Tuesday, June 27, 2017

The Senate Republican Obamacare Repeal and Replace Bill Will Not Reduce the Cost of Health Insurance

At the core of Republican objectives for the "repealing and replacing" of Obamacare is bringing down the cost of health insurance––not just the premiums but the out-of-pocket costs people pay as well.

If implemented, the Senate Republican bill may actually end up increasing costs compared to Obamacare.

Clearly, if Republicans cut $408 billion in current tax credits and other insurance assistance, as the Congressional Budget Office (CBO) has estimated, someone is going to be getting less and their net cost will be more.

But there is an even bigger factor at play here.

Readers of this blog are likely tired of my continually reminding them that only 40% of the Obamacare subsidy eligible ever signed up leading to a risk pool with too many sick people and too few healthy people to pay their claims. The Republicans are only going to make this problem worse.

My discussion with health plan actuaries has led me to conclude that Obamacare's expensive health plans could cost as much as 40% less if we had seen the industry objective of 75% of those eligible for a subsidy sign up.

The lesson for Republicans is that if they really want to reduce costs (premiums + out-of-pocket costs), their first objective needed to be assuring themselves of getting a bigger percentage of the pool to sign up––something a lot closer to the 75% objective.

But what do Republicans want to do in the Senate bill?

First they are proposing dramatically increasing the size of the potential risk pool by rolling back Medicaid and then booting those people into the individual health insurance market. Then they want to give those people a reduced premium subsidy. Then they want to cut their benefits by tying the subsidy to a 58% actuarial plan––effectively a high deductible Bronze plan.

Then they want to eliminate any cost sharing assistance for all of these former Medicaid people being moved into the insurance market as well as those low-income people already eligible for help with out-of-pocket expenses.

How many low-income people, at 100% of the federal poverty level making $12,000 a year, for example, will be willing to buy a $7,000 deductible plan? Other than the sickest among them?

Then they want to entirely eliminate the premium subsidies for those making between 350% and 400% of the federal poverty level.

So, when the day is done we would have millions more people in the potential individual insurance market being subsidized at levels far below what we have in Obamacare.

Millions more people being offered lousier plans.

Here's the key question: Given that only 40% of the subsidy eligible signed up under Obamacare, will the proposed Senate actions make that 40% take-up rate better or worse?

For the life of me, I can't see how it can't be a lot worse. And, if we have an even worse sign-up rate than 40% we can only have relatively fewer healthy people in the pool to pay the claims of the sick.

That means costs would be even higher under the proposed Senate bill than what we now have in Obamacare.

The CBO did say that average premiums could be 30% less in 2020. But the CBO also went on to say the "most important" reason was the "smaller share of benefits paid by benchmark plans."

Elsewhere in the CBO report, the CBO seems to be coming to the same conclusion I have:
Under this legislation, starting in 2020, the premium for a silver plan would typically be a relatively high percentage of income for low-income people. The deductible for a plan with an actuarial value of 58% would be a significantly higher percentage of income––also making such a plan unattractive, but for a different reason. As a result, despite being eligible for premium tax credits, few low-income people would purchase any plan, CBO and JCT estimate.
The Senate Republicans look to me to be going backwards with their Obamacare "repeal and replace" plan.

Now, some will argue that the state waiver provisions of the Senate bill could lead to a much more efficient health insurance market. They may be right. In fact, in my mind the state's ability to do what the Republicans have not done here, craft a much more efficient market, could be the silver lining.

But it would take 50 states to do the job the Congressional Republicans would have not done for that to happen.

So, how should this be fixed?

See my op-ed at CNBC.

Wednesday, May 17, 2017

Here's Who Gets the Blame If Obamacare Fails (Hint It's Not Obama)

With Obamacare's individual health insurance market struggling, the debate has shifted to who takes the blame if it fails.
 
Supporters of the law are willing to admit that it is failing but that it's Trump's fault.
 
Trump's constant undermining of the ACA is giving his opponents ammunition in the blame game. 
 
 
 

Tuesday, May 9, 2017

How ObamaCare Could Become ZombieCare

The individual health insurance market is becoming more unstable as last year's rate increases are beginning to take their toll on the health of the risk pools––particularly among the almost half of the consumers in the market that are not eligible for subsidies.

The Trump administration is making an already bad situation worse.

President Trump is wrong when he says the system will suddenly "explode" forcing Democrats to beg him to fix Obamacare––actually it will be mostly his constituents who will be begging for relief.

See my op-ed at CNBC.com

Thursday, March 30, 2017

Is Anthem Exiting the Obamacare Exchanges? The Trump Administration Needs to Decide if They Are In or Out

Bloomberg is out with a report that Anthem may exit most of their Obamacare exchange markets next year:
Anthem, Inc. is likely to pull back from Obamacare’s individual insurance markets in a big way for next year, according to a report from analysts who said they met with the company, a move that could limit coverage options for consumers at a politically crucial time for the law.

