Obamacare – After the Mid-Terms

By Michael Lujan, RHU, CHRSsvahu-michaellujan

November 6, 2014 – The mid term elections are done and Republicans won big by gaining control of both houses. This means an almost immediate move to repeal and replace the Affordable Care Act.  Not because it will be passed but for the benefit of the newly elected Congress who campaigned on repealing Obamacare.
They need to fulfill their campaign promises and get on record with a symbolic repeal vote. Then begins the real work of addressing the more achievable task of fixing or repealing parts of the landmark healthcare law.
Most likely, the GOP will first consider challenging the employer mandate and unintended problems created by the Employer Shared Responsibility provision. The definition of full-time employment could be increased from 30 hours to 35 hours or more. This could be a reasonable compromise which allows employers to keep workers and put a stop to the unfortunate workarounds and reduction in work-hours created by this provision.
The Cadillac tax, scheduled to start in 2018 may be next to go. While the tax is needed to fund the Affordable Care Act, the impact if unchanged creates an unfortunate incentive for large employers to offer less generous benefits. Penalizing employers for offering more comprehensive benefits always seemed to contradict the spirit of the Affordable Care Act and could see only minor resistance due to the lost tax revenue.
While we are talking about taxes, the small business tax credit could be amended to allow the credit for off-exchange group plans. Currently, the small business tax credit only applies for enrollment in the public marketplace SHOP or Small Business Health Options Program. Since many SBMs (state-based marketplace) and the federal marketplace (Healthcare.gov) have not been very focused on SHOP and even delayed their complete launch of SHOP in some states, it would seem reasonable to allow the tax credit for off-exchange employer-based groups who meet the IRS qualifications. (e.g. fewer than 25 full-time equivalent workers earning and average income less than $50,000 per year…) Employer sponsored plans have long benefited from tax deductions and incentives to encourage employers to offer benefits to workers, especially important for small employers who are not required to offer benefits and exempt from the Employer Mandate. Since more than 95% of all US employers have fewer than 100 employees, a broader small business tax credit would have a big impact for employer-based coverage and providing coverage for millions of working-uninsured.
California’s Prop 45 – 
In California, voters soundly rejected a ballot measure for more rate regulation of health insurance premiums. Proposition 45 was introduced by California’s Insurance Commissioner and a single-payer advocate group called Consumer Watchdog. The ballot initiative had early support which reflects the clear frustration of most consumers who simply want lower health insurance premiums. Field Polls in July showed 69% of likely voters would vote Yes on 45 which would grant authority for the insurance commissioner to approve or reject rates and also allow trail lawyers to intervene and file suit against carriers to defend their rates.  Citing comparisons with Prop 103, a 27-year old law which did the same for the auto insurance and P&C market, proponents of Prop 45 claimed this expanded authority would hold carriers accountable and lower premiums for health insurance.
The prop 45 debate played out like bad kabuki theater, with the Yes on 45 campaign portraying carriers as very over-the-top villains. The Yes on 45 campaign even dramatically delivered bull manure at the steps of an insurance company headquarters to play on consumer distrust of insurance companies.  But consumers trust their doctors and nurses and the No on 45 campaign was strongly supported by a very large coalition of doctors, nurses, hospitals and clinics. Also endorsed by small business, labor groups and consumer advocates. In my role as President Elect of CAHU, the largest association for health insurance agents, I participated in a grassroots campaign to spread the word on Prop 45. I also spoke as an advocate for small business (I am one) and from a perspective of having helped build the exchange as the former Director of Sales for Covered California. Closer to the election, many prominent newspapers and bipartisan leaders (including House Minority Leader, Nancy Pelosi) endorsed the No on 45 campaign, mostly to protect Covered California and California’s relatively successful implementation of the ACA. As voters learned more about the fine-print and who was against it, support for Prop 45 fell to 40% on election day.
The serious business of reforming our health care and health insurance system is complex and CA voters decided by a margin of almost 60/40 to reject this proposition. But they also said is something has to happen to show insurance companies are held accountable and carriers should justify their rates. The demand for more market transparency is a great thing for carriers who need to prove they are only an administrative middleman earning about 3-4% net profit; still earning big money but far less profit than many believe. Most consumers are surprised to learn how much a day in the hospital really costs or the broad range of costs for an MRI in the same zip code. In the US, we spend 4 to 6 times more than other countries spend for the same drugs and have huge opportunities for savings by reforming the pharma industry and policies. Supporters of the Affordable Care Act and Covered California will need to help educate consumers and show more progress to lower healthcare costs which drive our rising insurance premiums. CA consumers may find more assurance and confidence if provider payment reform; addressing fraud, waste and abuse; the Sunshine Act and other meaningful efforts to drive waste out of the healthcare system were explained. While California reduced it’s uninsured from 22% to 11% in just one year, consumers want to know that the cost curve is being bent and they might be able to afford to keep their coverage next year. It will be interesting to see how the new majority will respond and where compromise can be found.
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