SIUSLAW NEWS ❚ WEDNESDAY, FEBRUARY 15, 2017
7 A
A ‘Repeal and Replacement’ primer
(Editor’s Note: This is part
two in a Guest Viewpoint series
exploring the questions and
possible solutions about over-
hauling the Affordable Care
Act. The first in the series
appeared in the Feb. 4 issue,
submitted by Rand Dawson)
In attempting to understand
the impending battle over
repeal and replacement of the
Affordable Care Act (ACA), it
is important to keep in mind
what ACA is: a program of
individual health insurance to
enable people to have afford-
able health coverage free from
excessive financial risk.
Like all insurance, it operates
by pooling the premiums of
members of large classes to pay
the losses actuarially predicted
to be incurred by some of them.
The Law of Large Numbers
tells the actuaries that the more
people in the pool, the more
predictable the losses will be of
the actual losses experienced.
Through ACA, an estimated
20 million people gained cover-
age.
The
nonpartisan
Congressional Budget Office
estimates when ACA is
repealed, virtually all of them
will lose their insurance within
the first year. Leaving popular
ACA provisions, such as the
prohibition of pre-existing limi-
tations, in place, health premi-
ums will increase dramatically.
Assuming there’s no replace-
ment, premiums in the individ-
ual insurance market would
double by 2026.
Questions Raised:
Why did the number of
insureds dramatically increase
under ACA, why will millions
lose their coverage if it is
repealed and why will premi-
ums dramatically increase?
Underwriting health insur-
ance:
Insurance underwriters eval-
uate the risk and exposures of
potential clients. They decide
how much coverage the client
should receive, how much they
should pay for it, or whether
even to accept the risk of insur-
ing them. Prior to ACA, indi-
vidual health insurance pre-
existing condition underwriting
norms, according to the Kaiser
Family Foundation, would
today deny coverage to 27 per-
cent of Americans younger than
65 — or 52 million people.
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GUEST VIEWPOINT
B Y A RNOLD B UCHMAN
RETIRED COUNSEL TO HEALTHCARE INSURER
Women and seniors were
charged higher premiums
because they were generically
more at risk. Policies were can-
celed if customers used them
too much or rescinded if, upon
the filing of a claim, a minor or
unrelated pre-existing condition
was found to have been undis-
closed on the original applica-
tion.
The underwriting limitations
imposed on individual policies
were thought necessary to make
a profit. But, they also put ade-
quate insurance at a reasonable
price beyond many individuals
and small businesses.
ACA Solution:
Underwriting for a group
presents a more limited risk if
the group is balanced between
the healthy and unhealthy in a
sufficiently large, able-bodied
group such as an employer-
sponsored plan covering work-
ing individuals. ACA attempted
to overcome the risks inherent
in individual insurance by
requiring everyone to partici-
pate, thereby creating a large,
balanced group.
To make it affordable, premi-
um subsidies geared to income
were provided. To make it ade-
quate, certain benefits were
mandated. To make coverage
understandable, exchanges that
presented prescribed cover-
age/premium options in terms
allowing direct comparison
between competing insurers
CIGNA
were created.
To entice risk-wary insurers
to participate in the exchanges,
underwriting losses was limit-
ed.
Repeal:
The initial steps taken by
Congress and an executive
order signed by President
Trump have further shaken an
already unsettled insurance
market.
The prospect of eliminating
all or parts of ACA has made
hospitals and doctors nervous
and confused and scared
patients that mandated benefits
such as pre-existing condition
limitation exclusions, preventa-
tive care and caps on annual
and lifetime
out-of-pocket
costs — even in group policies
covering 150 million people —
will no longer be provided.
Thus, insurance premiums
for individuals can be expected
to grow beyond reasonable
reach for all but the upper class.
And for groups as well since
exorbitant profit-taking by drug
and device companies, medical
equipment makers, labs, and
supposedly “nonprofit” hospi-
tals will no longer be curtailed
by ACA.
As this happens, fewer and
fewer healthy individuals buy
insurance leaving more and
more unhealthy people in the
insurance pool generating more
and more claims requiring
higher and higher premiums; a
process known in the insurance
industry as the “death spiral” as
the risk becomes too great to
underwrite.
Faced with the prospect of
death spirals coupled with the
uncertainties of “repeal and
replace,” insurers inevitably
will exit the marketplace.
Replacement:
“Free market” solutions have
been offered up. However, as
David Brooks points out, the
American health care system is
not like a normal market.
Consumers’ needs for health
care are mostly unpredictable
and providers who know every-
thing about medicine don’t give
much information on compara-
tive cost and quality to their
patients who know virtually
nothing.
Patients “under the knife” for
emergency have little choice
and see the bill only after care is
provided. Fees for services are
often determined by how many
procedures are done, not
whether the problem is fixed
and the bill is only vaguely
related to the services they've
received.
Coverage is not access.
Access is the opportunity or
ability to obtain coverage. So,
proposed free market solutions
providing access rather than
coverage fall short of achieving
the ACA goal of affordable cov-
erage that enables people to
actually obtain adequate health
services free from excessive
financial risk.
Relying on traditional under-
writing concepts in replacing
ACA turns on the questions of
whether health coverage is a
right of citizenship and what
having insurance means.
Some of the following ques-
tions will need to be asked:
Is it simply making access
more affordable to people able
and willing to pay for it? What
of access for those whose
income is below the federal
poverty line?
Should out-of-pocket and
premium costs be capped at an
affordable fraction of every cit-
izen's income?
Should subsidies be provided
and if so in the form of tax
deductions? Credits? Vouchers?
