Idaho: Gov. Otter attempting the "BEWARE OF THE LEOPARD!" gambit

2018 MIDTERM ELECTION

Time: D H M S

“But the plans were on display…”
“On display? I eventually had to go down to the cellar to find them.”
“That’s the display department.”
“With a flashlight.”
“Ah, well, the lights had probably gone.”
“So had the stairs.”
“But look, you found the notice, didn’t you?”
“Yes,” said Arthur, “yes I did. It was on display in the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying ‘Beware of the Leopard.”

--Douglas Adams, The Hitchhiker's Guide to the Galaxy

Over a year and a half ago, I noticed that aside from the usual names being listed as insurance carriers offering individual market policies in various states (Humana, Molina, Blue Cross Blue Shield, etc), there was one other name which kept popping up over and over again: "Freedom Life":

As you can see, in a few cases they seem to go by an alias ("National Foundation" or "Enterprise"), but the wording of the filing letter is pretty much identical in every state...[in most states where they have filings] they're requesting the exact same 17.37% increase, and in [most states] they don't have a single person actually enrolled.

Question: How do you estimate how much you need to increase your rates if no one is even enrolled in your policies?

Bigger question: How do you operate a national health insurance carrier...with a grand total of 8 people enrolled in your policies? I assume that they have other divisions (ESI? Medicare Advantage? etc) which actually have a substantial amount of revenue, but this just seems weird to me.

It later developed that "Freedom Life" (sometimes operating under different names) can be found as officially filing to sell "ACA compliant policies" in over two dozen states...yet in every case, it's only a single Bronze policy being offered, and it's only "available" off-exchange only. I didn't bother checking but I'd be willing to be that this lone Bronze policy is only "available" in a single rating area in every state as well.

"Freedom Life" turns out to actually be a subsidiary of "USHealth Group, Inc.", which in turn is a subsidiary of Credit Suisse NEXT Investors, LLC...a branch of Credit Suisse Group AG. Yes, that's right: "Freedom Life" is actually owned by a Swiss-based financial services holding company.

It looks like "Freedom Life" actually specializes in non-ACA compliant "short-term" and "mini-meds". In other words, the very types of junk plans which the ACA was specifically intended to try and eliminate (or at least crack down on).

Furthermore, as noted by a commenter in another post of mine:

"Freedom Life sells a Bronze ACA compliant plan. It has a $7,150 deductible and costs $695/month for a 46 year old which is more than double what other ACA plans cost so they clearly don't want anyone to buy it. Since their website only shows their mini-med plans, it appears the only reason they offer it is so their sales agents can tell people how expensive Obamacare plans cost to help steer people into their cheaper mini-med plans."

In other words, these are basically phantom plans. They're technically available, but are so difficult to find (they're "listed" at the USHEALTH website, but they spend several paragraphs pretty much discouraging you from doing so before giving a phone number that you have to call to enroll in one of them) and enroll in that they're effectively ghosts. I don't know who the 1-2 people per state are who are "enrolled" in them but wouldn't be surprised to discover that they're Junior VPs of...Freedom Life itself.

This brings me back to Idaho. As I've written about several times, Idaho Governor "Butch" Otter is attempting to allow insurance carriers to sell non-ACA compliant "major" medical policies on the state's off-exchange individual market in direct violation of federal ACA regulations, which will no doubt stir up a swarm of legal action. There's still a few catches and requirements, at least...and the very first one is this:

...To sell these plans, insurers would have to:

  • Sell ACA-compliant plans on the Idaho health insurance marketplace (exchange). Idaho is one of just 17 states that run their own exchange;

...The first [bullet point] should weed out bottom-feeder fly-by-night scam-type companies, since none of them would be able to offer a policy up to the standards/requirements of the ACA exchanges in the first place.

Well, that was apparently a bit naive of me, because as David Anderson of Balloon-Juice pointed out today:

Insurers may be required to offer a single on-Exchange Silver and a single on-Exchange Gold plan but there is no requirement that they actually need to sell a policy. The rest of this post is a riff on Freedom Life’s system.

...If I was in charge of a company that wants to make money in the Idaho state plan market, I would design my on-Exchange offerings so that they would not sell. I would rent the narrowest legal network from a national rental network provider and offer to pay 500% of Medicare for my on-Exchange products. If the rental network asks for 700%, I’ll agree. We’ll fight over the pricing and network for the state underwritten products. I would then make the benefit structure as confusing as possible with $200 co-pays for PCP services and no cost sharing for ER visits. My goal would be to develop a Silver and Gold plan that no one intentionally buys.

That is the easiest loophole to exploit in Idaho.

"Beware of the Leopard" indeed.