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- 12/07/16--17:17: _America has an Obam...
- 12/08/16--09:18: _Nearly 30 million A...
- 12/09/16--16:02: _The problem with Tr...
- 12/13/16--08:53: _We're starting to g...
- 12/13/16--15:02: _Insurers want Trump...
- 12/14/16--10:30: _Here's the differen...
- 12/14/16--11:18: _Take a look inside ...
- 12/14/16--17:51: _52 million American...
- 12/15/16--17:50: _How an Obamacare re...
- 12/16/16--09:06: _So many people are ...
- 12/16/16--18:41: _The problem with th...
- 12/21/16--18:42: _Study shows fewer p...
- 12/22/16--17:27: _Republicans are hav...
- 12/27/16--16:02: _One of Obamacare's ...
- 12/29/16--08:02: _The GOP might not r...
- 01/02/17--16:45: _I'm a former health...
- 01/03/17--13:48: _Senate Republicans ...
- 01/03/17--17:26: _Trump may be ignori...
- 01/04/17--07:08: _Trump delivers warn...
- 01/04/17--12:16: _The battle lines ar...
- 12/07/16--17:17: America has an Obamacare dilemma
- 12/13/16--15:02: Insurers want Trump to retain some parts of Obamacare
- 12/15/16--17:50: How an Obamacare repeal could benefit the one-percent
- 12/16/16--18:41: The problem with the GOP's Universal Access healthcare plan
- 12/27/16--16:02: One of Obamacare's biggest successes should not be ignored
- 12/29/16--08:02: The GOP might not repeal Obamacare until after the 2020 election
- 01/03/17--13:48: Senate Republicans take first step toward repealing Obamacare
- 01/04/17--12:16: The battle lines are being drawn in the fight over Obamacare
The future of Obamacare is uncertain, to say the least.
President-elect Donald Trump has consistently called to repeal or replace the Affordable Care Act throughout his campaign, but many pundits see this as being a catch-22 for the incoming administration.
America’s healthcare system is already a global outlier (in a bad way), with disproportionate amounts of money being spent for very little return on life expectancy. For that reason, many people see the additional coverage of 20 million new people through Obamacare as a crucial step forward.
However, this new coverage hasn’t come without major challenges. Obamacare is plagued by soaring premiums, insurers leaving the program, and coverage monopolies in certain states. This puts America’s healthcare at an inflection point, and no one really seems to know how to solve it.
THE OBAMACARE DILEMMA
The following infographic from Healthgrad sums up the most recent metrics on Obamacare, as well as showing the double and triple digit rises in premiums that some states are facing.
As the infographic notes, the cost of healthcare has continued to escalate year after year, outpacing both inflation and wage growth. Obamacare has not been immune from this trend, and premiums are now being hiked because of low enrollment, mispriced plans, a dwindling pool of insurers, decreased competition in exchanges, and sicker patients than expected.
Despite only 25% of Americans supporting the outright repeal of Obamacare, it’s looking more and more likely that the healthcare system of tomorrow won’t look quite like it does today.
THE POST-OBAMACARE ERA
Right now, nobody knows quite what the future holds for U.S. healthcare.
Repealing or replacing Obamacare is fraught with at least six major issues, but perhaps the most significant one is a lack of decisiveness within the Republican party itself. What would Obamacare be replaced with, and how would that change be implemented?
Interestingly, there are at least seven Republican plans that have been tabled to replace Obamacare. Within that group, two of the more prominent ones come from Georgia Rep. Tom Price and House Speaker Paul Ryan.
Tom Price, who is Trump’s pick as the incoming secretary for the Department of Health and Human Services (HHS), has already published his consumer-driven healthcare model, and it already exists in legal language. In additional, Paul Ryan released his own proposal in the form of the A Better Way plan earlier this year, which also touches on other issues such as poverty, national security, and the economy.
Despite the number of options, the problem is that no one can agree on a particular solution. The party is heavily divided, and Trump is already receiving heavy blowback from the Tea Party faction for telegraphing potential delays in repealing or replacing the act.
Yes, the future of U.S. healthcare is murky – even to Trump and the GOP. However, what is clear is that with most chips stacked in the Republicans favor over the coming years, it is unlikely that they will miss the opportunity to initiate the post-Obamacare era in some shape or form.
For years, Republicans in Congress have been clamoring to repeal the Affordable Care Act (ACA), better known as Obamacare, President Barack Obama's signature legislative achievement.
With President-elect Donald Trump set to take office, the GOP may finally get its wish.
According to a new study, however, the repeal would come at a significant price, showing the tightrope the party could be forced to walk on to unravel the law.
The Urban Institute, a left-leaning think tank, analyzed the most likely proposal from Republicans for repeal of the law and found that millions of Americans could lose their insurance if it were to pass.
"We estimate that the partial ACA repeal would increase the number of uninsured people by 29.8 million by 2019, raising the total number of uninsured to 58.7 million people — 21 percent of the non-elderly population — compared with 28.9 million people uninsured if the ACA remains in effect," said the report, which was authored by Linda Blumberg, Matthew Buettgens, and John Holahan.
And the authors said the Republican repeal plan could hit certain groups of working-class families most.
"The vast majority of those becoming uninsured would be members of working families (82 percent), and more than half (56 percent) would be non-Hispanic whites,"the study said."The vast majority of adults becoming uninsured would lack college degrees (80 percent)."
Based on exit polling, many of these demographics that would be hit hardest by the repeal voted for Trump in the presidential election. According to exit poll data, non-Hispanic whites favored Trump by 20 percentage points, and non-college educated voters went for Trump by a 5-point margin. Non-college educated whites went for Trump by a 37-point margin.
Given the wide-ranging plans to repeal and replace Obamacare among Republicans — Trump, House Speaker Paul Ryan, and Secretary of Health and Human Services nominee Tom Price have all suggested or put forward differing plans — the researchers did have to make some assumptions.
They determined that the most likely scenario was a repeal from the budget reconciliation process. Since Republicans do not have a filibuster-proof majority in the Senate, they can likely only repeal those parts of the law that deal with the budget, such as Medicaid expansion and tax credits for exchange-based insurance.
Some GOP lawmakers have suggested they may pass a bill that would repeal Obamacare — but not until 2019. The Urban Institute used that time frame for its research.
The study estimated that spending by the federal government on healthcare would decrease by $109 billion in 2019 and $1.3 trillion form 2019 to 2028.
On the other hand, the medical losses due to uncovered Americans getting care at hospitals would also be significant. Blumberg, Buettgens, and Holahan noted that while uninsured people typically go in for care at a less-frequent rate, they do sometimes end up at the hospital or doctor.
These costs would be spread out between the federal government, local governments, and private healthcare providers. In total, the report estimated total cost for uncompensated care would total $57 billion in 2019 and $656 billion over 10 years.
A bill that passed Congress to repeal Obamacare in 2016 — which was vetoed by Obama — did not have an increase for federal spending on uncompensated care. In that case, more of the burden would fall on local governments and private healthcare providers, according to the Urban Institute.
If Republicans repeal Obamacare immediately, according to the study, the changes would come even more swiftly. an immediate repeal would cause insurers to lose nearly $3 billion for the year as people would likely stop paying premiums as they lose tax credits. Additionally, the number of uninsured would jump by 4.3 million almost overnight.
In order to mitigate these circumstances, Congress would have to take significant steps and pass a replacement bill.
"To replace the ACA after reconciliation with new policies designed to increase insurance coverage, the federal government would have to raise new taxes, substantially cut spending, or increase the deficit," the researchers concluded.
President-elect Donald Trump has repeatedly vowed to “repeal and replace Obamacare.” A logical question is: With what? The announcement of Rep. Tom Price (R-Ga) as Trump’s nominee for secretary of health and human services provides some answers.
Unlike other Republican critics of the Affordable Care Act (ACA), Price, an orthopedic surgeon, has offered many replacement plans of unmatched detail. His Empowering Patients First Act was 242 pages long. It offers a market-based vision for American health care, restricting government involvement.
His plan, however detailed, lacks specifics about what will happen to the 20 million or so who gained insurance coverage under the ACA. This includes people who have preexisting conditions and those who rely on Medicaid, the federal-state program that provides insurance to poor children, pregnant women of a certain income level as well as the disabled and blind under 65.
Price’s policies could also limit access to care for children, women and for many people of all ages with chronic and mental illnesses.
As a scholar of American policymaking, I hope to shed some light on Price’s plan.
