It’s not a tax bill, it’s a healthcare bill

OK, a bit of hyperbole – but only a bit.

Here’s how the Trump Tax Bill will affect healthcare…

  1. Immediate $25 billion cut in Medicare spending followed by a total of $400 million over the next nine years
    This has to happen under “PAYGO” rules which require offsets in spending when revenues are cut (as will happen under the Trump Tax).  Medicare is NOT AN ENTITLEMENT, it is an EARNED benefit. Starting January 1, 2018, doctors, hospitals, and pharma are going to take the hit as Medicare will stop paying for some care delivered by doctors.
  2. 13 million (+/-) more people will lose health insurance
    If you can sign up AFTER you get sick, why would you pay premiums until you need insurance? The bill ends enforcement of the mandate, but insurers are still REQUIRED to take all comers. So, many younger and healthier people will not sign up, and when they don’t the “pool” of insured people will get older, less healthier, and therefore more expensive to insure.
  3. Individual health insurance premiums will go up about 10%
    So, Insurance companies will raise premiums by about 10% as healthcare costs for the older, less healthy population will go up.
  4. Drive insurers out of the individual and small group markets
    See above…
  5. Reduce drug development for “orphan” diseases
    Today pharma gets a major tax break for developing treatments for orphan diseases, such as cystic fibrosis, epilepsy, muscular dystrophy and Angelman syndrome. It appears that tax break goes away – and this will greatly reduce R&D. The tax credit has been cited as responsible for treatments for about 350 diseases; there are around 7000 in total.  Here’s one pretty amazing success story that will likely not be repeated due to the end of the tax credit.

With fewer people covered by insurance, and higher rates for those that are, we’re likely to see more insurers drop out of more markets.

The greatest impact will be seen several years down the road, when the overly-optimistic growth projections prove to be just that. Already, experts predict the Trump Tax Bill will add over a trillion dollars to our national debt. When that happens, there are going to be calls for massive cuts to ALL services – including Social Security, Medicare, and Medicaid.

What does this mean for you?

I’m thinking Medicaid for all by 2027.

 

Why the GOP tax bill increases health insurance premiums

I received several emails from readers challenging my statement Friday that the GOP tax bill will result in higher health insurance premiums.  Here’s how.

Briefly, the Bill lets you buy health insurance after you get sick – without a penalty. It’s as if this guy was signing up for auto insurance post-crash…

Both the House and Senate versions of the bills end the penalty for those who don’t have health insurance. This penalty does 2 things; it financially penalizes those who go without coverage, and it generates funds that help pay for healthcare for others.

What the tax bills DON’T do is change the requirement that insurance companies cover anyone who applies.

Imagine if you were able to buy auto insurance after you crashed. Why would you bother to sign up and pay those premiums if you didn’t have to?

BTW, there’s a ton of research and history that shows what a bad idea this is, how much damage it does to insurance markets, and what we can expect.

Folks, this is just ONE example of the dumb ideas in this bill, from people who claim to understand how the free market works.

What does this mean for you?

Insurance rates are going to go up. 

 

The tax bill’s impact on healthcare or; If you like your cancer care, you can’t keep it.

The GOP “tax reform” bill will directly and significantly affect healthcare. Here’s how.

It removes the individual mandate, but still requires insurers to cover anyone who applies for insurance. So, millions will drop coverage knowing they can sign up if they get sick.

How does that make any sense?

Here’s the high-level impact of the “tax bill that is really a healthcare bill”:

The net – healthcare providers are going to get hammered, and they’re going to look to insured patients to cover their costs.

The real net – The folks most hurt by this are those in deep-red areas where there is little choice in healthcare plans, lots of struggling rural hospitals, and no other safety net.  Alaskans, Nebraskans, Iowans, Wyoming residents are among those who are going to lose access to healthcare – and lose health care providers.

Here are the details.

According to the Commonwealth Fund, “repeal would save the federal government $338 billion between 2018 and 2027, resulting from lower federal costs for premium tax credits and Medicaid. By 2027, 13 million fewer people will have health insurance, either because they decide against buying coverage or can no longer afford it.”

Most of those who drop coverage will be healthier than average, forcing insurers in the individual market to raise prices to cover care for a sicker population. This is how “death spirals” start, an event we’ve seen dozens of times in state markets, and one that is inevitable without a mandate and subsidies.

For example, older Americans would see higher increases than younger folks. Here’s how much your premiums would increase if you are in the individual marketplace.

So, what’s the impact on you?

