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Euthanizing pets increasing as vet costs rise

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Ohio’s Montgomery County Animal Shelter raised money and used some of its own late last year to have this dog treated for smoke inhalation after one of its owners died in a house fire and her significant other couldn’t afford to treat the dog or pick him up. The shelter cared for the dog for a month.(Photo: Montgomery County Animal Shelter)

Dogs may be “man’s best friend,” but in a still-struggling economy with rising veterinary costs, more Americans are choosing to put their ailing pets to sleep rather than pay for expensive treatments, experts say.

At Montgomery County Animal Resource Center in Dayton, Ohio, the rate of people seeking to euthanize their pets because they can’t afford treatment is rising between 10% and 12% a year, says Director Mark Kumpf. And at The Pet Fund, which raises money for people who can’t afford pet care, calls requesting financial support have doubled, says Executive Director Karen Leslie.

Each year, 3 million to 4 million dogs and cats are euthanized in animal shelters, including about 2.7 million that are considered adoptable, according to the Humane Society of the United States. Though “economic euthanasia” isn’t tracked nationally, Kumpf, Leslie and some other pet experts say the cost of veterinary treatment has risen higher than many pet owners can afford and is contributing to an increase.

At the Thomas Beath Veterinary Clinic in Fredericksburg, Va., two-thirds of the pets put to sleep every week are euthanized for economic reasons, clinic owners say.

“I’ve never seen as many people lining up to turn over pets,” says Kumpf, former executive director of the National Animal Control Association. “It’s heart-wrenching to see so many people come through the door.”

Americans own 83.3 million dogs and 95.6 million cats, according to research out last fall from the American Pet Products Association and the Humane Society of the United States. These owners spent about $55.53 billion on these pets in 2013, about $2 billion more than in 2012.

Costs are rising because vets are paying more for rent, employees, medication and equipment. The standard of care has also increased as vets adopt advanced treatments such as MRIs and bone marrow transplants, says Dog Fancy magazine editor Ernie Slone. Sophisticated medical care for an ailing cat or dog can easily run into thousands of dollars.

In December, a dog with salmonella had to be euthanized at Thomas Beath because his owners waited 10 days to bring him in out of fear of the costs of treating him, says Beath co-owner Jeanette Allard. But by then, their only choice was to pay $1,000 daily at a specialty hospital, which they couldn’t afford, she says.

“It kills me because it’s an emergency, so we can’t help them,” says Allard, whose facility is a low-cost clinic. “Pets to many people are like family members. … If you feel that way about your pet, you’re going to be devastated.”

Turning pets over to animal shelters isn’t necessarily a better solution. Many shelters are under financial constraints themselves and, especially in rural areas with low rates of spaying and neutering, often have high kill rates. Local rescue groups, such as Lost Dog and Cat Rescue and 4Paws cat rescue in the Washington, D.C., area, move as many pets as they can from shelters into foster homes before they are put to sleep. But they, too, rely on donations to pay for medical care.

There are options for owners struggling to pay for vet care:

Crowd-sourcing. Owners have used crowd-sourcing sites such as Gofundme to raise money for pet medical care. One person found a stray dog that was hit by a car and raised $6,000 to treat the dog’s fractures on Gofundme. The dog, once named Crash, has a happy ending and a new name. Winston has starred in commercials for the Ohio shelter.

Non-profits. Groups including The Pet Fund and Best Friends Animal Society and some shelters including Kumpf’s will also help owners find ways to get help with bills. The Pet Fund, based in Sacramento, has volunteers around the country, and pet owners in every state are eligible for assistance.

Insurance. Pet insurance can help with treatment costs, but it can often be more expensive than the treatment. Trey Simpson, 26, says without the Trupanion pet insurance he bought for his basset hound, Hashbrown, he likely still wouldn’t have the pet today. But a 2011 Consumer Reports analysis of four policies concluded insurance was “rarely worth the price.” Setting money aside periodically for vet bills and getting annual checkups at a low-cost clinic may be better options.

Rescue groups take in all the pets they can, as they know how traumatic it is for people to have to give up their four-legged companions. Barbara Hutcherson, director of programs at Lost Dog and Cat Rescue in Arlington, Va., says pet owners sometimes just can’t “provide what that animal needs due to changes in their family finances or job changes that have caused them to have a tighter budget.”

“The saddest thing that I see in my e-mail inbox is probably when someone needs to give up an older pet that they have had for many years because the care has become so expensive,” she says.

