The Common Sense Health Insurance Outlook

After the mid-term elections, the common thought was that having a Democrat House Majority would mean peace of mind for those who have individual health insurance policies. Over the last two years, between Trump and the GOP House & Senate, all perspective on health insurance was lost and the last two years have been filled with anxiety caused by repeated attempts to repeal the ACA and constant efforts to weaken it.  

While all of this was going on, the A.C.A. Marketplace has continued on and by some measures is doing better.  Insurance company margins have continued to improve during 2018, and a number of insurers entered the market or expanded their service area for 2019. The average number of companies per state in 2019 is 4.0, ranging from one company in five states (Alaska, Delaware, Mississippi, Nebraska, and Wyoming) to more than 10 companies in three states (California, New York and Wisconsin). In 2019, 58% of enrollees (living in about 23% of counties) have a choice of three or more insurers, up from 48% of enrollees in 2018. Although there are an average of 4.0 insurance companies per state, many insurers do not participate statewide. Insurer participation varies greatly within states, and rural areas tend to have fewer insurers. On average, metro-area counties have 2.3 insurers participating in 2019, compared to 1.8 insurers in non-metro counties. In 2018, 87% of enrollees lived in metro counties. 

The main repercussions of Trump’s Executive Orders, Trump Administration actions and the GOP legislature is that the U.S. is turning into two countries for the sake of health care and as they say in real estate, it’s location, location, location.  It’s important to note that two of the three states that have more than 10 companies have their own health insurance exchange (California and New York).  New guidance from the Trump Administration would give states wider latitude to expand or narrow the income range eligible for subsidies, target them toward younger people or allow them to be used for less costly but skimpier types of insurance. This could result in the pre-ACA health insurance market where your health insurance choices are completely dependent upon the State you live in.  Because the real question is: Is Trump Pushing Health Insurance Innovation Or An ACA Rollback? In the next edition, I’ll take a look at the states that are having success with their State Health Insurance Exchanges. 

A shock to the system:

Well, the quiet on health insurance did not last long.  To the surprise of basically everyone, federal Judge Reed O'Connor ruled in December (2018) that the entire Affordable Care Act is unconstitutional since Congress zeroed out the penalty tied to the mandate to buy health insurance. See the Texas v. U.S. - Mandate-Severability Opinion.

What’s next: 

An appeal would go to the Fifth Circuit Court of Appeals, which is considered one of the more conservative appeals courts. If the Fifth Circuit agrees with this latest ruling, it'd be up to the Supreme Court to decide if it wants to hear the case.  At the fastest, this would be 2-3 years down the road before the Supreme Court would hear the case.  For now, nothing changes and the Affordable Care Act is still in place.  

Deeper Ramifications:

Since U.S. District Judge Reed O’Connor’s surprise decision, most of the attention has focused on the immediate threat to pre-existing condition protections and health insurance for 20 million people covered through Obamacare’s Medicaid expansion and subsidized insurance markets. If the ruling is ultimately upheld after appeals, that would all be wiped away. However, the 2010 health law has numerous other benefits that millions more have been getting for years now and have come to take for granted. Features like letting young adults stay on their parents’ plan, eliminating caps on insurance benefits, free preventive care and helping seniors pay their drug bills. Here’s 5 Ways Nixing The Affordable Care Act Could Upend The Entire Health System

Where did this come from: 

A group of 20 state attorney generals (all GOP) argued in a lawsuit that the individual mandate was now unconstitutional as result of last year’s GOP tax bill that set the individual mandate at zero.  The Trump Administration did not stand with the ACA and did not defend an existing law.  It was left to a group of 16 Democrat state attorneys general to defend the law.  It is becoming more clear that the quality of your health insurance will depend on your state of residence and whether your state is Red or Blue. 

Reactions:

The House took action week to defend the ACA against a lawsuit filed by GOP states.  The Trump Administration has declined to defend the ACA in the suit which argues that the law’s protections for people with pre-existing conditions should be overturned. It’s unusual for the DOJ to not defend standing federal law. 

What’s most troubling is that the GOP consistently makes claims that are in direct contrast to their actions including dozens of attempts to repeal the ACA and Trump’s crippling Executive Orders.  Here’s a rundown of when Republicans Say They Will Protect Pre-existing Conditions. Their Records Say Something Else. John Boehner is correct in stating that the Republican Party is kind of taking a nap somewhere.

There is a saying to beware of what you wish for, because it might just come true. Republicans and Trump finally got their wish, although most are probably not happy that their wish came true. Trump is far and away, the happiest person about this, tweeting “Great news for America!”. Remember, Trump gets his health insurance through the Federal Government. The rest of his tweet talked about Congress passing a new law.  Guess that Trump missed the last few years where the GOP made multiple attempts to repeal the ACA while not being able to put together their own replacement plan. This is definitely not great news for Americans with pre-existing health conditions estimated to be between 25% and 40% of the population.  

As reported by Axios, Suddenly everyone is defending the Affordable Care Act:

  • Democratic attorneys general have vowed to appeal.
  • Pretty much every trade group is befuddled by the decision. The American Medical Association called the ruling "a stunning display of judicial activism." (However, the Council for Affordable Health Coverage, a conservative group funded by dozens of major companies, viewed this as "an excellent opportunity.")
  • Legal experts who have opposed and supported the ACA almost uniformly agree the judge's legal rationale is flawed or "indefensible."
  • The biggest problem is the ruling ignores a well-established legal principle that courts should be cautious about striking down an entire law because of a problem with one piece of it. Law professors Jonathan Adler and Abbe Gluck wrote about this in the New York Times this weekend. (Adler supported the 2012 and 2015 legal challenges to the ACA.)

