Supreme Court rules against a GOP effort to renege on owed payments to health insurers

On Monday, the US Supreme Court ruled against an effort of several years ago led by Senator Marco Rubio to shortchange health insurers money owed to them for accepting higher risk claimants early on under the Affordable Care Act. In essence, Rubio led GOP Senators to eliminate 89% of the funding under a risk corridor agreement to tie insurers through initial adverse risk (due to pent up demand from folks who were not previously covered).

The following excerpt from an article called “Supreme Court rules government must pay billions to Obamacare insurers,” by Susannah Luthi of Politico, may be of interest.

“The Supreme Court on Monday ruled the federal government owes health insurers massive payments from an Obamacare program shielding them from financial risks after the companies accused Washington of reneging on its funding promises.

The 8-1 decision could open the floodgates for federal cash to the insurance industry. Insurers who accused the government of a ‘bait and switch’ claimed they’re owed $12 billion from the Affordable Care Act program.”

The lone dissenting vote was from Justice Samuel Alito who said the insurers were getting a “windfall.” No, Justice Alito and Senator Rubio, they are getting what was promised in writing.

People could easily dismiss this as a fight that does not concern them. That would be a misjudgment. The Republican Senators led by Rubio screwed Americans to win a political argument in attempt to sabotage the ACA. Why do I say that? As a consequence, these insurers had to raise premiums that impacted unsubsidized folks and caused an increase to the offsetting premium credit under the ACA for the subsidized folks. That subsidy increase in turn increased our budget deficit. It also forced some insurers to exit the ACA with the US government owing them money, which hurt competition.

Sadly, all of the efforts noted above, which the Supreme Court just overturned, are true. That is a reason for the near unanimous vote. I encourage you to Google “Marco Rubio and ACA Risk Corridors” and read as much as you like. What frustrates this retired benefits consultant, manager and actuary is very few people know they got screwed. The following links to this article and one of my many pieces on shoring up the ACA are below.

https://www.politico.com/news/2020/04/27/supreme-court-rules-government-must-pay-billions-to-obamacare-insurers-211184

https://musingsofanoldfart.wordpress.com/2019/07/19/please-stabilize-the-affordable-care-act-now-to-help-americans/

Please stabilize the Affordable Care Act NOW to help Americans

A February, 2017 Morning Consult Poll noted that 35% did not know the Affordable Care Act (ACA) and Obamacare are the same thing. I want you to think of this poll when you see how Americans feel about the ACA. Today, just under half of American approve of the ACA, but that is in part due to the above and the fact more progressive Democrats want a Medicare-for-All replacement.

I wrote the following post a few months back as I am of the opinion Democrats and Republicans need to stabilize the ACA now and explore a few changes on a measured basis. As I wrote this, I call politics on the carpet for causing some of this mess, but everyone needs to check their egos and zero-sum games and fix the problems which are fixable. They also need to drop the BS lawsuits that are asking to rule the ACA unconstitutional again, when the group making the request changed a feature to further this mission. That is like ripping an engine off the plane and blaming the engineer while it is flying.

So for what it is worth, here are my suggestions. I am an Independent voter and retired, but my career included being an actuary, benefits consultant and benefits manager for a Fortune 500 company. I have shared with Senators and Congressional representatives a few thoughts on stabilizing the ACA, something Democrats campaigned on last fall and won in the midterms after the disastrous attempts of the Republicans to clean the slate that fortunately failed.

Medicare-for-All deserves debate, but will require a more elongated and data-driven discussion. We need to have Congress take steps to stabilize the ACA now. To do otherwise, is a disservice to Americans.

Here are my thoughts.
– the GOP sabotaged the ACA in two specific steps which increased premiums even more. They defunded 89% of the risk corridors (for initial adverse selection) driving some insurers out of the market. The other is Trump reneged on reimbursing insurers for copays/ deductibles for people making less than 2 1/2 times the poverty level. My suggestion is to pay insurers what we promised in writing and invite those who left back into the exchanges.*

– I suggest the lowering of the eligibility age for Medicare to age 62 (the age when retirees can first draw Social Security). This could be viewed as a pilot for Medicare-for- All. This action would lower the Medicare premium rate for all and lower the ACA exchange premiums due to the age of those leaving the ACA and joining Medicare. In other words, both the average age of Medicare and the exchanges would be lower, so the actuarial cost per person is less in both.

– Actively encourage the expansion of Medicaid in the remaining states – this will help the economies, healthcare providers and people in those markets. There are now 36 states who have done so. GOP Ohio Governor John Kasich calls Medicaid expansion a “no brainer.” North Carolina is debating this issue, but it needs to move forward with the number of rural hospitals that have closed thus far in the state.

– Finally, where only one option exists in a rural county, offer a Medicare option, again as a pilot. People should have choices.

