Category Archives: Obamacare

Unhappy Customers

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Insurance has long battled a negative public image.  Let’s face it.  Insurance is an intangible product that provides nothing that even remotely resembles instant gratification (to which our 21st century society seems to be addicted), and which we hope we never need to use but expect ironclad full coverage protection if/when we do need to use it.  What could possibly go wrong?

This is a troubling reality because the insurance product does more good for society than almost any other product when disaster does strike.  Insurance rebuilds lives and businesses.  Insurance soothes when pain runs deep.  Insurance quite literally saves lives.  Of course, that’s when everything works as planned, which is most of the time.  When insurance professionals properly match insurance coverages with client needs and takes the time to sell consultatively.  And when consumers take responsibility for understanding their risks and risk tolerances and seek to be informed purchasers rather than assuming that the insurance industry is packed with employees capable of mind-reading.  When it all works, it is beautiful.  When it doesn’t, the press kicks into high gear to vilify greedy and mean-spirited insurance companies.

I recently came across an article that specifically highlighted the rise (or decline, if you prefer) of the health insurance industry to among the most-hated industries in America.   The article cited work done by the American Customer Satisfaction Index, and quoted its director, David VanAmburg – who just happens to be my former college roommate and longtime friend.  David does good work, so I place significant credibility on the ACSI’s findings.  The natural inclination is to blame the increase in customer unhappiness with the health insurance industry on the Affordable Care Act (a.k.a. ObamaCare), but the ACSI findings didn’t find any direct evidence of this, though Mr. VanAmburg acknowledges that the influx of insureds under the ACA could be straining health insurers’ customer service resources.  Most of the complaints seem to arise from bad experiences with health insurer call centers and the (limited) choice of insurance plans – many of which are saddled with higher premiums and higher deductibles.

For all the good that the insurance industry does for people and society, we clearly have our work cut out for us.  Rebuilding lives that are torn apart by accidents and disasters, getting business back open again after a fire, providing the resources to care for the sick and injured, are all noble and admirable benefits provided by the insurance industry.  How can any industry that provides such benefits be among the “most hated” industries?  We’ve got some work to do.

On a sidenote, I recently blogged about federal government budget cuts in the crop insurance program.  Being the economic libertarian that I am, I questioned whether or not these budget cuts were really so tragic to the crop insurance industry or the agricultural interests they served.  Well, it’s all a moot point now, assuming President Obama signs the recently passed highway bill which restores the $3 billion that was initially cut from the crop insurance subsidy program.  Eh, what’s another $3 billion in a half-trillion dollar budget deficit anyways?

The Iron Triangle

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The health insurance industry has a new high-profile employee.  Marilyn Tavenner was the chief bureaucrat running Medicare, Medicaid, and the Obamacare exchanges.  Now she’s the CEO of the health insurance trade group America’s Health Insurance Plans.  No doubt, her deep connections to the Washington political class and the federal government’s new and deep role in our country’s health care system makes her an appealing hire.  It’s also a stark example of the “iron triangle” that is common in the top echelons of American political power.

Color me skeptical that this is a good thing for America’s individual health insurance providers, let alone consumers.

ACA Legal Challenge, Part 3

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Just two weeks ago I wrote about the Supreme Court’s ruling that upheld nationwide federal subsidies and preserved the Affordable Care Act.  In my closing paragraph I said that the legal challenges now seem to be exhausted and its time that we accept the ACA and move on.  Personally, I am not a fan of the massive health care reform law but as a businessman and insurance professional I’m growing weary of the uncertainty surrounding the law.  Well, as it turns out, I was wrong about King v. Burwell being the final judicial word on the ACA.

There looms another potential judicial dagger aimed at the heart of the ACA in the lesser-publicized case of Sissel v. HHS.  The case lost at the D.C. Circuit when the three-judge panel applied logic that resembled a mental version of the game “Twister.” The plaintiffs are now seeking an en banc review of the case at the D.C. Circuit, and the next stop could be the Supreme Court.  [sigh] Here we go again.  What is an insurance professional attempting to help their clients with health insurance and benefit plans to do?

At its core, Sissel’s argument is that the ACA violates the Origination Clause of the Constitution which requires that all taxation bills must originate in the House of Representatives.  In the murky legislative mechanics that gave us the ACA, the bill originated in the Senate.  When the original 2012 Supreme Court (SCOTUS) ruling came down, it upheld the individual mandate because SCOTUS ruled that the monetary penalty for not purchasing health insurance was actually a tax.  Chief Justice John Roberts took a lot of heat for that tortured legal conclusion, just as he did for last month’s interpretation of the law’s language regarding subsidies.  The two milestone SCOTUS rulings on the ACA have seemed to give incredible deference to the ACA and its intentions, more than its language.

If Sissel v. HHS makes it to the SCOTUS in the near future, things will get very interesting.  The biggest problem for SCOTUS is that its 2012 ruling that proclaimed the ACA’s penalities to be taxes now gives Sissel an opening to challenge the entire law as a violation of the Constitution’s Origination Clause.  On its face, I wonder how Chief Justice Roberts will reconcile what appears to be a slam dunk argument.  How can SCOTUS possibly rule that the law includes taxes as the justification for upholding the individual mandate, and then not rule the entire law to be unconstitutional on the grounds that it violated the Origination Clause?

