AS YOU SLEEP THE FUTURE OF YOUR HEALTH INSURANCE SUBSIDY HANGS IN THE BALANCE

KENTONSBUSINESSWEBPHOTO

Op-Ed by D. Kenton Henry

While most Americans who receive a health insurance subsidy to offset the cost of the coverage they obtained from the federal website, Healthcare.gov, go quietly about their personal business―the future of that subsidy―and the very future of the Patient Protection and Affordable Care Act (PPACA) or Affordable Care Act (ACA) for short―which gave birth to said subsidies―hangs in the balance. And, for the most part, these same Americans remain blissfully ignorant that the future of their health insurance protection hangs with it also. Apparently sleeping as its fate is to be decided by the 30th of this very month when the Supreme Court releases its decision on King vs. Burwell.

King vs. Burwell contests the financial help available to some enrollees on  the federal insurance exchange in 34 states on the basis that the PPACA was not written to allow for the existence of subsidies provided by the federal exchange. In fact, the plaintiffs argue just the opposite―that only those exchanges established by the states could provide such. Should the court rule in favor of the administration, it will mean the law has survived one more effort to derail it and its future may well be assured. However, If the plaintiffs prevail, that leaves the estimated 6.4 million recipients of the subsidies in the thirty four states which did not with illegally subsidized health insurance. And, without subsidies . . . health insurance reform starts to fall apart. The majority of the recipients will drop their coverage and only the sickest―who bring the most expensive claims to the insurance companies―will remain on their plans. This phenomena is know within the industry as “adverse selection”. In reality, it means that the youngest and the healthiest, regardless of age, will flee their plans like rats off a sinking ship. And the sinking ship will be Obamacare. The law itself. This is because it is estimated that insurance premiums for these 6.4 million will increase an average 256%. A result which will single-handedly insert the substitution “Unaffordable” into the Affordable Care Act―Obama’s signature landmark legislation― sending it into a classic death spiral.

And what does the Supreme Court’s decision hinge on? Four key words: “established by the state”. As in the subsidies are to be available only to income qualified recipients in those exchanges established by the state. The four words are contained in that portion of the law which details how premium subsidies are calculated for health insurance policies. Plaintiffs argue thirty four states never established an exchange. Ergo, how can subsidies be provided for their residents? They argue the wording was constructed to serve as an incentive for the states to create own exchange; the states called the federal government’s bluff and the feds willy-nilly pulled a rabbit out of their head and provided federal exchange subsidies for which no provision within the law was made. To follow their argument to its logical conclusion, the Internal Revenue Service has violated the law by providing tax credits to individuals in these states.

The administration argues that exchanges were created by the states when they effectively opted to let the federal government do it for them. Therefore, their inaction became their action. This allows subsidies to be provided their residents.

As a health insurance broker with twenty-nine years in the industry, I have survived the inevitable ups and downs of the small business owner. I, and my practice, have survived Hillary’s attempt in the early nineties at health care reform and the deterring effect of ever increasing health care costs; the resulting sky-rocketing insurance premiums and the general turbulence of an industry which attempts to manage the costs of a sector which comprises an estimated twenty percent of our nation’s economy. I have survived the Affordable Care Act’s resulting cut in my compensation and the loss of hundreds of clients who were forced off their policies because they did not comply with the law’s mandates. Policies with which, for the most part, my clients were happy. Had they not been, they would have dropped them on their own. I now survive the effect of premiums which have risen on average fifteen percent each of the last two years and, in many cases, much, much more for those clients who do not qualify for the subsidy. The bottom line is, “if you qualify for a significant subsidy, you are probably happy with this law. If you qualify for a relatively small subsidy―or none at all―you are most likely very unhappy with it.” It seems everyone is judging it from the perspective of their own personal welfare. And that is human nature, is it not? And I reluctantly admit, I am no exception. And it is not without guilt I do so.

Because, if the subsidies are revoked, by my estimates, I stand to lose approximately two thirds of the new business I have written in the last two years since ACA plans were forced on the public under threat of penalty. Just last month I experienced the first and slightest increase in income since the act’s passage in March of 2010. My income had been decreasing precipitously since then, mostly due to the “minimum loss ratios” imposed on insurance companies resulting in maximum losses to the agent and broker. But I accepted these; remained committed to my industry and business and have survived. If King v. Burwell is decided in favor of the administration’s adversaries, my clients will let their coverage lapse and the resulting personal effect will be “two steps forward and three steps back”. Hence, the guilt. The guilt born of knowing the worst aspects of this law (unknown to average person) are yet to be implemented and only a minute portion of the resulting costs are currently apparent. Those forthcoming will have a devastating effect on our nation’s treasury which is already eighteen trillion in debt and rising “with a bullet”. I know that progression of this law and its mandates is already forcing rationing of our health care providers and further progression is going to result in ever increasing rationing of health care treatment available to each of us. And yet, for my own sake, I don’t want to experience more losses.

