Life and Health Care after the California Midterm Elections

Posted on December 8, 2010.

Author: Frank Darras

In the wake of November's election, many Californians are wondering how the states and the federal government might change much-debated Patient Protection and Affordable Care ( PPACA). "Repeal and replace" seemed to be the platform of most GOP candidates, yet California saw little change in the guard with Barbara Boxer continuing in the U.S. Senate and Jerry Brown moving into the governor's mansion. Agents and brokers in particular may be asking how all this will affect their ability to earn their bread and butter. How can you maintain your client base in the aftermath of this recent election?

Leading the charge

California is a progressive state when it comes to health care, and was one of the first states to initiate action after the reform bill passed into law: California set up a health exchange through which individuals and small business can utilize "one-stop-shopping" for the best that health care money can buy. Some provisions have already been implemented, and consumers have, for the most part, viewed them positively.

Parents are now allowed to carry their children until they turn 26, and preventive care (e.g., mammograms) is now available to everyone at no cost. Also, those younger than 19 are no longer subject to exclusions on preexisting conditions. These measures have already become law and are not subject to any kind of repeal – and can all be very positive events that agents and brokers can use as selling points, along with the fact that the increase in employer cost is minimal when compared with the value they can pass along to employees.

While many GOP candidates made PPACA repeal a focus of their campaigns, recent polls show that people are more concerned about the economy and jobs than they are about health care issues. According to the polls, most Californians were split down the middle when it came to their views on health care reform. It's likely that California will continue its already well-blazed trail toward health care reform; the big question is, "Will funding be available?"

Stymied by the government

It's true that the state's recent elections may have ushered in little change. By contrast, enormous changes on the federal stage could still have some effect here at home. New Congressional leadership could try to repeal the act, but then President Obama still has the right to veto anything that comes out of Congress. It's more likely that funding for various programs will be at risk – something that could prevent states from successfully implementing reform programs that rely on federal funds in order to move forward.

Insurance companies will also try to dilute the reform act. Carrier lobbyists will focus on cutting down any law that requires them to increase their administrative costs, and thus lower their profits, such as publicly defining unreasonable premium increases before they effect premium payments. This would likely take a form similar to what the utility industry has been doing for years. They also don't want rules that require them to spend a larger percentage of their money on actual health care – again, therefore decreasing their profits. They want to be left alone to decide what qualifies as "actual health care" and what doesn't.

Anything but 'affordable'

Perhaps Democrats should have called the bill something other than "affordable." Since most of the measures designed to lower costs won't be implemented for another three years (if funding is available) and the costs of health care are still rising, the American public's perception will likely be negative. This will require agents to do a lot of client education over the next three years.

Health care costs continued to rise this year by about 9 percent. Despite the fact that reform appears not to eliminate increases in the cost of health insurance in the short term, agents can offer suggestions to employers and individuals by looking at ways to curb this increase. Some options would be to look at offering higher-deductible plans for employees; another option might be for employers to offer plans with percentage copayments instead of flat rates. In the latter scenario, employees would share some of the burden for higher costs.

With all the uncertainty surrounding how health care reform will eventually shake out, agents should focus on building strong relationships with their clients and position themselves as experts in reform. After all, consumers will need someone with terrific expertise to guide them through the maze of potential changes when and if they occur.