ObamaCare in the Republican Wave

In February of this year, the U.S. Congress passed a sweeping legislation called the Affordable Care Act, affectionately known as ObamaCare. The Bill then went to the President’s desk for signature and was hailed as landmark reform for health care. The only problem was that the majority of the American public saw it as one giant land grab by the Federal Government. Since the law went into effect, an increasing debate over its repeal has been growing. Already, major corporations, the medical community, politicians, and most Americans have determined that to implement the complete Bill over the next few years as various trigger points are reached will take trillions of dollars and force the entire nation to tighten its belt to pay for it. Doomsayers forecast that to completely fund the entire legislation would bankrupt future generations, and possibly the nation at large. More conservative talking heads feel that the Congress and the President may work out a compromise. But complete repeal is not likely while the current Chief Executive is in the Oval Office. 

According to National Review Online, now that the American people have handed Republicans the keys to House of Representatives on November 2, they can smother this $2.5 trillion extravagance in its infancy. While a GOP repeal vote surely would earn a presidential veto, a Republican Congress could defund this law’s implementation. The kicker is whether the Senate now will go along with the new Republican majority in the House. Their resounding triumph in the House gives Republicans a stronger position to pursue their stated goal of repealing the   Affordable Care Act (ACA), or at least portions of it. According to Medscape Medical News, House Republicans have already promised not to appropriate funds to implement the law. In addition, Republicans will assume chairmanships of House committees by virtue of their majority, giving them more leverage to oppose reform efforts by the Obama administration.

So the $64 Billion question is “What happens next?” The new Congress will have an opportunity to substantially change the course of health care reform. Outright repeal would undoubtedly face President Obama’s veto pen. But that’s not even what the public is asking for, as polls show that voters want health reform. They just don’t like the current version of it according to the Kaiser Health Foundation and the National Center for Policy Analysis. To understand the reasons why, it’s helpful to review who won and lost under the measure that became law last spring. The big winners are most (but certainly not all) of the 32 million whom will eventually become insured plus some people with high health care costs. Let’s generously peg that combined total at 50 million. The other 250 million Americans are going to lose more than they gain. For every winner, there are five losers. So, the second round of reform will have to tackle some of the most important problems of ordinary Americans--making health insurance portable, affordable, and fair.

Let’s take a look at each way that health care reform should work

PORTABILITY:  The single biggest problem most nonelderly Americans have with their health insurance is a lack of portability. If they get laid off, quit their jobs or just retire, they lose their coverage. For those who think the problem is solved with a health insurance exchange coupled with government subsidies and community-rated premiums, take a look at Massachusetts. There, if you lose your group plan coverage and buy subsidized insurance from the state’s exchange, you will have insurance that pays doctors little more than Medicaid rates. You’ll move from the head of the waiting lines to the rear. Here’s a better solution. Employers should be able to buy individual policies for their employees with untaxed dollars – a change that would require amending federal law. But right now, that is illegal. Employers can buy group insurance, but not individual insurance — even though the insurance may be just as good and has the added advantage for employees of being portable. This proposal would not require employers to buy portable insurance for their employees; it would only allow them to do so.

AFFORDABLE HEALTH INSURANCE: The individual mandate to buy insurance, starting in 2014, and the requirement that employers provide coverage for workers should be dropped. Instead, the government should offer reasonable tax relief to help consumers buy reasonable coverage. But for this approach to work, the government must (a) live within our means and (b) deal with everyone fairly. A large restaurant chain was questioning whether to continue offering the “mini-med” insurance plans it currently makes available to its estimated 30,000 low-wage employees because of the health law’s minimum benefit requirements and the fines that result if the plan falls short. (These types of plans generally cost about a $100 a month, cover some routine medical expenses but have annual deductibles or benefit caps and no catastrophic coverage. Companies like American General have very affordable group rates, and other individual plans are available through agencies like Core Five Solutions that also incorporate a discount through established PPO networks for even more savings.) This example drives home a key problem that stems from the health law’s minimum plan requirements. Ten-dollar-an-hour and minimum wage employees and their employers cannot afford insurance that costs more than $5,000 for individuals and more than $12,000 for families. Surprisingly, the health reform bill does nothing to help them. The law’s minimum-benefit-mandates also will affect baby boomers who retire before they become eligible for Medicare, making their insurance more expensive than it would have been. Further, above-average-income retirees will get little help from government if they buy the required insurance in a health insurance exchange and they will face a hefty fine if they don’t. Even employees who think they have post-retirement benefits from an employer may face an unpleasant surprise. A major US Corporation just announced it will be ending its coverage for its retirees and sending them instead to the health insurance exchange. And, some major unions have also decided to yank vision and dental benefits from retirees, making all those years putting the union first count for very little when it comes to getting your teeth fixed or a new pair of glasses.

