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Obamacare Premiums Will Be Way Higher Next Year. They Didn’t Have To Be.

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The messy health insurance exchange market was starting to settle down before Trump came along.

If you buy your own health insurance, gird yourself for another round of big premium increases next year.

Health insurance companies have begun submitting requests for rate hikes to state regulators in a handful of states, and it’s not looking pretty based on information that Maryland, VirginiaOregon and Vermont have already made public. Double-digit premium increases again appear to be on the horizon for many consumers.

And according to what these insurers are telling states, those rate hikes wouldn’t be nearly as big if not for actions President Donald Trump and the GOP-led Congress have taken.

The biggest change was the repeal of the financial penalty for people who don’t comply with the Affordable Care Act’s individual mandate. Although the mandate may have been less effective than the health law’s authors expected, insurers are nervous that taking away that incentive to get covered will result in fewer healthy customers, meaning less revenue to cover the costs of the sicker people who will remain in the market. That alone will account for 10 percent premium increases overall, according to the Congressional Budget Office.

In addition, the Trump administration is working to relax federal regulations to permit insurance companies to offer policies that don’t abide by the Affordable Care Act’s protections for people with pre-existing conditions and offer skimpier benefits. Insurers are concerned that healthy people will flock to these cheaper products, weakening the precarious balance between healthy and sick people in the exchange markets.

In the absence of efforts to undermine the market, we would be seeing a period of relatively small premium increases.Cynthia Cox, Henry J. Kaiser Family Foundation

The combined result of these actions will be much higher health insurance costs in 2019. On average, the new policies Trump and Congress have enacted will add $1,013 to unsubsidized annual premiums next year, an increase of 16.4 percent above what rates would have been, according to an analysis published Friday by the liberal Center for American Progress.

It didn’t have to been this way. After three years of overall poor financial performance among health insurers on the exchanges that drove big premium hikes, the marketplace had mostly stabilized in 2017, according to a Henry J. Kaiser Family Foundation analysis published Thursday.

“In the absence of efforts to undermine the market, we would be seeing a period of relatively small premium increases, driven mostly by the underlying growth in health care costs,” said Cynthia Cox, the lead author of the Kaiser Family Foundation report. “I wouldn’t be surprised if we’re in for another year of double-digit premium increases. And if that does happen, it would be in large part due to policy changes that are happening.”

Premiums for policies available on the Affordable Care Act’s health insurance exchanges have been rising since they began in 2014. What’s changed is who’s running them and how they’re managing a system that provides health coverage to nearly 12 million people.

Rates have risen each year of the exchanges’ existence, and cumulatively are more than 50 percent higher this year than they were four years ago. That’s according to a separate Kaiser Family Foundation analysis that looks at the average premium for the “benchmark” plans used to establish the value of the tax credit subsidies available to exchange customers who earn between the federal poverty level and four times that amount, or $12,060 to $48,240 for a single person.

But the reasons for these increases have changed over time.

During the first two open enrollment periods for exchange customers for 2014 and 2015, many Americans who previously bought their insurance directly ― as opposed to getting it from a job or a government program like Medicaid ― were stunned to see prices that generally were higher than before.

That mostly was the result of the Affordable Care Act requiring insurers to accept customers with pre-existing conditions (who tend to be more expensive to treat) and establishing a basic set of benefits that includes coverage for things often left out in the past, such as maternity care and prescription drugs, Cox said.

In 2016 and 2017, insurers implemented big price increases after realizing they hadn’t charged enough the previous two years to cover their expenses, and to make up for the end of Affordable Care Act programs designed to protect insurance companies from unexpectedly high costs.

As the Kaiser Family Foundation determined, rate hikes would’ve been smaller this year and in future years ― even though prices would’ve remained high ― if the market had been left as it was, Cox said.

“The 2017 premium increase was a one-time market correction that was needed in order for insurers to regain profitability, and the 2018 and possibly 2019 premium increases are due to something else,” Cox said. “They would’ve regained that profitability by now and it’s the political or policy changes that are driving premium increases.”

