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Health & Human Services Update on Health Insurance For Struggling Americans

Better late than never. Today it was reported by the departments of Health & Human Services, Labor & the Treasury on a final rule to help the average American afford health insurance. CMS (Centers for Medicare & Medicaid Services) reported staggering data from 2017 indicating a huge drop of greater than 20% of enrollment in market-based plans (ACA plans) for people without subsidies. It’s important to demarcate the difference between Americans getting premium subsidies versus those who do not (many of the enrollees today in ACA plans with subsidies were former Medicaid enrollees who were flipped into the ACA exchanges and reported as new enrollees) – while enrollment was down over 20%, at the same time premiums soared by more than 21%. This is what insurance nerds like me call the “death spiral.” Anyone who’s an expert in insurance, understands this term; though a morbid term, it is spot on. The ACA is the death spiral and has high-utilizing/sick enrollees and the healthy needed to pay the freight are abandoning ship in droves.

Arizona for example saw a cliff-like decrease in enrollment of the healthy Arizonians needed to pay for the sick, of over 73% in 2017. Many states saw that number climb over 40%.

As such, this news is very welcome by the millions on Americans now pounding the table that they want what the Obama Administration promised they could get, maintain, or do – keep their plan. Many people today actually want to be medically-underwritten and able to pay the type of premium they had years ago. In many cases that number is 1/10th what they’d have to fork over for an ACA plan that isn’t even a benefit many appreciate.

Short-term, limited-duration insurance is not required to comply with the Federal market requirements which govern the ACA and individual health plans.  So we’ll begin to rapidly see new carriers and plans hit the market as the predictive actuarial value and underwriting metrics are not much different than they’ve been for decades. America will need to buy lower cost plans to guard against catastrophic risk, and self-pay for medications and elective doctor visits, they way it was prior to the HMO revolution. That’s not a bad thing, it’s called becoming a healthcare consumer again.

President Trump will take a victory lap as he promised to deliver more affordable options and these will be drastically less expensive. These plans will not be for everybody, but the will fill a gigantic need of many Americans who today chose to go without ACA insurance.