Friday, March 10, 2017

Looks Like Federal Government Control of Healthcare Is Here to Stay

I'm glad people who understand legalese have figured out what the new Republican healthcare bill says.

The federal government still mandates what your policy will include.
While some of the regulations are tweaked with more flexibility, the 800-pound gorilla in the room — guaranteed issue mixed with community rating* (which is responsible for almost all of the premium hikes) — is left in place. Nor does this bill repeal the mandated essential benefits, which require insurers to cover a specific number of people and sex change operations, maternity care for men, etc.
And even the repeal of actuarial value “metal” requirements (platinum, gold, silver, bronze) — the most positive of the outlined changes — would not take place until the 2020 plans. 
Instead of penalty money going to the government, your healthcare insurer will be required to charge you 30% more for your coverage (Sec. 2711).  This will undoubtedly be just as effective as the Democratic penalties were in forcing young, healthy people to pay sky high prices for medical coverage.
By maintaining guaranteed issue, healthy individuals will just go without insurance, and then if they get sick, anyone can still demand a policy. It’s worth taking the risk of paying an extra 30 percent when you really need it in exchange for avoiding paying the equivalent of another monthly mortgage for nothing when healthy.
Moreover, the new premium penalty for those gaming the system won’t begin until 2019, but the individual and employer mandates will be repealed immediately. This will further hurt the solvency because, again, the bill would maintain the exchanges and the regulations. Therefore, higher prices mixed with fewer people paying into the system will result in a nightmare scenario.
I'm not sure that mandate will meet Justice Roberts requirement that it's only constitutional if it's a tax. Not too many taxes go directly to private businesses. Wouldn't it be ironic if Obamacare was constitutional but Trumpcare is not?

Lots of money will be lobbed at the states for Medicaid expansion.
As for Medicaid, the draft plan grandfathers in the entirety of the Obamacare expansion. Worse, it doesn’t freeze future enrollment for another two years, which will incentivize states to massively expand Medicaid before 2020. It also throws another $10 billion to states that never expanded Medicaid.
Federal taxpayer subsidies to health insurance buyers will continue in a fire hose manner.
. . . this House bill replaces the income-based subsidies with age-based subsidies – ranging from $2,000 for younger people to $4,000 a year for older enrollees, and as much as $14,000 for a family. It is a massive new entitlement for middle-income and lower-income Americans. It would apply in full for families earning up to $150,000, and then phased out $100 per thousand dollars earned over that threshold. Thus, a family could theoretically get some sort of subsidy well into the $200,000-plus income level. [emphasis added]
Does anyone think this will bring down healthcare costs? Or that limited healthcare insurance options will increase? Or that people angry about Obamacare will be happy about Trumpcare?

The key takeaway is that there is to be no repeal of the essential idea of Obamacare that the federal government should regulate how healthcare functions in the United States. Both parties and their leaders now agree with this. If the Democrats are smart, they will vote for this and then tweak it back to Obamacare when they get in power.

The only hope, and it is mighty slim, is voter anger. Rising healthcare insurance costs and dwindling choice of healthcare providers may keep that anger strong. But where is an angry voter to go?
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*Community Rating: "A rule that prevents health insurers from varying premiums within a geographic area based on age, gender, health status or other factors."

8 comments:

MAX Redline said...

I'm not sure that mandate will meet Justice Roberts requirement that it's only constitutional if it's a tax. Not too many taxes go directly to private businesses. Wouldn't it be ironic if Obamacare was constitutional but Trumpcare is not?

Yes, there's so much that in many ways seems worse than the original. What they should be doing is repealing Obamacare and starting over. But that's too much like work.

I'm happy to be getting out from under Obamacare, and I won't be signing up for Rinocare. I got my Medicare card this week, and signed up for a plan that covers the so-called "doughnut hole" as well.

Since I paid into Medicare for so many years, I don't look at it as a subsidy. And unlike the situation with Obamacare, we won't owe a couple of thousand dollars to the IRS because we somehow underestimated our future income. That's a darned stupid rule.

