AHCA Phase 1

The ACA (aka ObamaCare) was intended to have a public/private partnership. The design was to maintain the foundation of the employer based benefits platform and provide access to the market for those individual without employer based coverage. The third leg of the stool was the safety net program for the rest of the population. Medicare for the elderly was not changed.

The plan included subsidies or Advance Premium Tax Credits to help those working poor with incomes between 138-400% of the Federal Poverty Level. The expansion of Medicaid (aka MediCal in California) was the cornerstone of the safety net for children and low income adults.

As this process has evolved, it has become fairly clear that the debate of whether or not health care is a right or a privilege has not been settled. In 2015, about 36% of health care in the US was provided by some government program: Medicare, VA (Veterans Administration) and Medicaid. Employer based insurance covers about 49% leaving a balance of 7% of the population covered by individual insurance policies and another 9% still uninsured.

As of my deadline, we are preparing for a vote on the purported first stage of “repeal and replace” the ACA. The new law’s acronym (AHCA) will make the use of acronyms a bit challenging as we write about it.

This step is under budget reconciliation which means that financial matters can be addressed. Most all of the taxes that were put in place to pay for the ACA are eliminated quickly. These totaled about $600 billion. But the “Cadillac Tax” charged against “rich” benefit plans is merely postponed until 2025.

It’s interesting to note that $400 million of those taxes were due to limiting the tax deduction for insurance company Executives’ compensation to $500,000. The CEO of United Health Care was paid about $66 million last year, and he is only one of the execs. This provision will clearly be a boon to insurance companies. Further, the mergers that were declined last year will likely have more favorable treatment under the new administration, thus further consolidating control of the business to fewer insurers.

There are other insurance company taxes that will be eliminated as well. Cigna estimates that the additional insurance “industry fee” added 3-4% to insurance premiums. It was suspended for 2017, so that cannot be part of the explanation for 2017 rate increases.

Other taxes repealed are related to: tanning, net investment income, medical device, Rx and the increased Medicare tax on high earners. Soft taxes like limiting deductions for Flexible Spending Accounts (FSA), Health Savings Accounts (HSA) are eliminated as well as returning the medical expense deduction to 7.5% of income.

Individual and employer mandate penalties are eliminated. A “Patient and State Stability Fund” of $100 Billion through 2026 is established to help stabilize the insurance industry.

The ACA tax credit is repealed in 2020 and replaced by a new tax credit ranging from $2000-4000 for those with incomes under $75,000 (individual) $150,000 (family).

Obviously, greater minds that mine are at work here. I do not understand how we pay for the financial aspects of this bill. We have eliminated the taxes, but maintained some subsidies and a large stability fund. Will all of it come from the Draconian cuts to Medicaid?

Insurance market reforms include repeal of the insurance actuarial value standards, increasing the age rating requirements from 3:1 to 5:1. This means the highest rate can now be 5 times the lowest rate. If a 20 year old’s premium is $100, the 60 year old’s premium can be $500.

Actuarial value standards are repealed, so insurers can design any type of plan they believe will sell. There will also be tax credits for “catastrophic” plans and some off-exchange products. Look for the return of hospital only policies.

Insurers will continue to be required to issue coverage with no pre-existing condition limitations, but may increase premiums by 30% if there was a lapse in coverage of 63 days or more. If I am young, why would I enter the market? Would I be better off to skip the $200 monthly premium, wait until I got really sick, then pay $260, most of which would be covered by my subsidy?

I am pleased to share that I have recently been appointed to the Board of Directors of Shasta Community Health Center. I hope to learn more about public health and better inform my readers as to the effects of the proposed Medicaid changes as well as how public health delivery and financing effects our community.

Finally as stated in my first column September 2013: information provided is to the best of my knowledge at the time of writing.

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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16 Responses

  1. cheyenne says:

    We all know now that the ACA rewrite has been canceled because no one seemed to like it.  As far as the “Cadillac Tax” on rich plans that shows that the ACA needs some changes.  The Wyoming state health plan for it’s state employees, from the Governor down to snow plow drivers, is considered a “Rich Plan” by the ACA and the state estimated that the “Cadillac Tax” would cost Wyoming an extra 2 to 3 million dollars a year.  And I doubt any one covered by the Wyoming health care could be considered one of the 1%ers.  The ACA needs some changes to it but not a wholesale rewrite.

