Repealing Obamacare Demands Deliberate & Thoughtful Process
The next Congress is likely to repeal Obamacare by “reconciliation,” a parliamentary maneuver that allows a simple majority in the U.S. Senate to pass a bill. With fewer than 60 Republican Senators in the next Congress, reconciliation is the only way to move quickly to solve the problems Obamacare created. Otherwise, we could expect Democratic Senators to filibuster a repeal bill.
However, not every jot and tittle of Obamacare can be repealed through reconciliation, which sets up a challenging couple of years (at least) for those who wish to repeal Obamacare and replace it with patient-centered health care.
Read this entire Health Alert in The Hill.
The Democratic Party may have had enough of being voted out because of Obamacare to finally wake up and consider trying to win an election or two and join the Repeal or Die crowd.
I predict that repealing Obamacare will be bipartisan because the law just stinks that bad. Who will be the 1st Democrat to Repeal Obamacare and endorse President Trump?
Missouri–Claire McCaskill (D)
Montana–Jon Tester (D)
Florida–Bill Nelson(D)
Indiana–Joe Donnelly(D)
North Dakota–Heidi Heitkamp (D)
Ohio–Sherrod Brown (D)
Pennsylvania–Bob Casey (D)
Virginia–Tim Kaine (D)
West Virginia–Joe Manchin (D)
Wisconsin–Tammy Baldwin (D)
Hillary rode that Obamacare dead horse straight into the ground and took the rest of the Democratic Party with her.
It is not clear to me that Senate Democrats would oppose all reforms. Some reforms they might well support include:
1. Increase the desirability of HSAs to pay for medical care in lieu of insurance.
2. Force all healthcare and drug providers to publish price schedules online, like Amazon and Walmart do.
3. Eliminate the tax-favored status of employer-provided health insurance as a first step in getting employers out of the health care business.
4. Provide that HSA and insurance dollars be available to our medical tourists overseas.
There is zero appetite among politicians of either party (with the exception of Canadian-style single payer extremists) for tampering with employer-based benefits.
John, you think the politicians want the status quo and yet the voters demand change. John, you are from Canada so you didn’t vote did you?
Maybe John we should get auto insurance from our employers too so we can lose our auto insurance when we get fired. These politicians are so smart about insurance and taking bribes.
I am from Canada but am an American. When you run for office an win on a platform of eliminating employer-based benefits, please let us know.
Fine, keep fighting for employer-based benefits John. Is that why they pay you?
Is the platform to eliminate employer-based benefits or to equalize the tax credit between the two groups and provide the insured the freedom of how the tax credit will be used?
I don’t think anyone wants to eliminate an employer-based plan that is working and better than one that could be purchased privately.
This one change in the law is the Death of employer sponsored plans đ The repeal of Obamacare will be swift. John you donât need to Candy Coat the repeal of this Obamanation (yes a new word).
American is on the verge of a great rebirth, a paradigm shift in how Americans buy health insurance and how they pay for healthcare. Individual responsibility subsidized with individual tax credits. Yes another abomination but a step in the right direction. A far better plan than the ACA Obamanation.
Senate just passed on on 12/7/2016
Allowing small employers to use HRA for premium only plans againâŚâŚâŚstarting 1/1/2017
$4,950 cap for individuals and $10,000 families.
SEC. 18001. EXCEPTION FROM GROUP HEALTH PLAN REQUIREMENTS FOR QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS.
(a) Amendments To The Internal Revenue Code Of 1986 And The Patient Protection And Affordable Care Act.â
(1) IN GENERAL.âSection 9831 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
â(d) Exception For Qualified Small Employer Health Reimbursement Arrangements.â
â(1) IN GENERAL.âFor purposes of this title (except as provided in section 4980I(f)(4) and notwithstanding any other provision of this title), the term âgroup health planâ shall not include any qualified small employer health reimbursement arrangement.
â(2) QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENT.âFor purposes of this subsectionâ
â(A) IN GENERAL.âThe term âqualified small employer health reimbursement arrangementâ means an arrangement whichâ
â(i) is described in subparagraph (B), and
â(ii) is provided on the same terms to all eligible employees of the eligible employer.
