylvania Law School, says the plans aren't the solution to the problem of high priced insurance.
"The way that these plans answer that problem is saying, 'Well, we'll give you an alternative but that alternative is coverage that people call junk coverage or skinny coverage,' " she says. "So people have something called health insurance but it doesn't necessarily pay for all of their health needs."
Depending where you live, short-term plans vary widely. Massachusetts and Rhode Island, for example, require extensive coverage even for short-term policies. Maryland and Vermont passed laws to keep them limited in duration. Other states, like California and New York, effectively don't allow them at all.
But in some states, the options are plentiful. If you're considering one, be sure you understand what's covered, Hoffman says.
In Virginia, for example, short term plans are available for less than $70 a month, with a $5,000 deductible. One policy, offered by Stamford, Conn.-based IHC Group on the web site eHealthInsurance.com, doesn't cover prescription drugs unless you're inpatient in a hospital, and it doesn't cover prenatal care, mental health care or annual physicals.
UnitedHealthCare says it plans to offer short-term plans in several states. The company's web site shows policies that range from one with a $12,500 annual deductible for less than $80 a month to one with a $1,000 deductible for about $250 a month. The policies don't cover prescription drugs and only pay about 60 percent of the cost of hospital visits after the deductible and co-payment. And patients may have to get a physical to qualify at all.
A report by the National Association of Insurance Commissioners shows that short-term policies paid out an average 55 percent of their premiums in actual health care last year. Under the Affordable Care Act, insurance companies are required to spend 80 to 85 percent of their premiums on health care or refund money to their customers.
Aetna said it doesn't plan to offer short-term policies and four other major health insurers didn't respond to inquiries from NPR.
Hoffman worries that people who have become accustomed to the kind of coverage required under the ACA will be surprised when their short term plans leave them with big unpaid bills if they have an accident or become sick.
Still, President Trump and Health and Human Services Secretary Alex Azar say the whole point of expanding access to short-term insurance is to give people more choice, including the choice to buy insurance with few benefits.
HHS estimates that about 600,000 people will buy short-term policies next year and as many as 1.6 million could own them after five years.
The Congressional Budget Office, the nonpartisan research office that estimates the budget effects of policy proposals, gives a larger figure, estimating that about 2 million mostly healthy people will buy short-term plans. This could have the effect of driving premiums slightly higher on the ACA exchanges, because healthier people will leave the market, according to the CBO.
One of the nation’s largest dialysis providers will pay $270 million to settle a whistleblower’s allegation that it helped Medicare Advantage insurance plans cheat the government for several years.
The settlement by HealthCare Partners Holdings LLC, part of giant dialysis company DaVita Inc., is believed to be the largest to date involving allegations that some Medicare Advantage plans exaggerate how sick their patients are to inflate government payments. DaVita, which is headquartered in El Segundo, Calif., did not admit fault.
“This settlement demonstrates our tireless commitment to rooting out fraud that drains too many taxpayer dollars from public health programs like Medicare,” said U.S. Attorney Nick Hanna in announcing the settlement Monday.
Medicare Advantage plans, which now enroll more than 1 in 3 seniors nationwide, have faced growing government scrutiny in recent years over their billing practices. At least a half-dozen whistleblowers have filed lawsuits accusing the insurers of boosting payments by overstating how sick patients are. In May 2017, two Florida Medicare Advantage insurers agreed to pay nearly $32 million to settle a similar lawsuit.
The DaVita settlement cites improper medical coding by HealthCare Partners from early 2007 through the end of 2014. The company, according to the settlement agreement, submitted “unsupported” diagnostic codes that allowed the health plans to receive higher payments than they were due. Officials did not identify the health plans that overcharged as a result.
One such “unsupported” code was for a spinal condition known as spinal enthesopathy that was improperly diagnosed in patients in Florida, Nevada and California from Nov. 1, 2011, to Dec. 31, 2014, according to the settlement. The agreement did not say how much health plans took in from the unsupported codes.
The company also contracted with a Nevada firm from 2010 through January 2016 that sent health care providers to visit patients in their homes, a controversial practice that critics have long held is done largely to inflate Medicare payments. These house calls also generated “unsupported or undocumented” diagnostic codes, according to the settlement.
Officials said that DaVita disclosed the practices to the government. It acquired HealthCare Partners, a large California-based doctors’ group, in 2012. They said the government agreed to a “favorable resolution” of the allegations payment because of the self-disclosure.
In a statement, DaVita said the settlement “reflects close cooperation with the government to address practices largely originating with HealthCare Partners.” DaVita said the settlement will be paid with escrow funds set aside by the former owners.