Children’s coverage could be jeopardized
One of the main pillars of Price’s plan is tax credits based on age to individuals who wish to buy health insurance in the private market. Importantly, this proposal assumes that those who are younger will also be healthier, thus requiring less coverage.
However, there has been a rise from in the prevalence of chronic illnesses among children, from 12.8 percent in 1994 to 26.6 percent in 2006.
Also, incidence of type 2 diabetes and teen depression has increased. Mental health conditions often have an age-of-onset in the teens and 20s. Yet both age groups are allotted the lowest tax credits in the Price plan, and more children from lower- and middle-income households may struggle to obtain needed coverage.
In 2007, Price voted against the reauthorization of the State Children’s Health Insurance Program (SCHIP), a program founded in 1997 that provides medical care to about eight million low-income children, at a total cost of about US$13 billion. It has been cited as instrumental in reducing the number of uninsured children from 10.7 million in 1997 to 6.6 million in 2012.
Medicaid could be rolled back
Lower-income children are not the only lower-income group likely to suffer under Price’s proposal.
Currently, federal and state governments share the cost of Medicaid, with 32 states having adopted the Medicaid expansion that was called for under the ACA. An ACA repeal would eliminate expansions of Medicaid and the Children’s Health Insurance Program (CHIP) – which together cover approximately one in five Americans– and replace it with Medicaid block grants that the federal government provides to the states.
This would slow the growth annual rate of spending on Medicaid from its current level of 7 percent to 3 percent, according to the Congressional Budget Office. The CBO also estimated a reduction in Medicaid spending by $1 trillion over 10 years.
But The Medicaid programs that Price seeks to restrict not only are more cost-effective in the long run to administer – with the Robert Wood Johnson Foundation estimating that Medicaid coverage expansion reduced hospitals’ uncompensated care by 21 percent, with states saving in costs of caring for the uninsured – but have had demonstrably positive health outcomes for vulnerable populations. For example:
A study in the public health journal Health Affairs suggested that outpatient medical appointments increased 29 percent, while preventable hospitalizations fell 48 percent in the aftermath of a new new public insurance program in Wisconsin in 2009.
Also, The Kaiser Family Foundation reported in 2016 that Medicaid expansion under the ACA not only reduced the uninsured rates of those states, but in many cases improved access to care and utilization of some physical and behavioral health services. Similarly, an Urban Institute report on outcomes related to Medicaid showed greater access.
Those with preexisting conditions could lose out
In the aftermath of meeting with President Obama, Trump indicated some interest in preserving the provision that people cannot be denied insurance coverage for preexisting conditions.
This is challenging, however. Insurers’ ability to guarantee coverage regardless of preexisting conditions works in tandem with the ACA’s mandate that all individuals enroll in at least some level of coverage. The purpose of this was to bring healthy patients into the risk pool.
Price’s plan would prevent insurers from denying coverage based on preexisting conditions, but at a price. His plan would allow insurers to charge consumers up to 150 percent of standard premiums. This would apply if consumers do not maintain continuous coverage for at least 18 months. Thus, if someone becomes unemployed and unable to afford coverage in between jobs, he or she could be left without insurance.
Such a marked premium increase could in some cases be devastating, especially for those with chronic conditions. The Centers for Disease Control and Prevention estimated in 2012 that about half of the American population (117 million) had at least one chronic health condition, and one in four adults has two or more chronic health conditions. Seven of the top 10 causes of death are chronic diseases.
Mental health treatment could suffer
Within the context of preexisting conditions, it is worth emphasizing also that the CDC estimate focused on behavioral and not mental health, the diagnosis of which would also constitute a preexisting condition.
Yet about 16.1 million Americans had a major depressive episode in the past year, which does not include milder forms of depression, or other behavioral health conditions such as anxiety or psychotic disorders. Indeed, about one in five American adults will struggle with mental illness in a given year.
The ACA provided a marked expansion in access to care for mental and behavioral health by requiring that most individual and small group plans and all marketplace plans provide mental health benefits. The repeal of the ACA leaves the state of mental health care very much in question. It renders particularly vulnerable those who have capitalized on the ACA’s access to mental health coverage and in doing so, accumulated preexisting conditions.
Women’s health could be harmed
In his first term in Congress, Price cosponsored the Right to Life Act, which sought to extend 14th Amendment personhood to a fertilized egg and thus limit abortions. This did not make exceptions for pregnancies resulting from rape or incest, and it did not consider the health of the woman.
Price did not simply vote for legislation to defund Planned Parenthood (HR 3134 in 2015); he cosponsored it.
The defunding of Planned Parenthood could limit care to women, given that it provides contraception, STD testing, cancer screenings and prenatal care. Increased contraceptive use has been the main reason for a dramatic decline in teen pregnancies in recent decades.
Women in urban areas can obtain contraceptive care from many sources in urban areas, but Planned Planned Parenthood is the sole provider in one fifth of 491 counties surveyed in 2010. And in two-thirds of those counties, Planned Parenthood clinics served at least half of the women who obtained contraceptive care from safety-net health centers.
Who is empowered?
After the American Medical Association endorsed Price, an open letter signed by over 5,000 physicians challenged the endorsement.
The empirical evidence in favor of the programs that he seeks to scale back or eliminate altogether should temper his eagerness to overhaul the Affordable Care Act.
Such tempering is not yet apparent. How Senate Democrats and moderate Republicans – perhaps those in states that accepted and benefited from Medicaid expansion – respond to Price in the looming confirmation battle may provide some answers to who is empowered first under Price’s leadership.
House Republicans have dropped hints recently as to how the GOP will market its replacement for the Affordable Care Act, President Barack Obama's signature legislative achievement — and it's in the form of a simple analogy.
House Ways and Means Committee Chairman Kevin Brady told Business Insider last week that Republicans in Congress hope to replace the ACA, commonly known as Obamacare, with what he likened to a "healthcare backpack."
The "backpack" analogy has been employed a number of times over the past year. For example, Brady used the metaphor ahead of Obama's 2016 State of the Union address and continued to do so in various interviews over the summer and in recent days.
The metaphor even made its way into House Speaker Paul Ryan's "Better Way" plan.
"I'm absolutely confident that unlike Obamacare, we're not going to be ripping healthcare out of the hands of the American people," Brady told Business Insider. "We're going to give them options that are tailored to them with plenty of time and plenty of transition so they can pick a plan that's right for them."
"And our concept is to replace that huge bureaucracy of Obamacare with the concept of a healthcare backpack," the congressman added.
That backpack, he said, will center on the establishment of a healthcare savings account, easier access to electronic medical records, individual tax credits, and the elimination of Obamacare's mandates.
"A backpack that is tailored to the needs of patients and demands of families, that can go with them throughout their lifetime," Brady said. "From job to job and state to state and home to start a business or a family."
The Texas Republican said he was "thrilled" with the nomination of Rep. Tom Price of Georgia, a physician and staunch Obamacare critic, to head President-elect Donald Trump's administration's Department of Health and Human Services.
"We know to that Americans wanted change," Brady said of Trump's election. "So the opportunity to provide that backpack that's tailored and travels with you ... that type of unprecedented freedom and choice, all focused on the patient, is the biggest change we're proposing."
Repealing and replacing Obama's signature healthcare law will be an uphill climb, even as Republicans control both branches of Congress and the presidency.
There will likely be a transition period of roughly three years, as some Republican senators have said, between when the bill is repealed and when the replacement is implemented. And Republicans will face strong opposition from Democrats, who've said repealing and replacing the healthcare law would lead to millions of Americans losing their health insurance.
The proverbial clock is ticking. Once Donald Trump becomes president in January, it seems a matter of when, not if, the Affordable Care Act, America's health law of the land, will be repealed or significantly amended.
One of the key talking points of Trump's campaign, and of the Republican Party in general, is the idea of repealing and replacing the landmark ACA, which President Obama signed into law in 2010 and was appropriately nicknamed "Obamacare." A clear pathway to amending or repealing the law has been elusive until now. With a Republican as president, and both houses of Congress staying Republican in the November elections, a repeal is a real possibility. Even if the Senate can't muster enough votes to completely repeal Obamacare, a simple majority could lead to major changes that strip out many of its core components.
For health insurance providers, the likely demise of Obamacare brings mixed emotions.
Insurers won't miss these aspects of Obamacare
On one hand, most insurers aren't going to miss the hefty losses brought about by participating on individual ACA marketplace exchanges. UnitedHealth Group, the largest insurer in the country, announced that it was pulling out of 31 of the 34 states it was operating in for 2017 because its ACA plans had generated aggregate losses totaling nearly $1 billion between 2015 and 2016. Big ACA-based losses were also felt by Aetna, which has lost a cumulative $430 million on individual marketplace plans since inception, and Humana. Aetna and Humana, which had attempted to merge, but were denied by federal regulators, are cutting back on their county-based coverage by nearly 70% and almost 90%, respectively, in 2017.