â(B) ARRANGEMENT DESCRIBED.âAn arrangement is described in this subparagraph ifâ
â(i) such arrangement is funded solely by an eligible employer and no salary reduction contributions may be made under such arrangement,
â(ii) such arrangement provides, after the employee provides proof of coverage, for the payment of, or reimbursement of, an eligible employee for expenses for medical care (as defined in section 213(d)) incurred by the eligible employee or the eligible employeeâs family members (as determined under the terms of the arrangement), and
â(iii) the amount of payments and reimbursements described in clause (ii) for any year do not exceed $4,950 ($10,000 in the case of an arrangement that also provides for payments or reimbursements for family members of the employee).
â(C) CERTAIN VARIATION PERMITTED.âFor purposes of subparagraph (A)(ii), an arrangement shall not fail to be treated as provided on the same terms to each eligible employee merely because the employeeâs permitted benefit under such arrangement varies in accordance with the variation in the price of an insurance policy in the relevant individual health insurance market based onâ
â(i) the age of the eligible employee (and, in the case of an arrangement which covers medical expenses of the eligible employeeâs family members, the age of such family members), or
â(ii) the number of family members of the eligible employee the medical expenses of which are covered under such arrangement.
The variation permitted under the preceding sentence shall be determined by reference to the same insurance policy with respect to all eligible employees.
â(D) RULES RELATING TO MAXIMUM DOLLAR LIMITATION.â
â(i) AMOUNT PRORATED IN CERTAIN CASES.âIn the case of an individual who is not covered by an arrangement for the entire year, the limitation under subparagraph (B)(iii) for such year shall be an amount which bears the same ratio to the amount which would (but for this clause) be in effect for such individual for such year under subparagraph (B)(iii) as the number of months for which such individual is covered by the arrangement for such year bears to 12.
â(ii) INFLATION ADJUSTMENT.âIn the case of any year beginning after 2016, each of the dollar amounts in subparagraph (B)(iii) shall be increased by an amount equal toâ
â(I) such dollar amount, multiplied by
â(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting âcalendar year 2015â for âcalendar year 1992â in subparagraph (B) thereof.
If any dollar amount increased under the preceding sentence is not a multiple of $50, such dollar amount shall be rounded to the next lowest multiple of $50.
â(3) OTHER DEFINITIONS.âFor purposes of this subsectionâ
â(A) ELIGIBLE EMPLOYEE.âThe term âeligible employeeâ means any employee of an eligible employer, except that the terms of the arrangement may exclude from consideration employees described in any clause of section 105(h)(3)(B) (applied by substituting â90 daysâ for â3 yearsâ in clause (i) thereof).
â(B) ELIGIBLE EMPLOYER.âThe term âeligible employerâ means an employer thatâ
â(i) is not an applicable large employer as defined in section 4980H(c)(2), and
â(ii) does not offer a group health plan to any of its employees.
â(C) PERMITTED BENEFIT.âThe term âpermitted benefitâ means, with respect to any eligible employee, the maximum dollar amount of payments and reimbursements which may be made under the terms of the qualified small employer health reimbursement arrangement for the year with respect to such employee.
â(4) NOTICE.â
â(A) IN GENERAL.âAn employer funding a qualified small employer health reimbursement arrangement for any year shall, not later than 90 days before the beginning of such year (or, in the case of an employee who is not eligible to participate in the arrangement as of the beginning of such year, the date on which such employee is first so eligible), provide a written notice to each eligible employee which includes the information described in subparagraph (B).
â(B) CONTENTS OF NOTICE.âThe notice required under subparagraph (A) shall include each of the following:
â(i) A statement of the amount which would be such eligible employeeâs permitted benefit under the arrangement for the year.
â(ii) A statement that the eligible employee should provide the information described in clause (i) to any health insurance exchange to which the employee applies for advance payment of the premium assistance tax credit.
â(iii) A statement that if the employee is not covered under minimum essential coverage for any month the employee may be subject to tax under section 5000A for such month and reimbursements under the arrangement may be includible in gross income.â.