Contributing: Jayne O’Donnell and Ana Christina Spies

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Exchanges open Tuesday: Here’s what to do

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By Jayne O’Donnell and Annika McGinnis, USA TODAY (Sept. 30, 2013)

Don’t wait. But don’t hurry, either.

That’s the best approach to the new health insurance exchanges that are scheduled to open for business Tuesday. Buying insurance is supposed to be easier than ever once several provisions of the Affordable Care Act take effect this fall. That doesn’t mean the process is easy or should be done speedily, however, experts say. That’s especially true if insurance shopping is new to you.

“Don’t be hurried in buying a plan,” says Bryce Williams, managing director of global benefits consulting firm Towers Watson Exchange Solutions. “There’s no rush.”

Williams likens it to buying the first car off an assembly line: It may be best to let the new exchanges — particularly the 31 run by the federal government — iron all the kinks out. Federal exchanges may not be ready, and there may be more and better information and “hand holding” available after a few weeks. Besides, your insurance won’t start until Jan. 1, 2014, whether you sign up now or in December.

If you’re one of the more than 45 million people who lack health insurance, you can begin the enrollment process Oct. 1, but you certainly don’t have to. The deadline to purchase (or face a penalty at tax time in 2015) is March 31, 2014.

Every state has people called navigators who received grants to help guide consumers through the process in an unbiased way. Insurance companies are also increasingly pitching their individual policies online and in stores, where agents are available to help you figure out what plan is right for you — but they obviously have a vested interest in your decision. A key benefit to the new online exchanges is the ability to easily compare different plans — as you might during online car shopping — without a pushy salesperson hovering.

Key steps in the process:

•Step one. Check out the options on your state’s exchange. Start at HealthCare.gov, the federal government’s portal, which will route you to your state or allow you to create an account if the feds are running your state’s insurance marketplace. Plug in details about where you live, what you earn and family size. If your income is low enough, you may be alerted that you’re eligible for Medicaid and told how to apply for that.

•Step two. Determine if you are eligible for financial help, which can come in the form of subsidies to offset the cost of premiums, co-payments or deductibles.

Anyone under age 65 participating in the new state exchanges can get tax credits if their incomes are between the poverty level and 400% of the poverty level. In 2014, that means families of four that make $24,000 to $94,000 per year could get subsidies. Those who make 250% or less of the poverty level can get even more financial help. The federal poverty level is now $11,490 for an individual and $23,550 for a family of four.

•Step three. Calculate what you’ve been spending for your uninsured health care, including prescription drugs, doctor visits and any emergency room or other hospital visits. Are there health concerns you’ve avoided addressing that are likely to get worse, like that sore knee or breathing condition? Medicines you should be taking but aren’t? Are there young athletes in the house?

•Step four. Spend time pondering what type of plan is right for you, based on how much you can afford to pay in premiums, co-payments and cost-sharing for procedures, as well as what your medical needs are likely to be next year.

Options are grouped into coverage levels that are coined bronze, silver, gold and platinum based on the percentage of out-of-pocket costs borne by the consumer. Bronze plans cover the lowest percentage of expenses — 60% — and have the lowest premiums. Silver plans cover 70%, gold pay 80% and platinum plans cover 90% of out-of-pocket costs. Even policies that appear affordable may not be if you have high deductibles, co-payments or cost-sharing for procedures.

Could you afford to pay 40% of last year’s medical bills — and almost everything out of pocket until a high deductible is met?

You need to consider other factors when deciding among plans. Williams recommends consumers stick with insurers that are “well entrenched” in their area; not one you’ve never heard of before.

Farzan Bharucha, a health care strategist for consulting firm Kurt Salmon, recommends calling providers you would consider if you had insurance and ask whether they will be accepting patients in the policies you’re considering.

“A fair number will say they are full,” says Bharucha, who advises physician groups and hospitals.

•Step five. Decide whether it even makes sense financially for you to buy insurance. For some people, paying the annual penalty, which starts at $95 or 1% of income for the first year, may be the cheaper move. (Unless, of course, your health takes a turn for the worse.) By 2016, however, the annual penalty will be $695 or 2.5% of income.

The exchange plans are set up so you will never have to pay more than 9.5% of your salary for insurance. But the new law certainly doesn’t mean coverage will be cheap.

“It’s still going to be expensive, particularly for low-income people,” says Andy Hyman, who directs the health care coverage team at the Robert Wood Johnson Foundation. “There is a financial burden, but it’s far less today than what it was.”

How the financial help works

Under the Affordable Care Act, there are two main types of subsidies to reduce insurance costs and out-of-pocket costs of medical care: tax credits and cost-sharing reductions. To lower your insurance costs, if eligible, you can get subsidies to help pay for plans obtained in the new state exchanges. You might also qualify to pay less out-of-pocket for co-payments, co-insurance (that share of procedure costs you have to pay) and deductibles.

