As I have done for the last year or so, I will try and bring you up to date concerning the state of our health insurance situation in the Unites States.
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After a quick start out of the gate, the new administration and Congress attempted to put into bill form what they referred to as "Repeal and Replace" of the Affordable Care Act (ACA). In reality, many of Congress' men and women found out that as much as many people hated ACA's results of much higher premiums and cost-sharing, they also want coverage for pre-existing conditions and dependents up to age 26 to remain. The mixed message to their representatives was they wanted more but wanted to pay less. Does that surprise you or not sound like typical Americans? The first attempt was a watered-down version of ACA that split the Republican caucus and resulted in not achieving the 216 votes to get in the House. Meanwhile, the opposition to any change presented a narrow view of the bill and what they considered it's many faults, and ignored the fact that ACA currently is in a death spiral, referred to by those in the business as "adverse selection". With adverse selection the buyer of the health insurance examines their real need for health insurance as they compare that to pricing, and if the insurance is more expensive than the need, they don't buy. If they don't buy, the system looses one more generally healthy person and premium, and those who really need the insurance (health issues) buy. Each time that happens claims remain the same and total premium drops resulting in the need to raise premiums. This is the death spiral that Congress refers to. After 40 years in the insurance business, I have never found a solution to such a process and plans always eventually fail. The opposition's approach is to keep funding the spiral with tax payer's dollars to offset the increasing premiums. This eventually creates an unsustainable financial burden for all tax payers of this country.
More recently, the majority party is again styling a bill that tries to create a better balance between the popular elements of ACA and trying to reduce the cost of insurance. This is a very hard process. As I listen, too many of the folks in Congress (even those in the middle of the debate), really don't understand how health insurance works. One thing will have to be concluded at some point is that we are not all responsible for everyone else in this country. There is a certain amount of responsibility each of us has for ourselves, like our forefathers. We can't expect the government to solve all of our personal problems and freely hand out benefits. Thus, those who experience more health issues in their lives, regardless of the cause, will have to spend more money on health care than those who do not. Should some folks not be able to manage that cost due to hard times or a disability, programs like Medicaid or MN Care can be a safety net. (It also might be a good incentive for all of us to live as healthy a life-style as possible). That being said, the solution to the debate in Congress for those with pre-existing conditions are Assigned Risk Pools, designed for those who don't qualify for standard insurance coverage. These pools provide generally the same coverage as does the standard options, but will have higher premiums. Those premiums along with insurer contributions, health care premium taxes, and yes taxes from tax-payers, will sustain these pools. The rest of the insureds (about 70% of the nation) will be insured under standard plans at much lower costs. A truism in our business is that 30% of insureds represent 85% of the claims, and therein lies the problem with ACA. Community rating (premiums) in ACA was great to the 30% but was a catastrophe for the other 70%.
The positive is that the majority party appears to be closing the gap in their caucus and when they reach 216 votes, some reform bill will occur. Then the Senate will have to debate and agree to something. My guess is that health care will be returned to the states eventually with certain federal requirements to comply to. This process may take several adjustments as we begin to recover from ACA. As always, if you have any questions or concerns don't hesitate to contact one of us for help.