Three reasons, in particular, led most insurers to lose money on Obamacare's marketplace exchanges.
First, there was a mandate in place that required insurers to accept all consumers, regardless of whether they had pre-existing medical conditions. Before Obamacare, insurance companies were afforded the luxury of picking and choosing whom they wanted to insure. This way they could avoid potentially high-risk patients with costly or chronic ailments. Under Obamacare, insurers can't turn consumers away anymore, so that aforementioned group of sicker patients who'd previously been shut out of the system came flooding back in. These patients are generally sicker and costlier than your average consumer, leading to higher medical expenses for health-benefit providers.
Secondly, the Congressional Budget Office (CBO) let insurers down with its enrollment estimates. Less than two years ago, the CBO had been forecasting that 21 million paying members would be enrolled by the end of 2016. However, the latest projection from the CBO calls for just 10 million paying members by year's end. The CBO was way off in estimating how many people were uninsured before Obamacare's implementation, and it also overestimated how many workers would unenroll from employer-sponsored care in favor of Obamacare. In other words, insurers were left to fight over a much smaller patient pool than expected.
Finally, the risk corridor was mostly a bust. You could reasonably argue that the risk corridor punished overly profitable ACA insurers by requiring they divert a percentage of their profits to the risk-corridor fund. In turn, insurers with excessive losses that had priced their premiums too low wound up receiving only a small fraction of the money they'd requested. Ultimately, numerous low-cost healthcare cooperatives closed their doors, and the insurers that were profitable were only nominally so thanks to the risk corridor.
But they'd prefer to keep these Obamacare provisions
On the other hand, there are certain aspects of Obamacare that insurers don't want to go away. In particular, insurers have expressed strong interest in keeping two particular components of Obamacare intact.
Not surprisingly, health-benefit providers want a commitment from the Trump administration that it'll have a plan in place to cover lower-income individuals and families that are currently being supported by the Advanced Premium Tax Credit (APTC) and/or cost-sharing reductions (CSRs).
According to the latest update from the Centers for Medicare and Medicaid Services, 84% of ACA marketplace enrollees qualify for the APTC, which lowers their monthly premium, while 56% qualify for CSRs, which make copays, coinsurance, and deductibles more affordable. If a reconciliation bill were to remove the APTC and CSRs, medical care would probably be unaffordable for a large swath of low-income individuals and families.
Along those same lines, 31 states chose to take federal funds and expand their Medicaid programs. It's probable that Medicaid expansion could be rolled back, too, if Obamacare is repealed. In total, insurers have suggested that in the neighborhood of 22 million people could suddenly find themselves uninsured if Trump and Congress act too quickly, or if they don't have a plan in place to cover lower-income individuals and families.
From the perspective of an insurance company, if roughly 22 million people were suddenly taken out of the potential pool of members, they're probably going to head for the exit and not look back. Even though government-sponsored payments don't lead to the same juicy margins as more well-to-do consumers who can afford healthcare, the sheer guarantee of being paid by the federal government made the APTC and Medicaid expansion worthwhile for insurers.
The other provision insurers would like the Trump administration to keep or modify minimally is the individual mandate. The individual mandate is the actionable component of the law requiring that consumers purchase health insurance or pay a penalty come tax time. This penalty is known as the Shared Responsibility Payment, or SRP, and in 2016 it's the greater of $695 or 2.5% of your modified adjusted gross income.
The argument from insurers is simple: They need healthier young adults to enroll to help counteract the higher medical costs of accepting people with pre-existing conditions. The SRP is in place to provide the needed motivation to young adults who might otherwise choose to remain uninsured.
However, the SRP also has a pretty big issue. According to estimates from the Kaiser Family Foundation, the average household SRP in 2016 will be $969. While that might sound like a lot, it's peanuts compared to the $2,400 to $3,600 most healthy young adults could pay for an unsubsidized bronze plan. Even with the possibility of tax deductions for premiums paid, it's still cheaper to remain uninsured and pay the penalty for millions of Americans. Insurers want to see some sort of coercive tactic used to get healthier young adults to enroll in the Republican health plan.
One bit of solace for consumers and insurers
Regardless of whether you're a fan of Obamacare, one thing looks fairly certain: Modifying or repealing Obamacare isn't going to be an overnight affair.
Insurers would like to see these two aforementioned Obamacare provisions kept, but what they value most of all is having ample time to adjust their coverage options once healthcare changes are announced. It would appear likely that any Republican-led efforts to modify Obamacare or repeal it entirely would take place over at least a two-year period. That means consumers aren't simply going to wake up the next day after legislation is passed without health insurance coverage. Implementing a new plan over a few years gives the new administration the time needed to roll out incentives for healthier young adults and lower-income folks to maximize enrollment and minimize the uninsured rate.
It's still unclear exactly what healthcare reform is going to look like in America, but with the sands of time ticking down until Trump takes office, expect some of the industry's biggest names to chime in with suggestions in the weeks and months to come.
For many people, it's open enrollment season for healthcare.
That's the case for anyone buying insurance on the public 'Obamacare' Health Insurance Marketplace, wherein the deadline to enroll or change your plan is December 15 if you want coverage to start on January 1 (the deadline to establish coverage for all of 2017 is January 31).
Buying health insurance is a complicated and often confusing process — even without all the esoteric terminology and acronyms. So we're here to answer questions and cast some sunlight on a pretty important concept that frequently trips people up: the FSA vs. the HSA.
What do these acronyms even mean?
In one corner, we have the Flexible Spending Account* (FSA), and in the other, we have the Health Savings Account (HSA). In short, they're special accounts where you can store money for healthcare-related expenses. You can even use a debit card with these accounts to easily pay at the doctor's office or pharmacy.
(*A separate type of FSA exists to help parents to pay for the care of their children — childcare or nannies, for example. We're focused on the more common and broadly used FSA for health expenses.)
Thanks, but I have a checking account and savings account already, so I'm fine. I don't need more financial complexity in my life.
Like I said, these accounts are special: They help you save money.
Go on …
FSA and HSA accounts are tax advantaged. You can put money from your paycheck into them — money that Uncle Sam won't take a cut of.
How does that save me money?
Suppose you put $1,000 in one of these accounts to pay for health expenses next year. That's taken from your salary on a pre-tax basis, effectively reducing the amount of money on which you pay income tax by $1,000. If your income tax rate is 30%, for instance, that's roughly $300 the government won't get its grubby hands on. That's almost enough for a meal at one of New York City's fanciest restaurants.
Whoa! Ok, that's actually pretty cool. So can I put as much money as I want into these accounts?
No. For an FSA, the annual limit for pre-tax contributions in 2017 is $2,600. This money must be spent in the year you contribute it or you'll lose it — the money does not roll over. You also cannot change your contribution amount after open enrollment.
For an HSA, the annual limit in 2017 for an individual is $3,400, while the limit for a family is $6,750. This money does roll over; you can save it for however long you want. And you can change your contribution amount throughout the year.
Can I do both?
In most cases, no. You generally can't contribute to both in the same year. However, some limited-purpose FSAs do exist that are compatible with the HSA — but they come with restrictions, such as only being able to use the account to cover certain expenses, like dental and vision.
What are the benefits of the FSA?
Mostly what we've already covered. It can save you money by lowering your taxable income, so long as you're spending the money on qualified health expenses.
FSAs are also pre-loaded at the beginning of the year. So if you set your contribution to $2,600, you will have access to those funds on January 1, and then the money will slowly be taken out of your paycheck over the course of the year. So if you have a big-ticket medical expense to take care of — Lasik eye surgery, for instance — you can use those funds immediately to pay for it. If you didn't have the cash on hand and had to pay via credit card, you'd wind up paying extra money in interest to cover the cost. So in some ways, an FSA can function like an interest-free loan.
And the drawbacks of the FSA?
As the name suggests, the money in this account is meant to be spent, not held on to. Since it does not rollover, you'll lose whatever you don't spend during the year, so you need to estimate your health expenses carefully. FSAs also typically do not transfer from job to job. If you switch mid-year, you'll likely lose what you've contributed to your FSA.
Also important for the Obamacare folks out there: FSAs are not available to people buying insurance on the public exchanges. It's an employer-sponsored account, so if you're self-employed or your employer doesn't offer coverage, you're out of luck.
