It’s been a while since I’ve put fingers to keyboard to write about health care policy. That’s primarily due to the fact that I’ve been a bit busy for the last four months helping consumers navigate what is left of the individual health insurance marketplace during the annual PPACA (Obamacare) open enrollment period. I say “what is left” because we have lost 19 health insurance carriers since the passage of Obamacare and the taxpayer funded Obamacare co-op ‘health insurers’ that were supposed to replace them are also now bankrupt. This rapid demolition of the individual (non employer sponsored) health insurance market place has robbed my clients not only of access to their doctors but also to their preferred hospitals. Worse yet, they have lost their health plans every year now for 4 years in a row and their health insurance premiums have increased up to 150% since the passage of Obamacare. In other words, they have been forced to endure the exact opposite of what they were promised by Barack Obama and the Democrat party.
To say the individual health insurance marketplace in this country is in a dire situation is an understatement. In fact, if something is not done now to preserve what is left of that marketplace, we will have no health insurance carriers left to choose from in 2018. United Healthcare has already exited after losing more than a billion dollars. Aetna exited after losing more than half a billion dollars and Humana now has wisely exited the marketplace as well in most states. This leaves consumers with a monopoly dominated mostly by Blue Cross entities all of which have lost hundreds of millions of dollars since the inception of Obamacare. These few remaining carriers will not continue to contribute to their own demise forever. Something has to be done now, not later and that is the impetus behind the current GOP proposal to repeal and replace Obamacare. This is also why myself and other health care policy experts like Betsy McCaughey support the proposal. It is also important to note that because President Trump is an intelligent, informed and proven leader, he too supports this plan. Why? Because he understands how dire the situation currently is and how many people will be “hurt and hurt badly” if we do not act NOW. Watch his weekly address by clicking below:
To be frank, if you’re just reading this and you’ve never been on the other end of the phone with a woman with Ovarian cancer who’s calling you for help whilst she’s lying in her bed at Northwestern Memorial hospital weeping because she can no longer receive care there, you cannot possibly understand how dire the situation is. The worst part is that for the first time in my 20 year career as a licensed health insurance broker, there was nothing I could do to help this woman. There were literally no other options for her. There were only two other carriers I could offer her and those carriers offer only restrictive HMOs, none of which provide access to her preferred hospital or any of our other teaching hospitals. There are 19 million Americans just like her who are self employed sole proprietors and as such have to purchase their own health insurance in the individual marketplace. Their choices will soon be zero if something is not done now to incentivize health insurance carriers to once again reenter the individual health insurance marketplace. Already nearly 1/3rd of all counties in this nation have only ONE health insurance carrier to choose from. Soon it will be NONE.
The American Health Care Act
So, how do we accomplish that? The Republican party has chosen to do so in three phases. Paul Ryan did a power point presentation and I must say as a guy who has given hundreds of power point presentations, Ryan did a very good job explaining the process and I encourage you to watch it by clicking on the image below. I’m going to go a few steps further by breaking it down even more in bullet points listed below the video.
As aforementioned, three phases comprise the process of developing what will eventually be known as “The American Health Care Act“. They are as follows:
1.) The first phase of the GOP’s current proposal to repeal and replace Obamacare is the Budget Reconciliation Bill released on Monday March 6, 2017 which goes a long way towards doing so. Because it deals with only budgetary issues, it only requires 51 votes in the U.S. Senate to pass which means it should pass quickly. This budget reconciliation bill accomplishes the following:
a.) Repeals $600 billion in Obamacare taxes AND the individual & employer mandates. This means we will no longer be a ‘part time nation’ and individuals will no longer be unconstitutionally TAXED by a rogue I.R.S. for simply existing and refusing to purchase overpriced, government designed and mandated health insurance plans. It also repeals the 2.35% Obamacare payroll tax hike and the 3.8% tax on unearned income (capital gains).
b.) Puts caps on Medicaid enrollment to discourage over spending and allows states to structure their own Medicaid programs in order to better serve their Medicaid recipients.
c.) Creates innovation grants for states to redevelop health insurance risk abatement programs such as high risk pools which were abolished under Obamacare. These high risk pools help isolate and better control costs for those with the highest health care costs which makes health insurance for the healthy less expensive.
d.) DOUBLES the amount one can deposit into an HSA.
e.) STOPS all abortion funding under Obamacare.
f.) Creates a tax favored status for individual health plans by providing a refundable tax credit to purchase those plans. Currently there is no tax favored status for individual health insurance plans. Tax favored status has traditionally only been awarded to employer sponsored group health insurance plans. Ever try to deduct your health insurance premiums as a sole proprietor? Or for that matter deduct any of your medical costs above 10% of your A.G.I.? It isn’t possible now. If the American Health Care Act passes, sole proprietors will finally enjoy tax favored status for purchasing their own individual health insurance. It’s about damned time! In addition those who are not offered coverage via an employer will have a portable refundable tax credit to help pay for health insurance and a refundable tax credit is NOT a ‘subsidy’ that you did not EARN. It is simply a way of you keeping more of YOUR money by not paying as much in taxes so that you can use it to pay for health insurance. It is NOT a ‘new entitlement’ Rand Paul… but I digress.
g.) Covers preexisting conditions but rightfully penalizes those who attempt to game the system by waiting until they are sick to purchase health insurance. Such conduct increases health insurance costs for everyone and that is why that conduct was originally prohibited under 1996 HIPAA law. That law outlined specific waiting periods before one could qualify for coverage for preexisting conditions if they did not keep consistent health insurance coverage in place. There were also financial penalties for those who attempted to game the system that way. Obamacare allowed anyone who claimed a ‘loss of income’ to game the system throughout the year by jumping on and off health plans which resulted in massive losses to health insurers and their subsequent exit from the marketplace. That conduct MUST stop and the only way to do so is to penalize such bad behavior and no Rand Paul the 30% penalty (which is far too low) is not “another individual mandate”! It is instead proper management of risk. The Obamacare individual mandate was an unconstitutional IRS enforced penalty for simply existing and refusing to purchase overpriced, government designed and mandated health insurance! Without such proper management of risk which includes the aforementioned penalties for bad behavior we will have more of the same and by that I mean fewer choices, higher prices and a rapid collapse of the entire individual health insurance marketplace. “NeverTrumper” Rand Paul was WRONG about President Trump during the election and he is WRONG about the American Health Care Act. Period.
