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Political Realities And Health Insurance

Writer’s block. That is something I have never experienced, until recently. That may explain my silence over that past months during the ACA annual enrollment, I think the basis for this malady is my indecision about what to talk about, and the recognition of how little I really know about what I want to talk about. Frankly, without better guidance and information, it is still mostly cocktail conversation fodder.

So-where to start this conversation? It has always been my intent to offer unbiased information to any reader, and to remain non-partisan in my comments. That can be hard to do.  I wanted to avoid politics this time out, and focus on other health insurance topics. But, the bull roams the china shop, and cannot be avoided. The current administration in Washington is—putting it mildly– having a rough go of it over the first four months, with less policy done than hoped for, and way more unrest, suspicion, and doubt than necessary. This wayward pattern is fueled by the less than orthodox President Trump, who appears to delight in making things personal, and chooses to wade in the swamp, rather than hover above it.

The dis-jointed health care reform measure from the House is an example of how disruptive the opening months have been. First, the House majority Republican party cannot contain ranks, and the much-promised repeal of the ACA, and the “replacement” AHCA can’t even get to a vote in the House, and is shelved. It soon became clear that the work on tax reform could not be done without first getting s handle on health care financing. That brought the AHCA back on the table. To placate the most conservative faction within the party, some controversial items were added. That allowed the bill to barely pass the House.

Health Insurance Strategies:

My read on the House version of the AHCA? There are some good features in it. For example, I like changing the premium ratio to 5:1 from 3:1. Why? Logic. People 50-64 spend about 5 times more on health services than 20-29 year olds. This will make it cost more to buy insurance for older people, for sure, but also should lower premiums for the much desired younger customer. There are ways to help subsidize the premium load on older Americans, and the influx of healthier younger bodies will help stabilize the market.

I like that people can buy insurance throughout the year, even with a premium penalty of 30% for 12 months. The ACA was supposed to insure people. But, miss one month’s premium, and you can be cancelled—for the rest of the year—with no recourse. Incongruous is putting it kindly….

I like the idea of allowing people to see plans with lower out of pocket maximum risk. The ACA has seen increasing out of pocket risk each year, and I don’t see that changing. People receiving lots of premium assistance are not earning much income, and cannot afford risk that can hover over $7000 per year. That is bankruptcy waiting to happen. Health insurance is in essence a vehicle to finance health care delivery. Allowing consumers to decide what they want to buy in a health plan is sensible. Caveat- there still has to be a baseline of “essential” services in all health plans.

By the way, I don’t like the fake news out there that spreads fear and misinformation. Example? “The AHCA removes protections on coverage for Pre-existing conditions” That is not true. The law is clear on this, and my millennial daughter was confused on this one, so I sent her the actual text from the legislation, and asked her to forward it along to her nervous friends.


However, I am not convinced that the AHCA is “better” than the ACA. For all those years of trying to repeal the ACA, and all the talk of a better way in the Price Plan, and the Ryan plan, the AHCA seems hastily patched together, and incomplete. Thank goodness the Senate is choosing to read the house version, and then forget it. I am hopeful their version will be more thoughtful, and allocate funding in the right places to make insurance as affordable as possible for those who can least afford it. I also hope their version stands a chance of pulling over some Democrats, even at the risk of disappointing some of their own party on the far-right end.

If the AHCA is not a significantly better program than the ACA, why not combine ideas, and “repair”, instead? As a non-controversial example, let people make a choice between advanceable tax credits based on income (ACA), or the flat $4000 annual tax credits (AHCA). Based on what we know from the ACA, most people on the exchanges get monthly premium assistance. The ACA subsidy process works for them. Some consumers do not need, or do not get, subsidies, and could wait for an annual credit.

I recall the cries of the Republicans in 2010, when the ACA was rushed through on strictly partisan terms by a majority Democratic party. Déjà vu in 2017, except in reverse. That is not the way to pass lasting legislation, or the best possible legislation. At the end of the day, I will be surprised if the Senate AHCA version will be acceptable to the House majority when it returns for vote. It is very possible that the ACA will not die anytime soon. And based on the current momentum for Democrats racing towards the contested Congressional seats in the 2018 election cycle, it may not ever die.

Unfortunately, insurance companies must file rates for 2018, and they hate uncertainty. The inability to put together a meaningful reform package is further destabilizing the ACA individual marketplace, and it is not in good shape right now. Part of the sickness in the exchange markets is caused by the Republican stubbornness regarding reimbursing insurers for enhanced benefit modification costs. I get their argument that the ACA may not exactly state that funding is part of the law. I also get that the intent of the ACA to cover this is obvious, and that not funding insurers for their costs in 2018 is causing a stampede from the exchanges. Killing the ACA in this way is bad policy. 

Can We Do Better?

I would like all of us to create a better health delivery system than exists right now, anywhere in the world. That means accepting the fact that single payer has qualities that are useful, particularly in cost control. By taking the best of single payer, and mixing that with the best of our free market system, which does provide the most advanced overall health care service in the world, we can do better. Whatever that new program is, it must start with the problem of the cost of health care. We must address the drivers of healthcare inflation, and contain costs in a big way.

For starters, I want pricing transparency for services and drugs, and a way for consumers to compare pricing, effectiveness, and outcomes. An example would be to peg the published fees based on current MediCare pricing. Providers offer their services for a price that reflects Medicare plus or minus some percentage. A surgeon might publish Medicare +35%; another might offer Medicare + 10%, for the same procedure, and might actually deliver better outcomes. If we get engaged as consumers, we buy smarter, and that fuels competition that drives prices down.

As mentioned in an earlier rant, I am pretty much done with the Big Pharma game. With the amount that industry spends on marketing and lobbying being exponentially larger than they spend on research, and the cost of drugs now almost 25% of each premium dollar, and the opaque pricing and complicated rebate system created through Pharmacy Benefit Managers (PBM), maybe it is time rethink how we buy drugs. A single payer approach would be to regulate drug costs at the federal level—maybe based on VA pricing. This huge buying power for well over 300 million people would make it hard not to play in the US, and would obviously lower wholesale drug costs.

As we have been forewarned for years by the pharma industry, could this cause drug companies to stop, or slow, researching new drugs? Maybe, but I think not, based on how they spend their cash right now….I cautiously await the Senate’s work.