Like herpes, the misnamed Patient Protection and Affordable Care Act (“Obamacare”) keeps on giving. And Louisianans, who gained some relief from it courtesy of recent reforms, to varying degrees find themselves paying more one way or another.
Designed to redistribute income and to fail in making health insurance affordable for all but lower-income households to put maximal pressure on moving towards a single-payer system, upon its 2014 implementation it sent insurance rates skyrocketing. But even as legally people had to purchase this product (the “individual mandate”), only relatively few in the individual market did because of subsidization for lower-income households. This meant some people had to pay four different ways: not only with the higher rates, but also to government for the subsidies received by lower-income policyholders that made their costs close to zero, to subsidize a federal reinsurance fund ameliorating rate hikes, and to finance subsidies to insurers to do the same.
Yet that last expense contravened the Constitution, and Pres. Donald Trump wisely cut those off this year. This transpired after 2016, when the reinsurance fund expired by law. Combined with federal statutory changes that removed the individual mandate beginning next year, with fewer subsidies to insurers and a patient mix likely to change that increases costs per insured person, rates likely will continue upwards.
However, HB 246 by state Rep. Major Thibaut could set the stage to alleviate this upward price pressure. The bill would authorize the state insurance commissioner to obtain federal permission to establish a reinsurance fund. Every insured person would pay a monthly fee – a figure of $1.25 being bandied about – into this, allowing insurers to cap payouts in a certain range – $45,000 to $250,000 being discussed. This may produce another benefit as well: with Obamacare having caused all but three insurers to flee (and one wrote just two policies) after sustaining heavy losses, this could entice more to write.
After Louisianans have suffered so much, with individual market rates jumping on average 223 percent since Obamacare’s imposition – and taxpayers feeling the bite as well, since as rates go higher, their subsidization at the federal level increases also – this move could suppress higher spiraling rates. But it comes at a cost, the extra fee projected around $15 a year per person. This essentially universal group of ratepayers would subsidize a relatively small group who have borne disproportionate personal expense, who also would pay the extra tax.
In a way, this kind of program mirrors what the state did with the related part of Obamacare, its Medicaid expansion. It doubled taxes on health insurance premiums passed along to ratepayers as well as taxpayers, because it applied to policies through Medicaid for which the public paid. This transferred wealth from a relatively small group to a larger one.
That would make this consistent with the state’s populist history, where special interests would get state government to carve out a benefit paid for by many. At the same time, the unfair burden on the roughly 16,500 Louisianans paying full freight for policies shouts for some kind of remedy.
As often is the case, if the bill passes the details will determine whether the sum of those make for a good deal. Repeal and replacement would provide much better relief not just for the individual market subset but also generally the public as a whole, but with that effort apparently moribund for now, the state must seek other solutions in the interim.