Every State Must Close Obamacare’s Special Enrollment Loopholes
(A version of this Health Alert was published by Forbes.)
So, the Republican Repeal-and-Replace Obamacare train has finally left the station. Although free-market health reformers are divided on the merits of the American Health Care Act, as introduced by the Energy & Commerce and Ways & Means Committees of the U.S. House of Representatives, no-one can deny the Republicans have kept their promise to take up health reform as their first order of legislative business.
However, new legislation takes a long time to get to the President’s desk. Meanwhile, the Trump Administration has the unenviable task of enforcing a law they know harms Americans. They are doing the best they can to offer relief through administrative rule-making.
On February 17, the Centers for Medicare & Medicaid Services proposed a new rule to address one reason why Obamacare premiums jumped 25 percent this year: The exchanges attract too many sick people and not enough healthy people. This is called a death spiral; and one reason it occurs is the Obama Administration allowed people to jump in and out of the exchanges too easily.
People were able to abuse Special Enrollment Periods (SEPs). As with employer-based plans, health insurers in exchanges must accept applicants at any time of the year if they qualify for special enrollment. However, these qualifying events are not related to health status. Marriage, change of employment, or a long-distance move are examples of events that qualify an applicant for special enrollment.
However, there is evidence special enrollment is being abused. According to Avalere Health, special enrollees cost 5 percent more than those who enrolled during open season in 2015. Further, they only enrolled for an average of 3.6 months versus 7.8 months for those who enrolled during open season. This suggests some applicants have figured out how to game special enrollment. They apply for coverage once they have become sick, and drop it after treatment.
Some analysts claim health insurers are exaggerating this problem; and that tightening rules for special enrollment will dissuade healthy people from applying for coverage. This leads to the conclusion that rules for special enrollment should be eased to attract healthy applicants. However, if that were the case, health insurers would surely be lobbying for such changes. After all, insurers cannot claim Obamacare tax credits unless they enroll people. If they thought loosening standards for special enrollment would attract more healthy people, they would endorse that.
This adverse selection for special enrollment is likely due to the Obama Administration having allowed applicants to “self-attest” their qualifying event. The proposed rule will demand verification. For example, if an applicant gets married, he or she will have to provide evidence of having become married within 30 days of the wedding. That is not too high a hurdle.
The proposed rule also seeks to impose a continuous coverage requirement for special enrollment. For example, a person who moves to a new city cannot apply for special enrollment unless he had coverage in his previous city, with a look-back of 60 days.
This is too long. The ACA indicates the continuous coverage provisions for special enrolment should replicate those in the employer-based market. Individuals eligible for group coverage who lose other coverage must apply for group coverage within 30 days (unless coming from Medicaid or Children’s Health Insurance Program, in which case they have 60 days to apply). The exchanges should replicate this rule.
Another problem is that the proposed rule would only enforce this in states using Federally Facilitated Marketplaces (that is, healthcare.gov). Anticipating state-based exchanges would have trouble enforcing this rule for 2018, CMS seeks comment on whether there should be a transition period for state-based exchanges, or even that it remain optional for them.
On the contrary, giving state-based exchanges a “pass” on enforcing reasonable standards of verification and continuous coverage for special enrollment would be completely against the spirit (and arguably the letter) of the ACA. The original intent of ACA was that each state would establish an exchange. Indeed, there is strong legislative history indicating the federal government wanted and sought to induce every state to establish and exchange.
States which did not establish exchanges did federal taxpayers a favor. States establishing exchanges received grants totaling $3.9 billion through 2014 to help finance their exchanges. Those states enrolled about 2.6 million people in 2014, costing federal taxpayers $1,503 per enrollee. The majority of states, which did not establish exchanges, enrolled about 5.4 million people but only received grants totaling less than one billion dollars, or an average of just $152 per beneficiary.
Those states which established their own exchanges took billions of dollars of federal taxpayers’ money for the express purpose of being ready to execute Obamacare enrollment according to the law and regulations. CMS must enforce the new regulations equally among all the states. Non-enforcement would continue to put federal taxpayers at risk because states with state-based exchanges would not be taking important steps to stabilize the market.
Good point about the extra money spent on state exchanges. They have acted like a little jobs bank, and as a soft touch for politically-favored computer consultants.
Count me among the skeptics who do not feel that special enrollment is a big financial drain on insurers. Here is my reason:
– The large carriers in MN began demanding written verification for SEP status in fall 2015.
They lost more money than ever in 2016.
I am all for accuracy in this area. I just do not think it will make much financial difference.
Bob, didn’t you say you got a $30,000 grant to help people enroll?
The biggest scam in the world is letting people who get their COBRA notice from their employer to go to the exchange. These people should EXHAUST their COBRA or at least wait till Open Enrollment.
The way it is now the 1st month of CANCER these employer-based insurance companies switch their sick onto the exchange. I knew you would NEVER mention that John because we have told you 500 times.
If the marketplace asks you for any information when you send it in they can’t attach it to your file, this is impossible, so you will lose your tax credits and then insurance.
OK, I’ll bite.
How does a company switch a cancer patient who is fully
on COBRA over to the exchange?
I mean legally, or if it is illegal how do they do it in practice?
If someone is paying their COBRA premiums, how would this happen?
Bob, you know exactly how this works, let me help you. I said, “The biggest scam in the world is letting people who get their COBRA notice from their employer to go to the exchange. These people should EXHAUST their COBRA or at least wait till Open Enrollment.”
Exactly like I said, when they get their COBRA notice they can enroll in the exchange or COBRA. So, these employers are immediately getting rid of their cancers and other liabilities, like strokes, and laughing all the way to the bank. What a scam on the taxpayer.
You said that “they switched their sick onto the exchange.”
In 99% of employers, the business sends out a COBRA offer when the person leaves the job. In most cases that I see, the business has no idea if the employee is healthy or sick. I am rusty on this but I think that employers were legally banned from knowing this.
The employee responds yay or nay on COBRA to an outsourced COBRA administrator, not to ex-employer.
