Feds: Repeal, States: Replace


Avik Roy wrote an excellent piece in Forbes taking on the issue of guaranteed issue head on:

Thanks To Democrats, Pre-Existing Conditions Outweigh The Uninsured In The GOP Obamacare Deal

Should we continue letting the “ludicrously dishonest” (well stated Avik Roy) presumptions of the ACA shape the future of our healthcare delivery system?

I think not.

Prior to the ACA, 6 states (Maine, Massachusetts, New Jersey, New York, Vermont and Washington) required guaranteed issue individual plans. In 2010 these states had some of the highest individual insurance rates in the country:

KFF 2010 Average Individual Premium Per Person

There were another 35 states that offered guaranteed issue high risk pools:  

High-Risk Pools For Uninsurable Individuals

That means 41 states already had access to guaranteed issue individual health insurance plans prior to the ACA. 

Here’s another point… around my part of the country (KS / MO) the guaranteed issue plans available prior to the ACA were less expensive than the non-subsidized 2017 individual plans! 

ACA proponents are quick to point out that there are more people insured now than prior to the ACA. What they fail to mention is that most of those gains are from new Medicaid enrollments (15 million) vs. state or federal Marketplaces (11 million):

Key Facts about the Uninsured Population

Since I don’t just want to be the one pointing out problems without offering a solution, here are my recommendations for an ACA replacement plan:

  • Repeal the ACA… All of it
  • Individual mandates and employer mandates would be gone (no more 1095-C forms… would anyone be disappointed?)
  • All individual health insurance premiums should be tax deductible just like employer group plans are tax deductible
  • Employers should be able to contribute to individual health insurance premiums or group health insurance premiums pre-tax so employees can choose to keep their individual plans if they prefer
  • States should decide if they want dependents covered through age 26
  • States should decide if they want to require all individual plans to be guaranteed issue
  • States that don’t require guaranteed issue should be required to have a high risk pool

Since government programs are the nearest thing to eternal life we’ll ever see on earth (Reagan / Byrnes), I am assuming subsidies are here to stay.

  • These high risk pools would be partially subsidized by states and the federal government to help make them affordable
  • Low income people would receive reduced tax credits / subsidies to purchase whichever health plans they want (no minimum essential coverage / minimum value requirements)

Keep in mind, the subsidies could be reduced (if not eliminated) for a lot of people when the cost of insurance goes back down to pre-ACA rates.

  • States should decide if they want Medicaid expansion (and be willing to pay for it themselves)
  • Include tort reform legislation limiting frivolous lawsuits and capping malpractice settlements
  • Include Price Transparency legislation letting patients know up front what tests and procedures will cost

And since health insurance does not equal health care, there needs to be fundamental changes to physician access:

  • Direct Primary Care’s (DPC) monthly membership fees should be allowed as an eligible HSA / FSA / HRA expense (are you surprised I made it this far before mentioning HSA?)
  • States should be given block grants to explore more effective health care delivery systems (i.e. HSA & DPC) for Medicaid, Medicare, and VA

Allowing healthy Americans to purchase underwritten health insurance plans at substantially lower rates has been called discrimination by some. That is true. Insurance companies discriminate.

What would happen to auto insurance rates if everyone paid the same regardless of driving records or previous accidents? Most would pay substantially higher, some would pay less.

What would happen to life insurance rates if everyone paid the same regardless of weight / tobacco use / health issues? Most would pay more, some would pay less.

Providing access to high risk individual insurance plans for the few that need it while allowing healthy individuals to purchase lower cost underwritten plans would make individual health insurance affordable again.


WebMD interviews Newt Gingrich

Newt GingrichI found an interesting article this week:

Click here to read the article on WebMD

Here is my response:

The only thing Newt didn’t mention in this fantastic interview is that we do have one solution available today that achieves most of the objectives he is outlining. I am one of approximately 5 million Americans that have started one. They are called Health Savings Accounts, or HSAs.

Since HSA qualified plans require a high deductible insurance policy without copays for physician visits or prescription drug coverages I have an incentive to shop for the best value. Since copays insulate consumers from the actual cost of the products, it encourages people to spend.

What other product in our free-enterprise society is delivered with a copay? Imagine purchasing a car with only paying a $200 copay and having someone else pay the rest of the actual cost. Would any of us be driving the same car we drive today?

I couldn’t agree with Newt more on his analysis of prescription drug advertising. It has always frustrated me seeing the commercials stating we should “ask our doctor about” this latest and greatest prescription, yet there is never a mention of cost. Most people think, “Well that’s what I’m paying these huge health insurance premiums for”.

Although prescription drug and physician visits are part of my comprehensive major medical insurance policy, they accumulate towards my calendar year deductible. I still receive the insurance company’s PPO discount on these expenses. Should I satisfy my deductible, my insurance policy covers 100% of all of my medical bills for the rest of the calendar year for my entire family.

Those of us with HSA qualified insurance plans have a vested interest in NOT spending our health care dollars. The premium we are saving (and I’m saving a lot) can be placed into a triple tax-advantaged HSA account. I pay my medical expenses for my family out of the HSA account. If I don’t spend it, I keep it. My wife knows to ask the doctor if there is a generic available because every dime we spend out of our HSA is actually money out of our retirement. We still have insurance in case of a large claim, but we cover the small bills ourselves with money we would have paid to the insurance company.

HSA qualified insurance policies are allowed to cover preventive care such as annual checkups, immunizations, mam/pap, prostrate screening, etc. immediately without having to satisfy the deductible. Our particular insurance plans do, although not all of them offer this wellness feature. In some years wellness checkups are the majority of our expenses, and the insurance company pays it all.

These type plans are called “Consumer-Driven” or “Consumer-Directed”. They are showing great promise in reducing utilization while still offering a comprehensive major-medical insurance plan in case of a major claim.

It is great to see some of the larger companies finally beginning to offer these HSA qualified plans for their employers. Unfortunately they are not always designed to place the premium savings into the HSA account. With proper design and education for employees, these plans offer an actual solution to the ever increasing health care costs.

I just hope Newt’s calculation of 40% reduction without sacrificing quality becomes a reality. I know it has for my family.

Thanks for getting a great message out Newt!

  • HSA Contribution Calculator