Monthly Archives: February 2017

ACA Repeal and Replace – Word on the Street

When is ObamaCare going to be repealed?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  • Although I have heard the Individual and Employer Coverage Mandates will not be repealed, I have heard that the removal of the penalties for them may come soon.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.