GOP ACA Replacement Imminent....Predictions

[sactoking]

One thing I actually find interesting politically is that they are changing the 3:1 rule to 5:1. This change alone is going to raise rates substantially on older people who are their prime voting base. The 3:1 rule was too extreme in my opinion but I'm still surprised that they'd make such a big change to hurt their base.

The complaint against 3:1 was that premiums for the young were too high. By expanding the ratio to 5:1 you could drop their premiums which would result in more healthy people in the risk pool and lower rates overall.

If I were a betting man I'd put my money on premiums at the bottom of the age curve staying flat and premiums at the top rising dramatically, which is the opposite of what is supposed to happen. I think Congress knows this will happen too, which is why they originally wanted to peg tax credits to age instead of income.

 

[Commodus]

So what are the Rs trying to accomplish with this bill?

Nothing to address HC cost drivers, nothing to expand coverage and access, will drive up costs for the sick and elderly and poses a real solvency risk to the ins market.

They got rid of the mandate, but put in a poor replacement mechanism which will be less effective on more punitive.

They cut a number of taxes, but first pass look and the only way to not destroy the deficit for this is by killing of Medicaid, which looks highly questionable the way it's rolled out.

Overall it seems like a cobbling together of attacks on grievances with no thought to is potential impact/fallout.

To me, the real goal is simple: drive people away from government-backed health care programs, and for those that decide to stay on, enrich the insurance companies as much as possible. It comes across as regulatory capture, of the insurance companies effectively getting to write laws that favor them.

 

[fskimospy]

The complaint against 3:1 was that premiums for the young were too high. By expanding the ratio to 5:1 you could drop their premiums which would result in more healthy people in the risk pool and lower rates overall.

If I were a betting man I'd put my money on premiums at the bottom of the age curve staying flat and premiums at the top rising dramatically, which is the opposite of what is supposed to happen. I think Congress knows this will happen too, which is why they originally wanted to peg tax credits to age instead of income.

What are your thoughts on the effects of replacing the individual mandate with a 30% surcharge? This seems like it has a high probability of functionally destroying the private insurance market. I feel like only having to pay 30% extra will make lots of people rationally choose to forego health insurance until they get sick, which kind of renders insurance useless.

 

[Chromagnus]

The complaint against 3:1 was that premiums for the young were too high. By expanding the ratio to 5:1 you could drop their premiums which would result in more healthy people in the risk pool and lower rates overall.

Even if overall rates were to go down it wouldn't be nearly enough to counter the increase on older people. I'm not saying this still isn't the correct move, just surprised the republicans would make a change to lower premiums for young people and increase them for their base.

To the point of overall rates decreasing though, this is nice in theory but by removing the mandate they are going to decrease the number of healthy people in the pool and thus rates are going to rise. Republican's hate the mandate but it is something that is absolutely essential for everyone to have more affordable rates.

 

[Chromagnus]

What are your thoughts on the effects of replacing the individual mandate with a 30% surcharge? This seems like it has a high probability of functionally destroying the private insurance market. I feel like only having to pay 30% extra will make lots of people rationally choose to forego health insurance until they get sick, which kind of renders insurance useless.

The 30% surcharge doesn't do anything to encourage people to stay in the market if they are healthly since preexisting conditions are still covered. You are still better off not buying insurance, waiting until you get sick, then having your preexisting conditions covered while you pay a small surcharge.

As long as you are covering preexisting conditions people don't need to buy insurance until they are actually sick.

 

[theeedude]

US politics is a pendulum, not a one way train. You can't just go from ACA to universal single payer, you have to let GOP try their thing, and fail, first.

 

[Jhhnn]

I think both sides needed to try and fail at fixing health care before we were going to be at the point where people would accept completely blowing up the system with single payer. Both sides have incorrectly thought that they could fix it and now we are seeing that they can't. Hopefully some actual good change will ultimately come out of this but it may not be until 2020.

Except that the ACA hasn't failed at all. 20M people gained insurance coverage. It's less than perfect & has been crippled by Repubs in a variety of ways yet it still delivers to a lot more people than this so-called replacement ever will.

 

[Commodus]

The hilarious bit is the widespread objection to AHCA... among Republicans and right-wing groups.

