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5 Ways Obamacare Will Fail

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By Sean Williams, The Motley Fool

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Whether you’re ready for it or not, the Patient Protection and Affordable Care Act, known collectively as Obamacare, is going to be fully implemented in less than nine months. The blatant rising costs of health care in this country, compounded by the successful implementation of socialized health care from our neighbors to the north, pre-empted President Obama and lawmakers to vote for change in 2010. Yesterday, in fact, I examined five ways that this bill will improve the scope of health care in this country.

However, not everyone is on board with the proposed changes set forth in this bill. In fact, the opposition has tried everything under the sun in order to get Obamacare repealed without any success.

Source: White House on Flickr. 

Today, I propose to turn the tables and examine five areas where Obamacare appears destined to fail.

1. Health insurers will keep most of their leverage.
If you recall, one of the key points I touched on yesterday where Obamacare is a boon for paying members is that it requires the insurance industry to spend at least 80% of its premium revenue on actual health services. This will cap the profit potential of insurers and is expected to cancel out unwarranted premium hikes under the PPACA.

Conversely, there’s little in the way of fines and regulations that will ultimately stop health insurers from raising their premiums or from shocking current members with huge premium hikes in advance of the full implementation of the PPACA in 2014. Obamacare was expected to take the power of premium pricing away from health insurers and put it into the hands of consumers in a competitive marketplace, but it appears it will be more of the same even after the bill is put into action.

A perfect case in point is the complete 180 that the Centers for Medicare and Medicaid Services, or CMS, pulled on Medicare Advantage providers last week. In February, insurers like Humana and Universal American that provide Medicare Advantage — a broader-care coverage plan for seniors that involves fewer out-of-pocket costs — were informed that their Medicare reimbursement rates would drop 2.3%. Following weeks of rigorous lobbying to lawmakers, the CMS reversed its decision from a 2.3% reduction in reimbursements to a 3.3% increase, claiming that it changed the scope by which it expected doctor pay to fall as its reasoning. In essence, by complaining and lobbying, the insurance industry orchestrated itself a nice raise and completely debunked the premise of Obamacare, which is to reduce the reliance of private insurers on the governments’ wallet.

2. Premiums will continue to rise.
The entire premise of creating the PPACA was to avert what seemed like an exponential growth in health-care costs due to high hospitalization and prescription drug costs. However, it appears that the usually conservative Society of Actuaries believes otherwise.

The SOA released a report (link opens PDF) two …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Health-Benefits Providers Soar on Medicare Advantage Reversal

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By Sean Williams, The Motley Fool

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Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of health–benefits providers Universal American and Humana shot out of the gate like a rocket this morning, rising as much as 12% and 10%, respectively, after the Centers for Medicare and Medicaid Services, or CMS, reversed its previously announced decision to reduce Medicare Advantage reimbursement rates.

So what: In February, insurers that offer Medicare Advantage — a supplemental health–benefits plan targeted at seniors that’s more encompassing than Medicare and often allows for fewer out-of-pocket costs, but is also more expensive — were informed by the CMS that their reimbursement rates would drop for 2013. This sent Humana and Universal American, the two companies that derive 63.5% and 75% of their business from Medicare Advantage, respectively, down swiftly. However, yesterday the CMS reversed its decision on the premise that Congress would keep doctor pay consistent, without a major reduction. The move, on top of heavy lobbying by the insurance industry, allowed the CMS to recommend a 3.3% increase in reimbursement rates as opposed to the 2.3% decrease proposed in February.

Now what: As I stated earlier today, this is a big kick in the shin for Obamacare, which was drafted in order to keep private insurance from relying on the government for higher reimbursement rates. In addition, these insurers collectively used their lobbying power and the potential threat of benefit cuts and fewer provider network choices as the impetus to get what they wanted: a reimbursement rate hike. When all is said and done, it appears the insurers still seem to have plenty of clout in the health care industry — Obamacare or not!

Craving more input? Start by adding Universal American and Humana to your free and personalized watchlist so you can keep up on the latest news with these companies.

While you can certainly make huge gains in insurers like Humana and Universal American, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool’s free report “3 Stocks That Will Help You Retire Rich” names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Health-Benefits Providers Soar on Medicare Advantage Reversal originally appeared on Fool.com.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
Try any of our Foolish …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

The Insurance Industry Shows Obamacare Who's Boss

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By Sean Williams, The Motley Fool

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The Patient Protection and Affordable Care Act, also known loosely as Obamacare, was passed in 2010 to completely reform our current health-care system. The majority of those reforms were targeted at minimizing the rising costs of health care, requiring insurance companies to accept patients with pre-existing conditions, and protecting our hospitals and citizens by giving them access to broader forms of health coverage.

Part of those reforms — as we found out in February through a statement released by the Centers for Medicare and Medicaid Services, or CMS — included what was expected to a mid-single-digit drop in reimbursements for insurers who provided Medicare Advantage plans.

Medicare Advantage plans are more expensive than traditional Medicare plans, but they offer significantly better coverage — including vision care — and often allow for lower out-of-pocket costs, making them the perfect solution for more than 13 million seniors around the country.

There was serious concern from the get-go for insurers like Humana , Universal American , UnitedHealth Group and Health Net  — which generate 63.5%, 75%, 25%, and 25%, respectively, of their revenue from Medicare Advantage plans. These insurers made it clear that if these rates were to continue into 2014 they would simply reduce the amount of benefits offered and shrink the overall scope of the provider network.

The idea of higher premiums and fewer benefits didn’t sit too well with Congressional lawmakers, insurers, or insurance advocacy groups, which took to aggressive lobbying since the decision was announced in February. Last night, that lobbying turned out to be wholly worthwhile.

