Part of this article has been on my computer for the past five months. Every time I sat in front of the computer something happened to derail the latest version of the health and insurance program proposed by President Trump and the House of Representatives. While I am no longer going to stake my future on the exact plan design, there are some basic provisions that seem to show up in every design discussed to date. And though the House bill just passed, its future in the Senate as it exists is likely troubled. The reason is that there are provisions that make some lawmakers nervous. So, that you might have a better idea of what seems to be evolving, we’ll take a few minutes and discuss what’s on the table as of this writing.

It makes sense to dispense with the political arguments first. As most will recall, when the so-called Obamacare was first up for discussion and vote, there was plenty of wailing and gnashing of teeth. Now that President Trump and Congress have their versions of their plans, there is plenty of wailing and gnashing of teeth. The bottom line to life in “these here states” is that there exists this objective by both parties to derail the other no matter the cost. So, let’s forget all of the hyperbole, realize that whatever happens will leave a lasting imprint on our country’s insurance and health-care systems and look at all of this as objectively as possible.

Needless to say, as with the discussions around “Obamacare,” the special interests will all be weighing in heavily in the coming months. It may well be another summer of political advertising in the form of pro and anti “Trump care” forces.

It goes without saying that the changes in the making will send health care and health insurance in a new direction, in many cases the polar opposite from the Obama program. Many of the provisions that have survived through all of the discussions greatly impact how the program is funded.


Key changes

• Rather than fund Medicaid as a federal program, block grants will be provided to the states to manage the plans. The thought is that the states are in a better position to know what’s needed locally and will utilize the money in a better fashion while ultimately saving dollars. There are safeguards to ensure states comply with basic healthcare minimums.

• Along with the funding, overhaul Medicaid provisions altogether utilizing a slimmed down federal presence.

• Repeal virtually all of the tax provisions in the current Obama design. Included for discussion are the various excise taxes, medical devise taxes, “Cadillac Plan” provision for what are defined as rich plans, the research tax to fund the federal health tracking system and more.

• Repeal the added Medicare tax increase that was implemented a few years ago and caused many a small employer to be questioned by their employees when their take home pay was decreased suddenly.

• A system of refundable tax credits to assist lower income insureds in lieu of the direct premium subsidies in the Obama plan.

There are major plan design changes on the way as well. One area in heated discussion is the so-called pre-existing provisions. Currently, insurers are required to accept an applicant who meets certain criteria or enrolls during the open enrollment. And, assuming they have had prior insurance for the prescribed time, there is no penalty for any existing health issues, no matter how serious. And, that’s been the rub. Many have said that the greatest failure of the current system is in not enrolling the young and healthy and ending up with insurance pools that are typically older and sick. As a result, the insurers have been reportedly hemorrhaging money.

As part of the discussion currently underway, there is still guaranteed coverage as long as one meets prior coverage requirements. However, one camp has proposed that insurers would be able to charge people with pre-existing illnesses more than those who are healthy. The other camp wants the one-rate-fits-all concept to remain. There is reportedly $8 billion dollars in the new bill to help with uninsured people and those with preexisting issues. Here is where I must make full disclosure to clear up my personal bias and knowledge.

It is true that roughly 12% of the insureds make up about 80% of the claims paid. These are people who have typically contracted serious, generally terminal illnesses, many of which are of a longer-term nature. I am one of the 12%. As a result, the split premium design would work against me in most cases. Moreover, having spent a lifetime in and around the risk management, research and insurance industries, given the sheer size of the bills driven by the “12%,” it’s hard to believe the offset in rates could even begin to make a dent in the coverage cost. For example, in my case the cost of care up to death could well exceed $1 million dollars. I share this information simply to put this entire discussion in some perspective.

The outcome of the pre-existing and uninsured issue will no doubt be rehashed repeatedly in the Senate. As a result, watch these articles for more developments in the near future. As an aside, there has been discussion of age-based subsidies in order to help older people pay for their insurance. Again, as of now, not sure of the exact dollars or provision.

Another provision in the House bill is the expansion and widespread use of Medical Savings Accounts (MSA’s). A large part of the savings is assuming a more involved and educated health-care consumer. The design of the MSA was originally done with the thought that the consumer would be incentivized to participate in their health if they have a financial stake in the decision.

That said, the MSA incorporates a couple more provisions that are attractive to many. First, the consumer may sock away money for their own personal expenses on a tax advantaged basis. This has proven to be a very important part of this program. Furthermore, God forbid, someone finds oneself in the “12%” bracket with huge claims, the person is protected by the insurance company at a deductible level chosen by the insured/consumer. As one of my buddies in the shop used to say, “You get control of the first dollars spent and save taxes putting away the money needed to cover the deductible, but you know that there’s a point where you stop paying.”


The political minefield


Now, I will wander in to what many call the political minefield of the bill. One might remember the requirement in Obamacare that “essential services” (a specified plan design as required by the federal government) would include “reproductive care and services.” Shortly after this hit the street the lawsuits began, eventually ending up in the Supreme Court. At the court the decision was partially made and the balance pushed back down to the federal jurisdiction courts. The primary litigants were religious organizations and a number of companies that asserted the reproductive services provision violated their beliefs and wanted an exception. In every case I remember it would seem they were waivered.

In the new bill, the essential services provision is pretty well struck down moving the coverage issue back to the states and plan sponsors/employers for decision. Moreover, the requirement for reproductive services also appears to be struck down in the new bill. I suspect this one provision will no doubt be one of the most hotly debated portions of the bill when it hits the Senate.


Consumer incentives

Another contested portion of the House discussion is how to incentivize people, especially healthy, young people, to participate in order to better balance the pool of insureds. Under the ACA/Obamacare plan one would receive a penalty payable at tax time if the person did not have health insurance. There appears to be a version of this in the new plan. People who have gone without insurance for more than two months would/could be charged a late entry fee by the insurer. More to come here as well.

Lastly, big sigh of relief for people under 26 still on their parent’s coverage. That provision still exists in the new plan.

So, there you have it. Again, this is not meant to be the final say or much of anything beyond a summary of what has appeared so far. One could likely assume the new bill will read like an epic far exceeding “War and Peace” when this thing is done. The last bill was 10,000-plus pages. To prove how much of a life I DON’T have, I had actually read the last bill with Obamacare. Promising to do that again would be foolhardy in light of my physical issues and time, but I will do my very best to bring information to you as it comes. In fact, rather than wait for another article just on health insurance and care issues related to the many bills one their way, as the news seems to call for it, I will add a P.S. to other articles throughout the year.

Bottom line, my friends, is that all of us need to stay abreast of what’s happening here. Like the first generation of plan, there is little doubt that this new approach will profoundly impact you, your business and your employees.