Playing Chicken

Bruce Springsteen was right. You really could have 57 stations with nothing on. There were tons of reruns, and worse, the same shows were on multiple stations. One saga looked familiar. It was a New York production, a remake of a Hollywood classic. Only this time we didn’t get James Dean. Instead, the two ne’er-do-wells racing the stolen cars to the cliff were Donald Trump and Mitch McConnell. In this version they both jumped out in time but the American public was bound and gagged in the trunk. Dozens of stations were showing A President Without A Clue.

The Patient Protection and Affordable Care Act (Obamacare) took its first breath on March 23, 2010. It survived over sixty Congressional assaults, but died of stab wounds and blunt force trauma on October 13, 2017. We now have Trumpcare.

Obamacare was a failed attempt to make health insurance universal and affordable. It failed. Millions of Americans did acquire better, cheaper coverage, but others did not. You can trace the problems to the design, the actual language of the bill, the process (numerous Republican amendments and poison pills), or the concerted effort of the Republicans to discredit and destroy it once it became law. It doesn’t matter. We knew the goals and the PPACA came up short.

What is the goal of Trumpcare?

The last post of this blog covered Donald Trump’s Executive Order a few days before he issued it. The changes, the expansion of cherry-picking association policies and the revival of short term contracts, are not immediate. The first step is a sixty day period for the public and the stakeholders to comment. The immediate impact is Market Instability, the hallmark of Trumpcare. I talked with insurers on Friday. They will be ready to roll out alternative products by January 1^st.

Trumpcare was born with the elimination of the Cost Sharing Reduction Subsidy. Trump had been threatening to do this for months even though many, including his then HHS Secretary, Tom Price, had urged him to continue the program until Congress passed an Obamacare alternative. You may remember that these threats were the reason Anthem withdrew from the individual market.

There were four steps to individual health insurance under Obamacare, all based on the personal or family income of Americans who didn’t have access to coverage at work.

• Income below 138% of the federal poverty level – Medicaid
• Income between 138% to 250% of the federal poverty level - A tax credit subsidy to help pay for the premium and a cost sharing reduction to reduce the deductibles and out-of-pocket costs
• Income between 250% to 400% of the federal poverty level – A tax credit subsidy to help pay the premium
• Income in excess of 400% of the federal poverty level – Full premium

The insurers are contractually obligated to reduce the deductibles and out-of-pocket costs for those who qualify, but due to a failure in the wording of the law, the federal responsibility to fund it became a political football. Republicans sued and the courts let the funding continue as long as the President defended it. I don’t know that anyone really believed that Trump would do more than threaten to upend the market. But which insures could take a chance?

Insurers across the country are now being forced to decide whether or not to withdraw from the individual market. At the very least premiums must be increased to cover their additional exposure. Excellent reporting by Stephen Koff in Saturday’s Plain Dealer detailed how insurers were forced through the difficult processes of preparing rates for each state and how this will impact the consumers, the insurers, and yes, the American taxpayers.

It is assumed that Trump will institute this immediately, cutting off payments due for the rest of 2017.

Medical Mutual of Ohio, based in Cleveland, says it will lose $3 million to $5 million in just those three months because of this. The company is large enough to withstand it. Smaller companies might not have the same financial fortitude.

Consumers who qualify for a tax credit subsidy will receive a higher subsidy. The Congressional Budget Office, according to the Plain Dealer, projects that this one decision will increase the “deficit by $194 billion in the next 10 years”. And those that don’t qualify for subsidies will see higher premiums as soon as January 1^st.

Mitch McConnell and Paul Ryan have been playing chicken with 20% of our economy and the way Americans access and pay for healthcare for over seven years. It was cynical and unprincipled. It took Donald Trump to drive over the cliff.

DAVE

www.cunixinsurance.com

Picture – Cliff Straight Ahead - David L Cunix

 

 

Havoc

The wire services are abuzz with news that President Trump, the guy who campaigned in part on his disdain for President Obama’s use of the Executive Order, is poised to sign another Executive Order dealing with health insurance. Frustrated and confused by the Republican controlled Congress’s inability to simply pass any unvetted, purely political legislation regardless of the potential harm it might do to both the economy and the public’s access to care, Donald Trump is more than willing to take matters into his own hands.

The word for today is ASSOCIATION. Associations are not inherently good or bad. In fact, we have had the term Association within the health insurance lexicon for years. Small businesses in the Greater Cleveland area have joined COSE (Council of Smaller Enterprises) or NOACC (Northeast Ohio Area Chamber of Commerce) to get a discount on their group health insurance policies. The discount was often no more than the premium tax that wasn’t assessed on an association group contract. The businesses were still subject to health underwriting and the policies conformed to Ohio regulations.

I used to write health insurance on certain hardware stores. The stores were part of a franchise and the owners were given guaranteed access to an association health policy, the association of XXXX Hardware Stores. It didn’t take long for some of the owners to realize that if they and their employees had better than average health, they could purchase a group policy in the open market. The guaranteed issue, no health questions asked association policy became the insurer of last resort. The healthy bailed out until the only ones left were the most expensive to insure.