Please do not think I do believe there was no need for health care reform. When two of every five health insurance applications I submitted on behalf of clients was declined due to pre-existing conditions and another not taken due to “waivers” of such (prior to the law’s enforcement) I experienced the angst of my clients and my own.

And so I sit, in front of my computer desktop, on the edge of my seat monitoring each post from SCOTUSBLOG.COM and each editorial from the most liberal to conservative journalist (who knows much less about this law than I) attempting to predict as to which way this imminently pending decision will go. The patriotic conservative within me says, “for the welfare of my nation’s economy, this law should fail.” While the agent, broker, small business man within me who likes to eat, pay his bills, maybe put something away for retirement and doesn’t want to see any more of his clients lose their very necessary and greatly appreciated health insurance coverage says―”Please, oh, please. Let the Supreme Court of this United States of America, in all their supremacy, rule that the authors of the Patient Protection and Affordable Care Act didn’t really mean what they wrote. Let the subsidies stand.”

http://thewoodlandstxhealthinsurance.com

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Related stories:

THE NEW YORK TIMES

Politics

Four Words That Imperil Health Care Law Were All a Mistake, Writers Now Say

By ROBERT PEAR MAY 25, 2015

http://www.nytimes.com/2015/05/26/us/politics/contested-words-in-affordable-care-act-may-have-been-left-by-mistake.html?ref=us

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MORNING CONSULT Burwell Draws Line On Health Subsidy Fix Jon Reid   |   June 10, 2015  http://morningconsult.com/2015/06/burwell-draws-line-on-health-subsidy-fix/

“Happy Anniversary Healthcare.Gov!” (Do We Want A Divorce?)

Op-ed by D. Kenton Henry

BIRTHDAY CAKE

 

Happy anniversary, Healthcare.gov! Today, October 1st, marks the first anniversary of the premier of the originally beleaguered Federally Facilitated “Marketplace” (FFM), the federal government website for the purchase of Affordable Care Act (ACA) compliant health insurance plans in states which did not implement their own. And what of it now?

After a rollout, which was anything but smooth, and a current expenditure of approximately $2.1 billion dollars (after a winning bid of $90 million) the site seems to have solved the majority of its “front- end” issues. These involve opening an account; verifying identity and plan selection. But in light of notice that the time has run out for those who did not succeed in providing adequate proof of income for subsidy (“Premium Tax Credit”) purposes thereby resulting in their loss of coverage or―at least the subsidy―one is left wondering what if anything will change relative to this “back-end” issue for 2015. According to a September 15th article in the New York Times, approximately half a million insured face a forced plan change. “363,000 could lose their premium subsidies due to an inability to verify income, while 115,000 more could have their policies canceled because they have not proven their immigration status. Federal authorities have been working for months to resolve both backlogs.”

My BlueCross BlueShield of Texas clients who have “grand-mothered” plans just received notice dated today that “The health plan you now have will no longer be available and cannot be renewed”. Grand-mothered plans are those which have been modified in anyway, such as a change in deductible, but purchased prior to January 1 of this year when all new policies were required to be ACA compliant. Termination will be effective the end of 12.31.2014 and the client, insured will have until that date to enroll in a new plan for seamless coverage beginning January 1. These policyholders are instructed to log in starting November 15th to review their options and elect new coverage through BlueCross BlueShield. What will the benefits look like and what will be the cost? Well, we won’t know until November 15th. The consensus seems to be that premiums in all but a few locations will be increasing somewhat across the market compared to this year’s ACA compliant plans but at less than the average rate of medical inflation in recent years. (Call me skeptical.) But what about compared to their grand-mothered plan? No way. By the time you add in the additional cost of mandated coverage for benefits such as pediatric dental and vision, maternity and the rest of the “minimum essential health benefits” along with guarantee issue for pre-existing conditions, there is no way these policyholders are going to be pleased with the premiums their new options will cost. If they had thought the marketplace offered better options, they would have elected them for 2014. I am certain the words, “If you like your plan, you can keep your plan. Period.” will be ringing in their ears as they peruse their new options.

On the upside, an estimated 25% additional insurance companies will be providing coverage for 2015 both in and out of the marketplace and state exchanges. This increased competition will give consumerd more options and will hopefully help offset some of the inflationary aspects of mandated coverage in future years.

On the downside, what of the “It’s a penalty … not a tax!” ― now known as the “Shared Responsibility Payment” ― for not having coverage in 2015? That increases to $325 per adult and $162.50 per child or 2% of household income ― whichever is higher. (Family maximum is $975.) It will increase every year hereafter, tied to the rate of inflation beyond 2016.

