Earnings season continues
FEB 24, 2017 | BY ALLISON BELL
Scott Flanders, the chief executive officer of eHealth Inc., said today that he thinks the Trump administration wants to shut down HealthCare.gov
Former President Barack Obama's U.S. Department of Health and Human Services set up HealthCare.gov to provide Affordable Care Act exchange administration services for states that are unwilling or unable to handle ACA exchange enrollment services themselves.
"I've heard from two senior officials in the administration that it is their ambition to shut down HealthCare.gov," Flanders told securities analysts today during conference call.
Even if HealthCare.gov continues to operate, it might become a health plan information site, rather than an enrollment and e-commerce site, Flanders said. Once more people realize that running HealthCare.gov costs $1.9 billion per year, pressure to revamp it is likely to increase, Flanders predicted.
Flanders' company, the Mountain View, California-based parent of eHealthInsurance.com, held the conference call to go over fourth-quarter earnings. The company reported a net loss of $17 million for the quarter on $44 million in revenue, compared with a net loss of $12 million on $50 million in revenue for the fourth quarter of 2015.
The number of relationships with Medicare plan enrollees increased 33 percent, to 304,900, but the number of relationships with users of commercial individual major medical coverage fell 28 percent, to 360,600.
Flanders said policymakers have to make big changes soon if they want to see insurers offer commercial individual coverage in 2018.
The market has started to collapse, and the collapse is accelerating, Flanders said. Already, he said, eHealthInsurance.com has no individual products to offer consumers in some markets.
Carriers are still leaving the individual market, and some of the remaining players have stopped paying commissions on sales of individual products because the business is so unprofitable, Flanders said.
"If no action were to be taken in this market, there won't be one for the 2018 enrollment year," Flanders said. But Flanders said he is optimistic about how the Trump administration will respond to the problems.
The administration is "highly oriented to eliminating waste and government interference with the private sector," Flanders said.
Managers of HealthCare.gov have had a complicated relationship with web brokers, and Flanders said a shift of HealthCare.gov out of the health insurance sales business should be good for eHealth. For now, Flanders said, eHealth is trying to focus on increasing sales of Medicare plans and of coverage to employers with 20 or fewer employees.
By Warren S. Hersch
Critics are hoping the revisions will be significant
President Trump’s flurry of executive actions since taking office is upending the established order in the nation’s capital. Financial services professionals have a huge stake in the outcome for two of them.
Those executive orders — one calling for an “updated economic legal analysis” of the Department of Labor’s fiduciary rule, the other detailing “core principles” that could gut the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 — have unsettled federal oversight of financial services to a degree unseen since the end of the 2007-2009 downturn.
For industry stakeholders, the actions bring a welcome respite from impending regulatory changes for which many were ill-prepared.
That’s notably true in respect to the fiduciary rule, which was due to be phased in beginning on April 10. The myriad requirements of the DOL “conflict of interest rule,” stretching to 1,000-plus pages, had called into question business development plans for players throughout the distribution channel.
As expected, the Department of Labor filed a notice Thursday with the Office of Management and Budget to delay implementation...
“The executive order [respecting the rule] is a positive development because much of the industry wasn’t ready for the April 10 applicability date,” says Jason Smith, founder and chairman of Clarity 2 Prosperity, a Westlake, Ohio-based independent marketing organization. “Business partners I’ve spoken with — advisors, broker-dealers, and other IMOs — had all halted or substantially slowed their development efforts. The delay was definitely needed.”
Putting the rule on hold
The DOL filed on February 9 a Notice of Proposed Rulemaking with the Office of Management and Budget to delay the fiduciary rule’s implementation. The OMB’s review of the notice, expected to last 14 days before being approved and published in the Federal Register, doesn’t stipulate a new implementation date. But market-watchers anticipate a delay of up to 180 days, which would shift the original phase-in from April to October 2017. Whether the DOL thereafter elects to revise or repeal the rule may hinge, in part, on recent court rulings, all of which have sided with the DOL’s position on the rule under the Obama administration.
AUG 30, 2016 | BY GREGORY E. SCHWABE
Here's how to reach some of the prospects you may not have considered
If your prospecting is mainly with the age 55-80 group, you know it’s not what it was even a few years ago. “Almost tapped out” is the way some advisors are describing it.