2.) The second phase will be performed by our new H.H.S. Secretary Dr. Tom Price who will roll back the massive pile of regulations that were put in place by the fourth branch of government known unaffectionately as the ‘administrative state’. There are 1,400 references in the Obamacare legislation that state “the secretary may” or “the secretary shall” so Dr. Price can fix or roll back a lot of things on his own as our new H.H.S. Secretary.
3.) The third phase is the final repeal legislation which will take an act of congress requiring 60 votes. It will take longer because of this to pass and be signed by President Trump but no longer in my estimation than summertime. This is so because health insurers have to begin providing their 2018 plans and prices for review by state and federal regulators in the early fall of this year. So, there isn’t a lot of time for this final bill to pass. Vice President Mike Pence stated that we could see this legislation by April and I concur. This legislation will include all other things that we Conservatives want in a repeal and replace legislation. Those things include:
a.) “Selling across state lines” a.k.a. repeal of the McCarron Ferguson Act which requires and act of congress and 6o votes and cannot be done via the budget reconciliation process.
b.) Repeal of the Obamacare mandates on health insurers so they can offer new plans that are less expensive and do not include all of the onerous Obamacare mandates, many of which required coverage for non medically necessary expenses like sexual reassignment surgery, maternity for 64 year old women and so much more. This of course also requires an act of congress and 60 votes and cannot be done via the budget reconciliation process.
c.) Association health plans so that groups of people who work in the same field can pool together and purchase lower priced, group health insurance plans.
d.) Medical Malpractice Reform a.k.a. “Tort” reform.
e.) The income threshold for the deductibility of medical expenses drops from 10% to 5.8% which will provide $85 billion in tax relief to individuals
f.) Other parts of Dr. Tom Price’s reform legislation originally released in 2009 entitled “Empowering Patient’s First” which is the best piece of health care reform legislation I have ever read and I have read many. This is the template for the final repeal bill along with Paul Ryan’s “A Better Way” which he also worked with Dr. Price in devising.
But Steve! Why can’t we just suspend the filibuster and repeal and replace the whole thing all at once?! Because there is not enough political will to do so in the U.S. Senate and Senate Majority Leader McConnell has stated that he is not willing to do so. Why? Because there are political ramifications for doing so which could easily come back to haunt us in the future if we lose our narrow Senate majority. Just ask Harry Reid. Why expose ourselves to that risk if there is another way forward?
In conclusion as Dennis Prager said so eloquently “the BEST is the ENEMY of the BETTER“. In other words when you spend all your time screaming for the best you inhibit the progress currently being made on the better and the American Health Care Act is far, FAR better than Obamacare. As Dan Proft also said so eloquently, “instead of WAIVING the flag, help ADVANCE the flag.” This is the BEST shot we have had in 7 LONG years to repeal and replace Obamacare. Please everyone, let us work TOGETHER to get this done!
March 21, 2017 UPDATE: 7 EXCELLENT manager’s amendments added to President Trump’s American Health Care Act thus far:
1.) End most of Obamacare taxes THIS year, not next year.
2.) BAR any new states from expanding Medicaid.
3.) Establish a WORK REQUIREMENT for Medicaid enrollee adults who aren’t disabled, elderly or pregnant; states that institute a work requirement would receive a 5% extra administrative payment.
4.) Give states the option to receive Medicaid funding in a BLOCK GRANT or receive it in the form of per-capita allocations.
5.) Increase the growth rate of capped federal payments to the states for elderly and disabled beneficiaries by the medical component of the consumer price index plus one percentage point.
6.) Delay implementation of the Obamacare excise tax on high-value employer health plans for an additional year, from 2025 to 2026.
7.) Establish a reserve fund of at least $75 billion for tax credits to help Americans between the ages of 50 and 64 better afford health insurance with larger tax credits. The original amount was $4,000 for those over the age of 60. Read all the amendments here.
For an excellent fact based comparison between the PPACA (Obamacare) and the AHCA -American Health Care Act – see this > Kaiser Family Foundation comparison grid.
UPDATE April 26 2017: MacArthur amendment added to allow states to waive both the Essential Health Benefits and Community Rating provision.
UPDATE May 3, 2017: Upton/Long Amendment added to provide an additional $8 billion for states to establish risk mitigation programs for applicants in the individual health insurance market who are otherwise uninsurable and do not keep consistent coverage in place.
P.S. To Daniel Horowitz. SHAME on you sir for writing this hyperbolic TRIPE at Conservative Review. The Budget Reconciliation bill which you shamefully refer to as “Obamacare 2.0” is NOT a ‘gift to illegals‘. You would know that if you had linked the ENTIRE Budget Reconciliation bill to your ridiculous piece. Instead, you linked only a small part of the actual bill leaving out 66 pages, including pages 19 & 20 which specifically requires PROOF of CITIZENSHIP or LEGAL residency status before receiving benefits. No one eats their own like Republicans aye Daniel? Pathetic.