Look, I know that companies can be devious. I sympathize with anti-discrimination suits all the time. I just don’t see it happening so much with COBRA.
The vast majority of employees who leave a job either retire, get laid off or take another job. Very few as a percentage of the workforce get too sick to work and have to quit for that reason. Heck I needed heart surgery in 1999 and was out for six weeks before I could come back to work. It was a big bill which my employer paid. There are big bills paid on behalf of sick family members as well. Companies aren’t paying $6,000 per year or more in healthcare costs per covered life by kicking people out as soon as they get sick.
Do some people get too sick to work and have to quit? Yes. There are probably a lot more people who lose their job because they got laid off or fired and can’t afford to take up COBRA or pay for individual market coverage either if that’s what they have or had.
Barry, again I urge you not to use yourself as an example of a patient that got sick. You are in a field where a lot of money is spent and the employees are very valuable and not easily replaced. Along with that, they pay attention to what happens to their fellow employees. Think of those that are not in that position. I have seen enough of them in my office to know it is a problem.
My guess is if the insurer knew they would be responsible for all employees that got sick and had to maintain that person’s health inderfinitely, premiums would rise significantly.
It is strange, but even those that are fired frequently have developed early medical problems. The reason for their poor performance at work frequently results from their change in health status. I noticed that even in my office and I didn’t have that much staff. The bills might not be high on day one, but they increase significantly.
Be careful of assuming that a person that is fired, quits or otherwise leaves his normal job. They not infrequently have medical conditions attached.
Allan, I worked for a small subsidiary (23 employees) of a large company with well over 20,000 employees. About 80% of those employees were blue collar unionized folks. If anything, their health insurance was more comprehensive than the non-union employees’ benefits were and they received it in retirement as well which we did not. For a long time, we could buy into the corporate plan in retirement with our own money but even that benefit was eliminated by the time I retired.
That’s right Barry. In the future the definition of employer-based health insurance will be: here today, gone tommorow!
I understand, but your company was in the finance world and they have to maintain their image. They might have had a high quality selection of their employees.
Then again, what was the age breakdown of the least skilled workers. Did the average age lean towards the younger side?
How many people left earlier than expected? Did anyone trace their health for a number of years? No. But I note in my office that good employees suddenly had problems and quit or were fired or simply let go because they needed to cut down on the number of people. Why were they suddenly in my office when they never saw doctors before?
About ten years ago, I met a primary care doctor on one of the blogs who said he always liked to ask patients two questions that would help give him some insight into their overall well being. The first was how are things at home. The second was how are things at work. It’s likely that there is a mind and body connection that causes mental health or mental state to impact physical health.
That seems logical and are questions often asked by physicians.
However that response doesn’t answer the question at hand.
Let me cut to the chase. If people don’t lose their jobs due to illness then why are the number of people with work limitations so much greater for those on COBRA than those insured through their current job? That doesn’t even include many that might be even worse off because they didn’t take COBRA and might have died, ended up on some other government program or obtained insurance through a fake family job, lied to get insurance, etc.
My best guess is that the COBRA related problem is stress which can cause other medical conditions or exacerbate existing and known conditions. Losing or quitting a job can be very stressful regardless of the type of insurance one has or doesn’t have.
Yes there is adverse selection into COBRA. I do not know what impact Obamacare has on that.
Anti-selection. People taking COBRA are people for whom it’s a better deal. The rest are on STM or going bare. It has little to do with the reason they lost their job.
Barry, as you say you are just guessing which is near meaningless and all too often wrong, but as I have asked you elsewhere tell me why low fitness to work is so many times higher in the pool of COBRA patients than in the insured?
Stress can be interpreted in a very broad way. Anxiety disorders are medical conditions that can be related to all sorts of psychiatric problems which are medical disorders.
By the way Bart, I treated quite a few people that lost their jobs due to medical illness or where medical illness was significantly involved. I’ve treated a lot of people that took early retirement due to illness because it was better than being fired. The reason for many of these problems is that the employers need to lower costs in order to compete in the marketplace.
Reducing the hyperbole in Ron’s argument leaves him to be correct.
Allan, that’s fine. I don’t really want to defend ESI anyway. I don’t think anyone here really likes it. My only concern is that the replacement is better than the status quo, and that there’s some kind of orderly transition.
That’s the problem with some of the hysterical statements here. People keep getting sucked into defending something they don’t like either, simply because they believe those statements to be misleading or inaccurate or over-the-top.
Wouldn’t it make more sense to set aside the 80% of the market that’s currently entrenched in ESI, and focus instead on the 20% that’s presently fixable? I think the result would be a better system, one where the subsidies are designed to serve an actual purpose and do so efficiently, rather than pursue some half-baked and incorrect idea of “fairness” when compared with ESI.
Bart, the answer is no. We don’t want some uninformed employer who is focused on the bottom line deciding the health insurance on their workers children. The parents should choose the provider networks because they are familiar with their children’s medical needs.
Also, we must replace employer-based insurance so employees over 50-years-old will be able to continue to work instead of being thrown away because their medical expenses will probable be more.
Bart, it’s TIME to wake up and smell the roses of reality.
Sounds good Ron. Just show me what it’s being replaced with, and I might be on board.
Bart, if a system is done correctly there won’t be drastic changes in ESI immediately. Gradually it should shrink until there is some type of parity and then likely only the self insurers might remain with ESI, but that means the younger and less expensive employees will have to be satisfied. If they use tax credits then they shouldn’t be increasing them year after year. They should fix them and let inflation get rid of them.
Healthcare should not be tax deductible because that brings the federal government into the picture. It wasn’t intended to be tax deductible (mostly ESI) rather the tax deduction was initially given a blind eye and then it was impossible to get rid of.
When we favor one sector of the economy over another with all sorts of tax breaks it means our production changes based upon tax policy which is frequently political expediency. We probably emphasize healthcare too much. Why? Because the talent that goes into it are very bright in science and technology and that intellect is needed to advance and create wealth. If we don’t maintain a powerful economy we can’t have the welfare we have today and we become weak as well.
John, adverse selection provides credence to Ron’s argument which in its basic form I agree with.