(2) LIMITATION ON EXCLUSION FROM GROSS INCOME.âSection 106 of such Code is amended by adding at the end the following:
â(g) Qualified Small Employer Health Reimbursement Arrangement.âFor purposes of this section and section 105, payments or reimbursements from a qualified small employer health reimbursement arrangement (as defined in section 9831(d)) of an individual for medical care (as defined in section 213(d)) shall not be treated as paid or reimbursed under employer-provided coverage for medical expenses under an accident or health plan if for the month in which such medical care is provided the individual does not have minimum essential coverage (within the meaning of section 5000A(f)).â.
(3) COORDINATION WITH HEALTH INSURANCE PREMIUM CREDIT.âSection 36B(c) of such Code is amended by adding at the end the following new paragraph:
â(4) SPECIAL RULES FOR QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS.â
â(A) IN GENERAL.âThe term âcoverage monthâ shall not include any month with respect to an employee (or any spouse or dependent of such employee) if for such month the employee is provided a qualified small employer health reimbursement arrangement which constitutes affordable coverage.
â(B) DENIAL OF DOUBLE BENEFIT.âIn the case of any employee who is provided a qualified small employer health reimbursement arrangement for any coverage month (determined without regard to subparagraph (A)), the credit otherwise allowable under subsection (a) to the taxpayer for such month shall be reduced (but not below zero) by the amount described in subparagraph (C)(i)(II) for such month.
â(C) AFFORDABLE COVERAGE.âFor purposes of subparagraph (A), a qualified small employer health reimbursement arrangement shall be treated as constituting affordable coverage for a month ifâ
â(i) the excess ofâ
â(I) the amount that would be paid by the employee as the premium for such month for self-only coverage under the second lowest cost silver plan offered in the relevant individual health insurance market, over
â(II) 1â12 of the employeeâs permitted benefit (as defined in section 9831(d)(3)(C)) under such arrangement, does not exceedâ
â(ii) 1â12 of 9.5 percent of the employeeâs household income.
â(D) QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENT.âFor purposes of this paragraph, the term âqualified small employer health reimbursement arrangementâ has the meaning given such term by section 9831(d)(2).
â(E) COVERAGE FOR LESS THAN ENTIRE YEAR.âIn the case of an employee who is provided a qualified small employer health reimbursement arrangement for less than an entire year, subparagraph (C)(i)(II) shall be applied by substituting âthe number of months during the year for which such arrangement was providedâ for â12â.
â(F) INDEXING.âIn the case of plan years beginning in any calendar year after 2014, the Secretary shall adjust the 9.5 percent amount under subparagraph (C)(ii) in the same manner as the percentages are adjusted under subsection (b)(3)(A)(ii).â.
(4) APPLICATION OF EXCISE TAX ON HIGH COST EMPLOYER-SPONSORED HEALTH COVERAGE.â
(A) IN GENERAL.âSection 4980I(f)(4) of such Code is amended by adding at the end the following: âSection 9831(d)(1) shall not apply for purposes of this section.â.
(B) DETERMINATION OF COST OF COVERAGE.âSection 4980I(d)(2) of such Code is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph:
â(D) QUALIFIED SMALL EMPLOYER HEALTH REIMBURSEMENT ARRANGEMENTS.âIn the case of applicable employer-sponsored coverage consisting of coverage under any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2)), the cost of coverage shall be equal to the amount described in section 6051(a)(15).â.
(5) ENFORCEMENT OF NOTICE REQUIREMENT.âSection 6652 of such Code is amended by adding at the end the following new subsection:
â(o) Failure To Provide Notices With Respect To Qualified Small Employer Health Reimbursement Arrangements.âIn the case of each failure to provide a written notice as required by section 9831(d)(4), unless it is shown that such failure is due to reasonable cause and not willful neglect, there shall be paid, on notice and demand of the Secretary and in the same manner as tax, by the person failing to provide such written notice, an amount equal to $50 per employee per incident of failure to provide such notice, but the total amount imposed on such person for all such failures during any calendar year shall not exceed $2,500.â.
(6) REPORTING.â
(A) Wâ2 REPORTING.âSection 6051(a) of such Code is amended by striking âandâ at the end of paragraph (13), by striking the period at the end of paragraph (14) and inserting â, andâ, and by inserting after paragraph (14) the following new paragraph:
â(15) the total amount of permitted benefit (as defined in section 9831(d)(3)(C)) for the year under a qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2)) with respect to the employee.â.