Bummer. So what about the HSA? What benefits does it come with?
The HSA is one of the most powerful investment accounts that exists, thanks to its unique tax advantages.
As discussed, you don't pay taxes on the money you put in, just like the FSA. However, you can save the funds in the HSA for as long as you want — you don't lose them at the end of the year or if you switch employers — and you can also invest them like you would in a 401(k) or IRA.
Your investment will grow tax free, and you also pay no taxes when you decide to take money out of the account to spend, provided it's spent on qualified health expenses. It's a tax-savings bonanza.
Let's put it in dollar terms: If you started maxing out your HSA at age 25 and kept doing so for 40 years without withdrawing anything, it would be worth more than $1 million by the time you reach age 65 if you earned a 7.5% annual return.
Essentially, the point of the HSA is that it allows you to build up a large cushion of money to spend on emergencies or later in life, when health-related expenses tend to increase. So it's ideal for young or healthy people who don't anticipate needing to spend a lot on health care in the near future.
The HSA sounds pretty great. What are the drawbacks?
It's only available to people with high-deductible health plans. To be eligible, your deductible must be at least $1,300 as an individual or $2,600 for a family plan.
The out-of-pocket costs for these plans tend to be quite high, so if you're anticipating a lot of health expenses, this may not be right for you.
About these "qualified health expenses." What can I get away with? Can I use it for my gym membership? To laser the hair off my back? Medical marijuana?
Sadly, none of these would qualify. Your sweat session at SoulCycle is a no-go, and neither is cosmetic surgery of any kind. The purchase of controlled substances that are illegal under federal law, like marijuana, is also prohibited — even if they're legal under your state's laws.
Hospital fees, payments for doctor or dentist visits, fertility treatments, artificial teeth, the chiropractor, the purchase of a wig, and a whole array of other expenditures are covered.
Check out a more comprehensive list of what is and is not allowed here.
What happens if I 'accidentally' use my HSA debit card to pay for that medical marijuana, or a burger at Shake Shack, or some other non-qualified expense?
It's your life. Just be prepared to cough up the income tax on whatever you spend — plus a 20% penalty on top of that.
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On December 8, the first day Oscar's healthcare facility opened in Brooklyn, all of the available slots filled up immediately.
Oscar CEO Mario Schlosser points to that as a good sign of what's to come for the $2 billion health insurance startup's foray into physical healthcare spaces.
Oscar aims to be a more consumer-friendly insurance company that keeps all your health information in one easy-to-use and easily accessible place. The company opened the Oscar Center two weeks ago as part of a partnership with Mount Sinai that combines Oscar health insurance with Mount Sinai physicians.
"The thesis of the entire partnership is to say if we work together, we should be able to deliver an experience that is — a low bar would be 'less frustrating,' but the bar we're aiming for is actually a delightful experience, which is probably not the word anyone would use to describe their overall experience with the healthcare industry today," Niyum Gandhi, Mount Sinai's executive vice president and chief population health officer, told Business Insider.
The partnership came about when Schlosser saw Mount Sinai's ad in The New York Times that read, "If our inpatient beds are full, we failed." That began a series of conversations between Oscar and the hospital system that spanned two years — and in the healthcare industry, two years is fast.
Now the Oscar Center has opened its doors to Oscar members who are looking for a simplified and futuristic doctor visit. Gone are the clipboards asking for your medical history and receptionists behind desks; gone is the dimly lit waiting room. They've been replaced by a futuristic healthcare center that will serve as both a doctor's office and a community wellness center.
Take a look inside.
The Oscar Center has been open for about three weeks and is located in Brooklyn Heights, right next to the Jay Street-MetroTech subway stop.
The center is capable of handling things like regular checkups and pregnancy tests.
The office is staffed by a physician, a behavioral health specialist, a medical assistant, and a nurse practitioner. Anyone who wants to receive care at the Oscar Center must have Oscar health insurance.
The first thing you'll notice about the Oscar Center is how modern and bright it is. When you step off the elevator, you can see inside the community space to the left and the lobby straight ahead.
See the rest of the story at Business Insider
President-elect Donald Trump says that he would like to keep some of the “good parts” of Obamacare. High on that list is the ban on insurers discriminating against Americans with pre-existing medical conditions by either denying them coverage or charging exorbitant premiums.
In an interview last month with 60 Minutes on CBS, Trump said he intends to retain the Affordable Care Act’s protection for people under 65 years of age with chronic medical conditions such as heart disease, cancer, dementia or diabetes, calling it one of the highly controversial law’s “strongest assets.”
But with mounting uncertainty about how Trump and the GOP intend to repeal much of the Obamacare law next month without a replacement plan in hand, the plight of millions of Americans with pre-existing medical conditions is a very big question mark.
A new Kaiser Family Foundation study released Monday estimates there were at least 52 million Americans under the age of 65 who had pre-existing medical conditions that would have rendered many of them uninsurable before the Affordable Care Act took effect in 2014.
That means that about 27 percent of all adult Americans under the Medicare age of 65 potentially could have trouble finding new coverage in the future if they lose their existing policies under Obamacare, expanded Medicaid for low-income people or through an employer. The study was based on a review of extensive national health care data, including the National Health Interview Survey (NHIS) and the Behavioral Risk Factor Surveillance System.
“As discussions get underway to repeal and replace the ACA, this analysis quantifies the number of adults who would be at risk of being denied if they were to seek coverage in the individual market under pre-ACA rules,” the report states. “What types of protections are preserved for people with pre-existing conditions will be a key element in the debate over repealing and replacing the ACA.”
Some health care experts warn that even if the Republicans manage to preserve that protection against discrimination for the next two years or so, while they attempt to thrash out the details of a replacement plan, major insurers like UnitedHealthcare, Aetna and Blue Cross-Blue Shield are likely to accelerate their departure from the Obamacare market or substantially jack up their premiums.
That would effectively shrink the availability of coverage for people with preexisting conditions. And it would mean that many of them may have trouble finding replacement coverage in the future if they lose their existing policies obtained under the Affordable Care Act, through expanded Medicaid or through an employer.
“Unfortunately, there’s no magic pixie dust to make that easy or avoid difficult tradeoffs,” Larry Levitt, a senior vice president with the Kaiser Family Foundation, wrote on Monday in the Los Angeles Times. He was describing the likelihood of a “death spiral” in the Obamacare insurance market if the Republicans make good on their pledge to repeal Obamacare in January with no replacement plan in mind.
Before the advent of Obamacare, insurers routinely assessed the health status, health history and other risk factors in determining whether to grant coverage, and many times applications were rejected. Prior to the ACA’s coverage expansions, Kaiserestimated that 18% of applicants were denied coverage in the individual market.
Kaiser said its findings on the number of Americans with pre-existing conditions were on the “conservative” side, because the surveys they used do not include sufficient details on several conditions such as AIDS or hepatitis C that would have been “declinable” by many insurers before enactment of the ACA.
There are dozens of health conditions that would have ruled out obtaining coverage in the past, including multiple sclerosis, arthritis, epilepsy, stroke, mental disorders and obesity. And besides declinable conditions, many insurers also maintained lists of declinable prescription medications. Current use of any of those medications by an applicant would have almost certainly led to them being denied coverage.
And notably, the rates of “declinable pre-existing conditions” varied greatly from state to state. The low end, the study found, were in states including Alaska, Colorado, Massachusetts and Minnesota, where only 22 percent to 24 percent of adults had conditions that likely would have prevented them from obtaining coverage in the past.
The declinable pre-existing rates were much higher in other regions, especially among Southern states that frequently fare poorly in public health surveys. For example, Tennessee, Arkansas, Alabama, Kentucky, Mississippi and West Virginia all have declinable pre-existing rates of between 32 percent and 36 percent.
Repealing the Affordable Care Act remains the top priority for the incoming administration of Donald Trump -- ranking even higher than tax cuts -- but a new analysis of the effects of Obamacare repeal suggest that doing away with the law would be a de facto tax cut in and of itself, with the benefits disproportionately going to the wealthy and very wealthy.
“Repealing the Affordable Care Act would cut taxes significantly for the highest income one percent of US households,” write Howard Gleckman of the Urban-Brookings Tax Policy Center in Washington. “At the same time, it would raise taxes on average for low- and moderate-income households.”
The reason why repealing a health care law would have a large impact on people’s tax returns is that major elements of Obamacare were implemented through the tax code. Premium subsidies to help low-income families afford insurance were delivered as refundable tax credits. Penalties on those who failed to adhere to the individual mandate were imposed via a tax. And major tax provisions -- including the Medicare surtax, the net investment tax and the “Cadillac” tax on expensive employer-provided health plans -- were all enacted to fund the ACA.
