Big Issue #4 – Harnessing Healthcare Insurance

A topic that has been highly politicized around a lightning rod of a name is what to do about Obamacare. To illustrate this point, if we call it the Affordable Care Act, approval rates increase and if we use the name KyNect in Kentucky it increases even more. In a Kaiser Health monthly poll (see Note to Reader comment below) from November, 74% of Americans and half of Republicans want the ACA to continue. But, if you dig deeper, the Republican voters heavily favor almost all features of the ACA except those dealing with the mandates for coverage for the employer and individual.

The Affordable Care Act is not perfect and is complex, but it is actually working even though it has been hamstrung and is not fully implemented in 19 states. Given the states who have expanded Medicaid, we can actually contrast their results with those who have not. What is revealed is personal bankruptcy rates have declined and hospital accounts receivable have improved in those expansion states.

Unwinding the ACA will prove difficult and a different tactic is needed. A data driven analysis would help leaving the political rhetoric aside. A key recognition is our health care costs have a tendency to increase as we have an aging and overweight population. We are also over-medicated and have more surgical procedures than needed. So, any insurance system needs to be mindful of those cost pressures. Plus, we need to recognize the restriction on funding to insurance carriers for adverse selection exposure has led to increased premiums and some leaving the market.

I have several suggestions around the idea of not throwing the baby out with the bath water, supported by many more Americans than not as well as the hospital industry. A few to consider are as follows:

– Fully fund the risk corridors for insurers to tie them over for the initial adverse selection from unhealthier risks. This will moderate premium increases.
– Expand Medicaid in the remaining states. This helps people, hospitals and economies as per several healthcare foundation studies like Kaiser, Commonwealth, RAND, et al.
– Introduce a public option in states where insufficient competition exists. This would offer choice and a lower expense option since it eliminates a profit margin expense.
– Evaluate the efficacy of various fees and improve, eliminate or validate what makes sense to continue.
– Seek more ways to offer choice, but make this less confusing. Healthcare insurance is already confusing enough.
– Legislators need to buy into this and stop political posturing. It is clear to me that any success that has been achieved has been in spite of partisan naysaying. What far too many don’t realize is the ACA borrows from a largely Republican idea that was supported by the Tea Party leadership (Google “Senator Jim DeMint and Romneycare”)

As a former actuary, the principle of insurance is the good risks pay for the bad risks. Plus, insurance is designed to keep you from bankruptcy should a catastrophic event occur. So, an effort should be made to get better risks in the plan.

What many don’t realize, by having insurance you tap the agreed upon network discounts with the hospitals. For example a double hernia operation might cost $32,000 with no insurance, but the network discounted price is $18,000. With a plan that has a $6,000 deductible, you end up saving $26,000.

So, as our leaders evaluate options, we need for them to set rhetoric aside and look at the data. Access to insurance is vital and ACA requirements imposed on all insurance, even employer-provided care, benefit far more than than the 20 million covered directly.

Debt collections declining in states who expanded Medicaid

Since not every state fully implemented the Affordable Care Act, data now exists that can contrast those who did with those who did not. Thirty-one states and the District of Columbia have expanded Medicaid, with nineteen states still remaining.

For those who do not follow this closely, the ACA uses Medicaid expansion as the vehicle to deliver health care coverage for people beneath 138% of the poverty level. The federal government would front 100% of the cost for three years, eventually declining to 90% thereafter. Yet, the Supreme Court said states could opt out of this feature, which 19 still have done so.

Per the attached article, The Federal Reserve Bank of New York in a study finds a benefit to people in states where Medicaid expansion occurred is debt collections have declined. I have written before that the principal reason for personal bankruptcy is medical debt. The study’s authors note:

“U.S. counties that had a particularly high uninsured rate prior to the implementation of the Affordable Care Act have seen the per capita collection balance fall if their state embraced the Medicaid expansion. If not, the collection balance continued to climb.”

Yet, in states where Medicaid was not expanded, debt collection is noticeably more in comparison. Per The Commonwealth Foundation, Kaiser Family Foundation, RAND Corporation, Economic Policy Institute and a George Washington University study, expanding Medicaid helps those in need, helps a state’s economy and helps hospitals, especially rural ones who have high indigent and uninsured costs. The hospitals in Medicaid expanded states are seeing fewer uninsured patients and seeing better operating margins. Now, evidence shows it keeps more folks out of bankruptcy.