From Allan:
Allan, I appreciate the acknowledgement that this is the correct approach. That’s been my main concern lately.
Doesn’t matter. It’s an example of evolution over intelligent design. It may not have been intended as the nation’s primary high risk pool, but subsequent legislation has made it so.
It should be no surprise that Ryancare is following the same model– community rating subsidized by a tax preference– even if the authors don’t realize that that’s what they are doing.
My main concern now is that they aren’t overly generous with the tax credits, creating an even larger and more irrational entitlement than ESI.
…or at least one that’s just as bad in its own way.
Bart, you have NOTHING to say about the size of the tax credits, sorry. I think they are perfect. Remember, some families have a sick person in them who will require the High Risk Pool so these credits will help these families because the High Risk Pools cost more.
There might be too many moving parts for your command and control mind to wrap around just yet. I will do my best to inform you like I have done here.
I think it is fair to say that these Democratic Senators need to know when to fold ’em, know when to walk away and know when to run!
Ron, you may not have noticed but the Ryan plan maintains Obamacare’s ban on underwriting. That means we’ll all be in the high-risk pool. At least those of us who aren’t on Medicaid.
Phaze 1
Barry
You said vast majority , do you think it has happened to 1?
I didn’t say it doesn’t happen. I said Ron is significantly overstating the case in my opinion.
Barry, when asked if you have read insurance contracts you replied, “haven’t read any.” These are legal contracts, I hope you understand what that means.
Picture this, Ron drives 5 hours to meet with a Doctor in West Palm Beach with his 10 employees on a small group plan. Ron says, “Get your policy.” The Doc says, “I’m not sure where it is.” Ron says, “It’s in that file over there under “I”. So I get his policy or contract and go to the ELIGIBILITY CLAUSE that reads: OWNERS or employees who are working 30-hour-per-week at the firms regular place of business are eligible. Then Ron says, “Lets look at the TERMINATION CLAUSE, it says – when you are no longer ELIGIBLE!”
SO, Ron says, “If you have a heart attack or stroke and wish to retire you can’t because you will lose your health insurance. (THIS IS KEY) Then Ron closes with, really Doc if you are as bad a physician as you are at picking your insurance, I know exactly who not to see when I get a cold -YOU”
Barry, if a hurricane comes and blows the business away their isn’t even a COBRA for all of these employees.
COMPRENDO?
For a given small group, individual coverage is cheaper than group coverage because individual is underwritten (pre-ACA) and small group is experience rated. But what happens to the employees who can’t pass underwriting? If there is a high risk pool, how much is the individual supposed to contribute toward the premium and how many times higher than underwritten coverage will the gross premium be? That’s the fundamental problem at the end of the day — taking care of people who can’t pass underwriting often through no fault of their own but just being dealt a bad genetic hand.
I think its unfair that certain high paid athletes draw a good hand genetically and frequently so do their children. Through no fault of my own I’m lousy at basketball. I will never be a high paid entertainer. Barry you have got to do something about this inequity!
You think in terms of genetics rather than need.
Seems like that’s it in a nutshell. Under a rational system, X is the lowest available premium for underwritten coverage for an individual of a given age, and risk pool subscribers pay 2X (or 1.5X or even 1.0X) and taxpayers pay the balance.
The current GOP plan effectively puts everyone in the high risk pool, but I can’t figure out what the multiplier is or even if there is a consistent multiplier.
If we went back to underwriting coupled with high risk pools, I think the right gross premium for high risk pool coverage would be 1.0X the highest (rate-up) underwritten premium in the market and the right individual out-of-pocket contribution toward the premium would be 10% of modified adjusted gross income at most and a lower percentage for those with lower income but too much to qualify for Medicaid.
If age-based tax credits aren’t sufficient to drive the out-of-pocket premium to within those parameters, then additional subsidies will be required. It won’t be cheap and the broad middle class should expect to pay higher taxes, along with the wealthy, to raise the necessary revenue to make it happen. There’s no free lunch here.
Again you are setting parameters that do not necessarily refelct need. We have Medicaid for need. If one wants to have other programs then the cost should not be shifed to the insured for that destroys the marketplace.
My limited understanding was that before ACA, the highest rate-up (at least in California) was 2x the base rate (or maybe 1.75x, I wasn’t completely clear on that part).
But whatever target you set for risk pool pricing (taking all subsidies into account), it will effectively become the highest rate-up, no? So saying risk-pool price should equal the highest rate-up doesn’t tell you anything, it’s already implied.
I was more interested in the differential between lowest underwritten cost and risk pool price. That seems the most important “dial” in determining the other requirements, such as overall subsidy cost and tax credit levels, as well as what percentage of the population belongs in the risk pool.
A higher ratio has lower overall subsidy costs because of (1) lower individual subsidies and (2) fewer people receiving the subsidies.
If the ratio is 1.0, 100% of the population is in the risk pool. Going by KFF’s estimates, with a ratio of 2.0 (the pre-ACA underwriting limit), approximately 20% or 25% would belong there.
Perhaps by setting the cost ratio at 1.5, around half of the population would belong to the risk pool, balancing its political clout with the un-subsidized half of the population in underwritten markets.
I guess there are no underwritten markets under Trumpcare. But the idea of a cost ratio versus underwriting cost still seem useful in determining who are being subsidized and how much, and who are being stuck with hidden taxes.
Remember most experts in Senate procedure do not think the insurance regulations of Obamacare can be repealed through reconciliation. So, that is a constraint for the current bill.
Barry,
What are your thoughts on why eligibility clauses are put into group health and life insurance contacts in the first place. what Is the purpose for them and have you ever read one?
I have read thousands of eligibility clauses. PLUS, I have read thousands of TERMINATION of coverage clauses.
TERMINATION clause: When you are no longer ELIGIBLE.
I’m not in the insurance business so I’m not familiar with them and haven’t read any. If you think they’re important, then tell me and the rest of us why.
Does that mean you are drawing conclusions without knowing any of the facts?