Those 13 million who drop insurance, which include older, poorer, sicker people, will need coverage – and they’ll get it from at most expensive and least effective place – your local ER. Which you will pay for in part due to cost-shifting.

ACA provided a huge increase in funding for emergency care services – folks who didn’t have coverage before were able to get insurance from Medicaid or private insurers, insurance that paid for their emergency care.

From The Hill:

[after ACA passage] there were 41 percent fewer uninsured drug overdoses, 25 percent fewer uninsured heart attacks, and over 32 percent fewer uninsured appendectomies in 2015 compared to 2013. The total percent reduction in inpatient uninsured hospitalizations across all conditions was 28 percent lower in 2015 than in 2013. Between 2013 and 2015, Arizona saw a 25 percent reduction in state uninsured hospitalizations, Nevada a 75 percent reduction, Tennessee a 17 percent drop, and West Virginia an 86 percent decline.

If the GOP “tax bill” passes, hospital and health system charges to insureds (yes, you work comp payer) are going to increase – and/or those hospitals and health systems will go bankrupt.

 

 

Trump’s ACA Orders – One’s big news, the other’s just political fluff

President Trump announced two major policy changes yesterday; one will do little to affect healthcare markets and insurance, the other will have a drastic and almost immediate impact.

Cost Sharing Reimbursement payments help those making less than 250% of the poverty level pay for deductibles and other costs.

Ending CSR payments will force health insurers to:

  • increase premiums by almost one-fifth to offset the loss of CSRs; this is already happening in many markets…many had already done this, but others are sure to do so immediately
  • and/or stop selling insurance immediately and cancel policies already in effect, ending coverage for poorer Americans.

Here’s the funny thing; ending CSRs will INCREASE costs to the taxpayers because people who no longer get the payments will get tax credits – and others will too..

The reaction from many in Congress was negative; CSRs had been funded in the Republicans’ bills to repeal the ACA, and several House and Senate Republicans expressed concern that the President’s move would harm their voters.

This may be an unwise political move as well;

Trump’s supporters (51%)…[and] eight in 10 Americans (78%) say President Trump and his administration should do what they can to make the current health care law work.

Trump’s other Executive order will have far less impact on insurance markets. In sum, the order allows insurance companies to sell policies across state lines and offer stripped down policies 

The first – selling across state lines:

  • is already allowed in 3 states, and no insurers participate because mandates do influence costs, but the underlying cost of insurance is the cost of care.
  • Contradicts Republican orthodoxy – and ACA repeal efforts – that keep states in control of insurance markets. The across-state-line sale of insurance guts state insurance regulatory authority.

As does the part of the order allowing sale of stripped down policies. These plans, known variously as association health plans, multiple employer welfare arrangements (MEWAs), and multiple employer plans (MEPs), have a pretty crappy history. Allowed years ago, many went belly-up leaving healthcare providers unpaid and members uncovered.

There’s a lot of detail to these, (see here) but the real issue is simple – policyholders often get screwed, and, like selling across state lines, MEWAs flout state regulation of insurance.

What does this mean for you?

These orders will further screw up the health insurance industry. The real effect will be to push us closer to single payer, a result unintended and with far more drastic consequences.

Susan Collins saves the GOP

With her announcement that she won’t vote for the Graham-Cassidy bill, Sen. Susan Collins (R ME) has ended GOP efforts to kill the ACA.

She also saved her party from the disaster that would befall it if the bill had become law.

here’s why.

  • millions of core Republicans would have lost health insurance coverage,
  • states that went for Trump in the presidential election would have lost billions in federal funds,
  • many of the people covered in the individual market in Trump states have pre-existing conditions; Cassidy-Graham would have allowed insurers to drastically limit their coverage
  • Key GOP states such as Arkansas and Kentucky would lose billions in Medicaid dollars over the long term

This doesn’t mean future efforts won’t seek to slash coverage for kids via cutbacks in the Child Health Insurance program (CHIP), limits on Medicaid, or thru budget machinations. But these will be much lower-impact, subtler moves that won’t be as potentially devastating to the Republican brand as Cassidy-Graham. CG would have shown core supporters the GOP’s “solution” to the healthcare mess was far worse than the current one.

So, what now?

Nothing much is going to happen with healthcare in Congress for some time.  That’s too bad, as ACA needs fixing – namely:

This would go a long way to giving certainty to insurers, certainty that would lower premiums and stabilize markets.

What does this mean?

