paulalwilson

When is ObamaCare going to be repealed?

This is the question I hear in almost every conversation I have with a client.   My answer remains the same as it has for years.   You can’t put the toothpaste back in the tube. Especially after you smeared it all over the walls.

This law is engrained; not only throughout the healthcare system, but employers see it creeping into their lives through the DOL and IRS. Entire systems have been reprogrammed to determine how physicians are paid, how rates are determined and offered and tax dollars are collected from every end of the spectrum and spread out among unending national, state and local entities.

MediCaid expansion put more people on public health care.   (MediCal here in California) The MediCaid system, working differently in each state, has expanded its reach in ways that has taken people out of the insured pool. This not only affects insured rates, but also resulted in a massive expansion in MediCaid costs nationally. The Kaiser Family Foundation, Medicaid spending accounts for one in six dollars spent in the health care system. The additional funding for this is coming from taxes and penalties.

Any outright repeal of ObamaCare would send the MediCaid and Private Market into chaos.

Possible quick changes I hear on the street

• Although I have heard the Individual and Employer Coverage Mandates will not be repealed, I have heard that the removal of the penalties for them may come soon.   If this happens, and I have my doubts, there will be no reason for the 1094/1095-C to continue. Employers subject to tracking and reporting will be overjoyed if that happens.

• The Budget Reconciliation move is not going to spawn an all-in-one repeal of ObamaCare.   Even a simple majority is not going to make that move.

• Dependents will get to stay on their parents plan to age 26, although there is almost never a benefit in doing so.  This is a throwaway media talking point from ACA proponents and it’s bone to give them. With age rating, putting your healthy 26-year old on a lower cost plan makes far more sense. Using that stand-alone 26-year-old income to qualify for premium and coverage subsidies…even better.

• People will not be turned away from coverage due to a pre-existing condition. Warning: don’t be confused when you hear them talk about pre-existing conditions not being a roadblock to coverage.   There is talk of instituting “waiting periods” during which time a pre-existing condition can be excluded from coverage.   You will see this caveat when they are discussing penalties for not staying continuously insured.   BUT, they will say with a straight face, that your pre-existing condition will not limit your ability to purchase insurance.

Example of ongoing piecemeal bills to come

Currently on deck we have the “Middle Class Health Benefits Tax Repeal Act” (S. 58 and H.R. 173). This bill repeals the so-called “Cadillac Tax,” which will impose a 40% excise tax on health plans that exceed certain cost thresholds ($10,200 for employee-only and $27,500 for family coverage) beginning in 2018.

Why is this so important? The Executive Director of the National Association of Health Underwriters Janet Trautwein explains it best in her recent congressional testimony, “When the law was created, it was marketed as a tax on the richest benefit plans, but that is not the case. Not only does it not actually identify plans with ‘Cadillac’-type benefits, but it’s structured in such a way that many employers, from the smallest employer to the largest corporation, may have to reconsider their ability to offer coverage to employees at all. The reality is that this tax will weigh heavily on a majority of American businesses that can’t afford it and will have to make severe cuts to stay above water. Many of these employers, even after reducing benefits and premiums, will still not be able to lower their annual costs under the Cadillac-tax thresholds. The Cadillac tax hits especially hard those employers with an aging workforce, those with high claims and those in areas with high medical care costs.”

Repeal and Replace is a long and slow process

At a recent industry meeting we were told that legislation would continue to roll out throughout the summer. Lamar Alexander (R-Tenn.) said, “That means, as Ryan has said, we will do most of our legislation on it this year,” Alexander said. “Most before summer,” but the full change and implementation of it will take up to six years.”

“(First) We have to send a rescue team in on the individual market,” he said. “[HHS Secretary Tom] Price will start with some administrative fixes to stabilize it and once we stabilize it — say, for three years — we can move along and make long-term changes to the individual market and have discussions with state governments about Medicaid.

I agree that stabilizing the sick market is the priority. In California, we are lucky to have 5 or 6 strong carriers in most areas of the State.   Other States have little or no competition.   Some even have NO insurers offering coverage throughout a region.