(B) INFORMATION REQUIRED TO BE PROVIDED BY EXCHANGE SUBSIDY APPLICANTS.âSection 1411(b)(3) of the Patient Protection and Affordable Care Act is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph:
â(B) CERTAIN INDIVIDUAL HEALTH INSURANCE POLICIES OBTAINED THROUGH SMALL EMPLOYERS.âThe amount of the enrolleeâs permitted benefit (as defined in section 9831(d)(3)(C) of the Internal Revenue Code of 1986) under a qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of such Code).â.
(7) EFFECTIVE DATES.â
(A) IN GENERAL.âExcept as otherwise provided in this paragraph, the amendments made by this subsection shall apply to years beginning after December 31, 2016.
(B) TRANSITION RELIEF.âThe relief under Treasury Notice 2015â17 shall be treated as applying to any plan year beginning on or before December 31, 2016.
(C) COORDINATION WITH HEALTH INSURANCE PREMIUM CREDIT.âThe amendments made by paragraph (3) shall apply to taxable years beginning after December 31, 2016.
(D) EMPLOYEE NOTICE.â
(i) IN GENERAL.âThe amendments made by paragraph (5) shall apply to notices with respect to years beginning after December 31, 2016.
(ii) TRANSITION RELIEF.âFor purposes of section 6652(o) of the Internal Revenue Code of 1986 (as added by this Act), a person shall not be treated as failing to provide a written notice as required by section 9831(d)(4) of such Code if such notice is so provided not later than 90 days after the date of the enactment of this Act.
(E) Wâ2 REPORTING.âThe amendments made by paragraph (6)(A) shall apply to calendar years beginning after December 31, 2016.
(F) INFORMATION PROVIDED BY EXCHANGE SUBSIDY APPLICANTS.â
(i) IN GENERAL.âThe amendments made by paragraph (6)(B) shall apply to applications for enrollment made after December 31, 2016.
(ii) VERIFICATION.âVerification under section 1411 of the Patient Protection and Affordable Care Act of information provided under section 1411(b)(3)(B) of such Act shall apply with respect to months beginning after October 2016.
(iii) TRANSITIONAL RELIEF.âIn the case of an application for enrollment under section 1411(b) of the Patient Protection and Affordable Care Act made before April 1, 2017, the requirement of section 1411(b)(3)(B) of such Act shall be treated as met if the information described therein is provided not later than 30 days after the date on which the applicant receives the notice described in section 9831(d)(4) of the Internal Revenue Code of 1986.
(8) SUBSTANTIATION REQUIREMENTS.âThe Secretary of the Treasury (or his designee) may issue substantiation requirements as necessary to carry out this subsection.
(b) Amendments To The Employee Retirement Income Security Act Of 1974.â
(1) IN GENERAL.âSection 733(a)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1191b(a)(1)) is amended by adding at the end the following: âSuch term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).â.
(2) EXCEPTION FROM CONTINUATION COVERAGE REQUIREMENTS, ETC.âSection 607(1) of such Act (29 U.S.C. 1167(1)) is amended by adding at the end the following: âSuch term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).â.
(3) EFFECTIVE DATE.âThe amendments made by this subsection shall apply to plan years beginning after December 31, 2016.
(c) Amendments To The Public Health Service Act.â
(1) IN GENERAL.âSection 2791(a)(1) of the Public Health Service Act (42 U.S.C. 300ggâ91(a)(1)) is amended by adding at the end the following: âExcept for purposes of part C of title XI of the Social Security Act (42 U.S.C. 1320d et seq.), such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).â.
(2) EXCEPTION FROM CONTINUATION COVERAGE REQUIREMENTS.âSection 2208(1) of the Public Health Service Act (42 U.S.C. 300bbâ8(1)) is amended by adding at the end the following: âSuch term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).â.
(3) EFFECTIVE DATE.âThe amendments made by this subsection shall apply to plan years beginning after December 31, 2016.
“This one change in the law is the Death of employer sponsored plans”.
