Can PPACA just be fixed?

Much of the talk this week surrounds several research reports that show that the employer mandate is really unnecessary.   According to an article in Marketwatch:

In their study, the researchers concluded that roughly 200,000 people would be left without coverage if the mandate were eliminated. Considering that 251.1 million would get coverage with a mandate, that represents eight one-hundredths of one percent, or 0.08%.”

Which is essentially no effect at all.  Indeed, in every case where my clients dropped coverage transitioning to the PPACA rules the employer took great pains to make sure their employees were better off on the exchange.  The perception that employers are evil people intent only on the bottom line, to me, is a political one that works to the advantage of the administration in drumming up support for an unneeded mandate.  Truth be told, some employers are, but the vast majority (as every study has pointed out) would not drop coverage if they could.  Unless, of course, the “Affordable Care Act” makes insurance so expensive they can no longer afford it.


Medicaid-  The medicaid expansion is a quiet disaster.  Here is why:  The Federal Government says you cannot get a subsidy if your income is below 133% of the Federal poverty Level (FPL).  About half the states did not adopt the Medicaid expansion rules, and have lower thresholds.  So my clients in South Carolina, for example (where the threshold is 50% of FPL, also unrealistically low) end up in this position:

They make too little to get government support in the form of a subsidy

They make too much to get Medicaid in South Carolina

They make too little to afford full premiums

They caught in the middle, and I have had a number of clients in this spot- they cannot get help, they cannot afford the coverage, but the law will fine them if they don’t get covered.  Ridiculous.

How to fix that?  Allow people to receive subsidies if they are above there states Threshold for Medicaid.  Then the onus to increase the states threshold falls on the Federal Government, and not the poor.  Can we afford this long term?  Probably not, but like everything else recently, it would resolve peoples immediate issues, kicking the problem down the road a bit.

Another problem with Medicaid- I have had several clients in several states “forced” onto Medicaid, even though they have substantial assets.  Husband on medicare, wife has not worked recently, has no income, and since only her income is counted, she must go on Medicaid.  Never mind the $1.5 million dollar home, more than $2 million in retirement assets, the boat, and the nice cars in the driveway.  Her response “Like hell I will.  The American people do not need to support me, I will buy the plan and pay the full premium, thank you very much.”

How to Fix that?  Simple.  Restructure the eligibility to account for more assets when they are available.

Cadillac Plans-  Haven’t heard much about these in a few years but this still lurks behind that darkened overpass ahead.  The Cadillac Plan rule taxes employers who receive an abnormally rich benefit plan, while other employees do not.  Disregarding the politics, I understand the concern (although I disagree with the premise).  The problem comes in here – the based the definition on 2010 rates, saying that if your single premium exceeds “X” in 2018 you have a cadillac plan and will pay a 40% tax.

The problem is that they do not begin adjusting for premium inflation until 2018.  Had they done that, no big deal – premium inflation has slowed only slightly under ObamaCare.  However, based on current premium trends, most corporate health plans will be more expensive than “X” by 2018, and that will generate an enormous tax burden.  In some cases it will make the claims paid taxable to the employee.  Stupid.

How to fix that-  I would throw this clause out, but if you have to keep it, set it 50% above the average single plan for the year 2018 and then trend it annually based on claims inflation, not consumer inflation.