Unfortunately, while many 2016 presidential candidates have backed the “repeal” part of the “repeal and replace” equation, few have addressed how they would start over.
They would do well to follow the advice of The Heritage Foundation. The think tank’s soon-to-be-released policy handbook for candidates, Solutions 2016, lays out the “then what” reforms candidates should be talking about:
- Remove regulatory and policy obstacles that discourage choice and competition.
- Encourage personal ownership of health care by reforming the tax treatment of health care.
- Transform health care coverage for low-income Americans by reforming Medicaid as a true safety net and glide path out of poverty.
- Modernize Medicare program to meet the demographic, fiscal, and structural challenges that threaten to bankrupt the system.
High-deductible health plans (HDHPs) are increasing in prevalence in both the group and individual markets. In the group market, rising insurance costs make HDHPs more attractive to employers. Employers now spend an average of $5,179 and $12,591 on health insurance premiums for their employees in individual and family plans, respectively. A recent Henry J. Kaiser Family Foundation of employers shows that deductibles have increased 67 percent since 2010. Nearly one-quarter of workers are enrolled in an HDHP, up from 4 percent in 2006. Nearly half of workers are covered by an insurance plan with a general annual deductible of at least $1,000 for individual coverage.
In the individual market, almost 90 percent of enrollees in Affordable Care Act Marketplaces are in a plan with a deductible above the amount that qualifies a plan as an HDHP: $1,300 for an individual and $2,600 for a family (not including cost-sharing reductions) in 2015. The increasing number of enrollees in and prevalence of HDHPs raises a number of policy questions.
With the results now in from the Affordable Care Act’s third open enrollment period, it’s getting increasingly difficult to sugarcoat the extremely low numbers of enrollees relative to original projections. The 12.7 million people who signed up for an exchange plan amounts to just half as many enrollees as was projected by government and private sector research organizations when the ACA passed.
The Rand Corporation predicted 27 million, the Centers for Medicare and Medicaid Servicespredicted 24.8 million, the Urban Institute predicted 23.1 million, and the Congressional Budget Office predicted 21 million.
N.C. Insurance Commissioner Wayne Goodwin this week became the latest public official to warn of the harms wreaked by the Affordable Care Act, saying the federal insurance law has destabilized the state’s insurance market and now threatens to leave some residents without options for health insurance.
Goodwin expressed his concerns in a letter sent Tuesday to Sylvia Burwell, secretary of the U.S. Department of Health and Human Services, as a follow-up to a personal conversation he had with the Obama administration official in November. Goodwin, a Democrat up for re-election this year, warned that the ACA is driving up insurance costs, reducing consumer options and generating unsustainable financial losses for the insurers, with the potential risk that insurers will withdraw from the state altogether.
Stung by losses under the federal health law, major insurers are seeking to sharply limit how policies are sold to individuals in ways that consumer advocates say seem to discriminate against the sickest and could hold down future enrollment.
In recent days Anthem, Aetna and Cigna, all among the top five health insurers, told brokers they will stop paying them sales commissions to sign up most customers who qualify for new coverage outside the normal enrollment period, according to the companies and broker documents.
Today the Mercatus Center unveiled a study by Bradley Herring (Johns Hopkins University) and Erin Trish (University of Southern California) finding that the much-discussed health spending slowdown that continued in 2010-13 “can likely be explained by longstanding patterns” over more than two decades, rather than suggesting a recent policy correction. Projecting these factors forward and incorporating the effects of the Affordable Care Act’s health insurance coverage expansion provisions, Herring-Trish predict the expansion will produce a “likely increase in health care spending.”
Though not surprising in light of longstanding appreciation of insurance’s effects on health service utilization, the latter finding is nevertheless profoundly concerning given that pre-ACA health spending growth trends were already widely held to be untenable.
Private health insurers made a Faustian bargain with Democrats in 2010: In return for supporting passage of the Affordable Care Act, the companies would be able to grow their business with subsidized customers who were required to buy insurance. How’s that working out?
Except for Dr. Faustus, not great. Democrats lost control of the House and Senate thanks in considerable part to their votes passing ObamaCare on partisan lines. And now we’re learning that private health insurers are losing money on their Affordable Care Act business, as Aetna was the latest to acknowledge on Monday during its quarterly earnings report.
The head of the third-biggest U.S. health insurer said he has “serious concerns” about whether or not ObamaCare’s new markets are sustainable, echoing criticism from other top for-profit insurers.
“We continue to have serious concerns about the sustainability of the public exchanges,” Aetna Inc. Chief Executive Officer Mark Bertolini said on a call Monday while discussing the company’s fourth-quarter results. “We remain concerned about the overall stability of the risk pool.”
Large U.S. health insurers have faced a rocky start in the Patient Protection and Affordable Care Act, which in 2014 opened up new markets where millions of Americans buy coverage, often with tax subsidies to help them afford it. Aetna is one of the biggest insurers in ObamaCare and, like its rivals UnitedHealth Group Inc. and Anthem Inc., has struggled to make a profit in the business.
Before you try a short-term plan, consider the pros and cons:
- You can buy them any time of year.
- Their premiums are generally lower than major medical insurance plans. The average premium for short-term plans sold by eHealth in California last year was $177 per month, Purpura says.
- They may have broader networks of doctors and hospitals than some plans available from exchanges.
- They won’t accept you if you have pre-existing conditions, or if they do, they won’t cover them.
- They may not cover benefits such as maternity care, preventive services or prescription drugs. Some may offer drug or dental discount plans, but those aren’t the same as insurance.
- They last less than a year and you have to reapply at the end of each term. There’s no guarantee you’ll be accepted again, especially if you got seriously ill while you had coverage.
Blue Cross and Blue Shield of NC is expecting to lose more than $400 million on its first two years of Obamacare business. According to this morning’s News and Observer, “The dramatic deterioration in Blue Cross’ ACA business is causing increasing alarm among agents and public health officials.” In response to its bleak experience with the ObamaCare exchange, the company has decided to eliminate sales commissions for agents, terminate advertising of ObamaCare policies, and stop accepting applications on-line through a web link that provides insurance price quotes–all moves calculated to limited ObamaCare enrollment.
Chris Conover of Duke University’s Center for Health Policy & Inequalities Research explains what we can learn from North Carolina’s experience.