If your practice is feeling that pain, there’s a way to reach a broader, motivated and largely untapped audience: Consumers age 36-55.
You can do it with Indexed Universal Life (IUL) insurance policies. What grabs the attention of this age group is the concept of a “tax-free retirement.”
Unlike IRAs and other qualified retirement accounts, there are few cap limits on IUL contributions. Essentially, this means your clients can invest as much as they want into IUL savings vehicles.
These accounts not only help them hedge any risks associated with their retirement savings; they also offer your clients the potential of having tax-free distributions in retirement. The higher contributions are not only wonderful news for your clients, but you can also benefit from a greater earning potential based on the regular and automatic deposits they make to these accounts.
IUL opens up more sales opportunitiesAs you know, IUL is experiencing double-digit growth in the insurance and financial services industry. Continue reading to find out why.
The growth that these types of policies are experiencing is so significant, you can be sure that if you’re not selling IUL, the competition is out there getting the business.
Here are some of the ways you could be pitching IUL to new prospects:
Even at a lower rate of return, the values are far better than nearly all GULs on the market. Would a client trade the handcuffs that most GULs come with for a few less years of guarantees and the future flexibility than an IUL offers? It has been said this product offers “optionality,” the flexibility of deciding how to use it in the future without having to make any decisions today.
Continue reading to learn by many advisors now prefer IUL over mutual funds.
Why do accountants and advisors often prefer IUL?Here's why:
It’s easy to understand why IUL is setting sales records, particularly with 36-55 year old prospects. They’re motivated consumers who take retirement seriously and want to do all they can to maximize their assets. While IUL may not fit every prospect, the opportunities are enormous.
BY ALLISON BELL
A team at the National Association of Insurance Commissioners is working on an update of the standard Life Insurance Buyer's Guide.
The NAIC's Life Insurance Buyer's Guide Working Group held one conference call meeting on the topic earlier this month and scheduled a second conference call meeting for Feb. 7.
The group has posted an example of a life insurance calculator on its section of the NAIC's website, a consumer guide prepared by the American Council of Life Insurers, and one regulator's proposed revision of the existing NAIC guide.
Related: Life buyer's guides are a compliance maze
The NAIC is a Kansas City, Missouri-based group for state insurance regulators. It has no direct authority to change state insurance regulations and procedures, but states can choose to use NAIC models as the basis for creating their own laws, regulations, consumer publications and technical guidance materials.
Regulators have been talking about updating the buyer's guide at NAIC meetings for months.
In April, for example, participants in a Life Insurance and Annuities Committee session at an in-person NAIC meeting in New Orleans said the American Academy of Actuaries wanted to see the NAIC rewrite the guide. The ACLI told the committee it would not necessarily mind seeing the NAIC rewrite the guide, according to the meeting minutes.
Some regulators and consumer group reps have talked about wanting to update the guide to modernize it and make it more useful to consumers.
Birny Birnbaum, a consumer rep with the Center for Economic Justice, said he would like to see the guide contain more plan-specific information.
A deferred annuity buyer’s guide roundup
Nebraska commissioner to lead NAIC life committee
KHN Morning Briefing
Summaries of health policy coverage from major news organizations
A federal court judge ruled last month that the $34 billion merger would hurt competition in the insurance industry. As part of the deal, Aetna will give Humana $1 billion as a break-up fee,
CNBC: Aetna, Humana End $34 Billion Merger Agreement
Aetna and rival Humana are terminating their merger, after their $34 billion deal was blocked by a federal court on antitrust grounds. Aetna will pay Humana a $1 billion break-up fee, in accordance with the agreement. (Coombs, 2/14)
Reuters: Aetna, Humana Walk Away From $34 Billion Deal After Court Ruling
After the Jan. 23 court ruling, Aetna and Humana had said they were weighing whether to appeal the decision and extend their agreement, which was set to expire on Feb. 15. Aetna and Humana announced the deal in July 2015, just a few weeks before Anthem Inc and Cigna Corp said they would also combine. A year later, the U.S. Justice Department sued to block both transactions and won in separate lawsuits, derailing what would have been a massive industry consolidation to three insurers from five. (Humer, 2/14)
Hartford (Conn.) Courant: Aetna, Humana Call Off $37 Billion Deal
"While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction," [Aetna Chief Executive Officer Mark] Bertolini said. "We are disappointed to take this course of action after 19 months of planning, but both companies need to move forward with their respective strategies in order to continue to meet member expectations," Bertolini said.