“This case involved illegal conduct in which patients’ medical conditions were improperly reported and were not corrected after further review — all for the purpose of boosting the bottom line,” reads the government’s statement.
The settlement also resolves allegations made by whistleblower James Swoben that HealthCare Partners knew that many of the diagnostic codes were unsupported, but failed to report them. The company reported only cases in which it deserved higher reimbursement, while ignoring codes that would slash payments, a practice known as “one-way” chart reviews.
Swoben, a former employee of a company that did business with DaVita, will receive just over $10 million for the settlement of the “one-way” allegations, under the federal False Claims Act, which rewards whistleblowers who expose fraud.
KHN's coverage in California is supported in part by Blue Shield of California Foundation.
By Brenda Richardson August 30
Rebecka Snell, 65, says she knew that if she and her husband Vic Labson were to continue living in their 1960s ranch home in Lakewood, Colo., improvements would have to be made to create a safer and more enjoyable space.
Moving the washer and dryer from the walk-out basement to the main level was high on her wish list.
“It was not just going up and down stairs; it was carrying laundry baskets up and down the stairs,” Snell said.
She consulted with Barbara Barton, a master kitchen and bath designer and certified Living In Place professional in Littleton, Colo., who laid out a plan to provide a suitable and comfortable space.
To accommodate Snell, “we included the stackable washer and dryer hidden behind cabinet doors on the main level,” Barton said. “Then, we knew we needed to add better railings on the stairs going down to the basement. And for the family room, there was just one rail, and we added a second.”
For many older adults, there’s no place like their own home. The problem is that most of the nation’s housing is not designed to accommodate physical and cognitive challenges that come with aging.
Steep stairways, narrow hallways and other structural barriers can make an older home feel like an indoor obstacle course. A few universal design modifications can go a long way in helping residents of all ages live safely and comfortably in their homes.
Here are some home improvement ideas that might allow you to comfortably remain in your home rather than having to move elsewhere as you get older:
● Invest in smart-home products. Technology is a game-changer for remaining independent in your home and staying connected with others, says Erik Listou, co-founder of the Denver-based Living In Place Institute, which trains professionals in the housing and medical fields on accessibility and safety in the home. Sensors can keep a virtual eye on you and your home to improve comfort, security and energy efficiency. As you move around your home, the devices can report back to a caretaker or a loved one about your daily routine.
Voice-controlled personal assistant devices give you the ability to turn on or off household items such as lights, a TV or a thermostat. Moreover, with a push of a button, you can control connected-home systems around the house, including sprinklers, windows and locks.
Rebecka Snell installed a walk-in bathtub with grab bars in her bathroom. (Nick Cote/For The Washington Post) ● Fall-proof your home. The National Institute on Aging reports that six out of every 10 falls happen at home. By making a few modifications, you can increase your safety and comfort.
For starters, install handrails on both sides of a stairway to prevent nasty tumbles, being sure they extend beyond the top and bottom of stairs.
Modifying the front entryway so the surface from the exterior to the interior is level will reduce the risk of falling and make the transition from the outside to the inside easier.
“If the house has front steps, add a handrail on each side,” Listou said, noting that, ideally, you would reconfigure the entryway to have a sloping walkway rather than steps.
A door overhang at the main entrance can shield you from the elements and reduce the risk of slipping during inclement weather.
Eliminate slipping and tripping hazards indoors by removing floor mats and throw rugs. Choose floor coverings that are slip-resistant, durable for wheelchair or walker use and able to smoothly make the transition to adjacent rooms. If the budget allows, install a stair lift or elevator.
● Widen doorways. Narrow doorways are problematic for people of all ages, but especially for people with limited mobility. Make your doorways at least 36 inches wide instead of the standard 30 inches. Listou said if a resident or visitor is carrying groceries or using a walker or wheelchair, that’s the perfect size for navigating through a home easily. To make doors easy and safe to use, replace doorknobs with lever-type handles with end returns. These help prevent clothes from snagging on the knob or handle and keep hands from sliding off the end of a regular door lever handle.
● Create an accessible bathroom. Consider replacing your tub with a walk-in shower instead of one with a step-over threshold. Install sturdy grab bars at the entrance to the shower, inside the shower and by the toilet to provide stability and support. A taller toilet will aid in sitting and rising. Bidets or bidet toilet seat conversions can significantly improve hygiene.
Snell’s master bathroom had a jetted tub that occupied about a third of the room. “I didn’t want a tub in the bathroom, because I never used it,” she said. “I wanted to use the space for things that matter to me. If I could get in the tub, I couldn’t get out.”
