Repealing Obamacare

Well, the Republican leadership is going to put their cards on the table in 7 card stud poker with all the cards face up and see what happens.

The Hill

Reconciliation is the convoluted method used to pass Obamacare over the filibuster process (Republicans were the minority party in 2009). Republicans intend to use the same process to pass the repeal over the objections of the 48 Democratic Senators in January.

The Affordable Care Act has many tentacles beyond the few that cause most people grief. The main thing people are unhappy with is the mandate to buy insurance and the penaltax. But that is a relatively minor part of the 2000 page bill.

  • Gender equity was a big part – that men and women of the same age had to be charged the same premium, even though women spend substantially more on health care
  • Medicaid expansion – at its roots, the ACA is a federalizations of the entire health insurance industry. The ACA mandated that states loosen the requirement to be on Medicaid, specifically ending the asset tests and only looking at income
  • Ending lifetime or annual maximums – that is what has killed BCBS of NC, having to pay huge big pharma bills for exotic medicines. BCBSNC has been paying out 10x in benefits what it collects in premiums. That is not a sustainable business model.
  • Subsidies to insurance companies to protect them from bad actuarial assumptions and adverse selection (that only sick people buy coverage after they get sick)
  • Mandates of covered services in a policy, including preventive care having no requirement for deductibles
  • Coverage of children on their parent’s policy up until age 26 (presumably that is mostly there for young adults with preexisting expensive health conditions)
  • Premium subsidies for low income people in between Medicaid eligibility and 400% of the poverty level (about $45,000)
  • “Must issue” requirement – this is closely related to the pre-existing condition test ban, but not totally. Must issue means that an insurance company cannot deny coverage to anyone, but in theory they could refuse to pay the expenses of known problems
  • Limits on overhead expenses (and profit) by insurance companies
  • 300% cap on premiums based on age
  • Medicare provider reform

I will be riding this roller coaster, probably for the next 4 years, should I live that long. Part of the reason I have had no medical expenses for three years (other than one primary care visit) was concern that Republicans would undo “must issue” and pre-existing condition tests would return with a vengeance, and racking up diagnosis codes now could cost me dearly down the road. Many companies that used to write individual coverage have been merged into larger companies or have withdrawn from writing individual policies.

I recognize that notion is somewhat irrational, but my distrust of the medical care system is at the root of that. This point not lost on my niece, the primary care doctor – she didn’t understand why I didn’t want to rush out and find out everything medically wrong with me. Her mother had no health insurance and refused to see a doctor. It runs in our family, because we have doctors in the family 😉 in my case, there are no children to worry about. My sister got her children through college, launched into adulthood, and viewed her job as mother as complete, and if her children wanted an ongoing relationship, it would be on her terms. They refused, and she died. Her kids will never understand.

From a legal standpoint, the US government has a contract with insurance companies to pay the Obamacare subsidies for 2017, and Blue Cross has extended coverage to me for the coming year. If the subsidies are withdrawn, I can pay the full premium, but I am probably the exception.

Each constituency that benefits from Obamacare will fight the repeal. Health Care providers and insurance companies might declare bankruptcy. Small children with horrible medical problems will become props on TV networks. Do you want little Jessica and her cute puppy to die because of evil Mr Trump and greedy insurance companies working for Wall Strert?

Put your seat belt on. No standing. I hope you are tall enough to be on this ride.

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5 Responses to Repealing Obamacare

  1. Fred Stiening says:

    Forbes checks in
    http://www.forbes.com/sites/robertlaszewski2/2016/11/12/it-isnt-news-that-trump-wants-to-keep-the-pre-existing-condition-reforms-he-said-so-in-february/2/

    Allowing insurance to operate across state lines doesn’t solve the problem, although for me it might have freed me from the issues of HIPAA making it hard to move between states. Without must issue, nobody is going to compete to sign up people paying $500 a month premiums with $5000 a month expenses. HSAs don’t solve that either.

