5 things we know about the Republican health care reform plan

We know more about the Republican plan to reform national health care policy now that the Senate has released its ‘secret’ plan. These are a few things that are all but certain at this point:

  1. Obamacare will not be repealed or replaced. Both the House and Senate reform bills keep most features of the prior law in effect and actually expand on these provisions.
  2. Tax penalties associated with health plans will be removed. 
  3. The poor will be hurt. Massive changes to Medicaid will hurt access to health care for the poor.
  4. The rich will benefit. The reform measures focus on huge tax cuts for high income individuals and businesses. The Republican proposals as written are more focused on these tax cuts than on reforming health care.
  5. The plan will change before passage. Both political parties want health care law reform this year but the currently proposed bills will need to be modified before passage.

There are still many more things we don’t know, but now we can finally put some financial planning strategies into motion to best prepare for the changes ahead.

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How will you fare under the Senate health bill?

Summary of Senate health bill’s effect on small businesses:

  1. eliminates requirement to be insured
  2. protects insurers in the marketplace
  3. shifts but retains tax credits
  4. lowers the number of people eligible for free or reduced price coverage
  5. cuts taxes for the wealthy
  6. suspends the ‘Cadillac Tax’
  7. strips federal funding from Planned Parenthood
  8. is surprisingly light-weight; only about 145 pages
  9. is not a repeal of Obamacare but instead mostly strengthens and builds upon it.
  10.  places restrictions on abortion coverage (changed definition of qualified plan and elimination of small employer credit)
  11.  liberalizes withdraws from Health Savings Accounts
  12.  removes employer taxes for not providing health insurance
  13.  includes option for a work required for non-disabled medicaid recipients
  14.  adds a $5,000 federal filing fee for a qualified small business health plan that possible bypasses state regulation?

This is not meant to be a complete analysis. Clearly there are portions of the bill outside of my area of practice that I do not understand. This post is based on the draft version published today; certainly there will be changes as this moves along.

In short, if a version of this bill becomes law then I see a lot of financial planning opportunities for small business owners under the health care reform proposal.

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Outrage over Senate’s health care reform bill spreads

US Senator Bob Menendez from New Jersey joined with many health care advisers, including myself, in expressing his outrage over the secretive process used to draft the replacement bill for health care reform that is apparently designed to hide the details from public scrutiny.

I’ve been an advocate of health care reform and an active participant in the public policy process from a small business perspective for more that 30 years that span several changes in political leadership. My comments on health care reform and tax policy are quoted in The Wall Street Journal, Money Magazine and other public media. I offered support that was requested by the Republican Congress led by Newt Gingrich in the early 1980s. I was aware that someone with a “Office of the President of the United States” registered internet domain address periodically read my blog on health care reforms for small business during the Democratic-led years around 2012. In late 2015 the National Federation of Independent Businesses asked me to write a letter in opposition to portions of the Affordable Care Act in preparation for a meeting with Senator Menendez and others. Clearly the heath care reform measures of the past thirty plus years have been developed through bipartisan open public policy. As for me personally, I’ve demonstrated the ability to work with both political parties as part of the public lawmaking process. That is not true today. Never in all these years have I felt like such an outsider to the health care reform process as today. Like most of America, I don’t know what’s in the hidden legislation and I must presume, as Senator Menendez does, that there are sinister reasons why this small group of Republican Senator’s are acting in secret.
This is Senator Menendez’ message:

Dear friends,

As I send this note to you, 13 Republican men are meeting behind closed doors, secretly writing a healthcare bill – a bill that will impact every American and one-sixth of our nation’s economy.   I haven’t seen their plan and I know you haven’t either.  Because there hasn’t been a single public meeting or hearing to discuss it.   

It’s pretty clear why Senate Republicans are hiding their plan to gut the Affordable Care Act from the American people.  They are ashamed of it.  Because if it’s anything like the House Republican bill that passed earlier this year, it’s going to be mean-spirited and devastating for our families – stripping health insurance from millions of people.  

Sadly, that’s what we expect.  I’ve forcefully denounced the House Republican bill, or AHCA, as I believe it is cruel and won’t improve anyone’s healthcare. 

Here’s what we know about it, by the numbers:

A 60-year-old in Monmouth County who makes $20,000 a year would see premiums rise to $9,660 from $960, according to the Kaiser Family Foundation. That’s an increase of over 900%!

Under the House Republican healthcare proposal, 95% of New Jerseyans wouldn’t get a tax cut, but the wealthiest FIVE PERCENT would receive a total of $13 billion in tax cuts over 10 years. New Jersey Policy Perspective explains that, “the wealthiest 1 percent of New Jersey taxpayers would receive 73 percent of the tax cut. These taxpayers, with an average annual income of $2.9 million, would receive an average tax cut of $23,000 a year.”