Lee, this appears to be a constructive amendment to ACA in which qualified small group employer HRA’s that are 100% funded by employees are no longer considered group health plans, and are given certain exceptions to Obamacare requirements. To adopt this new HRA arrangement, it appears that a small group need only cancel its existing group health plan and replace with a qualified, new HRA arrangement.
“(B) ELIGIBLE EMPLOYER.âThe term âeligible employerâ means an employer thatâ
â(i) is not an applicable large employer as defined in section 4980H(c)(2), and
â(ii) does not offer a group health plan to any of its employees.”
I agree this seems very attractive to small employers – while likely much less attractive to their employees. And i don’t see how large employers will be affected; Do you mean instead that you expect this will result in the death of small employer-sponsored plans? Thanks.
Way too long an excerpt! Just so everyone knows, this is H.R. 34, the 21st Century Cures Act, which the President will sign later this afternoon.
Lee, it seems you have put a lot of thought into the above excert. I wonder if you can explain why you are so certain this is a death knell for for employer sponsored health plans referring us to the specific lines in the text perhaps expanding on it with your knowledge of health insurance along with its incentives.
HRA’s have existed a long time.
Allan,
best I can do on a Friday my friend.
I believe the repeal of the Affordable Care Act and the allowing of small business to once again utilize HRA premium only plans made illegal by the ACA will result in profound, and possibly unintended, consequences for corporate America, the average U.S. employee, and more broadly, the entire U.S. economy. The Individual Tax Credits proposed by Tom Price will allow employees to turn down employer coverage and claim an individual tax credit. Because most employers do not offer dependent subsidized plans most employees will gladly accept the individual tax credit.
By shifting insurance responsibility to the employee, the individual tax credit opportunity will allow
U.S. companies to radically redefine the role they play in the health care system.
The Individual Tax Credit could save S&P 500 companies nearly $700 billion through 2025.
These potential savings represent about 4% of the S&P 500’s current market capitalization.
For U.S. companies with 50 or more employees, total savings to businesses could amount to
$3.25 trillion through 2025.
As we approach the Trump years, efforts to repeal the ACA legislation outright may shift towards an attempt to address the present shortcomings of the law as it is written today. Potential changes include making the law even more market-oriented, seeking to increase coverage options available to individuals, small businesses, and even large businesses,
From a business perspective the Individual Tax Credits presents an opportunity for companies to radically redefine the role they play in the health care system, mirroring events that happened decades ago, as companies reconsidered their employee retirement benefit policies. Potential implications for companies include:
Increased profitability for corporations since they may be relieved from the financial, regulatory, and administrative burden of providing health care coverage as a traditional term and condition of employment.
Utilizing health care coverage as a recruitment tool, as opposed to an expected or assumed benefit of employment.
Grasping the opportunity to shift retiree health care benefits towards the Individual Plans, thereby reducing or outright shedding long-term corporate expenses.
Individuals will also benefit from more Stabil Coverage , Coverage Affordability, Labor Mobility, And An Overall More Competitive Health Insurance Market
From the individual purchaser’s perspective, the individual tax credit will produce multiple improvements of the health care benefit system, including:
Universal individual ownership of health care insurance coverage, as opposed to benefits that are largely provided under terms of employment, offering more widespread and stable benefits to consumers. Broader participation, which should produce improved economies of scale, affordability, and benefits. Widespread portability of benefits, allowing an individual to maintain preferred care givers and benefit coverage terms in the event of changing employers over the course of an individual’s career.
The creation of a modern, open, and truly competitive health care insurance market that provides unfettered opportunities for consumers to find the most appropriate and best priced coverage option amongst multiple providers for both individuals and groups seeking coverage.
Over the long run, the Individual Tax Credits will eventually come to be historically recognized as the starting point of the reconstruction of the U.S. health care benefit industry and a catalyst for how companies provide health care insurance for their employees. In this regard, Individual Tax Credits will Mirror the creation of the Individual Retirement Account (IRA) as a byproduct of Congress first passing the Employee Retirement Security Act (ERISA) in 1974. The ERISA legislation was primarily designed to enable, protect, enhance, and thus modernize the accumulation of retirement benefits over the course of an individual’s working career. This legislation ushered in an evolutionary process, which for close to the last half century has seen employers gradually and consistently migrate away from the defined benefit pension structure in favor of the defined contribution approach, including IRAs, Keogh plans, and 401k plans.