Tax credits

The subsidy amount is based primarily on income and number of family members. The tax credit is calculated as the cost of a “benchmark” middle-range plan in your area minus your required payment, a set percentage of your family income. These benchmark plans are set as the second-lowest-cost “silver” plans for a person of your age living in your area. Depending on how much you make, you’ll be expected to pay between 2% and 9.5% of your income on monthly premiums. The difference between what you’re expected to pay and the cost of the premium is what the government will cover.

For example, Kaiser Family Foundation says a 40-year-old who makes $30,000 a year is expected to pay 8.37% of income in insurance, or $2,512 per year. In this person’s area, the estimated “benchmark” premium is $3,857 per year. So this person gets a tax credit of $3,857 minus $2,512, or $1,345, the foundation says.

These tax credits are “advanceable,” meaning that the savings are included in your monthly premiums. You pay lower costs up front, rather than having to get reimbursed later.

Cost-sharing subsidies

Health Savings Account-qualified health plans define a general maximum amount for out-of-pocket costs. Then, eligible people can get reductions in their own maximum out-of-pocket expenses, which range from one-third to two-thirds of this initial maximum, depending on income. Those with the lowest incomes — at or below 250% of the poverty level — can also get plans that cover a higher proportion of the cost of medical services.

Still murky? You’ll see how much you can get in savings after you fill out an application for the state exchanges starting Tuesday. But until then, you can estimate your potential savings with the Kaiser Family Foundation’s subsidy calculator. This calculator takes into account information about your income, family and tobacco use and gives you estimates of how much you might receive in subsidies and how much you might have to pay for premiums and out-of-pocket costs.

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Survey: Americans do not like to discuss finances

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By Annika McGinnis, USA TODAY (Nov. 17, 2013)

American families may not be saving enough for retirement but even worse, they’re not talking about it with each other, show the findings of a new study out Monday.

“Family & Retirement: The Elephant in the Room,” a representative survey of 5,400 adult Americans conducted by Merrill Lynch and consulting firm Age Wave in August shows 70% over the age of 25 have not had a discussion with their parents about retirement.

More than half — 56% — of parents over the age of 50 have not discussed key financial issues, including wills, health directives, inheritance plans or where they plan to retire, with their children.

Time is running short for Baby Boomers, now 47 to 67 years old. Even without health care complications, they’re worried about life after they stop working. One-third of people surveyed age 50 and older say they feel well prepared for retirement if everything goes as they expect.

Less than one in four surveyed over the age of 50 say they would be prepared financially if they or their spouse were forced to retire early due to health issues. But, according to the new study, a third of all people who retire early do so because of health problems.

“It will not be uncommon for people to live to 80, 90, 100 — unfortunately, our health span isn’t lined up with our life span,” Age Wave CEO Ken Dychtwald said.

Not discussing these emotionally delicate topics is preventing many Americans from facing the facts together as a family. More than 90% say they would not be prepared financially if an aging parent or close relative needed long-term care. And just 37% of people age 50 or older believe they’ll need long-term care before they die. The reality: 70% eventually will need the costly services, the new study says.

What’s already happening is that many Americans have boomerang children, adults who have moved back home or are financially dependent on their parents, at the same time as they’re being confronted with the financial pressures of their aging parents.

AARP expert Amy Goyer, 52, has spent her career advising people on retirement savings — but she hasn’t been able to save a penny for years. Her mother had a stroke decades ago, and her father’s Alzheimer’s prevented him from caring for her. Goyer moved across the country to live with and care for her elderly parents.

“I know I need to be saving, but it’s a dollar-and-cents thing that I haven’t been able to do,” Goyer laments. She’s not alone.

There’s no shortage of generosity. The past five years, 62% of Americans age 50 or older have given an average of almost $15,000 to family members — older and younger relatives, the new study shows.

Often, it’s parents giving to their adult children. More than two-thirds– 68% — of parents age 50 or older have provided some form of financial support to their adult children the past five years. Of those who know where the money went, 20% say it was to pay the mortgage or rent, 18% went to pay cell phone bills, 17% helped pay for a car, 15% contributed to health care expenses and 11% helped pay back student loans.

“Within families, if you work hard and take some lucky breaks, you may be the person who’s got a grandchild thinking of going to private college for four years — and it might be you paying for it,” Dychtwald said. “Someone [in our survey group] said ‘I was expected to support the college fund; now I am a college fund.”

