More Changes on the Horizon

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As the saying goes,“There is nothing as constant as change”. This certainly applies to the world of health insurance. Maybe we should also add the reminder that “No good deed goes unpunished”.

The “change” is that while the Federal mandate to have insurance was effectively removed last year. Now the state of CA is implementing its own mandate starting in the tax year 2020. The state’s penalties will be similar to the prior federal penalties-the larger of $495 for an individual or 2% of income. These penalties will be used to help subsidize those that receive coverage in the state.

The CA subsidies are targeting those that earn 400-600% of Federal Poverty Level (FPL). This is between $50,000 and $75,000 for individuals and between $103,000 and $155,000 for families of four.

The “good deed” that I refer to was the attempt to move the largest industrialized nation in the world to some form of universal health (sickness) care. The Affordable Care Act, (ACA also known as “Obamacare”) attempted a comprehensive solution to our “uninsured” problem. The subsidy portion of the bill targeted primarily those uninsured earning 100-400% of the federal poverty level. For a family of four, this meant earning between $25,100 and $100,400 in 2019.

The legislation was comprehensive, addressing not just the uninsured but the delivery system, the financing and insurance systems and the future of health care, including support for training new physicians and quality of care issues. It was intended to be funded by a myriad of new taxes.

The work that went into compliance with these regulations was complex and costly for the health care industry, Remember that this industry represents 1/5 of our nation’s economy. Consumers were delighted with some of the provisions and angered by others.

There have been more than 50 unsuccessful votes to overturn the legislation. Yet, there was no opposition consensus on an alternate plan. Rather, the law has been erratically dismembered demonstrating pure ignorance on the methodology for creating a healthy insurance pool. Simply eliminating the mandate that all Americans have insurance, yet requiring insurers to accept everyone without pre-existing condition limitations is the primary demonstration of the ignorance.

There are possible work-arounds. One example is to establish a rule that if an individual does not enroll when they are initially eligible, then they must wait 5 years or even never be allowed to enroll. That would protect the pool from those that would simply wait until they were sick to enroll.

But, then what do we do about our schizophrenic rule that requires hospitals to treat patients, regardless of their ability to pay? It’s common knowledge that those bills left unpaid by the uninsured are funded by the insured patients, so the rest of the population pays in terms of higher premiums.

As of my press deadline, we are anxiously awaiting the results of the New Orleans Federal Appeal court ruling, fully expecting this issue to return to the Supreme Court. Will the new court stand on the precedent of 2012? Will the new arguments point at different provisions? Where does the Executive Branch stand? They have changed positions multiple times in the last few months.

If the lower court ruling is upheld and the entire bill is found to be unconstitutional who will put Humpty Dumpty (our health care system) back together again? How much more money will the industry spend trying to comply with rules that change erratically?

We just received word that the individual health insurance market in CA is facing its lowest ever premium increase, averaging .8%. The key word here is “average”. We do not yet know what our individual area’s rates will be. We do know that Anthem is back in the market expanding its offerings in CA.

This rate news is small comfort to couples in their 60’s who are paying $1600-$2000 monthly for a $6000 deductible plan.

Stay tuned the roller coaster ride looks like it’s going to continue into the 2020 election cycle. If you want to be more knowledgeable about the situation, I highly recommend the book “Priced Out: The Economic and Ethical Costs of American Health Care”. It is a quick read that Amazon extols as follows: “From a giant of health care policy, an engaging and enlightening account of why American health care is so expensive?and why it doesn’t have to be”. It will help you better understand the system and make you better prepared to engage in intelligent discussion about the topic.

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 Beck's column is also published in the Redding Record Searchlight.
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4 Responses

  1. Avatar Patricia says:

    Marge Beck is definitely the most knowledgeable and articulate insurance person I know. I deeply appreciate it that she shares her wisdom and look forward to her analysis as all of this unfolds.

  2. Avatar Candace C says:

    Patricia, ditto!

  3. Avatar Anita Brady says:

    Just finished an unexpected 5 day stint in hospital and every time they scanned my bar code, I saw $ signs. Thank goodness for Medicare and my Supplemental (Margaret helped me with that last year at age 65).