The bathroom makeover was extensive, involving widening the doorway, adding luxury vinyl tile, which is softer on feet, a walk-in tub and a curbless shower with two grab bars. The shower wall was prepped with bracing for a future fold-down seat, and the toilet paper holder integrates a grab bar.
Rebecka Snell upgraded to her home to allow her and her husband to age in place. Some of the improvements include adding more handrails. (Nick Cote/For The Washington Post) Even a cramped powder room can be made more accessible. The door can be modified to a sliding door, and a pedestal sink will take up less floor space than a bulky vanity. Another option is to carve space out of an adjacent closet to expand the size of the bathroom.
● Modify the kitchen. Conveniences such as rollout shelves and a microwave oven at counter height can help you maintain independence in the kitchen. Ideally, you would have open space beneath the sink to provide wheelchair accessibility. An electric cooktop with controls on the front will eliminate the need to reach across hot burners. To avoid having to bend over, add seated work spaces for food preparation.
Snell’s revamped kitchen includes an induction cooktop, which offers the safety of no open flame. The control panel is operated by the touch of a finger. Pullout drawers provide easy access, and the dishwasher is raised six inches from the floor for easy access and less bending. Two ovens that are separate from the cooktop are raised to prevent leaning over. At the center of the kitchen, the island is convenient and accessible for meal preparation.
“What’s surprising is that the remodeling was seamless,” Snell said. “Everything seems so natural now. When I leave the house, and I don’t have these features elsewhere, I’m really grateful for what I have. I feel comfortable that I’m less likely to injure myself.”
● Aging in the right place. Some house designs might not be practical or cost-effective for aging in place. For example, Denver resident Larry Armstrong’s former home, a two-story, turn-of-the century Victorian, was not a good candidate for modification.
“It had high ceilings and winding staircases,” said Armstrong, 71, a certified Living In Place professional who works with remodelers and designers. “It would have been very difficult to adapt to live in place,” he said. “I had even looked at the possibility of putting an elevator in, but it would have damaged the integrity of the core of the home. You walk in and, all of sudden, there’s an elevator sticking out in the middle of the house.”
Instead of renovating, Armstrong and his wife came up with Plan B, moving to a three-bedroom, ranch-style bungalow. The home has a zero-step entry, but needed a few more modifications, especially in the master and guest bathrooms. They just have a few more tweaks to make.
“Living comfortably and living in place is not really an age issue,” Armstrong said. “It’s for the young mother with her arm full of groceries and pushing a stroller, the guy who blew out his knee while skiing and coming back from rehabbing. It’s for every one of us. We want to live comfortably wherever it is we are.”
It's not uncommon for those nearing retirement to become nervous about their nest egg, concerned it won't be sufficient. This has led some savers to pursue self-directed IRAs, an individual retirement account that you control with investments of your own choosing. These IRAs are often invested in real estate, private mortgages, precious metals and private company stock. But with the increasing appearance of bitcoin and other cryptocurrencies in these retirement accounts, the Securities and Exchange Commission has issued a new warning.
In its August 8 Investor Alert, the SEC warned that assets in traditional IRAs — stocks, bonds and mutual funds — generally fall under the agency's oversight, but that is not the case with self-directed IRAs, which lack transparency.
The SEC said there wasn't a single event that led the agency to issue the new warning, but Lori Schock, director of the SEC's Office of Investor Education and Advocacy, told CNBC, "Now that some self-directed IRAs include digital assets — cryptocurrencies, coins and tokens, such as those offered in so-called initial coin offerings — we think it is important to alert investors about the potential risks and fraud involved with these kinds of investments that may not be registered."
The SEC joins the Association of International Certified Professional Accountants, which also warned about this type of fraud in its recent report, Eye on Fraud, indicating that the types of investments permitted in a self-directed IRA can be ripe for elder abuse. A self-directed IRA's unique risks "include lack of disclosure and liquidity, as well the risk of fraud," according to the report.
A $100 billion market and 'a growing potential pool' for fraudsters Though the IRS requires that a self-directed IRA be set up by an authorized custodian, the custodians only hold and administer the assets. They don't validate the legitimacy of the investment, so there's a potential to be scammed. This situation is becoming more of an issue as boomers with significant wealth — much of it in retirement accounts — move into retirement, said Randal Wolverton, lead author of the report and a member of the AICPA's Forensic & Litigation Services Fraud Task Force. That "becomes a growing potential pool for fraudsters," he said. Scammers look for soft targets, such as those who are wealthy and incentivized to invest or exhibit signs of loneliness or diminished cognitive ability.