In Granbury, Tex., Gene Berrier, 87, paid for not only his daughter’s college education, but also the college degrees of two grandchildren. Their father had been killed when they were children, and their mother couldn’t afford to send them to college.

“I’ve wondered a lot of times why I did it,” he said. “I guess eventually they became mine.”

Just as often, children shoulder the financial responsibilities of their parents. Nadia Allaudin, 37, has been financially helping her parents for nearly 20 years. The child of Pakistani immigrants and a father who abused her mother, the Merrill Lynch senior vice president spends about 25% of her income providing for her mother.

Allaudin started saving for retirement early, so her care-giving responsibilities mostly affect discretionary spending decisions, such as whether to buy a second home.

When people don’t anticipate these expenses, “their own needs get pushed to the side” and they have to dig into their retirement savings — often with detrimental consequences, Allaudin said.

AARP spokesperson Nancy Thompson points out that caregivers who can only work part-time or quit a full-time job early because of their responsibilities are reducing what they contribute to Social Security. They’ll have less to spend later on in life.

Goyer and Thompson say the upcoming holidays that create a reason for extended family get-togethers offer an opportunity to broach the subject of long-term financial planning. They also recommend hiring an accountant and using the services of AARP long-term care planners, budget planners and online self-help programs such as one called “Decide, Create, Share.”

Dychtwald is grieving the loss of his father, who died six weeks ago. Because his family had discussed “everything” years ago, they could focus solely on “sharing [their] love and final words,” he says.

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Is health law really to blame for plan changes?

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By Jayne O’Donnell and Annika McGinnis, USA TODAY (Oct. 3, 2013)

A handful of big-name firms and many small ones are making major changes to their health care plans this fall, and while some big companies are blaming the Affordable Care Act, insurance and economic experts call those claims an exaggeration.

Making health insurance changes, including big premium and deductible hikes when the rate of increase in health care costs has slowed, creates a “messaging issue,” says University of Michigan business economics professor Thomas Buchmueller.

“That’s not an easy conversation,” says Buchmueller. “It’s convenient to say, ‘the ACA is raising our costs.'”

Big companies citing the ACA are “using this as cover,” says Farzan Bharucha, a health care strategist for consulting firm Kurt Salmon. “Companies are making a business decision that by dropping or limiting coverage you won’t have employees leave.”

Still, there has been big news from some big companies — and even a major university — and some cite the new law.

Among them:

Darden Restaurants. The owner of Red Lobster, Olive Garden and LongHorn Steakhouse, decided last fall to hire fewer full-time workers and more part-time workers to lessen expected costs of insuring full-time workers under the ACA. But it reversed the policy in December after complaints. The company recently decided to give employees a designated sum of money to use to choose their own insurer and plan level through a private online exchange that is separate from the new government exchanges. Darden says the move is unrelated to the health law. Private exchanges are an increasingly popular way for employers to reduce their health costs without cutting coverage for employees, who would be considered insured for the purposes of the ACA.

Home Depot. The retailer said last month that full-time employees’ insurance plans will cost more this fall because its insurance prices had risen. Spokesman Stephen Holmes wouldn’t comment on whether that was due to the ACA: “We don’t discuss our cost structure, so I’m not going to point specifically to any one thing.” The home-improvement chain also said in September that it’s sending about 20,000 part-time employees who had low-cost/low-benefit “mini-med” plans prohibited under ACA to the new federal and state marketplaces to buy their own insurance. Holmes wouldn’t disclose whether workers will get a subsidy to pay for their new insurance, but these plans are nearly always paid fully by employees.

Securitas. The large security-guard provider Securitas said last week that it’s sending 55,000 employees to the new state exchanges to buy their own insurance plans. The move was in response to the prohibition of “mini-med” insurance plans that the company previously provided. Spokesman Jim McNulty says the company didn’t contribute to the plans and will not be giving workers money to buy on the exchanges. He expects most of the workers on the plans — 90% of whom are full time — will qualify for government subsidies.

• Sears. The retailer decided to give employees a set amount of money to choose their own health care insurer and benefits through an online private exchange run by Aon. “The Affordable Care Act motivated us to think differently about the health care benefits that we provide associates,” says spokesman Howard Riefs. But, he noted, “The final decision to proceed with a private exchange model was made independent of Affordable Care Act considerations.”

UPS. The delivery company dropped health insurance for about 15,000 of its employees’ spouses whose employers also offered insurance. In a memo to workers, the company said it expects the cost of medical care in 2014 is to increase about 7.25% compared to 2013 and said an additional 4% rise would be due to the Affordable Care Act. It cited the need to cover dependent children longer and the expected rise in the number of employees enrolling in plans. The University of Virginia also dropped this type of spousal coverage and blamed the health law last month.

