Media reports suggest that today (or, at, least, this week) the Supreme Court will hand down its decision on The Affordable Care Act. To briefly recap, dozens of states sued the federal government to overturn the act; the reasons for that suit are varied, such as the individual mandate, but include such issues as Medicaid funding requirements, which is a huge unfunded liability for states.

I’ve resisted the urge to handicap the forthcoming possibilities, but I do have an opinion. Right or wrong, I’m going to publish it today; one way or the other, the debates between Mr. Obama and Mr. Romney about health care in the upcoming general election will be fascinating to discuss in light of what the SCOTUS decides.

There are four possible outcomes: to do nothing and leave the entire Act standing; to narrowly strike down just the mandate provisions; to strike down the mandate and two other major provisions (which is the position that the Obama Administration said should happen if the Supremes conclude that the individual mandate is unconstitutional), and the fourth: declaring the entire Affordable Care Act unconstitutional.

I have no idea what the “Vegas line” is on this decision, so, I will take my shot-in-the-dark and lay odds:

Do nothing: 12 to 1. Not likely.

Strike down just the individual mandate: 6 to 1. Too narrow, and creates a bigger problem.

Strike down the mandate and the provisions relating to it (the position argued by the Administration if the mandate is unconstitutional): 4 to 1. The Administration wins, and the remaining Act becomes a rallying cry for progressives who always wanted the single-payor option (and this decision almost guarantees it).

Strike down the entire Act: 3 to 1. The most sensible solution of all.

My reasons for giving the best odds for striking the entire Act lay in the unprecedented suit brought by a coalition (frankly, a majority) of states against the federal government. I’m unaware of any action brought against the government by so many states, and this alone should prompt an unprecedented examination of the role of the federal governments’ power to pass legislation that intrudes on the right of the states to govern themselves. It also bears pointing out that the federal government is, technically,  a government of limited powers (the term “states rights” is not a pejorative for discrimination, despite what liberals have always said) with the remaining powers reserved exclusively to the states. With the individual mandate exceeding any rational understanding of the purpose and use, even in liberal hands, of the Commerce Clause, the demand by the states to be relieved of a burden they clearly feel is unconstitutional has to be carefully considered. The strange manner in which the Act was passed, the lack of ANY bipartisanship (or, of that matter, any input from anyone except the Progressive Caucus in the bills ultimate form) the distorted cost projections, not to mention the majority view of the Act across the nation by voters – all of these things must be taken into account by the Justices. Never mind that they are legal scholars who pass judgment on constitutional issues at the highest level; there is and always will be a political element to every controversial Supreme Court decision. Couple this with the lack of a severability clause, and my opinion is that the Supremes err, not on the side of caution, but on the side of good sense: telling Congress that this legislation is so flawed and so intrusive that it would be best to just start over.

And that is what I think the Supremes will do. If they don’t, they will be performing a major disservice to the country, by leaving in place a huge entitlement program that completely remakes the social contract between the government and its citizens (or should they now be called subjects?) without any rational means to pay for it (assuming that the Commerce Clause doesn’t allow the government to tell you what you must buy), while dooming a portion of the insurance industry to almost-certain extinction or, worse, outright nationalization or regulation as a monopolistic utility, with the government calling ALL the shots, while re-distributing massive tax increases to pay for it.

Whatever they decide – it’s going to be interesting. And don’t forget that, in the absence of any new federal legislation, states, including Colorado, will be in a position to craft their own solutions, which is how it should be in the first place. The fact is that Colorado state Republicans control the House by a slim one vote margin – and history shows that in the early 90’s, Colorado’s Governor Roy Romer (D) threatened to pass a single payor system unless “health reform” was enacted, which set us upon the very path we now walk.

Let the games begin! Quoting Rep. Michele Bachmann: ““The decision on Obamacare goes well beyond health care,” she wrote. It “will determine whether or not the court believes the government has a right to mandate that Americans buy a product or service, a direct impact on our freedom and liberty.”

The Department of Health and Human Services (HHS) has just announced that any and all FDA approved “contraceptive methods, sterilization procedures, and patient education and counseling for women with reproductive capacity,” will be provided under ObamaCare “without cost” in college/student-based health plans, and for women of college age but not attending school.

