Obamacare advertising withdrawn

Advertising Withdrawn:

Federally sponsored advertising encouraging people to enrol for health insurance has been withdrawn. This comes a week after the President’s inauguration.

Young people encouraged to enrol:

This move was instigated by the Trump administration. The deadline for enrolment expires on 31st January 2017. The Obama administration encouraged younger people to enrol.  This should be as soon as possible thus providing funds to take care of the older infirm citizens.

Politico reported that of the $60 million spent, $5 million in advertising has been withdrawn. This amount will be returned to the government. The Department of Health and Human Services has stopped emails being sent to citizens encouraging enrolment.

A Replacement plan:

A replacement plan has yet to be unveiled by the Trump administration. Under the Affordable Care Act, most Americans must have some form of health coverage for most of the year or face a possible tax penalty.

A penalty will be charged:

Nothing happens if you don’t want Obamacare. No one will force you to buy it. If you don’t buy it, then the IRS will charge you a penalty if you are not exempt from paying it.

There are nine exemptions. The biggest one is the “affordability exemption”. If your cost for the lowest priced pan is 8% of your income or more, then it is deemed unaffordable for you. Therefore you are exempt from paying the penalty if you do not buy coverage.

If you are not exempt from paying the penalty the penalty and you still don’t pay it, the IRS can withhold the penalty from any overpayment in taxes you have made. In other words, they will take it out of your tax refund.

If you are self-employed and don’t get refunds or you adjust your withholdings to ensure you don’t get a refund, there is thus nothing the IRS is allowed to do.

Not illegal to pay the penalty:

The law specifically says the IRS cannot use liens, levies or any other method to recapture the penalty. This is because its not actually illegal not to pay the penalty.

Loopholes:

If you get sick and want to sign up for Obamacare, you can do it at the next enrollment time for the individual market. If you don’t want to wait, then there are loopholes which allow you to sign up right away under the HIPAP law using a 2-person group guaranteed issue provision. Grab a friend and start a small group. You can have a plan pretty quickly.

Collision Avoidance Systems reduces Insurance Claims

Prior Highway Loss Data Institute (HLDI) studies have indicated that some collision avoidance systems are reducing insurance claims.

Of the 2.63 million new cars registered in 2015, more than 1.5 million came with self-activating safety systems.

There are fewer bodily injury liability claims.  The systems are functioning as intended.  These systems are designed to stop the severity of front-to-rear crashes.

 More benefits were shown in systems that added autonomous braking systems. Thus autonomous braking reduced bodily injury liability claim frequency by 14-32 percent.

Sensing technologies are evolving. The price of the systems have dropped.  As a consequence, some non-luxury vehicles are now available with these technologies.

For example, the 2013 Honda Accord was offered with a camera-based front crash prevention system as well as lane departure system. The bodily injury liability reduction was a significant 40 percent. The Honda Accord is one of the best-selling cars in the United States.

The Honda Accord has high sales volumes.  Gross insurance losses will be reduced as a result of the front crash prevention system.

 Technologies take three decades to spread through the fleet. The current analysis focuses on collision avoidance features.   The feature either comes as standard equipment or is offered as an option.

Ninety five percent of all registered vehicles could have rear park assist by 2037.  Rear park assist was rolled out in the United States in 1995.  The crash avoidance technology will therefore not be available in 95 percent of registered vehicles until 2048. Federal mandates would accelerate the fitment of these features.

Federal and local government encourages the use of three currently available technologies (telematics, collision avoidance and automated traffic law enforcement.  These technologies will reduce traffic accidents and insured automobile losses. Consequently Property/Casualty insurers see a major reduction in their auto insurance premium revenues.

“In the near term, an auto insurer should be asking itself three questions,” says Donald Light, Senior Analyst with Celent’s Insurance group.

“ How is it monitoring technology-driven changes in insured losses, (i.e. the progress of the scenario)? Second, do scenario technologies provide new kinds of data?  And third, what should it do differently this year and next?”