I disagree with Rand Paul on a lot of things, but he's extremely honest when he says it's a "bail out for the insurance companies." It's modern Republicanism in naked form, a policy that's dictated by bribes (sorry, lobbying) and not what's right for the people it's supposed to serve.

And yeah, these critics are also right in that it's a half-hearted measure. It pleases neither those who prefer Obamacare (as it's likely to raise costs and punish people who can least afford it) nor those who want to kill government health care plans outright. If you want to axe a government health care mandate, just be done with it -- don't put in a half-baked offering which is just Obamacare, but worse.

 

[theeedude]

There are two types of health care systems that survived evolution in the developed world, something like the ACA and something like Medicare. Now you can say they are all idiots overseas and our brilliant Republicans will figure out some other way. OK, you can bet on that if you want.

 

[Chromagnus]

Except that the ACA hasn't failed at all. 20M people gained insurance coverage. It's less than perfect & has been crippled by Repubs in a variety of ways yet it still delivers to a lot more people than this so-called replacement ever will.

Failed may have been too strong of a word. It got a lot of people covered and that in itself is a success but it failed to address costs any any real way and it was promoted that it would. If it had been a plan to get more people insured it would have been a huge success but as it's name implies it was also supposed to make insurance more affordable and it didn't. Democrats failed at making health care affordable but they succeeded in getting people covered.

In theory the Republican's could make it more affordable and fail and getting people covered. (Although this new plan looks like it won't actually address either concern). Hopefully this leads us to true innovative change after both have taken their shot at it.

 

[Jhhnn]

The 30% surcharge doesn't do anything to encourage people to stay in the market if they are healthly since preexisting conditions are still covered. You are still better off not buying insurance, waiting until you get sick, then having your preexisting conditions covered while you pay a small surcharge.

As long as you are covering preexisting conditions people don't need to buy insurance until they are actually sick.

That's not accurate. All plans have enrollment periods. If you don't sign up you can't sign up until next year other than in very unusual circumstances. It's not just about sickness, either, but also about injury. Signing up next year won't cover the bills if you get busted up in the meanwhile. It won't cover the bills for a heart attack or a lot of things that can't be fully anticipated.

 

[Jhhnn]

Democrats failed at making health care affordable but they succeeded in getting people covered.

Bullshit. Exchange subsidies make insurance a lot more affordable for families who don't have employer sponsored plans.

 

[Chromagnus]

That's not accurate. All plans have enrollment periods. If you don't sign up you can't sign up until next year other than in very unusual circumstances. It's not just about sickness, either, but also about injury. Signing up next year won't cover the bills if you get busted up in the meanwhile. It won't cover the bills for a heart attack or a lot of things that can't be fully anticipated.

Young invincibles aren't concerned with heart attacks and rates of injury are extremely low in situations that aren't covered by other types of insurance (i.e. work comp, car insurance, homeowners/renters insurance etc). I'm not saying there aren't any gaps, I'm just saying that a 30% surcharge won't be enough of a punishment to convince young healthy people to buy insurance. A mandate does a much better job and making sure their are healthy people in the risk pool.

 

[Chromagnus]

Bullshit. Exchange subsidies make insurance a lot more affordable for families who don't have employer sponsored plans.

I don't disagree with this, there are definitely people that were able to get cheaper insurance under the ACA but overall health insurance costs have continued to rise. Health care costs are more expensive than they have ever been and the ACA did very little to address this. Costs need to be addressed going forward.

 

[SMOGZINN]

I don't disagree with this, there are definitely people that were able to get cheaper insurance under the ACA but overall health insurance costs have continued to rise. Health care costs are more expensive than they have ever been and the ACA did very little to address this. Costs need to be addressed going forward.

I doubt that there is any way to control health care costs that fit within the Republican ideology. Insurance companies are not likely to lower premiums or expand coverage as long as the government is helping to enforce insurance. Remember that while premiums and deductibles have increased their profits have hit all time highs. They are not increasing rates because of increased risk, but because they have not maximized profits under the current system.

 

[Blackjack200]

I doubt that there is any way to control health care costs that fit within the Republican ideology. Insurance companies are not likely to lower premiums or expand coverage as long as the government is helping to enforce insurance. Remember that while premiums and deductibles have increased their profits have hit all time highs. They are not increasing rates because of increased risk, but because they have not maximized profits under the current system.