"Medical loss ratio" is a measure of the financial performance for health insurance companies. The number is h

“Medical loss ratio” is a measure of the financial performance for health insurance companies. The number is higher when a larger percentage of premiums collected is spent on medical care. After rising over the 2014-2016 period, the average medical loss ratio for insurers on the health insurance exchanges nearly returned to its pre-Affordable Care Act level in 2017.

Something else happened instead. Premiums rose a lot for this year. The Trump administration significantly cut back on enrollment efforts. Sign-ups fell on the health insurance exchanges. And the uninsured rate began climbing last year after falling to a historic low.

Health insurance companies instituted big premium increases for 2018 in anticipation of Trump’s plan to cut off billions of dollars in repayments the federal government owed health insurers covering the lowest-income exchange customers. Insurers also reacted to Trump’s comments in 2017 that hinted his administration wouldn’t fully enforce the individual mandate.

As the evidence from the open enrollment period for 2018 indicates, the Affordable Care Act’s subsidies will protect most people in this market from the rate hikes. The way they’re structured, the subsidies rise along with the premiums and tax credit recipients’ share of the premiums is capped at a percentage of their income.

Eighty-three percent of the 11.8 million people who enrolled in an exchange plan qualified for subsidies. It’s the remaining 17 percent of unsubsidized exchange customers and the several million more people who bought their policies directly from an insurer would are exposed to the increasingly higher rates.

The Trump administration argues that these are the people who will benefit from the availability of new types of coverage that don’t meet Affordable Care Act standards. And that’s likely true for healthy people who don’t need the coverage as much but earn too much income to be eligible for tax credits. Plus, the end of the mandate penalties makes it so people can choose these other policies and not face fines.

While that means there will be winners from these policy changes, they will weaken the exchange markets, which is especially bad news for people with incomes too high for subsidies but who have pre-existing conditions.

“The combination of no individual mandate plus plans that may be attractive to healthy people and aren’t attractive to sick people can mean that the market can deteriorate progressively over time,” Cox said. Even so, the subsidies will keep enough healthy, low-income people in the pool to prevent the exchanges from collapsing, she said.

Voters tell pollsters that health care costs are a major issue for them going into this year’s congressional elections and Democrats are aggressively campaigning against Trump’s “sabotage” of the Affordable Care Act.

There’s likely little relief on the way from the federal government, but several states are attempting to stabilize their local markets. The New Jersey and Vermont legislatures have approved state-based individual mandates like the one in force in Massachusetts since 2007. And states including Alaska, Maryland, Minnesota and Wisconsin have passed laws designed to mitigate premium increases.

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Fox News Host Neil Cavuto Tells Trump He Stinks In Fiery Takedown

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“I guess you’re too busy draining the swamp to ever stop and smell the stink you’re creating.”

Fox News host Neil Cavuto had some harsh words for Donald Trump on Thursday: Mr. President, you stink. 

The host listed some of Trump’s worst lies and misstatements, including claiming there was widespread voter fraud in the 2016 election and the recent revelation that he repaid his personal lawyer Michael Cohen for $130,000 in hush money given to porn star Stephanie Clifford, known as Stormy Daniels, after he’d repeatedly denied knowing about the situation.

“How can you drain the swamp if you’re the one that keeps muddying the water?” Cavuto asked. “You didn’t know about that $130,000 payment to a porn star until you did.” 

Cavuto, one of the few hosts on Fox News who calls out the president, said Trump cannot criticize the press for reporting “fake news” when he repeatedly makes false statements without correction.

“Your base probably might not care,” Cavuto added. “But you should. I guess you’re too busy draining the swamp to ever stop and smell the stink you’re creating. That’s your doing. That’s your stink. Mr. President, that’s your swamp.”

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“A job that was taken by a robot 30 years ago ... is not coming back, no matter what the president of the United States says.”

Flint Can Teach The U.S. About So Much More Than Poisoned Water

In a diner just down the road from the factory where he works, Art Reyes is talking about assembly line jobs and the robots that have taken them over.

He pauses to order a couple of the city’s signature Coney dogs (hot dogs topped with chopped onion and a mixture of fine-ground beef hearts and spices). Coneys and the restaurants that still serve them are survivors of a more prosperous era, when Flint was known as a hub of industry and the automaker General Motors employed half the city.

