Archive for the ‘#americanhealthcareact’ Tag

An Affordable Health Insurance   1 comment

Amid rising hmedical insurance costs and the debate over reforming/replacing the ACA, it’s easy to miss that an alternative already exists and needs to be protected in any health care reform plan. As Obamacare has driven up the cost of insurance premiums, a growing number of consumers and employers have turned toward high-deductible health plans (HDHPs), often known as “catastrophic health insurance.”

Image result for image of the american health care billThese plans feature lower-than-average premiums in exchange for higher-than-average deductibles, and many on the market today are paired with tax-advantaged health savings accounts (HSAs).

This is as opposed to some small group and individual market policies where you pay high premiums, but you also have a high deductible as a cost-savings means.

Brad and I used to have one of these in the individual market before I accepted a job with medical insurance that covers the family … for a price. There were no attached Health Savings Accounts available in those days and we only satisfied the deductible when we had our daughter through midwife delivery. Prenatal and labor and delivery just topped over the deductible and because we had chosen a low-cost (and much healthier option for childbirth) the insurance company reimbursed the entire bill … a nice baby-warming gift.

We looked into it when Obamacare drove up my family premiums by more than 50% over two years, but we couldn’t find one that covered our family … only individuals. I’ve heard that’s changed, but we don’t need the coverage currently.

Under a high-deductible health plan, you pay for all your medical expenses, except for qualified preventive care (which the ACA made mandatory), up to the annual deductible. After that, some plans pay 100 percent of your covered medical expenses. Others initially pay a share of your medical bills (maybe 80 percent) before paying 100 percent when you reach an out-of-pocket maximum.

TRelated imagehese plans are sometimes referred to as catastrophic health insurance plans, but the name is not exactly accurate. Under health care reform, the plans must cover 100 percent of preventive care, even before you pay the deductible. Additionally, many of the plans cover a full range of health care services – not just hospital and emergency medical costs you might associate with catastrophic care. So, if you’re someone with a chronic disorder, you still might use health insurance coverage for regular doctors’ visits after the deductible is satisfied.

But how do you pay for the medical care you need before the deductible is satisfied? Often the HDHP is paired with a tax-advantaged Health Savings Account. HSA-qualified, high-deductible health plans have been covered by federal law since 2004. These plans are coupled with a health savings account that lets you set aside pre-tax money to use for medical care today. In recent years, these plans have been reformed to allow them to roll over from year to year and now you can even pass them to your heirs.

Consumers shopping for affordable individual health insurance were the first to gravitate toward HSA-eligible plans, followed by small employers, but larger businesses are now looking at them as well. In the latest data, nearly 17.4 million Americans were covered by “health savings account/high-deductible health plans” in 2014, which was a 12 percent increase over 2013. Since 2011, HSA plans have grown on average 15 percent annually.

Currently, not all high-deductible health plans can be paired with an HSA. To qualify for HDHP status in 2016, the plan must have a deductible of at least $1,300 for an individual and $2,600 for a family. Out-of-pocket maximums can be no more than $6,550 for an individual and $13,100 for a family. My former small-group employer has employees paying $1000 a month for an “ordinary” insurance plan that has similar parameters, so they wouldn’t be losing much with an HDHP.

You can contribute up to $3,350 per year in pre-tax dollars to an HSA as an individual or up to $6,750 as a family. You can save an additional $1,000 in the account if you’re 55 or older.

The money in the account grows tax-free, and in some cases companies that service the accounts provide investment options, such as mutual funds to promote further savings growth.

When you withdraw the funds, you don’t have to pay taxes so long as the withdrawals you take are for qualified medical expenses, such as the HDHP’s deductible or medical costs not covered under the plan, including dental and vision care. You can even save for long-term care not covered by Medicare.

An HSA account is portable. Even if you switch to a different type of health plan or change employers, the money is still yours to spend on health care.

They’re a no-brainer for the young and healthy, but Rick believes they’re well-suited for all age- and health groups. There are currently 20 million active HSA accounts in the US, but expansion plans could increase the number significantly.

