Medicare Is Not A Health Reform Piggy Bank

I fully agree with Mr. Rich Galen in his column published on January 10, 2017. I agree that Medicare can not be the piggy bank for healthcare reform in this nation. Medicare works because it covers a very distinct pool and demographic. To avoid hypocrisy, yes, I have indeed talked about expanding Medicare to age 55. I have also stated that it should be a limited exposure like what Plan C on Medicare Supplement did for the under 65 and permanently disabled Medicare membership. I am hoping a retooling of the ACA will restore to our seniors the benefits they lost when Congress did their Medicare cuts. One thing, at least there is a serious discussion occurring over the replace part of "Repeal and Replace".

http://www.realclearhealth.com/articles/2017/01/10/medicare_cannot_be_used_as_americas_health_care_piggy_bank_110369.html

Oh Boy, Look What I Found

Ok, if you have been following my Facebook Agency page, you will know I have been all over utilization costs and guaranteed issue as the key issues that have driven up healthcare premiums. I have consistently said that when you offer health insurance to all with no way to actually rate the premium based on elements of risk management, you will end up chasing utilization costs that will be collected via increased renewal premiums.
Well, look what I found from the Congressional Budget Office. They essentially admit I was right. Here is the link to CBO publication
https://www.cbo.gov/publication/52371

Here is the quote regarding an admission of increased costs and thereby admitting there will be no way to control them.

"Leaving the ACA’s market reforms in place would limit insurers’ ability to use strategies that were common before the ACA was enacted. For example, insurers would not be able to vary premiums to reflect an individual’s health care costs or offer health insurance plans that exclude coverage of preexisting conditions, plans that do not cover certain types of benefits (such as maternity care), or plans with very high deductibles or very low actuarial value (plans paying a very low share of costs for covered services)."

As you can see the government understands what they are up against and have zero intention to fix it.

Text and Explanation of President Trump's Executive Order on the Affordable Care Act

Here is the text of the Executive Order on the Affordable Care Act issued by President Donald Trump on January 20, 2017. My comments will be in red.

THE WHITE HOUSE

Office of the Press Secretary

For Immediate Release January 20, 2017

EXECUTIVE ORDER

- - - - - - -

MINIMIZING THE ECONOMIC BURDEN OF THE PATIENT PROTECTION AND AFFORDABLE CARE ACT PENDING REPEAL

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. It is the policy of my Administration to seek the prompt repeal of the Patient Protection and Affordable Care Act (Public Law 111-148), as amended (the "Act"). In the meantime, pending such repeal, it is imperative for the executive branch to ensure that the law is being efficiently implemented, take all actions consistent with law to minimize the unwarranted economic and regulatory burdens of the Act, and prepare to afford the States more flexibility and control to create a more free and open healthcare market.

What This Means - Do no more harm. The ACA still exists but do nothing to expand it as we find a fair and affordable alternative.

Sec. 2. To the maximum extent permitted by law, the Secretary of Health and Human Services (Secretary) and the heads of all other executive departments and agencies (agencies) with authorities and responsibilities under the Act shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.

What This Means - The individual mandate is dead as a doornail. The rest of the ACA is now just window-dressing. Once the individual mandate is gone, the entire socialized medicine aspect is gone as well. This will be the section that goes down in history as where the ACA died.

Sec. 3. To the maximum extent permitted by law, the Secretary and the heads of all other executive departments and agencies with authorities and responsibilities under the Act, shall exercise all authority and discretion available to them to provide greater flexibility to States and cooperate with them in implementing healthcare programs.

Sec. 4. To the maximum extent permitted by law, the head of each department or agency with responsibilities relating to healthcare or health insurance shall encourage the development of a free and open market in interstate commerce for the offering of healthcare services and health insurance, with the goal of achieving and preserving maximum options for patients and consumers.

What This Means - Sec. 3 and 4 deal directly with reciprocity and creating products and plans that can cross over state lines while still being able to effectively adjudicate claims. If the President does this right, it is a game changer in our industry and people will be very happy with the plan offerings available to them.