Additional variables remain to be seen such as “provider selection”. While pressure is being put on insurance companies to increase the number of in-network providers available to the insured, surveys seem to indicate more providers are electing not to join. They feel payments have dropped to low to make it worth their while to participate. Insurance companies are going have to find alternative ways to control costs and since they cannot control the risk they are forced to assume (elative to pre-existing conditions and the mandated “loss ratio”) they are going to ration our providers and our treatment.

On a final note, the enrollment period for 2015 plans will be half as long as for 2014 and will end February 15th. So get ready to be like the sheep, in the Wild Kingdom segment, passing through the anaconda. It’s going to be a tight squeeze! And once again . . . “Happy Anniversary to Healthcare.gov!”

By all means, please contact me if you feel I can make the celebration cake a little more palatable!

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FEATURED ARTICLE:

The New York Times

U.S. to End Coverage Under Health Care Law for Tens of Thousands

By ROBERT PEAR SEPT. 15, 2014

WASHINGTON — The Obama administration said on Monday that it planned to terminate health insurance for 115,000 people on Oct. 1 because they had failed to prove that they were United States citizens or legal immigrants eligible for coverage under the Affordable Care Act. It also told 363,000 people that they could lose financial aid because their incomes could not be verified.

The 115,000 people “will lose their coverage as of Sept. 30,” said Andrew M. Slavitt, the No. 2 official at the Centers for Medicare and Medicaid Services, which runs the federal insurance marketplace.

Some of them may be able to have their coverage reinstated retroactively if they produce the documents that they were repeatedly asked to provide in recent months, Mr. Slavitt said.

At the end of May, the administration said, 966,000 people were found to have discrepancies in their immigration and citizenship records. Most sent in documents as requested. In mid-August, the administration sent letters to about 310,000 people who had failed to respond. They were supposed to submit documents by Sept. 5, but the 115,000 consumers failed to do so, Mr. Slavitt said.

Many consumers and lawyers who work with them said that they had tried to submit immigration and citizenship papers, but that they experienced problems transmitting documents through HealthCare.gov. Other people said they sent the documents by mail to a federal contractor in Kentucky but never heard back from the contractor or the government.

“We heard from lots of consumers who told us they sent in their documents multiple times or tried to upload them through HealthCare.gov,” said Mara Youdelman, a lawyer at the National Health Law Program, an advocacy group for low-income people.

Jenny Rejeske, a health policy analyst at the National Immigration Law Center, which represents immigrants, said: “It is unduly harsh to terminate coverage while there are still technical problems with the federal system for verifying citizenship and immigration status. And there has not been adequate notice to people who speak languages other than English and Spanish.”

Florida leads the list of states whose residents are losing coverage because of immigration and citizenship issues, with 35,100. Federal officials said they were ending coverage for 19,600 people in Texas, 6,300 in Georgia, 5,300 in North Carolina, 5,200 in Pennsylvania, 4,000 in Illinois and 2,400 in New Jersey. The numbers released on Monday are for 36 states using the federal insurance marketplace. They do not include terminations in California, New York and other states running their own insurance exchanges.

Federal subsidies for the purchase of private insurance are a cornerstone of the Affordable Care Act. More than eight out of 10 people who selected health plans through the exchanges from October through mid-April were eligible for subsidies, including income tax credits. But in many cases, the government could not verify the incomes people reported when they applied for subsidized insurance.

This does not mean that they provided false information or were ineligible for assistance. The government tried to verify incomes by checking 2012 tax return information, but consumers may have switched jobs or received pay raises since filing those returns. As a result, officials said, the information in their applications may not match the data in federal files or in sources available to the government.

Mr. Slavitt said that on May 30 there were roughly 1.2 million households (and a total of 1.6 million people) with “data-matching issues.”

Since then, the government said, it has closed cases for 467,000 households with data discrepancies, and 430,000 cases are “currently in the process of being resolved.”

“There are still about 279,000 households with unresolved income-related data-matching issues that haven’t sent in supporting information, representing 363,000 individuals,” Mr. Slavitt said. They will soon receive letters from the government asking for proof of income, and if they do not reply by Sept. 30, they may lose some or all of their subsidies.

They would still be eligible for coverage, but in many cases could not afford it. In some cases, they would also have to repay some or all of the subsidies they received.

It is also possible that some people could receive larger subsidies if their incomes are lower than what they expected when they applied.

(A version of this article appears in print on September 16, 2014, on page A18 of the New York edition with the headline: U.S. to End Coverage Under Health Care Law for Tens of Thousands.)

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