The House Republicans’ bill proposes ending federal funding for the ACA’s expansion of Medicaid, which would force New Jersey taxpayers to fork over nearly $27 billion more a year in taxes to cover the increased costs of covering 552,000 New Jerseyans with Medicaid.

The latest estimates are that through Medicaid cuts and the loss of health insurance subsidies, 540,000 New Jerseyans would lose their health insurance under the House Republican bill.

54,000 New Jerseyans with jobs tied to Medicaid and tax credits could lose their job if the House Republicans’ healthcare bill were to become law.

The massive funding cuts to healthcare and New Jerseyans losing their health insurance would translate to $6.6 billion in lost economic activity in the state of New Jersey alone.

Ten out of 12 New Jersey members of the House of Representatives, both Republicans and Democrats, agree that the House Republican bill is too mean for New Jersey, and voted against it. 

…So, what happens next? 

In just seven days, Republican leaders in the Senate expect us to vote on a bill that we haven’t even seen! This is a bill that would completely upend 1/6th of our economy, and impact the lives of millions of Americans. 

That’s the number of public hearings Senate Republicans have told us we should expect on their bill. Keep in mind that when Democrats passed the Affordable Care Act in 2009, we had held 53 bipartisan meetings, hearings, briefings and roundtable discussions in the Finance Committee alone.  

Twenty hours.  That’s how long we will be allowed to debate the Republican health care bill when they bring it to the floor.  Think about that – less than one day will be spent debating a bill that will affect every American for years to come.  When we finally brought the Affordable Care Act to the floor, both Republicans and Democrats spent 25 straight days debating it in front of the American people. 

The secret process Senate Republicans are using to jam this bill through is absurd and completely unacceptable.  The fear is real – they want to bring the bill to the floor, rush it in the dark of night, for a simple reason – they are ashamed of it.   I’m proud of work we did to expand health insurance coverage to millions, and provide necessary protections for working families and those with pre-existing conditions. I will be fighting to protect your healthcare with everything I’ve got.


U.S. Senator Bob Menendez

My criticism here is not based on the content of the secret Republican health care bill or its potential effect on the nation. We don’t even know that yet. This criticism is simply focused on the point that secretive lawmaking is an unacceptable process for the United States of America.

I strongly suspect that when we do see the details of this secret Senate project it will become clear that the focus of the bill is a wealth transfer from the poor to the rich and that it is not actually a proposal to fix the health care system. Nothing from any source suggests that Republican leadership has the motivation to address the real problem with heath care that we’ve known for decades: the price of health care is too high relative to the rest of the economy. Only cost controls and rationing will fix our health care problem. Republicans won’t implement these types of forced cost reductions or health care rationing across society but they will try to force it for the poor. The only question is whether we allow it.



Begin financial planning for health care changes now

We expect major changes ahead to U.S. health care policy under the current federal leadership. We don’t know specifically what these changes will be and when the changes will come. Yet for those with chronic medical conditions, it makes sense to begin financial and legal preparations for the change now. One key aspect of the change is already clear: more people will face the risk of medical bankruptcy than before. Your financial assets, and maybe even your life itself, are at stake.

The basic difference between The Affordable Care Act (Obamacare) and The American Health Care Act (Trumpcare) is how the plans handle sick people. Obamacare puts healthy and sick people into the same insurance pool and spreads the costs evenly over the population. Healthy people and sick people pay the same. But under Trumpcare – the Republican bill that passed the House and will be revised by the Senate – healthy people will no longer be subsidizing sick people. Health insurance for sick people will be very expensive, even after government subsidies.

Nobody likes to think of themselves as falling into this category of “sick people”. Yet many of us will eventually develop chronic medical conditions that are expensive to treat. In any given year the statistic that 80% of our nation’s medical costs are spent on 20% of the people holds true. The individual corollary, from a financial planning perspective, is that 40 % of us will incur a medical experience at least once in our lifetime where the cost of treatment will exceed our total household net worth. Even a simple and routine maternity expense for a healthy young woman, for example, exceeds the financial abilities of most young couples. Dreaded diseases like cancer, diabetes, heart conditions are far worse.

Most people with chronic medical conditions have trouble paying for health care. This is not new. This means, for example, that a financially stable person who develops adult onset diabetes is likely to become impoverished over time. I’ve covered this trend and the data behind it in many blog posts over the years. Under the Republican health care plan, this type of medical bankruptcy will happen sooner and affect a lot more people.

