RANT: How Supreme Court Ruling On Health-Care Reform Law Could Affect You

I know, this is a little out of the scope of “Cool Dude Stuff,” but it will affect all of you in some way or another. And this is kind of a big deal for anyone in my industry sooo… It’s kind of relevant.

As we all remember, back in 2010 President Obama signed into law the Affordable Care Act. The reason I bring this up today. Is because it may, or may not, be overturned by a Supreme Court ruling tomorrow (6/28/2012).

In case you don’t know, the Affordable Care Act was primarily implemented with the intention to lower health care costs and grant guarantee health insurance for all Americans. The primary ideas of this act are sound.

• First, make health care affordable for all Americans by implementing an 80/20 rule, which would force the insurance carriers to use 80% of their premiums collected to go to paying clams. The remaining 20% can be used to cover over head, including administration, marketing, fix cost, broker fees, company profit, etc.  

If you think that the insurance companies are “raking it in,” here’s how the non-profit Blue Shield of California says it spends each health care premium dollar.

• Second, the act was to make health insurance available and guaranteed issue for all Americans, no matter what their current or past health status (This portion has already taken place for children under the age of 19, and for everyone else over 19 it will take effect January 1^st 2014).
• Third, the act requires that insurance policies have minimum standards for health insurance, including coverage for preventive care, no more life time maximums, and emergency rooms are billed the same in and out of network.

Now I know, this is an extremely boiled down version of the health care reform bill, but for all intensive purposes of this blog… that’s what it covers.   

Having some standards set and pulling rains of the Wild West that is the health insurance industry isn’t a bad idea. But personally, there has to be a better way than this. If you read the above bullet points and loved the ideas of this reform, you’re not alone. But just like every other law or bill that is passed, there is going to be collateral damage. For every constraint you put on health insurance companies, there is a loop hole and reaction. For example:

• The 80/20 rule that was implemented by the health care reform has forced carriers to do several things. First, it has forced carriers to over charge its members for premiums and then issue them refunds at the end of the year if they happen to go over the 20%. This is far easier the asking for more money. And given additional restraints, they are only allowed to increase your premiums a certain amount per year (meaning they can’t just increase your premiums 400% to make up for losses). Second, they drastically cut broker commissions (I don’t know if you know this, but if you purchased you health insurance from a broker… they’re making 20-30% of your month premium. So if you have any broker friends out there, you can bet they’re crossing their fingers that this bill gets over turned) making it more difficult to sell health insurance for agents and brokers.  
• In regards to offering guaranteed issue health insurance for all American, well this is where the BIG problem lies. As you should know, insurance is game of risk and diversification of risk over large numbers. In order to make the idea of guaranteed issue health insurance possible the act also had to include a mandate that all Americans be either purchase health insurance or they would face a healthy end of year penalty. Ok… That “sounds” like a good idea. But it’s marks precedence for a “slippery slope.” If I tell my government that they can force me to buy health insurance, what’s next? (This is actually what the Supreme Court is ruling on right now) Some say that the mandate where Americans would be forced to purchase anything is unconstitutional, and the whole bill should be thrown out.
• On another note, I don’t know if it would be a good idea to have everyone insured with underwriting. The US has highest obesity and cancer rates in the world. Our insurance rates would go through the roof!
• Finally on this point, we run in to outlier scenarios like trying to insure children by themselves. In most states, you can’t insure a child under the age of 19 because the guaranteed issue and too high of a risk. When everyone becomes guaranteed issue, in 2014, I don’t even want to know what kind of twisted side rules the insurance carriers are going to come up with.  
• The third point… Is actually kind of good. This is the only portion of the Affordable Care Act that doesn’t really have major negative repercussions.

But what does all of this mean to YOU… Well that’s simple. Higher overall costs and less availability.

In summary, there are a lot of aspects of Affordable Care Act that are positive, or at least have the right idea, but there’s a lot more thinking and problem solving that needs to take place before this complex issue can be solved. This Affordable Care Act is more like using a hammer, when what you really need is a needle and thread.  

For now all we can do is wait for the Supreme Court ruling tomorrow… Personally, I have my fingers crossed that it gets over turned and we send all of those over paid House Reps back into their offices to rewrite this thing and earn their paychecks for change.

But those are just my thoughts…