How Agents Can Prosper As Obamacare Becomes Trumpcare

By Michael Z. Stahl

We're almost in the first health care open enrollment under President Donald Trump, and the scene isn’t quite how he envisioned it. Instead of a repeal-and-replace version of health care, we still have a mostly intact Affordable Care Act (ACA). But all the Washington squabbling, media hype and budget cutbacks have taken their toll on consumer perception of the condition of the federal and state exchanges.

Make no mistake, this is no longer Obamacare. We now live under Trumpcare.

Consumers are increasingly uncertain and confused about signing up for health insurance this year. According to an Oct.16 survey of individuals either uninsured or insured through the marketplace, a majority believe that Obamacare will be cancelled in 2018.  Additionally, many are unaware that they still qualify for tax credits to lower their premiums, and fewer than 10 percent are aware that 42 states have Dec. 15 as the final deadline to enroll.

These misunderstandings may provide significant opportunity for insurance agents and brokers to get the word out, provide the facts and reach out beyond their client base. The fact is that it’s going to take extra effort to help ease consumer fears this year. It begins with clarifying the current environment.

How did we get here? Here’s a rundown of how Obamacare became Trumpcare.

Jan. 20, Inauguration Day: President Trump issues an executive order (Minimizing the Economic Burden of the Patient Protection and Affordable Care Act Pending Repeal) that directs agencies to weaken enforcement of the individual mandate. As a result, the IRS states that it will accept tax returns even if taxpayers fail to indicate whether they have qualified coverage. Many insurance companies voice their concern that an unenforced individual mandate will result in healthy people opting out of buying insurance, thereby increasing costs for those who remain.

Jan. 26: HealthCare.gov cancels millions of dollars in advertising for the remainder of the open enrollment period. Experts estimate that this cut enrollment by 500,000.

April 18: The Centers for Medicare and Medicaid Services (CMS) enacts a shortening of the open enrollment period from three months to six weeks.

May 4: The House passes a repeal-and-replace bill (American Health Care Act of 2017), sending it to the Senate. When the Congressional Budget Office (CBO) estimates millions will likely lose insurance coverage under the plan, many House Republicans who voted for the bill openly call for the Senate to provide an improved bill.

July 28: After struggling to craft a more robust repeal-and-replace bill, the Senate fails to pass the “skinny” health care bill when Sen. John McCain, R-Ariz., issues the famous thumbs down on the Senate floor deep into the night. His vote, along with those of Sen. Susan Collins, R-Main, and Sen. Lisa Murkowski, R-Alaska, tip the balance below the 50 votes needed to send the bill to the House.

Aug. 31: The Trump administration announces a 90% percent cut in ACA advertising for the open enrollment period. The administration also announces a cut of approximately 40 percent in funding to nonprofit navigator groups that help promote and facilitate enrollment.

Sept. 26: The Senate again attempts to pass a repeal-and-replace measure, this time known as the Graham-Cassidy bill. The bill never makes it to a vote because it becomes apparent that the Republicans will not have the votes again, with McCain, Collins and Sen. Rand Paul, R-Ky., once more stating their opposition.

Oct. 6: Trump makes a ruling that broadens which employers can exempt themselves from covering contraceptives, such as birth control pills, on religious or moral grounds. Nonprofit organizations, for-profit publicly traded companies, and higher-education institutions can now opt out of providing contraceptive care for their employees.

Oct. 12: Trump issues an executive order (Promoting Healthcare Choice and Competition Across the United States) that instructs his agencies to “consider proposing regulations or revising guidance, to the extent permitted by law” within 60 days to allow association health plans (AHPs), eliminate restrictions on short-term health plans and expand the use of health reimbursement accounts (HRAs). Supporters say these changes will allow for plans unencumbered by Obamacare rules. Meanwhile, detractors say they will offer lower-value plans and siphon healthy people away from ACA policies, thereby driving up the cost of those plans for people who need them. However, it remains to be seen if and when these plans will be available.

Oct. 13: Trump announces that he will cease making payments to insurance companies that funded cost-sharing reductions (CSRs) for 6.5 million low-income consumers. While eligible consumers will still have their out-of-pocket costs reduced, in order for insurance companies to cover the lost funding, premiums are expected to rise by an additional 20 percent.

And, with that, we have transitioned from an Obamacare world to a Trumpcare one.

What Does This Mean for Agents and Brokers?

Trumpcare will have some similarities to Obamacare, but the differences are significant. Here are six things to keep in mind for you and your clients.

There’s a time crunch. Obviously the most difficult job for agents and brokers is fitting into 45 days the work that previously took three months. There is simply no way to help the same number of people in half the time. And with Medicare and employer enrollments coming in the same period, resources will be stretched even further.

Consumers will need to rely on you more than ever. Obtaining assistance with choosing or enrolling in a health plan may get harder. President Trump reduced 90 percent of the advertising budget for healthcare.gov and about 40 percent of the budget for nonprofit enrollment assistance from the navigator program. That means you may have an influx of new clients who need your help.

Despite claims that it won’t be enforced, the tax penalty is still legally in place. That penalty will set scofflaws back $695 per adult in a family and $347.50 per child under 18, with a maximum of $2,085, or up to 2.5 percent of the family income, if you go without qualifying coverage.

Price hikes may be a nothing burger for some and an opportunity in disguise for others. First, premium subsidies will rise right along with premiums, meaning many lower- to moderate-income families may find that their costs are not too dissimilar than prior years. But for others, particularly those not subsidy eligible, rising premiums will cause a major crimp on the wallet. Those consumers may need to consider alternative options they can afford, such as short-term plans or health sharing plans. Make sure you have all of the product options in your quiver and do a thorough review to ensure you’re recommending the right plan for each customer.

Timing is everything. Even though Trump wants his plans implemented immediately, the gears of Washington might turn more slowly than he expects. After the latest executive order on AHPs, short-term plans, and HRAs, it could take months to get through the regulatory process. Short-term insurance proposals can easily spark battles within the insurance sector, and Trump’s decision to end cost-sharing reduction payments has already prompted a number of  states and Washington, D.C., itself to file suit on the administration. However, Sen. Lamar Alexander. R-Tenn.,  said Oct. 17 that he and Sen. Patty Murray, D-Wash., have agreed on “a short-term limited plan to stabilize health care markets.” This plan includes funding the CSR payments the president nixed on Oct. 13. There’s a lot of wait and see here.

It’s not only carriers who are leaving the individual market. Reduced broker commissions are causing a separate exodus. There’s been a drop of almost 35 percent in registered brokers for healthcare.gov since 2015 (from more than 103,000 to about 67,000).  If you’re still willing to work in the individual health insurance market, you might be Forrest Gump’s proverbial last shrimp boat.

Now, more than ever, insurance agents and brokers need to be on the front lines in cutting through consumer misperceptions, providing education and staying up to date on the latest news from Washington. The president has changed Obamacare into the Trumpcare he promised while on the campaign trail. How he continues to implement Trumpcare will certainly affect us all.

Michael Z. Stahl is a two-time author, insurance expert and executive vice president at HealthMarkets. He may be contacted at [email protected].

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