“I believe everyone should be in charge of their own health care decisions. These plans mean that consumers care how much medical care costs. It incentivizes them to make informed decisions. Last year, my son chose to forego expensive surgery in favor of physical therapy to correct an orthopedic injury. He’s back doing stupid athletic things in less time than the recovery from surgery would have been. He’s less likely to hurt himself in the future because he’s learned a great deal about body mechanics. If he’d been covered by “full-coverage” insurance, he would have been less conscious of the costs and asked fewer questions about the alternatives. Yes, he cost a surgeon a lot of money, but that money went to a physical therapist, a gym membership, and whatever investments his HSA is attached to. Yes, Lela, I read “The Broken Window” by Bastiat when you suggested it and I can apply it.” Rick (a doctor)

Rick supports the government funding HSA’s for lower-income people, paired with a HDHP, as an alternative to the one-size-fits-all (but it doesn’t) current medical insurance scheme. It would save the government money in the long run and it would force people to pay attention to their own medical care decisions and by the time someone turned 18 and was responsible for their own health care, they’d have plenty of money in the account to act as a cushion for any future medical expenses.

Come on, GOP! Go Free Market!   3 comments

Lela’s preferred free-market plan for medical care policy would be no plan whatsoever. I’m offended that anyone thinks they need to tell me how to take care of myself. I’m able to make those decisions for myself. Government, get out of the way and let the market work. Free individuals can negotiate among themselves for lower and better coverage and care.

Rick’s preferred free-market plan for medical care policy would include sliding-fee medical clinics that would operate under charitable auspices. We forget that fraternal organizations used to contract with doctors to provide their members with medical care for a low monthly fee and that churches used to operate hospitals. Contrary to revisionist history, these systems and institutions were well-run and responsible for a rapid increase in the overall health and lift expectancy of Americans. That was all before the American Medical Association got involved in deciding who could become a doctor or open a clinic, using the force of government to create a virtual monopoly.

Image result for image of the american health care billRick was stunned when he wrote that. We believe he just became a libertarian … except he supports government-funding for those sliding-fee clinics, so he’s not quite there yet.

The fact is that it’s really scary that so much of the country believes we must have a federal top-down strategy to manage a huge chunk of the American economy. That’s the main problem. We don’t need a federal plan for health care now any more than we needed in the 1990s or the 1950s. Yet Republicans have allowed liberals to frame the entire debate in anti-market terms.

The Freedom Caucus stood up and said these things and Pesident Trump, who is a progressive who in the past said he favored liberty-and-choice-destroying universal health care, pulled the bill. He hinted that they would keep the Amercian Health Care Act on the shelf until Obamacare implodes (likely toward the end of this year) and then dust it off then. That’s the wrong approach!

The AHCA falls far short of a free-market solution. It’s certainly not a repeal of Obamacare. It’s a half measure that tries to fix the unfixable with tiny doses of deregulation that essentially do very little to impact the core of the ACA. The AHCA’s the “tweak” on the rudder of the Titanic headed toward the iceberg that did nothing to keep the behemoth from hitting it and eventually sinking.

Trump suggested a three-phase rollout, but there were no details for the other two phases, so they might as well not exist because the Republicans will lose the Senate and possibly the House in 2018 if things continue the way that they are headed. Obamacare has too many flaws to ever be fixed and pretending otherwise is not going to get us anywhere.

We’ve seen what the Democratic Party plans for health care (and not insurance, but actual care). They would channel us all into Bureau of Indian Affairs-like services that see our mortality rate drop to British levels (dead people are much lower drain on government than living ones). The Democrats oppose opening up insurance markets across state lines because …. Who knows why because it doesn’t make any sense. Opening up auto insurance across statelines did wonders for improving competition and controlling premiums. Thirty years later, my monthly premiums are just now about what they were before the market was opened up. And Alaska has different coverage than, say, New Hampshire, so no, that’s not a problem either … except maybe in the minds of people who think government-run medical care is the answer to the medical insurance crisis in this country. If that’s the only choice you’re willing to accept, all other alternatives look wrong.