The impact of repeal would result in subsidies being stripped away from people in the low end of the income distribution, and taxes that disproportionately hit the wealthy being eliminated.
Gleckman finds that, on average, people in the lowest income bracket would face about a $90 per year tax increase, but that number varies widely. Some would actually see a tax break of $1,200, while others would lose thousands of dollars’ worth of insurance premium subsidies.
Middle income households would generally see little change, except for the three percent or so at the low end of the spectrum who would be subject to the loss of an average $6,200 in premium subsidies.
But if the results are ambiguous for the lower and middle-income brackets, there’s no doubt that repeal would be a windfall for the very wealthy.
“[N]early everyone in the highest income one percent would enjoy a substantial tax cut, averaging $33,000 or about 2.1 percent of after-tax income,” Gleckman writes. “Those in the top 0.1 percent would get an average tax cut of about $197,000, raising their after-tax incomes by 2.6 percent, thanks to the repeal of the net investment tax and the extra Medicare tax.”
The number of people signing up for insurance through the Affordable Care Act, the healthcare law better known as Obamacare, is taking off, and the groundswell is even making the Obama administration change its plans.
According to an update on Wednesday from the Centers of Medicare and Medicaid, the number of Americans who had signed up for coverage through the law's health-insurance exchanges had hit 4,015,709, with 1.1 million new enrollees and 2.9 million people renewing coverage.
In fact, according to a release from CMS, the rate of sign-ups has increased in recent days.
"Since December 10, sign-up activity has accelerated," the release said. "With the December 15 deadline for January 1 coverage approaching, the last two days — Monday, December 12, and Tuesday, December 13 — have been two of the biggest days of any Open Enrollment, with more than 700,000 sign-ups."
In total, CMS said, 250,000 more plans were selected during the first 40 days of the open enrollment than at this point last year.
The groundswell of demand for the plans has caused CMS and the Department of Health and Human Services to push back some of their deadlines.
The last day to sign up for coverage that would go into effect on January 1 was Thursday, but CMS and HHS official decided to extend this deadline because of the increased demand.
CMS director Andy Slavitt tweeted that the deadline had been extended to Monday because of "huge demand for coverage."
All of these moves come under the shadow of a possible repeal of the law by Republicans and President-elect Donald Trump come January 20, when Trump takes office. Despite the looming possibility of changes, it appears that more people than ever are signing up for the ACA.
Republicans on Capitol Hill, vowing to repeal the Affordable Care Act the moment the next Congress is gaveled in, are fighting back against grim warnings that doing so will mean millions of people will lose their health insurance policies.
A senior House leadership aide, in a briefing with reporters Thursday, conceded that the Republican plan would likely result in fewer Americans having health coverage -- but that will be because they choose not to purchase it.
One of the key underpinnings of the Obamacare and its most controversial element is the individual mandate that requires Americans to either carry health insurance or pay the penalty. (The law includes large subsidies for many low and moderate-income people in order to make health insurance affordable.) The point of the mandate is to come as close as possible to universal coverage -- a world in which virtually everyone is insured.
While universal coverage has a very obvious warm-and-fuzzy appeal to those who believe that health care should be available to everyone who lives in the world’s wealthiest country, it also has a powerful underlying economic rationale based on the realities of the insurance market. By requiring everyone to buy into the health insurance market, the healthy, who on average consume less health care than the sick, effectively subsidize their coverage.
Many opponents of the ACA, particularly those with a libertarian bent, see this as an unacceptable coercive “taking” by the government, arguing that people should not be forced to purchase something they may not want.
Supporters of the law have claimed that because of the unpredictability of illness and accident, nobody can truly opt out of the health insurance market and that the mandate is the best solution to the free-rider problem -- uninsured people seeking emergency care that they often cannot pay for but that hospitals are obligated to provide.
While the details of what the Republicans intend to replace the ACA with remain sketchy, one of the goals expressed in Thursday’s briefing, as reported by The New York Times, will be to replace the principle of universal coverage with something quite different: universal access.
The idea is that having health insurance will not be a requirement, the unnamed aide said, but will be a viable option for anyone who wants it.
“Our goal here is to make sure that everybody can buy coverage or find coverage if they choose to,” the aide reportedly said.
The details remain to be worked out, and that will be no small task if indeed it is achievable at all.
The problem lies in the basic economics of the health insurance market. Without a mandate to purchase insurance, the people who see the least value in it -- younger, healthier consumers -- are likely to decline to buy it. The result is a pool of insured people who are older and sicker on average than the population as a whole.
That is a more expensive group of people to cover, and health insurers used to have two options for dealing with a pool of potential customers who were sicker than the population as a whole: raise prices or deny coverage to sick or high-risk patients.
However, the ACA removed that second option, requiring insurers selling policies through the health insurance exchanges to extend coverage to all applicants. (Indeed, the individual mandate was the trade-off that insurers accepted in exchange for dropping limitations on pre-existing conditions.) Repealing that part of the law would be wildly unpopular, and indeed President-elect Donald Trump has said that he does not support doing so.
This leaves price increases as insurers’ only option -- short of leaving the exchanges completely -- for dealing with a sicker population. Supporters of the ACA argue that this is just the first step in a vicious cycle. As costs go up, healthier people start to question whether the value they receive from their insurance policy is worth the cost and more of them will drop their policies, leading to further premium increases for those who remain, and so on and so on.
How Republicans plan to address this problem is unclear. Over the past few years, proposals for subsidized high-risk pools meant to take the sickest patients out of the general insurance pool have been floated, but whether they would be viable remains a question.
Right now, Republicans are working hard to dismiss the fear that they will take actions in January that will immediately throw millions of people off the health insurance rolls. Top party leaders have promised that there will be a considerable adjustment period -- some have said up to four years -- during which a replacement will be devised.
What isn’t immediately known is how the next Congress will handle the individual mandate. Leaving it in place during the transition period would be seen by many of the ACA’s most ardent opponents as a betrayal. But eliminating it could cause insurers operating in the health care exchanges to rush for the exits, creating a major coverage crisis for millions of Americans and resulting, at least in the near term, in the exact opposite of “universal access.”
A new report published by the Commonwealth Fund this week highlighted a variety of aspects of the insurance coverage gains made after Obamacare was passed, including a sizable decrease in the number of people who say they skipped going to the doctor because of cost concerns.
In 2013, before the law had gone fully into effect, 20 percent of adults said they had forgone seeking medical treatment because of the cost. Two years later, after the ACA had been mostly implemented, that number had shrunk to 13 percent nationally.
"The historic decline in uninsured rates has been accompanied by widespread reductions in cost-related access problems and improvements in access to routine care for at-risk adults," the study said.
The study found that the uninsured rates dropped in every state, but that there were some particularly large decreases in the uninsured rates for low-income adults in states that expanded Medicaid under the law. (States were given the option to opt-out of Medicaid expansion with a 2012 Supreme Court decision, and many red states have chosen to do so).
"Nine such states experienced 10 to 13 percentage-point reductions in their adult uninsured rate from 2013 to 2015. Six of these states—California, Kentucky, Oregon, Rhode Island, Washington, and West Virginia—sliced their uninsured rates by at least half over the two years," the report said.
The study also examined how the uninsured rates have changed under the ACA with regards to the disparities between white and black or Hispanic communities. Between 2013 and 2015, there were significant coverage gains made among those minority groups: the national uninsured rate dropped to 15 percent from 24 percent among black adults and to 28 percent from 40 percent among Hispanic adults. But here too, states' decision to expand Medicaid played a crucial role.
"In states that expanded Medicaid as of January 2015, the average uninsured rate for nonelderly black adults was 11 percent compared to 19 percent in states that did not expand," the report said. "For Hispanics, the difference was even greater: the average uninsured rate was 22 percent in states that expanded Medicaid and 36 percent in states that did not."
The study comes as Republicans are plotting their moves to repeal Obamacare without a replacement, which they say they'll come up with in a two- to four- year transition phase. It is unclear whether GOP lawmakers will seek in their ACA alternative to match Obamacare's achievements in coverage access.
With only weeks to go before the GOP-controlled Congress begins work on legislation to repeal the Affordable Care Act, Republican lawmakers and staff are struggling to address potentially catastrophic effects of killing off the program without a suitable replacement in hand.
