New and Improved Death Panels

Texas ultra-conservative GOP Senator, Ted Cruz, tells us that it is “unfair” for healthy people to be in the same healthcare risk pool as sick people, effectively subsidizing those with pre-existing conditions. Those millions of folks who have higher medical costs, he maintains, need either to pay the higher costs that their medical conditions require or perhaps tap into an elusive pool of federal money to support their medical requirements. You’d have to believe – wink, wink – that a Harvard-educated lawyer might actually understand that he is challenging the entire concept of “pooled risk” that in inherent in any notion of “insurance.” Huh, Ted has to know that insurance is “pooled risk.” To suggest a different structure is to alter the most basic notion of insurance in every single category whereinsurance is available, from car insurance required of drivers by most states, to renters insurance and ordinary business insurance, etc. Oh, and healthcare.

This is “lyin’” Ted Cruz’ way of appeasing the GOP’s extreme right who want to repeal Obamacare (the Affordable Care Act or ACA) without replacing it. So “busy Republicans,” anxious to cater to those extreme interests, think that they have figured out how to create reconciliation legislation that will effectively decimate healthcare to those who need it most but appear to offer cheaper insurance to the masses. Those who need healthcare the most will be ones who soon will be unable to afford it.

Here’s how the latest incarnation of the Senate Reconciliation bill – revealed by GOP Senate Majority Leader, Mitch McConnell, on July 13^th – would change the House’s American Health Care Act (AHCA vs. the ACA)… that same proposal that the non-partisan Congressional Budget Office told us will eventually deprive over 22 million folks who are currently covered under the ACA from coverage.

Under the new proposal, there would actually be two separate tracks of insurance policies. Carriers would be allowed to offer “skinny” insurance packages – policies that would exclude pre-existing conditions and medical issues that are expensive to treat – as long as they also offered policies with the same degree of coverage currently available under Obamacare. The catch? That latter risk pool – where full coverage is available – would only be comprised of people who needed that extra coverage. And the “marketplace” would determine the premiums, co-pays, deductibles and exclusions. People would pay for what they want included, but there would be no cap on what those insurance company charges could be. Pretty clearly, many folks will not be able to get coverage for serious pre-existing conditions.

So let me think. A pool of only low-needs folks would pay next to nothing for bare coverage. But an entirely separate high-needs pool, with only older pre-Medicare buyers combined with people with real pre-existing conditions, would have to pay for what they “want”… or more likely, what they can afford. If it is even available. Premiums could be tens of thousands a year for sufficient coverage, and where ailments are not flat out excluded, the co-pays and deductibles could easily slide into six figures for those with major health issues. Even on the lower end of folks with some real medical needs, the CBO estimates that a 60-year-old earning $11.5K a year, using the available tax credits in the revised bill, would still have to pay $4.8K a year in premiums… without even addressing the costs of co-pays and deductibles!!! Seriously? Food, clothing and shelter just become pesky little luxuries. Are you listening Trump voters? Remember the campaign promises?

The “skinny” package would not share any of the risk for those needing full coverage (pre-Medicare older users and folks with pre-existing conditions). These “skinnies” would probably lose some of the most common benefits required under the ACA, like maternity and newborn care, mental health services and addiction treatment, outpatient care, hospitalization for severe medical issues and related emergency room visits and prescription drugs. Eh, so what? Young folks think nothing bad will ever happen to them. Older folks know it does.

Are there any pluses? Slight improvement in very minor areas. What might make this GOP proposal more palatable to GOP moderates from states where their constituents desperately depend on Obamacare is a provision that maintains the higher taxes on the wealthiest segment to be applied to assist states that require more contributions to help their poorest constituents. Essentially, the current3.8 percent tax on net investment income for individuals earning more than $200,000 and couples earning more than $250,000; and a 0.9 percent surtax for the Medicare insurance program for the elderly on people with those incomes. The Senate plan also fosters the use of healthcare saving accounts, a system that virtually nobody thinks is sufficiently beneficial for vast majority of Americans (costs will rise staggeringly for those who can afford it least). Of course, when tax reform legislation comes down the pike later, you might bet that those higher taxes on the rich could easily vaporize… wink wink.

 “The new bill provides [these] additional funds [over their earlier proposal] to help stabilize the individual insurance market, providing $70 billion on top of the $112 billion in the original bill. That would help insurers hold down growth in the cost of insurance premiums and help lower-income insurance holders cover out-of-pocket medical expenses.

