Obamacare Turns Three, Remains Unpopular

This entry is from an article written by:

Roger Stark, MD, FACS
Health Care Policy Analyst

President Obama signed the federal health care bill, The Affordable Care Act (ACA), into law three years ago. Let’s look at what has happened over the past three years.
The law remains extremely unpopular with Americans. Since passage, polls have consistently shown at least 50 percent of voters disapprove of the law. A recent Kaiser Family Foundation poll revealed that only 41 percent of respondents actually understood the law while 57 percent did not.

The estimated cost of the law has gone up dramatically. Originally the nonpartisan Congressional Budget Office (CBO) estimated Obamacare would cost $940 billion over its first 10 years. This was based on a deception written into the law of 10 years of revenue starting in 2010 but only six years of benefits starting in 2014.

The CBO now estimates the cost to be $2 trillion over the 10 years starting in 2012. Revenue comes from a $716 billion cut to Medicare providers and over $1 trillion in new or expanded taxes. None of the significant Medicare cuts have taken place as scheduled, so the cost overrun of Obamacare has already started. Health insurance companies are warning of 30 to 116 percent increases in premiums and the government’s own CBO estimates at least 10 to 13 percent increases in rates.

Even President Obama sees the failure of parts of the law. He has signed the repeal of the long-term care provision, or CLASS entitlement. He also signed the repeal of the $1.7 billion Small Business Tax Reporting Requirement, which would have forced businesses to report every vendor transaction over $600 to the IRS.

>> Click here to read Roger Stark's entire column online

Health Insurance Exchange Lingo: Terms you should know

This won't hurt...much.

Here are just a few of the terms you’ll be hearing a lot about in the coming months as the exchange market gets up and rolling.

Public exchange
A government-regulated online marketplace that can be run by the federal or state government. It will be the only place where individuals, families, and small groups may purchase health insurance that’s eligible for new federal subsidies—tax credits and cost-sharing assistance—as of Jan. 1, 2014. (Small groups are only eligible for tax credits.) In Washington state, the Public exchange is called the Washington Healthplanfinder.

Washington Healthplanfinder
The online marketplace for individuals, families, and small businesses (1–50 employees) that provides side-by-side plan comparisons based on factors such as cost and quality. For individuals, it will include a calculator to help consumers
determine if they qualify for financial assistance (subsidy) to help pay for their coverage, and allows them to purchase coverage online. It becomes operational on Oct. 1, 2013 for enrollment in plans becoming effective Jan. 1, 2014.

SHOP
This is an acronym for the Small Business Health Options Program, the part of the exchange specifically for small employers and the self-employed. It begins in 2014, and Group Health plans to participate in 2015.

10 essential benefits
The minimum health benefits all Individual & Family and small businessplans must provide in Washington state: ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, rehabilitative services and devices, lab services, preventive and wellness services and chronic disease management, and pediatric services—including dental and vision care. Plan designs should be published sometime in the summer of 2013.

Metal tiers
Plan options will be broken down into tiers based on the level of coverage they provide. Each tier corresponds to an actuarial value. The actuarial values are bronze (60 percent), silver (70 percent), gold (80 percent), and platinum (90 percent). As you can imagine, platinum plans will cost more than the other "metals." Rates may not be published until summer of 2013 but you should be prepared for Sticker Shock.

April is Cherry Blossom time in our nation's capitol

April 8-9, 2013 was my fourth trip to Washington, D.C. in 18 months. These were not sightseeing vacations but business trips. When insurance is your profession, politics is your business. On this sojourn to the nation's capitol I was with nearly 1,000 other members of the National Association of Insurance and Financial Advisors, NAIFA. Our group was "on the hill" April 9th and included advisors from every State. We covered 85% of the offices for Senators and Congressmen.

Some Senate and House members were in their offices but we met mostly with their tax counsels, chief of staff and legislative aids. Our message was to make sure they know and understand the role of insurance agents to their constituents.

• 75 million American families depend on insurance for their family security.
• 20% of all long-term savings are held in life insurance policies
• The insurance industry pays out $1.5 Billion per day in benefits
• 18% of all bonds are purchased by the insurance industry
• Life insurance, annuities and long-term care policies reduce dependency and promote self-reliance, thrift and individual responsibility

President Wilson in 1913, the year Congress enacted the income tax, made sure than Americans would have incentives in life insurance products so they would put away money to provide for their future. Those incentives remain in place today.

Although there are no bills pending that would change those incentives legislators are looking everywhere for "revenue" to feed their spending habits. And it's early in the session with many months of wrangling ahead of us.

None of the legislators or staffers indicated they would seek to change the incentives found in the current tax law. In fact, each office assured us they would reject any plan to alter the current tax treatment of life insurance.

However, our work is not done and we dare not rest. We will be back to advocate for our clients, our families and our industry.

Another part Obamacare quietly going away

We saw the demise of the Affordable Care Act’s foray into long-term care when the CLASS act bit the dust. It was a smack-your-forehead moment when the not-ready-for-prime-time-players realized that their grandiose idea of selling insurance coverage for nursing home care was both unaffordable to citizens and much more expensive than originally calculated. My professional organization, NAIFA www.naifa.org led the effort to shine the light of truth on this fiasco of the Obama administration and the CLASS Act was withdrawn. Here is a Business Roundtable blog article that discussed this - http://businessroundtable.org/blog/class-act-dumped

One of the earliest ACA programs was the Pre-Existing Conditions Insurance Plan or PCIP. In Washington it is called PCIP-WA. Well, it’s going down, albeit quietly. The PCIP was drafted to provide an [expensive] method for uninsured people to obtain health insurance even though they had pre-existing conditions. In other words, a cancer sufferer, obese diabetic heart patient or someone afflicted with HIV/AIDS could enroll and get coverage immediately. The premiums were NOT low but the coverage was a method to avoid bankruptcy for those who needed this plan and could afford to buy in.

