Doctors, hospitals, labs, clinics, imaging centers and other medical providers expect to be paid for their products and services. Health care is expensive. Chronic
medical conditions create chronic costs. Medical providers expect some assurance of getting paid for treating patients. Employer provided group or individual insurance is the traditional guarantor of
payment. A medical billing department was not as concerned about deductibles of $1,000 or even $5,000. The liability of collecting hundreds of thousands or millions of dollars for routine medical
procedures or a catastrophic illness was of greater concern to the medical community. In-force health insurance with unlimited lifetime maximum benefits and coverage provided legal liability and
financial guarantees of payment. Under the ACA, medical insurance was a Federal program whose essential benefits were the same nationwide. The insurance carrier, deductibles and co-pays could vary
but the law applied equally among the states. The American Health Care Act (AHCA) puts the onus of responsibility for determination of essential benefits on states to regulate. Health care in rural
states will differ from states with large populations living in urban areas. Medical infrastructure of diagnostic and treatment equipment and technicians is very expensive to purchase, maintain and
be used by competent, knowledgeable personnel. Imaging centers, diagnostic labs and treatment centers rely on a steady stream of insured, paying patients to be a viable business. The economics of an
efficient health care delivery system requires a stable funding source from its patient population. In the absence of the ACA, consider the following in your personal health care
Under the age of 65
1. Get yourself and your family into a health insurance plan. Pre-existing conditions will be used in determining eligibility for medical coverage.
2. For the self-employed participating in the "gig economy", join or start a guild or association with guaranteed medical insurance. Or, find employment with a
large employer of more than 100 employees with a benefits package that includes guaranteed health insurance. Choose every optional benefit available such as; maternity, vision, dental, life
(including dependent term life) and disability coverage.
3. Know the name and location of hospitals and medical providers with the best outcomes medical history nearest your residence. Visit the insurance or HMO's website
to determine the medical provider networks available to you and the locations of services offered. To get treatment for cancer, diabetes, or heart disease, do you have to travel across town , or are
medical services centrally located?
4. Beware of companies offering guaranteed issue health plans that pay fixed dollar amounts for hospitalization and dread disease coverage (cancer, diabetes, heart
disease, neurological impairment, etc.) Such policies will not replace traditional health insurance issued by well known HMOs and brand name insurers.
5. Beware prescription drug and ancillary plans which promise discounts and supplemental coverage for medicine, dental, vision, maternity and cognitive impairment
Over age 65, Medicare beneficiaries, and those near age 65
1. Stay on your large group employer's health insurance coverage if available while you work past age 65. Know what "prescription drug creditable coverage" means in
your group employer provided health plan and under what circumstances you must enroll in Medicare Part D Rx coverage and when. Know what "Initial Enrollment Period" (IEP) means and how it applies to
you and the difference between Parts A and B of Medicare. Know how many days the IEP lasts and your rights to enroll in parts A and B and when to use those rights.
2. When eligible, enroll in a Medicare Supplement alphabet plan, such as G, D or N. Use "Plan Finder" at the Medicare website to get the best Part D Rx plan to meet
your needs and budget.
3. If a Medicare Supplement "Medigap" alphabet plan is not affordable, enroll in a Medicare Advantage plan with Part D Rx included (MAPD) and a local PPO option
benefit if available in your area. A MAPD plan with PPO option is the next best coverage to a Medicare supplement "Medigap" alphabet plan and usually has a lower premium.
4. If the first 2 options (Medicare supplement alphabet plan or MAPD with PPO coverage) is not affordable, enroll in the MAPD plan which includes your current
medical providers in their HMO network and has the best Part D Rx formulary (list of drugs) to meet your prescription drug needs. Look for optional dental and ancillary benefits.
5. Retirement planning must include research into Medicare insurance options. A change in residence will require careful consideration of medical infrastructure
available to meet your current and future health care needs. If you have one or more of the 15 chronic illnesses to trigger your eligibility for a Medicare Special Needs Plan (MAPD "SNP"), be certain
medical specialists are available to treat your condition.
The Federal government is getting out of the health insurance business. Congress is no longer willing to fund the health care delivery system, especially for the
under 65 population. The new American Health Care Act in its final form will place states in charge of regulating and paying for its health care system. States will determine what essential benefits
health insurance will cover. The Federal government will provide limited funding for pre-existing conditions but leave implementation of coverage for the states to decide. Your state of residence and
health status will be determining factors in the cost and quality of your future health care needs. Choose a healthy lifestyle in a state with the best medical services you can afford in your working
and retirement years.
