One glaringly obvious problem as republican legislators were working on their healthcare plan was that they didn’t understand how insurance works. Every auto and homeowner’s insurance company participates in a reinsurance plan which make these policies less expensive for the consumer. Reinsurance plans are designed to kick in when the primary company is at risk for not honoring its claims because of unforeseen circumstances. This program, called “risk corridors” was originally part of the ACA (THIS IS NOT A BAILOUT), but the US congressional republicans did not honor this commitment which is why there have been spikes in premium rates, higher deductibles and copays as well as insurance companies leaving the ACA marketplace.
If the president and the republican legislators continue to not meet its commitments required by the 2010 ACA/ Affordable Care Act/ Obamacare, they are responsible for its implosion and yes, they own it, especially when there are sensible steps that can be done to stabilize the ACA market which will reduce costs to consumers.
Here is the rest of the story…
On July 30, 2017, Reed Abelson, Abby Goodnough and Katie Thomas of the New York Times penned the following report, “How to Repair the Health Law (It’s Tricky but Not Impossible).”
“Citing the protracted uncertainty over the law’s future, many insurers have proposed big rate increases again for next year even though many are no longer incurring big losses in its marketplaces. People covered by one insurer in Maryland could see premiums rise by more than 50 percent if proposed rate increases go into effect, and premiums for plans in Virginia and Connecticut could increase more than 30 percent. In North Carolina, where rates are already among the nation’s highest, Blue Cross and Blue Shield of North Carolina wants an increase of nearly 23 percent but said it would have sought less than half that amount under more predictable circumstances.”
“Among the hardest hit are those who do not qualify for subsidies to help with premiums or out-of-pocket costs, which rise along with rate increases. Michael Lawson, an independent consultant for local governments in Washington, D.C., said the monthly premiums for his basic plan from CareFirst jumped to $527 this year from $290 last year. He is 60 and earns too much to get a subsidy, but because of various health problems he has already reached his $5,000 deductible for the year. He likes his plan but thinks that to keep rates more stable, Congress and the Trump administration need to do a better job of enforcing the law, particularly its requirement that most people have health insurance.”
(Lawmakers) need to enforce the A.C.A. as it’s written,” he said. “Don’t kill it by benign or even malicious neglect.”
“The politics are exceedingly tricky in a divided and dysfunctional Washington, but economists, insurers, doctors and health policy experts across the political spectrum agree that immediately addressing three or four basic shortcomings in the existing system would go a long way toward making the law more effective and financially stable.”
Stabilize the Markets
“There is widespread agreement that the first order of business is to calm very jittery insurance markets. “You need to stabilize things before we change them,” said Michael Neidorff, the chief executive of Centene, one of the few insurers that are aggressively expanding in the market.”
“Time is of the essence: Next month, insurers must decide what they charge for 2018 or whether they want to stay in the marketplaces at all.”
“The most significant step would be to guarantee continued funding to reimburse insurers for waiving deductibles and co-payments for low-income customers, as the health law requires companies to do. The Trump administration has threatened to stop making the payments; insurers are now getting them on a month-to-month basis.”
“If these so-called cost-sharing reductions are not paid for the remainder of the year or in future years, people will see premiums go up by nearly 20 percent to cover them, according to the Kaiser Family Foundation.”
“Companies could also decide to leave the market, creating a potential collapse, said Mike Kreidler, the insurance regulator for Washington State. In a statement issued Friday, state regulators urged lawmakers to move quickly. “We have insurers who are very apprehensive and very nervous,” he said.”
“While insurers are hopeful that Congress will pass legislation guaranteeing the payments, they would also welcome a commitment from the administration that it, too, wanted to stabilize the market. “There seems to be a conflict internally: Are they going to sabotage the market or are they going to help the market?” said Gary Cohen, a former Obama administration official who is now an executive at Blue Shield of California.”
“President Trump has hinted he is unwilling to help. His Twitter post on Friday reacting to the Senate vote, like others he has posted recently, suggested a willingness to watch the market collapse: “As I said from the beginning, let ObamaCare implode, then deal.” In another post on Saturday, he warned that bailouts “for insurance companies” could “end very soon.”
“But the fundamental problem that many insurance customers face is sky-high deductibles or premiums that are simply out of reach. Health economists and others say there are ways to lower premiums so more people can afford coverage.”
“One of the best quick fixes that is not controversial is reinsurance,” said Paul Ginsburg, a health economist who directs the Center for Health Policy at the Brookings Institution. That would involve the government helping insurers pay for the sickest, most expensive people, whose costs can drive up premiums in places where there are not enough healthy customers to balance them out.”
“The Affordable Care Act provided the funding for three years, but many people think reinsurance needs (risk corridors) to be permanent. A bipartisan agreement seems possible now because in their failed replacement bills, both House and Senate Republicans had supported the idea of providing assistance to insurers, as well as extra “stabilization” funding for states to potentially help lower people’s premiums and deductibles.”
“Over the longer term, lawmakers need to find a way to encourage more people, especially those who are healthier, to enroll, said Dr. Martin Hickey, the chief executive of New Mexico Health Connections, one of the few remaining start-up insurers created by the law. He said he was proposing rate increases of anywhere from 20 to 25 percent, although they were proposed before the Senate bill failed.”
“The pool needs to get stabilized or otherwise we will see year after year of double-digit increases,” he said.”
Reduce Drug Prices/ Case study Dalessandro family
“Mark Dalessandro, an adjunct professor at a community college in Tucson, saw his out-of-pocket expenses for the asthma medication Advair jump to $292 per month this year from $50 per month last year, after he was forced to switch plans because his insurer, Blue Cross Blue Shield of Arizona, left the market in his area. He said he had little choice but to pay for it. “For just a month’s supply, for something that helps me breathe, what are you going to do?” he said.”