I expect President Trump will sign many health care related bills

Health Care legislation has been up to the White House many times over the past eight years with no hope of a Presidential signature.   I believe the Congress and President Trump will work to pass legislation in an attempt to help consumers and small business. The main focus has to be on 1) The cost of health care and 2) Create an atmosphere to return competition to a healthy insurance market.   At least that will be their intention.

Depending on legislation passed, California Legislators have NO desire to see any repeal of ACA and will pass look-alike legislation when they can.

Patience is mandatory here. We don’t want anyone repealing ACA for bragging rights. We DO want a smooth transition to a healthier market and we need to get moving on it now.   Don’t expect to see any movement that directly affects you any time before 2019.

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Paula L. Wilson, RHU, REBC

June 7, 2016

ObamaCare has fundamentally changed the health insurance market, and not for the better. Between the mandates to policy provisions and the ongoing way in which Americans use health care resources like an unending trough, insurers are having to take drastic measures to provide a product that is affordable to anyone.

Whether you are purchasing in the individual market or the small group insurance market, ObamaCare (ACA) has changed how you purchase health insurance.   As time goes on, market changes spurred on by the legislation, make the process even more complex.

ACA desired to make things easier for the public. Categorizing individual and small group plans into 4 major categories, Platinum, Gold, Silver and Bronze.   Each metallic level suggesting that plans found within a category could be considered to be of equal actuarial value. We are to believe that the benefits within a category are simply equal and that how benefits are paid is simply rearranging the deck chairs on the Titanic. But that is simply not true. There is more to health care than a percentage payable or the amount of your deductible.

How, when and where you purchase your coverage is now not so cut and dry. What will be covered and from whom you receive your care is of upmost importance.

Tax Treatment –

In the past, HSA qualified plans have stood out as a great option for many. The combination of the tax-free savings and lower priced high deductible plans were a win-win.   Now that ACA plans have made $2,000 deductibles and $6,850 out of pocket maximum the norm, HSA Qualified plans with similar requirements and no upfront benefits, just don’t stand out from the crowd.

Of course, those who want to put away those tax-free savings for themselves or encourage it in their employees ($3,350 single/$6,750 family 2016) may find the HSA is still the best for their situation. Beware, that many of the reasons you purchased the HSA qualified plan pre ACA may no longer be of value.

A brief look a the current market will show the HSA plan options have dwindled as insurers have either reduced the number of qualified plans available or left that market completely. ACA was clearly not designed to embrace this market. As a matter of fact, I am sure it was designed to destroy personal choice and enhanced the idea of personal responsibility for your own wellness.

Provider Access –

In order to remain competitive, insurers must reduce payments to physicians.   ACA may require that certain items must be covered and that everyone must be accepted, but the insurer can negotiate with physicians as to what they are willing to pay for each procedure.   Large medical groups with thriving practices may be able to demand higher reimbursement while some must succumb to restricted contracts.   This leveraging has spurred the expansion of “limited networks”.   For example: Insurance Company A may have a single plan that is offered with several different levels of provider networks. The rate for the full network could be 50%* more than the rate for the exact plan with the smallest network.   This is how you will pay your way into those best medical groups.

When you see advertisements or offers within your own insurance renewal offering savings, the network is going to be key. If you are lucky enough to find your physician inside one of these smaller networks don’t be so quick to jump on the offer.   There is more to medical access than primary care physicians.   Be sure to check ancillary carriers, urgent care centers and hospital access.

Most important, everyone should be asking his or her insurer if there is any change in the provider network or prescription formulary at the time of renewal.

Prescription Needs

 Spending on prescription drugs rose 12.6 in 2014 and is expected to rise 7.3% a year through 2018. In order to combat the effect of this single cost item in your health plan, insurers develop formularies. Formularies are simply a list of the drugs covered under your plan. Most insurers have several regional and national formularies that could be attached to your particular insurance plan. It is important for you to gain access to that list and ask each year for the formulary to be used before accepting a new plan. It is the law that this be provided to you.