FAIR HEALTH INSURANCE: One option is to take the tax subsidies already in the system and add to them whatever taxpayers are willing to pay. For instance, instead of the arbitrary, unfair and regressive tax subsidies that pervade the current system as well as the new health reform law, every single adult should get a refundable health insurance tax credit of $3,000. Every family should get $7,500. And that’s that. Taxpayers would be able to use their credits to pay for the first $3,000/$7,500 of their private health insurance premiums. People would pay additional costs from their own resources, but I suspect individual choice and market competition will allow many to make do with those limited subsidies.

What about pre-existing conditions?

The White House and Congress have blurred the distinction between people who are uninsured through no fault of their own and people who are willfully so. Consider a workable system in which people who are continuously insured do not lose access to the system merely because they retire or lose their jobs. For example, one idea is to let everyone purchase regular insurance as well as change-of-health-status insurance. The latter would protect against illnesses that create new pre-existing conditions. However, people should not be allowed to game the system by opting not to be insured while healthy and then getting insurance at the rates everyone else pays when they get sick, a situation that is already threatening the Massachusetts health plan.

TORT REFORM: How about a nationwide ban on high end lawsuits? One major reason health care has become so expensive is that America has become a very litigious society. People sue one another over the most ridiculous reasons, and frivolous lawsuits have been the cause for many a personal bankruptcy. When doctors and health care providers are forced to pay thousands of dollars for malpractice insurance just to survive financially, who do you think pays for those premiums at the end of the day? Consumers eat those expenses in the form of higher medical costs, co-pays, and deductibles as the cost is passed along through the health care system to the end users. Some states have instituted reforms, like Texas capping payouts at $250,000 no matter what the jury decides. Although the actual difference tort reform makes may be small in comparison to the overall grand scheme to reduce health care costs, any net reduction is worth the effort to guarantee that health care reform is cost effective.

According to Medscape, the main result of the election is uncertainty for physicians; but one positive in the election results is the possibility of victorious Congressional Republicans prescribing one of their favorite reforms for healthcare — tort reform. The cornerstone of tort reform in the eyes of physicians and Republicans alike is a cap on noneconomic (pain and suffering) damages awarded to malpractice plaintiffs. Also, physicians face a massive cut in Medicare reimbursement on December 1, and a smaller one on January 1 that will add up to 24.9%, unless a lame-duck Congress later this month acts to avert it. The cuts are triggered by Medicare's sustainable growth rate (SGR) formula for setting physician pay. The Congressional Budget Office has put the price of replacing the SGR formula with one considered more equitable for physicians at more than $300 billion.

But Republicans could still fall back on the congressional power of the purse, denying the administration billions of dollars to carry out the most far-reaching social legislation since Medicare and Medicaid. The end game is funding, though, according to the Drug Discovery and Development Magazine. Faced with an opposition Congress "defunding" his health care plan, would the President make a stand? Would he risk shutting down the Health and Human Services department, the IRS, or perhaps even the whole government? Extensive efforts by the administration to tout the new healthcare benefits for seniors and families, small employers and large corporations, have failed to rally public opinion. Major components such as taxpayer-subsidized coverage for millions now uninsured, an IRS-enforced mandate that most Americans carry a policy, and guaranteed coverage for people in poor health are still more than three years away.