By extension, the implementation of the Individual Tax Credits is the start of a process that will transform the health care industry. Individual Tax Credits will shift health care benefit responsibility away from employers. Competition among the insurers, will custom tailor benefits to the needs of the individual consumer while simultaneously increasing affordability. The federal government will encourage participation claiming the Individual tax credit by allowing tax credits for health care insurance premiums paid to all workers.
Just as the original 1974 IRA has seen multiple rounds of revisions and improvements over the decades following its initial rollout, including the recent introduction of the Roth IRA in 1997, it stands to reason that the Individual Tax Credits are also destined to attract more than its fair share of improvements and revisions in the years to come, and perhaps even sooner than many people currently anticipate.
Collaboration between private sector innovation and public sector promotion via payroll tax incentives has seen IRA account balances blossom from tax deferred contributions of just $1.4 billion in 1975 to over $5.3 trillion of accumulated value.
If we look at historical health care premium cost trends we can establish a reason why companies will look to change the traditional health care arrangement between employers and employees, and the potential ramifications for corporations as they reduce or eliminate the practice of offering health care insurance coverage to their employees.
As Fembup noted, any drastic changes to employer-provided health care benefits would likely be frowned upon by employees and the voting public at large. Neither lawmakers nor the White House will anticipate the idea that Individual Tax Credits could provide corporations with an enormous subsidy to earnings. However, once a few notable companies start to depart from their traditional approach to health care benefits, it’s likely that a substantial number of firms could quickly follow suit.
The result would be a dramatic departure from the legacy employer/employee payroll deduction benefit provision relationship, and could quickly be the modern day equivalent of companies moving from defined benefit pension plans to defined contribution programs, as mentioned above.
The ever-increasing cost of health care, representing a substantial financial burden for individuals and corporate America alike and will be the key driver of the reforms.
Thanks. I think I understand you better now. The death knell for employer sponsored health plans is due to a multiplicity of factors, not just one bit of legal language. Hopefully that will happen though I donât mind if employer sponsored health plans exist as long as the insured can independently get the same deduction.
âshifting insurance responsibility to the employeeâ is the way to go. That by itself breeds more responsibility. When Barry blames physicians for their lack of knowledge regarding price this recognition might settle the question. It is the patientâs insurance not the physicians so the patient should look to the insurer and its agents.
I think a big mistake was made when Medicare incentivize direct payments to the physician. It is the patientâs insurance and there should be a wall around the insurer and the patient. That ensures that everyone recognize that the patient is the payer and the patient. Physicians, therefore, can respond more directly to the patient rather than third parties.
John,
I think this is the first step in the process.
The changes are going to come first from the small employers over the next few years hit critical mass and then the flood gates open.
Thanks Lee –
I suspect the flood gates won’t open until the large employers say they are open. And, I think, employee resistance is going to be a considerable factor – more so for large employers than for small employers even though all of them would like to shed the responsibility of managing medical benefits for their employees.
Part of the problem with health reform is that Democrats fundamentally misunderstand the purpose of insurance. As my Health Alert on Monday explained, the ACA was designed to maximize cross-subsidies — not insure against unknown risks. We all have unknown risks; the risk that I could be that 1 in 10,000 who suffers a heart attack or is diagnosed with cancer despite having no risk factors. If there are 10,000 of us, it’s easy to insurance against. However, the ACA wanted to combine us 10,000 and comingle us with 90,000 people with pre-existing conditions and known risk factors and expected us to all pay the same (high) premium.
Devon, employer-based health insurance companies just switch their sick workers to the “ACA Exchange” when they become too sick to work. They are playing us all for fools as they laugh all the way to the bank.
Employer-based insurance privatizes the profits and Socializes their losses. We are all too stupid to stop them.
But, but, but, people have to switch insurance companies after they get cancer right?
Devon, your post of Dec. 9 essentially argues that healthy people should be able to buy cheap insurance against unknown risks. (as they could when carriers could do full underwriting in most states. Grandfathered plans are incredibly cheap, I see them every day in my agency.)