THE RETURN OF ASSOCIATION PLANS
Associations will be able to once again contract with a health provider-like an HMO or an insurance company, to obtain medical health coverage for its members. The
Association must not be formed for the purpose of obtaining health insurance. The Association could be a professional organization, church, fraternal society, homeowner's association, craft guild,
union, etc. with by-laws, constitution and membership rules and regulations. The Association could self-insure for the first $50,000 or $100,000 of covered benefits and contract with an insurance
company or health provider organization for claims up to the maximum benefits limits; $5 million or an unlimited amount, for instance. Association plans usually offered maternity as an optional
benefit and had waiting periods for pre-existing conditions. Coverage was medically underwritten and an applicant could be declined for some medical conditions, and there was no guaranteed issue. The
Master Policy contained an explanation of benefits and members accepted into the plans received certificates of coverage. In the late 1970s and into the 1980s, Association plans were popular but were
not actuarially sound. Premiums were set too low to meet the claims in the self-funded dollar range and insurance carriers would not renew an Association's Master Policy if excessive claims created
losses. When Associations raised premiums to cover claims, healthy members obtained coverage elsewhere and the remaining members got older and sicker and could not leave the group's medical plan.
Increasing premium rates could not be sustained, plans failed and certificate holders were left with no coverage and uninsurable. The whole mess was called "the age curve phenomenon" and was the
principal reason for ACA coverage to be mandatory.
With mandatory coverage missing in the American Health Care Act, insurance companies will be compelled to underwrite applicants for health insurance and charge
premiums on an actuarially sound basis. Otherwise, the age curve phenomenon will cause a plan to ultimately fail. Associations and HMOs could join together for their mutual benefit.
The American Health Care Act has passed the House in Congress and will now go to the Senate for further deliberation. Here are excerpts from a summary of the
proposed health care law courtesy of Emerson Reid Insurance:
• Age Rating Ratio allows states to increase the permitted age rating to a ratio greater than 5:1. • Essential Health Benefits allows states to define their own
lists of essential health benefits without regard to the ACA list. • Health Status Underwriting allows states to permit insurers to include health status as a legal factor when underwriting for
individuals who did not maintain continuous coverage, subject to a number of limitations and safeguards. In addition to the state waivers, a further amendment was made to the House bill to help it
pass. This amendment provides an additional $8 billion in high-risk pool funding over five years for waiver states for individuals with pre-existing conditions who fail to maintain continuous
coverage and may be subject to health status underwriting. Under this amendment, states could also allow insurers to charge higher premiums to people with pre-existing conditions if they’ve had a gap
in coverage as long as the state provides people priced out of commercial insurance with assistance, like a high-risk pool.
Below is a brief summary of the provisions of the House bill affecting employers: • Elimination of the Employer Mandate penalties. The penalties are
reduced to zero, essentially, repealing the mandate to offer minimum essential coverage to full-time employees that is affordable and provides minimum value. • Elimination of the Individual Mandate
penalties. Penalties are reduced to zero, essentially repealing the requirement for individuals to maintain minimum essential coverage to avoid a tax penalty. • Further delay of the Cadillac Plan
Tax. The effective date of the Cadillac Tax is delayed until 2026. • ACA Reporting. The ACA reporting rules have not been removed, so it is still not clear whether 2017 ACA reporting would be
required. • Cost-sharing Subsidies. The AHCA repeals the cost sharing subsidy program under the ACA and replaces it with a new refundable tax credit which would be effective in 2020. The credit would
vary from $2,000/ year to $4,000/year depending on age, with a family overall cap at $14,000. • Pre-Existing Conditions. The bill removes the ACA’s blanket prohibition on pre-existing condition
exclusions. The AHCA imposes a premium surcharge of 30% for 12 months for an individual enrolling after a break in coverage of 63 or more days in the prior year. The revised bill allows states to
permit additional premium costs and health status underwriting. There will also be high-risk pool funding over five years for waiver states for individuals with pre-existing conditions who fail to
maintain continuous coverage. • Metal Tiers and Age Banding. The AHCA repeals the actuarial value standards, essentially eliminating the bronze, silver, gold and platinum tiers and allows more plan
options, presumably at below bronze levels. It also changes small group medical insurance age-rating from 3:1 to 5:1 (which can be increased under a state waiver). • HSAs. Alignment of the annual HSA
maximum contribution to the maximum out-of-pocket limits on qualified HDHPs (High Deductible Health Plans). • OTC and FSA. The AHCA repeals the ACA tax on OTC drugs and medicines and again permits
tax favored accounts. Also, it removes the annual cap of $2,500 on employee health FSA contributions. • Medicaid Expansion. The AHCA gradually rolls back Medicaid expansion by cutting federal
reimbursement to states if they leave the expansion in place.
Santa Ana, California
Copyright 2017 Robert M. Coleman
First licensed in 1978, Robert M. Coleman-Calif. License #0563687, does business as Term Insurance Agency and Coleman Insurance Services. He worked as a direct
agent for Great-West Life Assurance and Metropolitan Life before becoming a general agent. The focus of his agency sales and service is on life, health, disability, dental, annuities, long term care,
worldwide emergency medical coverage, retirement planning, and Medicare (Medigap) plans for individuals, families and small business owners. Bob Coleman, known as “The Insurance Man”, uses the motto:
“Insurance Designed To Last A Lifetime.” Bob says, “I carry a Medicare insurance ID card. So, for me, there is a special interest in Medicare and Medigap insurance coverage and its future funding.”
As an online resource tool, Bob Coleman provides the following website: terminsuranceagency.com. Medicare beneficiaries will find Bob Coleman helpful in meeting their need for financial security in
their elder years.