What happens next will be very interesting.  SCOTUS could refuse to take up the case and let the D.C. Circuit’s ruling against Sissel stand.  The problem with that is that the D.C. Circuit’s ruling essentially obliterates the Origination Clause, and SCOTUS may not be able to stomach that precedent.  If SCOTUS does take up the case, all bets are off.  Personally, I thought the plain language at the core of the issue in King v. Burwell was a slam dunk and I was wrong.  I am actually somewhat intrigued by the notion of a trifecta ruling in favor of the ACA and especially the judicial acrobatics that would most certainly come out of such a ruling on Sissel v. HHS.

I can anticipate a few such legal gyrations… SCOTUS might rule that the ACA bill did actually originate in the House because there was some monkey-business with “empty shell” bills from the House that were filled with the ACA language by the Senate.  That’s a political game that the nation’s Founders certainly did not intend but SCOTUS seems to be willing to give more weight to certain intentions than others these days (see King v. Burwell).  Another way out could be to somehow massage the D.C. Circuit’s logic that declared the ACA’s taxes were not intended to raise revenue but to expand health insurance.  So the ACA included a tax in order to uphold the individual mandate but it’s not a tax in the sense that it is not a revenue-raising bill that must originate in the House.  Huh?  What is a tax if not a means for government to raise revenue?  Good luck John Roberts.

One thing is certain… I do not envy my insurance industry colleagues who specialize in the health insurance market these days.  Does the ACA cover whiplash?

 

Affordable Care Act Survives (Again)

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The U.S. Supreme Court has spoken on the highly anticipated King v. Burwell case.  Subsidies are legal in all 50 states, rather than only in the states with their own insurance exchanges.  The political debate continues and the Justices will receive criticism/praise (depending on one’s personal viewpoint) for having upheld the universal subsidies implementation of the ACA law.  This ruling seems to contradict the plain language of the law and the evidence that the language was intentionally written as it was to coerce the states into setting up exchanges.

Ironically, the Supreme Court found in 2012 that the federal government could not coerce the States into expanding their Medicaid programs under the ACA.  I can’t help but wonder if that specific ruling played into the Court’s ruling on King v. Burwell.  Stay with me… If the court had found that the plain meaning of the ACA language and the evidence (as provided by Gruber) suggested that subsidies were limited only to States setting up their own exchanges, then the Court would have to say that the federal government was once again attempting to coerce the States.  And since it already ruled once that the federal government could not coerce the States on Medicaid expansion, would it not then have to say that the subsidy/exchange coercion is also illegal and thereby throw out the subsidies entirely… in all 50 states regardless of exchanges?

If you follow and buy into my logic, then the Supreme Court Justices (most notably Chief Justice Roberts and swing vote Kennedy) were choosing between upholding the imperfect law as is, or a significant rebuke of the ACA’s subsidy system that would have left them with a glaring inconsistency with their 2012 ruling on Medicaid expansion, or a complete destruction of the ACA law by revoking all subsidies.  Given those choices, I’m not surprised that Roberts and Kennedy chose the first option.  The SCOTUS is not supposed to be political or partisan, but they are human.  I don’t believe that Roberts and Kennedy were comfortable with any of the choices other than upholding the subsidies, despite the statutory language and clear intent of the law’s architects.

Another effect of this ruling could be a further centralization of the U.S. health care system at the federal government level – an outcome that is likely fine with the Obama administration’s single-payer acolytes.  The New York Times suggested that the ruling removes a primary reason for States to establish and operate health care insurance exchanges, so many States may just let the Feds takeover the entire process.  Another bit of irony since that reasoning further supports the notion that the law’s intention was indeed to condition subsidies on State-run exchanges.

The political battle over the ACA will continue for years to come.  For now though, the significant legal challenges that might upend the law seem to be exhausted.  From an insurance perspective, it seems to me that it’s time we all accept the ACA as settled law, for good or for bad, and figure out how to best live with it.  And if you happen to believe that the law includes provisions supporting “death panels” then this may be easier said than done.

Affordable Care Act – Unhinged

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Last week I wrote about the recent midterm elections and a few potential effects on the insurance industry.  In that post, I mentioned the Supreme Court’s acceptance of the King v. Burwell case which could ultimately reverse many of the Affordable Care Act’s (ACA) subsidies, which would ultimately lead to an unraveling of the current law.  That eventuality would require the Obama Administration and the Republican-led Congress to reopen the law for significant legislative re-writing.  Or under normal circumstances that would be the expectation.

Of course, these are not normal times.  President Obama has taken several unilateral steps to modify the ACA without any legislative action.  The President’s actions have led to criticisms of lawlessness and anti-Constitutional exertions of power.  The Administration argues that they are simply taking common sense steps to smooth the implementation of the complex law.  Based on last year’s enrollment troubles, they apparently didn’t take enough such actions.  With more unilateral executive orders looming on immigration policy, nothing should be assumed to be beyond the reach of this Administration’s use of executive power, legitimate or otherwise.