Can the group to be covered
be made big and diverse
enough without compulsory
participation so the Law of
Large Numbers yields accurate
underwriting?
Can the opponents of ACA
devise a competitive, free mar-
ket health care system that can
deliver good care at lower costs
when the developed world has
yet to do so?
And, of course, where will
the money to pay for all this
come from?
Such are the policy questions
that need to be resolved in judg-
ing whether a program replac-
ing ACA is meaningful.
Or, whether Retain and
Repair ACA would not be a bet-
ter approach than Repeal and
Replace.
Arnold Buchman spent more
than a decade with CIGNA
Corp. devising and implement-
ing financial and benefit-deliv-
ery group health insurance
strategies.
Annual ‘ Fraudville’ event to raise funds for B&G club
The Boys and Girls Club’s
seventh annual “Fraudville” lip
sync event will be held
Saturday, Feb. 25, at Three
Rivers Casino Resort.
“Fraudville” is a fun-filled
evening featuring seven local
businesses and organizations
strutting their stuff on stage, as
they vie for a trophy in the lip-
sync contest.
Hal’s Electric hopes to retain
the first-place title they won
last year.
They will be competing
against Siuslaw Elementary
School teachers and staff,
Oregon Pacific Bank, Boys and
Girls Club Board members,
Mapleton School teachers and
staff, Florence Kiwanis and
Coastal Fitness.
In addition to the lip-sync
contest, there will be a silent
auction with delectable treats,
libations, art and sporting gear,
and four live auction items
with special prizes and trips.
A Name-That-Tune game
was introduced last year and
was so popular that it will
return this year.
New to the event is a
Roomba Beer Pong, where
players are challenged to get
the ping pong ball into a mov-
ing beer cup and may win a 6-
pack.
Judging the event will be
Nicole Hundley, long-time par-
ticipant in the lip-sync contest,
“Boomer” and Susan Wright,
Roger and Calista Cates, and
special guests John and Patty
Hardison.
At the start of the evening,
guests will be invited to bid on
a Wild Card seat at the judges
table.
Rounding out the fun and
games is a raffle for a
Lamiglass Salmon Rod with a
Shimano reel and a chartered
salmon fishing trip for two,
with a total package value of
$540.
All prizes are sponsored by
Hal’s Electric, Tony’s Garage,
Hunt Family Dentistry, and
HuntingFish Charters.
I N HONOR OF THE
100 TH A NNIVERSARY OF R OTARY F OUNDATION
Raffle tickets sell for $5
each, with a maximum of 500
tickets to be sold.
“Fraudville” tickets are now
on sale at Coast Insurance
Services, Oregon Pacific Bank,
Banner Bank, New Concepts,
Boys and Girls Club and at the
door for $25.
Tickets allow entrance to the
event and include food and ice
cream sundaes.
A limited number of
reserved seats are still avail-
able. These seats allow for up-
front viewing of the hilarious
antics of the lip-sync bands.
Call Coast Insurance for these
reserved seats by calling 541-
997-3455.
All proceeds support pro-
gramming at the Boys and
Girls Clubs of Western Lane
County.
Florence Rotary Club’s
100 Acts of Good
Tuesday 1/7
Kathryn Nalore
Arnold Lowe
Florence
Florence
Chen’s Family Dish
Safeway/Florence
Wednesday 2/8
Doris Creager
Brien Mill
Florence
Florence
Sears
International C-Food Market
Thursday 2/9
Shirley Raia
Shirley Raia
Florence
Florence
Grocery Outlet
Grocery Outlet
Friday 2/10
Betty Wooley
David Jefferis
Florence
Florence
Safeway/Florence
Safeway/Florence
Saturday 2/11
Judith Sidell
Craig Brandt
Florence
Florence
Safeway/Florence
Safeway/Florence
Sunday 2/12
Allison Roane
Richard Forster
Siletz
Florence
Blue Dolphin Antiques
Firehouse Restaurant
Cody Lane
Robin Siewell
Reedsport
Florence
Three Rivers Casino Resort
Safeway/Florence
44. Florence Rotary continues to disburse funds for the
2015-2016 Peru Water Grant
45. Rotary donates $250 to Siuslaw Middle School 8th
grade Civil War fi eld (re-enactment) day
46. Rotary donates $250 to Siuslaw High School
Project Graduation for a safe, alcohol and drug-free
graduation night
47. Florence Rotarians help host the Heceta Head
Lightstation’s. Victorian Christmas Open House
48. Florence Rotarians assist the Florence Kiwanis Club
sell $2365 in See’s Candy
49. Rotary donates $500 to Siuslaw Volleyball Club
For more information Call President, Pat Riley: 541-991-6371
Monday 2/13
www.thefl orencerotary.org
DIRK’S
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5
201 -
F
E
BEST O
F LO E N C
R
Best Burger!
Civil Rights
work to be
recognized at
library
On Saturday, Feb. 25,
KXCR, Community Radio,
and Citizen’s Democracy
Watch will commemorate
400 years of social justice
activism.
The event will be held in
the Bromley Room at the
Siuslaw Public Library, and
is free to the public.
The commemoration will
include a remembrance of
those who gave their lives to
work for equal rights from
1717-2017.
The meeting will conclude
with a conversation dis-
cussing issues of social jus-
tice and work that remains to
be done.
For more information con-
tact Jenny Velinty at 541-
997-7573.
We serve Breakfast and Lunch!
Donuts • Bagels
Biscuits and Gravy • Breakfast Burritos
Deli Sandwiches and so much more!
Open 7 Days a week!
Eat in or call for take out!
@S IUSLAW N EWS
1136 Hwy. 101 • Florence •541-997-8630
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