With efforts to repeal the Affordable Care Act dead in Congress for now, a critical test for the law’s future is playing out in one small, conservative-leaning state.Iowa is anxiously waiting for the Trump administration to rule on a request that is loaded with implications for the law’s survival. If approved by the federal Centers for Medicare and Medicaid Services, it would allow the state to jettison some of Obamacare’s main features next year — its federally run insurance marketplace, its system for providing subsidies, its focus on helping poorer people afford insurance and medical care — and could open the door for other states to do the same.Iowa’s Republican leaders think their plan would save the state’s individual insurance market by making premiums cheaper for everyone. But critics say the lower prices come at the expense of much higher deductibles for many with modest incomes, and that approval of the plan would amount to another way of undermining the law.Iowa calls its request a stopgap plan that would allow the state to opt out of the federal health insurance marketplace, HealthCare.gov, for 2018 and create a state-run system that its insurance commissioner says would lower premiums for the 72,000 Iowans who currently have Obamacare health plans, including 28,000 who earn too much to get subsidies to help with the cost.But the cheaper premiums would come with a big trade-off: higher out-of-pocket costs. The only option for customers would be a plan with deductibles of $7,350 for a single person and $14,700 for a family. The proposal would also reallocate millions of federal dollars that the health law dedicates to lowering costs for people with modest incomes and use the money for premium assistance to those with higher incomes, no matter how much money they make.The individual insurance market is particularly fragile in Iowa, partly because the state has allowed tens of thousands of people to keep old plans that do not meet the health law’s standards. Aetna and Wellmark Blue Cross & Blue Shield, the state’s most popular insurer, are both withdrawing at the end of the year. The only insurer planning to remain, Medica, is seeking premium increases that average 56 percent, blaming Mr. Trump’s ongoing threats to stop paying subsidies known as cost-sharing reductions that lower many people’s deductibles and other out-of-pocket costs. Wellmark has said it will stay if the stopgap plan is approved.“What we are trying to address is a really large number of people being priced out,” said Doug Ommen, the state’s Republican insurance commissioner.
No Medical Insurance Available
Aetna and Wellmark Blue Cross & Blue Shield will both pull out of Iowa starting in 2018. Only one insurer, Medica, plans to remain. But Medica wants a 56% premium hike. Wellmark will stay if the stopgap plan is approved.
If the stopgap plan is not approved and Medica does not get approval for a 56% premium hike, the state will have no providers for individuals or families not in a corporate plan.
Step in the Wrong Direction?
Is this a good idea or a bad idea? The alternative might be no insurance providers to choose from.
But what percentage of families can afford $14,700 if something happens?
The proposal adds subsidies based on federal poverty levels to make things more affordable for low-income earners.
Federal Poverty Levels
Sock it to the Middle Class
Individuals making more than $48,240 and couples making more than $64,960 get crucified under the plan. The stopgap plan table shows why.
- An individual, aged 25 making up to 150% of the poverty level ($18,090) will pay $108 per year.
- An individual, aged 25 making up to 301%-400% of the poverty level ($48,240) will pay $792 per year.
- An individual, aged 25 making up to 401% of the poverty level ($48,241) will pay $3,516 per year.
- An individual, aged 60 making up to 150% of the poverty level ($18,090) will pay $300 per year.
- An individual, aged 60 making up to 301%-400% of the poverty level ($48,240) will pay $2,136 per year.
- An individual, aged 60 making over 400% of the poverty level ($48,240) will pay $9,504 per year.
- A couple, both aged 60, making over 400% of the poverty level ($64,960) will pay $9,504 per year.
In addition. an individual would have a deductible of $7,350. A family would have a deductible of $14,700.
The article claims "The proposal would also reallocate millions of federal dollars that the health law dedicates to lowering costs for people with modest incomes and use the money for premium assistance to those with higher incomes, no matter how much money they make."
The posted table says otherwise.
The fatal flaw in the pan should be obvious.Those making over 400% of the poverty level will opt out.
Those pie-in-the-sky premiums of a mere $300 a year for those aged 60 making the poverty level will never cover costs because a huge percentage of those making over 400% or the poverty level will opt out.
Should the Middle Class Pay More for a Loaf of Bread?
A major flaw in Obamacare is the notion that everyone should pay the same price. Under the plan, young and healthy millennials overpaid, effectively subsidizing older and/or physically obese persons. The millennials opted out.
The Iowa plan may capture millennials, but because of the screw job on the wealthy, those making over 400% of the poverty rate will drop out.
Effectively the state said if you can afford to pay more you must pay more. Imagine grocery stores charging $15 for a loaf of bread if you make $48,241 but only 48 cents if you make up to $18,090.
The idea is preposterous.
Insurance for those older should cost more than those younger. Insurance for unhealthy individuals should also cost more. But that's where it has to stop.
Obamacare is blowing up because it seeks to redistribute costs in a way that cannot possibly work. The Iowa replacement plan will fail for similar reasons. One plan screwed the young and the healthy, the other screws those the state deems to be able to afford to be screwed.
That cliff is a mere $48,240 for individuals and $64,960 for a couple.
A couple making $64,961 would have to pay over $24,000 out of pocket before insurance covered a dime.
This is a huge screw-job not on the wealthy, but on the middle class!
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Mike "Mish" Shedlock