How will collision avoidance technologies affect premiums? Karlyn Carnahan, principal of insurance at Novarica says:

“Theoretically, they should help to bring premiums down. As accident frequency drops, smaller claims are eliminated. But this has to be coupled with inflationary trends and the fact that medical costs are rising.  We can hope that technology will help costs remain stable.”

Greg Horn, vice president of industry relations at Mitchell, agrees that there will be a reduction in frequency of accidents.  However,  the cost of replacing some of these technology pieces, such as an adaptive radar sensor mounted in the grille of a car, will be expensive. “So the question is: Will the reduction in frequency outweigh the additional repair costs when these vehicles are in accidents”?

Over time, there will be a significant impact on insurance premiums. This will be augmented by telematics and automated traffic law enforcement.  Examples are red light and speeding cameras and, in 10-15 years, driverless cars.

Are these technologies sufficiently reliable and thoroughly tested.  Are we  headed for an increase in claims related to the technologies themselves.

“All technologies fail at some rate”, says Light. Yes, there will be greater exposure for auto manufacturers and manufacturers of the various collision avoidance technologies, but it is unlikely that those new sources of premiums (commercial) would come close to replacing reduced premiums, from personal auto insurance.”

While tested and ready for public consumption, there are several issues with some of the first-generation technologies. For example, blind spot cameras are prone to false alarms in heavy fog or rain. Autonomous braking systems can fail or be delayed if the sensor in the grille gets caked in mud.

Overall, however, Light believes accident avoidance technologies will become “increasingly important in terms of increasing auto safety.  Auto insurance losses will decrease.  Premium costs will be reduced.”

Carnahan also sees growth in these devices.   Manufacturers will therefore strive to make their vehicles smarter. They will  improve telematics. The latter will be enabled by better broadband technologies.
“Vehicles (in accidents) should diagnose themselves.  They should also automate claims notifications. This helps settle claims quickly, thus reducing expenses.”

Premiums in the 14 largest car markets in the world are  therefore expected to drop by $20 billion by 2020.

 

 

2017 Insurance Resolutions

Insurance is an essential safety net for unexpected occurrences in your daily life, therefore  it has to be current and updated on a regular basis. Below are some smart insurance resolutions for 2017.

1. Keep an inventory
Make a list of items in your house. Keep it updated because should there be a disaster, this list will guarantee that you don’t forget to claim anything. According to the Insurance Information Institute 48% of homeowners say they don’t have an inventory.

2. Understand your insurance
Ensure that you understand your policy. Read the policy’s declaration page. This will help you understand auto and home insurance. Scrutinize the summary of benefits of your health insurance. Be familiar with limits and deductibles. Be sure that you understand copayments and coinsurance for health care policies.

3. Quit smoking
Health and life insurance typically cost less for non-smokers. You   therefore need to be smoke-free for at least a year to get non-smoking rates.

4. Improve your credit
Make resolutions to improve your credit rating because the worse your credit, the higher the risk you are to your insurer. You will be penalised with increased insurance premiums.

5. Do not leave the keys in your car
A car is stolen every 6 minutes, according to the National Insurance Crime Bureau. Auto theft with the keys or an electronic fob inside the car is up 31% since 2013. If your car is stolen and you don’t have comprehensive coverage, you will have to buy another car with your own money.

6. Stay in your kitchen when cooking
Cooking fires are the number 1 cause of home fires. Unattended cooking was by far the leading cause.

7. Find out the real price
64% of consumers who do not purchase life insurance, think that it is too expensive.  Thus, obtain quotes. It may be cheaper than you think.

8. Tell your beneficiaries
Let your life insurance beneficiaries know where to claim money when you die. They do not need a policy to claim because knowing who your insurer is, is enough.

Repeal could cause job losses

The Republican-controlled Congress recently took its first steps to repeal the Affordable Care Act. Therefore, without satisfactory replacement thereof, heavy job losses are expected to follow.