Many of my clients receive a single digit renewal with no obvious change in the benefit structure and proceed to jump on the easy option to renew.   Not so fast. You must check for changes to your provider and prescription formularies.

When you buy insurance

ACA limits when you can buy insurance.   If you are in the individual market, you can only purchase insurance during the annual open enrollment period. (November 1 to January 31) If you decide in July that you have made a mistake and that your physicians are not in your chosen plan, you have wait until the next open enrollment to choose the proper plan.

Small employers have far more leeway in their ability to change plans. Employers with 50-100 employees should note that they are considered small employers in 2016 and must purchase coverage within that market.   Employers previously considered large group are in for some big changes.

Government Premium Assistance/Where you buy insurance

All of these buying decisions have to be made whether you are purchasing your coverage direct from an insurer or indirectly from the insurer via your state or federal health care exchange. In states with a private market still in tact, there is no reason to purchase through an exchange unless you are to receive premium assistance. To see if you qualify for premium assistance you can local your exchange at healthcare.gov.

Use a professional experience insurance agent whenever possible. Unlike exchange employees, they are small business owners that will provider personal ongoing service.   Local professional agents can be found at nahu.org/consumer/findagent.cfm.   Many are willing to help you even if you are applying for premium assistance.

A note to Employers

Small employers must now purchase their employee benefit plans through the small group market.   ACA prohibits employers from purchasing or even reimbursing employees for individual (non-group) plans. Employers who reimburse employees for individual non-group health plans face a $100 a day or $36,500 per year, per employee excise tax. This rule applies to all employers. Creating anything that looks and smells like an employer sponsored plan is not only disallowed under ACA, but it also becomes subject to laws including ERISA.   Individual policies just don’t fulfill the requirements.

Employers who are aware of employees or families with special concerns and needs should do their best to make sure important coverage is not interrupted. Loss of coverage to a specialist or lifesaving specialty drug will have far reaching affects. A problem that can be avoided with proper care.

Regardless of the avenue you choose to purchase insurance, how you make the decision requires far more planning than before ACA. Primary considerations must now include thoughtful planning and research on needs involving tax treatment, provider access and prescription needs.

Paula L. Wilson, RHU, REBC is an independent insurance agent in Southern California since 1985. She specializes in health insurance and benefit plans for employers as well as providing life, disability and long term care insurance to individuals. She can be contacted at 888-447-2852 or paula@paulawilson.com.

With not much else to do and with a great need to avoid the CNN blaring in the Jury Waiting Room, I spent my time pouring over the first concrete result of ObamaCare received in our agency.   The results leave me with a very screwed up look on my face. (no jokes)

We need to hear from the entire jury to even begin to reach a verdict.   What I am posting below is an actual set of results from a mid sized employer group plan.   The rates pulled represent different age categories and family combinations.   This one company is different from the rest of the market because the physician list DOES NOT change.   It will be interesting to see the first set of real numbers from a standard PPO or HMO.

The result is a clear reduction in coverage with rates going -/+ 25%!    Assuming the same rate basis, the rates would have been much higher if they had not reduced the benefits.  Frankly, this makes absolutely no sense.  Although I expected this carrier to look good, I did not expect this result.

Those of you who understand the rate compression rule of 3-1 from ages 19-64, would know that we expected to see older folks getting the best result while the under 30s should get increases.  What we have here makes no sense.   The only explanation is going to be found in the drug formulary, lab and specialty drugs.   I have not made that comparison yet.   Without a actual Summary of Benefits and Coverage, I can’t make a final ruling from this juror.

I submit Exhibit 1 for you perusal:

You may be wondering if I rigged this comparison.   I did not.   In a previous Blog I explained how insurers will MAP or CHOOSE one of the new ObamaCare plans for your renewal.  This must be done for all non-grandfathered plans because all plans must be canceled at their 2014 renewal.   The insurer chose this new plan.

I look forward to receiving and reviewing the details hidden within this plan to see where benefits have been reduced or enhanced.

I hope to bring you some examples for the national small business insurers shortly.