The Democrats don’t want to look at access to actual medical care, insurance costs or the continued growth of the welfare state. They seek to constrain markets to create monopolies that can be controlled by a federal regulatory regime. When that fails, because it ignores economic reality, they will insist upon passing single-payer.

“When I was working in France, I had opportunity to do some visitation in England and Germany and look behind the scenes of their medical care systems. When I developed appendicitis, I dosed myself with pain killers and antibiotics and caught a jet to the United States rather than go under the knife of any of my colleagues in Europe. They’re nice people; some of them were very well trained by European standards and they mean well, but I do not recommend any single-payer or universal medical system in the world. All of the ones I’ve seen are inadequate for anyone I love who has any illness requiring high-skilled treatment.” Rick (speaking as a doctor)

Potential Victories:

  • Halting federal funding of unPlanned Parenthood, the nation’s largest abortion mill
  • Offering states more flexibility in the operation of their Medicaid programs.
  • Expanding health savings accounts
  • Getting rid of the individual mandate
  • Opening insurance across state lines
  • Repealing Obamacare’s taxes

Pressure from conservative groups made the American Health Care Act, as presently conceived, a non-starter. That’s a good thing. The Affordable Care Act would have been a lot worse if it hadn’t been for the moderate Democrats who just couldn’t stomach its more socialist aspects. Democrats did not, despite prevailing mythology, compromise with the GOP in 2009. The GOP managed to pass some amendments, but they were all technical in nature – commas and spelling repair. The Democrats were forced to compromise with their own moderates.It only takes a few senators to hold an entire party’s golden goose hostage.

This time around, the GOP was confronted by the conservative Republicans of the Freedom Caucus, who rightly pointed out that the people did not sweep the GOP into office in order to “tweak” Obamacare. They voted for the GOP because the GOP promised to REPEAL Obamacare.

No federal entitlement has been repealed, replaced or even significantly modified after its passage, but this is the fight that caused Republicans to win majority control in 32 states, hundreds of seats in the House and Senate, and that nicely shaped office in the White House. So Republicans need to take a good hard look at where they stand right now. If they don’t have the strength of character to back of full repeal of Obamacare, then they were elected on a lie. Surely someone among them has a better idea than either the AHCA or the ACA.

Republicans, please recognize that you were put into the position that you’re in right now by people who want to get rid of Obamacare. You shouldn’t allow yourselves to be intimidated by Democratic rhetoric that you’re going to kill Grandma and expose “the children” to the winter winds. We know they’re full of gas. They tried to convince the American people that Obamacare would be a political and economic success story even as the American voters argued that it wouldn’t be. Reality has shown the Democrats were phenomenally wrong and that the American people understand economics better than the elites. The voters who put you in office are not going to fall for a lecture about how unpopular a repeal bill will be. Feel free to pass a bill that incorporates the principles many GOP voters say they believe in.

 

REALLY! They’re behind you and even libertarians like Lela and doctors like Rick will cheer you on.

How Could They Make It Worse   Leave a comment

So when Rick and I started our series, we didn’t yet know what Congress was going to propose for certain, but they came out with the House plan now (March 8), so we decided to write up our impressions.

The draft House health insurance bill fails to correct the features of Obamacare that drove up health insurance and medical care costs and mainly just tweaks Obamacare’s financing and subsidy structure.

The bill focuses on protecting those who gained subsidized coverage through the law’s exchange subsidies and Medicaid expansion, while failing to correct Obamacare’s misguided insurance regulations that drove up premiums for Americans buying coverage without government subsidies.

 

The draft bill leaves Obamacare’s costly insurance regulations in place and attempts to offset those costs with the same basic approach.

Approximately 22 million individuals currently receive subsidized health insurance coverage through the exchanges (8 million) and the Medicaid expansion (14 million). For them, Obamacare’s higher insurance costs are offset by the law’s subsidies.