“There’s nothing in the ACA that would make dropping spousal coverage be an obvious response,” says Buchmueller. “That’s the type of strategy firms have been doing for a while.”

Most large companies made any big ACA-related changes to their health insurance plan two years ago, says Bryce Williams, managing director of global benefits company Towers Watson Exchange Solutions. He says only about one in 10 of the major companies Towers represents are making major changes to their health plans this year. Towers Watson represents about 80% of the companies on the Fortune 500, he says.

Some changes, like the elimination of mini-med plans, can benefit employees. Some workers were shocked to find how little coverage they had when they landed in emergency rooms. Private exchanges, which IBM and Walgreens have also announced they’re moving employees to — can be what Williams calls a “win-win” for workers and employers. Many other experts warn that employers’ contributions may not keep up with premium increases.

It’s far more believable for a small company to cite the new law than for big employers to do so as it’s had little effect on them financially this year, says Allen Wishner, CEO of Flexible Benefit Service Corp., which serves insurance brokers for small to mid-sized companies.

These companies have far more regulatory burdens and costs associated with the new law, he says. In July, those employing more than 50 workers were given another year to provide insurance to all full-time workers or face a $2,000-per-employee fine.

“I struggle to see what’s different” for large employers, says Wishner, a director of the Employers Council on Flexible Compensation. “The delay kept the status quo for the most first part.”

Smaller employers may wind up sending employees to the government exchanges because of the “expense of it and the administrative burden of offering insurance,” says Ed O’Malley, president of the corporate client group for National Financial Partners, which advises companies on ACA compliance and health care, and manages private exchanges. “In industries, that are more competitive, it may be more difficult to not offer health insurance.”

Walmart to launch Black Friday sales earlier

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By Annika McGinnis, USA TODAY (Nov. 12, 2013)

As the holiday shopping season kicks off, Walmart is the latest major retailer to announce an even earlier launch to annual Black Friday weekend sales — beginning at dinnertime Thanksgiving evening.

Following a slew of similar announcements from stores including Target, Best Buy and Macy’s, Walmart said Tuesday that it will hold two major sales events at 6 p.m. and 8 p.m. Thursday, two hours earlier than last year. With this year’s six-day shorter holiday shopping season and low rates of consumer confidence following the government shutdown, Walmart is upping its efforts to draw in more customers: offering what experts said were impressive deals and guaranteeing more products to customers in line during the Thursday sales.

Some exclusive sales will still occur Friday, including an 8 a.m. sales event and “manager’s specials” discounts on high-demand items. But this year, many of the best deals occur or begin Thursday, including online shopping bargains that start early Thanksgiving morning.

Stores moving major sales to Thursday is a “big move,” said online deal expert Brad Wilson, founder of deal analysis website BradsDeals.com.

“We saw even in the last two years, when stores were opening Thursday, they weren’t necessarily kicking off their promotions on Thursday — the best deals wouldn’t necessarily start at 6 p.m. and 8 p.m.,” he said. “This really shifts the focus.”

As stores stagger sales, the annual mobs of shoppers camped outside stores before dawn on Friday may lessen, analysts said. This year, Toys R Us will open its doors at 5 p.m. Thanksgiving day, Best Buy will open at 6 p.m. and Target will open at 8 p.m. Macy’s, J.C. Penney and Kohl’s will offer Thursday hours for the first time, and Kmart will open at 6 a.m. Thanksgiving morning and remain open for 41 hours straight.

Black Friday is becoming more of a “six-day weekend” than a single day, Wilson said. And Walmart’s early sale events are an effort to keep up with the competition, said Duncan Mac Naughton, Walmart’s chief merchandising and marketing officer.

“Almost everybody is moving at least one hour up,” he said. “We thought that was the best time to ‘win the weekend.’ It’s going to be a competitive market. With six fewer days to Christmas, Black Friday’s going to play an even more important role.”

On Thanksgiving this year, mixing turkey with shopping is no longer taboo, in fact for some, it’s become tradition. Target and Kohls both announced their stores will open at 8 p.m. on Thanksgiving Day. VPC

Walmart stores this year will offer 21 “guaranteed” products — 18 more than last year — if customers stand in line for them during the 6 p.m. to 7 p.m. and 8 p.m. to 9 p.m. Thursday events, according to a company press release. If so, the store ensures customers will receive a product, either that night or before Christmas. For some products, shoppers can wait in line for wristbands signifying their purchase and then go shop for other items, as long as they return to pick up their product within two hours of the start of the sales events.