I don’t think one needs to be an insurance agent to have reasonable ideas about health insurance reform and I don’t think one has to be a doctor to have some reasonable ideas about healthcare reform.
I note that while I was working, I had lots of contact with health insurance executives, along with leaders of drug retailers, drug wholesalers, and hospitals.
I’ve also had lots of experience as a patient, interacted with many doctors on blogs over the past 10 years and read widely on the subject.
“I don’t think one needs to be an insurance agent to have reasonable ideas about health insurance reform”
No, but one should have some basic knowledge.
I have met Presidents, but that doesn’t give me any special understanding of the Presidency.
Being a patient only tells you of your experiences, not everyone else’s experience.
You extrapolate from casual events and think those casual events provide you with the answers.
Instead what we are seeing is bias since the information you pick up that agrees with your bias you accept while discarding or not even paying attention to evidence that totally disagrees with your bias.
Bob, I am used to putting good group salesmen down quickly and you my friend are not good. Lee could tell you because when he got his license in 1992 his trainer was the best you can get. Lee was trained that the employer-group sales people were “Merchants of Death.” His name was Tom, my he rest in peace. Who you are trained by matters, that’s an under-statement.
Bob, I know exactly who you are when you weasel around this subject. I know you give the employer a computer list of the top ten employees that have had the largest claims last year and how they are THE reason for this LARGE increase this year. #2 was a dependent child with $100,000 in Rx, like my daughter, and several expensive surgeries with no end in sight. Like magic, that employee is fired!
Bob, in my mind’s eye I see you with bloody horns, a long pointed tail and cloven hooves, marching under your battle flag of skull and crossbones screaming your shrill cry to the sick of, “NO QUARTERS!”
I know employer-group sales people worship at the alter of SATAN, which is worse than slimy, that’s for sure.
Ron, I’ll raise several issues here. First, many large employers, probably including those teacher groups in Iowa that you referred to, offer employees disability insurance which pay 60% of salary until they age into Medicare if they become too sick or unable to perform their duties. Presumably, that money would go a long way toward helping them pay the COBRA premium even if it’s pretty high.
Second, people who get too sick to work can apply for Social Security disability benefits. Once approved, they become eligible for Medicare two years later regardless of age. Of course, if the reason they left the job is that they were laid off, fired or simply quit, it’s a different story.
I think the issue you raise is far less common than you suggest it is but nobody has any numbers one way or the other. People who work for small employers are much less likely to have disability benefits and the employer will know which of his employees, if any, have very high healthcare costs. If he’s hard hearted enough, he could probably invent an excuse to lay that person off especially if he thinks he can replace him or her with a healthy person.
Third, I think I remember you saying that your daughter was able to get an ACA exchange plan shortly after the exchanges went live. What insurance did she have before that, why wasn’t it good enough and what would she have done without the ACA guaranteed issue coverage?
Finally, if we went back to underwriting and an insurer signed up 50,000 healthy people in the first year, the premium would be low to reflect the group’s uniformly good health status. Over time though, they will start to get sick and incur significant claims. As that happens, what’s to stop the insurer from introducing a slightly different product maybe with different copay amounts and out of pocket maximum limits and maybe slightly different breadth of coverage but similar actuarial value overall to attract those that are still healthy? Those who got sick will be left behind in the original pool and their premiums will rise rapidly presumably in hopes that they will drop the policy altogether. While I never supported Medicare or Medicaid for all, at least those policyholders don’t lose them if they get too sick to work or too sick to earn satisfactory profits for the carrier.
Barry, Allan is right that employer-based health insurance is a failed business model that will soon be replaced. In 1996 the HIPPA legislation was needed by large employers to fire their aging Baby Boomers because they were turning 50-years-old. These old employees were absorbed into small business and small business paid the price for these discarded sicker workers. The good news is the tax-free HSA was born with the Original Pilot Test.
Health insurance was still cheap, cheap cheap, in 1996. Today the prices are high and employers know to not hire people over 50-years-old because their medical claims are much higher. Today it is worse and these employers will think twice before hiring a 40-year-old because their cost is much higher than a 27-year-old just like their life insurance premiums. Today, 40-years-old is the new 50-years-old when it comes to not being able to find employment.
We are going to replace this old system of employer-based health insurance that discriminates against older workers with President Trump’s age-based tax credits and individual insurance then employers won’t care how old the employee is anymore and we can begin the healing and Make America Great Again.
“Second, people who get too sick to work can apply for Social Security disability benefits.”
That shifts the costs from ESI to Medicare and lowers the cost to the insurers. Many people are now considered “too sick to work” though they can work elsewhere. There is a lot of gaming in this sphere and in disability. All these things save insurers money because the sick and disabled leave the pool with some of them gaming the system since some could have continued to work.
“nobody has any numbers one way or the other.” The people that likely have a firm handle on the savings are the insurers because they are the ones that understand insurance actuary work. Those that make policy for the US don’t and neither do you. The insurers aren’t going to tell you what you want to know. It’s “proprietary”
The question is whether we are able to face the hard choices because the system is financially unsustainable with loads of people gaming it while all too many fall through the cracks. You are too interested in preserving the wealth of individuals and not letting them pay extra to offset that risk if they desire.
Oh No! He would not know who those employees are. That would be against the law! (wink wink).
Barry, take note of John’s “(wink wink)”. That involves human nature something frequently not counted for when working on the books. You want direct proof of many contentions, but who is to say human nature hasn’t altered the rules and regulations. Even observation does. The Heisenberg Theory even applies in our health care discussions even if better known under a different name that I can’t remember.
Given a choice in that position I would definitely choose COBRA over some narrow and equally expensive exchange plan. But I work for a real-world private sector employer with reasonable premiums.
I suppose I might reconsider after the first year, if my income drops enough to qualify for means-tested subsidies and I’ve had time to shop around.
The individual is free to decide whether to COBRA or to to Obamacare exchange. I have not followed COBRA market for a while but if the person has an income under 400% FPL he will tend to go to exchange to get the tax credit.