    • Steve Towers Steve Towers says:

      Well said.  All federal entitlement programs get tinkered with on an ongoing basis.  Obamacare has been tweaked here and there.  Alas, Trump has pledged that there will be no more fine-tuning—he didn’t get his way, so Plan B is to stop changing the oil and rotating the tires.

      Oh, and of course all of the blame for Trumpcare’s failure is falling  on Paul Ryan.  Fox has even started calling it “Ryancare.”  And Trump issued the following tweet yesterday:  “Watch @JudgeJeanine on@FoxNews tonight at 9:00 P.M.”

      Here’s what Judge Jeanine had to say, while calling for Ryan’s resignation:  “I want to be clear. This is not on President Trump. No one expected a businessman to completely understand the nuances, the complicated ins-and-outs of Washington and its legislative process.”

      Pirro’s defense of Trump is that he lacks the skills and experience to be POTUS or push a legislative agenda.  With friends like that, who needs enemies?

      And Trump is like, “Yeah. What she said.”

      • Beverly Stafford says:

        I’m glad I don’t watch Judge Jeanine because I probably would have stuck my finger down my throat.  Although the repeal of the ACA was anticipated in the beginning, the Republicans actually came through for the electorate on this bill.  How did LaMalfa vote?

        • Steve Towers Steve Towers says:

          It didn’t go to a vote—Speaker Ryan pulled it when it became clear that it wasn’t going to pass.  LaMalfa was going to be a “yea” vote—he supported it all along.   Not surprising—LaMalfa is as reliable a rubber stamp as they come.

          His recent Town Hall meeting in Grass Valley—focused on Trumpcare—must have been an eye-opener for him.  The crowd of 1,500 constituents was in a sour mood.

  2. Rod says:

    Superb article Margret.

    “…it has become clear that the debate whether or not health care (insured) is a right or a privilege hasn’t been settled”.  Obviously, I’m biased, I believe the execs collecting $66 million annual salaries are also biased.

    Who’s gonna buy health insurance for the uninsurable?  Should the unhealthy be the American standard?

    Maintaining good health isn’t a right nor privilege, it’s the way of survival.  Asking the healthy to underwrite the bad choices of the unhealthy is wrong.  We should direct the debate towards good health and away from insurance.

     

    • Steve Towers Steve Towers says:

      Rod — Not all medical maladies are brought on by unhealthy habits, regardless of what you tell yourself.  Many forms of cancer are by-products of the aging process.  Other diseases are caused by genetic anomalies.  I applaud you for taking good care of yourself, but if some uninsured drunk driver jumps the curb and hits you and you subsequently need weeks of hospitalization and inpatient rehab, the rest of us pay, unless your plan is to crawl into a hole and die.

      “Should the unhealthy be the American standard?”

      It already is.  People are healthier in northern and western Europe, where they have socialized medicine.  According to that liberal rag Forbes, here are the top 10 healthiest countries on the planet:  Iceland, Sweden, Finland, Germany, Switzerland, Australia, Denmark, Canada, Austria and the Netherlands.

      Incidentally, I respect your opinion more than the opinions of conservatives who work for the government, but piss and moan about other people mooching off the taxpayers for their healthcare.

      • Rod says:

        Don’t be silly Steve,  everything that comes in life can’t be insured nor prevented. Good health is good insurance.

        We can’t buy the bill of goods (insurance) without demanding quality.  The pool (insurance) is overflowing to the point there’s no reward for prevention.  Asking a 20 year old to keep the pool overflowing for their next 45 years equates to human bondage…slavery.  Corrupt slavery.

        No, insurance of health grants no comfort nor guarantee.  It’s a gimmick.

         

         

        • Steve Towers Steve Towers says:

          My insurance coverage has financial incentives for prevention and disincentives for unhealthy behaviors like smoking.

          As for your comments about guarantees: That’s the strawiest of straw men.  I never said anything about insurance guaranteeing good health.  And nationalizing healthcare goes directly to quality.  As it stands, part of premiums go to generate profit.

          I’ll ask you straight up:  You get hit by that drunk driver and severely injured, are you going to ask to be euthanized?  Or will you avail yourself of the system of shared risk/cost that the rest of us are paying for?

          You don’t have to answer.  We know the answer.

