Friday, November 4, 2016

Repeal and replace the ACA: It’s called Medicare

Repeal and replace the ACA:  It’s called Medicare

In case President Obama were to read this, let me be clear.  I am not whining.  Maggie and I are blessed.  We have the resources to absorb this year’s increase in our insurance premiums.  However, I think our general situation is instructive about the glaring deficiency of the insurance market place in North Carolina.  I can also see why some folks are attracted to the idea of repealing Obamacare.

About a month ago Blue Cross Blue Shield canceled our insurance policy and directed us to  Earlier today we went about the business of selecting a new policy for 2017.  Here’s the bottom line.  There is only one carrier: Blue Cross Blue Shield.  Realistically there are only three plans that vaguely mimic our current coverage.  Our new annual premium will be 25% higher than last year, our in-network deductible will double, and our out-of-network deductible will jump 191%.  In addition, the orthopedist who replaced my knee will no longer be in our insurance network.   Thank goodness we’re reasonably healthy and only have a handful of physicians.  Essentially Duke and UNC have colluded with Blue Cross Blue Shield to create plans that only cover providers in for their respective health care networks.

To give the current situation a little context, imagine a couple in their late 50s or early 60s deriving their income from independent contracting or consulting.  Suppose their annual income net of business expenses is $100,000, a good income in North Carolina. According to the marketplace, their annual premiums just jumped from $22,000 to $27,000 (it was $17,000 in 2015), their deductible increased from $5,000 to $10,000 and their out-of-network deductible increased from $13,700 to $40,000!  They don’t qualify for a tax credit to subsidize some of the cost of insurance.   Even though this couple has health insurance, any kind of significant medical event will totally wipe out their income and deplete their savings.

After paying federal, state, sales and property taxes, our couple has a net income of about $64,000.  After paying insurance premiums their remaining income is down to $37,000, and that’s before working through their deductible.  Add in the normal costs of living—housing, food, and vehicle costs--and this couple may well be dipping into savings just to pay for health insurance.  Rather than saving for retirement, our couple has a financial challenge even though they have a six-figure income. 

In my view, it’s not the Affordable Care Act alone that is creating this problem.  In North Carolina, our legislature failed to extend Medicaid, so many poor people are still uninsured and have their medical needs met in emergency rooms and clinics.  Congress was unwilling to fix some of the technical defects in the Affordable Care Act that would help to rein in costs; a majority our congressional representatives want the ACA to fail.   With or without the ACA, most North Carolinians don’t have a real marketplace for health insurance.  Instead we have a monopolist Blue Cross colluding with a couple of large health care providers.  It’s not surprising that premiums are skyrocketing and coverage is shrinking.

Repeal and place is a good idea: it’s called Medicare.

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