We tried to tell ’em, but no one on that side of the aisle listens: health reform inevitably drives health insurance rates even higher due to mandates and required coverage benefits on every policy (in Colorado, this was made worse by action at the state, not federal, level, when the Democrat ‘super-majority’ passed mandatory maternity coverage for every individual health policy sold or renewed in the state). This year, the average premium nation-wide rose 9 percent, higher than the last two years combined.

Want the whole story? go here.

And, before you think this report is biased, read this: the Centers for Medicare and Medicaid Services (CMS) estimates the growth in health insurance costs will increase 10 extra percentage points in 2014 because of health reform – a 14 percent increase, versus 3.5 percent without the law.

An interesting comment on what agents and brokers bring to their clients:

“The thing many people don’t know about our industry is that health insurance agents are in the business of saving lives. Like family physicians or ER surgeons, agents are intimately connected with their clients’ quality of care — and are often exceptionally hands-on in fighting for a treatment or surgery to be approved by the insurer so that it can be performed by the doctor.

This same hands-on guidance is needed before coverage is in place. Choosing a health care plan is no easy task, as anyone who has shopped for an individual health plan will tell you. It is also frequently not an affordable task. In a struggling economy, one of the biggest challenges agents now face is convincing people that health care coverage is a necessary expense, not an expendable one.”

I thank the contributor for an industry newsletter for this observation. This commitment to the client is a hallmark of all good agents and brokers. Somehow, Washington misses the point when they pass legislation that specifically excludes agents from assuming their rightful place as a trusted advisor to the public, and instead empowers entities with an agenda not wholly in keeping with the best interests of the general public (or, private-sector employees!) to do the job that trained and ethical insurance agents have been doing for decades. How so, you say? Believe it or not, under the Affordable Care Act, agents and brokers may not be compensated, and aren’t recognized as traditional insurance licensees for the purposes of placing health insurance. In essence, your health insurance agent or broker, whether you use individual or group insurance, will be out of business on January 1st, 2014. He most likely won’t be able to assist you – and, assuming you need to use an exchange-based product (a good bet for many people) you won’t be allowed to use him.

Of course, the conventional wisdom from HHS is that agents and brokers will of course be allowed to assist their clients and prospects through the exchanges. And this is about as far as the mainstream media will take it (they really don’t want to get involved in the details, you see). What HHS is really saying is that if a state wants to allow agents to enter the exchanges, they can do so, under new rules announced recently. But under the AFA, they still can’t earn a commission for the placement of a health insurance policy or group plan. We can however, receive “grant money” through the health insurance exchange, known as a “Navigator” grant (but the funding for these grants cannot come from federal funds). What’s really interesting is that agents and brokers are a long way down on the list of specific “entities” are are allowed as navigators, and, as I recall, weren’t originally included in the Navigator section under Obamacare, and this is telling: included in this list are groups and organizations whose primary focus isn’t in serving the public with accurate insurance information: consumer-based nonprofits and unions lead the list. I’ll let you, the reader, figure out why unions would be allowed to act as navigators with employees of primarily non-union employers.

Of course, HHS will allow the state exchange to “enforce existing licensure standards, certification standards, or regulations for selling or assisting with enrollment in health plans and to establish new standards or licensing requirements tailored to navigators”. Color me sceptical, but I foresee some Insurance Departments making it easier, not harder, for previously unlicensed entities to act as navigators, and harder for traditional agents and brokers, who primarily work as independent contractors with a cottage-industry business model. It’s simply a matter of scale – a union or a non-profit is very familiar with the way government works, and can easily acquire any expertise required to achieve navigator status and apply for grants to enroll large numbers of eligible individuals – they themselves have the resources to hire employees, under a broker license, to do just that. As a national operation, they are tailored-made for the kind of large scale enrollment activity that Obamacare requires. Individual agents work alone, sometimes in larger agencies, but rarely with more than a few dozen agents. Inevitably, there will be problems with compensation for agents and brokers. We don’t receive salaries from a union.

There are other hurdles that agents will find hard to meet – almost as if they were specifically being targeted for extinction through the use of the navigator process. For instance, navigators must “provide information in a manner that is culturally and linguistically appropriate to the needs of the population being served”, along with other heretofore nonexistent requirements for agents and brokers working in the private-sector insurance market. While, again, the devil is in the details, I doubt that many agents, assuming a strict interpretation of these requirements to receive navigator grants, will be able to meet these onerous requirements, especially given the nature of the lack of any clear compensation path. It’s another matter entirely if the governing board of the health insurance exchange, empowered with granting navigator status, is anti-broker, as will almost certainly happen in some (most?) states. As proof of the politics involved, consider the number of state insurance commissioners who continue to insist that agent compensation not be excluded from the Minimum Loss Ratio rules as a pass-through cost – almost ensuring the death of the traditional insurance agent in the role he’s always played in the delivery of health insurance policies to the public.