A call to bipartisanship: 

This is a great opportunity for Congress and Trump to grow up and model good behavior such as speaking respectfully to each other and to setting up bipartisan committees to come up with a solution that will be acceptable to both Republicans and Democrats. There is a reason why these people are called representatives, however, they seem really unclear as to whom they represent.  There is more that Americans agree on with Health Insurance, then they disagree on.  Americans want access to Affordable Health Insurance, choice in their Health Insurance & Health Care and no penalty for pre-existing conditions.  

In a sign that perhaps the GOP is slowly awakening, in a December 11 (2018) floor speech, GOP Senator Lamar Alexander signaled that Republicans want to move away from the acrimonious question of how to help people who don’t have employer-provided health insurance, a question that dominated the ObamaCare debate of the past decade, and focus instead on how to make treatment more affordable.  He noted that experts who testified before the Senate in the second half of last year estimated that 30 to 50 percent of all health care spending is unnecessary. “The truth is we will never have lower cost health insurance until we have lower cost health care,” Alexander said on the floor. “Instead of continuing to argue over a small part of the insurance market, what we should be discussing is the high cost of health care that affects every American.”

A Senate Republican aide said GOP lawmakers are prepared to abandon the battle over the best way to regulate health insurance and focus instead on costs, which they now see as a more fundamental issue.

“There’s no point in trying to talk about health insurance anymore. Fundamentally, insurance won’t be affordable until we make heath care affordable, so we have to do stuff to reduce health care costs,” said the aide. “There are lots of things that can be done to reduce health care costs that aren’t insurance, that aren’t necessarily partisan,” the source added.

In 2000 the United States spent considerably more on health care than any other country, whether measured per capita or as a percentage of GDP. At the same time, most measures of aggregate utilization such as physician visits per capita and hospital days per capita were below the OECD median. Since spending is a product of both the goods and services used and their prices, this implies that much higher prices are paid in the United States than in other countries. But U.S. policymakers need to reflect on what Americans are getting for their greater health spending. They could conclude: It’s the prices, stupid. Read the full research paper: It’s The Prices, Stupid: Why The United States Is So Different From Other Countries.

A Health Insurance Common Sense Solution:

 

As I wrote about in A Health Insurance Roadmap, this is a perfect example of Occam’s Razor - the simplest solution is usually the correct one. My suggestion, based upon last year’s A Health Insurance Roadmap, is going with the simplest solution, which is a Medicare for All based plan. The issue with this statement is that Medicare for All has many different meanings. My solution does not involve single payer or complete universal health insurance.  It does include doing away with all group health insurance plans, period. Everyone, between the ages of 18 and 65 goes into the same health insurance pool. This accomplishes the goal of spreading the risk between healthy and unhealthy people and allows people to have portability of their health insurance and not have to switch medical providers and medications. 

Medicare Part A is extended to cover all U.S. Citizens.  To some degree, this already is in place as under the Emergency Medical Treatment & Labor Act (EMTALA) ensures public access to emergency services regardless of ability to pay. Section 1867 of the Social Security Act imposes specific obligations on Medicare-participating hospitals that offer emergency services to provide a medical screening examination (MSE) when a request is made for examination or treatment for an emergency medical condition (EMC), including active labor, regardless of an individual's ability to pay. Hospitals are then required to provide stabilizing treatment for patients with EMCs.

The traditional Medicare Parts B & D (plus MediGap Supplements) are mostly only available through insurance companies under Medicare Advantage Plans. Medicare Parts B & D are only offered in parts of the U.S. where is there are no participating insurance company (or only one company, so consumers have a choice).  Medicare Advantage is growing quickly and now accounts for one third of all new Medicare enrollees. Except for emergency room visits, health insurance basically still works the same. All new enrollees, including those turning 65 would only go into Medicare Advantage programs.  And, Medicare Advantage programs do have issues that would need to be addressed. 

The remaining question is funding and employer premiums.  Medicare Taxes continue and the income cap is removed, that helps stabilize Medicare (this is only a start).  Employers would then be able to fund Health Care Spending Accounts that employees use to pay health insurance premiums (HSA’s allow employees to use pre-tax dollars to pay health care costs). Yes, this is a simplistic, incomplete solution, however, it is a solid start that maintains the private health insurance marketplace while not greatly increasing the burden on the federal government.  

States and cities are moving ahead with their own plans as at least 10 states are exploring whether to allow residents to pay premiums to “buy in” to Medicaid, the federal health care program for the poor. See: Medicaid ‘Buy-In’ Could Be a New Health Care Option for the Uninsured. Single payer is on the table as new Governor Gavin Newsom is already moving California toward single-payer. And New York City Mayor De Blasio Unveils Health Care Plan for Undocumented and Low-Income New Yorkers. 

The health insurance sector remain stable heading into 2019, according to new analysis by S&P Global Ratings.  "A combination of still-favorable business conditions, financial factors, and diminished near-term legislative uncertainty balances our concerns relating to merger and acquisition activity, elevated policy risk, and re-emergent legal overhang," said S&P analyst Joseph Marinucci. Here’s how: A robust job market bolstering employer-sponsored plans, Baby Boomers transitioning to Medicare Advantage, and ACA exchanges attracting new payers are good signs for health plans in the coming year.

The reality is that single payer health insurance is not sustainable in the U.S. economy. It’s time for a bipartisan plan that allows everyone to purchase coverage while being fiscally sustainable. Our system and economy are based upon sound private markets supplemented by government programs as needed, the social safety net. It’s all about managing expenses and having realistic expectations. It’s incredible that in our country that we have people without access or only limited access to quality health care along with being forced to ration medications. It’s time for us to have a common sense health insurance plan.  

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