A key state’s Obamacare markets are facing a nightmare scenario

Nevada’s Division of Insurance said Monday that Anthem, the largest provider of Blue Cross Blue Shield plans in the country, would pull out of the state’s 2018 individual insurance exchanges under the Affordable Care Act.

Anthem will no longer offer plans in the three counties in which it was planning to participate next year. The insurer had already announced in July plans to exit 14 rural counties in Nevada.

The newest round of departures in Clark, Washoe, and Nye counties will not leave additional Nevadans without an option on the Obamacare exchange for 2018. (The earlier exits have left those 14 counties with no options on the Obamacare marketplace next year.)

“While the Division is disappointed in Anthem’s latest decision regarding its withdrawals, we believed that it was in the interest of the Nevada public to let consumers know about the Anthem decision as soon as possible,” Barbara Richardson, Nevada’s insurance commissioner, said in a statement.  “The Division is continuing to work with our state partners on attracting an insurance carrier to serve the 14 bare counties and to support the stability of the market for those insurance carriers who remain.”

Richardson also cited rising costs and uncertainty surrounding the Trump administration’s decision regarding key payments to insurers, known as cost-sharing reduction (CSR) payments, as reasons for Anthem’s exit.

“Based on the rate submissions the Division of Insurance received from Anthem, they proposed an average rate increase of 62%,” Richardson said. “This proposed rate increase did not reflect the potential elimination of payments to insurance carriers for Cost Share Reductions (CSRs). Loss of the Cost Sharing Reduction payments has the potential to increase further rates in the Nevada market.”

In a statement, Anthem pointed to enrollment and policy uncertainty over CSRs and the possibility the Trump administration stops enforcing the penalty for not buying insurance as reasons to leave the state.

“Today, planning and pricing for ACA-compliant health plans has become increasingly difficult due to a shrinking and deteriorating individual market, as well as continual changes and uncertainty in federal operations, rules and guidance, including cost sharing reduction subsidies and the restoration of taxes on fully insured coverage,” the statement said.

Insurers are facing an end of August deadline to lock in rates for most states next year, and contracts for 2018 exchange offerings must be locked in by the end of September.

Nevada is perhaps worst off of all states in terms of outlook for Obamacare’s future. Wisconsin, Ohio, and Indiana each have a single county without an insurer, but the widespread blank spots for Nevada require a more large-scale fix.

Health policy experts have described counties with no insurers described as the “worst-case scenario” for the Obamacare markets. There is no back-up plan for empty counties, so if the state government can’t convince another insurer to step in, anyone with coverage through those exchanges would likely go without it in 2018.

Anthem’s moves come despite relative support from Republican Gov. Brain Sandoval for the exchanges and for more people getting covered through Obamacare. Sandoval was a staunch opponent of every proposal congressional Republicans put forward to repeal and replace Obamacare.

Perhaps most importantly, the future of Nevada’s Obamacare market could also become a major sticking point during GOP Sen. Dean Heller’s re-election bid in 2018. Democrats have identified Heller’s seat as a possible pick up and given the map for the midterm elections, it could be one of the most hotly contested races next year.



WideCells raises £650,000 as stem cells insurance plan gains momentum

Stem cell storage specialist WideCells Group PLC (LON:WDC) has raised £649,000 through a private placing to speed up development of its three main divisions, CellPlan, WideCells and WideAcademy.

A portion of the funds will also be used to develop a Client Relationship Management (CRM) System for use across all three of its divisions.

CellPlan, Widecell’s stem cell insurance product is ahead of management expectations and has received applications from numerous cord blood banks in respect to offering CellPlan to their clients.

These banks together store over 175,000 stem cell samples and Widecells is now carrying out quality assessments.

A new stem cell storage facility at the Institute of Stem Cell Technology at the University of Manchester Innovation Centre (UMIC), remains on track to become operational this quarter, while a contract research facility will now also be added.

WideAcademy, meanwhile, will receive funding to support initiatives developed by Alan Greenberg, the former Director of Education at Apple, who recently joined as a non-executive with the aim to establish it as high-profile resource for both healthcare professionals and families.

João Andrade, Widecells chief executive, said the new funds would enable it to expedite both  market penetration and the establishment of  new revenue streams.

“Positively, the board’s participation in the Placing aligns them closely with our shareholder base and incentivises them to successfully execute on these new plans. Five board members including Andrade have applied for 160,000 shares.

” CellPlan is receiving a fantastic reception and the level of interest from storage facilities is beyond our original expectations.  In terms of WideCells, thanks to a contract to conduct research at our Institute of Stem Cell Technology, we are already generating revenues ahead of our original plans.  Therefore, we have allocated some funds to capitalise and grow our presence in this market,” he said.

“Finally, Alan Greenberg has presented us with an opportunity to establish WideAcademy as a go-to digital resource for healthcare professionals and families who want to find out more about the US$100bn stem cell industry.

“We plan to build an App, and collaborate with leading digital influencers who share our vision of making the cutting edge more accessible.”