In Colorado, exchange legislation was adopted in May 2011, with the passage of SB 11-200, The Colorado Health Benefit Exchange. The legislation as passed and adopted does not address any issues regarding navigators in Colorado, and in fact does not mention agents or brokers in any way shape or form.

I can only draw the conclusion that, barring a Supreme Court decision invalidating The Affordable Care Act in it’s entirety, or the election of a super majority of Republicans in the House and Senate at the federal level (and the election of a Republican President in 2012) my role as an agent/broker advising the public as a licensed insurance agent on health insurance and group benefits will most likely come to an end in 2014. This isn’t anything new, of course: Hillary Clinton, who headed up her own scheme for a government takeover of health care, was asked by an agent in 1993 what would happen to health insurance agents under her plan. The Wall Street Journal quoted Clinton as saying, “I’m assuming anyone as obviously brilliant as you could find something else to market.”

Spoken as a true central planner. One wonders what else they will “nationalize”.

In a bulletin issued March 15th, 2011, the Colorado Division of Insurance has “changed its interpretation” of their previous bulletin, issued in December of 2010, regarding maternity coverage for individual health policies issued in Colorado.

The controversy stems from a difference between the “applicability clause” in the enabling legislation, HB 10-1021, and the statute, as enacted. The applicability clause states that maternity coverage was to be provided for both issued and renewing policies, while the statute, as enacted, calls for maternity coverage to be provided only for “issued policies”. The Divisions’ initial guidance under the previous Bulletin did not require the coverage on renewal policies.

In it’s new bulletin, the Division, after “further statutory review”, finds that, in its opinion, the provisions of HB-10-1021 does indeed require coverage for maternity expenses for issued and renewing individual sickness and accident insurance policies and health care coverage contracts, reversing in toto it’s previous position, without showing any specific reason or legal basis for the change in its position.

Now, it’s no secret that this Bill was controversial, rammed through a Democrat-controlled legislature without any input from either the industry or the minority, and signed by the Governor post-haste. While touted as a “reproductive services” bill that ensured fairness, in actuality there is no fairness in requiring males of any age, children, and females of non-child bearing years to pay for this expansion of maternity coverage. Certainly, purchasing individual health insurance with maternity coverage was available in Colorado – so, what was the point of the legislation?

Colorado’s Democrat legislators have been attempting to recast the individual health insurance market as the mirror image of the small group market for years, and this legislation is one result of that thinking. The downside to this, and the biggest problem, is the cost to such a policy. Anyone who looks at group coverage, as compared to individual coverage, is aghast at the price, a point most Democrats seemingly ignore, and which has contributed to the decline in Colorado’s small group insurance pool, especially since the repeal of risk-based premium provisions in the small group market.

A quick analysis of the rates now being charged for individual health policies shows that the legislation has, indeed, made individual health insurance policies more expensive, and will have a negative effect on new policy issuance in Colorado. One wonders if that was the intent of the legislation – after all, with higher premiums, a certain segment of the population is locked out of the market, just simply based on price. If one can only buy Cadillacs, rather than something cheaper, does one simply not buy? This has the effect of increasing the pool of un-insureds in Colorado,  rather than expanding the pool of covered individuals, regardless of what the PR coming from Democrats would suggest.

Let’s not forget that Colorado residents lost a strong carrier when Aetna withdrew from the Colorado market due to this legislation. Will we have others withdraw, as well? One only needs to look at the disastrous outcome of the Kentucky health insurance market (and others, notably New Jersey) to see what will transpire as more and more carriers flee the state because of their inability to expand the risk pool because of high premiums, mandated benefits, and hostile regulatory and legislative actions.

Of course, Democrats have us covered there, too: their real solution is to get rid of all carriers and saddle the residents with a single-payor system. I shudder to think what that will cost in higher taxes and job loss.