But libertarians in general and Republicans in particular rarely had an answer for what sick people should pay for health insurance.
High risk pools were pathetically underfunded in many states and did not even exist in over 17 states.
If we go back to full underwriting, I do have to challenge you: what should people pay if their risks are known?
Bob what exactly do you mean “if their risks are known”?
They have cancer and need medical treatment not insurance,
Senator, I knew you don’t know the answer – that’s why I asked someone else.
Bob?
sorry
“But libertarians in general and Republicans in particular rarely had an answer for what sick people should pay for health insurance.”
This type of statement is a bit foolish. One should not be looking towards one’s ideology to answer this question. The ones with the best answer are actuaries and risk managers.
We have an answer and have written about it ad nauseum: Health status insurance, guaranteed renewable. How to achieve it when the employer is the insurer of first resort is a challenge. How to achieve it when people fail to pay premiums continuously is a challenge.
Let me explain my comments a little better.
The only way to get cheap health insurance again is to allow full underwriting.
When you have full underwriting, then the insurer gets very few claims for a year or two. They only have to pay for people who have accidents, or those who develop heart disease et al with no prior warning.
This enables the insurer to pay nice commissions, and make quite a bit of money before the initial underwriting “wears off” after 3 to 5 years. This is the exact history of Golden Rule and similar companies.
Anyways, if this is the primary vehicle for individual health insurance, some people are going to be declined. One can debate the percentages but declines are inevitable.
The ACA’s attempted solution was guaranteed issue. This quickly caused massive price increases for the persons who had cheap underwritten policies before, and the anger at these price increases has steadily sabotaged the ACA.
In my opinion, the country does want a solution to the declines if we go back to full underwriting. That is all I was trying to get across in my comment.
“The only way to get cheap health insurance again is to allow full underwriting.”
Bob, what do you consider cheap” insurance?
I can recall when group insurance ran about $85 monthly per employee. Do you consider that “cheap”?
Besides, I think a large and growing number of people don’t really want medical insurance they want medical welfare; and when that number reaches a reliable majority of voters, that’s what we will have.
btw, you have not responded to my Q what exactly do you mean “if their risks are known”.
Fembup, Bob says, “âRisks are knownâis meantto describe a person who already has cance, heart disease, et al,…” Exactly like I said he would say.
Also Fembup, the 1st tax-free MSA only cost $25 a month so I think that $85 a month for your over-priced group insurance is way too expensive. But, I know you are a smooth operator so I’m sure you made it sound cheap.
That is $24 a month and not $25.
“Exactly like I said he would say”
Yes. Exactly.
Bob, you can get cheap health insurance in many ways including by offering lousy insurance. We are seeing that with Obamacare except the price isnât cheap.
âThe ACAâs attempted solution was guaranteed issue.â That is a pretty dumb way to move towards universal coverage for all. That increases the number of people that donât want insurance. Why would people pay more than the value of the purchase? If anything you would want people, especially the young, to flock towards insurance and get used to it so they want to buy it.
Let the market place handle insurance and the price will fall 30-50% That will leave even less people in trouble. For the rest price supports can be offered. Whatever type of support offered should not affect the premium otherwise the socially acceptable person caring insurance will be the one paying the penalty.
‘Risks are known’is meantto describe a person who already has cance, heart disease, et al, which are the things he/she wishes to insure against. Thin fire insurance for a house that is already on fire.
My agency gets calls every day from persons who want to be sue that their ACA insurance is in force, because they have expensive treatments scheduled for the coming week.
“Risks are knownâis meantto describe a person who already has cance,”
You are confusing risk and manifestation. They’re different. Coverage of risk is what your pay your insurance company for; manifestation of an injury or disease is what your insurance company pays you for. This is more than a semantic difference.
With insurance, risk by definition is an unknown. For example everyone has some risk of getting cancer. Insurance companies actuarially evaluate risk in a population and then adjust for specific persons who have certain specific risk factors. This actuarial risk is used to calculate premiums which the insurance company expects will be sufficient in aggregate. But in every case each individual’s own actual risk still remains unknown; in fact, it’s unknowable.
