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Insurers' pullback means problems for Obamacare


GOP remains split on health care bill

There won’t be a vote on the fate of Obamacare on Friday.

CNN reported that President Trump has asked House Speaker Paul Ryan to pull the bill. The stock market rallied off its lows of the day following the news. Several health care stocks even turned higher.

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But make no mistake. Even though lawmakers failed in their bid to repeal the Affordable Care Act, the future of the seven-year-old health care law remains troubled.

Many insurers have struggled on the exchanges because enrollees have been sicker and costlier than expected.

This prompted many major carriers — and several smaller ones — to pull back their participation on the state exchanges in 2017. Many of those that remained hiked premiums to ensure they could cover their policyholders’ medical bills.

The government is taking steps to shore up the market so millions don’t lose coverage as GOP lawmakers look to overhaul the nation’s health care system.

Still, despite Republican claims that the market is collapsing, the Congressional Budget Office has said the individual market would “probably be stable” if the Republican bill is enacted or not.

And S&P said in late December that huge price hikes for 2017 were a “one-time pricing correction.”

The nation’s largest public insurers, however, have concerns.

Humana (HUM) said last month it would exit all of the ACA exchanges in 2018, regardless of what happens in Congress.

The CEO of Aetna (AET) said at a Wall Street Journal forum last month that Obamacare was in a “death spiral.” Aetna and Humana had planned to merge but the two pulled the plug earlier this year after a federal judge blocked it due to antitrust concerns.

Cigna (CI) said in November — just days before the election — that it was not planning to expand its ACA business this year.

Anthem (ANTM), which had hoped to merge with Cigna before that deal was also shot down in court, said last month it too was unsure of whether it would participate in the ACA exchanges in 2018.

Its CEO, Joseph Swedish, recently wrote a letter to two Republican House committee leaders in which he expressed support for parts of the American Health Care Act, the GOP bill that some have dubbed Trumpcare.

Related: What’s inside the Republican health care bill?

And UnitedHealth (UNH) said last April, back when Hillary Clinton was still leading Donald Trump in many presidential polls, that it was planning to get out of most ACA insurance exchanges by this year. It has lost more than $1 billion on the exchanges.

Related: Humana has already pulled out of Obamacare

Two smaller insurers, Molina (MOH) and Centene (CNC), stand to lose (or gain) the most from a future with Obamacare.

Those two companies have actually done well under the ACA, thanks to their focus on Medicaid — the government program that expanded under the ACA.

Molina, however, recently warned that it wanted to see major changes to Obamacare’s risk programs. Because of its success on the market, it has had to pay its rivals, That has hurt its own financial performance.

–CNNMoney’s Tami Luhby contributed to this report.

CNNMoney (New York) First published March 24, 2017: 1:01 PM ET


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Thousands of Trump University students file to get their money back


Trump University lawsuits settled for $25 million

Thousands of former enrollees at Trump University are one step closer to getting back at least some of their money.

More than 3,700 of them have filed claims as part of last year’s $25 million settlement agreed to by President Donald Trump, according to an attorney for the plaintiffs in the case. About 7,000 former students were eligible to submit claims, but the deadline to file was March 6.

If the court approves the settlement, former students are projected to receive back about 80% of the money they spent on live seminars or mentorships from the now-defunct, real estate education program, says Rachel Jensen, the class counsel for students nationwide.

The settlement brings the possible closure of three lawsuits that claimed Trump University defrauded students and threatened to drag Trump into court early into his presidency.

A court hearing will be held on March 30 to decide whether to approve the settlement, though one risk is a late challenge from a former student. Sherri B. Simpson of Ft. Lauderdale, Florida filed an objection to the settlement with U.S. District Judge Gonzalo Curiel in San Diego, where the cases have been consolidated.

Simpson, who says she spent about $20,000 on Trump University courses in 2010, told CNN she wants more from the President than just a portion of her money back.