When current Massachusetts Governor, Charlie Baker, was CEO of Harvard-Pilgrim Healthcare, he wrote about people who would sign up for coverage under Romneycare’s guaranteed issue provision knowing they needed healthcare soon like a hip or knee replacement or were pregnant, etc. Then shortly after they got their care and recovered, they would drop the policy. The average medical loss ratio for policyholders who game the system this way was approximately 600% according to Baker.
There should be a way to make people commit to paying the premium for at least a year unless they can prove they got a new policy such as through an employer or lost their source of income and could no longer afford to pay the premium. They should also be able to show that they had continuous coverage with no more than a 63 day gap before they can take advantage of guaranteed issue rules to sign up for insurance after they get sick or when they know they will need expensive care soon. Government is generally much too lax in protecting taxpayers from unethical people who will game any system if they think they can get away with it.
“Government is generally much too lax in protecting taxpayers from unethical people who will game any system if they think they can get away with it.”
That is a major part of the problem and that is why we have to place more responsibility onto the patient. But, a lot of your statements involving policy actually permit such gaming.
Anthem CEO Praises GOP Health Bill, Calls for Swift Action!
https://morningconsult.com/2017/03/09/anthem-ceo-praises-gop-health-bill-calls-swift-action/
“Swedish, who runs the country’s second-largest health insurance company, specifically endorsed the bill’s provisions”
SO, CEO Swedish endorses this REPLACEMENT that will kill his company. It’s hard to find a good CEO these days.
I keep telling you employer-based insurance is DOOMED, DOOMED I tell you.
If ESI is so doomed, then why are so many employers staying with it? The CBO tells us that significantly fewer people than expected enrolled in ACA exchange plans mainly because far fewer employers than expected dropped ESI and pushed their employees to the exchanges.
Moreover, the republicans quickly realized that they don’t have the votes to tamper with the employer tax preference even a little bit. It looks to me like there is plenty of interest in keeping it intact and not just from unions. ESI does cover 150 million people after all.
“If ESI is so doomed, then why are so many employers staying with it?”
ESI is doomed if we correct certain major problems we face in healthcare. It is not doomed if government continues to pander to it. There are a lot of forces that wish to continue ESI and a lot of forces that don’t understand how detrimental ESI is to appropriate healthcare legislation. Policians are blinded by votes and have refused to use their intellect.
This type of logic, assuming ESI is good based upon the fact that so many employers stay with it, is the same logic used in countries where so many businesses and people do certain things because otherwise they will be shot. Very poor reasoning when one is trying to figure out cause and effect.
Votes for politicians are like profits for businesses. Politicians aren’t blinded by votes but rather responding to incentives in their “market” that get them into power and keep them there.
Votes have superficial similarity, but not the same as profit and wealth. Wealth can be exchanged for goods and services. Votes can’t unless they are being used in a way that is not intended.
That’s not the point. The point is that the need for votes to stay in power drives politicians’ behavior in terms of what legislation they will or won’t support. A politician could even tell you point blank that he agrees with you that a particular idea might be the most appropriate market friendly solution to an issue in an economic sense but it won’t fly with his constituents. Therefore, he will oppose it and vote against it if he thinks it’s in his political interest to do so.
The relationship is that both money and votes drive many decisions. Votes are not like profit in the context of your total remarks.
House Minority Leader Nancy Pelosi said Friday that Democrats would be willing to compromise with Republicans on a revised health care law if the GOP reaches out to them
Specifically, Pelosi said she would be willing to accept Republicans’ plan to expand Health Savings Accounts, which are tax-exempt accounts that people can use to pay for medical expenses. The Republican health care bill, called the American Health Care Act, would increase the amount of contributions that people can make to their accounts from $3,400 to $6,550 for individuals and from $6,750 to $13,100 for families.
THERE YOU GO — EVERYBODY AGREES ON HSAs!
http://www.usatoday.com/story/news/politics/onpolitics/2017/03/10/pelosi-says-democrats-willing-to-deal-on-health-care/99001568/
An increase in individual HSA limits from $3400 to $6550 would seem to benefit a pretty narrow demographic….namely, a person who makes enough money and has a low enough health insurance premium so that the larger HSA is even possible.
This would be about 20% of the persons who come into my agency….mainly young successful self-employeds, and good for them. People over 50 have all they can do just to pay their premiums, and that will get worse under the Ryan plan.
Off the cuff I do not see how HSA’s will transform the health industry. The policies that the HSA holders buy seem to cost about 95% as much as all the other qualified plans.
I am all in favor of HSA owners forcing doctors and clinics into greater price transparency. However most of the constructive bargaining will be about things like lab tests and discretionary surgeries…..while the large claims that actually drive the cost of health insurance continue unabated. If a health insurer sees 1,000 people save $100 on lab tests but has one extra premature infant or genetic disease claim, there will be no premium savings.
Michael Cannon who is quite sharp has been talking about large HSA’s, where a corporation transfers its entire outlay to the employee to spend as he or she wishes. I do not know the mechanics of this but it sounds interesting.
Cannon’s idea would benefit the healthy and screw the unhealthy and already sick.
I understand what you are saying, but putting all your comments together make you sound as if you intend to eat the goose that lays the golden eggs.
President Trump should PRESSURE Democrat Senators
Senator of Missouri is my 1st choice Clair McCaskill is a setting duck and can be pressured into voting for Obamacare Replacement. Read’em and weep:
https://www.donaldtrumphsa.com/2017/03/11/trump-should-target-missouri-mule-for-termination/
In this post above I show that a 30-year-old husband and child can get STM HSA Qualifing Insurance for $260 a month in Tampa Bay. This qualifies for tax credits of $4,500 so President Trump will pay 100% of their coverage and deposit $1,380 into their tax-free HSA.
If this family moves to St. Louis the tax credit is constant but the insurance is less so the HSA deposit grows to $2,352 from President Trump.
If Democratic Senator votes against Trump’s replacement she is stealing all of the tax-free HSA deposits from all of the citizens of Missouri, would she do that?