I'm more and more convinced that simply forcing health care providers to publish their fees is 90% of what's needed to control costs. Look at what price transparency has done in other industries.

It's not an ideological issue. It's a powerful special interest that does not want costs to come down. Democrats are not pushing for this either.

 

[SMOGZINN]

I'm more and more convinced that simply forcing health care providers to publish their fees is 90% of what's needed to control costs. Look at what price transparency has done in other industries.

I agree with this, but it is not as simple as it sounds. Medical pricing is based on a cross index of IDC coding and insurance per doctor (or at least practice). There are currently 155,000 IDC codes. Each code will have a different cost for each different insurance, and one for no insurance. That means that to publish a full list of fees would require a small library of books for each doctors office. And then you would not know what it was going to cost you until you find out just how your diagnosis ends up being coded since the coding process is as much an art as a science.

 

[theeedude]

I think the age based tax credits are a beginning of universal basic income, since they aren't means tested until $75K.

 

[Chromagnus]

I doubt that there is any way to control health care costs that fit within the Republican ideology. Insurance companies are not likely to lower premiums or expand coverage as long as the government is helping to enforce insurance. Remember that while premiums and deductibles have increased their profits have hit all time highs. They are not increasing rates because of increased risk, but because they have not maximized profits under the current system.

Part of the problem is that the main focus is on insurance at the moment. Insurance itself actually has very little to do with the cost of health care in general. There are a lot of things that could be done separate from insurance that would address costs. Pharma, med-device, hospitals, these things contribute to cost. Also just general cultural philosophies on end of life care could reduce costs. These just haven't been the focus of a lot of policies yet. Insurance is expensive because health care is expensive, insurance doesn't make health care expensive.

 

[Dulanic]

I'm more and more convinced that simply forcing health care providers to publish their fees is 90% of what's needed to control costs. Look at what price transparency has done in other industries.

It's not an ideological issue. It's a powerful special interest that does not want costs to come down. Democrats are not pushing for this either.

The fact that we STILL aren't told what it costs until AFTER is insane. There is no other market where this is the case. The other factor is driving down drug costs, they have spiraled out of control completely.

 

[Chromagnus]

I agree with this, but it is not as simple as it sounds. Medical pricing is based on a cross index of IDC coding and insurance per doctor (or at least practice). There are currently 155,000 IDC codes. Each code will have a different cost for each different insurance, and one for no insurance. That means that to publish a full list of fees would require a small library of books for each doctors office. And then you would not know what it was going to cost you until you find out just how your diagnosis ends up being coded since the coding process is as much an art as a science.

Yep, the whole system is super messed up. The IT side of most hospitals is a complete disaster too, no one knows what anything costs and costs are different based on the type of insurance you have. Publishing rates would only help if they had to charge the same rate for the same procedure, but they don't.

 

[ElFenix]

Bullshit. Exchange subsidies make insurance a lot more affordable for families who don't have employer sponsored plans.

that's just shifting the payer, that doesn't make it more affordable at a societal level. you need massive changes in how people use and utilize healthcare to do that, and putting people on a plan with such a high deductible that they still don't go to the doctor doesn't fix that.

 

[Dulanic]

I agree with this, but it is not as simple as it sounds. Medical pricing is based on a cross index of IDC coding and insurance per doctor (or at least practice). There are currently 155,000 IDC codes. Each code will have a different cost for each different insurance, and one for no insurance. That means that to publish a full list of fees would require a small library of books for each doctors office. And then you would not know what it was going to cost you until you find out just how your diagnosis ends up being coded since the coding process is as much an art as a science.

I don't think I agree with this. With computers in today;s age, they can build it up, they just don't want to. Keeping it confusing benefits them. 20 years ago I'd agree, but 20 years ago we didn't have this mess.

 

[sactoking]

What are your thoughts on the effects of replacing the individual mandate with a 30% surcharge? This seems like it has a high probability of functionally destroying the private insurance market. I feel like only having to pay 30% extra will make lots of people rationally choose to forego health insurance until they get sick, which kind of renders insurance useless.