Well, the administration is quietly closing the program down. There are two reasons for the PCIP going out of business: 1) the program ran out of money (gee, what a surprise) and 2) beginning in January 2014 these folks should be able to obtain health insurance through their State health insurance exchange – policies that do not have health screening for enrollment and have no waiting periods for pre-existing conditions. Read about it here-- http://www.huffingtonpost.com/2013/02/15/obamacare-uninsurable_n_2698435.html?utm_hp_ref=business

Like everything else Obama has initiated there was a large amount of fanfare when the program came out. Like everything else that Obama has touched, the demise of the PCIP is happening without widespread public notice. Some 23 States have a PCIP in place. People who have a policy will be allowed to continue the coverage but we expect that all states will cease taking new applications within days.

When you meet people who think Obamacare is the best thing the USA has done to take care of its citizens, reflect on your experiences with the post office (broke), the DMV, FEMA (it took them 5 days to get fresh water to Katrina victims), OSHA, FDA, etc. and consider how it is going to be when the government takes over ALL of your health care.

I'm leaving...on a jet plane!

The National Association of Insurance and Financial Advisors (NAIFA) is the premier organization for professionals since 1895. I have been a member since 1975 and currently serve as the Washington State Chairman for the Political Action Committee.

I will be flying out Sunday morning, January 27th for Washington DC along with my Co-chair, Alex Collins of Bothell and our State Political Involvement Chair Richard Miller of Yakima. We'll have meetings and training all day Monday the 28th. Our "Day On The Hill" is Tuesday the 29th. We have appointments to see Senator Patty Murray, Senator Maria Cantwell, Representative Susan DelBene and Representative Dave Reichert. In reality, we may only get a chance to talk with legislative aids as the House will be in recess and the Senators seldom take time to meet with constituents personally.

We'll be discussing tax reform issues that are being considered such as taxing life insurance benefits, IRA and 401(k) accounts as well as employer provided benefits. With the budget being in such a mess, legislators are looking everywhere to find money to feed their spending habits. For example, life insurance death benefits and the cash values in a life insurance policy have been given special tax treatment since the income tax laws went into effect  in 1913. That is why when a widow receives a death benefit from her husband's life insurance there is no income tax due. Some legislators want to change all of that.

They would change the laws so that when a person dies and the beneficiary receives, say $100,000 of life insurance proceeds, the government will take 30% of it. Can you imagine a widow getting a tax bill for $30,000 on the money her husband arranged to be paid so that she can remain in her own home and take care of the kids?

Watch for reports on our experiences next week.

Health Care Reform - 2013

Health Care Reform (The Affordable Care Act, or Obamacare) is the law of the land. Changes have been rolling out since 2011. In 2013 the following changes will take place.

• Medicare payment bundling: Medicare pilot program is established nationally on payment bundling to encourage doctors, hospitals and other care providers to better coordinate patient care.

• New Flexibile Spending Account (FSA) limit: Beginning on January 1, 2013, contributions to FSAs will be capped at $2,500 per year.

• Medical tax deduction: The threshhold for claiming medical expense tax deductions is raised from 7.5 percent to 10 percent of adjusted gross income. If you file an itemized tax return, you can deduct qualified medical expenses in excess of that threshold. The threshold remains at 7.5 percent for the elderly through 2016. See IRS Publication 502 for more information.

• Medicare payroll tax: is raised to 2.35 percent from 1.45 percent for individuals earning more than $200,000 and married couples with incomes over $250,000. The tax is imposed on some investment income for that income group.

In Washington State, the federally mandated Health Insurance Exchange is being established by the Health Care Authority. The name will be Washington Health Plan Finder. Licensed and certified insurance agents in Washington will be able to help people navigate the system.

My practice includes health insurance for all ages. I will be active helping my clients and all others with choosing and enrolling to a health insurance plan when the Health Plan Finder is up and running. In the meantime, check with me about your options prior to January 2014.

Health Insurance in 2013

If you are buying health insurance for yourself and or your family, you have seen notices from your company about rate hikes coming in January 2013.  LifeWise, Regence BlueShield and Group Health have filed with the Office of Insurance for rate increases. Their requests were not granted. That is , the amount of increase they sought was not approved. Instead, the OIC approved rate increases lower than what the companies needed or wanted.

What is driving these rate increases?  Several factors including rising costs of health care in general, mandated benefits (58 at last count) initiated by our OIC in Olympia, and new regulations and mandates involved with the PPACA (Health Care Reform).

What is coming in the future?  The PPACA is the law of the land. Effects of the new law started showing up in 2011 and continued in 2012. For 2013 there are several new segments of the law being instituted. New taxes, new mandates and regulations are being implemented now and yet even more are being written as time goes on.

By October 2013 we should have a Health Insurance Exchange up and running. The new government program has a new name - Washington Health Plan Finder - and can be tracked at this web site www.hca.wa.gov/hcr/exchange

The Health Care Authority is in charge of establishing WHPF. The HCA testified to the Office of Insurance in the fall of 2012 that A) the WHPF will cost about $50 Million a year to operate, B) health insurance premiums may be 70% higher than similar plans offered on the market today.

Interestingly, the OIC operates on about $50 Million every biennium and gets most of its funding from premium taxes levied on all insurance companies operating in Washington. The WHPF will operate for a couple of years on Federal grants but must be self-sustaining by 2015 when that Federal money dries up. The WHPF has no idea how they can afford to operate and is trying to figure it out.

In my opinion, we are in for a rough ride over the next couple of years. I will be involved in helping people navigate the new choices coming in the fall of 2013. Watch for updates to this subject. If you want to be notified by email of unfolding details, let me know.