While the result may be a failure to deliver on a core campaign promise, what’s really happened is the GOP didn’t do deeper and broader damage to itself.

 

 

One last shot at repealing ACA – quick takes on Cassidy Graham

The GOP has just eight days to pass legislation to repeal ACA, and the Cassidy-Graham bill is perhaps the most drastic effort we’ve seen to date.

Cassidy Graham would upend the health insurance and healthcare industries almost overnight.

Here’s the quick summary…

The ACA would end on January 1, 2020.

Over ten years, states would lose a total of $215 billion in funding for healthcare.

The federal subsidies that now go to the 31 states that expanded Medicaid would be spread across all 51, making Texas, Florida, Alabama and other non-expansion states big winners. New York, California, Pennsylvania and other expansion states would lose billions.

from CNN…

States that wanted to replace ACA would apply for federal block grants; each would come up with their own programs and approach.

Insurers would still be required to cover any and all applicants. 

It’s likely at least 15 million, and probably more than 20 million, would lose coverage.

Implications

The individual insurance markets would be in turmoil starting October 1. Insurers would exit the individual markets as none would want to be the last option for folks desperate for insurance.

Many states would be unable to come up with their own solutions in that timeframe. Smaller states such as Delaware, Montana, Rhode Island and the Dakotas would be hard-pressed to develop and implement a program in 27 months.

The Medicaid programs in big states would be severely disrupted, with potentially devastating consequences for hospitals especially those in low-income areas.

What does this mean for you?

If Republicans marshal the votes necessary to pass Cassidy-Graham, they will blow up the health care industry, with devastating and far-reaching consequences.

Repeal and replace is dead. Now what?

We are getting very, very close to retiring the ACA Deathwatch meme.

With last night’s news that two more Republican Senators won’t support BCRA, the Republican Repeal-and-Replace bill, efforts to kill “Obamacare” are dead.

Yes, there will be a move to pass a repeal only bill – they will fail, for the same reasons the BCRA died;

  • deep divisions within the Republican Party,
  • a keen understanding by many Senators that BCRA would crush their core supporters and lead to a revolt; and
  • Congressional Republicans have yet to make the transition from a party of opposition to a party of leadership.

I predicted this back in December, doubled down in May, and repeated that prediction after the House passed the AHCA. This wasn’t some amazing insight, rather a careful reading of the bill, and an understanding that taking something very valuable, very personal, and very important from people is political suicide.

So, what now?

Nothing much is going to happen with healthcare in Congress for some time.  That’s too bad, as ACA needs fixing – namely:

  • enforcement of the mandate;
  • guaranteed full funding of the Cost Sharing Reductions that help lower-income Americans pay deductibles and co-pays;
  • allow us older folks to buy-in to Medicare, thus reducing insurers’ risks

This would go a loooong way to giving certainty to insurers, certainty that would lower premiums and stabilize markets.

For now, my sense is Congress doesn’t want to hear smell see or taste anything healthcare-related for a long time.  There will be lots of politicking from the right about “Obamacare’s death spiral” and the left on GOP’s complicity in same.

What does this mean for you?

The good news is this horrible bill didn’t – and won’t – pass. 

The bad news is worse – nothing is being done about the core problem with US healthcare – it costs way too much.

 

ACA Deathwatch – Handicapping ACA repeal legislation

With Sen John McCain’s unexpected surgery delaying a Senate vote on the BCRA (Senate Republican ACA repeal-and-replace bill), here’s where ACA repeal stands.

Briefly, my take is Congress will not pass a repeal bill. So, the ACA Deathwatch clock’s hands turn back yet again

The core problem is the damned-if-you-do-or-don’t nature of the legislation.  By a 2-to-1 margin, Americans prefer “Obamacare” to the replacement

However, Republicans like repeal and replace. So, McConnell et al are stuck with a terrible choice – pass repeal and replace legislation that most Americans don’t want, or pass legislation that their base wants.

Add to this the strong support for ACA from several key Republican governors, and the fact that those most hurt by repeal would be core Republican voters; rural, white, lower-middle income folks, and the dilemma becomes knottier still.

A vote has been delayed indefinitely, allowing opponents – who grow more numerous by the day – to rally more opposition to BCRA.

What’s the future of repeal-and-replace? 

As of now, cloudy indeed, with a strong chance of dying with a whimper and not a bang.

What does this mean for you?

We’ll explore implications for workers’ comp of a non-vote on BCRA later this week – factoring in other legislative moves to slash Medicaid plus the non-enforcement of the mandate into our analysis.