DealNews.com Features Director Lindsay Sakraida said some deals are the best she’s seen yet this year, including a 16GB Apple iPad mini for $299 with a $100 Walmart gift card, an iPhone 5C for $45 or a 5S for $189, both with a $75 gift card, and an Emerson 50-inch LED HDTV for $288.

The earlier times, competitive deals and spike in “guaranteed” products signify retailers pulling out all the stops to bring in more customers, as they enter a shorter shopping season with more wary shoppers, analysts said.

“Even though there are people still crazy about Black Friday and willing to camp out, some consumers are weighing whether it’s worth going,” Sakraida said. “It’s going to be more of a trend to have stores saying, ‘Here’s an item that you absolutely will get when you come.'”

Though stores’ new openings might cut into Thanksgiving dinner, Wilson said moving away from “one starting line at 5 a.m. or 6 a.m.” helps consumers get more deals.

Walmart’s push for holiday shoppers began a month early this year, with the rollout of a set of online promotions Nov. 1. But though Sakraida said consumers might be able to find some good deals through early sales, she recommended taking advantage of what she saw as especially impressive Black Friday weekend bargains.

“We’ve already noticed a lot of stores pushing the holiday shopping element more,” Sakraida said. “(Lower consumer confidence) will encourage retailers to offer especially good doorbusters and really enticing deals that actually can be a really great opportunity to get great prices.”

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Even doctors in dark about new health plans

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By Jayne O’Donnell and Annika McGinnis, USA TODAY (Nov. 10, 2013)

More than a month after HealthCare.gov and 15 state-based exchanges opened for business, consumers and even physicians are finding it’s isn’t easy or even possible sometimes to find out which doctors and hospitals are in the plans’ provider networks.

“Some states, they have it, and for some, it isn’t available. It ‘s a big unknown for the patient,” says Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, whose members manage doctors’ practices. “It’s very much up in the air.”

That means insurance shoppers often can’t choose plans that their doctors participate in — or that include doctors near them. It also means doctors may not be able to confirm they’re in a plan when consumers ask them. While consumers may now occasionally find a doctor listed on their commerical insurance plan isn’t accepting patients or is no longer on the network, at least they can reliably find provider lists and doctors at least know what plans they currently participate in.

Gilberg says he wouldn’t buy a plan “if I didn’t know if my physicians were in the network or the hospital was in the network.”

The Department of Health and Human Services (HHS) and others say there’s plenty of time for consumers to shop for plans and note many of the uninsured don’t even have doctors.

“The Health Insurance Marketplace will significantly improve access to care for people who lack affordable health coverage today,” said Joanne Peters, an HHS spokeswoman. “The good thing about the law is that now people have more options to shop for a plan that includes their doctor, whereas before they didn’t have the ease and flexibility to do that.”

The uncertainty stems from the general glitchiness that remains for some state exchanges and the federal site, HealthCare.gov, which is selling plans for 36 states that didn’t set up their own exchanges. It’s also due to the fact that insurers are still deciding what doctors they want on their networks and often haven’t even informed doctors if they are including them on their networks.

Some insurers have clauses in contracts with their existing doctors that say the doctors have to participate in any plans the insurers offer in that state. Doctors who don’t want to participate on the exchange plans might have had to opt out, which some may not have realized, says Sam Unterricht, a Brooklyn ophthalmologist who heads the Medical Society of the State of New York. And many doctors and hospitals are still negotiating with insurers over rates.

A survey released last week by the New York medical society found 40% of 405 doctors said they didn’t know how they wound up on insurers’ exchange plans. Just 6% said they chose to be on plans and 16% said they had to participate as part of a contract. The rest said they declined to participate. Three quarters of the doctors said they had never received a fee schedule from insurers for the plans.

In an attempt to cut costs, insurers are also cutting the number of hospitals and doctors they include in networks, and that’s a process that may continue through December.

“The intent is that when January rolls around, they should have all of the providers,” says Farzan Bharucha, a health care strategist at consulting firm Kurt Salmon.

It’s common that doctor and hospital networks are updated throughout the year, says Robert Zirkelbach, spokesman for America’s Health Insurance Plans, which represents insurers. And all of the networks have to meet “adequacy standards.”

In one rural area of Tennessee, there will only be two insurance carriers, and one isn’t listing any doctors yet. Another is a new co-op insurer and is still building its medical network, says broker J. Darlene Tucker, based in Scotts Hill, Tenn. Even so, she says her customers have bigger concerns now.