Republicans would face tricky political and policy challenges:

• Would they allow insurance companies to again deny coverage to children with medical problems? The new law prohibits that.
• How would the GOP make up billions in lost federal revenue, since the Congressional Budget Office has ruled that the law reduces the deficit?
• Would Republicans bring back the coverage gap in the Medicare prescription drug benefit? The law gradually closes it.

Expect a House floor vote on repeal in short order, even though the GOP does not control the Senate. That's the opening move, to send a message. What happens next is anybody's guess. Now, Congress can make narrow targeted efforts to go after the cost problems. Without the president, the bill can't be repealed. But, legislators can aggressively go after portions of it. One provision of the law is already on its way to being rescinded: a requirement that nearly 40 million businesses file tax forms for every vendor that sells them more than $600 in goods. Other targets include the fines for people who refuse to get coverage and a new long term care insurance program.

According to NPR.org, any repeal legislation is certain to be vetoed by President Obama. Republicans would need a two-thirds majority in both houses to avoid a veto, which seems highly unlikely. The recent GOP “Pledge to America” proposes to do away with health care mandates on small businesses, allow the purchase of health care across state lines and enact "real medical liability reform." However, in September, consumer protections have already taken place as one of the initial phases of the bill. Insurers can no longer impose lifetime caps on benefits and must allow parents' plans to cover young adults up to age 26. Companies also can't cancel policies retroactively unless they can prove fraud, and they can't discriminate against children with pre-existing health conditions. These protections essentially amount to an implementation of much of the "patients' bill of rights" that kicked around Congress in the late 1990s and was aimed at curbing insurance industry practices.

The timing of the new provisions — coming six months after President Obama signed the health care bill into law — is hardly coincidental. The people who wrote this bill knew that it was going to take a good long time to get the major benefits up and running, so they wanted to have something tangible and popular to show voters before the important midterm elections that just happened. Republicans seem to want to let the new benefits stay in place, noting that the patients' bill of rights was mostly bipartisan. Both parties are having problems with the insurance industry. And that industry doesn't support many of these changes unless they're also accompanied by a requirement that everyone have health insurance — something that's at the top of the Republican hit list.

Instead, Congress should pass what it should have adopted in the first place: a simple, far cheaper program. One additional option can be centered on “health stamps.” These vouchers would help truly uninsurable poor people purchase insurance, much as food stamps help low-income Americans buy almost any groceries they please, without capsizing the entire supermarket system. Medical-malpractice reform, universal tax-free health savings accounts, and individual purchases of portable medical plans (all available across state lines) should also compose the balance of the GOP’s antidote to the ACA. Drawing a line in the sand like John Wayne did in the movie “The Alamo” sounds great when you are rattling the political saber. It’s far more difficult in a contentious environment, combined with special interest groups, and a public mandate by voters, to derail a gigantic set of laws already enacted. Some changes are possible and somewhat likely to take place. However, Obamacare’s ultimate demise, though, likely will require a Republican chief executive to sign its death certificate.

About The Aothor

Mark Roberts’ professional sales background includes almost 30 years of sales and marketing in the tax, insurance, and investment markets. Currently his key focus is developing relationships with large national client groups, including insurance plans, employers, unions, affinity groups, and associations, and financial institutions in various areas of responsibility including sales, marketing, and account management. Mark also is a licensed life, health and accident insurance agent in all 50 states and DC, and has participated in multiple large national employer open enrollments for voluntary products including limited medical benefit plans, short term disability, term and universal life policies, cancer and critical illness policies, and many other insurance products. Additionally, Mark has been writing a health care blog for the past 3 years, found at www.yourbesthealthcare.blogspot.com , which is a topical weblog about various health care issues. He has been noted recently as the Medical Reporter for an online news service with over 110,000 subscribers at www.thecypresstimes.com , and he has been pleased to regularly contribute articles to magazines for both medical and dental topics both in the US and the UK. You can reach Mark at markr@careington.com or by phone at 800-441=0380, x2905.