Why Obamacare is so hard to replace

Last month I wrote regarding one of the proposed Obamacare replacements recommended by Speaker of the House, Paul Ryan. See “Obamacare Replacement – A Blast From the Past,” Daily Local News, January 17, 2017.

Ryan recommended State High Risk Pools for people with preexisting medical conditions, a strategy that had been tried previously without real success. It is easy to understand why. If you place large numbers of people who are otherwise uninsurable into a separate plan, the premiums, if you receive coverage at all, would be prohibitive.

Now that other proposals have surfaced from members of Congress, it might make sense to revisit the topic and shed more light on a difficult subject – why is it so difficult to replace the Affordable Care Act (otherwise referred to as Obamacare) and what would a replacement, if any, look like?

First point is that the ACA was not a substitute for an otherwise finely tuned machine of health insurance coverage in

the U.S. If it had been, it would have been an easy task just to go back. Instead, Obamacare, because it could not start over, had to be grafted onto an already extremely complicated health care system with lots of moving parts. Some people had then, and still have now, multiple layers of insurance – Medicare, Tricare, coverage through an employer or prior employer. Who pays depends on coordination of coverage. Other Americans had or still have no coverage at all or buy their health insurance individually. Some are covered by Medicaid and now by the Medicaid expansion.

Here are some of the ideas that are being kicked around now. None of them are especially new.

• Buying Health Insurance Across State Lines. Actually the ACA set up a system to do just that, to sell insurance across state lines. Insurance companies did not jump on board and, if they did, it would not necessarily have been a great thing. Here is why. Many years ago under the McCarron Ferguson Act, the federal government indicated it would not interfere with states in dealing with insurers unless a state did not otherwise regulate them. Buying across state lines would be good, right? The idea is that a Pennsylvanian who wanted to receive health insurance coverage would

shop around and, when he saw say an Alabaman or Alaskan or Iowa policy that looked inexpensive and good to him, he would buy it. The market would control cost. However, states regulate insurance companies within their own borders. There is no guarantee and, in fact, it is likely that your doctor or hospital in Pennsylvania might not accept the Alabama policy.

This happens now with Medicare Advantage plans. If you move to another area the likelihood is you will not be covered. Finally, if your new out of state insurance company does not cover your claim, would you be willing to travel there to litigate it? Companies tend to build in a home court advantage by requiring litigation in their state. In addition many companies today, not just in the insurance field, also write into their contracts that consumers must use arbitration and cannot participate in a class action lawsuit. You could pay for an out of state plan that provides no real coverage and not be able to fight the result when you are most vulnerable and sick.

• High Deductible Insurance Plans With Health Savings Accounts. Suppose instead of considering out of state plans you take a high deductible plan, which, frankly speaking, many Americans are doing now either out of limited choice or from necessity even under the ACA and otherwise. You then contribute to Health Savings Accounts through work to pay during

the deductible with tax advantaged dollars. The tax benefit works for some but if you cannot afford the deductible and would not benefit from tax savings because your income is already low, it is less attractive. When you are hit with a catastrophic loss, for many the $2,000 or $5,000 is way too much to handle. The insurance company does not pay until you have exceeded the deductible and the deductible comes from your own funds. The result, generally speaking, is that people try to minimize their medical expenses by not going to the doctor.

• Preexisting condition revisited. One member of Congress recently suggested that the insurance coverage requirement for preexisting conditions continue for two years. Then no one who gets sick could buy coverage after. When you think of it, it is not an attractive alternative.

For more, listen on Wednesdays at 4 p.m. to radio WCHE 1520, “Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care. Janet Colliton, Esq., limits her practice, Colliton Elder Law Associates PC, to elder law and estates with offices at 790 E. Market St., Suite 250, West Chester, PA 19382, 610-436-6674, colliton@ collitonlaw.com. She is co-founder with Jeffrey Jones of Life Transition Services LLC, a service for families with long-term care needs.