Sec. 5. To the extent that carrying out the directives in this order would require revision of regulations issued through notice-and-comment rulemaking, the heads of agencies shall comply with the Administrative Procedure Act and other

2

applicable statutes in considering or promulgating such regulatory revisions.

Sec. 6. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

What This Means - Sec. 5 and 6 basically say "yes, we understand there is a separation of powers and yes, we understand there is a process for amending or deleting regulations but understand you as an agency head will not stall the process". These two sections are saying that they understand there is a process but they are also saying there is a new sheriff in town.

DONALD J. TRUMP

THE WHITE HOUSE,

January 20, 2017.

# # #

In Summary, this is not the repeal that everyone was looking for. Thank God it wasn't because with nothing in place yet, it would create chaos. No, this is a very deliberate and measured Executive Order that says, things are changing, this is the path we are taking and politically motivated agency heads better not get in the way.

The really interesting time is when the actual plan descriptions start getting released. Please Mr. President as you are designing plans, do not make your reciprocity plans all MSA's or HSA's. The average consumer doesn't understand them and when they were offered as a Medicare plan, we in the broker community received more complaints about them. They are a great alternative for the consumer savvy enough to understand how they work but they can also be a problem for the consumer who is used to walking into their PCP office, showing their card and handing over $20. Keep moving forward with reciprocity but keep managed care as an alternative. Even if they are similar to PPO and POS, allowing the member to go out of state on the out of network side. You have a great opportunity here, Mr. President. Don't be like the last occupant of the White House, let us help you.

Part 4 The Final Chapter in "Sensible Solutions To The Affordable Care Act

This is the final chapter to my essay "Sensible Solutions To The Affordable Care Act". I saved the best for last because today we will talk about the affordability issue for Americans at both ends of the age spectrum, the young and those just outside of Medicare eligibility.

Act II - Did it have to be this way (Solutions For Moving Forward)

In short, the answer is no, it didn’t have to be this way. From the time that the ACA was introduced in the U.S House of Representatives, health insurance professionals who had operated under this type of proposed healthcare system were offering solutions that did not include more of the same that had decimated the healthcare systems in the 4 Reform States. When then President Obama had said “if anyone has any other ideas, he was all ears”, we were shouting with a volume found at a Motorhead concert but as expected, he ignored us.

So, what exactly were we proposing? It is clear that healthcare is expensive and only a complete dismantling and overhaul of the entire system will completely fix this problem. Politicians do not have the stomach for such an endeavor and so we are left to create a comprehensive band aid.

Now, under the right circumstances, this “comprehensive band aid” could indeed be the cure. It touches on all the subjects that make healthcare unaffordable for many.

These are the same ideas we introduced during the initial Affordable Care Act debates that got ignored. We will now go into depth on each proposal and show how they were conceived and how they can help.

1. Allow Association Health Plans in All 50 States - In 46 out of 50 states, people can join pools of coverage based on interest and occupation known as Association Health Plans. The National Federation of Independent Business (NFIB) allows for their members to pool together to create a wider pool of insureds which helps spread risk and lower premium rates. The American Bar Association (ABA) and American Medical Association (AMA) also have such risk pools for their membership. Currently the 4 Reform States do not allow their residents to join these pools. Making these plans available in all 50 states would both create competition and provide another outlet for people being crushed under nearly unaffordable premium amounts.

2. Allow For Reciprocity In Plans Across State Lines - Right now because of network rules and state regulations, a plan that is offered in one state can not be offered in another. It is true that some plans offer out of state coverage through their out of network coverage but aside from some very select issues, no captitated, managed care plan will provide in network services in another state on a non emergency basis. There has been talk about this for years in regards to large carriers who provide coverage in multiple states to be able to eliminate state lines in offering coverage options. There has also been talk of creating regional alliances. I do not believe these regional alliances will work especially in the Northeast where most of the Reform states reside. One of the biggest concerns of this proposal is the states lack of desire to allow the smaller “regional” carriers into their market if they believe they do not have the reserves to meet utilization costs borne by its membership. A state’s health of its citizens will help alleviate that concern in that no smaller carrier will willingly put itself in harms way by offering products in states where they know they will take crippling losses.

