How will Large Group Health Insurance Plans Look Under Donald’s Trump’s Regime? By William F. Schaake, CIC, CRM, CLCS © 2016

In order to repeal and replace any major part of the Affordable Care Act or the entire act, there needs to be 60 like votes in the Senate to prevent and overturn a Democratic filibuster. Currently there 52 Republican seats and 48 Democratic, along with 2 independents. Come November 2017, there will be another 25 Democratic seats up for grabs and 8 Republican. Considering that 10 of the Democratic states voted

red, the likelihood that the Republicans will win the majority of 60 seats is very high

next year–but a full repeal in 2017 is not likely.

Mr. Trump already indicated that there are many components of the Affordable Care

Act that he would like to keep intact or expand on such as maintaining continuous

coverage without pre-existing exclusions or allowing children to be covered under

their parents plan until the age of 26 or even older.

So what will happen with Obamacare? Should we call it Trumpcare?

If the Republicans were to propose a bill to repeal and replace the Obamacare, a Democratic filibuster is more than likely in the near term, therefore, the Republican response would probably be to pass a budgetary change called a reconciliation that can remove the teeth out of the lion that was created. This can include waiving the penalties for non-compliance. If either the individual and employer tax or penalty is waived, then many may drop the coverage that was originally secured to avoid the penalties in the first place. Why procure coverage to avoid the Employer & Individual Mandate if there are no financial repercussions by not doing so?

If the recently added 20,000,000 Americans would all of the sudden drop their coverage, this could defeat the process to expand the base of healthy individuals to an existing failing system. Theoretically, the high medical utilizers would be left covered potentially raising the medical loss ratio and threatening the financial viability of our current system–possibly causing a death spiral among the carriers as we recently seen with the COOP’s.

The infrastructure of medical care has adapted to the gradual changes of Obamacare over the last six years by adding methods to adjudicate claims electronically, develop systems to store medical data electronically, and allow consolidation of health care providers, taking advantage of their economies of scale.

Our health insurance delivery system and those involved in the sales, servicing, and advisement to individual and companies evolved into a machine that has been almost completely restructured to deal with the penalties and to maintain compliance. A complete overhaul could cause even more disruption and mayhem.

What would happen to the thousands of auditors hired by either the IRS or the DOL?

The IRS and DOL armies are waiting to be deployed to review the thousands of tax documents, payroll forms, and ACA reporting documents of the large group corporate accounts now required to provide minimum value plans that meet the “Affordability” of its full-time employees. If a full repeal is enacted, or if the employer mandate were to be removed, would these auditors be added to the unemployment line or would they be redirected to review other types of returns, maybe enforce existing ERISA rules that also apply to large group plans? Sometimes the devil you know if better than the one you don’t.

The additional $ 273 billion in annual costs to provide administrative and technical support to keep companies in compliance will certainly whither to a great degree, but the loss of the thousands of additional jobs created by the law firms, risk managers, payroll companies, and accounting practices could have grave consequences on our financial system if the Act it is fully dismantled too abruptly. A better idea may be a gradual deconstruction.

In my opinion, the recently added individuals that are currently covered through Obamacare will be better off to remain covered until the next system is installed or at least until the next enrollment period. Sudden changes can cause chaos so a a transitional period needs to be created to ease these changes and allow individuals and businesses the ability to adjust to the new rules.

Maybe granting leniency or to ease up on the penalties for non-compliance that would be imposed on individuals and businesses. Maybe raise the threshold for employers to provide coverage to over 100 compared to the current 50 full time eligibles. Maybe offer waivers to those companies that can show financial hardship or to those industries that have a disproportionate share of their cost compared to the employees’ pay such as in the hospitality and retail industries.

Other changes mentioned may include allowing insurers to cross state lines or grant the states the authority to regulate and control their own set of rules instead of adhering to the ACA, but I think the greatest impact could be to allow individuals to buy into a system already in force–Medicare.

Medicare as an option for Individuals and Large Groups

For the most part, Medicare is a program we pay into throughout our working life and then by retirement have a way of covering our medical expenses. Part A is generally provided automatically at the age of 65 funded by tax dollars paid into the system, Part B and D are elected and the cost the recipient pays is based on their income.

So why not allow an individual at a younger age than 65, buy into this same system that is provided to those older? How about granting an employer of a large group with tax credits or incentives to offer a group Medicare product to its employees as an option? Since the Medicare Tax is already a line item on the Employee’s W-2, then any adjustment to the rate is merely a simple payroll change. No need to to file complicated forms or figure the employees’ share of the medical rebates on the employees’ contribution.

The Medicare platform is already on a national level, it has a payment and distribution system already in force, and an infrastructure with the potential to be improved. Just like the US Postal Service, or any state department of motor vehicles, the system is already up and running, but in need of repair and improvement. Furthermore, a program tapping into the Medicare system can offer competition to the private markets in a way similar to the State Insurance Funds competing for workers’ compensation business or the USPS providing overnight delivery to compete with UPS or Fed-Ex.

Allowing individuals and businesses to buy into an existing system that clearly isn’t perfect is somewhat radical and may be in need of improvements, but it may be the best and quickest method of promoting health insurance on a national level. If more emphasis and resources were devoted to refining what is already established, such as creating a better checks and balance system, employ outside firms to ensure better oversight, and to set more price controls in areas that clearly overcharge the institutions with the deep pockets, then we may have a better chance of lowering health care costs years from now.

In my opinion, too many lobby and special interest groups had their say in the failing Affordable Care Act which is why it was destined for failure before it was even passed. Didn’t Nancy Pelosi state that the bill would have to be passed to find out what’s in it? Did she even read the nearly 2300 pages of bill before it was passed?

Now the the market is shrinking even more due to consolidation and the recent merger announcements of Anthem buying Cigna and Aetna purchasing with Humana only add to the inevitable direction of a single payer system. Prices can only go higher with less competition so we need more options, not less. If the five national carriers are allowed to merge leaving only three left, we have no hope but to rely on the federal government to carry us from cradle to grave and our taxes inevitably go higher and the quality of health care go lower

Finally, the system can’t be changed unless you remove the benefactors that have the most to gain. The oligopolistic companies controlling healthcare are now becoming the new robber barons of this century. They are setting the prices and mandating how coverage is administered by expanding their terrain to include every American to ensure greater profitability–and it’s not the insurance companies we have to blame.

We need greater transparency and a system that encourages greater efficiencies, not one that promotes protective devices to ensure the profitability of a select number of companies. Health care now accounts for over a fifth of our GDP, and if control is granted to the companies benefiting by Obamacare, then we have no chance of true health care reform. .

Please send your comments using the box to the right or call our office. 516-576-0007

Thank you,

William F. Schaake, CIC, CRM, CLCS

President of Group Coverage, Inc.