Freedom

Game Night, a new movie currently showing in local theaters, includes a scene where a couple is locked in a room. The man asks his wife for matches. “You’re going to light a fire in a windowless room that we’re trapped in”? He responds, “Why do you have to make my idea sound so stupid?”

There is an impulse to do something. Anything. Action without thought. Action without any notion of the consequences. That may be entertaining in the movies, but it has been down right depressing in government. We have endured eight years of Congress threatening to repeal Obamacare, the Patient Protection and Affordable Care Act. Eight years of our elected representatives begging for matches in a locked windowless room. Pardon me if I make their actions sound foolish and irresponsible.

Republican legislators, especially those stuck in statehouses with Washington as their goal, felt compelled to express their hatred of Obamacare whenever and wherever they could. We will ignore, for the moment, both the value and the Republican roots of the law, and focus just on the cynicism. It was important for these men and women to report to their constituents that they were doing something. Lucky for them, their base never really asked what they were doing or how these bills might impact the access and payment of health care. The U.S. House of Representative passed over 60 bills that repealed all or most of the PPACA. And those mired in the minor leagues did what they could at the state level.

And that brings us to Ohio. Thanks to term limits on the state level, our Columbus politicians rotate through the chairs at the statehouse and Washington. A defeated U.S. Senator grabbed the State Attorney General job on his way to running for Governor. By the way, I should probably mention that before DeWine was a Senator he was the Lieutenant Governor. Before that, Congress. And yes, before that, he was in the Ohio State Senate. You know, an outsider. So the meaningless law you promote today may be a major part of some future campaign.

As Stephen Koff reported in the Plain Dealer, Ohio has been looking at a Section 1332 Waiver since 2015 to eliminate the Individual and Employer Mandates. As noted in August, the state expressed a real interest in applying for a Section 1332 Waiver to stabilize our market. The stakeholders were invited to participate. Serious people, experts in the various avenues we could pursue, invested significant time to craft a proposal. One of the options, a reinsurance program, had real promise. And then the plug was unceremoniously pulled. Now? Now we are back to a request to eliminate the Individual Mandate.

It was just last August that our Governor, John Kasich (R) and Colorado’s Governor, John Hickenlooper (D), were in Washington begging Congress to act responsibly. They strongly promoted both the Individual Mandate and the funding for the Cost Sharing Reduction. The Kasich administration has now officially given up. The Republican controlled legislature has demanded the filing of the waiver on the Individual Mandate. And though no one appears to have given any thought as to the consequences of the elimination of the mandate, or created the positive alternative that warrants the change, Ohio is searching for matches…

A quick Idaho update – As noted in my last post, Rotten Potatoes, Idaho has decided to create a parallel universe for health insurance. Healthy individuals will be able to purchase underwritten policies that do not comply with the PPACA. The initial offerings will have separate deductibles for name brand drugs and exclude coverage for maternity, etc. The rates for a 45 year old may be half of a compliant contract. And, as the healthy and those wishing to gamble migrate to these policies, the exchange policies which cover preexisting conditions and qualify for a subsidy will rise exponentially. This is the very definition of adverse selection.

Blue Cross of Idaho is the driver of this program. Their new policies, with fewer protections and less coverage, are called Freedom Blue. I love naming a potentially insufficient policy that may not be fully understood until time of claim – Freedom Blue. Because, when you think about it, freedom is just another word for nothing left to lose.

DAVE

www.cunixinsurance.com

Photo – David L Cunix – Stuck on the Wrong Side of Liberty

Rotten Potatoes

Congratulations to Idaho, now in the lead in the national race to the bottom.

Idaho Governor C. L. “Butch” Otter, his handpicked successor, Lieutenant Governor Brad Little, and Insurance Director Dean Cameron addressed the Associated Press at the annual legislative preview last month.

Congress and President Donald Trump have eliminated the individual mandate requiring all Americans to buy Obamacare plans or face financial penalties. That means we will no longer be penalized for buying coverage that doesn’t meet all of the Obamacare rules.

Modern Healthcare

According to the Associated Press report, “Cameron added that the goal is to reduce costs for essential healthcare coverage by 30% to 50%”. That’s a heck of a goal. Can it be achieved? The answer, of course, is a qualified YES.

Idaho hopes to create a two path system. The poor, the working class, and the sick would be forced down one bumpy road. The healthy and the gamblers would take the other road which could be a dead end.

Option 1

Idaho maintains its own exchange, Your Health Idaho, which offers policies compliant with the Patient Protection and Affordable Care Act (Obamacare). These policies, per the law, cover the ten Essential Health Benefits. Policies are guaranteed issue, cover pre-existing conditions, and don’t have a lifetime cap on benefits. Tax Credit Subsidies are designed to help the working class pay for the premiums.