The Wall Street Journal: Aetna, Humana Mutually End Merger Agreement
The end of their deal, which would have forged a diversified insurance powerhouse, leaves both insurers with challenges as they forge separate paths forward. ... In his ruling last month, U.S. District Judge John D. Bates said the merger would unlawfully threaten competition, harming seniors who buy the private Medicare coverage known as Medicare Advantage. The 156-page decision said that combining the two companies likely would lead to a substantial lessening of competition for Medicare Advantage plans in 364 counties. (Wilde Mathews, 2/14)
Bloomberg: Aetna, Humana Abandon $37 Billion Merger Blocked By Judge
Aetna and Humana, which had agreed to combine in July 2015, are free to make new deals or spend billions of dollars on buying back their own shares. Another massive health insurance deal, meanwhile, is grinding forward -- for now. Anthem Inc. said on Monday that it’s seeking a fast-track appeal of a different judge’s ruling that blocked its own proposed $48 billion acquisition of Cigna Corp. (Tracer, 2/14)
In yesterday's newsletter, CEO of Americans for Annuity Protection, Kim O'Brien states:
"As you undoubtedly know, on Friday it was widely reported from a circulated draft of a memorandum the White House intended to submit to the Secretary of Labor pushing back the April 10 implementation deadline by 180 days (See Section 1 (c)). We cautioned it was a "draft and could change" which was prescient because IT DID! No sooner had reporters' fingers finally stopped typing with dozens of articles posted announcing the delay, then we receive word from our inside sources that the final memorandum DID NOT include the delay language...." Read more below
“Congress gave the DOL broad discretion to protect investors”, according to Judge Barbara M.G. Lynn who ruled in favor of the Labor Department on Wednesday.
Lynn had promised a ruling by Friday. The nine plaintiffs, including the U.S. Chamber of Commerce, the Securities Industry and Financial Markets Association and the Financial Services Institute, sued the DOL over its fiduciary rule in a Texas court.
The nine plaintiffs in the Texas case are represented by former Labor Department solicitor Eugene Scalia, who’s now a partner in Gibson, Dunn & Crutcher’s Washington office and a son of deceased Supreme Court Justice Antonin Scalia The risks of committing a prohibited transaction could be significant, and may include litigation, audits from the DOL and Internal.
In a joint statement, the co-plaintiffs stated: "We continue to believe that the Department of Labor exceeded its authority, and we will pursue all of our available options to see that this rule is rescinded." President Donald Trump's recent directive to the Department to review the rule, is "reflecting well-founded, ongoing and significant concerns about the rule, is a welcome development.”
The American Council of Life Insurers also released a statement about the decision. Executive Vice President and General Counsel Gary Hughes said the ACLI is, "disappointed with the decision from the U.S. District Court, Northern District of Texas on our joint legal challenge with the National Association of Insurance and Financial Advisors (NAIFA) to the U.S. Department of Labor’s fiduciary regulation
Lynn states in her ruling: "In contrast to the situations in the cases cited by Plaintiffs, in [the Employee Retirement Income Security Act] Congress did speak clearly, and assigned the DOL the power to regulate a significant portion of the American economy, which the DOL has done since the statute was enacted."
Congress, Lynn said, "gave the DOL broad discretion to use its expertise and to weigh policy concerns when deciding how best to protect retirement investors from conflicted transactions."
Lynn’s opinion “is a complete vindication of [former Labor Secretary] Tom Perez, Phyllis Borzi, and the rest of Obama’s Department of Labor,” said Tom Clark, of counsel with The Wagner Law Group, in a comment Wednesday.
“Even with the attempt to find a favorable venue in the Northern District of Texas, every district court to address these issues [has] now ruled in favor of positions taken by the previous administration. That being said, the current administration and the Department of Labor still have the ability to seek a stay in the applicability of the rule and to ultimately modify or repeal the rule,” Clark pointed out.
While Lynn’s ruling “might make that task harder and more politically distasteful, the new Department of Labor under Trump is still in the driver’s seat. However, I think it is fair to expect that opinions such as this one will embolden supporters of the fiduciary rule who will ultimately seek to challenge the new Department of Labor in court. It seems the situation will get messier before the industry has reliable clarity.”