I can’t help but wonder when this entire ACA house-of-cards will finally tumble.  It has been controversial and lacking any majority public support since its passage.  It barely survived its first major Supreme Court challenge but the King v. Burwell case looks rather ominous to the law’s future in my opinion.  Then just a few days after the Supreme Court accepted that case, the midterm elections gave new power and emboldened the Republican opposition and their desire to dramatically change, if not repeal, the law.  Now this week we’ve seen and heard from economist Jonathan Gruber as he repeatedly spoke of the deceptions built into the ACA law and the selling thereof to the public and to Congress.  Dozens of Representatives and Senators who fell for the deceptions and voted for the law have since lost their jobs.  Making matters worse for the ACA is that Gruber’s vocalizations were insulting and arrogant, and cannot be dismissed as a one-time slip of the tongue.  Here he is calling American voters stupid, and the deception (beginning at the 1:50 point of the video), and more insults.  Taxpayers paid this guy to deceive them.

At the Risky Business event hosted on the Ferris State campus last Tuesday, one of our insurance professional panelists was asked about the ACA.  The panelist’s response began by saying, “It’s a train wreck.”  Indeed.  Most shams that are built as a house-of-cards on a foundation of lies, deception, and arrogance do eventually turn into a train wreck.  The ACA train has had a bad couple of weeks and the Supreme Court could make it even worse next year.  The train is picking up speed on very rickety rails.  This is not going to end well.  My fear is that we the people are going to be injured far more extensively than the conductors of this runaway train.

Elections have consequences

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The incessant bombardment of political campaign advertisements on television and radio have now given way to holiday advertisements and music.  Thank all that is good and holy, amen.  While some may say it’s too early for holiday cheer, I for one will gladly trade campaign ads for “Jingle Bells” any day of the week.

The post-election dust is settling and everyone is taking stock of what the results may mean for a myriad of issues, including insurance.  Michigan’s political climate remained largely unchanged in terms of the balance of power in the legislature, governor’s office, and supreme court.  So what, if anything, does that imply for reforms to the Michigan no-fault auto insurance law and the prospect of some premium relief for Michigan auto insurance consumers?  The unlimited lifetime medical benefits that figure prominently in the cost of Michigan auto insurance continue to be an actuarial challenge (I’m being polite).  So will another two years of complete Republican control of state government prompt any action when nothing has happened in the last few years of complete Republican control?

More interesting is the sea change at the national level.  Republicans rolled to control of the Senate, increased their caucus in the House, and won more Governerships nationally.  Most notably, the Republicans took over the Governor’s office in some very Democratic states: Maryland, Illinois, and Massachusetts.  This sets the stage for considerable drama over the next two years, and from an insurance perspective the future of health insurance is very much at the center of the drama.

It is clear that the Affordable Care Act will come under fire in the new Republican Congress and that efforts to repeal or fundamentally alter the ACA will be met with Mr. Obama’s veto pen.  However, the Supreme Court could force the hand of both sides as early as next June.  It was just reported today that the Supreme Court will take up the King v. Burwell case that challenges the legality of some ACA subsidies.  If the Court strikes down the subsidies, the ACA crumbles unless and until the gaping hole left by the subsidies is repaired by Mr. Obama and the Republican Congress.  That opens the entire law up for legislative remodeling.  During the debate over the ACA several years ago, President Obama famously said, “elections have consequences” and “I won.”  I wonder how he feels about that same line of reasoning today.

Obamacare and the Courts

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As I mentioned a couple of weeks ago, moving week has arrived for me.  So I’m going to share just a few thoughts on the latest developments in our nation’s raging debate over health insurance, and then leave it to those of you who wish to post comments to debate the point while I’m busy toting furniture around.

Two different courts recently issued polar-opposite rulings on the question of whether Obamacare’s subsidies are legal for citizens of states who opted not to build their own health insurance exchanges.  The plain language of the statute clearly says that the subsidies may only be paid to citizens purchasing health insurance through a state-run exchange.  The statutory language is not a mistake, though that would be reasonable presumption given the haste and political gyrations through which the bill became law in 2010.  The disputed language actually accurately reflects the political calculation made by the Democrats during the construction of the law.  They thought that this language would create an irresistible carrot to entice states to develop their own exchanges.  It backfired when 36 states decided not to offer their own exchanges, leaving it up to the Feds instead.

This Business Insurance article encapsulates the issue well and provides an enlightening quote from federal government legal beagles.  Here’s the most entertaining paragraph of the article:

Government lawyers wrote in the court filing that the July decision, if left intact, would “impose a severe hardship” on people who currently get the subsidies in the form of tax credits. The appeals court’s ruling led to “harsh and illogical results,” the government lawyers’ court filing said.

The Feds are arguing that the court (through its ruling) is imposing “severe hardship” and “harsh and illogical results” on the citizens who may lose their health insurance subsidies.  That’s rich.  From where I sit, the court is simply interpreting plain English.  It appears to me that the authors of the controversial and politically charged law are the ones responsible for “severe hardship” and “harsh and illogical results” that may now descend from their political shenanigans.  Perhaps the operative wisdom at work here is “you reap what you sow.”