Until now, GOP lawmakers’ biggest challenge has been to convince consumers, insurers, the hospital industry and others that the process will be gradual – perhaps taking as long as two to three years to implement – and that the 20 million or more people who obtained coverage under Obamacare and the expanded Medicaid provision will not abruptly lose their plans.
However, it is now dawning on the Republicans that repealing the dozen or so major Obamacare tax increases along with the premium subsidies for low and middle-income Americans would seriously crimp their effort to devise and finance a substitute health insurance program down the road.
Obamacare is financed by a combination of tax increases, Medicare tax increases and cost-saving measures, and other federal and state tax revenues. When Congress passed the Affordable Care Act in 2010, it required hospitals, the health insurance industry, medical device manufacturers and pharmaceutical companies to share in the cost because of the huge profits they would likely accrue from millions of new paying customers.
Republican critics of Obamacare have long derided these additional taxes – especially the 2.3 percent medical devices tax, a 10 percent tax on indoor tanning services, and taxes on brand-name drugs and health insurance companies selling policies on and off the government exchanges as millstones around the necks of businesses large and small.
They have also targeted two other Obamacare tax hikes on the earnings and investments of those making more than $250,000 a year.
But there is compelling evidence that if the Republicans go ahead next month and scrap all the taxes hikes as part of an overall repeal of the Affordable Care Act, they will not have enough revenue to finance a replacement plan.
Obamacare operating costs are likely to total $1.24 trillion between 2019 and 2026, according to the Congressional Budget Office. A new Brookings Institution analysisreleased earlier this week estimates that only 40 percent of that total – or $496 billion – would be available to finance a Republican replacement over that same period if all the existing tax provisions were scrapped.
The Republicans could generate as much as $850 billion of the total needed through a number of budgetary and tax maneuvers, including the use of “dynamic” budget scoring to claim $200 billion of new revenues through economic expansion. There is also talk of capping the tax exclusion for employer-provided health insurance to pick up another $100 billion or so.
Still, they would fall far short of the resources they would need if they repealed all the tax hikes mandated by the ACA.
“These tax cuts would make it much more difficult to achieve a sustainable replacement plan that provides meaningful coverage without increasing deficits,” wrote Loren Adler, a Brookings health policy expert, and Paul Ginsburg, a senior fellow in economic studies.
Meanwhile, the liberal-leaning Center on Budget and Policy Priorities warned in another report that Senate and House GOP leaders might attempt to raid the Medicare and Medicaid healthcare programs to underwrite their replacement plan should Congress repeal all of the existing Obamacare taxes.
“Given Republicans’ opposition to revenue increases, such as those used to fund the ACA, they most likely would turn to Medicaid and Medicare as their primary source of savings to finance a replacement measure,” the report stated.
According to The Hill, Republican House Ways and Means Committee members discussed the possibility of preserving some of the Obamacare taxes during a legislative retreat last week at the Library of Congress.
While no firm decisions have been made by House Speaker Paul Ryan (R-WI) and Senate Majority Leader Mitch McConnell (R-KY), it now appears unlikely that the Republicans will seek an across the board elimination of all the taxes. Some of the Obamacare taxes could be preserved as part of a larger tax reform bill later in the year, according to the report.
The Affordable Care Act, often known as Obamacare, has caused a lot of controversy. Much of the act could be repealed soon.
But in making decisions about future health policy, the act’s successes shouldn’t be overlooked.
One of these is reducing the percentage of people who, after being discharged from the hospital, end up back there within 30 days.
After a hospital stay, many patients are still recovering and often facing new illnesses.
As they heal, they must struggle to cope with and understand new symptoms and new medications, and often face an array of doctor office visits. Some doctors call this the post-hospital syndrome.
Before the ACA, nearly a fifth of all Medicare patients were readmitted to the hospital within 30 days of leaving it, at a cost of $15 billion per year. Some — perhaps many — of these readmissions are preventable.
Helping patients avoid problems that send them back to the hospital can improve their quality of life while also reducing costs. Before the ACA, though, there were no real incentives to help patients avoid a return to the hospital.
That has started to change. One part of the ACA, the Hospital Readmissions Reduction Program, instituted financial penalties for hospitals with high readmission rates. The initial round of penalties was for readmissions after heart attacks, congestive heart failure, or lung infections.
As readmission rates go up, so do penalties. The penalties can be substantial. New York-Presbyterian Hospital in New York City, for example, lost more than $1 million due to this penalty last year.
Several elements of the Affordable Care Act, such as Medicaid expansion and tax penalties for not having health insurance, have prompted much debate. But payment reform to improve quality and value — including this quieter but critically important element of health reform — has attracted support from both parties.
We often don’t have rigorous evidence to support what policies work best to improve quality of life, quality of care, and value for patients covered by Medicare. Based on research we and other colleagues published in today’s Annals of Internal Medicine, we believe that penalties for high readmission rates are working.
We analyzed discharge and readmission data for 15 million patients at nearly 3,000 hospitals between 2000 and 2013 and used advanced statistical methods to estimate the effect of financial penalties on readmissions. During the first decade of the 21st century, we found that readmission rates had been increasing for two of the three penalized conditions.
But the moment hospitals knew that financial penalties were coming, real change began to occur. Based on our experiences working at large academic medical centers, we believe the knowledge that financial penalties were looming motivated doctors and hospitals to implement changes to help prevent readmissions.
After the ACA became law, readmission rates for all of three of the penalized conditions declined dramatically.
Our study could not identify exactly how doctors and hospitals reduced readmissions. We and others believe that better educating patients about their conditions before leaving the hospital, better coordinating their care, and providing access to office visits after leaving the hospital have helped improve patient safety and reduce readmissions.
In that sense, our results show more than the effectiveness of penalties for high 30-day readmission rates. More generally, they point to how Medicare can improve the care that patients receive through innovative payment models.
Before the penalty plan was put in place, Medicare had disclosed readmission rates of hospitals on its Hospital Compare website. Disclosure alone did not appear to have much of an effect. Penalties did.
The connection between penalties and declines in 30-day readmissions is far from obvious. Whenever the government imposes penalties on hospitals, unintended consequences can easily occur. For example, penalizing low-performing hospitals might make them do even worse.
Data release earlier this year showing overall improvement in readmission rates might have been driven by hospitals that were already doing better, and that the poor performers might have been getting worse.
Our research suggests that did not happen. In fact, hospitals with the highest readmission rates — and which were due to incur the largest financial penalties — generally showed the greatest improvement. So the policy has not only appeared to cause the overall readmission rate to improve nationally, but the improvements have been relatively concentrated among the lowest-performing hospitals.
Many drugs have what’s called a dose-dependent effect. The higher the dose, the more effectively it fights disease. Penalties for readmission may have a similar dose-dependent effect. Hospitals with bigger penalties appear to have reduced readmissions more than those with smaller penalties.
Such a relationship increases our confidence that the penalties are actually causing the improvement, instead of being associated with some other factor that is actually driving the change.
In 2010, health reform started to change the structure of Medicare payments in several key ways. Our research suggests that penalties such as those imposed by the Hospital Readmissions Reduction Program can play important roles in improving performance, lowering costs, and reducing the differences between high- and low-performing
With the election of Donald Trump as president, Republican lawmakers finally have a repeal of the Affordable Care Act, the healthcare law better known as Obamacare, in their sights.
But while Republicans control the presidency and both houses of Congress, a repeal of Obamacare may not come as soon as "day one" the way leaders like Paul Ryan and Mitch McConnell have said.
According to Bloomberg's Sahil Kapur, there is no consensus among Republicans as to when a repeal should take place, but GOP staffers are floating the idea of waiting until after the 2020 presidential election.
Several plans put forth by Republicans would feature a "repeal and delay" mechanism, in which a law is passed that "repeals" the ACA but goes into effect only after a given period of time. This, the thinking goes, would give lawmakers enough time to craft a replacement and also avoid possible political fallout from potentially leaving some people without health insurance.
With over 20 million people having gotten health insurance through various provisions of the ACA, pulling the rug out from under these Americans could be politically dangerous for Republicans.
The original repeal-and-delay plan that was floated in November would have delayed the repeal date until 2019, after the first midterm election.
This move would carry significant risks. Politically, Trump could lose his reelection bid, thus costing the GOP its chance at repealing the law. From the market side, a long delay could cause insurers to pull out of the individual insurance market in anticipation of the move, destabilizing coverage for millions and causing prices in the market to soar.
Bloomberg also reported that Republicans were planning to present the Obamacare law as failing on its own, thus making repeal more palatable despite the coverage increases.
