Hurricane Who? The Wheels of Repeal-Replace Are Still Rolling

Hurricane Who? The Wheels of Repeal-Replace Are Still Rolling

I hosted a seminar recently with some “mature” adults and received positive feedback. The seminar was on the basics of Medicare. We did not go in detail about the plans. Our objective was to lay a foundation of knowledge so the people would be better equipped when making decisions regarding their healthcare. Teaching about health insurance is akin to talking about the Bible. Whatever your spiritual persuasion (or choice to not partake) growing up in our culture you have a basic understanding of biblical stories and the overarching themes of the Bible.

Health insurance is a lot like that in many ways. People understand they are better off having it but their eyes glaze over when an in-depth discussion is broached on the subject. Herein lies the problem when having debates about “healthcare”. You cannot have a substantive discussion about policy if all the interlocutors do not have a baseline of knowledge to argue around. That is no slight to those who do not have “substantive knowledge” of healthcare. I would not be offended if two mechanics were discussing the differences between Chevy and Mopar. All I know is the necessity of having a vehicle, especially in Houston and I enjoy driving them. But I don’t have a working knowledge of engines to be able to argue which is  better to purchase to accomplish my objectives.

Let me add another layer to this morass of confusion-I bid you come deeper into the weeds. We are not discussing “healthcare reform” although that is the moniker. What we in fact are discussing in our current politics is healthcare insurance regulations. We’re just talking about how to pay the bills. We haven’t touched the ideas of controlling costs and improving quality. Our chief concern at this stage is access. That’s why there is so much talk of how many people will lose coverage if this or that bill is passed. How much money should be spent on Medicaid, read access for the poor. Will people with pre-existing conditions be charged higher premiums or denied outright-access for the sick. Will there be monies to reduce the costs of insurance premiums and deductibles and co-payments? The answer to that question is affordability. And if it is not affordable then I won’t be able to. . .you guessed it-ACCESS!

The Mandate

Is there still a penalty for not having insurance? According to Healthcare.gov there is a $695 fee per adult for not having a qualified health plan (QHP). A QHP includes the ten essential health benefits the ACA legislates every plan must cover. The purpose of the mandate is to encourage everyone to obtain health insurance. The estimated effect of most people being covered is the cost of insurance going down. Why would the cost go down? I’m glad you asked. All insurance is based on actuarial values. Simply put, the insurance company projects 20% of the people who are covered will spend 80% of the money coming from premiums collected. If the pool was 10 people according to the numbers I just quoted 2 individuals would use the insurance and the other 8 people will not. Those 2 people (the insurance carriers estimate) will use 80% of the money that was collected from those 10 people.

So, what happens when the pool goes from 10 people to 10,000 people? That’s a lot more premium dollar being collected thus reducing the risks the insurance company must bear. If their risks are lessened we can then assume the cost of said risk is lower subsequently the plan premiums would be lower. Remember I mentioned we were talking about health insurance regulations and not healthcare reform? Case in point. The cost of the service is not being considered. The cost of prescription drugs is not on the table at this point. The price of the insurance to have access to healthcare is what we are currently addressing.

Again, the purpose of the mandate is to get everyone in the pool. The new law does not repeal the mandate. The legislation as presented restructures how the penalty is collected. Under the current law the penalty is collected when you file taxes. Under the proposed law the penalty is assessed when the person tries to purchase insurance. What!

For example, Bill decides the premiums are too high in 2017 so he does not enroll in a health plan. 2018 he is a year older and a bit wiser so he decides to shop for coverage again. The insurance company asks if Bill had insurance in 2017. He replies negatively. The insurance carrier can charge Bill a higher premium because he did not have continuous coverage. Under the ACA mandate the penalty payments were placed in a fund to help pay for the subsidies the law allows. Under repeal-replace the penalty dollars go to the insurance carriers. This is not a statement of political position this is a presentation of facts.

 

Pre-existing Conditions

If you want to. No really! Under the current law insurance carriers cannot charge a higher premium or deny coverage to anyone with a pre-existing condition. Under repeal-replace the law gives discretion to the states to create rules of how the insurance carriers can determine who is covered.

Can we backtrack to another conservative idea we have not discussed lately? Do you remember the idea of selling insurance across state lines was put forth as a means of reducing premiums? The idea was that a carrier based in Arkansas would set their prices and then sell the same plan in California for the same price creating competition which would drive down costs nationwide. Simple right. But, Chevy’s don’t have hemispherical combustion chambers. In other words, it’s not that simple.

We don’t have to be data analysts to know there is a reason the cost of living is higher in California than it is in Arkansas. I don’t have the numbers, but I would venture to guess a doctor isn’t paid as much nor do they have as many doctors in Arkansas as they do in California. Do I need to go any further to get my point across?

Now, let’s add the new layer of giving freedom to the states to create their own laws about health insurance plans. We will never be able to create parity from state to state to use one state’s system as an example because the legal environment will be different in each state. Not to mention the cost of living and other factors we have yet to put on the table. It appears in our efforts to simplify things we are only complicating them further. If Arkansas decides to put in their law that the insurance companies cannot discriminate based on medical history and freedom loving Texans choose to eschew onerous regulations then will the sick Texans migrate to Hot Springs?

Enrollment Window

One last thing. I won’t belabor this point. The enrollment period is from November 1st until December 15th. You better decide about your healthcare before you complete your Christmas shopping. That’s all I got to say about that.

Leave a Reply