Sunday, March 26, 2017

Trump and the GOP Should Face It: There's Only One Option Left to Fix Health Care

I've been saying for years that Obamacare will never be "repealed and replaced," but it will have to be fundamentally fixed, and that fix will inevitably have to be bipartisan.

But with the developments of the past week, I learned something new: Trump and the Republican leadership are ideologically closer to most Democrats than they are to their own far right wing in the House and Senate.

See my post at CNBC.com


Monday, March 13, 2017

Let’s Not Let the Republicans Make the Obamacare Replacement Debate About the Congressional Budget Office—Fewer People Will Be Covered and Many Will See Big Cost Increases

If you carve a huge chunk of revenue out of Obamacare and shift more subsidies to the middle class it should not be a surprise that the lower income folks will pay the price


The Congressional Budget Office (CBO) has estimated that 14 million of people would lose coverage in 2018, 21 million in 2020, and 24 million in 2026 if the House Republican plan is allowed to significantly amend the Affordable Health Care Act (Obamacare).

In my last post, I called the House Republican bill "mind boggling" for the negative impact I believe it would have on the number of those uninsured and the viability of the individual insurance market. Guess the CBO agrees with me.

The CBO's report came after the Brookings Institute estimated 15 million people would lose Medicaid and individual health insurance coverage at the end of ten years under the Republican plan. The arguably more business oriented S&P Global estimated between 6 million and 10 million people would lose coverage between 2020 and 2024.

Republicans are jumping on the CBO estimate reminding us that the CBO’s Obamacare projections haven’t been perfect in the past.

This is not the issue.

What Republicans are proposing, and how those proposals will impact how many people have insurance in this country, is the issue.

Tuesday, March 7, 2017

The House Republican Obamacare Replacement Plan: Mind Boggling

It won't work.

Obamacare works for the poorest that have affordable health insurance because all of the program's subsidies tilt in their favor.

Obamacare doesn't work well for the working and middle class who get much less support––particularly those who earn more than 400% of the federal poverty level, who constitute 40% of the population and don't get any help.

Because so many don't do well under the law, only about 40% of the subsidy eligible have signed up and, with so many insurers losing lots of money, the scheme is not financially sustainable because not enough healthy people are on the rolls to pay for the sick.

To fix it, House Republicans are proposing a very attractive program for the better off and, with the Medicaid rollback, gutting the program for the poor to be able to pay for it.

Wednesday, March 1, 2017

The Cockroach Proposal––Selling Insurance Across State Lines

I call support for giving insurance companies the ability to sell insurance across state lines the cockroach proposal.

As bad as it is, you just can't kill the damn thing!

Last night, President Trump once again listed this idea in his address to Congress as one of his health care talking points.

Here is a post about the idea I published on this blog a year ago in the midst of the Republican presidential primary:

Any candidate that suggests such a scheme only shows how unsophisticated he and his advisers are when it comes to understanding how the insurance markets really work––or could work. 

I gave a speech to 750 health insurance brokers and consultants in DC last week.

When selling health insurance across state lines, something Trump and a number of other Republican presidential candidates have been pushing, was mentioned the audience literally laughed. That's what health insurance professionals who spend their days in the market think of it!

Tuesday, February 28, 2017

Obamacare's Insurance Exchanges Are Self-Destructing––and That is Why Obamacare Needs to Be Fixed in 2017

Obamacare was self-destructing the day before Donald Trump was elected, and the Republican victory, with their talk of "repeal and replace," has only accelerated things.

Aetna's CEO recently said that the Obamacare insurance exchanges are in a "death spiral."

Cynthia Cox, of the "non-partisan" Kaiser Family Foundation responded that the insurance exchanges "are not really in a death spiral yet." She would know more than the Aetna CEO whose company lost $450 million in the Obamacare individual market last year.

Monday, February 27, 2017

Rethink 'repeal and replace'

This is an op-ed that I authored in USA Today––two years ago.

Wouldn't change a word of it:

Rethink 'repeal and replace': Column
Robert Laszewski
7:29 PM ET January 14, 2015

Obey health care customers, not political orthodoxy,  when proposing Obamacare fixes

The Republicans seem determined to "repeal and replace" Obamacare. They simply cannot bring themselves to consider fixing what they have come to revile.

Being against the president's namesake legislation has been a big winner in at least two out of the past three elections. But now that Republicans are in charge of the Congress, just attacking Obamacare won't work. They have to put something on the table.

However, they need to come up with something better. An effort to repeal and replace Obamacare would be a huge political mistake. There is no issue that presents a worse political minefield than health care. Each and every potential reform means somebody will be losing something and will be very motivated to stop it.

See the remainder of the op-ed here. 

Wednesday, February 8, 2017

Reports of the Demise of Obamacare Repeal and Replace Are Greatly Exaggerated

Many recent press reports have centered around the notion that Republicans are stuck in the mud trying to get their repeal and replace promises moving.