Counter to this narrative, however, the Department of Health and Human Services reported last week that 6.4 million people had signed up for plans on the exchanges established by Obamacare since open enrollment began on November 1 — the quickest sign-up pace of any of the four open-enrollment periods under Obamacare.
At the same time, premiums have increased significantly for 2017 and there are still too few young people on the exchanges.
Still, the biggest challenge for the GOP will be coming up with a replacement plan, and while numerous plans have been floated — from Ryan's Better Way to the Empowering Patient's First Act proposed by Tom Price, Trump's pick to lead the Department of Health and Human Services— a consensus replacement has yet to be reached.
There’s a joke among insurers that there are two things that health insurance companies hate to do – take risks and pay claims. But, of course, these are the essence of their business!
Yet, if they do too much of either, they will go broke, and if they do too little, their customers will find a better policy.
This balancing act isn’t too hard if they have a pool sufficient to average out the highs and lows. I speak with some experience as the former CEO of one of these firms.
Employee-sponsored insurance has fit this model fairly well, providing good stability and reasonable predictability. Unfortunately, the market for individuals has never worked well.
Generally, this model forces insurers to take fewer risks so that they can still make money. They do this by excluding preexisting conditions and paying fewer claims. In such a market, fewer people are helped, and when they are able to get insurance, they pay a lot more for it than if they were part of an employee-sponsored plan.
The Affordable Care Act changed all of this. Companies were required to stop doing these bad things. In exchange for taking on substantially more risk of less healthy patients, they were promised more business by getting access to more potential customers.
The federal government offers subsidies to help pay the premiums for consumers whose income falls below a certain level. The law also stipulates that all people must be covered, or they face a penalty. This so-called individual mandate also guaranteed business for the insurance companies, because it led healthy people into the risk pool.
To entice insurers into the market, the ACA also offered well-established methods to reduce risk. For example, it built in protections for insurers who enrolled especially sick people. It also provided back-up payments for very high-cost cases and protected against big losses and limited big gains in the first three years.
These steps worked well in establishing a stable market for Medicare drug plans when this program started under President Bush in 2006. Competition there is vigorous, rates are lower than estimated and enrollees are satisfied. In other words, the market works well.
Congress did not honor the deal
But when the time came to pay up for risk reduction in the Obamacare exchanges, Congress reneged and paid only 12 percent of what was owed to the insurers. So, on top of the fact that the companies had to bear the risk of unknown costs and utilization in the start-up years, which turned out to be higher than they expected, insurers had to absorb legislative uncertainty of whether the rules would be rewritten.
It is no wonder that this year they have dramatically increased premiums, averaging 20 percent, to compensate for the extra risk they didn’t factor into the original lower rates. In contrast, underlying health costs are rising at about 5 percent.
Repeal and replace?
And now comes the reality of the “repeal and replace” initiatives from the Republicans. If the uncertainty of this market was large before with the ACA, it is almost unknowable under whatever comes next. Thus the initial exit of some latecomers, including United Healthcare, and undercapitalized minor entrants, such as nonprofit co-ops, is almost certain to become a flood of firms leaving the exchanges. They have little choice since the risks are too large and the actuarially appropriate rates are still not obvious given the political turmoil and changing rules.
Some in Congress seem to think that passing the “repeal” part immediately but delaying its implementation for two or three years will somehow leave everything as it is now. But this naïve notion misses the fact that the riskiness of the Obamacare individual insurance exchange markets will have been ramped up to such a level that continuing makes no sense.
Even if a company reaches break-even in the “delay” years, it will lose when the repeal is effective. If the premium subsidies now available to lower-income enrollees go away immediately and the mandate to sign up for an insurance plan disappears, then the number of people purchasing individual policies on the exchanges will drop like a rock. In fact, it is clear that even debating this scenario is likely to be self-fulfilling, since insurers must decide on their participation for 2018 by the late spring of 2017. Look for many to leave then.
When risks are too high, just exit
It is easy to leave a market when things look bad. The health plan I oversaw, although top-rated by JD Powers, was losing huge amounts when I took over. Part of the turnaround we put into place was to withdraw from a number of counties where most of the losses were occurring. The same will be the case in the ACA exchanges.
It is easy to predict that this induced uncertainty from Congress will effectively kill the exchanges even if it delays the implementation of repeal. As a result, all of the individuals who have benefited from coverage and subsidies will lose out. They will either not be able to gain insurance because of a preexisting condition, or they will not be able to afford the higher premiums.
When they leave the market, it is also easy to guess that the political and economic price will be substantial in terms of patient access, provider uncompensated care costs and employment in the health sector – a major job creator. It is hard to predict these costs, but they could be into the billions of dollars. And, the health of millions could be jeopardized.
Is there any way out of this dilemma for those who don’t like Obamacare? Clearly the first principle, since all of the solutions suggested rely on private insurers, is to reduce the level of risk for them – the opposite of what we are doing now! Even House Speaker Paul Ryan’s proposals rely on private firms which will be loath to trust the game they are asked to play because of the dramatic changes to the rules.
If we want them to continue to do the good things required by the ACA, we can’t make it so uncertain. What this means is that the mechanisms designed to reduce risk and a stable set of operating arrangements must be reaffirmed as core principles of all reform and replace efforts. This shouldn’t be hard for market-oriented Republicans, if they can leave behind their political baggage. Blind talk of repeal with no clear way to build confidence among the private insurers, which will be needed in the replace phase, leads to market failure.
Like the dog that finally caught the car it had been chasing and doesn’t know what to do, what comes next for the administration and Congress is not clear. But we shouldn’t fool ourselves to think it will be easy or painless. Otherwise, it may be that the great experiment trying to establish a viable market for individual insurance – ironically long a conservative objective – will end in the chaos of what came before.
Senate Republicans initiated their first attempt of the new Congress to roll back the Affordable Care Act, one of President-elect Donald Trump's biggest campaign promises.
On Tuesday, Sen. Mike Enzi introduced a resolution to repeal Obamacare through the budget reconciliation process, which would allow Republicans to repeal the law with a simple 50-vote majority in the Senate.
"Americans face skyrocketing premiums and soaring deductibles," Enzi said in a statement. "Insurers are withdrawing from markets across the country, leaving many families with fewer choices and less access to care than they had before — the opposite of what the law promised."
Though Obamacare has provided insurance for close to 20 million Americans, Enzi's resolution would initiate a partial repeal of the law without offering a permanent replacement plan, which some congressional Republicans said they would announce in the coming months.
For their part, Democrats plan to resist or make Republicans pay a heavy political price for the repeal of the law, President Barack Obama's signature legislative achievement.
Obama himself is set to visit Congress this week to rally support for the healthcare law. Vice President-elect Mike Pence will meet with House Republicans the same day to counter the president's visit, urging Republicans to pass their own version of healthcare reform.
For its part, the Trump transition team has maintained that it would keep in place popular Obama administration plans, but hasn't indicated which of the existing Republican replacement healthcare plans it would support.
During a Tuesday interview on MSNBC's "Morning Joe," incoming Trump counselor Kellyanne Conway pledged to craft a plan that allowed the millions of people insured under Obamacare to keep their insurance. She did not specify how any existing Republican plans would allow everyone who is covered through Obamacare to keep their insurance, but referenced familiar Republican proposals, including allowing people to purchase health insurance across state lines and promising to block-grant Medicaid.
"We don't want anyone who currently has insurance to not have insurance," Conway said.
Donald Trump tried to take credit for Sprint’s plan to create 5,000 jobs in the U.S.
The plans were in place before the election, so there is some question about how much credit he should get.
But Trump’s habit of claiming more credit than he deserves stands in sharp contrast to President Obama’s inability to communicate all of the good things that have happened during his presidency.
A report by Catherine Rampell in The Washington Post cites a poll on Obamacare: Astonishingly, about a third of respondents believe the share of Americans without health insurance has risen in the last five years. Even a sizable chunk of Clinton voters (21 percent) believes this. In fact, the uninsured rate has fallen precipitously, and now stands at an all-time low.”
Or, to cite another example, how many people know that Obama cut payroll taxes for workers in an attempt to stimulate the economy? Workers received a “Making Work Pay” tax cut of $400 ($800 for couples) that was distributed in small amounts in 2009 and 2010.
Amazingly, it was intentionally underplayed based upon an idea from behavioral economics that the tax cut would stimulate the economy more if workers were unaware of it. There is some debate about how well the tax cut worked, but the point is that very few people were even aware that they received it.
The Obama administration’s lack of effective communication with the public was a big mistake. When Bill Clinton was president, it seemed like you could hardly turn on the TV without seeing someone vigorously and effectively defending his administration, and there was certainly no shortage of people defending George Bush.
