Healthcare markets have one month to live

Health insurers have one month to live

By James D. Smith, President, Indianapolis Association of Health Underwriters

For all the turmoil we all feel emanating out of Washington, D.C., it’s still a beautiful city full of history. You can’t help but feel proud when you’re there. I had the luxury of being in D.C. a couple of weeks ago for the National Association of Health Underwriter’s Capitol Conference as part of my role as President of the Indianapolis chapter. While there, we met politicians, economists, medical providers and heard from think tank specialists on all sides. Something struck me, though. It was the look of fear on many of their faces.

It was unnerving. The message from the conference, leaders, and executives in positions to know was clear: In some states, America’s health insurance market for individuals and families has one maybe two months to go before it collapses. “James, that’s completely hyperbolic, how can that possibly be true?” You ask. I asked myself the same thing.

The collapse is not far-fetched. What NAHU and political leaders have to do right away is “stabilize the markets”, which is a fancy way of saying, “Make insurance companies feel comfortable.” If that makes you roll your eyes, you’re not alone, but there’s some truth here.

The very real scenario starts within the next couple of months as insurance companies must decide if they want to stay in the individual health insurance market, otherwise known as the Healthcare Exchange. If they don’t, they can leave, and 18 million people are at risk of losing coverage.  At present, one-third of US counties have just one health insurance carrier. That’s projected to increase substantially in 2018 with some counties potentially not having any carriers.

If they decide to stay, insurers then have to file their rates for 2018. They have to know what to charge NOW for health insurance claims that will occur next year and beyond. Any rational person, regardless of party or position, can understand the difficulty of that type of projection and recognize that any enterprise can’t continue to lose hundreds of millions of dollars a year in perpetuity.

NAHU and industry leaders are currently concerned with this short-term problem for the sake of the long-term. Two things need to happen. First, a reduction in the length of open enrollment. Initially, it was supposed to be a couple of months. But now it stretches to six with extensions and delays. That’s allowed people to forego insurance, get sick, get insurance, get healthcare, and then drop insurance again in one open enrollment period – all legally. Second, tighten up rules governing special enrollment, or “life events”. If someone says they’re getting married or divorced and needs coverage mid-term, they should at least have to provide a marriage or divorce certificate. Both policies enjoy bipartisan support.

If we don’t first stabilize the individual health insurance market, that dominoes into small groups and employers, then large groups, and there’s nothing left after that. I’d also encourage us to resist using the phrase “repeal and replace” because if the health insurance system collapses there won’t be anything to replace.

We can fix the enrollment periods. We can permit people to purchase more kinds of health insurance – like catastrophic coverage, which is a boon to the young – for less money and apply tax credits to help pay for it. And yes, NAHU and others support more transparency in pricing. People deserve fair and accurate information so they can make smart decisions like we all do every day for purchases big and small. But we have to move quickly because we may not have any options at all within a year.

James D. Smith

Mr. Smith is the President of the Indianapolis Association of Health Underwriters, a local non-profit organization dedicated to educating, training, and supporting health insurance professionals and consumers across central Indiana.

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NAHU represents more than 100,000 licensed health insurance agents, brokers, general agents, consultants and benefit professionals through more than 200 chapters across America.