3. Allow for Underwriting in Issuance - This one proposal gets to the heart of healthcare reform. Are we providing health insurance or health coverage? Many would argue that we are not providing health insurance as insurance requires elements of risk management to be in place to prevent the insurer from taking losses that could have been prevented. Under the Affordable Care Act, it would seem operates under a system of health coverage. The regulations enforcing the ACA do not provide the carriers any ability to assess or mitigate the risks they may be taking in providing coverage to members. The big bonus for the allowing of underwriting is how it will spur enrollments of younger Americans. Right now, the ACA “underwriting process” is literally age and zip code. Yes, there are a few other questions but the rates seem to base off of age and zip code. If we could allow younger Americans to use their age and health to their benefit then we wouldn’t have to worry so much about what the non enrollment penalty is because people will instead get a plan because they are now affordable. Underwriting will also support our national desire to get healthy. We tell people to exercise, eat right and try to get healthy. So they do all that and healthcare is still out of hand. How about letting people who do try to live that healthy lifestyle benefit from it? Allowing for medical underwriting will do that. 

4. Allow for True Catastrophic Care Plans - This is one of the easiest ways to get young people insured at an affordable rate. Catastrophic Care plans work because they only insure for major claims like hospitalization. It allows the insured to “self insure for the sniffles” while having coverage for a claim that could potentially threaten them with bankruptcy. It works out well for all. The problem is not every state has allowed Catastrophic Care plans to be offered. We should make sure that the product offerings in each state includes Catastrophic Care plans. Now, if the states include underwriting in their Catastrophic Care plans, you can really save people some money. I really believe underwritten Catastrophic Care plans are a serious solution to the affordability issue.

5. Allow for Age 55 and older to Enroll In Medicare - There has been a lot of talk over the years about allowing Americans age 55 and older to enroll in Medicare. Right now, Medicare works because we are talking about limited pool and because of that the actuarial science works. To add a new dimension to this pool, it would require a recalculation of the risk management policies used to make Medicare work. To expand Medicare to this younger demographic pool would also mean deciding if the current Medicare plan descriptions can support this new load or will there have to be new plan descriptions created to meet the needs of this new pool. For instance, can we offer an Age 55 individual a zero premium plan currently offered to Medicare recipients in certain counties in our country? Can we offer the current menu of Medicare Supplement plans or will there have to be a new plan introduced much in the way Plan C was created to meet the needs of the disabled under 65 market? Here is a proposal. Make a 55 year old pay 2x the Part B premium to “buy in”. The member won’t care as it will still be cheaper than the private market. Create a specific Medicare Supplement for them. I would include underwriting on initial offering even though they might be in what would be considered their Initial Election Period. Yes, let the member use their good health to buy in the Group A Rate Table. Price it around the rate for Plan N and make it heavy on preventative services. Offer the same Part D prescription benefit services available to current Medicare recipients. For Medicare Advantage, allow the Under 55 member to access all of the MA or MAPD plans available in their service area. Since the Medicare Advantage plans are all managed care and the providers are captivated, the 2X Part B premium can help alleviate some of the pain that will be associated with the growth of this once limited pool.

Part 3 of Sensible Solutions To The Affordable Care Act

Today we discuss the next alternative to the Affordable Care Act. The next proposal deals with one of the ideas championed by President Trump. I agree with this proposal and give my own take on the proposal.

Act II - Did it have to be this way (Solutions For Moving Forward)

In short, the answer is no, it didn’t have to be this way. From the time that the ACA was introduced in the U.S House of Representatives, health insurance professionals who had operated under this type of proposed healthcare system were offering solutions that did not include more of the same that had decimated the healthcare systems in the 4 Reform States. When then President Obama had said “if anyone has any other ideas, he was all ears”, we were shouting with a volume found at a Motorhead concert but as expected, he ignored us.

