This week in the “American Health Care Act”

obamacare with cancel cirle over it

The administration has laid out a three pronged approach.  The first step is “Repeal and Replace ObamaCare” (which looks a lot more like “repairing” – which is probably good).  This would involve eliminating individual and employer mandates, unburdening the tax load placed by the ACA, revitalizing Medicaid, and expanding Health Savings Accounts.

The second phase involves “Essential Regulatory Relief.”  This involves allowing sales across state lines (more on that below), and a couple of nebulous statements like “loosening restrictions,” “improving choices,” and “putting downward pressure” on what sounds like fraud and abuse in the system.

The Third phase includes other legislation, including items to actually improve health care and lower costs.  This includes streamlining processes for drug approval, ending incentives to over-test patients, and developing association health plans.

The same Congressional Budget Office (CBO) that estimated 24 million Americans would be covered under the ACA (and was off by 50%) now claims that the same number will lose coverage.  Interesting, from ObamaCare facts as of 3/15/17:

     As of January 2015, the uninsured rate was 12.9% according to Gallup (average from the fourth quarter of    2014). By the end of the 1st quarter 2015, it dropped to 11.9%. That translates to about 16.4 million Americans having coverage who wouldn’t have had coverage without the ACA.

So are we saying that the number of insured will drop by almost 8 million from before the ACA?  I don’t give much stock to the CBOs estimates on anything, as they never seem correct.  That being said, it makes sense to a certain extent, and here is why:

FIRST, when you no longer penalize people, it makes sense that some will drop coverage.

SECOND, if the subsidies change significantly, the number of people that can afford insurance will drop.  The last statistic I heard is that 87% of those with a subsidy are paying less than $100 for insurance per month… Of course, the fact is that, with $6000 deductible, there is a huge difference between “being insured” and being able to afford to use that insurance.

Selling across state lines is a special challenge for several reasons.

Legislatively, Insurance Supervision is a States Rights issue.  Its controlled by 50 individual State Insurance Commissioners – not the Federal Government.  A real-life example – ever had an employee move across the country and then complain that the COBRA is useless because their are no doctors in the network in their new location?

When standardization was needed for Medicare  Supplement Policies, it had to be accomplished by the National Association of Insurance Commissioners (NAIC) – and even then there are some variances between states.

Pricing is a bigger issue.  Why is insurance cheaper in location A then in location B?  Because the cost of healthcare varies widely.  According to Beckers Hospital CFO, The average cost for a day in a for-profit hospital ranged from $3714 in North Dakota to a low of $815 in Maine.

The problem here is when I live in Bismarck, ND and buy a policy out of Portland, ME.  I go in the hospital and the carrier has built in an avg hospital rate of $815. Does the insurance company have to pay the 458% higher rate for ND (and go broke)?  Or do they pass that cost onto me, and I have to pay it, in exchange for lower premiums?