“If there is one health care issue that both Republicans and Democrats have vowed to fix, it is the rising cost of prescription drugs. During the presidential campaign, Hillary Clinton and Mr. Trump railed against outrageous prices set by pharmaceutical executives like Martin Shkreli and drug companies like Mylan, the maker of the EpiPen.”
“And though Mr. Trump has excoriated the industry, his administration has not yet put forward a plan to address the issue. A draft executive order on drug prices that was obtained by The NY Times in June revealed a far more industry-friendly approach, easing regulations in the hopes the drug companies would lower prices on their own.”
“Democratic leaders in Congress identified rising drug prices as one of their economic priorities in a new campaign, “A Better Deal,” that was made public this past week. Under their plan, a new federal agency would take action against companies that engaged in egregious “price gouging,” Medicare would be allowed to directly negotiate the price of drugs for seniors, and companies that raised their prices significantly would have to warn the federal government in advance, as well as give a reason for their planned price hike.”
“That is not to say the parties have not found some areas of agreement. There is bipartisan support for measures that would speed more generic drugs to market, including a proposal that would crack down on brand-name manufacturers that bar generic companies from gaining access to the samples they need to make copycat versions. And Dr. Scott Gottlieb, the new commissioner of the Food and Drug Administration, is taking steps to encourage more competition among generic manufacturers.”
Expand Access for Poor
“Although the Affordable Care Act has greatly expanded access to coverage — the nation’s uninsured rate fell to 10.9 percent last year, according to Gallup, from 17.1 percent in late 2013 — many Americans remain shut out. One of the biggest reasons is the refusal of 19 states to expand Medicaid to virtually all low-income citizens, as the law’s authors intended. Some may be reconsidering now that repeal of the health law seems unlikely.”
“The Supreme Court ruled in 2012 that it was unconstitutional to require states to expand the program, leaving it to each governor and legislature to decide. As a result, more than 2.6 million of the nation’s poorest citizens remain in a coverage gap: They cannot qualify for Medicaid, but because the law was written with the assumption that they would all get it under a national expansion of the program, they are not eligible for subsidies to help them buy private coverage.”
“About half these people are black and Hispanic, according to the Kaiser Family Foundation; about two-thirds live in Florida, Georgia, North Carolina and Texas.”
Case Study of Family in Alabama (Jeff Session’s state) without Medicaid expansion
Ms. Thrasher said she was supposed to see the doctor for blood work and prescription refills at least four times a year but could afford to go only twice, paying a flat fee of $85.
“Sometimes it might as well be $1 million,” Ms. Thrasher said. “When you’re broke, you’re broke.”
“Under the terms of the health law, the federal government covers 95 percent of the cost of expanding Medicaid and will always pay at least 90 percent. But with many state lawmakers anxious about taking on even a small share of the expansion costs, one alternative that could possibly win bipartisan support is extending subsidies for private coverage to people whose income is below the poverty level.”
“Regardless, some holdout states will most likely reconsider expanding Medicaid with repeal of the Affordable Care Act off the table for now. In Maine, for example, voters will decide whether to do so in a ballot measure this fall. Republican lawmakers in Kansas, North Carolina and South Dakota have also expressed growing interest.”
In Alabama, though, Ms. Thrasher remains pessimistic.”
“Alabama sticks to its guns,” she said, “even if it’s shooting itself in the foot.”
Gronda, thanks for sharing this well written article. My current post is along the same lines that the President and Congress own this issue. If the ACA fails, it is on there watch, especially with their active role on defunding or threat of more defunding commitments to insurers. The sad truth is the President’s career is one of stiffing people on committed payments, whether it is bankruptcy or just not paying someone.
This “not paying” sums up a key told the GOP Senate has played to destabilize the insurance market. Humana left the exchanges with the federal government owing them $591 million, e.g.
The ideas in the article are excellent. I do think we can use Medicare to stabilize markets with no competition or insurers. I have also suggested we extend Medicare eligibility for all to age 62. But, we should measure the success of making these changes.
Finally, we should remind people that the ACA borrowed from a GOP idea that was advocated by The Tea Party leadership for the whole country through Senator Jim DeMint. Unlike attempts to rewrite history, there were several bipartisan meetings to discuss healthcare. It was only toward the time of the vote did the GOP get marching orders to not vote for it. When people say Dems did not invite the GOP to be at the table is just not true.
I have been saying this for four years. Let’s improve this imperfect law. Keith
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Sorry for the typos. Outside of a bad use of “there” it should say “key tool of the GOP led Senate.” My apologies.
Please never worry about typos etc. It looks like bipartisan efforts are appearing on both houses of congress but the question is, will leadership block these attempts to reasonably fix Obamacare.
How many blogs have both of us written about hoe republicans have been sabotaging the success of Obamacare from its inception in 2010? Despite all their attempts to kill it including not honoring their contractual obligations as required by the ACA Act, Obamacare IS NOT IN A DEATH SPIRAL BUT IT DOES NEED FIXING.
I do hope that the courts can make the legislators honor their obligations as insurers file suits against them for reneging on their obligations.
Gronda, thanks for ignoring my mistakes. I saw today where a bipartisan group of Governors has asked the President to not defund the subsidies as they would be harmful to people. They have joined with the bipartisan group of Senators, led by GOP Senator Lamar Alexander of TN. Keith
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This might sound very naïve because it’s coming from the UK and our NHS environment, but it might be best if current Republican congress/senate members just tip-toe away from the whole thing and then they’d only have divert a fraction of their resources simply making up a story about how they improved things. (It’s an old trick but it might just work)
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It may be their last ditch effort. It would be a better plan than just letting Obamacare, as it currently stands, implode.
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