Fred Reish, partner in Drinker Biddle & Reath’s employee benefits and executive compensation practice group in Los Angeles, agreed that even with Lynn’s ruling, “It is still possible that the Trump DOL will take a different political position and delay and modify or delay and kill the fiduciary rule. But, this is one less reason that they can use for that purpose.”
So, where are we? According to Reish, “We are still waiting to see if the DOL will delay the applicability date of the fiduciary rule. Once that happens, the next steps will unfold. I suspect that we will be watching this in slow motion for at least another year.”
Dear Annuity Broker,
We've been patiently and quietly following all of the news regarding the DOL Rule that is supposed to start April 10th. After weeks of seeing people counting down the days to the start date and trying to convince you to join them because they have applied for a "fiduciary status" we can't justify letting the "fear mongering" go on unanswered any longer. Therefore we have committed to providing you with a source of information that you can both trust and use to maintain your status as an"independent" broker.
DOL Fiduciary Update
HOW WILL THE RULE IMPACT INDEPENDENT BROKERS?
Most of us got in the sale of financial services products as a Career Captive Life Insurance Agent or Stockbroker. Either way, it didn’t take long to figure out that there was an independent system out there that offered more products, better service and higher compensation. If you are selling annuities and that is a large part of your business, the DOL Fiduciary Rule has brought out opportunists, large IMO/FMOs that want to make you captive again and take away your independence.
BE PATIENT…Don’t fall for the “FEAR’ tactics that many of these organizations are using to get you to sign up with their organizations. BE SMART…… Don’t lose your independence, once you sign up with one of them to place your Annuity business, they will require you to place ALL your other business with them as well…there goes your independence.
Because there is too much up in the air, our recommendation is that it is business as usual for now. Why are we telling you to be patient? Here's why:
• The 18 organizations that applied for Financial Institution (FI) status have been put on hold because the DOL does not have confidence those organizations can provide the oversight and supervision under the rule.
• The DOL realized they did not understand Independent Distribution and are now defining what will be “exemptions” that have yet to be published at this late date.
• President-Elect Trump has said that he would repeal laws that “overregulated” the financial services industry, such as Dodd-Frank and others, including the DOL Fiduciary Rule.
• Lawsuits are either pending or appealed in Washington DC, Dallas and Kansas City. While some of these cases have been heard, the outcomes are uncertain based on appeal.
• President-Elect Trump took office January 10, 2017, and the DOL Rule could be repealed, de-funded or changed substantially.
• Nothing happens until April 10, 2017. WHAT’S THE RUSH???
These IMO/FMO’s took a bet that Trump would lose. They made an investment to use the DOL Fiduciary Rule to make you captive again. Now they are losing money and need you to sign up with them. The next time one of these people calls you or solicits you to move your license under their hierarchy, remember how important it is to maintain your independence. Ask them if they will require you to do ALL your business through their contracts. If the answer is YES, politely tell them NO THANKS.
AMC Life Marketing and NBAgency, our national marketing group, have a solution for you as we approach April that allows you to remain independent. But don’t let this be a distraction. BE PATIENT, and write as much business as you can until we all know what is going to happen with the DOL Fiduciary Rule. Your family depends on you.
By Julie Rovner February 10, 2017
Kaiser Health News
After a bruising confirmation process, the Senate confirmed Rep. Tom Price, R-Ga., to head up the Department of Health and Human Services, by a 52-to-47 vote.
As secretary, Price will have significant authority to rewrite the rules for the Affordable Care Act, some of which are reportedly nearly ready to be issued.
But there is much more now within Price’s purview, as head of an agency with a budget of more than $1 trillion for the current fiscal year. He can interpret laws in different ways than his predecessors and rewrite regulations and guidance, which is how many important policies are actually carried out.
“Virtually everything people do every day is impacted by the way the Department of Health and Human Services is run,” said Matt Myers, president of the Campaign for Tobacco-Free Kids. HHS responsibilities include food and drug safety, biomedical research, disease prevention and control, as well as oversight over everything from medical laboratories to nursing homes.
Price, a Georgia physician who opposes the Affordable Care Act, abortion and funding for Planned Parenthood, among other things, could have a rapid impact without even a presidential order or an act of Congress.
