The public may get a look at a draft of the Senate healthcare bill for the first time this week. What’s it mean for Montana? Here's what the CEO of one health insurance company based in Helena says about it:
"I don't think that their plan is going to improve health care in the state of Montana. I think just the opposite is going to happen. And I think, I really do think a lot of people are going to get hurt."
That's Jerry Dworak, who runs Montana Health Co-Op, one of the new insurance companies created by the Affordable Care Act, signed by President Obama. The Health Co-Op covers about forty percent of the Montanans who buy individual health plans.
Dworak says that, based on the health bill passed by the U.S. House, and what Senate leaders are saying about their plans, he thinks the Republican proposals would be good for insurance companies, but not the public in general. Tens of thousands of Montanans stand to lose health coverage.
"Financially, yeah, we'd be better off, but the sad thing about it is, I don't think we'd cover the people that need care the most," he says.
Dworak says that, because the Republican health care proposal would make insurance more expensive for older people, but cheaper for younger ones. And that would mean that the overall pool of people that an insurance company covers would become younger and healthier than it is now. So they'd stand to take in more money in premiums, and pay out less for health care – meaning bigger profits.
"The older people couldn't afford the coverage to begin with, so they'll drop off. That's why they say, after ten years it'll lower premiums, because the people that need the coverage can't get it any more," he says.
Dworak doesn't see a need to repeal the current health care law. He says that his not-for-profit company is now doing fine financially, and is only planning small price increases for next year in Montana, in the single-digit percentage range. He says he thinks that the health co-op would continue to do well under the existing health care law, the Affordable Care Act.
But Montana's Republicans in Congress, Senator Steve Daines and Representative Greg Gianforte have said the Affordable Care Act needs to be repealed because, under it, insurance markets are “collapsing.” I asked Dworak if he thinks that's true.
"All I can speak for is the Montana and the Idaho. I can't see them collapsing. Again, I can't speak for Blue Cross, I haven't seen their – oh, I did see Blue Cross's first quarter financials, HCSC's, and they made a billion dollars. I don't see that collapsing. And PacificSource made money as a corporation, so I don't see that collapsing. And obviously we’d like to continue things the way they are right now, so we don't see it collapsing. We're having a positive contribution to surplus, and everything seems to be going pretty well. Now, can they make some changes in it? Sure."
Eric Whitney: The House bill asks for pretty major cuts to Medicaid and it sounds like that's probably going to be in the Senate bill they're talking about rolling back Medicaid expansion further deep cuts to Medicaid. If those cuts go through, will that impact premiums for people who are buying private coverage?
Jerry Dworak: Yeah I think so, I think what will happen is that the rates would go up for everybody buying and private coverage.
You know, there is there is a relationship between how much money you make and how healthy you are. I don't really want to go into sociological or whatever, but there there's definitely a relationship there. And when Medicaid expansion went in, we saw our loss ratio go down. So that obviously their costs were higher than the average.
It will cause our rates to go up.
EW: Congress is talking about eliminating the individual mandate, the requirement that most Americans have health coverage or pay a penalty. What impact would that have on the market in Montana?
JD: It's going to raise the rates for the people who have the coverage.
Now, the mandate as it's been used hasn't really helped us a lot, but there has to be some benefit to that mandate, and of course, the more healthy people leave, the sick people have to pay more, or the people left in the pool have to pay more. So it can't help. How much it can hurt is anybody's guess. I would say anywhere from two to maybe five or six percent.
I don’t know. I’ve got a 26-year-old and a 25-year-old, and they’re ‘invincible,’ and unless they are told to get it - Al Capone once said that I can get a lot more done with a kind word and a gun than a kind word alone, and I think that would apply in this situation, too.
Dworak says that next year, Montana’s Health Co-op is planning to raise premiums by about five percent - but that assumes the individual mandate is still in place. Another factor that could drive up prices in Montana is if Republicans follow through on getting rid of Obamacare cost sharing reductions. Those help low income people with co-pays and deductibles in the health insurance plans they buy on the private market.
"That's about 20 percent of the total income that we receive," Dworak says. "So if all of a sudden that goes away, then we're going to have to raise the rates up another 20 percent. Then there‘s the mandate. You know, the mandate hasn't been extremely effective but it's still there. If that goes away it's not going to improve your loss ratios. And you've got to have to factor that in. And then of course the total unknown. I mean insurance companies are risk averse.The more unknowns there are the higher they're going to increase your rates. So there's that factor.
"So, if everything stayed as is, it's five percent, we can move forward. You add the 20 percent with cost sharing reductions go away, you add another five percent is that if the mandate goes away, and you add another five or six percent just because we don't know what else is going to happen. You know, do the math. Five percent, it can get up to 30 to 35 percent, to 40 percent just by putting all these unknowns and try to factor those into a premium.
EW: If the status quo stays the same, the Affordable Care Act stays the way it is, you're seeing 2018 rates go up single digits. And if if the changes you talk about are made then those rates are going to go up north of 30 percent?
JD: They could go up north of 40 percent.
Dworak’s Health Co-op has filed it proposed prices for 2018 with Montana’s insurance commissioner for review. The insurance commissioner doesn’t have the ability to change those rates, just to check them and determine if insurance companies will have the ability to pay all the claims they may be liable for. The 2018 rates were written based on the current health care law. If Congress repeals and replaces it, many in the industry assume big changes wouldn’t take place until 2019 at the earliest, but right now, only a handful of people know what’s actually in the Senate health care bill.