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!

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.

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. 

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.

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 

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?

"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?

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.

"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.

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

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.

It Isn't News That Trump Wants to Keep the Pre-Existing Condition Reforms----He Said So in February

Far from a news scoop, Donald Trump first said that he would preserve consumer protections against health insurance pre-existing conditions last February.

See my post at Forbes

"Now What Do We Do?" Trumpcare?

Of course, "Now what do we do," is the famous line from Robert Redford's character in The Candidate, stunned by his victory and confused about what to do next.

But it doesn't really apply here.

A few thoughts as all of this sinks in:

Obamacare: Dead Law Walking!

There is no doubt that Obamacare is dead.

The only question is just exactly how Republicans will get rid of it.

While Republicans have the votes they will need in the House, Republicans will not have the 60-vote Senate supermajority necessary to get rid of all of it. Therefore, they will use their slim Senate majority and Senate budget reconciliation rules. It takes just 51 Senators to make spending decisions.

There are two routes they will consider:

The Good and the Bad of Obamacare

See my comments on CNBC today using this link.

In this interview, I mentioned the information a broker in Naples Florida sent me regarding some of their customers buying Obamacare compliant individual health insurance.

Here are the broker's 2017 examples:

Family of four, mom and dad age 40, two kids. Lowest Bronze annual premium $13,176. Deductible $7,150 single, $14,300 family. Income $130,000. Not eligible for subsidies. Exempt from the individual mandate because their premium exceeds 8.16% of their modified adjusted gross income (MAGI). The broker points out that their premium plus one deductible totals $20,236––16% of MAGI––the point at which they can begin to collect on claims (there may be some nominal first dollar benefits such as a wellness benefit).

Single woman age 45. Lowest Bronze premium $4,968. Deductible of $7,150. Income of $50,000. Not eligible for a subsidy. Exempt from the individual mandate because her premium exceeds 8.16% of her MAGI. Broker points out that her customer's premium plus the deductible totals $12,118––24% of the customer's MAGI––the point at which she can begin to collect on claims.

Couple ages 64 and 61. Lowest Bronze premium $20,004. Deductible of $7,150 single and $14,300 family. Income of $150,000. Not eligible for subsidies. Exempt from the individual mandate because premium exceeds 8.16% of MAGI. The broker points out that the total of their annual premium and one deductible is $27,154––18% of their MAGI––the point at which they can begin to collect on claims.

Premiums obviously vary by market. Rather than taking my word for it, I suggest you go to HealthCare.gov and check out a few markets. You do not need to log in to browse the plan offerings. You need only insert a zip code and age and family status, as well as to enter a big income like $100,000 to be assured of getting the unsubsidized price no matter their status. The unsubsidized price is the price that half of the people buying Obamacare compliant plans are paying.

Will the Administration's Making Good on Billions of Dollars Due the Health Plans Solve Obamacare's Exchange Problems?

Amy Goldstein at the Washington Post is out with a story reporting that the Obama administration is looking to use an obscure federal law to pay billions of dollars in Obamacare risk corridor liabilities to participating insurance companies.

Detailed Obamacare Blue Cross Enrollment--About Half the Enrollment Doesn't Get a Subsidy!

About half of those buying Obamacare compliant individual health plans do not receive a subsidy.

I was struck by this comment coming from one of Obamacare's most vocal supporters, Vox's Sarah Kliff:

Obamacare's insurance expansion is on the path to looking like other safety net programs we know, offering limited services to a predominantly low-income population.

She might be right about Obamacare devolving into a low-income style safety net program. But she couldn't be more wrong about the people who have no choice but to buy Obamacare if they want health insurance.

In the September 2016 issue of the trade publication, The AIS Report on Blue Cross and Blue Shield Plans, reporter Steve Davis did something no other reporter I know of has done. He called a number of Blue Cross plans and asked how many of their Obamacare individual health insurance policyholders get a subsidy and how many do not. His report covers 26 state Blues plans.

Big Obamacare Rate Increases Don't Reflect What People Actually Pay––Wrong!

How many people in the individual health insurance market don't get a subsidy to pay for their health insurance, or wouldn't be eligible for one it they did buy it?

Here is what an Obama administration spokesperson said yesterday about all of the big 2017 Obamacare rate increases: "Headline rate increases do not reflect what consumers actually pay," said Kathryn Martin, acting assistant secretary for planning and evaluation at the Department of Health and Human Services.

What she is once again referring to is that 85% of those getting subsidies could get their rate increases eliminated or blunted by the subsidies. It is worth pointing out that the consumer only avoids the big increase if they are in, or move to, the lowest or second lowest cost Silver Plan.

Staying with a higher priced plan they might now be in will not avoid the increases.

And, once again, the administration doesn't tell us that moving to a lower price plan may require higher deductibles and co-pays and more limited provider networks.

But more importantly, why does this administration, and so many Obamacare supporters that parrot this line, continue to ignore the many millions of people who do not get a subsidy and have no choice but to take the full whack from these rate increases if they want to stay covered?

"The Blues Have Deep Reserves and They'll Be Here Long After We're Gone"--Here's How It Really Works

The denials about just how bad the Obmacare exchange situation is keep piling up.

Maybe the most uniformed and naive was this comment in the Dallas Morning News:

"The Blues have deep, deep reserves, and they'll be here long after we're gone,"[Sabrina] Collette [a research professor at Georgetown University], said. "They're probably calculating they can ride out this rocky time and emerge with a dominant position."

In the same article it was reported that local Dallas HMO Scott and While Health Plan is withdrawing from the exchanges. The article also pointed out that Texas Blue Cross has lost more than $1 billion on the exchanges over the last two years and is now seeking a rate increase of 60% for 2017.

These Blue Cross plans, particularly the community-based not-for-profits like Texas, do not have a bottomless bank account.

Latest Proposals to Fix Obamacare Come Up Way Short--The Insurance Industry Trade Association Joins the List of Deniers

In my last couple of posts, I have lamented the degree to which prominent Obamacare supporters have been denial about the trouble The Affordable Care Act exchanges are in. Now we can add the insurance industry trade association, AHIP, to the list.

With the Obamacare exchange exits by the publicly traded health plans, the not-for-profit Blue Cross and regional HMOs now form the backbone of the Obamacare exchanges. I am not predicting any imminent exits on their part, but another year will be a different story if this isn't fixed. If you look at the size of their statutory surplus accounts and their staggering ongoing losses in the face of reports the risk pool continues to deteriorate, it's a simple exercise in math so see what's coming.

The clock is just plain ticking on the time left to fix Obamacare.