Regardless Of Who We Vote For, Health Insurers Will Win

Gurney in hospital corridor.
Gurney in hospital corridor.

As we get close to the election, it's clear that something should be done, at the federal or state level or both, to address the shortcomings of the Affordable Care Act.

The news that premiums on the so-called Obamacare benchmark health plans will be 25 percent higher on average next year came on the heels of earlier reports that people in most states will have considerably fewer health plans to choose from.

The health care consulting firm Avalere, which tracks insurer participation in the Obamacare exchanges, says the number of insurers offering Obamacare coverage has fallen from an average of more than five last year to just 3.2 next year. While most of the nonprofit health plans are sticking with Obamacare, three of the biggest for-profit insurance corporations -- Unitedhealthcare, Aetna and Humana -- have announced that they're pulling out of many markets.

Hillary Clinton has pledged to fix what ails Obamacare while Donald Trump, like just about every other Republican, has pledged to get it repealed.

Don't hold your breath

Regardless of which one makes it to the White House, don't expect much of anything to actually happen, at least in Washington. Odds that the law will either be repealed or fixed in any meaningful way are very slim. That's because neither party is expected to have a big enough majority in Congress for any legislation of consequence to reach the president's desk.

If Clinton becomes president and Democrats regain control of the Senate, it's possible that some fixes could be made during the budget reconciliation process, but there are numerous restrictions on what could be considered.

For the record, Clinton says she would address rising premiums by limiting the amount of money Obamacare enrollees have to pay for coverage to no more than 8.5 percent of their income. The current limit is 9.66 percent.

She also wants Americans to have access to a "public option" -- a government-run health plan that would compete with private insurers. Here Clinton is supporting a proposal that private insurers hate but that was so popular among most Democrats back in 2009 that the House version of Obamacare contained language that would have created such a health plan. But even though the Democrats controlled both the House and Senate back then, the insurance industry called in enough chits to ensure that the public option language was stripped out of the final Senate bill, and it was the Senate version that reached Obama's desk. You can rest assured that the industry would be just as motivated to keep a public option from being born during a Clinton administration as it has been during the Obama administration.

Keep in mind that Obama also supported a public option. He still does, but can't get Congress to create one.

Magical thinking

As for Trump, he says that after he gets Obamacare repealed (that's not going to happen, but let's suspend disbelief for a moment), he would "allow" health insurers to sell policies across state lines, encourage more people to enroll in health savings accounts and change the way Medicaid is administered by giving states almost total control over the program through block grants.

Democrats are not keen on any of those ideas, which Republicans have supported for years, and will continue to block them. The only way they'd have a chance of becoming law would be for Republicans to way outnumber Democrats in the next Congress, and that's not expected to happen.

Even if Republicans do retain control of both the House and Senate next year, don't look for Obamacare to be repealed. That's because, when push comes to shove, Republicans will not vote to strip 20 million Americans of coverage they have gained because of the law. Here's another reason it will not be repealed: the insurance industry won't allow it. Despite the complaints some insurance corporations have made about losing money on their Obamacare enrollees, they have thrived overall under the law.

The share price of most of the big for-profit insurers has more than tripled since the law went into effect. Those companies are actually making record profits under Obamacare. Remember that Obamacare makes it illegal for most of us to be uninsured. Without a public option, Americans who are not eligible for a government-run program like Medicare or Medicaid (Medi-Cal in California) have no choice but to buy coverage from a private insurer. Look at it this way: If you were a business owner, wouldn't you be delighted if Congress passed a law requiring people to buy the stuff you sell? (That's why I told members of Congress during the health care reform debate that if they passed a law without a public option, they might as well call it "The Health Insurance Profit Protection and Enhancement Act.")

But even if Trump could deliver on his campaign promises, "allowing" insurers to sell policies across state lines simply won't work. He would have to force them to do so, and also force state insurance regulators to go along with the idea.

Chickens and eggs, eggs and chickens

Selling coverage across state lines is already possible, and some states have even tried it. Georgia, for example, formally invited insurers from neighboring states to come in and set up shop a few years ago. There were no takers. Not a single one. That's because the barriers to enter a new health insurance market are incredibly high.

It's a chicken-and-egg kind of thing. To be able to get people to enroll in their health plans, insurers have to offer competitive premiums and offer a pretty good provider network. To pull that off -- to be able to price their policies competitively -- insurers have to get hospitals and other health care providers to give them decent discounts. But if an insurer doesn't already have a lot of enrollees, health care providers have little if any incentive to offer it much of a discount. Bigger and well-established health plans with a lot of enrollees have much more clout at the negotiating table with doctors and hospital executives than out-of-state plans with no enrollees.

It is extremely difficult for a new entrant in any health insurance market to achieve sufficient market share to turn a profit. That's why most of the co-op health plans authorized by the Affordable Care Act have already gone out of business. They couldn't get to the point where they weren't bleeding red ink. Again, the chicken-and-egg thing.

Trump would make shady insurers happy and rich

The only way insurers would be interested in Trump's idea of "getting rid of the artificial lines around states" would be if Congress got rid of all the consumer protections in the Affordable Care Act and allowed insurers to set up operations in whatever state has the fewest coverage mandates and regulations.

Shady, profit-obsessed companies would actually love that. They'd be able to go back to charging women more than men and older folks five to ten times as much as younger folks for the exact same policy. They'd be able to once again charge people with pre-existing conditions more than healthier people. And they be able to sell risky, bare bones policies in every state, even if lawmakers and regulators in the other states objected to insurers being able to sell such junk insurance within their states' borders. In other words, what Trump believes is a good idea is something that insurance regulators in just about every state think is a terrible idea. Great for shady insurers, awful for the rest of us.

What all this means is that, unless Democrats and Republicans can set aside their ideological and political differences and agree on how to "fix" Obamacare, which is highly unlikely, we shouldn't expect either Clinton or Trump to get much of anything done. If any progress is to be made in the foreseeable future, it undoubtedly will have to be at the state level.

This has also been published by HEAL California. If you believe money should not be a factor in one's health, join HEAL California to make a difference.