About 25 million Americans with unsubsidized individual-market coverage (10 million people) or small-employer plans (15+ million people) are the ones who most need relief from Obamacare that can only be supplied by repeal, and they probably don’t care about or for replacement. Their experience of Obamacare has basically been “all pain, no gain,” as they have been subjected to significant premium increases and coverage dislocations with no offsetting subsidies.

Unfortunately, the draft House bill provides no meaningful relief for that group of middle-class Americans who are most adversely affected by Obamacare and are most supportive of repeal.

The draft bill leaves Obamacare’s costly insurance regulations in place and attempts to offset those costs with even more subsidies.

The draft bill’s new Patient and State Stability Fund is particularly problematic. It would provide grants to states of up to a total of $100 billion over the nine years, 2018-2026. What are the significant problems with this new program? They’re substantial.

  • It substitutes new funding for old Obamacare funding without adequately addressing the misguided Obamacare insurance market rules and subsidy design that made the exchanges a magnet for high-cost patients. Those Obamacare mistakes created an insupportable burden on the individual insurance market by concentrating expensive patients in only that small portion of the total market.
  • Like Obamacare, it doesn’t actually reduce premiums, but rather uses subsidies to mask the effects of Obamacare provisions that drove up premiums in the first place.
  • It creates a new entitlement for states.

Furthermore, without a resulting reduction in unsubsidized premium levels, future Congresses will likely face pressure from states and constituents to extend and expand the program. It will become a creeping Medicaid-like drain on resources that will destroy medical care access in this country. Under the Medicaid expansion, the federal government reimbursed states 100 percent of the cost of expanding Medicaid to able-bodied adults, with federal support eventually declining to 90 percent. These are able-bodied people who earn a living (in Alaska, up to $52,000 a year for a family of four) and their medical care is paid for by the taxpayers.

Yet, states continue to receive significantly less federal assistance (50 percent to 75 percent, depending on the state) for covering the more vulnerable populations (such as poor children and the disabled) that the program was intended for. That policy was both inequitable and unaffordable.

The draft bill does not correct that inequity, but rather reduces the enhanced match rate from 95 percent to 80 percent. The better approach would be to allow states to immediately cap expansion population enrollment, while also setting federal reimbursement for any new expansion enrollees at normal state match rates.

Such changes would likely limit the addition of new individuals to the program, and also substantially reduce the size of the federal revenue loss that expansion states will incur when the program terminates. That is because a significant share of current enrollees can be expected to leave the program for other coverage during the transition period.

Yet another policy mistake is the failure to take the first step toward providing more equitable tax treatment of health insurance.

The House version drops a proposed cap on the unlimited tax exclusion on employment-based health insurance contained in an earlier version, while retaining the so-called “Cadillac tax”—the 40 percent excise tax on so-called “high-cost plans”—and delaying its implementation until 2025.

Congress should kill this punitive excise tax and replace it with a cap on pre-tax funding so as to encourage employers & workers to evaluate the trade-off between higher health care spending and higher cash wages, to rethink how much of total employee compensation should be devoted to health benefits.

While the Cadillac tax would force employers to alter the health benefit plans that they provide their workers, no such effect would result from the cap on the exclusion. It would instead limit the amount of employer health benefits that constitute pre-tax income to workers, which would make the tax treatment of employer-sponsored health benefits consistent with the tax treatment of other benefits (such as retirement savings plans, group life insurance, and dependent care) offered by employers.

Workers would still be able to use after-tax income to purchase additional coverage, just as they can with other employer benefits, and the employer would still be able to offer a plan whose value exceeds the level of the cap on pre-tax funding.

This bill misses the mark primarily because it fails to correct the features of Obamacare that drove up health care costs. Congress should continue to focus on first repealing the failed policy of Obamacare and then act to offer patient-centered, market-based replacement reforms. Stop making patients into a group where things are done to them and put them back in control of their own health care.