Wayne Rowe, CEO of Quality of Life Health Services is concerned. This facility provides primary care to the poor. Thus, without the ACA, this entity would have a negative cash flow.

The Commonwealth Fund is based in New York. It is headed by a former Obama administration official. This fund promotes health care improvement. A report by the fund estimates that 28,000 Alabama jobs could be lost if Obamacare in not replaced. 31% would come from the health care industry. 12% would come from construction, while retail jobs would decline by 10% statewide.

The study on repeal also estimates that the state of Alabama would lose $465 million in state and local taxes. Furthermore, a loss of $26 billion in business output between 2019 and 2023 is expected if the ACA is not replaced.

Dropping the Affordable Care Act would place greater financial strains on state hospitals because these institutions are already cash-strapped.

Other job losses that would occur are in California, with 334,000 positions lost and Florida adding 181,000 to this figure. In addition, Texas could lose 175,000 positions as well as Pennysylvania, New York and Ohio creating 125,000 additional unemployed Americans.

Senator Rand Paul, a Republican from Kentucky, has drafted a replacement plan. It is called “Obamacare Replacement Act”. He expressed concern that repealing Obama’s statute without a replacement in hand could cause turmoil in the insurance market.

Senator Susan Collins, R-Maine has similar concerns. She wants to see a detailed replacement plan before voting on repeal.

On Friday 13 January 2017, Congressional Republicans made the first move to repeal Obamacare. The House voted 227-198 in favour of the repeal.

Republicans are eager to see how their party will redraft the $3 trillion a year healthcare system.

There have been disagreements about the method of payment for the GOP replacement plan. Paul Ryan proposed taxing part of the value of some health insurance provided by employers. Many Republicans feel uncomfortable about Ryan’s suggested method of payment for the healthcare plan.

Repealing Obamacare

President-elect Donald Trump has repeatedly vowed to repeal and replace Obamacare.

These statements therefore suggest that big changes are in store for the health insurance marketplace and Americans who rely on it.

How soon would this new legislation come into effect? What would it look like?

Health policy analysts say that an outright repeal of Obamacare is unlikely without bipartisan agreement.

It is possible for Congress to defund Obama’s Health care plan by using budget reconciliation. This is a streamlined process for making tax and spending charges.

Obamacare could be put down by a Senate filibuster with an outright appeal. A filibuster is an obstructive tactic used in the United States Senate to prevent a measure from being brought to a vote.

The most common form of filibuster occurs when a Senator attempts to delay or entirely prevent a vote on a bill.    This is done by extending the debate on the measure. Senators may thus speak for as long as they wish  Furthermore they can choose  any topic. they choose. However, three fifths of the Senators duly chosen and sworn may therefore bring the debate to a halt by invoking cloture.

Cloture is a process in parliamentary procedure aimed at bringing a debate to a quick end.

In 2015 Republican Tom Price of Georgia sponsored a measure to cut off funding for Obamacare.

Price’s reconciliation bill would have stopped premium tax credits and cost-sharing subsidies. These elements were intended to make health insurance more affordable for low and middle income Americans. This bill would also have ended individual tax penalties for people who failed to maintain health insurance coverage.

Medicaid is currently operating in 32 states. This bill would furthermore ensure that federal funding for Medicaid expansions would be cut off.

The principle reforms by the Trump administration includes health savings accounts (HSAs). Furthermore, greater state discretion in regulating health insurance.

Paul Ryan, the House Speaker, compiled some key elements in his proposal called “A Better Way”. Ryan has suggested market-based solutions. Examples are tax credits adjusted for age. This will thus assist people in buying health insurance in the individual market.

Although details of Trump’s healthcare plan remain sketchy, the major GOP proposals have a few features in common:-

1. Using health savings accounts

2. Creating high-risk insurance pools

3. Selling health insurance across state lines