Lastly, to add insult to injury, the Division, in its decision requiring maternity coverage in all policies renewing after January 1st, 2011, has authorized carriers to retroactively charge additional premium for the coverage, assuming the carrier has filed and has approved such premium. Even if the carrier has not filed for rates relative to renewal maternity coverage, the Division will allow such retroactive charges, once rates are approved, to the policyholder.

I’ll research and comment on the average rate increases this latest exercise in “fairness” will cost the average Colorado health insurance consumer in another post, assuming that such information is even available.

The small employer tax credit, which was added to the Internal Revenue Code by the health care reform law, is effective for taxable years beginning in 2010.

Anthem has been gracious enough to produce a fact sheet on the tax credit.

For more details about whether you qualify for the tax credit and how to claim the credit,  talk with your tax advisor, due to the complexity associated with determining the amount of credit an employer is entitled to receive. Or, call me and I can help.

This should really not come as any surprise to anyone who has followed Aetna and it’s on-again/off-again history in Colorado:

“Aetna retrenches in Colorado” – read, exit, stage left, once again.

Perhaps a quick look at the not-too-distant past is in order. Aetna, in a snit to this observers’ mind, left the Colorado market with the first whiff of “reform” that passed through Colorado in about 1995; this was the same period, more or less, marked by Roy Romers’ threat to put all of Colorado on a single-payor system unless the legislature enacted health insurance reform. And a bunch of recalcitrant, big name insurers (and a non-profit, if memory serves) had to be dragged, kicking and screaming, into the small group market, which they had avoided like the plague for eons. Exit number one for Aetna.

Then, in 1997, Aetna decided to come back into the state with the purchase of Frontier Community Health Plans, Inc., a small and fragile managed care company based here in Colorado. Known back then as Aetna U.S. Healthcare, they made quite a thing of being able to offer a variety of HMO-based products in Colorado – just before the crash-and-burn of HMOs and “managed care”.

And now, we have exit number two. Unless they buy someone (again), Aetna will be barred from re-entering the Colorado market for five years.  (By that time, individual plans will look, and cost as much, as small group plans do now. Care to guess how many people will be forced to drop their coverage?)

To its credit, Aetna grew its individual business here, eventually becoming the sixth largest provider of individual health plans. With its decision late last year, in the wake of health care reform, which mandates a minimum loss ratio for small and large group carriers, to leave the  small group market, Aetna set the stage for the abandonment of the Colorado insurance market once again, just as it did in the mid-nineties.

Now, don’t get me wrong – I have no problem with any private sector corporation doing what it needs to do to survive in a bad economy. But from this agents’ perspective, Aetna always seemed more interested in protecting their bottom line the easy way, rather than stay and slug it out in a “competitive” environment, like some others have – Anthem, United Healthcare, and Assurant Health, to name three. Even some that aren’t particularly competitive in terms of product or premium make up for those weaknesses with superior service and other products – or they remain as admitted carriers who aren’t actively in the market, as any veteran of the health insurance biz in Colorado will attest to.

Unfortunately, we have less and less competition in the group or the individual market in Colorado than ever before, and much of the blame for that can be laid directly at the feet of the legislators who feel that doing everything they can to make things “fairer” is the answer to controlling costs (hint: it isn’t). One only has to look at the cloistered relationship between legislation/regulation and admitted carriers to understand that, to a degree, existing carriers in Colorado don’t really want more competition, and legislators, at least on the Democrat side, are all the more interested in making it harder to compete here in any event, thereby strengthening the hand of the existing carriers at the expense of any other carrier who wants to do business here but can’t or won’t risk insolvency for the privilege of serving Colorado and its shrinking small business and other health insurance base. Certainly, mandating “reproductive services” (mandatory contraceptive and maternity coverage) for all new individual policies sold in the state, in the name of equality and fairness, won’t attract any new carriers, and likely played a hand in Aetnas’ exit, as well.

Hint: That individual policy you have, right now? It just became a whole lot more valuable.

On one hand, I wish Aetna had stayed – we need the competition. By the same token, leaving when things get , well, tough, isn’t endearing, either. Maybe Aetna just needs to admit that it can’t live on the paper-thin profits of the health insurance industry – after all, when was the last time Wall Street was bullish on health insurance? Especially with the individual mandate, the dubious gift hailed by John McCain, Mrs. Clinton, and by POTUS Obama, all but dead and gone for now, skewered on the sword of a Federal Judge who understands the constitutional mandate of limited federal power. Too bad that no one thought of that before they passed the bill – so that we could read what was in it, of course.