But, at least as I see it, the Obama administration did not benefit as much as it should have from effective spokespeople in the media (and where were members of the House and Senate for the past 8 years, they dropped the ball too).
There is a way in which the Obama administration communicated admirably, but unfortunately, it was mostly with policy wonks. What I will miss the most when Obama leaves office is the excellent work performed by his Council of Economic Advisers. The role of the CEA is to provide objective economic analysis that the president can use to make informed decisions.
For example, when George W. Bush was considering imposing a tariff on imported steel, the chair of the CEA at the time, Glenn Hubbard, warned him of the consequences for the US economy. Bush imposed the tariffs anyway (though they were rescinded two years later when other countries threatened to retaliate), but at least he did so with full knowledge of the potential harm it would do.
President Obama appointed top-notch economists to the CEA, and the work they have done on a variety of issues is careful and academically rigorous (for example, since August there have been reports on Active Labor Market Policies: Theory And Evidence For What Works, Labor Market Monopsony: Trends, Consequences, and Policy Responses, and The Performance of Community Banks over Time).
One piece of research, a report on Occupational Licensing, changed my mind. I have always thought about occupational licensing as a way to overcome a market failure due to lack of information about the quality of, say, medical procedures. The idea is that since consumers lack the knowledge needed to evaluate the quality of the service they receive, licensing and professional groups can police members and enforce quality standards. This is
This is useful and serves the interest of consumers, but the report convinced me it has gone too far. In many cases, licensing thwarts competition by erecting barriers to entry with no corresponding benefit to consumers, and it would be helpful to reevaluate the need for licensing using the guidelines given in the report.
What we seem to be getting from the Trump administration, which has floated Larry Kudlow as head of the CEA – he has no formal training in economics – is a slate of appointments that will provide political cover for whatever the administration wants to do. I find that distressing. One of the most important roles of the CEA is to shut down bad ideas, but it looks as if it will be transformed into a cheerleading agency for whatever Trump proposes.
I understand that macroeconomics has not performed perfectly in recent years, but it would be a mistake to use the shortcomings as a reason to throw out economic analysis altogether. There is a substantial body of both theoretical and empirical analysis of policies such as tax cuts for the rich, the imposition of tariffs, infrastructure spending, shutting down immigration, and the other things Trump has talked about. Even with policies I disagree with, there are good and bad ways to put them into place. Ignoring what economists have learned would be a big mistake.
Even with policies I disagree with, there are good and bad ways to put them into place. Ignoring what economists have learned would be a big mistake.
President-elect Donald Trump tweeted Wednesday that Republicans needed to "be careful" in their coming effort to repeal the Affordable Care Act, the healthcare law better known as Obamacare, to keep blame for its shortcomings on the shoulders of Democrats.
"Republicans must be careful in that the Dems own the failed Obamacare disaster, with its poor coverage and massive premium increases like the 116% hike in Arizona,"Trump wrote.
He added that Republicans shouldn't "let the Schumer clowns out of this web," referring to Democratic Senate Minority Leader Chuck Schumer.
"Dems are to blame for the mess," he said.
Trump's tweets came a day after Senate Republicans introduced a resolution that would roll back major parts of the ACA through the budget reconciliation process. It also came as both President Barack Obama and Vice President-elect Mike Pence headed to Capitol Hill, where the two were meeting with lawmakers of their respective parties on the future of the law.
Health-policy experts have raised concerns that a repeal of the law without a replacement would leave more than 20 million people who have received healthcare through various aspects of Obamacare without coverage. A quick repeal could turn into a political disaster for Republicans if there is no guarantee of continued coverage for those Americans.
The possibility of the blame being pinned on Republicans has not been ignored by GOP leaders. Former Republican House Speaker Newt Gingrich told CNN recently that Republicans had to make sure people do not lose coverage as part of an Obamacare repeal.
"They have to have bridges to give people a sense of comfort that they're not going to be abandoned,"Gingrich said.
And Republican Sen. John McCain told reporters"we've got to concentrate our efforts to making sure that we do it right so that nobody's left out."
Republicans leaders in recent days have been pushing the message that Obamacare is "failing on its own," citing increasing premiums, and therefore must be repealed. Trump's tweets seem to echo this message, saying the ACA will "fall of its own weight — be careful!"
Despite the premium increases, the number of people signing up for health plans through the public exchanges set up by Obamacare is the highest in the exchanges' four-year history.
Check out the full tweetstorm from Trump:
Republicans must be careful in that the Dems own the failed ObamaCare disaster, with its poor coverage and massive premium increases......— Donald J. Trump (@realDonaldTrump) January 4, 2017
like the 116% hike in Arizona. Also, deductibles are so high that it is practically useless. Don't let the Schumer clowns out of this web...— Donald J. Trump (@realDonaldTrump) January 4, 2017
massive increases of ObamaCare will take place this year and Dems are to blame for the mess. It will fall of its own weight - be careful!— Donald J. Trump (@realDonaldTrump) January 4, 2017
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The fight over the future of the Affordable Care Act, better known as Obamacare, kicked off in earnest Wednesday with both Democratic and Republican leaders laying out their cases for saving and dismantling the healthcare law, respectively.
The day after Senate Republicans introduced a resolution that would repeal a large chunk of President Barack Obama's signature healthcare law through the budget reconciliation process, lawmakers met privately with their party's leaders, who pushed their plans for the future of healthcare in America.
Vice President-elect Mike Pence and Obama met with congressional leaders of their parties on Wednesday to map out the road ahead. Each side ended the day with a more firmed-up sales pitch.
Much like Republicans' two-pronged promise to "repeal and replace" the ACA, the GOP's new path forward is marked by two distinct messages.
On one hand, Republicans emphasized that the Obamacare markets are collapsing on their own and must therefore be overhauled. On another, GOP leaders stressed the need for a "smooth" transition to a new plan that may not come as quickly as many of their constituents likely expect.
Republicans leaders have been attacking the healthcare law for years, with leaders such as President-elect Donald Trump, House Speaker Paul Ryan, and Senate Majority Leader Mitch McConnell all saying repeal of the law would be an immediate priority for the new Congress.
That gung-ho attitude seems to have cooled in recent days, as Republicans leaders have cited the need to ensure that the over 20 million people that have gained healthcare through the ACA retain their coverage.
Ryan cited the need for a "stable" transition to a replacement during a press conference Wednesday, while Pence stressed "an orderly and smooth transition to a market-based healthcare reform system."
Other Republicans lawmakers, including Sens. Rand Paul and John McCain, also emphasized the need to be cautious on repeal without a replacement plan in place.
They were echoed by Trump, who in a series of tweets on Wednesday morning cautioned Republicans to "be careful" to make sure Democrats "own the failed Obamacare disaster" instead of having any future problems pegged on the GOP.
Pence cited the increases in premiums for Obamacare exchange plans and deductible increases as reasons the law needed to be replaced. Republicans as a whole argued that even if there are disruptions or kinks, Obamacare was failing anyway, so change will be necessary.
"We're talking about people's lives. We're talking about families," Pence said.
'Make America Sick Again'
For their part, Democrats made an attempt to lay problems arising from any tweaking of Obamacare at the feet of Republicans. They came with a slogan blaring that repeal would "Make America Sick Again"— a play on Trump's "Make America Great Again" campaign moniker.
Additionally, Democrats looked to peg any lapses in care or other disruptions in the healthcare market on the GOP.
In a press conference Wednesday, new Senate Minority Leader Chuck Schumer cited concerns from health-policy experts that a Republican plan to repeal the law and delay its replacement would cause instability in the individual health insurance market and large price hikes. Schumer said such a process would cause "chaos" in insurance markets.
Obama, devoting one of his last days in office to the future of his signature legislative achievement, told Democratic leaders to start to call any changes "Trumpcare" and not to "rescue" Republicans by compromising on replacement plans, according to CNN.
Democrats also touted the successes of the law — including the lowest uninsured rate in the history of the country, the provision that prevents insurers from denying coverage based on a preexisting condition, and the elimination of lifetime limits on coverage. These aspects of the law have been overwhelmingly popular with the American public.
"They want to repeal it and then try to hang it on us. Not going to happen. It's their responsibility, plain and simple," Schumer said Wednesday.
The dueling message campaigns come at a time when the American public remains split over its provisions and its overall future. The Kaiser Family Foundation found in December that 49% of Americans want to expand or keep the ACA as it is now, while 43% of those surveyed preferred to repeal the law entirely or roll back what it does.