Mary Mohr, executive director of the Retirement Industry Trust Association — the trade association for banks and trust companies that administer self-directed IRAs — said her organization has been working with the North American Securities Administrators Association on antifraud initiatives since 2011. She said the total number of assets in organizations that are members of her trade group just crossed the $100 billion mark. "We're a fast-growing segment of the marketplace," she said.
Self-directed IRAs aren't new; they were created through the 1974 Employee Retirement Income Security Act. Mohr said these types of investment accounts hold appeal because some people are looking to diversify away from securities and mutual funds and use the full spectrum of what is allowable by the IRS. "They want to invest in what they know and what they feel they have control over." She said problems may arise because some IRA owners are under the illusion that the custodian conducts due diligence on investments, when self-directed IRAs are a do-it-yourself affair.
Mohr said to watch out when a promoter says an investment is IRS-approved, since the IRS doesn't approve any assets, nor do custodians. She said unsecured promissory notes are an area in which the most fraud occurs. If someone is promoting a promissory note that will pay 12 percent to 15 percent, it's possibly a scam, she said.
Wolverton said third-party scammers tend to promise returns that beat the existing market and tap into the fear of many retirees who are concerned they won't have enough money to sustain their lifestyle and lifespan in retirement. They're eager to multiply their nest egg.
"That's the impetus that a lot of our scoundrels are looking for when encouraging risky investments," he said. He added that fast-moving changes in the investment world, with cryptocurrencies like bitcoin, pose new and emerging threats. These types of currencies have a history of significant price fluctuations. A scammer is not responsible for the volatility, but may encourage quick actions to time the market swings to the detriment of the investors, Wolverton said.
Lisa A. K. Kirchenbauer, president of Omega Wealth Management in Arlington, Virginia, said that there is a danger in being defrauded by "shady companies" with self-directed IRAs. She said that the old adage, "if it's too good to be true, it probably is," applies here. Understanding the potential pitfalls are key. "This is not for your unsophisticated investor."
In addition to fraud, those considering a self-directed IRA need to be careful to ensure they don't violate any federal laws governing retirement accounts. Scott Bishop, head of financial planning for STA Wealth Management in Houston, said to be aware of promoters who claim it's possible to own your own business or vacation home with self-directed IRAs. Being personally involved with an investment could be a prohibited transaction that could disqualify your IRA, causing immediate taxation and/or penalties by the IRS, he said. Avoiding this situation of self-dealing can often be difficult when it comes to real estate transactions, Kirchenbauer said.
Nevertheless, Bishop said it is important to point out that there is the potential for self-directed IRAs to bring significant profits. "If you bought Facebook pre-IPO in your IRA, you'd be in great shape now."
5 ways to protect your investment when considering a self-directed IRA
Securities brokers are regulated by the Financial Industry Regulatory Authority, and their backgrounds can be checked here. Mohr said to do your research; not all custodians handle all types of assets, so it's important to understand their services as well as their fees. Bishop said it's important to find a custodian who is not being promoted by someone selling something. And "if you can't find a custodian who is willing to make the particular investment, view that investment as a red flag," he said.
Familiarize yourself with IRS rules and regulations. If considering a self-directed IRA, make sure to understand which types of investments are prohibited so you don't incur harmful tax consequences. Consulting with professional investment advisers can help head off this type of situation.
Wolverton said that investors should be suspicious of unverifiable biographies of managers or promoters. Ask questions about references and experience and determine whether the promoters are registered with the SEC, FINRA or state regulators. Request to see an offering memorandum and prospectus. Look over the financials.
Tom Anderson, Retirement Industry Trust Association president, said simply Googling the name of the person offering the investment can provide key background information, including whether there's been an arrest.
Read all materials pertaining to the investment. Bishop said it's key to closely review disclosure agreements that are part of any investment transaction or to ensure a financial, legal or tax expert does so. This will help you to better understand the expectations of return, liquidity issues, possibilities of loss and environmental liability, as well as the risk of a loss of principal if the investment goes belly up.
Helpful links If you suspect you're a victim of fraud, file a police report. It also helps to file a complaint with the FBI's Internet Crime Complaint Center. You can also contact the North American State Security Administrators to get information on your state enforcement contacts.
AICPA has a fraud resource center.
The Retirement Industry Trust Association's website also provides information on safeguarding investments.
At a glance, Medicare’s prescription drug program — also called Medicare Part D — looks like the perfect example of a successful public-private partnership.