The new placing shares were issued at 12p.




Direct Line’s soaring profits, dividends, and the real reason you’re paying all-time-high motor insurance premiums

While motorists grapple with all-time-high premiums, Direct Line was the toast of the City having turned in a bravura set of results that sent the shares soaring skyward.

It comes a couple of weeks after I penned an attack on the insurance industry for trying to pin the blame for the record costs of insuring a car on the cost of compensating accident victims such as myself.

I ventured to suggest that the real reason premiums are rising is, instead, down to the industry’s desire for greater profits, and a lack of competition in the market to keep them down.

Direct Line’s results, which show a 9.5 per cent increase in operating profits to £354.2m, add weight to my argument.

First the background. The industry screamed blue murder following the Government’s decision to tweak the “Ogden rate”, which is used to calculate what is paid to compensate people for what are often awful injuries, in victims’ favour. Bear in mind, we aren’t all the fake whiplash claimants that insurers would like you to believe we are. Some of us are grappling with serious disabilities.

The Association of British Insurers took aim at the decision when its own figures revealed that motor insurance premiums have risen by 11 per cent in the last year.

But here’s what Direct Line had to say on the subject in its results statement: “Detailed case reviews conducted in Q2 (the second quarter of the year) of the additional costs arising from the lowering of the Ogden discount rate indicated a lower than expected increase to claims costs. This has resulted in a reserve release of £49m, leading to a total prior-year reserve release of £174.6m in the first half of 2017.”

In other words, we’re not taking the hit we thought we would from paying out a bit more to compensate paraplegics, amputees, people in constant pain (such as myself). So we’re kicking £49m extra over to our shareholders.

Here are some more figures from its statement that you might like to consider: Direct Line’s motor insurance loss ratio improved from 84.6 per cent in the first half of 2016 to 81.7 per cent in the first half of 2017. What that means is that claims are reducing as a proportion of the premiums it takes in. As a result, it’s making more money. Happy days for Direct Line shareholders!

At this point, I should stress that this piece should not be read as an attack on Direct Line. In fact, it is a company that has (in the past) served as a welcome, and disruptive, market entrant that enhanced competition.

My argument a couple of weeks ago was rather that, despite Direct Line’s past activities, the insurance market is not competitive enough to keep prices down (and that the competition authorities and/or the Financial Conduct Authority should investigate as a result).

Hence you paying through the nose for your insurance.

But you don’t just have to take my word for it. I based my original conclusions on a study by city consultancy Capital Economics. It found that while there are a lot of brands under which insurance companies sell their product, the actual number of underwriters, which control pricing, is quite small. There are just nine big ones.

On the back of its results, Direct Line has increased its interim dividend to shareholders by a staggering 38.8 per cent.  You read that right: The dividend increased by 38.8 per cent.

Remember that number when you get your renewal letter.



Making retirement lemonade from health insurance lemons

Whether you believe health care is a right or a privilege, you can’t deny that staying well is gobbling up more and more household cash.

And making it to age 65 when Medicare kicks in is not exactly a full-exhale moment.

For a 65-year-old couple today, lifetime out-of-pocket health-care expenses in retirement — including Medicare premiums, supplemental insurance and dental coverage — is going to eat up more than $320,000 in today’s dollars, according to HealthView Services, a software firm specializing in health-care cost projections.

Baked into that eye-opening sum is HealthView’s expectation that retiree health-care expenses will rise more than 5 percent annually, which is more than double the current rate of broad consumer inflation.

“The HSA is the best tax-saving tool. Money goes in pretax and comes out pretax. There’s          nothing else like it.”-David Hays, president, Comprehensive Financial Consultants

That means health-care costs are going to consume an ever-bigger portion of Social Security benefits. HealthView estimates that a 66-year-old couple today with an average Social Security benefit has out-of-pocket health-care costs that eat up 40 percent of their retirement benefit. By age 85, those medical costs could total 71 percent of their Social Security check.

Annual Projected Costs vs. Social Security COLAs (Avg. 66 Year Old Couple*)

Annual Health Care Costs
Social Security
Annual Difference
Percent of Social Security Dedicated to Health Care Costs
70 $14,554 $35,946 $21,392 40%
75 $20,058 $40,869 $20,811 49%
80 $27,503 $46,464 $18,961 59%
85 $37,293 $52,828 $15,535 71%
87 $42,148 $55,610 $13,463 76%
Source: HealthView Services

With that outlook, a health savings account paired with a high-deductible health plan that lowers premiums is worth considering. Sure, it’s frustrating that the state of health insurance has spawned high-deductible health plans and HSAs, effectively pushing more out-of-pocket costs onto consumers in return for the carrot of a premium that Mercer says is about 30 percent lower than a traditional standard policy.

Yet what makes for somewhat less-than-platinum health insurance actually shines brightly as a retirement savings strategy. A 55-year-old couple today can build a tax-free retirement stash worth more than $175,000 at age 70 by maxing out on HSA contributions and earning a 5 percent annualized rate of return. Yes, tax-free.