That line appeared to be reinforced over the weekend when President Trump said, in a pre-Super Bowl interview, that the process could draw out into next year. My sense is that what Trump was talking about was the fact that the whole process, that includes implementing the replacement, could take well past 2017. Trump, never one for getting the details right, was taken literally by the press looking to write stories about how the whole process was foundering.

Speaker Paul Ryan quickly countered in his press briefing that Republicans will legislate a repeal and replace of Obamacare this year.

As I have reported to you a number of times, that process, especially the replace part, will be very difficult to achieve given the need to have at least eight Democrats onside with a complete replace bill.

But, I can also tell you that the repeal part is still on track to occur this spring, as I have been reporting for some time, likely in March.

Tuesday, January 24, 2017

How Republicans and Democrats Could Come to a Bipartisan Compromise Over Obamacare

It's not a question of whether or not Republicans and Democrats will come to a compromise over replacing Obamacare.

The Republican attempts to repeal and replace aside, the law is unsustainable in its current form.

Since it will take 60 Senate votes, and the Republicans only have 52 seats, there is no way we can get to a solution to the Obamacare conundrum without a bipartisan compromise.

So, what might that look like?

See my op-ed at CNBC.com 

Saturday, January 21, 2017

Is the Trump Administration on Its Way to Its Own "If You Like Your Health Plan You Can Keep It" Fiasco?

On Friday night the administration issued an executive order giving Trump administration appointees enormous flexibility in modifying how the Obamacare individual health insurance market works.

Specifically, President Trump has given his administration the power "to waive, defer, grant exemptions from or delay the implementation of any provision or requirement of [Obamacare]."

The administration has not been clear about just exactly what it is they now want to do.

Their action raises a basic question: Why grant this flexibility if it is not their intent to materially change the way Obamacare works in the individual health insurance market?

Tuesday, January 17, 2017

"Repeal and Replace" Obamacare: How Will All of This Sort Itself Out?

Will the Republicans Follow Through on Their Promise to Repeal Obamacare?
Yes.

You have probably been reading press stories that bring into question whether or not Republicans will actually keep their campaign promise to "repeal" the Affordable Care Act (ACA). In fact, there is much discussion going on among Congressional Republicans about repealing key funding elements of the ACA as part of a budget process prior to having a replacement ready to pass the Congress.

But, they will defund the core elements of Obamacare sooner rather than later on their way to replacement. They have to. Repealing Obamacare as a first priority was a core campaign promise. If Congressional Republicans and President Trump fail to do this they will suffer a precipitous drop in credibility with their base.

Do Republicans Have a Replacement Plan?

Friday, January 13, 2017

Fixing Health Insurance Reform is a Zero Sum Game: The Only Way Republicans Can Lower Costs is to Provide Less Coverage––Wrong!

Don't Underestimate the Value of Rearranging the Deck Chairs

Anna Wilde Mathews and Louise Radnofsky have a well-done story in yesterday's Wall Street Journal. They point out that a relatively few sicker people account for most of the cost of care:
Congress has begun the work of replacing the Affordable Care Act, and that means lawmakers will soon face the thorny dilemma that confronts every effort to overhaul health insurance: Sick people are expensive to cover, and someone has to pay.
That is right.

But, this statement would seem to infer, as I have observed the general discussion about fixing Obamacare has often inferred, that there is a certain cost to health insurance and that Republicans can rearrange the deck chairs any way they want but the cost will be the same.

Wrong!

What I think this story, and the general discussion about how to cover people in the future is missing, is that Obamacare is so flawed that by itself it is manufacturing plan premium levels that are at least 30% to 40% higher than they need to be.

Thursday, December 1, 2016

"Republicans Are Being Awfullly Naive" About the Transition Period in "Repeal and Replace"

"To have an orderly ["Repeal and Replace"] transition, I think Republicans need to reimplement the risk corridors by February or March. That is the only chance they have. I don't think there is a single Republican member of Congress who has thought about this. I am reading all of these quotes and they're completely blind to the fiasco on the individual market that they're about to create."

Read my complete interview with Sarah Kliff at Vox.


Monday, November 28, 2016

Obamacare Repeal, Transition, and Replace: The Republicans Have a Tiger By the Tail

I wouldn't be surprised to see Obamacare more fixed than replaced before this is over. I'm not sure Republicans have really come to grips with the daunting task they face for both replacing Obamacare and managing through what will certainly be a problematic transition.

See my post at Forbes


Thursday, November 17, 2016

Will It Take a Crisis to Replace Obamacare?

My interview this morning with Steve Inskeep on NPR's Morning Edition

We discussed repeal and replace, Republican proposals for replacement, the fundamental differences between Democrats and Republicans on health insurance reform, and the outlook for what is likely to happen.
Avoid having to check back. Subscribe to Health Care Policy and Marketplace Review and receive an email each time we post.

Blog Archive