The financial planning approach for this situation used to be called “Medicaid planning”. The concept involves protecting whatever assets can be saved before medical care providers have the legal right to claim the residual wealth of the patient. The proverbial situation “lost the house to the nursing home” is a best-known example.

Financial planning for medical costs requires a long time frame and family cooperation. Trumpcare planning will involve earmarking funds for health care, avoiding taxes on this money, separating and protecting assets, and providing for bullet-proof supplemental insurance. The only logical response to Trumpcare is to revisit your financial planning, review your assets and titling, and then reconsider the potential risk and cost of catastrophic health care.

I urge clients to review of their financial plans now to be prepared for big changes ahead.

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Why I oppose the Republican health care plan

(Hint: It’s pretty much the same reason as I opposed ACA but with a new additional objection that it gives unwarranted tax breaks to the wealthy).

“Anybody with $250,000 a year of adjusted gross income and a lot of investment income is going to have a huge tax cut.” – Warren Buffett, 5/5/2017 on the Republican health care bill. Buffet estimates his taxes would drop by 17%. President Trump tweeted that he would pay more under the new Republican plan but tax authorities like Tony Nitti wrote that would be impossible.

The Republican health care bill does a lot to cut taxes for wealthy corporations and individuals. It does nothing to cut the nation’s out-of-control health care spending.

Warren Buffet helped put it in perspective this way:

In 1960, the year I was born, corporate taxes made up 4 percent of GNP. Now they amount to half of that at 2 percent of GNP. So while published rates are higher, corporations pay less of their share of the public financial burden. The large majority of people polled by Gallop over recent years agree that large corporations and wealthy individuals do not pay their fair share of taxes.

Meanwhile, in 1960 health care was 5 percent of GNP. It has more than tripled to 17 percent of GNP today. Everyone knows that 17% of health care costs is unsustainable in any society.

So corporations pay a smaller portion of our total public expenses while health care devours up a much bigger portion of our money. Given this simple and basic analysis that even a Congressman can understand, why are Republicans focused on cutting corporate taxes instead of cutting health care costs? It makes no sense, and that’s why I strongly oppose the Republican health care bill.

We’ve known for decades how to solve the health care crisis. It is simple, in theory, and plenty of other nations have done it. We simply lack the political will to get the job done. But it is an absolutely terrible idea to make a bad situation even worse by refusing to address the underlying problem and deflecting attention to a fake issue that corporate taxes are too high. Separately, I’ve published a short explanation about why the new Republican health care bill is such a threat to your personal financial security.

There is only one solution: cut health care costs dramatically. Yes, that means cutting back, setting limits and rationing publicly funded medical care. Yes, that means some people will suffer more and die earlier than if they had a blank check medical care. But this change is necessary and inevitable. We just don’t want to face it.

For more than 30 years as a health care adviser I’ve predicted that we will have a national universal publicly funded basic health care plan supplemented by private plans for those who can afford it. Essentially we will wind up with class-based health care. It seems that we will arrive at this inevitable conclusion, as Churchill says, only after we’ve tried everything else.

Worst threat ever to your personal financial security

It’s now been more than 30 years since I finished my formal business education in health care administration and more than 20 years since wrapping up tax law handling of health and welfare benefits. I’ve applied this training in an unusual manner to address consumer financial planning issues as an independent adviser rather than actually working within the health care industry itself. In this capacity, I’ve addressed questions from more than 50,000 Americans in every part of the country. Every single one of these 50,000 people share the same basic underlying concern: Will they be able to access basic medical care when they need it? I try very hard to avoid the political issues and focus only on helping people cope with their health care financing struggles. But it’s tough to keep quiet when we see the type of horrible and ignorant legislative and administrative actions that do nothing to help ordinary Americans afford medical care. Separately, I published a short explanation of why I oppose the Republican health care bill citing comments by Warren Buffett.

We all know that health care has a huge impact on our financial well-being. That is an understatement. Financial ability to access health care can actually be a matter of life and death. This is the single most important factor in our overall well-being, happiness, security and quality of life.

Over these 30+ years we’ve watched our leaders battle with heath care affordability but not make much progress. I wasn’t a fan of the grossly misnamed “Affordable Care Act” for that reason. Health care regulation is complex, and I don’t fault any law or legislature that attempts to make even the tiniest steps toward resolving the difficult issues.

Yet yesterday our US House of Representatives took the largest legislative step backwards that we’ve ever witnessed in modern times. The bill called “The American Health Care Act of 2017” that passed on May 4, 2017 with only 217 Republican votes keeps every former legal protection for members of Congress and their staff but strips most legal protections from the rest of us. Meanwhile the bill gives uncounted billions of dollars in tax savings to the richest individuals and corporations while stripping away health care funding for the poorest. The betrayal of public trust is beyond description.