Former Ohio Governor John Kasich, who was the most reasonable GOP presidential candidate in the view of many, said expanding Medicaid was a no brainer. He said it would bring $13 Billion to his state over the next several years when announced. It also helped his constituents. During the campaign he remained a supporter of Medicaid expansion, which swam against the GOP tide. It is hard to be a lone advocate in a sea of political animosity.

It is past time for leaders in the remaining states to stop thinking like party representatives and start thinking like financial stewards. Several states gave serious consideration, such as Oklahoma, Alabama, Idaho and Wyoming, to expanding during the spring, but in spite of strong data showing its benefits to the state, its hospitals and people, Republican animosity toward the ACA defeated the proposals. Medicaid expansion would help many, including those Republican constituents in poverty living In rural areas. It should be noted that these are the same folks who feel their party is not doing more for them.

Make a move legislators and help all your people, but especially your constituents.

http://www.benefitspro.com/2016/06/13/states-that-embraced-health-care-reform-seeing-les?eNL=575f314b140ba09f23187fc4&utm_source=BPro_Daily&utm_medium=EMC-Email_editorial&utm_campaign=06142016

Obamacare – a few reminders and successful anecdote

As I mentioned in earlier posts, Obamacare, while imperfect, complex and rolled out poorly, moves the ball forward in a major way to address our uninsured problem in the US. The website difficulties are being fixed, but it is important to remember a few things. Early implemented parts of the law have already extended coverage to 3 million young adults, eliminated the denial of coverage for pre-existing conditions on children (adults will get this on January 1,2014), eliminated lifetime maximum benefit limits, improved prescription drug benefits for seniors, restricted the profit margin on insurance premiums leading to policyholder rebates the last two summers to name a few key changes thus far. 

This law, which is largely a GOP idea, has been fought every step of the way with some GOP led states like my own in North Carolina not expanding Medicaid and offering state exchanges, both of which have led to increased premiums in the North Carolina version of the federal exchange markets and the former harming our impoverished citizens and state economy. For those who lost coverage like me (this is not news), if you make less than $111,000 as a family of five, e.g. (it varies by family size), you will also benefit from a subsidy on the exchange which will decrease your net premium. Note, a key reason for higher premiums for some is the elimination of the pre-existing limitation on coverage.

Enough about that, let’s use a real example, as this will be where the rubber hits the road. As noted above, my family is losing coverage under the individual market, but this is not a surprise, because my new insurance company told me this would happen when I signed up in May. I should add one of my adult children is losing coverage as well because we had to get a high risk pool policy, as he was denied by the insurance company because of a pre-existing condition. This denial will not happen under the new law, as noted above, which is a huge selling point.

So, I knew that our coverages would cease on December 31 and was waiting for the federal exchange options to be offered. With the new pricing structure to recognize the better benefits, the elimination of the pre-existing condition limitation, health care inflation and the impact of my state not expanding Medicaid which increased the cost in NC, because of my age I was one of the people looking at a premium increase for a slightly worse coverage plan without the subsidy. So, I shopped on the exchanges and here is what I can do, without a subsidy:

Keep slightly worse coverage levels with my current provider and $200 per month higher cost than both plans we have now for my son and everyone else;

-Obtain a similar plan through another insurance company with $55 per month less cost than we pay now;

– Obtain better coverage through another insurance company for about $160 per month more than my current plan, but less than the one offered by them above.

All of our doctors are in both networks, so that is not an issue, but this is very important in people’s decision-making. We will actually be doing the third option due to the better family coverage, although the second choice was tempting.

Now, again this is without the subsidy. So, with the subsidies shoppers will be seeing even lesser premiums than what is indicated above.  So, a few takeaways. If your coverage is ceased, don’t panic and look at the options that are available. If your family income is beneath 4 x the poverty limit ($111,000 for a family of five, $94,000 for a family of four, e.g.) then you will get an additional price break.

But, also note the following. If your state did not expand Medicaid, the cost of plans under the exchanges will be higher. If your state did not push a state based exchange, the competition is likely to be among fewer insurance companies, so the exchange cost options will tend to be higher. Obama deserves all the criticism he is getting on the poor rollout of the website and not being painstakingly thorough on what was going to happen. Yet, the GOP machinations are driving costs up as well with these two issues and not working to make this complex law better since election last fall, choosing to not support the education efforts and voting to repeal it over 40 times. I have been a broken record on this issue even before the election – make it better, not stand in its way.