Of course not everyone will get cancer, and thank goodness for that. But when a person does get cancer, it’s no longer an unknown, and no longer a “risk” – it’s an actual manifestatIon of the disease.
So what? So this: as long as an insurance policy is in force, it will reimburse covered expenses for injury and disease i.e., manifestations. You work in an agency- you should darn well understand this because when worried people call your agency every day they aren’t asking about risk, they’re asking will I be paid? They expect and deserve a clear response from you. Did you forget to renew your policy? Did you forget to pay your premium? No? Then you’re OK.
One more thing: when insurance companies are not allowed to set premiums based on their evaluation of risk, they are no longer simply providing insurance, and their methods of calculating premiums no longer work. So long as you stop pretending it’s insuring risk, you can call it anything you like – Obamacare comes to mind. i prefer “medical welfare”.
PS Still looking for your answer to my other question, what do you consider “cheap” insurance?
Bob, be careful when you try to evaluate how much risk costs. Take coronary heart disease. A person may have had a heart attack and now is placed in a higher risk status. However, that person might never have another cardiac problem, or he might have a heart attack and die before any care is provided. In those two cases there was a risk, but no need to pay a claim. That same cardiac could have another heart attack or another heart attack followed by chronic congestive heart failure. The former is a moderate payout while the latter is a high payout. But when you are thinking how high that higher risk status is remember that in the general population of healthy people anyone of the can suddenly fall into that same risk. Therefore when worrying about how high a premium those risk factors create one has to subtract the real risk from the healthy population and for cardiac disease it is high in older age groups.
Allan, I can’t tell who you were responding to but, in case it was me, I agree with you which is why “in every case each individualâs own actual risk still remains unknown; in fact, itâs unknowable.”
John F., I was responding to Bob. Take note, I began that statement with, “Bob, be careful”. But, I do note that my reponse was under your name. Whether that was my fault or the blog’s I don’t know. If it was my fault, sorry.
Yeah, it was the inconsistency of the name and positioning that made me wonder. But it never hurts to tell someone when you agree with them. đ
Cheap would be $100 a month for a single person under age 40.
To get the premium down there you would probably have to have a lower annual limit such as $100,000. You certainly would have no mandates for maternity or mental illness.
Bob, is $100 monthly for a single person under 40 your benchmark for cheap? Isn’t that more than a family premium of $85?
And its interesting to me that you can think of only one reason I can remember a family premium of $85 a month,
John — I think you may be comparing apples and oranges. Bob’s statement about $100 per month for a single person under 40 being cheap is priced in today’s dollars. I’m not sure what year family coverage cost only $85 per month but if it was back in the early to mid-1970’s, you would have to multiply that number by about five to convert it to today’s dollars. So, $85 per month then would be equal to $425 per month now. Since most employer family plans that I’m aware of are valued at roughly 2.5-3.0 times what single coverage is worth, Bob’s $100 per month number for single coverage would be equal to $250-$300 for family coverage which is less than the $425 number in today’s dollars that is the equivalent of $85 per month in the early to mid-1970’s. The bottom line is that $100 per month for single coverage may or may not be cheap depending on how comprehensive the scope of coverage is and how broad the provider network is.
Drat BC. I’ve been so eagerly awaiting Bob’s response.
I do hope he doesn’t take your comment as letting him off the hook for explaining himself. đ
John, you misinterpreted my comment about people calling to verify their coverage. I was referring to the people who are buying a brand new policy, and want to be sure that the yet-to-be-issued policy will cover their surgery in two weeks.
Allan, you are totally correct that cardiac cases can differ greatly. I was once a life insurance underwriter, and we studied all the medical records to assess how severe the risk really was.
Of course this could take six weeks. The health insurers by and large must issue plans much quicker, so their pattern has been to decline all heart history cases when they are allowed to underwrite.
“you misinterpreted my comment”
Oh? And here I thought I merely read it.
Bob, you have this endearing habit of saying one thing, then claiming later you meant something different. That act is wearing thin.
Therefore, Bob, you demonstrate that many that are declined insurance are declined more for administrative reasons than for medical reasons. This tells us a lot about high risk patients that aren’t at such a high risk.