          • Rod says:

            Great question Steve…euthanized…by my order?  I don’t know.  I’ve completed my CA advance directives and will.  My assets have already been assigned according to my heart’s content.  My estate won’t be handled by probate.

            If I die today, I think I’ve got the bases covered with a bit of money in reserve.

            Contemplating one’s mortality is a subject for another article.  Maybe someone will pick-up the subject and we can tumble down that trail of thought.

             

    • cheyenne says:

      Rod, I am 74 and still in decent health despite years of abusing drugs and alcohol which I have stopped.  But I know many younger people in Redding who lived a lot healthier life than I did who contracted fatal diseases from who knows what and died.  Being healthy or unhealthy is a crap shoot no matter what your lifestyle is.  And should we pay for unhealthy people, yes, but that is the hard part.  Maybe Medicare for all is the answer.  The ACA’s risk provider section guaranteed, which they failed to do, the insurance companies that the provider program would pay for any losses incurred.  They only paid 12% and that is why WinHealth here in Wyoming and other small insurers in other states went bankrupt.

      • Steve Towers Steve Towers says:

        The answer is obvious, if not for our pig-headedness.  In northern and western Europe they pay about a third-less per year per person (in the form of taxes rather than premiums).  Everybody is covered, and healthcare isn’t driven by profit incentives. For that substantially lower cost they get superior healthcare to ours and better health outcomes.

        It’s damned near a no-brainer.  In fact, if we could somehow remove the brains from some of the most pig-headed ideologists among us, we would in short order have a far better healthcare system than Obamacare.

        • Beverly Stafford says:

          Amen, Steve.  Now if we could just start a grass roots movement to achieve this . . .

        • Curtis says:

          Not a 100% sure that your figures are accurate but here’s the tax % for France;

          Up to €9,700
          0%

          Between €9,701 – €26,791
          14%

          Between €26,792 – €71,826
          30%

          Between €71,827 – €152,108
          41%

          Above €151,108
          45%

           

          Right now there is no “tax” for health care even though the SC ruled the ACA as a tax.

          Roughly if I took my annual premium paid for health care and “added” it to my % paid in taxes, I would be around the 45% marker that France is paying.  And I don’t make over 151,000 Euro a year.

          Also, if America were to go to a single payer system, a lot would have to change in the current medical system we have.

          I don’t have the time today to go over it but if you take the “profit” out of the system whether it be the insurance companies, doctors, pharmacies and hospitals, you also take away the incentives for quality care.

          If you just take the insurance companies and their profit out, then you still have 3/4 of the problem not solved.

          If you don’t “charge” everyone, you still have one segment of the population paying for another.

          The government reimbursement to hospitals and doctors today, is not enough for them to operate at the level of care they operate on today.  They are supplemented by insurance company money which has a different reimbursement level than the government.

          It goes on and on.  It is not as easy as most people want it to be.

      • Rod says:

        Cheyenne,  It’s good to still be alive, yes?

        “Should we pay (insurance) for unhealthy people?  We’re beyond discussing Medicare.  Otherwise we’d both be long gone.

        A multi-generational family who feeds the census numbers as a means of living…………….

        Who has earned their life for them?  The over taxed working poor.

  3. Marc Carter says:

    “We’re going to have insurance for everybody. There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us. We can expect to have great health care. It will be in a much-simplified form. Much less expensive and much better.” — Donald Trump, January 2017

    In the meantime, Ryan & Trump can take sadistic ownership of the greatest (failed) health care rip-off plan in the world because they refuse to look at a world map:Country & Healthcare Costs as % of GDP

    United States 16.9 %

    Switzerland 11.5Japan 11.2Germany 11.1Sweden 11.1France 11Netherlands 10.8Denmark 10.6Belgium 10.4Austria 10.4Canada 10Norway 9.9UK 9.8Finland 9.6New Zealand 9.4Ireland 9.4Australia 9.3Italy 9.1Spain 9Portugal 8.9Iceland 8.8Slovenia 8.4Greece 8.2Chile 7.7%

    Health care is not complicated….unless you’re morally and geographically challenged.

    • Rod says:

      You’re confused Marc.

      “Health care isn’t complicated”…….unless you believe in health care insurance.

      Nobody disputes the need for health care,  80% of Americans dislike buying insurance for the idea.

       

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