Today, Flint is better known for violence, economic strife and an ongoing water crisis that exposed tens of thousands of residents to lead-tainted drinking water. It’s a far cry from the city’s heyday in the 1960s, when Flint was the epitome of the American dream and people flooded in for well-paid, secure manufacturing jobs. Even those without a college education could expect GM to provide them with what Reyes describes as a “good, solid, middle-class life.” Today, he notes, for the most part, “those jobs no longer exist.”

This job decline is true across the U.S., which saw nearly 6 million manufacturing jobs disappear from 2000 to 2010 — about a third of the sector’s total. Hardest hit were the Rust Belt states; Michigan alone lost 440,000 of these jobs

Arguments abound in the Rust Belt as to where the manufacturing jobs went. Some support the narrative, spun loudly by Donald Trump, that free trade has allowed countries like China and Mexico to steal jobs; others blame unions.

There’s no easy explanation for what happened to places like Flint. But the influence of technology, particularly automation, is conspicuously absent from many debates taking place at the highest levels. Trump never mentions it when talking about reversing manufacturing job losses. His Treasury Secretary Steve Mnuchin, questioned last year about the threat of automation and artificial intelligence, said they were “so far in the future” that they were “not even on my radar screen.” 

For Reyes, 50, a lifelong Flint-area resident who has worked at GM for 30 years, there’s no question that automation played an outsize role in changing the city permanently. He has watched tens of thousands of manufacturing jobs leave. He has also watched with dismay the appearance of “Make America great again” hats on the heads of his colleagues, stunned that they would buy Trump’s promise to bring back manufacturing jobs, which Reyes says are gone forever. While heavy industry still has a presence in the city, much of the work in factories like GM’s Flint Assembly Pant, where he is an electrician, is done by robots.

A 2015 Ball State University study supports Reyes’ view. Led by economics professor Mike Hicks, researchers found that U.S. manufacturing is, in fact, enjoying healthy growth. The problem? It isn’t benefiting human workers. Hicks and his co-authors found that productivity increases, largely driven by automation and technology, were responsible for almost 88 percent of manufacturing job losses in recent years. Machines allow factories to produce more with fewer people.  

The upside, Hicks said, is that technology tends to create more jobs than it kills, and he thinks that will continue to be the case. But he cautions against confusing job creation with a return to old employment trends. “The new job will come about, but it may take two or three years, it might not be in the same place, and it certainly isn’t going to require the same set of skills,” he said.

As researchers like Hicks sound the alarm about a coming wave of machines and AI likely to upend many medium- and low-skill jobs, Flint could serve as an indicator for challenges to come. That is, if America would only pay attention.

Reyes sits outside the GM Flint Assembly Plant, where he works as an electrician, April 29.
RACHEL WOOLF FOR HUFFPOST
Reyes sits outside the GM Flint Assembly Plant, where he works as an electrician, April 29.

In hindsight, there were warning signs about how machines might alter Flint. Back in 1960, the city was the setting for a speech by then-Sen. John F. Kennedy, who spelled out the potential effects of automation. He spoke of deserted industrial towns across West Virginia, Oregon and Wisconsin and of people reliant on meager government food handouts. This could be the future for many more people, he predicted, “unless we recognize that machines should provide a better life for people and not a life of desperation for men who are 45 years and 50 and who can’t find a job.”

At its peak in the 1970s, GM employed some 80,000 people in Flint; it now employs about 7,200. The company significantly curbed its operations in the city in the ’80s, shuttering plants or moving them to the suburbs or to other countries. As the auto industry declined, so did Flint’s population, from almost 200,000 in 1960 to roughly 100,000 today.

From 2005 to 2013, Reyes, in his role as a union leader, helped former GM factory employees through programs like Michigan’s No Worker Left Behind, a free tuition program to help people acquire training or degrees. Where people ended up, he says, “ran the gamut.” He knows of one man who worked with marketing giant Amway and retired with a solid living in Florida. But he also knows a man who, already burdened with family struggles, killed himself.