“The bill retains the previous bill's phase-out of the Obamacare expansion of the Medicaid government health insurance program for the poor and disabled and sharp cuts to federal Medicaid spending beginning in 2025.” AOL.com. Major insurance carriers have been pretty silent about this GOP reform package. Until now. They finally figured out that the GOP bill would destabilize their entire industry… and started squealing at the utter inanity of the proposal. There were no insurance carriers who supported that reform package. Zero. None. Nada. And they’re the experts.

“Insurer groups, including the national Blue Cross Blue Shield Association, have derided these ‘skinny plans,’ saying they would raise insurance premiums, destabilize the individual insurance market and undermine protections for pre-existing medical conditions. Moderate senators could balk at the provision for the same reasons.” AOL.com. Let’s hope so!

The July 12^th Los Angeles Times embellishes: “In a document circulating on Capitol Hill, the trade group America's Health Insurance Plans outlined how allowing some health plans to be exempt from coverage requirements would create instability, cost more and fail to protect people with preexisting conditions. The group predicted that the generous exchange plans that were compliant with coverage requirements would become a de facto high-risk pool, with higher premiums that would mean mostly sick people would want to enroll. More people would drop out as premiums rose, leaving all but the sickest buying insurance — which would push premiums even higher.

“‘The individual market faces well-documented challenges to stability, including higher premiums, lower-than-expected enrollment, fewer plan choices, and risk pool problems in certain states and markets,’ the document states. ‘It is important that policymakers avoid policies that threaten to further increase uncertainty or threaten stability.’” Insurance carriers are not the only group that thinks the GOP plan is ludicrous. Here’s an excerpt from AARP’s official response (July 13^th) to McConnell’s proposal:

"This bill may have changed but the results are the same:  higher costs and less coverage for older Americans. We urge the Senate to vote 'NO' and start from scratch on a new health bill that lowers costs and maintains vital protections and coverage that millions of Americans count on.

"AARP reiterates our opposition to the Age Tax which would allow insurance companies to charge older Americans five times more than everyone else for the same coverage while reducing tax credits that help make insurance affordable, and we strongly oppose increasing costs for people with pre-existing conditions.   

"AARP also remains alarmed at the Senate bill's drastic Medicaid cuts. The proposed cuts would leave millions of Americans, including 17.4 million poor seniors and people with disabilities, at risk of losing the care they need and their ability to live independently in their homes and communities.”

And here’s the really crazy part. Except where Donald Trump openly sabotaged Obamacare – refusing to fund and telling carriers that he will not guarantee any market stability to allow them to plan for coming years (which has forced more than one carrier to drop out of the needed healthcare exchange markets) – Obamacare was beginning to stabilize and work as designed. As hard as Donald Trump has tried to insure the collapse of the ACA – swearing that it cannot work and that insurance companies who remain will inevitably fail – it has proven resilient, turning toward profitability even without the obvious fixes that the statute has always needed.

The prestigious Kaiser Family Foundation (yup, the folks associated with Kaiser-Permanente hospitals) said in a July 10^th report: “As we found in our previous analysis, insurer financial performance as measured by loss ratios (the share of health premiums paid out as claims) worsened in the earliest years of the Affordable Care Act, but began in improve more recently. This is to be expected, as the market had just undergone significant regulatory changes in 2014 and insurers had very little information to work with in setting their premiums, even going into the second year of the exchange markets.

“Loss ratios began to decline in 2016, suggesting improved financial performance. In 2017, following relatively large premium increases, individual market insurers saw significant improvement in loss ratios, averaging 75% in the first quarter. First quarter loss ratios tend to follow the same pattern as annual loss ratios, but in recent years have been 10 to 15 percentage points lower than annual loss ratios. Though 2017 annual loss ratios are therefore likely to end up higher than 75%, this is nevertheless a sign that individual market insurers on average are on a path toward regaining profitability in 2017.”

There’s very little about the AHCA that works. It certainly will make life hell for older folks and those with preexisting conditions who are not covered by employer group plans, who have to access individual policies (if they can find them) under the AHCA. The plan is hastily drafted, ill-conceived, not well-fleshed-out, and exceptionally unlikely to work as GOP constituents might think. Congressional Republicans, so committed to their blind “repeal and replace” hypnotic mantra that they feel they have to pass something, are so acutely aware of how bad their bill is… that they have delayed when that statute would, if passed, take effect such that it would not impact the 2018 mid-term Congressional elections. If America were to feel the rather abysmal results of this legislation, we might even see Democrats elected in right wing districts in Texas, Oklahoma and Kansas! Oh no!!!!

I’m Peter Dekom, and if the self-immolating Republicans actually cannot pass the AHCA, perhaps they can be convinced to sit down with Democrats and fix what is obviously wrong with the ACA… or simply rely on sabotaging the ACA to force their way later.