Washington, Trump and Health Reform…

With the Republican effort to “Repeal and Replace” having failed, the question becomes “What’s going to happen to Obamacare?” It’s a good question and while the future is very unclear there are a few points worth noting.

The biggest point to realize is that the vast majority of the changes being discussed involve Medicaid (MediCal in California) and the individual insurance market, which is less than 7% of the total insurance market. So, for the vast majority of Americans who get their health insurance from their employer, the government, or Medicare there should be minimal impact. Your kids will still be able to stay on your plan up to age 26, there will be no pre-existing condition limits and premiums will remain tax favored. Unfortunately, the current rise in premiums will likely continue at a similar rate because current and proposed legislation will do little to reduce medical costs.

The future of the individual plan market is much less clear and upward pressure on rates is very high. One problem is the lack of insurance carrier profitability in the individual market and therefore a lack of participating insurance companies. The second issue is insurance carriers hate uncertainty and the current political environment if full of that. The biggest threat to carriers is the loss of premiums subsidies for low income premium payers. This is something that can be done with no Democratic support and would have huge negative impact on the risk pool and drive costs up significantly.

The government requires insurance companies to file rates many months in advance. So, if no legislative changes occur very soon, 2018 plans and benefits will likely look much like 2017, but with somewhat higher rates.  However, in California insurance carriers were allowed to file two separate sets of rates.

If premium subsidies are dropped, or some other negative action occurs, carriers may elect to use their second, higher set, which would be terrible for the consumer. We will keep you posted on what happens here!