4 Complete list of races US Senate 2018
4.1 Alabama (special)
4.2 Arizona
4.3 California
4.4 Connecticut
4.5 Delaware
4.6 Florida
4.7 Hawaii
4.8 Indiana
4.9 Maine
4.10 Maryland
4.11 Massachusetts
4.12 Michigan
4.13 Minnesota
4.14 Mississippi
4.15 Missouri
4.16 Montana
4.17 Nebraska
4.18 Nevada
4.19 New Jersey
4.20 New Mexico
4.21 New York
4.22 North Dakota
4.23 Ohio
4.24 Pennsylvania
4.25 Rhode Island
4.26 Tennessee
4.27 Texas
4.28 Utah
4.29 Vermont
4.30 Virginia
4.31 Washington
4.32 West Virginia
4.33 Wisconsin
4.34 Wyoming
Currently, Democrats are expected to have 23 seats up for election
By contrast, 10 Democratic senators are running for reelection in states Trump carried last November. Trump won half of those states — Indiana, Missouri, Montana, North Dakota and West Virginia — by double digits. That means that 20 percent of all Democratic seats up in 2018 are in states Trump won by double digits and 40 percent are in states that the president-elect carried last November.
It’s not just that Democrats have so many vulnerabilities. It’s that Republicans have so few.
What that means is that the much-coveted-almost-never-attained filibuster-proof Senate majority — 60 seats — is possible!!!
In the Ryan plan, would you still get the tax credit if you bought short term insurance? Or do you just get the tax credit no matter what, and not have to prove that you bought a certain kind of ‘qualified’ plan?
I honestly do not know.
Also, I wonder if the pending legislation eases up on short term plans? the April 1st regulation now in effect will make them much less attractive.
What I would have hoped is that Ron would be able to tell his clients, “Given your age, I have a STM plan available for $400 a month, but you need to pass underwriting and it doesn’t qualify for a tax credit. I also have a permanent Trumpcare plan for $675 a month that is eligible for your $250 tax credit, so your net cost will be $425 a month. So for practically the same price you can have permanent plan and never have to worry about renewal.”
But I guess its best not to have too many expectations.
Bob, people get the tax credit for any health insurance in the individual market. Paul Ryan says that is FREEDOM!
STM is individual insurance and Credible Coverage I might add.
Stealing? Isn’t that money that would have to be stolen from taxpayers first?
Bart, yes you are correct that the government is stealing TRILLIONS of dollars from taxpayers.
My question is will Claire McCaskill vote against President Trump’s Obamacare replacement and STEAL all of the HSA deposits that President Trump will make to poor hardworking Missouri families?
Remember, one family could get $3,000 a year from the great President Trump in their HSA. Multiply that by millions of Missouri families and that gives Buffoon Clair McCaskill something to think about if she doesn’t want to be DRAINED from the swamp.
But it’s not their money until you steal it from someone else.
Bart, I like that reply.
“That’s been my main concern lately.” (shrinking ESI gradually)
Bart, to be honest, that wasn’t totally apparent, but if it is so we are in agreement. ESI is a horror show that permits the majority of people to simply close their eyes and not see what is happening.
“nation’s primary high risk pool, but subsequent legislation has made it [ESI] so.”
I don’t believe that to be so. The truly (long term) high risk frequently don’t maintain their jobs for a long time. They end up in the self insured group where they are forgotten. Then there is Medicaid and Medicare.
“Ryancare”
Ryan is a known disappointment.
“My main concern now is that they aren’t overly generous with the tax credits, creating an even larger and more irrational entitlement than ESI.”
I agree, but they have shown their path to more entitlements. Instead of inflationary increases to the rebates they should have no increases and let the subsidies shrink with inflation.
Maybe the President is considering all these things. He has a lot of power through the Secretary since the ACA left a lot of holes in the bill for the Secretary to fill or eliminate.
If you accept KFF’s estimate that roughly 25% of people on ESI couldn’t qualify for pre-ACA individual coverage, that would mean there are 37 million high-risk individuals with ESI. Thirty million might be a safer estimate, but even so what other program has so many high-risk people?
You might argue that such a large number is a bad thing that demands change and not stasis, and I would agree, so long as the solution addresses the problem.
I don’t accept that logic. In
Bart, sorry for the computer crash, but to continue. Despite the fact that in adult life I never had a severe illness and the bills on my healthcare were almost zero every year I was insured I was denied private insurance for two years. The insurers understand cherry picking so the assumption appears to be that anyone in the non ESI group is suspect for having greater knowledge of a potential condition than the insurer.
Insurer’s make money by insuring. If all were insured privately these assumptions would not exist and the cost of such assumptions would be distributed over everyone. The so called high risk patients will become a cash cow to some insurers because they will pay slightly higher premiums, maybe for a number of years. We overblow costs because we try to cover too many angles and that contributes greatly to the overall cost of insurance.
Everyone in One individual pool . What a concept 👍
Lee, then we can high pressure these greedy insurance companies.
I like everybody in one large pool, my pool, except the sick people.
Lee, I can’t make heads or tails out of your comment.
Bob, I am not sure who you are responding to.
I am going to answer Bart’s question below in case one misunderstood what was in my comment though it was totally clear.
This sounds like a defense of the individual mandate.
Allan, you seem to be saying that if there is no ESI market, insurers will somehow become less cautious in the underwritten markets. I suppose anything is possible, but I wouldn’t want to count on it.
But to continue that train of thought, what percentage of current ESI customers would you say would be uninsurable with pre-ACA IM? By “uninsurable” I really mean anyone with an pre-ACA up-rating of 2x or more.
Pauly tossed out 4% in his recent interview, but I think he was really talking about young people at the beginning of their careers.
The fact that you were denied coverage, I’m assuming unfairly, points to what I think is a basic limitation of underwriting. It’s basically just go/no-go way of selecting the most desirable customers. There’s no way an underwriter is going to look at someone with a cancer history and say “this person needs a 2350-percent rate-up”. And from what I can tell, they seem to use limited data points as “markers” that point to possible risk. If you happen to have the marker but not the suspected condition, you are treated more unfairly than a healthy person would be in a community-rated pool.
