The Law Of Unintended Consequences

Fall 2017

There are certain things I can count on every November – Sunday afternoons in my office working on renewals and Open Enrollment, trees shedding their leaves, and the Republicans trying to screw up healthcare. Yes, just another November.

We are a little over halfway through this year’s Open Enrollment Period. Now is a good time to see how we’re doing.

Ball of Confusion – What has been the most confusing part of this year’s open Enrollment?  Medical Mutual of Ohio’s network change.  I’m still getting calls weekly.  First and most importantly, the MMO network change ONLY APPLIES TO POLICIES SOLD TO PEOPLE UNDER AGE 65 SINCE 2014.  The new network does not apply to Medicare supplements.  It does not apply to group policies.  When in doubt, call your agent.

Against all odds – The Patient Protection and Affordable Care Act (Obamacare) has withstood seven years of attacks and sabotage.  This year, with an administration actively trying to undermine the law daily, the PPACA has proven to be remarkably resilient.  The Open Enrollment has been reduced to 45 days, less than half of what it should be.  The advertisement budget disappeared.  The federal healthcare Exchange is closed on Sundays.  Funding for the Cost Sharing Reduction was eliminated.  And with all of that Enrollment is up, way up.

Skinny Networks – One of the ways the insurers have used to rein in costs has been to limit your choice of doctors.  Like the original HMO’s and PPO’s of 30 years ago, the insurer can negotiate better pricing if it can drive more business to specific hospitals and providers.  This gives us the new partnership between the Cleveland Clinic and NY based Oscar and the Medical Mutual network changes mentioned above.  Rate increase would have been much higher in Cuyahoga County without this change.  Some counties even saw a rate reduction.  But limiting access has hit Northeast Ohioans hard.  Many in Greater Cleveland utilize doctors and services at both University Hospital and the Clinic.  Individual policyholders in Lorain County will find it difficult to access University Hospital doctors at nearby St. John West Shore.  And people living in Chesterland will find it hard to purchase a policy that will cover them at Hillcrest.  This trend won’t end anytime soon.

25% and Higher – Did we really see rate increases over 25%?  Yes, but not across the board. As noted above, President Trump eliminated the funding for the Cost Sharing Reduction last month.  Ohio insurers were prepared.  The Silver Level policies purchased through the Exchange, the only contracts impacted by this decision, experienced significant price increases.  All policies may have taken a bit of a hit, but the real impact was on the Silver policies.  Individuals and families committed to comprehensive coverage will experience the full impact of the rate increases if they don’t qualify for a premium tax credit subsidy.  If you are getting a subsidy, you might not notice a change.

A Price Decrease – Yes, lots of people are seeing no change in their premium for 2018 or even a decrease.  It doesn’t appear that the President or his advisors actually understand how the PPACA works.  Increasing the price of Silver Level policies increases the premium tax credit for all subsidy eligible participants.  The price goes up, the subsidy goes up, and the net premium stays about the same. The insured doesn’t pay more, but we, the US Taxpayer, are covering the difference. This is the law of unintended consequences.  And it gets worse.  The subsidy is based on income.  So if the insured purchases a Bronze Level policy, the new higher premium tax credit can result in a lower premium for 2018.  I have seen reductions between 15% to as high as 20%!  Lots of insureds, especially the healthier ones, are moving to the Bronze Level policies and pocketing the savings.

Up is Down – The Republicans have turned their attention to tax reform.  This being Health Insurance Issues With Dave, we wouldn’t have wasted any time on the merits of the current proposals had the Senate not floated the idea of eliminating the Individual Mandate as a way to fake a balance.  We have covered how you can’t build a healthcare payment system based solely on the sick and the responsible.  We have noted that the Individual Mandate, strikingly similar to the plan the Republicans used when creating Medicare Part D, traces its origins to the Heritage Foundation.  So why insert this in a tax bill?  The concept is that more Americans, the healthy ones, would take a pass on health insurance and save the taxpayer the subsidy money.  Terribly cynical, but would that work?  Of course not!  As with the Cost Sharing Reduction debacle, what we would see is a severe hike in the price of health insurance as we remove the best risks from the insurance pool.  The premiums would spike, the subsidies would jump, and the taxpayer would, again, be on the hook for the additional cost.  And if you don’t qualify for a subsidy?  You get hit twice – higher premiums and higher taxes if and when Congress ever chooses to bring in enough money to pay the bills.

Just another November.

DAVE

www.cunixinsurance.com

Photos – David L. Cunix

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