Drug benefits are entirely provided by private insurance plans, with generous government subsidies. There are lots of plans to choose from. It’s a wildly popular voluntary program, with 73 percent of Medicare beneficiaries participating. Premiums have exhibited little to no growth since the program’s inception in 2006.
But the stability in the premiums belies much larger growth in the cost for taxpayers. In 2007, Part D cost taxpayers $46 billion. By 2016, the figure reached $79 billion, a 72 percent increase. It’s a surprising statistic for a program that is often praised for establishing a competitive insurance market that keeps costs low, and that is singled out as an example of the good that can come from strong competition in a private market.
Much of this increase is a result of growing enrollment — it has doubled in the past decade to 43 million — and higher drug prices. But there is also a subtle way in which the program’s structure promotes cost growth.
When enrollees’ drug costs are relatively low, plans pay a large share, typically about 75 percent. But when enrollees’ drug spending surpasses a certain catastrophic threshold — set at $5,000 in out-of-pocket spending in 2018 — 80 percent of drug costs shifts to a government program called reinsurance. This gives people in charge of private insurance plans an incentive to find ways to push enrollees into the catastrophic range, shifting the vast majority of drug costs off their books. For example, they could be less motivated to negotiate for lower drug prices for certain types of drugs if doing so would tend to keep more enrollees out of the catastrophic range.
Reinsurance spending, which is not reflected in premiums, has been rising rapidly.
“This harms the very competition that Part D was supposed to establish,” said Roger Feldman, an economist at the University of Minnesota. Consumers are naturally attracted to lower-premium plans, but choosing them increasingly shifts higher costs onto taxpayers if plans achieve those lower premiums in part by shifting more drug expenses onto the government’s books.
Subscribe to The Times Documenting this is a recent study by Mr. Feldman and Jeah Jung of Penn State University that was published in Health Services Research. The study found that the disconnect between premiums and reinsurance costs has increased over time. Additionally, insurance company plans exhibiting less of an effort to manage the use of high-cost drugs had higher reinsurance costs. This is consistent with incentives to encourage enrollees into the catastrophic range of spending.
The Medicare Payment Advisory Commission has been warning about this problem for several years in its annual reports to Congress. According to MedPAC, between 2010 and 2015, the number of enrollees entering the catastrophic drug cost range grew 50 percent, from 2.4 million to 3.6 million, now accounting for 8 percent of enrollees.
“It’s ironic for a program supposedly built on market principles,” said Mark Miller, a former MedPAC director. “You wouldn’t see this kind of thing in the commercial market.” For commercial market insurance products — such as those offered by employers or in the health insurance marketplaces — only about 1 percent of policyholders reach a catastrophic level of expenditures at which reinsurance kicks in. (Mr. Miller and I are co-authors of an editorial about Ms. Jung’s and Mr. Feldman’s study, which also appears in Health Services Research.)
Reinsurance is the fastest-growing component of Medicare’s drug program, expanding at an 18 percent annual rate between 2007 and 2016. In 2007, it accounted for 17 percent of government spending for Part D. In 2016 it was 44 percent.
The Affordable Care Act hastened this growth. The law requires pharmaceutical manufacturers to pay some of the cost of the drug benefit. (The Bipartisan Budget Act of 2018 further increased how much manufacturers must contribute.) For the purposes of reaching the catastrophic threshold and triggering reinsurance, these industry contributions count as out-of-pocket payments for enrollees, even though they are not.
That means enrollees don’t have to spend as much as they otherwise would to trigger the reinsurance program. Although this is of great benefit to enrollees, it also pushes up taxpayer liability for the program.
Changing the extent to which manufacturer’s contributions count as enrollee out-of-pocket spending is one potential reform of the program. Other solutions include increasing the liability of insurance company plans in the catastrophic range and decreasing the liability of taxpayers.
This would have the effect of bringing premiums more in line with program spending. Doing so would “return Part D to the market-based program it was intended to be,” Ms. Jung said. As it stands, there is a substantial divide between what Part D was billed as and what it actually is.
Austin Frakt is director of the Partnered Evidence-Based Policy Resource Center at the V.A. Boston Healthcare System; associate professor with Boston University’s School of Public Health; and adjunct associate professor with the Harvard T.H. Chan School of Public Health. He blogs at The Incidental Economist. @afrakt
A version of this article appears in print on Aug. 14, 2018, on Page B3 of the New York edition with the headline: The Large Hidden Costs Of Medicare’s Drug Program. Order Reprints | Today’s Paper | Subscribe