I recall people commenting here in the past who actually participated in or were close to the underwriting process, so perhaps they can correct me if necessary.
Anyway there doesn’t seem to be much chance of returning to pre-ACA underwriting, so this is only relevant to the original question of “what will be the impact of folding high-cost employees into a non-ESI general risk pool.”
“if there is no ESI market, insurers will somehow become less cautious in the underwritten markets.”
Bart, in the past health insurers never took into account all the conditions involved when they did their actuarial work in determining premiums. It was too expensive and didn’t yield an increased profit. Instead they let certain things go and changed how they did things based upon claims experience. So, NO, they will not become less cautious. They will look for those things that affect their costs the most and use fudge factors so actuarily they make the desired profit. If there are many insurers I can choose my own insurer to insure based upon my needs.
You do realize that zip codes are used as well. They have nothing to do with health other than the fact that members of one zip code might have costs higher than members of another.
“what percentage of current ESI customers would you say would be uninsurable with pre-ACA IM? ”
That is totally dependent upon how you define the word uninsurable. I’ll bet in my case it might have had to do with some faulty data in the past history section (corrected by a board certified M.D. in that field). Additionally I am a physician and might know I needed private insurance because I would be forced because of a medical condition to retire. After two years it was clearer that both potential assumptions were wrong. I had almost no medical costs what so ever. I then was given health insurance at the going rate.
Unless some drastically different proposals emerge, it looks like the only data insurers will be using are age and zip code.
I guess I’m ambivalent about the prospect. I understand that insurers will have incentive to compete for healthier customers at the expense of the less-healthy, but if this means less first-dollar coverage and lower premiums on average, that’s not necessarily bad.
Does anyone have an estimate for what Trumpcare premiums will be like for the various age ranges? Which is the best starting point:
1) Exchange plans adjusted for relaxed minimum coverage requirements
2) Small company ESI premiums (assuming they are age-banded)
3) ???
If everything is currently 3:1, we also need to convert to 5:1.
I would just like to see how the premiums compare to the proposed tax credits.
Bart, you have come to the right guy. Remember, I NEVER signed up one person on STM before Obamacare because of the term date staring you in the face and you just didn’t save much from permanent IM. If you know the relationship between these 2 products you can predict Phaze 3 IM premiums. It is just that simple. The numbers I use are always conservative because in the near future we will be looking back on today and I won’t let you say, “Ron, you were wrong.” Why wood eye?
Great, I’ll look forward to your data.
I take it your current permanent IM offerings are ACA-compliant, similar to the exchange plans? Are they similar in price as well?
“Unless some drastically different proposals emerge, it looks like the only data insurers will be using are age and zip code. I guess I’m ambivalent about the prospect.”
Bart, traditional insurance is the transfer of risk for money. Therefore, in theory, the insurers should not care if the person is sick or well because they earn money off of both. The major problem is government intervention forcing insurers to provide pre paid medical care that includes things not everyone uses or needs. That is very expensive.
Take ACI, auto care insurance, (doesn’t exist). It includes gas, tires once per year, brakes every 18 months and a car wash once a week. It’s not the individual’s fault that he has to drive so far to work so we should all share his gas bill. Some need tires once a year and brakes every 18 months. Therefore we all get them at that time period and some of us get more than we need. I so happen to like new tires and brakes even if some others would let them go for another 5,000 miles. Then there is the car wash weekly. If I’m not paying for it why should I wash the car myself? …And by the way do the interior as well and use that fine air cleaner.
Of course you can see why the ACI would climb to new heights and have to be regulated. Now hire all sorts of companies to monitor each person’s driving habits, use of tires, braking habits, and figure out how much water is actually used in cleaning a car. Make sure another group is inspecting the cars for cleanliness and fining the insurer and or the cleaner for window spots.
The government decides to start cutting. First they increase the time the tires and brakes are used so people are driving on bald tires with poor brakes. ‘That saves a ton of money’ says all the studies, but no one counted the deaths on the highway, the traffic congestion, the cost of the police, ambulances and care for the injured. The government pats itself on the back, but notes the prices are still too high so they figure it must be due to the price of gas. Therefore they fix the price of gas and we have gas shortages with lines, but they note the price of gas has been controlled by the cuts so again they pat themselves on the back. On and on this continues. In the meantime the population is starting to drive less because so many can’t afford the premiums so they mandate everyone pay and if they don’t drive cars they pay a fine.
Finally one says that all of this is crazy. We are going to let everyone pay for their own care or buy their own insurance based upon their risk.
The nuts out there say, but what about the guy whose job forces him to drive so many miles? He can’t afford it. It’s not fair. …And what about the guy that needs a clean car and can’t clean it himself? They are not to blame for their problems so we have to keep on funding. Tax the very rich like we did when we started the AMT (the idea was to tax a very few people, but now is taxing huge numbers). You know how far that goes. The taxes grow greater and encompass more people until no one is rich and everyone is poor.
The answer is to find a way outside of the insurance program to satisfy those needs. We will be left with a few that may need help, but we won’t be wasting money on 100% of the population including non-drivers. Remember, before we started the road towards the ACA there were probably only 8 million Americans that couldn’t carry insurance through no fault of their own. How many has the ACA placed on Medicaid? 14 Million? How many can’t afford their premiums and deductibles? How many are finding their networks and care limited?
We have to untangle the mess. Despite what the Republicans say there will be winners and there WILL be losers. If one focus’s on the losers the problem continues to grow until unsustainability rears its head and the system falls apart leaving everyone in trouble. Focus on the mass of people and then focus on those that fall through the cracks, but do the latter outside of the system of risk insurance.
The disease we face is not as bad as the cure the left wants all of us to take. If one recognizes that one can see a relatively simple cure that is better than what we have today.
Allan, this is excellent. Central planners like Barry know exactly when I need new tires and want to fine me if I don’t wash my car.
The mid-1960s was also the period when workers won pensions and retiree health care benefits, which enabled them to live many years after they stopped producing profits for corporate America.