Money you deposit in your HSA account is made with pretax income, mimicking the upfront tax break earned on contributions to traditional 401(k)s. The money grows tax-deferred while it remains in the account, and distributions used to pay for health expenses are tax-free.

“The HSA is the best tax-saving tool,” said David Hays, president of Comprehensive Financial Consultants in Bloomington, Indiana. “Money goes in pretax and comes out pretax. There’s nothing else like it.”

HSAs as a retirement strategy

Here’s a cheat sheet for converting your health insurance to a retirement savings plan:

Self-fund current medical expenses

Using an HSA for retirement makes sense if you can cover current medical expenses from existing savings or cash flow. That means carving out a significant chunk of an emergency fund for potential out-of-pocket costs tied to using an HSA. You can save in an HSA only if you have a high-deductible health-care policy.

This year, that means an individual plan with a deductible of at least $1,300 and a family plan with a deductible of at least $2,600. The annual out-of-pocket exposure is $6,550 for an individual this year and $13,100 for family coverage.

Max out your HSA contribution

This year, individuals can contribute up to $3,400 and couples can contribute $6,750. If you’re at least 55, you can make an additional $1,000 “catch up” contribution. There is no income limit; anyone with a high-deductible health-care policy can open an HSA. (Note: Some employers contribute to employee HSA accounts; the combined value of contributions you and your employer make can’t exceed the aforementioned limits.)

Invest for the long-term

Most HSA plans will plunk your money into a bank account. “If this is money you want to grow for 20 or 30 years, you don’t want it just sitting in a bank account,” said Hays.

“You don’t want to take money from a retirement account today and then use it for current medical expenses”-Skip Johnson, Great Waters Financial

If you’re not thrilled with the stock and bond fund options through the plan offered at work, you can roll over your contributions to another HSA administrator. Use the advanced search at HSA Search to find plans that offer mutual funds, and then drill down to see if the lineup includes low-cost index funds.

Jump-start your HSA savings with a onetime tax-free IRA rollover

You are allowed to make a one-time transfer of money from an individual retirement account into your HSA, up to the annual contribution limit for the year you make this move. (For 2017, that is $3,400 for individuals and $6,750 for couples, plus $1,000 if you’re at least 55.) This is essentially a get-out-of-tax-jail-free move, as you can move money in a traditional IRA into a HSA where it can be used tax-free for medical expenses.

This only makes sense if you are truly committed to saving in the HSA for retirement. “You don’t want to take money from a retirement account today and then use it for current medical expenses,” said Skip Johnson, an advisor at Great Waters Financial in Minneapolis. “Only do this if the money will stay growing in your HSA for retirement.”

Save all your medical receipts

Johnson, who uses a high-deductible plan and HSA for his family of five, says his “aha” moment was when he learned that you can take a tax-free withdrawal at any time, for any purpose — health care, a vacation — as long as it can be validated as reimbursement of past medical expenses.

“You just need the documentation to prove you are reimbursing yourself for a medical expense you paid for, whether it was last year or 20 years ago,” said Johnson.



Pennsylvania Insurance Commissioner Urges Consumers to Review Their Auto Insurance

The proliferation of usage-based insurance options, recent changes in driving behavior and more available transportation options are reasons Insurance Commissioner Teresa Miller is urging Pennsylvania drivers to review their auto insurance, according to a press release issued by the Pennsylvania Department of Insurance.

“People working from home, cities establishing bikeways, and the availability of transportation network companies (TNCs) such as Uber and Lyft, are reasons some people are driving less and why they may be able to get the coverage they need for less money,” Commissioner Miller said in the release.

Miller also noted over time, families’ driving patterns change. A family member may retire and no longer be commuting to work or may change jobs and work closer to – or from – home. Additionally, a dependent child may move away to college, leaving their vehicle at home.

“I would advise consumers to speak with their insurance professional about any household or driving habits that may have changed to see if and how their premiums could be reduced,” Miller said in the release.

Usage-based insurance (UBI) has emerged as an option in which drivers’ premiums depend in part on driving habits. UBI works by monitoring driving habits through an app or a device that plugs into the vehicle. According to the National Association of Insurance Commissioners (NAIC), driving elements monitored include miles driven, time of day, where the vehicle is driven, rapid acceleration, hard breaking, hard cornering and air bag deployment. After these elements are taken into consideration, drivers’ premiums could be lowered based on noted driving patterns.

“In Pennsylvania, if you opt into a UBI program, your rates cannot go up solely because of information gathered by a UBI device,” Miller explained in the release.

However, if consumers are receiving a discount on auto insurance premiums because of opting into the UBI program, information gathered through a UBI-monitoring device could result in this discount being reduced or dropped, the release added. Rates can also rise for reasons unrelated to a UBI program. Commissioner Miller said consumers should discuss UBI with their insurance professional before deciding whether to install a device.