As a warning shot aimed directly across the bow of Obamacare, the insurers operating in the Medicare Advantage industry were informed by the CMS on Monday that it had decided to reverse its original recommendation of a 2.3% reimbursement cut in 2013 in favor of a 3.3% increase in the rate of reimbursement!

The reversal decision came about after the assumption was made that Congress would keep payment rates to doctors from falling next year, which is in contrast to the reduction in pay rate that had been factored into the February assessment. It also acts against the premise of the PPACA, which is to wean private insurers from relying on government aid for certain health care plans, including Medicare Advantage.

The bigger story here appears to be the kick in the shin that Obamacare just took at the hands of the insurance industry. By exerting its lobbying power — hinting at the possibility of reducing benefits for 13 million-plus seniors in 2014 — and getting some 160 lawmakers to write letters to persuade the CMS to change its opinion, the insurance industry effectively dictated itself a raise.

From an investment standpoint, insurers like Humana and Universal American — which have significantly more revenue and profit exposure to Medicare Advantage than anything else in the product portfolio — should benefit the most. UnitedHealth Group and Health Net should benefit as well, although their …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Universal American Corp. to Present at the Barclays Capital Global Healthcare Conference on Wednesda

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By Business Wirevia The Motley Fool

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Universal American Corp. to Present at the Barclays Capital Global Healthcare Conference on Wednesday, March 13 th

WHITE PLAINS, N.Y.–(BUSINESS WIRE)– Universal American Corp. (NYS: UAM) announced today that its Chairman & CEO, Richard Barasch will present at the Barclays Capital Global Healthcare Conference on Wednesday, March 13, 2013 at 10:15 am Eastern Time at the Loews Miami Beach Hotel, in Miami Beach, FL. Mr. Barasch had previously been scheduled to present on March 14th.

The presentation will be simultaneously webcast over the Internet via the Investor Relations section of the Company’s website at www.UniversalAmerican.com. A replay of the presentation will be available on the Investor Relations section of the Company’s website for approximately one month following the presentation.

About Universal American Corp.

Universal American (NYS: UAM) , through our family of healthcare companies, provides health benefits to people covered by Medicare and/or Medicaid. We are dedicated to working collaboratively with healthcare professionals in order to improve the health and well-being of those we serve and reduce healthcare costs. For more information on Universal American, please visit our website at www.UniversalAmerican.com.

Universal American Corp.
Robert A. Waegelein
President &
Chief Financial Officer (914) 934-8820
or
INVESTOR RELATIONS COUNSEL:
The Equity Group Inc.
www.theequitygroup.com
Fred Buonocore (212) 836-9607
Linda Latman (212) 836-9609

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The article Universal American Corp. to Present at the Barclays Capital Global Healthcare Conference on Wednesday, March 13th originally appeared on Fool.com.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Can Health Insurance Still Profit From Baby Boomers?

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By Brandy Betz, The Motley Fool

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The baby boomers are coming, meaning tens of millions of seniors will become eligible for Medicare benefits in coming years. Already a huge part of overall health-care costs, Medicare accounted for 21% of national health-care spending in 2012 and 15% of the federal budget. The government-sponsored health insurance began in the mid-1960s but has since expanded to include contracted plans from private companies, called Medicare Advantage. Insurers have flocked to the market, lured by the promise of profits from a growing senior population. But new dangers lurk around the corner.

The annual increase in Medicare spending per beneficiary has slowed as Affordable Care Act cuts begin slicing away at reimbursements tied to the program. And further cuts are pending that could affect leading Medicare players including UnitedHealth , Humana , and Universal American .

Private players
The majority of Medicare members belong to the government plans. These plans, which receive funding primarily through payroll tax pay-ins and general revenues, cover hospital care and doctor visits. The government compensates health-care providers directly for services.

But about 25% of Medicare patients belong to Medicare Advantage plans that private insurers manage on behalf of the government. The plans still receive funding from general revenues, but beneficiary premium payments play an enhanced role.

Medicare Advantage has become a priority for several leading insurers, accounting for 65% of Humana’s overall revenues last year and 75% of Universal American’s revenues. United Healthcare has the most Advantage members. But the company’s also less dependent as its broader Medicare & Retirement segment only accounted for 35% of revenues. Cigna spent $3.8 billion to acquire HealthSpring, which had over 1 million members in Advantage and prescription drug plans, or Medicare Part D.

What’s the appeal? According to a Reuters article, Advantage beneficiaries bring in about three times as much revenue as patients enrolled in standard commercial insurance. The Advantage plans also offer profit margins of 3 to 5%.

Unwelcome news last month, however, caused insurance shares to plummet.

Dis-Advantage?
Medicare Advantage insurers receive set payments per beneficiary from the government, which is then paid out to health-care providers. The payments have historically been 14% higher than the costs for government-administrated Medicare, but that gap has narrowed since the 2010 passing of the Affordable Care Act and further cuts are around the corner.

In mid-February, the Centers for Medicare & Medicaid Services proposed (PDF link) a cut to reimbursements received by private insurers for Medicare Advantage plans. Industry trade group American’s Health Insurance Plans estimates a resulting pay cut to plans of 7% to 8%,  which could equal $11 billion in losses for the Advantage providers. Humana indicated in a regulatory filing that the company would suffer a “mid-single-digit decline” in rates if the CMS figure held true.

The final rate-cut decision won’t appear until April 1. But if the suggested price sticks, some insurers may try to reduce their reliance on Advantage plans. CRT Capital Group analyst Sheryl Skolnick suggested market leader …read more
Source: FULL ARTICLE at DailyFinance