There are other changes that would help, but this needs a data-driven analysis and not whatever the GOP did in 2017, which was a horrible approach to legislation that resulted in horrible legislation. Had any of the GOP legislation passed to kill the ACA, the GOP would have lost even more seats and we would be talking about a recession coming our way.
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* Please feel free to Google these topics: “Marco Rubio and risk corridors” and Donald “Trump and ACA subsidy decision”. The former caused insurance premiums to increase more than they otherwise would have and some insurance companies left the exchanges with the US government owing them money. The risk corridors were designed to tie insurers over until the initial adverse selection flushed out of the system.

The latter was frustrating because the subsidy helped people in need. Trump untruthfully claimed it will only affect insurer profits, but the carriers committed to the customers to do this under contract. The CBO said this action raised the deficit by $10 billion, since premium subsidies went up to pay for the increased premiums. In my home state of NC, BCBS said before the Trump decision premiums were NOT going to increase. After the decision, the premiums increased 8%.

Saying this in a more succinct way, the GOP screwed American people to win a political argument. Sadly, that is the truth, but very few people know of this. This also is an exemplar of the President’s lying affecting hard-working people. Lying is one thing, but setting policy off lying is another matter altogether.

Note, the ACA is imperfect and complex. Obama was not truthful when he said you could keep your doctor – no new network should make that universal claim. But, it still has not been fully implemented in all the states with those who did not expand Medicaid. But, people need to be fully aware of the sabotaging of the ACA undertaken by the GOP, which I find interesting, as the ACA is largely based on a GOP idea. That is politics for you – you did it, so I must be against it.

Note to Democrat Senators running for President – stabilize the ACA

The following note was posted on the website for the seven Democrat Senators running for President, with a copy to select others.

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I am an Independent voter and retired, but my career included being an actuary, benefits consultant and benefits manager for a Fortune 500 company. I have shared with Senators and Congress people a few thoughts on stabilizing the ACA, something Democrats campaigned on last fall and won.

Medicare for All deserves debate, but will require a more elongated and data-driven discussion. We need to have Congress take steps to stabilize the ACA now. To do otherwise, is a disservice to Americans.

Here are my thoughts.

– the GOP sabotaged the ACA in two specific steps which increased premiums even more. They defunded 89% of the risk corridors (for initial adverse selection) driving some insurers out of the market. The other is Trump reneged on reimbursing insurers for copays/ deductibles for people making less than 2 1/2 times the poverty level. My suggestion is to pay insurers what we promised in writing and invite those who left back into the exchanges.*

– I suggest the lowering of the eligibility age for Medicare to age 62 (the age when retirees can first draw Social Security). This could be viewed as a pilot for Medicare for All. This action would lower the Medicare premium rate for all and lower the ACA exchange premiums due to the age of those leaving the ACA and joining Medicare. In other words, both the average age of Medicare and the exchanges would be lower, so the actuarial cost per person is less in both.

– Actively encourage the expansion of Medicaid in the remaining states – this will help the economies, healthcare providers and people in those markets. There are now 36 states who have done so. GOP Ohio Governor John Kasich calls Medicaid expansion a “no brainer.”

– Finally, where only one option exists in a rural county, offer a Medicare option, again as a pilot. People should have choices.

There are other changes that would help, but this needs a data-driven analysis and not whatever the GOP did in 2017, which was a horrible approach to legislation that resulted in horrible legislation. Had any of the GOP legislation passed to kill the ACA, the GOP would have lost even more seats and we would be talking about a recession coming our way.

***********************************************************************************************

* Please feel free to Google these topics: “Marco Rubio and risk corridors” and Donald “Trump and ACA subsidy decision”. The former caused insurance premiums to increase more than they otherwise would have and some insurance companies left the exchanges with the US government owing them money.  The risk corridors were designed to tie insurers over until the initial adverse selection flushed out of the system.

The latter was frustrating because the subsidy helped people in need. Trump untruthfully claimed it will only affect insurer profits, but the carriers committed to the customers to do this under contract. The CBO said this action raised the deficit by $10 billion, since premium subsidies went up to pay for the increased premiums. In my home state of NC, BCBS said before the Trump decision premiums were NOT going to increase. After the decision, the premiums increased 8%.

Saying this in a more succinct way, the GOP screwed American people to win a political argument. Sadly, that is the truth, but very few people know of this. This also is an exemplar of the President’s lying affecting hard-working people. Lying is one thing, but setting policy off lying is another matter altogether.

Note, the ACA is imperfect and complex. But, it still has not been fully implemented in all the states with those who did not expand Medicaid. But, people need to be fully aware of the sabotaging of the ACA undertaken by the GOP, which I find interesting, as the ACA is largely based on a GOP idea. That is politics for you – you did it, so I must be against it.