What next for the ACA?

As of this writing, the first order of business was for President Trump to sign an Executive Order expressing his intentions to repeal the ACA (Affordable Care Act aka Obamacare). This is a simple order that starts with the summary intention to repeal the act, but also states that the law must be enforced.

It further states the departments may at their discretion “waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden” on pretty much anyone- except employers were not specifically mentioned. Oversight or intentional? It reaffirms compliance with the Administrative Procedure Act of 1946 that requires notice-and-comment rule-making. So you can bet all stakeholders, particularly your insurance company will be watching the process closely.

Assuming Mr. Price is confirmed as the head of Health and Human Services (HHS) he will have a great deal of power in this process. This is where the nuts and bolts are really worked out.

So what should we look for in the future? Most all voters support many provisions of the ACA such as coverage for dependents to age 26, no pre-existing conditions, guaranteed issue etc. The biggest objections are to the mandate for coverage and the associated tax penalties for non-compliance.

When policymakers were working with insurers to craft the law, the mandate was a key provision. Without it, insurers simply would not play. The tax penalties were the “big stick” to encourage participation of employers and individuals.

How might this be addressed in the future? One idea is that in order to qualify for the guaranteed issue and no pre-ex provisions, individuals would need to show no break in coverage. Assuming that means absolutely no break in coverage, insurers might buy into this one. The law now allows up to a 60 day break. More than 100,000 people enrolled in the individual exchange on the day after the election. Maybe they were hoping to get in before the rules change.

It is my understanding that Congress and the Office of Management and Budget must approve the funding associated with any of these changes. So now we come to the bigger question. When the law was written it was funded by a series of new taxes. Should the law simply be repealed, then it would follow that all the taxes would also be repealed, right? (Good news for real estate investors, insurance companies, device manufacturers).

These taxes paid for the subsidies. So without the subsidies for the working poor, how will they pay these premiums? Budget reconciliation should have started by last Friday. This is where the subsidies could be withdrawn.

What drives premiums? Health care costs!

Under the ACA 80-85 cents of every $1 must be used to pay direct medical claims to doctors, hospitals, pharmacies etc. So we know that 80-85% of every premium dollar is going directly to health care costs.

The Trump administration supports a free market in health care, although he has suggested regulating Rx costs. Selling across state lines or creating buying groups does nothing to address the 85 cents! It will not increase competition.

To “increase competition” you need to allow the companies to offer “swiss cheese” plans again. These are plans that have holes and it is “buyer beware” to find them.

So the reality is that health care costs are driving premium increases. Pretty simple.

So how do you reduce costs? There are a number of ways. You may cut benefits. If it’s “last in first out”, then mental health and wellness benefits will likely be the first benefits to go.

You may provide a more efficient delivery system. According to Kaiser Health,”One of the main ways the Affordable Care Act seeks to reduce health care costs is by encouraging doctors, hospitals and other health care providers to form networks that coordinate patient care and become eligible for bonuses when they deliver that care more efficiently”.

“The law takes a carrot-and-stick approach by encouraging the formation of accountable care organizations (ACOs) in the Medicare program.” About 6 million people are in ACO’s nationwide and 10,000 locally. (A future column will explain our local ACO’s).

The fact that the ACA is far-reaching and complex cannot be overstated. How will repeal effect these efforts to control health care costs? Again unknown.

The reality is that repealing the ACA is not a simple proposition. The collapse of the individual insurance market is only one very real concern. There are many more. This must be approached with thorough and thoughtful analysis. No $1.5 billion errors allowed!

Margaret R. Beck
Margaret Beck  CLU, ChFC, CEBS started her insurance practice in Redding in 1978. As an insurance broker/consultant,  she represents businesses and individuals as their advocate.  She assists in choosing proper products, compliance with complex benefit laws and claims issues once coverage is placed. All information in her column is provided to the best of her knowledge, subject to final regulation by the respective agencies. Questions to be answered in this column can be submitted to info@insuranceredding.com.  Beck's column is also published in the Redding Record Searchlight.
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7 Responses

  1. Frank Treadway says:

    The way we can approach this complicated health program, as Ms. Beck outlines, is to simply work on the local level. We have no choice but to call, write or show-up at our local representatives office and kindly demand that he represent those of us on Medicare and ACA benefits as our current and sitting Congressperson in WashingtonDC. You all know who he is and now you need to call him, write or show up at his office on 2885 Churn Creek Rd. SteC, 530.223.5898, {DC office-202.225.3076} M-F, they’re closed 12noon-1pm. Otherwise we’ll end up with that unknown health care that is mentioned in the article above.

  2. K. Beck says:

    Once again, thank you so much for giving us information we would not normally have. AND explaining everything so it makes sense!!! Hope you don’t mind, but I am making a copy of this article and taking it to Rep. LaMalfa’s office. I have heard all the complaints and stories, eye ball to eye ball regarding what happened, on the negative side to many people who had good health care taken away from them (by their employers) when the ACA was passed into law. I have also heard many stories, again, eye ball to eyeball, of people who for the first time in their lives have health care coverage. There needs to be tweaking, but not a total eradication of the ACA.

  3. Beverly Stafford says:

    The ACA was not a perfect bill by any stretch, but something like eight million people finally had health care coverage because of it.  Put some good minds toward tweaking it, but repeal it without a better plan in the works?  Just dumb.  Thank you, Margaret, for again explaining the nearly impossible to understand.

  4. Dean Germano says:

    Thanks Margaret for a well written explaination as to what is at stake. This should not be a Democratic or Republican issue but affordable and comprehensive coverage for all residents of our Country.

  5. Dean Germano says:

    Thanks Margaret for a well written explaination as to what is at stake. This should not be a Democratic or Republican issue but affordable and comprehensive coverage for all residents of our Country is everyone’s concern.

  6. Steve Murray says:

    Here’s what I know. Before Obamacare I could not buy insurance AT ANY PRICE. This was a  market failure in action , not to mention immoral. Thank heavens I did not have any  health issues. If I had, I may have been bankrupted. After Obamacare I can buy insurance and participate in a health insurance marketplace. Flawed as it may be, Obamacare is far better than what we had before.  Lets change it and improve it, not abolish it and replace it with ??????

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