This has provoked ever-greater anger and bitterness in the ruling class. By the 1990s, there was a chorus of complaints about the aging population and how out-of-control health care costs were undermining the global competitiveness of US businesses. In 2005, Delphi CEO Steve Miller complained that “people are living longer these days” and declaring that employer-paid benefits only made sense in an era when “you worked for one employer till age 65 and then died at age 70…”
In opposition to all of those who claimed Obamacare was a social reform, the World Socialist Web Site explained that it was the opening shot of a health care counterrevolution aimed at stripping the working class of access to affordable and decent coverage, and substantially reducing life expectancy. This assault is now being vastly expanded.
Barry requires the building of a revolutionary leadership to unite every form of social opposition in mass political movement of the working class for a workers’ government and socialism. This is the only way that profit can be taken out of health care and high quality medical coverage established as a social right for all.
Ron, since Barry has been on this list and others he has been moving in the right direction. It is a slow movement because Barry is very itelligent, detailed and understands numbers though lacks a bit of knowledge about human behavior. Hopefully he will move away from all these abstract numbers that pollute the healthcare environment and deal with reality. If he ever completes that evolution his detailed focus will point away from the focus you presently are observing.
Are you guys confusing me with Barry?
No Bart, you are different than Barry, but you are also intelligent. This time hopefully I spelled the word ‘intelligent’ correctly. Ron uses Barry as a stable metric that can be used for comparison. I believe that is a bit wrong because Barry is evolving.
Allan, I don’t see anything in your latest comment to disagree with.
If the GOP bill in its final form keeps the ban on underwriting but removes some of the minimum coverage requirements, and insurers respond by scaling back first-dollar coverage in order to attract healthier customers, then the result may be what you are asking for.
Of course there will be a constant tension between left and right over minimum coverage requirements, but I don’t see how that is avoidable.
“Allan, I don’t see anything in your latest comment to disagree with.”
Of course not! 🙂
I don’t believe the Republican bill is going far enough in certain areas and despite the protestations from many Republicans I believe there will be many hurt under their plan. That is inevitable because the ACA created an environment where any change would mean harm. If the ACA were left alone it would simply devastate most Americans. Then an alternate plan would look great. Remember, before the ACA only about 8 million Americans were without healthcare due to no fault of their own. The ACA placed around 14 million (I think) onto Medicaid further eroding Medicaid’s ability to help the most needy. Doesn’t that sound like a giant screw up?
Allan — There are several key differences between car insurance and health insurance. First, car insurance can often be had for $1,000 per year give or take and insurers can assess risk quite accurately based on the driver’s record and can also take into account the value of the car to be insured. Second, a person with few or no assets to protect can just decide to drive without insurance and if he has an at fault accident, he’s judgment proof because he has no assets. Third, going without car insurance is not life threatening. Even if he is in an accident, he will probably at least get stabilizing care in the ER whether he can pay or not.
Health insurance is considerably more expensive especially for older people even if they’re relatively healthy. If they go without health insurance, there are plenty of medical treatments that they won’t be able to access including cancer care. They may not be able to get expensive drugs either if they make too much money to qualify for drug companies’ charity programs. If their income is low enough, they can qualify for Medicaid but there is no equivalent of Medicaid for car insurance nor should there be.
As for taking care of the 8 million outside of the health insurance marketplace, that’s fine in theory. We can take care of them with high risk pools. Even Ron supports high risk pools. The problem is that people don’t want to pay the cost through taxes that it would take to make them actually work for the people who need them. The history of high risk pools in this country is abysmal.
Politicians don’t like to support them because it requires taxing the many to pay for the few and the many don’t want to pay. That makes the risk-reward equation unfavorable for the politician who wants to get re-elected especially since many of the folks who need the high risk pool insurance are too sick to even vote and politicians prefer to sprinkle benefits across as many voters as possible.
So, taking care of the 8 million outside of the health insurance marketplace is easy to articulate as a concept but darn hard to execute in practice. Show me high risk pools that work for the people who need them at an out-of-pocket premium they can afford with the rest covered by taxpayers and I’ll be there in support and I’ll be willing to put my money up to help pay for them. If most of the broad middle class, upper middle class and wealthy people who would bear the burden of the taxes needed to pay for high risk pools felt the same way I do, maybe we could make some progress.
1)”First, car insurance… insurers can assess risk quite accurately based on the driver’s record” 2)”can also take into account the value of the car to be insured.” 3)”Second, a person with few or no assets to protect can just decide to drive without insurance” 4) “going without car insurance is not life threatening.” 5) “he will probably at least get stabilizing care in the ER whether he can pay or not.”
You have made 5 points to distinguish healthcare from auto insurance. Admittedly there are differences between almost every endeavor, but there is commonality as well. Health care and auto insurance have a lot of commonality.
1) Here you are talking about information asymmetry and I presume you are making the claim that information asymmetry is lacking for the patient in the patient/ insurer domain. I don’t agree. In fact information asymmetry is in favor of the patient. The insurer doesn’t have that much information on the health of the patient. The patient does and that creates information asymmetry that works against the insurer.
2) The insurer can adjust for value about as easily as the auto insurer. The actuaries of both sectors could target a 5% return and both mostly achieve their results. Auto insurance has limits on liability which means that an injured third person might not be paid the amount needed because auto insurance is permitted to be limited. The same can hold true for health insurance. In both cases the money for healthcare can run out.
3) A person without assets can decide to not to carry health insurance just like the one driving the car who doesn’t carry insurance.
4) Going without auto insurance means that the person he hits might never recover and be able to work again and therefore doesn’t have the life he would have had had the person carried insurance.
5) Lack of auto insurance or health insurance doesn’t mean the person won’t get care.
The two are far more similar than different. Your emotional attachment to one rather than the other is different than mine, but when dealing with healthcare policy we have to leave emotion at home.
You make some other points mostly very generalized so I decided to skip them and focus on your major points that included information asymmetry. I will add one comment only. There were about 8 million people through no fault of their own that didn’t have healthcare before Obamacare placed an additional 14 million people (correct the number if it is inaccurate. I am not sure) on Medicaid and we still have loads of people uninsured.