People need to give the new law a chance and look at the options available. States that did not expand Medicaid need to strongly rethink this, as they are harming people and their state economies, so say the Rand Corporation and Kaiser Foundation. What was less noticed with the numbers announcement on exchange enrolments this week, was that 390,000 people have signed up for the Medicaid expansion in October.

But, all of this will be compromised if Obama’s team does not keep improving the website.

Why are the states with the worst healthcare not expanding Medicaid?

Help me understand why legislators of the states with the worst healthcare rankings and the highest children poverty rates are the ones who are resisting the expansion of Medicaid? This question is in bold, as for the life of me, I cannot think of a logical reason why legislators would not want to help people, especially when studies such as the latest one by the Rand Institute, show that Medicaid expansion will have a positive economic impact on the state. The reason, of course, is GOP led states are doing anything in their power to beat the Affordable Care Act (Obamacare), which ironically is based on a Republican idea. It has absolutely nothing to do with trying to help millions of Americans in need.

A few brief statistics might help. According to the United Health Foundation and Center on Budget and Policy, select statistics from the 2010 Census would reveal the worst states on health (note the rank in parenthesis is their children poverty ranking) who are not expanding Medicaid.

49th worst health (tie) – Louisiana (49th worst in children poverty)

49th (tie) –  Mississippi (41st)

46th – South Carolina (48th)

45th – Alabama (28th)

43rd – Oklahoma (24th)

40th – Texas (47th)

39th – Tennessee (32nd)

36th – Georgia (43rd)

33rd – North Carolina (39th)

I have noted in earlier posts that the lack of healthcare insurance or limited insurance is by far the number one reason for personal bankruptcy. In my home state of North Carolina, we have over 500,000 people who would benefit from the Medicaid expansion and poverty, as noted above, is high. Poverty is also an equal opportunity offender, which knows no political party, color or ethnicity. For example, The Charlotte Observer reported this weekend that of those in poverty in NC – 37% are White, 35% are Black and 20% are Hispanic. They are in rural and urban settings. They are registered Republican, Libertarian, Democrat and Independent.

When I have asked legislators what do you propose to do if you do not expand Medicaid, I receive no response. Since this is largely a GOP idea, it is hard to come up with another one, but they must be against it since Obama passed it. Yet, who is harmed by these stances? It is not the Kings and Queens – it is the pawns. When people are surveyed, the majority support many features within Obamacare, including the expansion of Medicaid. It is just the GOP has done such a good job of labeling this imperfect law as horrible and giving it a lightning rod name, that people say they do not favor it in its entirety. That is unfortunate.

We have a poverty problem in this country that needs to be talked about more. A part of this multifaceted issue is the absence of affordable healthcare. The Affordable Health Care Act has addressed and will address a major chunk of these uninsured. What I find troubling is the pawns in this political game are the ones who get screwed. In NC, there has been a growing movement called Moral Mondays (click on this link to review post http://musingsofanoldfart.wordpress.com/2013/06/03/moral-mondays-the-new-civil-rights-protests-in-north-carolina/ ) where several hundreds of NC citizens protest each Monday. The past seven weeks, 480 people have been arrested for trespassing and failure to disperse. These include people of all colors, ministers of various types of churches and professionals, including doctors, who are pushing back on several laws that harm those in need, including the decision not to expand Medicaid.

But, let me leave the “right thing to do issue” and speak of the economic impact. The Ohio governor who has relented late to do the Medicaid expansion said “we are talking about $13 billion coming into our state over the next seven years.” Also, rural healthcare is in big trouble and has been for several years with high indigent (uninsured costs). The Affordable Care Act would help people get to the doctors and hospitals in a more affordable and best suited way and the practitioners would be assured of payment and not have to chase dollars. This Ohio governor saw it as a win-win for his state and is pushing it through. What he is seeing now is occurring in all of the states above and is actually worse. SC, for example, has a wide swath of poverty down the middle eastern part of the state and no one is doing anything lasting to remedy it.

However, the state stragglers need to act now as they will be in no position to expand Medicaid, if they wait much longer. Yesterday, Arizona’s governor just signed the bill to expand. While not a fan of the Affordable Care Act, she sees Medicaid expansion as the best path forward. And, if these state legislatures don’t expand Medicaid, they will be screwing the pawns in their states yet again.