I have to presume that these 217 Republicans either didn’t bother to read a brief of what’s in the bill or blatantly don’t give a damn; so long as they can move along a piece of party-sponsored crap.

Fellow Americans, let’s be clear and strong in this point:

This bill is not just wrong, misguided, short-sighted or dangerous. It is a horrible abomination against ALL Americans (not just those under Obamacare but every person covered by employer-sponsored insurance, Medicare, Medicaid, etc. Yet members of Congress and their staff are exempt from the impact of the bill). Support for this bill, IMO, borders on the legal definition of criminal intent to harm fellow Americans. Every one of those 217 members of the House who voted for this crap yesterday must be held accountable.

In my region of the Delaware Valley there were 9 Republicans in Pennsylvania and 2 in New Jersey (none in Delaware) who voted for this atrocious act:

I urge my neighbors in PA and NJ to let these bullies know that we will not tolerate this type of white collar legislative crime that specifically intends to bring cruel denial of basic medical care and premature death to millions of Americans while cutting the financial burden for the wealthiest sector. Public outrage against the bill has already caused these scoundrels to abandon the part of the law that gives themselves special health care protections. The unpopular Section 1312(d)(3)(D) provisions were removed. Additional public pressure will scare them into some reconciliation of reality that voters will not tolerate this type of behavior in an elected official. Let them know this bill will never become law and that they will face consequences for voting to undermine your health care and financial security.

Forming an action plan before setting a goal = FAIL

Tonight the nation prepares for the next imminent failure of Congress in its efforts to reform the nation’s health care policy. By the end of the week we will likely read headlines that the efforts of our nation’s leadership landed in the scrap heap again. Why? There is a simple but important lesson here for all of us:

Putting an action plan together before having a goal is a recipe for failure.

For seven years the nation’s majority party leadership had an action plan of “repeal and replace”. Yet they never had a goal. Healthcare policy reform requires a very difficult choice in setting a goal. If the goal is to cover everyone then that costs a lot of money. If we want to save money then we can’t cover every medical condition and every person. But we can’t formulate a goal until we are willing to face that difficult choice.

President Trump is only fueling the failure. He doesn’t care about the goal or it’s impact as long as he can say that he “repealed and replaced”.

The world of politics is infamous for avoiding basic truth like this.  Yet the same basic policy issue that has been around since I first considered the impact of national health care policy or the financial planning of individual and small business clients. That was 35 years ago. The difficult choice is not going away and not getting easier. Yet the solution that we will eventually arrive upon is quite obvious. We’ll get there, as Churchill suggests, only after we’ve tried everything else.

Health insurance help for illegal immigrants

My free online advisory service launched in the 1990s provides bits of financial advice to people; mostly on issues related to small business operation. The topical subjects of these questions have shifted over time and now quite often come from people who have trouble finding affordable health insurance or covering uninsured health care expenses. I presume this means that people are more concerned about health care issues than other personal financial issues now than in the past. Apparently I’m one of the few advisers licensed throughout the U.S. in health insurance who offers this type of support to international travelers and immigrants regardless of their legal status.

The most basic fact, often misunderstood, is that commercial insurance companies don’t care about your legal immigration status. Insurance applications do not require that you disclose your citizenship, a social security number or tax ID number. An insurance company will not ask about your citizenship or visa status. They do not communicate with USCIS. Being a non-citizen can actually be an advantage when buying health insurance because the tough provisions of the Affordable Care Act do not apply. A point of tension lately is that immigrants (both documented and undocumented) excluded from Obamacare provisions so they can buy custom-designed private health insurance on more favorable terms than U.S. citizens. Over the years I’ve build a good relationship with the administrators of a health insurance plan called “Inbound Immigrant” and have referred many of their current policyholders. The coverage is available to anyone who has been in the U.S. for less than two years and the policy can be kept for up to five years.

The second fact is that nobody has a very good solution to our national health care crisis. The best I can do is to offer partial solutions and lower the impact of high health care costs. I can only estimate that perhaps about a thousand of these requests cam from illegal immigrants. When I sold part of my business to n online publisher years ago, the company made it clear that I was not to speak or write about this aspect during the three year period of our non-compete clause.

Today I received this message through OnlineAdviser: “My mother brought me to the U.S when I was 8 months old. I’ve been here for 34+ years but unfortunately I have not been able to fix my immigration status. My question is which insurance company will take my ITIN number and can it cover infertility treatments?”