Option 2

Rates could drop quickly if, with the state’s blessing, the insurance companies could cherry-pick the healthy and reconfigure the benefits.

• Underwrite – Accept only the healthy or charge more for those that aren’t.
• Pre-existing conditions – Limit or exclude ongoing health issues
• Cap Benefits per year or lifetime - $1,000,000 will be the starting point.
• Add co-pays to Preventive Care – Good-bye free colonoscopies and annual exams

You get the idea. It is like buying a car. That BMW would be a lot cheaper if you weren’t forced to pay for the engine and tires.

The Idaho Statesman reports that Director Cameron is adamant that the new plans will cover newborns and won’t have lifetime caps. I wonder if the regulations he is making up today will be in effect next month, much less next year or the year after.

The consequences of this move, if implemented and not blocked by the courts or the feds, are pretty easy to predict. Let’s look first at the PPACA compliant policies.

Policies on the Idaho exchange, Your Health Idaho, will increase substantially from day 1. President Trump eliminated the funding for the Cost Sharing Reduction Subsidy last fall. This will continue to impact premiums. As the healthy are siphoned off, the existing pool will simply become sicker and sicker. Each successive premium increase will force those paying the full premium to reassess their needs and risk tolerance. Those individuals and families who are eligible for the tax credit subsidy will continue to qualify for income based assistance. The premiums go up, their subsidies go up.

The non-compliant policies have a distinct price advantage. And though the initial offerings might appear to be insurance lite, it won’t take long for the benefits to devolve into a portfolio of non-coverage with plenty of Idahoans not truly understanding the limitations of their policies until the time of claim. For every 60 year old questioning the need for maternity coverage there is a 20 year old wishing to opt out of the cost of a policy covering cancer treatment. But this being the real world, we know that it will be the distraught 20 year old caught without maternity and the devastated 60 year old underinsured, or possibly uninsured, for cancer.

The good news is that Blue Cross of Idaho is really excited. According to the Idaho Statesman the insurer has been a driving force for this change. And really, it is pretty easy to understand why. The policies that Blue Cross of Idaho sells on the exchange will be allowed to rise to cover the anticipated claims while the new contracts will be specifically designed to not have long term expensive claims. Blue Cross will peel off the good risks and the exchange will be stuck with the rotten potatoes.

DAVE

www.cunixinsurance.com

Photo – Idaho Potatoes – David L Cunix

What Is The Point?

I have always been a pragmatist. This has served me well in my chosen profession, insurance agent, where my main function is to solve problems. My focus is the most direct route from Point A to Point B. But what happens if the people in charge have no interest in finding Point B and are busy debating the existence of Point A? That is the reality of the current health care debate.

During Tuesday evening’s State of The Union Address, President Trump proudly noted that he had eliminated the Individual Mandate? Why? Not why was he proud? Donald trump announces his accomplishments like a 3 year old standing by a potty. No, why was he proud, specifically, of eliminating the Individual Mandate? How does that help anyone access or pay for health care?

The answer, of course, is that the President has absolutely no idea what he did or how his actions will impact the cost of health insurance. The elimination of a portion of the nuts and bolts of the Patient Protection and Affordable Care Act (Obamacare), especially one with Republican roots, does not hurt the former President’s feelings. That may be the motivation, but the elimination of the Individual Mandate can only lead to higher premiums.

We have just entered the month of February. The insurance companies are still frantically trying to finalize all of the policies and changes that were crammed into this most recent Open Enrollment. Other departments are busy planning for 2019. We are only months from the insurers’ initial filings. How in the world can any insurer plan for 2019?

Neither the White House nor the Republican controlled Congress appear to be doing anything with health care. The issue has fallen off their radar screens. Not only wasn’t there a real Republican alternative to Obamacare, there also doesn’t appear to be any interest in creating one. They have moved on. But we haven’t.

The President received tepid applause from his Congressional cheering section when he noted the high cost of prescription drugs at the SOTU. Someone forgot to tell him how much the pharmaceutical industry has invested in this Congress. But let’s pretend that he and Congress were interested in getting a handle on these out of control costs. Who amongst them would take the lead? What, if anything, would get done?

The first step is to craft a consensus defining Point A and Point B. Then we might have a chance to improve the delivery and payment of health care in this country. Until then, what’s the point?

DAVE

www.cunixinsurance.com

Photo – A Couple of Dollars’ Worth - David L. Cunix