Penalized for Offering High-Quality Coverage   4 comments

“Would you want to be a patron of a restaurant that didn’t want you as a customer?”  John C. Goodman, Health Economist

Obamcare set up incentives for health insurers to avoid the sickest people because they would not be able to charge for pre-existing conditions.

What? You didn’t know that?

Under the individual insurance that existed prior to Obamacare, beneficiaries could buy guaranteed-renewable health insurance. If they developed a condition while insured, they could still buy health insurance at a premium that applied to the whole pool they were a member of when they originally bought insurance. Insurers were required by contract to take them even if they developed a serious condition and they also had an incentive to treat everyone on the pool well because it was bad publicity that might cost them customers if they were seen to be discriminating against people in the pool.

The political rhetoric around the (un)Affordable Care Act made it seem like insurers could toss people off policies for developing serious diseases or charge them ridiculous prices, but this was not actually true. What Obamacare did do was say that insurers could no longer charge for pre-existing conditions. Only, they figured out a way to game the system, according to a study by Michael Geruso of the University of Texas, Timothy J. Layton of Harvard Medical School, and Daniel Prinz of Harvard University. Goodman describes this as “being the restaurant that turns away customers they don’t want.” ,

Here’s a portion of their abstract:

We first show that despite large regulatory transfers that neutralize selection incentives for most consumer types, some consumers are unprofitable in a way that is predictable by their prescription drug demand. Then, using a difference-in-differences strategy that compares Exchange formularies where these selection incentives exist to employer plan formularies where they do not, we show that Exchange insurers design formularies as screening devices that are differentially unattractive to unprofitable consumer types. This results in inefficiently low levels of coverage for the corresponding drugs in equilibrium.“Screening in Contract Design: Evidence from the ACA Health Insurance Exchanges,” NBER Working Paper #22832, November 2016.

Cato Institute health economist Michael Cannon lays out some of the implications in a recent op/ed titled “How ObamaCare Punishes the Sick,” Wall Street Journal, February 28, 2017 (March 1 for print edition.)

A long excerpt:

Predictably, that triggers a race to the bottom. Each year, whichever insurer offers the best MS coverage attracts the most MS patients and racks up the most losses. Insurers that offer high-quality coverage either leave the market, as many have, or slash their coverage. Let’s call those losses what they are: penalties for offering high-quality coverage.

The result is lower-quality coverage–for MS, rheumatoid arthritis, infertility and other expensive conditions. The researchers find these patients face higher cost-sharing (even for inexpensive drugs), more prior-authorization requirements, more mandatory substitutions, and often no coverage for the drugs they need, so that consumers “cannot be adequately insured.”

The study also corroborates reports that these rules are subjecting patients to higher deductibles and cost-sharing across the board, narrow networks that exclude leading cancer centers, inaccurate provider directories, and opaque cost-sharing. A coalition of 150 patient groups complains this government-fostered race to the bottom “completely undermines the goal of the ACA.”

It doesn’t have to be like this. Employer plans offer drug coverage more comprehensive and sustainable than ObamaCare. The pre-2014 individual market made comprehensive coverage even more secure: High-cost patients were less likely to lose coverage than similar enrollees in employer plans. The individual market created innovative products like “pre-existing conditions insurance” that–for one-fifth the cost of health insurance–gave the uninsured the right to enroll in coverage at healthy-person premiums if they developed expensive conditions.

I would follow the link, because Cannon backs up his analysis with a lot of links. He also warns policy makers who are hesitant about repealing the pre-existing condition rules:

If anything, Republicans should fear not repealing ObamaCare’s pre-existing-conditions rules. The Congressional Budget Office predicts a partial repeal would wipe out the individual market and cause nine million to lose coverage unnecessarily. And contrary to conventional wisdom, the consequences of those rules are wildly unpopular. In a new Cato Institute/YouGov poll, 63% of respondents initially supported ObamaCare’s pre-existing-condition rules. That dropped to 31%–with 60% opposition–when they were told of the impact on quality.

Really, follow the links. Learn what’s really happening. Don’t accept the Wikipedia version of this debate.

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