So, what exactly were we proposing? It is clear that healthcare is expensive and only a complete dismantling and overhaul of the entire system will completely fix this problem. Politicians do not have the stomach for such an endeavor and so we are left to create a comprehensive band aid.

Now, under the right circumstances, this “comprehensive band aid” could indeed be the cure. It touches on all the subjects that make healthcare unaffordable for many.

These are the same ideas we introduced during the initial Affordable Care Act debates that got ignored. We will now go into depth on each proposal and show how they were conceived and how they can help.

1. Allow Association Health Plans in All 50 States - In 46 out of 50 states, people can join pools of coverage based on interest and occupation known as Association Health Plans. The National Federation of Independent Business (NFIB) allows for their members to pool together to create a wider pool of insureds which helps spread risk and lower premium rates. The American Bar Association (ABA) and American Medical Association (AMA) also have such risk pools for their membership. Currently the 4 Reform States do not allow their residents to join these pools. Making these plans available in all 50 states would both create competition and provide another outlet for people being crushed under nearly unaffordable premium amounts.

2. Allow For Reciprocity In Plans Across State Lines - Right now because of network rules and state regulations, a plan that is offered in one state can not be offered in another. It is true that some plans offer out of state coverage through their out of network coverage but aside from some very select issues, no captitated, managed care plan will provide in network services in another state on a non emergency basis. There has been talk about this for years in regards to large carriers who provide coverage in multiple states to be able to eliminate state lines in offering coverage options. There has also been talk of creating regional alliances. I do not believe these regional alliances will work especially in the Northeast where most of the Reform states reside. One of the biggest concerns of this proposal is the states lack of desire to allow the smaller “regional” carriers into their market if they believe they do not have the reserves to meet utilization costs borne by its membership. A state’s health of its citizens will help alleviate that concern in that no smaller carrier will willingly put itself in harms way by offering products in states where they know they will take crippling losses. How we address the concerns and open up these tougher state’s markets will be discussed in the next two proposals.

Today we begin to discuss some alternatives to the Affordable Care Act. I hope to have the entire piece up by Inauguration Day. For today, I have listed the first of five alternatives to the current Affordable Care Act.

Act II - Did it have to be this way (Solutions For Moving Forward)

In short, the answer is no, it didn’t have to be this way. From the time that the ACA was introduced in the U.S House of Representatives, health insurance professionals who had operated under this type of proposed healthcare system were offering solutions that did not include more of the same that had decimated the healthcare systems in the 4 Reform States. When then President Obama had said “if anyone has any other ideas, he was all ears”, we were shouting with a volume found at a Motorhead concert but as expected, he ignored us.

So, what exactly were we proposing? It is clear that healthcare is expensive and only a complete dismantling and overhaul of the entire system will completely fix this problem. Politicians do not have the stomach for such an endeavor and so we are left to create a comprehensive band aid.

Now, under the right circumstances, this “comprehensive band aid” could indeed be the cure. It touches on all the subjects that make healthcare unaffordable for many.

These are the same ideas we introduced during the initial Affordable Care Act debates that got ignored. We will now go into depth on each proposal and show how they were conceived and how they can help.

1. Allow Association Health Plans in All 50 States - In 46 out of 50 states, people can join pools of coverage based on interest and occupation known as Association Health Plans. The National Federation of Independent Business (NFIB) allows for their members to pool together to create a wider pool of insureds which helps spread risk and lower premium rates. The American Bar Association (ABA) and American Medical Association (AMA) also have such risk pools for their membership. Currently the 4 Reform States do not allow their residents to join these pools. Making these plans available in all 50 states would both create competition and provide another outlet for people being crushed under nearly unaffordable premium amounts.

Sensible Solutions To The Affordable Healthcare Act

We are now 4 days away from the inauguration of the 45th President of the United States, Donald J Trump. One of President Trump's key legislative goals is the repeal and replacement of the Affordable Care Act. This blog is going to examine the causes leading to the Affordable Care Act and what we are proposing in terms of repeal and replace for the Affordable Care Act.
Today we start with Act I - Some Ideas Are Better Left Unsaid (How We Got Here). Here we discuss how the nation has already had elements of the ACA and how we knew what was going to happen.
So without further adieu, I present Part I of the examination and solution for the ACA.

