Fixing the Affordable Care Act?

Yesterday Democrats in the US House of representatives introduced a bill to undue the changes that the current President made to the Affordable Care Act and attempt to fix many of the broken parts of the law. The bill is called “Undo Sabotage and Expand Affordability of Health Insurance Act of 2018“.

Since the Democrats are expected to take majority control of the House of Representatives this year it seems possible that this or similar bills could be approved. Even so, the bill is largely symbolic at this point, it is highly unlikely to become law under the current president,

In short, this bill is the exact opposite of what the Republican Party wants.  It would expand availability of qualified health insurance and undo the expansion of limited benefit insurance.

The focus of my attention and the purpose of this blog is to help clients prepare for and cope with whatever the health plans and laws are, and not to take a side or offer an opinion as to the merits of any plan.

Exploring the phenomenon of increased early insurance terminations

An increasing number of consumers are terminating health coverage within days, weeks or months of buying health insurance online.

I’ve noticed a trend in online health insurance enrollment that seems to be accelerating. I don’t understand it yet; this post is primary a basis to seek additional information.

The observation: The incidence of early termination of benefits is accelerating. In a growing number of cases, the benefits are canceled within days of online enrollment.

Background: I’ve been involved in online health insurance enrollment since the early 1990s an ran a national enrollment service for about a decade. In those early days online insurance enrollees typically relied on professional advice and assistance via telephone that, in my observation, contributed to increased suitability and satisfaction. Today’s health insurance exchange enrollees typically do not use available human advisory services so there is less data available on the motivations, psychology or emotional influences of enrollees on the insurance enrollment process.

Possible explanations:

Lack of consumer information – I’ve long been suspicious that online health insurance enrollees do not have sufficient information to make appropriate decisions. I’ve noticed, for example, confusion between primary coverage and supplemental health insurance.

Confusion with the Affordable Care Act – The Trump administration’s push to promote lower cost insurance with lower level of benefits may be misunderstood by consumers. Consumers may not understand for example, that they may enroll in expensive coverage that covers pre-existing medical conditions without limits OR low cost coverage that limits those benefits, but that they can not enroll in low cost insurance that covers pre-existing medical conditions in the entirety.

General distrust – Formerly an online consumer typically felt they could trust advice from a telephone support. I’m not sure that is true anymore. The wave of ‘fake news’ and propaganda about heat care this year is unprecedented.

Short term use – It is possible that consumers are enrolling for coverage immediately before a schedule doctor visit, for example, and cancelling coverage immediately afterward. I have only  few anecdotal comments to indicate this might be true. No reliable base of information is available. Some commenters speculate this will be accelerated by the cancellation of the health insurance requirement known as the ‘individual mandate’ under the Tax Cuts and Jobs Act.

Solutions: One possibility is to include health insurance advisory services as part of an employer-provided employee benefit plan. Not coincidentally, this is the approach that Freedom Benefits has adopted for 2018.

Another possibility is restoration and expansion of the health insurance navigator program that was established in 2010. This does not seem politically likely under the current political leadership.

A third possibility is to use improvements in technology to screen applicants and communicate on suitability and policyholder satisfaction issues. Our partners are working on these issues that require a greater investment in Artificial Intelligence and technology.

Effects of federal government halt to health insurance subsidies

The federal government has announced that it will not pay scheduled benefits called Cost Sharing Reductions for lower income working class people who buy their own health insurance. It turns out that relatively few people are actually affected. Here are six things for consumers to know:

  1. In most cases the action does not directly affect the amount your pay for insurance. A ‘subsidy’ is not the same as a ‘premium tax credit.’ The amount of  premium tax credit is unaffected. In fact, the number of people who qualify for the credit may increase.
  2. Insurers will increase the premium rates for all policyholders. But most of this increase is paid by the federal government. The 15% of policyholders who pay the full premium will pay more unless the increase now qualified them for a premium subsidy.
  3. The amount of ‘out-of-pocket’ payment for lower income policyholders could increase. If so, in some cases it might be possible to adjust your HSA, FSA and payroll tax withholding to nullify the change by an insurer.
  4. Some insurance companies say they already anticipated Trump’s move when they set their 2018 premiums. States granted insurance companies an extra rate increases to make up for the lost federal funding.
  5. No insurance companies have announced their attention to withdraw from any market because of the federal government action.
  6. Employers that want to help employees make up the difference have a range of tax-free options that allow them to do so. Talk to us about the range of options,

Despite the strong public objection to this action, it might turn out to have minimal impact. The larger danger is that low-income individuals will become frustrated or confused about their health benefits and choose to not enroll in subsidized insurance coverage next year.

Concerns of small businesses in response to the president’s executive order on health care

On October 12, 2017 the president issued an executive order that directed federal government agencies to explore ways to loosen niche types of health insurance. My annotated copy of the execuive order is posted on my web site at http://tonynovak.com/annotated-health-care-executive-order/.

The executive order does not address these immediate concern to small businesses and individuals:

1) Indicate any change in state insurance regulations that prohibit the use of short term medical or limited benefit insurance plans within its borders. This is of special importance in states with the most restrictive and most expensive insurance.

2) Predict how state insurance regulators will react to the sale of already approved limited benefit or short term medical insurance across state borders to residents within its jurisdiction.

3) Indicate how state insurance prohibiting the use of association insurance plans will be affected or persuaded to ease in conjunction with this executive order.

Freedom Benefits is working with insurance companies, business associations and individual business clients to address these issues and close the gap in knowledge where specific health plan solutions are needed. We are especially focused on solutions for New Jersey small businesses since this state has the most restrictive insurance laws in the nation in this market niche.

Freedom Benefits acts as an adviser but not an insurance company, agent, broker, insurance exchange, association health plan or other entity affected by the executive order. We may be paid paid to perform support functions for any of these entities.

States most hurt by Trumpcare

Associated Press reports that 70 percent of those who will be hurt by the cut in Cost Sharing Reductions health care subsidies announced this week live in states Trump won in his election. This underscores the political risk for Trump and the Republican  party for the move that is largely condemned y voters in both parties and called “ill-advised” by his own party leaders. It seems clear that Americans will blame the president for increased costs and chaos in the insurance marketplace in the future. The cut affects only low income workers who struggle to afford health coverage, not poor people who are covered by Medicaid.

Lower income residents of the following states are listed as being among the most hurt by the cuts according to the Centers for Medicare and Medicaid:

  • Alabama
  • Idaho
  • Florida
  • Georgia
  • Louisiana
  • Massachusetts
  • Nevada
  • Mississippi
  • North Carolina
  • Oklahoma
  • South Carolina
  • South Dakota
  • Utah

Residents of my local area in New Jersey and Delaware and southeastern Pennsylvania are not as likely to be affected. Residents of rural Pennsylvania will be affected and I anticipate blogging about that soon.