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LETTER FROM THE EDITOR

No Squirrels Have to Die

Clara really wants to murder a squirrel.

Or she seems to. She is a large pit bull, but she looks like a greyhound as she exits the back door when a squirrel is in the yard. Invariably, the rodent is a fluffy-tailed flash up a tree before Clara can reach it.

I hadn’t told her that it doesn’t help the stealth aspect if she barks as she charges. I guess I didn’t want to see what she’d do if she caught it.

But I got the answer to that question when an escaping squirrel fell out of the tree and plopped on all fours right in front of Clara. Judging by the squirrel’s face, if rodents have obscene words, it was thinking them at that moment.

Clara had her own cartoon expression that clearly read, “Huh?” After all these years of barking at and chasing these things, she had no idea what to do if she caught one.

The squirrel finally obtained presence of mind to spin around and bolt, which left Clara watching in a daze. After a moment, though, she snapped back to chase and bark mode.

 

Disarming the Trap

Affordable Care Act opponents had a similar scenario after Donald Trump won the presidency with Republican majorities in both houses. At long last, the demise of Obamacare plopped right in front of them.

Now what? As of this writing, Republicans were lined up to repeal and replace later. But even some GOP members are anxious about what the replacement might be.

Some ACA rules have helped consumers. Two popular ones are the ban on pre-existing condition exclusions and allowing children to stay on a parent’s plan until they are 26.

Some of the most hated Obamacare elements and effects are rising premiums, the individual mandate, restricted choice and very high deductibles.

Deductibles are so high that it seems like not having insurance at all even though people are paying at least several hundred dollars a month for coverage — and some pay far more than that.

But Obamacare is a booby-trapped box where removing one thing causes another part to explode. Remove the requirement to have insurance but retain the ban on exclusions for pre-existing conditions and insurers are left with more sick people to pay for with fewer dollars from healthy members.

Carriers will have to raise rates on the riskiest people to make up the money. And they would most likely be allowed to do that. As Senior Editor John Hilton reported in this month’s InFront column, opponents are calling for an increase in the age band allowance.

The ACA allows carriers to charge as much as three times more for the most risky enrollees over the least risky. The House Republican Better Way proposal, supported by the National Association of Health Underwriters, would raise that to 5:1.

That would not guarantee that the younger and healthier population will get a better rate (if they elected to buy it). But it would ensure that older enrollees will be paying more.

Would anybody be paying less premium? We probably all remember that one of the main drivers for reform was the relentless double-digit annual increases in premium. So how would a new system depress those increases?

That is not clear. The ideas floating around include erasing state borders for coverage, tax credits and health savings accounts (HSAs). These elements are in the Better Way proposal, but the plan does not clarify how they would cut premiums.

Removing state restrictions on selling insurance would not automatically open a national market. Provider networks still have to accept the insurance. The companies that have the capacity to negotiate deals with multiple networks are already large and would grow larger, allowing for greater economy of scale.

The likely outcome would be an acceleration of the trend of larger insurance companies consuming smaller ones, leading to less competition. Economy 101 tells us that less competition means less pressure on keeping prices in check.

This federalizing also flies in the face of the American state-based insurance system. Who is the regulator now?

Tax credits would help, but Obamacare already has subsidies and families are still struggling. And if the credits are applied later and don’t have an effect on the premium, that would increase the impact on the family budget.

HSAs always seemed like a good idea that didn’t work as well in practice. The proposal has a plan to fix them, which would be welcome. But they allow families only to spend their money more efficiently rather than control prices.

 

Fix or Forget?

The ACA has plenty of problems, as described earlier. Obamacare was an attempt to preserve the free-market insurance system while establishing requirements that guaranteed a level of quality and a standardization that allowed for comparison shopping.

Needless to say, a lot of that didn’t work. Health insurance is more expensive and high deductibles are dissuading people from seeking care.

The question is, do we fix the ACA or go back to what we had with some new amendments? Or might a third way be possible?

We can be hopeful, but effective compromise might have long ago been a victim to the drive to be “right.”

Maybe all we know now is the endless cycle of barking and chasing.

 

Steven A. Morelli

Editor-In-Chief

Steven A. Morelli is editor-in-chief for InsuranceNewsNet. He has more than 25 years of experience as a reporter and editor for newspapers, magazines and insurance periodicals. Steve may be reached at steve.morelli@innfeedback.com steve.morelli@innfeedback.com.


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