“At this point, clients aren’t even asking about who is in the network;” Tucker says. “They are still trying to get far enough into the HealthCare.gov website to determine what their monthly premium will be and what insurance plan they can afford.”

Some doctors say they’re still waiting to hear what rates insurers are paying — or they are appalled they are so low.

Michelle Berger, an Austin-based ophthalmologist, says she has only heard from one of the insurance companies she works with and she signed a contract to be on Blue Cross of Texas’ exchange plans. She did so before she saw the fees she would be paid, which she says are only slightly better than Medicaid.

“I’m not going to be able to take a full day of exchange patients and keep my doors open,” she says.

Peters says there will be enough doctors for the newly insured.

“We have put protections in place to ensure that consumers have choice through good access to networks of providers,” Peters said. “Consumer protections in federal and state law require health plans to include a sufficient network of providers as well as essential community providers.”

In Sugarland, Texas, internal medicine physician Elizabeth Torres says she doesn’t know what plans she’s listed on, but she does know her profit margins are so thin she won’t be able to accept many patients at rates that are lower than Medicare.

“We’re hoping to hear more information,” Torres says. “Everything’s trickling out a little at a time.”

Around some other states:

In New York, broker James Schutzer found a 2,025-page spreadsheet of doctors when he looked up hospitals on the NY State of Health exchange recently. When he went on Empire Blue Cross’ site, he got the same spreadsheet and a “Find a Doctor Alert” that noted the individual and small group health products are “under construction.”

Unterricht says the accuracy of the provider lists will be suspect, too, because doctors may unwittingly be on an insurers list since they already accept their commercial plans. “Some may not accept new patients right away, and some may not accept new patients at all,” he says.

In California, the provider network for individual plans became searchable Wednesday, and there’s still no access to the plans for small businesses in the Small Business Health Options Program or physicians in the networks. The state had to start from scratch building the medical network because there was no consistency in medical coding, says Sacramento broker Laurie Rood. Programmers didn’t realize each insurance company had a different physician code.

In Maryland, the exchange does offer an option to search plans by provider and insurance company. The site compiles the list of providers so people don’t have to go to the company website to check on their own. Gene Ransom, CEO of the Maryland State Medical Society, says Maryland’s exchange plans are so similar to what’s already commercially available, the process went more smoothly than in many other states.

Like in Texas, where Berger says, “It’s a comedy of errors right now.”

Contributing: Fola Akinnibi

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Big insurers avoid many state health exchanges

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By Jayne O’Donnell and Annika McGinnis, USA TODAY (Oct. 21, 2013)

So few insurers offer plans on some of the new government health insurance exchanges that consumers in those states may pay too much or face large rate increases later, insurance experts say.

An average of eight insurers compete for business in 36 states that had exchanges run or supported by the federal government last month, the Department of Health and Human Services says. (Idaho has since started its own exchange.) But just because an insurer sells in a state, it doesn’t mean it sells in every area of a state so many residents have far fewer options.

Many state-run exchanges also have far fewer than HHS’ average, which is weighted based on the number of uninsured residents in an area. Vermont has two, Kentucky has three and Nevada and Maryland each have four.

Some insurers pulled out of the exchanges required by the Affordable Care Act as the Oct. 1 launch approached. That leaves an uneven patchwork of providers — ranging from one insurer in New Hampshire and West Virginia to 16 in New York.

The difference also leads to a wide disparity in the numbers of plans, from just seven in Alabama to 106 in Arizona, according to HHS’ analysis. But HHS spokeswoman Joanne Peters says the situation is still much better than it was before the law took effect.

“In the past, consumers were too often denied or priced out of quality health insurance options, but thanks to the Affordable Care Act consumers will be able to choose from a number of new coverage options at a price that is affordable,” she said in an e-mail.

About a third of insurance companies opted out of participating in the exchanges in states where they were already doing business, according to a recent report by McKinsey & Co. About half of states — which include about a third of the non-elderly insured population — will see a “material decline” in competitors, says McKinsey, while the other half of states will have about the same or more insurance choices on the exchanges.

“When there are too few carriers, down the road there will be issues with rate increases that make plans unaffordable for average Americans even with rate subsidies,” says Bryce Williams, managing director of Towers Watson Exchange Solutions, which operates private insurance exchanges for companies. “We need competitive insurance markets in all states (and) multiple carriers competing hard.”

Williams notes that most counties have five to seven insurance companies competing on Medicare plans. Competition on their exchange has held down costs and kept annual rate increases to less than 2.8% a year, he says.