The other information seems to indicate a young woman who has risen in socioeconomic status but has not been able to resolve citizenship issues. I hear from many others with similar stories.

My response:

“Hi Jennifer. Right now the only easily available options are limited benefit medical insurance policies, sometimes called “mini-med plans” that do not cover fertility treatment. See www.corehealthinsurance.net as one of the most popular in this class.

Any of the plans listed on our website www.freedombeenfits.net are available to you without immigration status fixed. ITIN is valid on any application.”

Today’s newspaper coverage of health care reform efforts indicates that the latest Republican health plan is likely to lead to a removal of infertility coverage and stripping down of other benefits in insurance policies anyway, so perhaps the options available now in this young woman’s situation will prove similar to the norm even for U.S. citizens in the near future.

Did the Republicans really win the health care reform battle?

A strong case can be made that the Republicans have already essentially accomplished much their agenda with regard to health care reform. If we look at what is really happening on ‘Main Street’ and not in DC and ignoring how the law is supposed to work we see:

  • No enforcement against businesses for ACA requirements
  • Growing number of tax professionals who do not comply with ACA requirements for self-reporting of penalties
  • The president’s order to government agencies to minimize the impact of ACA
  • A government option remains as a safety net
  • Growing number of non-compliant health insurance choices in the interstate health insurance market
  • Health plan sponsors may modify coverage based on religious grounds
  • Taxpayers may ‘forum shop’ on health care law and choice of insurance options based on their own unrestricted choice of residence
  • IRS admission that it does not have legal authority to collect ACA penalties other than to withhold future refunds
  • IRS announcement that it won’t fail to process or withhold refunds from taxpayers who refuse to comply with ACA self-reporting.

The end result, I argue, is that we have a voluntary safety net program that can be utilized but that nobody is forced to use.

Almost every day I receive calls from individuals and business owners telling me their problems with ACA. In response, I list a range of options that are available to them. They don’t always like the options I present; that’s not something I can control.

I typically discuss risk management, asset protection, choice of residence (insurance law issues), and tax planning. The response is something like “all I really want is cheap insurance that covers everything”. Sorry about that. But don’t say that ACA is the only problem in your way.

No law – Democratic or Republican – can make health care options palatable to reasonable Americans. None of this discussion or the news this week addresses the core issue that health care is too expensive and increasing at an unsustainable pace. None of this addresses the tough but inevitable questions surrounding rationing of health care.

My point is simply that freedom of choice is a core Republican principle. That’s where we are today, regardless of what the law says.


Trump signals new willingness to work with Obamacare

A new development in the health care reform issue that came out around midnight. In my mind, this news is the most significant news about health care reform in the past several years.

We already knew that Americans hate the health care reform bill before Congress for a vote today. One poll by Quinnepiac University reported 3 voters are against the bill for every 1 in support. That extremely clear expression of public opinion is remarkable in politics today. Even the majority of Republicans polled oppose the bill. My own anecdotal observations of over 1,000 respondents at Wall Street Journal’s online comments indicated even more lopsided opposition to the bill.

Apparently President Trump himself insists on the House of Representatives vote on Friday (later today) even without the necessary votes to pass the bill. Trump is prepared to leave Obamacare in place and work to modify it. This is the moderate approach that I and most people who work in health care advisory roles have advocated as the most prudent public policy for the last several years.

Shortly after midnight the Wall Street Journal reported “White House budget director Mick Mulvaney delivered an ultimatum from the GOP president to a meeting of House Republicans on Thursday night: Mr. Trump was done negotiating. If the bill failed on Friday, he said, Mr. Trump would leave the 2010 health law in place and move on.” I consider this great news.

I hope that the 30 Republican House holdouts stand their ground and that the U.S. moves forward in what has always been the most prudent direction for the nation.

This tired old street fighter attitude of throwing out all the collective work of our best public policy minds to date and the result of years of open public policy process to start again from scratch needs to be recognized for what it is: political grandstanding. Surely Obamacare needs a lot of fixing. But throwing it out in favor of the new bill is a terrible idea. Let’s be clear that the new bill is far worse than what we have now and America knows it. We expressed our opinions publicly this week with the force of unified public expression against the republican House bill that America has not seen in decades. Never in our lifetime has the United States public been so overwhelmingly unified on one side of an issue.

Something that makes up 1/6 of our economy deserves more than middle-of-the-night twisted backroom dealmaking for votes. The nation was clear and strong in saying that the Republican bill is worse than Obamacare.

Kudos to the President for seeing the wisdom in this!

One poll by Quinnepiac University reported 3 respondents are against the bill for every 1 person in support. Even the majority of Republicans polled oppose the bill.