Act I - Some Ideas Are Better Left Unsaid (How We Got Here)

In a Washington Post column written by Steven Pearlstein entitled “Donald Trump is about to face a rude awakening over Obamacare”, an argument is made that says a President Trump will have problems in repealing and replacing the Affordable Care Act. I believe if we keep thinking with the same ideas that have gotten us to this point then yes, repeal and replace will be difficult. If we open our minds and look at new potential alternatives then repeal and replace can be an extremely viable option.

As currently constructed, the Affordable Care Act is a guaranteed failure. Why? Because Guaranteed Issue with liberal Pre-Existing Conditions clauses make rate structuring a very difficult proposition. If you want to know why your renewal increases are so high, it is simple. When you have guaranteed issue with no actuarial science used in building proper rate structures you end up chasing the prior years utilization losses. What I mean by that is, if you aren’t charging enough premium to cover the utilization costs of that year, there are going to be huge deficits being created meaning the filed rates for the coming year will have to be enough to help recoup those losses from the prior year. This creates a scenario where you never catch up with prior year losses and the system collapses under its own weight. The only answer would be to get it right the first time but the problem with that is, in a guaranteed issue system the “correct” rate would be so expensive no one could afford it. We are witnessing this in the 4 “Reform States”. These states are NY, NJ, MA and NM. We will refer to these 4 states often in this column as they are the standard bearers for government intrusion into healthcare and they are also the 4 most expensive healthcare markets in the country.

To better understand the failures of the Affordable Care Act, we must look at the 4 Reform States as they are the inspiration and business model for the Affordable Care Act. NJ led the way for government run/controlled healthcare when they passed PL 92-162 or “The Creation of the NJ Small Employer Health Board”. This billed passed in 1992 and was enacted 1 January 1993 making NJ the first state in the nation to create a system of quasi-socialist medicine. What they did was keep private carriers but the carriers had to file their rates both new and renewal with the state’s Department of Banking and Insurance, they had to offer plans that met the requirements of the 5 State Mandated Plans. What the state mandated plans rule means is carriers wishing to offer product in NJ have to meet 5 regulated plan descriptions. In 1993, the 5 plans were Catastrophic Care, HMO, EPO, POS and PPO. On top of the 5 mandated plans, carriers had to ensure that their plans covered a government approved schedule of benefits. Add in MA’s RomneyCare individual mandate and you have the Affordable Care Act. So you can see the wheels of the Affordable Care Act have been set in motion for nearly a quarter century.

So we have talked about NJ’s reform market being the blueprint for the ACA’s medal plans, let us now talk about the individual mandate. Governor Mitt Romney of Massachusetts was the politician who introduced our nation to the individual mandate. 

The individual mandate supposedly ensures that everyone has skin in the game. What it is also supposed to do is use the premiums collected from the young healthy individuals to pay for the utilization costs borne by older less healthy individuals. This is where politics and ideology come in to play, sadly. While the individual mandate has indeed increased participation, it has come at a high cost to individual taxpayers as well as state and federal government budgets. Taxes have been raised to meet the needs of those under the FPL (Federal Poverty Level) limits and budgets have been strained at the state level with Medicaid expansion as well at the federal level with income based subsidies. 

The fact is, the only thing keeping the federal subsidies afloat is the U.S government has no problem printing monopoly money and calling it legal tender. At its current path and pace, the only option remaining for the Affordable Care Act is catastrophic failure.

#affordablecareact #donaldjtrump #healthinsurancesolutions

Welcome

Welcome to the official blog for the Robert W Kulessa Agency. We are an insurance agency in Toms River NJ specializing in Medicare and retiree benefit plans.
This blogs aim is to educate and entertain. We will talk about the Affordable Care Act, Medicare and anything that can affect your Medicare or healthcare benefits.
I will try to post here as often as possible.