Reyes was helping people, but he was helping them through bleak times. He remembers going home one day and telling his wife that he’d had the worst day of his life, then arriving home the next day and saying the same thing again.

Overall, he says, people who went into training programs tended to make a better adjustment. “They had something to look forward to,” he says, adding that people who weren’t willing to move on “ended up very bitter and had a harder time.”

According to the McKinsey Global Institute, retraining workers will be a continuing ― and needed ― trend. A 2017 poll by the company found that about two-thirds of public, private and not-for-profit organizations saw “addressing potential skills gaps related to automation/digitization as at least a top-ten priority.”

Looking back, Reyes says, he finds it interesting that a lot of the people he helped find new jobs and skills didn’t go into technology or full-time work for big companies like GM. He saw a lot of them become independent contractors or entrepreneurs.

“They’d been burned by a major corporation,” he recalls. “The more time they seemed to have had in the shop, the more likely they went into business for themselves.”

Machinery sprays paint on a pickup truck at GM’s assembly facility in Flint, March 23. The base coat is applied by
RACHEL WOOLF FOR HUFFPOST
Machinery sprays paint on a pickup truck at GM’s assembly facility in Flint, March 23. The base coat is applied by 18 robots.

If Flint has a lesson to teach about automation, it might simply be, “Get used to it.”

The new normal for manufacturing is on full display at the GM Flint Assembly Plant paint shop, where the drab aluminum shells of vehicles go to get their eye-catching colors. There are hardly any people on the floor. And yet the place is a whirl of activity. An assembly line moves parts past small herds of robotic arms that spray on the paint. A few workers at various stations add finishing touches while electricians sit at a lone desk monitoring the machines’ vital signs. 

For two decades, Reyes tried to resist just this kind of automated workplace. He held various offices with the powerful United Automobile Workers union, bargaining on contracts at a time when automation was a chief concern. The attitude in the 1980s was that the robots were taking away jobs — and it was true. Thirty years on, however, his attitude toward technology has changed, even if he remains unhappy about what it has done to so many of his former colleagues.

“It’s not even an acceptance. It’s an acknowledgment that there’s a proper place for technology,” he says.

Though he no longer bargains for the union, he doesn’t want his fellow union members to kid themselves about the reality of modern manufacturing.

“I will continue to try to convince them that a job that was taken by a robot 30 years ago ... is not coming back, no matter what the president of the United States says,” Reyes maintains.

Nevertheless, manufacturing still has a future in Flint. It’s just a different kind of future, with a smaller workforce. GM seems to be hanging on to its few remaining workers in the city. Since the recession, the company has poured nearly $3 billion into its facilities here, modernizing and automating where possible. But the 300 people employed in the paint shop before a $600 million revamp two years ago have kept their jobs.

Plus, the improvements to the shop mean that people no longer have to climb into enclosed spaces and apply noxious chemicals to the car frames — which makes for a healthier work environment. In the 1960s, by contrast, humans performed every job, no matter how dirty or dangerous.

A robot puts a sealant on a pickup truck at the GM Flint plant.
RACHEL WOOLF FOR HUFFPOST
A robot puts a sealant on a pickup truck at the GM Flint plant.

Some union leaders recognize they need to adapt to new technology. Eric Welter, the UAW Local 598 shop chairman, is a full-time bargainer and says his job is to make sure workers aren’t left in the dust. “It’s really important that we embrace technology and figure out how to be a meaningful part of it rather than fight it,” he says. “Because UAW and General Motors have a good partnership and my people make good wages, I need to make sure we are also efficient, otherwise we’ll price ourselves out of the market. Part of that efficiency is automation.”

As the face of Flint’s industry continues to change and it grapples with its water crisis, it is trying to distance itself from the image of a crumbling Rust Belt city. Its small downtown is undergoing a revitalization project and is now home to a number of trendy restaurants and shops.

Reyes wants to play a role in what’s next. In 2016 he was elected to the board of trustees at Flint’s Mott Community College, saying it needed to play a role in diversifying Flint’s economy. “I may not have been able to stem the flow as it happened so long ago,” he says, “but I sure as hell can help the next generation of workers feel less of the sting.”

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