Provisions in the law, such as those that prohibit cost sharing or deductibles for preventive care, help level the playing field between states with and without a large number of insurers, some say.

“The quality will be comparable because they have to meet a minimum threshold (for) the basics of the plans,” says Georgetown senior research fellow Sabrina Corlette. “It’s really around the pricing that competition can play a role.”

Mary Chalmers, 62, lives in rural California where she just has two plans to choose from even though California has 12 insurers participating on the exchange. The same “silver” plan costs $62 more a month in her hometown of San Luis Obispo than in Los Angeles. Thanks to a subsidy, however, the self-employed investor’s premium for an individual policy will drop from the $467 she pays now a month to about $100 a month.

States with just a few providers “definitely lose the competitive effect of carriers competing against each other to drive down those costs,” agrees David Cusano, also a senior research fellow at the Georgetown University Health Policy Institute.

Corlette says insurers’ decision are motivated by profits.

“Serving the public is not part of their mission. … They’re crunching the numbers and looking at tightening profit margins,” she says. “Part of that is a result of the Affordable Care Act, basically telling these insurance companies that your insurance model to attract healthy people and keep out sick people is no longer allowed.”

Some insurers’ approaches:

Aetna. In May, Aetna acquired Coventry Health Care, which also had filed plans for some of the exchanges. Aetna dropped out of some states where Coventry filed plans and the reverse was true in other states.

On a combined basis, Aetna and Coventry plans will be available on a statewide basis in 10 state exchanges and in limited geographic areas in seven state exchanges. Spokesman Matthew Wiggin says the company “narrowed in on those states where we had the right cost structure and network arrangements to meet the specific demographic needs of exchange consumers.” The result, he says, is the company’s presence will deliver “long-term profitable growth.

Cigna. The company is selling plans on five exchanges — those in half of the states in which it sells individual plans. Spokesman Joseph Moody notes that while Cigna is a “national leader in employee health plans,” it only started selling plans to individuals in the last four to five years.

HealthNet. Although it’s one of the only major insurance providers that has been losing money in recent years, HealthNet is taking a different approach, offering the cheapest rates — sometimes by 25% — in Southern California, said company spokesman Brad Kieffer. HealthNet expects to see 19.4% growth in revenue in 2014, a huge jump from 2011, when growth shrank 16.2%.

In New Hampshire, the exchange has just Anthem Blue Cross and Blue Shield, which greatly reduces the number of hospital options, says State Sen. Andy Sanborn. Since more than 90% of doctors are affiliated with specific hospitals, the new plans will also exclude many doctors, he added.

Plans don’t include the capital’s Concord Hospital, and the next-closest hospital uses Concord doctors, Sanborn said. So, he said, people will have to drive to a third hospital an hour away. They’ll even have to call an ambulance from a far-away hospital to pick them up, he said.

“There’s an absolute outcry of people at this point,” he said.

In West Virginia, where there is also only one provider, Highmark Blue Cross Blue Shield submitted its rates “long before” it knew the competition, spokeswoman Kristin Ash wrote in an e-mail. Prices were based on regulations and company experience, she wrote.

Some insurers said they dropped out of exchanges due to uncertainty. For Aetna, the new law could be “materially adverse,” the company wrote in its second-quarter SEC filing, mentioning the new Medicare requirements, individual coverage mandate, rating limits and new fees and assessments. In states that didn’t expand Medicaid, enrollment could also drop, Aetna wrote.

Carriers are “really worried” about a sicker population purchasing plans and driving down profits, Cusano said.

West Virginia, with its single insurer, ranks 47 out of 50 in terms of health, according to the 2013 America’s Health Rankings Senior Report.

Companies also may have left because of tougher regulations on pricing, quality, transparency and more, especially in state-run exchanges such as Maryland, Oregon and Rhode Island, Cusano said. Williams says New Jersey, which only have three insurers, has some of the toughest regulations in the country for insurers — and much higher rates than in nearby New York.

Companies doing well tended to be more conservative. Aetna and United Health Care, which have both pulled out of several exchanges, both enjoyed strong revenue growth last year. The companies expect to continue their growth through at least 2014, a trend Cusano said could be due to larger markets and enrollment increases because of Medicaid expansion.

As some larger insurers left certain marketplaces, companies that used to serve only the Medicaid market may move in — a trend already seen in states including Rhode Island and Oregon, Corlette said.

The number of companies participating in exchanges may also grow — or deplete — after insurers see what theirs and other companies’ experiences have been.

“It is too early to speculate on 2015, but we will use our experience in 2014 to help inform our exchange strategy for 2015 and beyond,” says Aetna’s Wiggin.

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