    Before Obamacare, every state was required to operate a HIPAA plan that offered guaranteed coverage to people who could demonstrate they didn’t have a coverage gap. This is similar to how car insurance works for 19 year olds. Knowing they will cost more than premiums can cover, the state sets up an assigned risk pool. If you want to write auto insurance in the state, a portion of everyone’s premium goes to the assigned risk pool. It serves the public interest, since we don’t want uninsured 19 year olds with no assets driving cars.

    The HIPAA plan works the same way. Insurers that sell health insurance have to pay a portion of their premium income from healthy customers into the pool to cover sick people. This is more about protecting hospitals than helping poor people.

    The wrinkle here is the ACA pushed many employers to self insure – where Blue Cross (ET al) are only administering the plan and negotiating discounts, but there is no actuarial process. Employers decide who is in their private risk pool by who they hire, and who they fire when they get sick. I don’t know if self insured employers can be forced to pay into the assigned risk pool.

  2. Fred Stiening says:

    Until Obamacare, I was enrolled in the Illinois CHIP plan (unrelated to the federal program of the same name). I was paying about $1000 a month for a plan with a $5000 deductible. When Obamare went into effect, the state of Illinois intended to close the agency, but at the last moment decided to keep it around, possibly to be there in the event Obamacare was repealed or thrown out by the courts.

    It is still around, waiting in standby mode. It currently still has 328 enrollees who for some reason are not eligible for Obamacare, Medicaid or Medicare.

    http://www.chip.state.il.us/downloads/AR2015.pdf

    Premiums paid were $3.7 million or an average of about $11,000 a year. The fund had $9.8 million in covered expenses and $2.4 million in administration expenses. (64% of premium income) The $9 million shortfall was covered by an assessment charged by the State of Illinois. One reason for an employer to self-insure is to avoid paying that assessment.

  3. Fred Stiening says:

    I am not an insurance expert, but my preliminary review (at least in North Carolina) is that self insured employer plans are NOT considered to be insurance plans for the purposes of HIPAA qualified coverage. 50 million employees are in self insured employer plans.

    http://www.siia.org/i4a/pages/Index.cfm?pageID=4546

    The 18 months of post employment coverage under COBRA is tricky, since there is no insurance company involved, only an administrator. How the premiums are calculated when the employee has to pay the entire premium is murky. If the employer goes out of business, there is no COBRA left to participate in. If you worked for a company not based in the state where you live, your state insurance department may have little influence.

  4. Fred Stiening says:

    In Illinois, 1/3 of the expenses are prescription drugs. Health providers have been known to pay the premiums to keep people enrolled in assigned risk pools to milk the fund. Here are the top 20 drugs and what they are used for:

    1 HARVONI   $ 355,988       - Hepatitis C
    2 H P ACTHAR $ 317,038      - Lupus and Rheumatoid Arthritis
    3 HUMIRA   $ 203,722        - immunosuppressant - psoriasis, Crohn's disease
    4 EXJADE $ 108,480          - iron chelation due to frequent transfusions (see: Hillary)
    5 COPAZONE   $ 61,179       - multiple sclerosis 
    6 ORENCIA $ 59,648          - Rheumatoid Arthritis 
    7 ATRIPLA   $ 54,746        - HIV / AIDS
    8 GENOTROPIN $ 52,910       - growth hormone for children
    9 ENBREL   $ 50,680         - Psoriasis, Rheumatoid Arthritis 
    10 TRUVADA $ 48,761         - HIV / AIDS
    11 LANTUS   $ 37,851        - diabetes (insulin)
    12 ABILIFY $ 35,627         - schizophrenia, depression, autism
    13 ENOXAPARIN   $ 35,553    - blood thinner (heparin)
    14 REYATAZ $ 33,914         - HIV / AIDS
    15 NOVOLOG   $ 33,811       - diabetes (fast acting insulin)
    16 XYREM $ 32,790           - narcolepsy  (involuntary sleeping)
    17 CIMZIA   $ 30,968        - Crohn's disease, Rheumatoid Arthritis
    18 IBRANCE $ 29,896         - Breast Cancer
    19 HUMALOG   $ 29,700       - Diabetes (insulin)
    20 DULOXETINE $ 27,866      - Depression, diabetic neuropathy 
    

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