The difference between these two types of associations is that in the first example association members and non-members were on equal footing. The only thing different was the absence of a premium tax, which may or may not have been as much as the membership fee into the organization. In the second example, one path led to a health insurance policy that was selective and rewarded the healthy and/or punished the sick while the other path led to a policy that charged everyone the same price regardless of risk.

The more open, less selective plan was doomed to failure.

Senator Rand Paul (R-KY) has long championed a version of the association health insurance model. His option would allow businesses or individuals to form associations specifically created to avoid the regulations and consumer protections of The Patient Protection and Affordable Care Act (Obamacare). And President Trump appears to be ready to sign off on this.

The Paul / Trump associations will offer flexibility and lower premiums and will be hailed as a consumer benefit. There are two ways that these association policies can save money and both center on flexibility.

1. The policies will have the flexibility to eliminate a broad range of coverages for particular illnesses. The rush to the bottom will feature policies that fail to cover specific conditions or will place limits on the amounts paid.
2. The policies will have the flexibility to ask health questions and choose to insure only the healthiest individuals and groups.

And who does that leave on the outside looking in? The unhealthy, the older worker, and eventually everyone who might be a worse than average risk. In other words, the unlucky. And the unlucky will be trapped in a health insurance death spiral consisting of individuals and families dependent upon the good graces of a system that was initially designed to spread risk across the broad spectrum of American citizens. There is a reason why the National Association of Insurance Commissioners (every state has one) has adamantly opposed this type of association health policy. Someone has to look out for the American consumer.

My friend and fellow agent, Barb, heard about this possible change and exclaimed, “It will be just like it was where people with preexisting conditions can’t get covered!”

So a couple of quick questions:

Can he really wreck this much havoc on 20% of the economy without Congressional approval? YES.

Are you young enough, healthy enough, and lucky enough to not be hurt by this? HOPE SO.

DAVE

www.cunixinsurance.com

Banner – Lianesha Mays

A Small Victory

Birth Control was always a point of contention. Facing numerous failures to execute one large sweeping rebuke of President Obama and his most important legacy, the Patient Protection and Affordable Care Act (Obamacare), the Trump administration continues its smaller scale attacks of sabotage, subterfuge, and repeal by executive fiat. President Trump’s latest victim is the coverage for Birth Control Pills, IUD’s, and the Morning After Pill.

This blog has detailed Obamacare’s numerous battles to provide no-cost reproductive coverage for women. Making this a part of the Preventive Care Benefit, FREE and available to just about everyone, intensified the fight. And let us be clear, this was a fight Secretary of Health and Human Services Kathleen Sebelius wanted. Though a majority of American women may favor and utilize some form of contraception such as Birth Control Pills, the addition of IUD’s and the Morning After Pill guaranteed that powerful forces would never settle for anything less than the total elimination of this benefit.

Trump gave them what they wanted this past Friday.

Before we go any further, let us first address the accessibility of Birth Control. Under the PPACA the pills, or at least many versions, are FREE. With Birth Control Pills being lumped in with the Preventive Care Benefit, both the cost and the stigma associated with contraception was eliminated. And though many organizations will now eliminate the benefit under either religious or moral grounds, Birth Control Pill will still be prescribed to their employees and may still be covered. We will just revert to the way it used to be. Young women will parade into their doctors’ offices complaining of menstrual issues and the doctors will prescribe the Pill to regulate their cycles. The medication will be covered, just not free, so that we will also be back where access to contraception was as much a class issue as it was religious. Can the employers remove this medication completely from their lists of covered meds? In some instances, perhaps. I sure wouldn’t want to be the HR manager that had to explain this to the mother of a distraught 15 year old.

And while we are here, let us take a moment to award this year’s King of Hypocrisy Award to Tim Murphy who was just forced to resign from Congress.

All health policies force us to pay for certain medications and/or procedures that we, personally, couldn’t or wouldn’t use. A single, never married, male never encountered any of the claims associated with pregnancy or menopause. My prostate cancer claims were paid with the premiums of men AND women. We are all in this together. You might find the concept of organ transplants for adults over 50 as an unnecessary luxury, a cost that should be borne by the organ recipient. Perhaps, but that isn’t how our system works. We don’t take a poll to see which health issues you choose to cover. Here we spread the risks amongst as many people as possible.

There are organizations that are applauding this latest executive action. And since it was broken into two parts (religious organizations and those with a moral objection), at least part of Friday’s order may survive a court challenge. I view it as another step towards separating health insurance, the way we access and pay for healthcare, from employment. I certainly understand why the Catholic Church didn’t want to pay for Birth Control Pills for nuns (They were exempted), but do you want to be forced to ask about the Pill when you are applying for a job at a machine shop? Where, exactly, does the line get drawn?

I have insured churches and synagogues. I have insured the deeply religious and the ritualistically observant of many faiths. My clients, in almost every case, simply chose to forego those benefits that they deemed inappropriate. They didn’t try to impose their deeply help values on the rest of society.

On Friday the Trump administration scored a small victory. One hundred thousand women and/or their daughters may be forced to pay for Birth Control Pills. Some will. Some won’t. We won’t know for about five years if this leads to more unplanned pregnancies, unwanted children, and abortions. But right now the thing to remember is that Donald Trump scored a small victory.

Break out the Champagne!

DAVE

www.cunixinsurance.com

Picture - "Time to Dedicate Another Trophy" by David L Cunix