T. D. said...

Good for you, Max. I'm on Medicare and this is the first year my insurance rate has gone up a chunk. So, I think the effect is buffered.

I agree with you that the IRS payment system was a mess. This is better because it's a 1 year 30% penalty. And just for that reason, as Daniel Horowitz says, lots of young people will choose to forego high rates now and pay the 30% penalty later. If you put aside a third of year's payments and spent the rest on what you want, you would already have the penalty paid off.

The other good thing is the dropping of the employer mandate. That will be good for business expansion. A friend of ours hasn't expanded his business which is roaring because he didn't want to grow and come under the 50 employees regulations.

But, it should have a horrific impact on people who will lose their employee coverage and insurance companies who will still have to cover high cost customers and have less healthy customers paying in.

It certainly doesn't look like it will avert the coming train wreck in healthcare insurance coverage and the U.S. healthcare system.

MAX Redline said...

Very good point about the effects of dropping the employer mandate on business, TD, but yes, it means that a lot of people would lose their employer-paid coverage. Obamacare was designed to fail, in order to scoot us all along into a single-payer, national healthcare system.

The Rinocare bill will push us further in that direction.

Under Obamacare, young folks were supposedly going to have to buy health insurance, which would cut the costs of caring for sick people. But then it emerged that they could stay on Mommy and Daddy's plan through age 26. And the 27-40 year-olds chose to just pay the penalty at tax-time. As expected.

T. D. said...

"Obamacare was designed to fail, in order to scoot us all along into a single-payer, national healthcare system.

The Rinocare bill will push us further in that direction."

I think you're right, Max. The house is going to come tumbling down even quicker under this mess.

Why not just go back to what it used to be like and let most people decide their own healthcare and use federal funds and regulatory power on targeting the real issue. Spend all those government billions now propping up the whole structure on subsidizing either poor people or hospitals and doctors who take care of them?

MAX Redline said...

Exactly right, TD - we spent a lot less on health insurance, out-of-pocket, deductibles, & co-pays before Obamacare and its myriad empty promises. I'd prefer to return to that. And I'm completely unimpressed with RinoCare.

This is what happens when government insinuates itself into 1/6 of the nation's economy. But the Rinos seem to think that they should keep parts of it rather than just repeal the whole hot mess.

I tried to "enter a life-change" on their healthcare.gov website yesterday. Naturally, that didn't work, so I ended up calling them. I want to keep my wife on the Kaiser "Gold" plan and remove me from coverage entirely - I'm pretty healthy, and it won't be long before I "age into" Medicare, so to heck with it.

Got that done by phone, supposedly. We'll see. But to cover her, it'll take only about half of a mortgage payment. Better that, though, than having to pay more than our mortgage to cover both of us.

Still waiting to see that $2500 savings that Barry promised....

T. D. said...

Yes, most Americans thought pretty well of their healthcare before 2010. But, Dems had to "fix" the whole system to help those not covered instead of just helping the people not covered.

Now, the Republicans and Trump admin are adding to "unfulfilled" claims that Obama made famous.

In his February 28, 2017, speech Trump added: "The way to make health insurance available to everyone is to lower the cost of health insurance, and that is what we are going to do." (https://www.youtube.com/watch?v=hPWS-CN_Xi0#t=41m55s)

On the Republican plan (American Health Care Act) HHS Secretary Tom Price added: "I firmly believe that nobody will be worse off financially in the process that we're going through." And "So, there's costs that need to come down, and we believe we're going to be able to do that through this system." (https://www.youtube.com/watch?v=X-HNVqPgRF4)

Sigh. The promises keep coming. I don't believe costs are going to come down. They're going to keep going up as long as you force health care providers to charge sick people and healthy people the same rate for health insurance with no factoring of health risks.

This is like saying insurance rates for all drivers have to be the same. For risky drivers their rates will come down. For most drivers, their rates will go up. A basic law of economics is that shared costs are only good for people who need more or take more than others.


MAX Redline said...

I couldn't agree more, TD!

T. D. said...

Always heartening to be on the same page as you, Max! :-)