A few things to keep in mind:
I've only seen a 66 page bill at this point. There seems to be quite a bit of stuff from the GOP talking points missing (sales across state lines, changes to tax credits, etc.). Trump has tweeted that more is coming. At this point I'd say it's not unreal to assume that this is the tip of the iceberg. As such a lot of this in conjecture based on what I've heard may be coming.

That being said the change from the mandate penalty to the continuous coverage penalty is subtle but dramatic. The former says "For each year you don't have insurance you must pay" and the latter says "If you don't have insurance you must pay when you get it." The mandate penalty amounts to negative punishment (if you don't do this thing you will be punished) and the continuous coverage penalty amounts to positive punishment (if you do this thing after waiting you will be punished). While the efficacy of the mandate penalty is certainly debatable it's my personal belief that it will have worked better than the continuous coverage penalty. Let's examine them more closely.

Under the mandate penalty a taxpayer must pay a surtax to the federal government for each month, after a grace period, in which they did not have minimum essential coverage. The surtax was calculated as a percentage of the taxpayer's income and capped at a fixed dollar amount each year. The goal of the individual mandate penalty was to "encourage" younger and healthier people, who might ordinarily eschew health insurance, to enter the risk pool and keep overall premiums in check. In 2016 the surtax was 2.5% of adjusted gross income, capped at $695 per person per year.

Hypothetical scenario: Unmarried male, no children, age 27. Graduated from college, lives in Las Vegas, earns $38,000/year. If this person were to go the entire year without health insurance they would pay a surtax of ($38,000 x 0.025 = $950 > $695) $695. A Catastrophic plan is available off the Exchange for $165.53 per month, or $1,986.36 for the year. While income is below 400%FPL there are no tax credits available because of premium prices in Las Vegas. If we assume that the person does not buy insurance they pay $695 per year, a savings of $1,291.36 per year. And that assumes that they actually pay the $695, which is avoidable if you do your taxes correctly. That same person, faced with a continuous coverage penalty, will absolutely pay nothing for not having insurance. When it eventually comes time to buy insurance he faces a one-time surcharge of 30%. Based on 2016 numbers the surtax is $1,986.36 x 0.3 = $595.91, a one-time charge less than what he would have been paying each year. That leads me to believe that the continuous coverage penalty will lead to more "young invincibles" sitting out coverage, not fewer, which will likely cause premiums to rise.

Then you have to figure in the deterrent effect of the continuous coverage penalty. The mandate penalty goes away when you buy insurance, the continuous coverage penalty is TRIGGERED when you buy insurance. This could very well mean that people who don't buy insurance become less likely to buy with each year that goes by (since premiums go up with age the penalty also goes up with age). Think of it like auto insurance. I know people say to shop around for auto insurance every 6-12 months to get the best deal but there's a catch: that only works for relatively undiscounted premiums. Many (most?) insurers offer huge discounts for longevity plus low incident rate ("3 Year Accident-Free," etc.). They also don't match or carry over longevity with other insurers. So if I have a great discount (30%+) for longevity there's practically no chance that another insurer will be able to beat my rate off the bat. Now, it may be possible that another insurer's base rates are lower than my current rate so that in the long run I would be better off switching and working toward that new 30%+ discount, but it's difficult to make that decision. The same holds true with the continuous coverage penalty. I'm young and healthy and I don't need insurance, and there's no penalty anyway so why bother. Oh, now I'm 30 and the premiums are $200/month plus a $60/month surcharge? I guess I can take care of this infection on my own? Now I'm 35 and premiums are $400/month plus a $80/month surcharge. Well, I guess I'll wait for my knee to heal on its own. 40 years old with $600/month in premiums and surcharge, I guess I'll skip that colonoscopy. It becomes a treadmill of being uninsured that makes the penalty worse the more you need it until at some point the cost of care is going to overwhelm the penalty cost and you purchase, at which point you're going to contribute to a spoiling risk pool and drive overall premiums up even higher.

 

[Chromagnus]

I don't think I agree with this. With computers in today;s age, they can build it up, they just don't want to. Keeping it confusing benefits them. 20 years ago I'd agree, but 20 years ago we didn't have this mess.

They don't keep it confusing to benefit them. They keep it confusing because it would be very expensive to fix. Most hospitals don't have very large dedicated IT staffs to easily make these changes. Non-medical technology in hospitals is really out of date.