The ACA lives on – good news for everyone

Especially congressional Republicans.

As of 4 pm on Tuesday, 9 Republican Senators have publicly stated they will vote against the Senate’s health care bill. While some want more dollars, care, and support, others want a complete repeal. This puts Majority Leader McConnell in an unwinnable position; everything he gives to the moderates upsets the hard-right Senators.

While McConnell continues to say they’ll vote on the bill after the July 4 recess, that’s unlikely.  He rammed it through in secret precisely out of fear that the longer it was in the public eye, the lower the chances for passage. Rest assured Senators will get an earful when they return home to do the parade thing.

While many Republicans will be assailed by hard-right activists for failing to deliver on “repeal and replace”, many are likely raising a toast to the gallows they just avoided.

There are two reasons for this. First, neither of the Republican bills would do anything to address the real problem – healthcare costs.  insurance costs are high in large part because healthcare in the US costs way too much and about a third of that spend is unnecessary.  So, if the bill had passed, it would have done nothing to keep costs low, and the Republicans would be getting the blame for higher premiums – as the Dems have since 2014.

More immediately, the House or Senate or some combination bill would have crushed core Republican voters – white, working class, generally older Americans. BCRA/AHCA would have led to sharply higher insurance premiums for many, while their poorer neighbors would have lost the Medicaid coverage they gained, if they are fortunate enough to live in a state that expanded Medicaid.

The average net increase for a silver plan under BCRA was, according to the CBO, 74 percent.

Older people – like me – would have paid much more than that.

And that’s why the glasses are clinking in the bars around Capitol Hill.

What’s next? Hopefully Republicans will allow Democrats into their discussions, so both parties can work on desperately-needed fixes to ACA. A great start would be telling insurers the Cost Sharing Reduction payments are going to happen. This would stabilize the current situation so they could start working on permanent fixes.

While that would be best for the country, I’m not sanguine about the likelihood that will happen. If Trump et al kill the CSRs, premiums will jump by a lot, and that could be the death knell for individual coverage.

What does this mean for you?

Here’s hoping Congress does some real live work for the people, instead of this symphony of dysfunction we’ve been witnessing for the past few years.

If it does, we’ll be in a whole lot better shape next near.

The Senate version of AHCA – What to watch for

Senate Republicans are set to release their revised American Health Care Act today – here’s what we know about their version, and what to watch for.

An excellent summary is here.

Medicaid – the biggest, most significant, and most important changes are to Medicaid.

74 million Americans are covered by Medicaid, and about 2/3rds of Medicaid funds go to elderly and disabled Americans.  Reportedly the Senate bill will:

  • eliminate Medicaid expansion funds over several years, and
  • significantly reduce future federal funding for Medicaid

As a result, more than 14 million low-income, disabled, and elderly Americans will lose coverage for nursing home care, rehabilitation, and all other healthcare services.

Individual and employer mandate

The mandate would be effectively repealed by eliminating enforcement. Today individuals and employers with more than 50 FTEs have to provide coverage or pay a penalty. Note – there has never been a requirement that employers with fewer than 50 workers provide insurance.

Insurance subsidies for lower-income Americans

The Senate version reportedly has preserved some of the current income-based subsidy provisions, unlike the House bill.

Pre-existing condition coverage

Cloudy would best describe what we know about the Senate bill’s approach to ensuring people with pre-existing conditions are covered. There just aren’t enough details, however even if pre-ex conditions must be covered, it appears insurers will be able to charge much higher premiums for those with pre-ex conditions, and/or exclude treatment for those conditions from their insurance policies.

Benefits

There are mandatory benefits in ACA; these would be eliminated in the Senate version, so your insurance plan might not cover mental/behavioral health and addiction coverage, and/or coverage for different types of care such as physical therapy or hospital services. While this provision would likely reduce premiums, it reduces coverage as well.

Tax changes and the federal deficit

All ACA-related tax increases are repealed with the exception of the Cadillac tax on high-value insurance plan, a change that will substantially increase the federal deficit.

Unforeseen implications – job loss

There’s been far too little coverage of one of the most important impacts of AHCA – the loss of close to a million jobs if this is signed into law. While employment would increase over the very-near term, over the next few years it will drop as fewer people have insurance and thus can’t get care.

What does this mean for you?

Millions of Americans will lose their health insurance, smaller hospitals will close, and cost shifting will explode as providers try to stay in business.

I don’t see the bill – in it’s current form – passing. But we are close to ACA’s death than we were a few weeks ago.