“What he did to me and what he did to everybody else was really fraudulent and I’d really like to take him to trial. I’d like to hold him accountable,” Simpson said.

Simpson said in addition to a refund and three times the amount she spent on the programs, she also wants an apology from President Trump.

John F. Banzhaf III, a law professor at George Washington University, said Simpson’s objection could delay or even derail the settlement, because if the judge rules in her favor, the settlement would have to be adjusted to allow additional students to opt-out. If the judge rejects her argument, she could appeal.

“What she is doing could torpedo the settlement. If the court grants her request, it means she would be free to sue Donald Trump on her own,” Banzhaf said.

Trump University is the defunct, for-profit real estate seminar business Trump launched in 2005. It promised to teach students investing techniques they could use to get rich in real estate — just like Trump.

Some students ended up paying tens of thousands of dollars. While the initial Trump University seminar was free, teachers would then upsell them for another program. A “one-year apprenticeship,” which was effectively a three-day seminar along with the phone number for a “client advisor,” cost $1,495, according to court documents. A “mentorship” cost at least $10,000 and the most expensive, the “Gold Elite” program, cost $35,000.

Trump University effectively closed in 2010, the same year the New York Department of Education directed the program to stop operating without a license.

Was it a fraud? In advertisements, Trump said he “hand-picked” the instructors himself, but during a deposition, Trump did not remember a single instructor when a list of names was read. Lawsuits also argued the program was marketed as a university when it was not licensed.

The first of the three lawsuits was filed in 2010. Ultimately, there were two class action suits and a suit from the New York Attorney General Eric Schneiderman.

Donald Trump agreed to settle on November 18, just 10 days after his victory. It saved the president from having to testify in a trial in San Diego.

The settlement is a complete turnaround from Trump’s earlier position on the lawsuits. “This is a case I could have settled very easily, but I don’t settle cases very easily when I’m right,” he said in March 2016 at a Republican presidential debate.

“We are pleased to announce the complete resolution of all litigation involving Trump University,” a Trump Organization spokesperson said at the time of the settlement.

“While we have no doubt that Trump University would have prevailed at trial based on the merits of this case, resolution of these matters allows President-Elect Trump to devote his full attention to the important issues facing our great nation.”

Trump has remained defiant about the settlement, even suggesting in a Tweet in June he may re-open his shuttered school in the future. When the settlement was reached, then President-elect Trump tweeted: “I settled the Trump University lawsuit for a small fraction of the potential award because as President I have to focus on our country.”

Felicisimo Limon, one of the former students who submitted a claim, told CNN he lost about $30,000 on real estate courses he called, “all lies.”

Limon, a retired Navy veteran, and his wife attended a free seminar near San Francisco in 2008. He says Trump University representatives convinced him to pay thousands of dollars for seminars he later realized did not include any advanced real estate techniques.

“I am really happy there is a settlement. I was not looking forward to a court fight with Donald Trump,” Limon told CNN on Monday.

Limon says he submitted a claim for $29,000 of more than $30,000 he believes he is owed.

trump university limon
Felicisimo Limon who told CNN he lost about $30,000 on real estate courses he called, “all lies.”

He says the Better Business Bureau of Metropolitan New York, which is administrating the settlement, asked him for receipts of his payments. And after several years Limon says some of his receipts are missing.

He isn’t sure of what the final amount of his settlement will be but joked that he deserves more than he put in.

“I think they had my money for so long, they should give me interest on top of it,” he said.

Bob Guillo, another former student profiled by CNN, said he’s out $35,000 and that he deserves all his money back. Though he thinks the settlement is unfair, the 77-year old retiree doesn’t want to go through a drawn out lawsuit.

The $25 million settlement will be divided with about $21 million going to students covered in two California class-action suits and $4 million going to additional students covered by the suit filed by New York Attorney General Eric Schneiderman.

The attorneys involved waived all fees.

CNNMoney (New York) First published March 23, 2017: 4:50 PM ET



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