Some advocates are excited by that possibility. “With Dr. Price taking the helm of American health policy, doctors and patients alike have sound reasons to hope for a welcome and long-overdue change,” Robert Moffit, a senior fellow at the conservative Heritage Foundation, said in a statement when Price’s nomination was announced.
Others are less enthusiastic. Asked about what policies Price might enact, Topher Spiro of the liberal Center for American Progress said at that time: “I don’t know if I want to brainstorm bad ideas for him to do.”
Here are five actions the new HHS secretary might take, according to advocates on both sides, that would disrupt health policies currently in force:
Birth control coverage: Under the ACA, most insurance plans must provide women with any form of contraception approved by the Food and Drug Administration at no additional cost. This has been particularly controversial in regards to religious employers who object to artificial contraception, leading to alterations in the rules, and resulting in a two separate Supreme Court rulings, one about private firms’ rights to make religious objections, and one about nonprofit religious hospitals and schools.
As secretary, Price would have two main options. He could expand the “accommodation” that already exempts some houses of worship from the requirement to any employer with a religious objection. Or, because the specific inclusion of birth control came via a regulation rather than the law itself, he could simply eliminate no-copay birth control coverage from the benefits insurance plans must offer. (This assumes continuing existence of the health law, at least for the short term.)
Medicare payment changes: The health law created an agency within Medicare, called the Center for Medicare and Medicaid Innovation, that was tasked with exploring new ways to pay doctors and hospitals that would reduce costs while maintaining quality. The HHS secretary has the authority to require doctors and hospitals to participate in the experiments and new payment models. Some have proved unpopular with physician and hospital groups, in particular the idea of paying providers so-called bundled payments for packages of care, rather than allowing them to bill item-by-item; one such package covers hip and knee replacements, from the time of surgery through post-surgical rehabilitation. Price, as a former orthopedic surgeon himself, would likely act to scale back, delay or cancel that project, since he “has been a critic in the past,” said Dan Mendelson, CEO of Avalere Health, a Washington-based consulting firm.
Planned Parenthood funding: Republicans have been agitating to separate Planned Parenthood from its federal funding literally for decades. Congress would have to change Medicaid law to permanently defund the women’s health group, which also performs abortions (with non-federal funds) at many of its sites. But an HHS secretary has many tools at his disposal to make life miserable for the organization.
For example, during the Reagan and George H.W. Bush administrations, rules were put in place, and eventually upheld by the Supreme Court, that would have banned staff in federally funded family planning clinics from counseling or referring for abortion women with unintended pregnancies. The subsequent Clinton administration repealed the rules, but they could make a comeback under the new secretary’s leadership.
Price could also throw the weight of the department into a probe into Planned Parenthood’s ties to firms allegedly selling fetal tissue for profit, which has also been investigated by a House committee.
Tobacco regulation: After years of discord, Congress finally agreed to give the Food and Drug Administration (limited) authority to regulate tobacco products in 2009. “The core authority is statutory,” said Matt Myers of the Campaign for Tobacco-Free Kids, who advocated for the law. That means Congress would have to act to eliminate many of its changes. But a secretary who opposes the law (Price voted against it at the time) could weaken enforcement, says Myers. Or he could rewrite and water down some rules, including recent ones affecting cigars and e-cigarettes.
“The secretary has very broad discretionary authority not to vigorously enforce or implement the statute in an aggressive manner,” Myers said.
Conscience protections: At the very end of the George W. Bush administration, HHS issued rules intended to clarify that health care professionals did not have to participate in performing abortions, sterilizations or other procedures that violated a “religious belief or moral conviction.”
Opponents of the rules complained, however, that they were so vague and sweeping that they could apply not just to opponents of abortion, but also to those who don’t want to provide birth control to unmarried women, or HIV treatment to homosexuals.
The Obama administration revised the rules dramatically, much to the continuing consternation of conservatives. They were among the few health-related items included in the health section of Trump’s website before he was inaugurated and the page was taken down. “The Administration will act to protect individual conscience in health care,” it said. Many expect the rules to be reinstated in their original form.
This is an updated version of a story that initially ran Dec. 9, 2016. It was updated Feb. 10, 2017 to reflect that Tom Price had been confirmed by the Senate.
email@example.com | @jrovner
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