ACA’s Tobacco Surcharge Undermines Key Goal of ACA

ACA’s Tobacco Surcharge Undermines Key Goal of ACA

When Obamacare was passed in 2009 I recall thinking to myself that the allowable surcharge for smokers in a health plan was outrageous – up to 50% of a premium could be surcharged, without government subsidy, for tobacco use.  This ought to make cigarette smokers kick the habit, I remember thinking to myself.  Consequently, as more smokers kick the habit, we would have a healthier risk pool, I rationalized to myself.  With a healthier risk pool, our health insurance premiums would stabilize or even decrease.  Sounded logical to me at the time. 

A study by researchers at Yale School of Public Health reveals an unexpected consequence of the ACA’s tobacco surcharges.  Turns out, high surcharges resulted in lower rates of insurance enrollment among smokers in the first year of the ACA’s implementation by 12% compared with those incurring no surcharges.  What’s worse?  Smoking cessation did not increase.  Both of these effects are at odds with Obamacare’s mission of universal coverage and prevention of disease. 

Professor Abigail Friedman, the study’s first author, concluded, “Our findings suggest that high tobacco surcharges undermine attempts to achieve universal coverage, a key goal of the ACA.”  Dr. Friedman added, “Moreover, they do not appear to increase smoking cessation, at least in the first year after ACA implementation.”

The researchers found even more striking results among younger adults.  In the under-40 age group, smokers facing the highest surcharges showed a 20% drop in their likelihood of having insurance coverage relative to those facing no surcharges.  Considering the ACA’s risk pools have turned out to be older and sicker in practice, any obstacle preventing younger individuals from enrolling in the ACA will hinder the long term viability of the law itself.

“The larger effects among younger smokers are particularly concerning,” noted Professor Susan Busch, the study’s senior author.  “This group has lower healthcare costs than older individuals, so their exclusion may reduce the marketplaces’ long-term stability by limiting risk-pooling.” 

The study’s results are very important for improving enrollment techniques for the future of health insurance plans.  The results show us how critical enrolling smokers is for achieving universal coverage, especially for younger smokers.  The results could inform how states might regulate the size of tobacco-use surcharges.  States may consider restricting or eliminating these surcharges in order to increase insurance coverage.  They may consider utilizing other, more effective, smoking cessation programs to make this population healthier. 

The impact of the ACA’s tobacco use surcharge is not only a financial burden to the smokers who are hampered with an up to 50% increase in premium costs, the reluctance of some smokers to pay the surcharge by not enrolling in health insurance will also hinder the health of the insurance marketplace and the financial well-being of the medical providers faced with their care.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.

 

 

Debt Collection and the Compliance Minefield

A. Alliance is a legitimate, law abiding collection agency. This means we scrutinize everything we say and do to make sure we are compliant with all federal, state, and local laws. Believe it or not, it’s not an easy thing to do because laws aren’t as black and white as you might think.  In reality there are a lot of gray areas that are actually somewhat fluid—with laws morphing with each new interpretation from our courts and governing bodies.  Consequently we spend a lot of time and money working to stay complaint; looking for updates and new interpretations, and then altering our procedures and processes to reflect the latest changes in the laws.

All of our collectors go through rigorous training before hitting the collection floor and are ACA certified Collection Specialists.  They not only test and recertify regularly, but also receive ongoing compliance training which includes answering a daily compliance question.  We also record all calls and review them for training and quality assurance.

There are many resources we utilize to keep up with industry regulations. ACA International, the Association of Credit and Collections Professionals, is one of them.  They have a great Consumer Financial Protection Bureau (CFPB) Resource Center which is a continually updated storehouse of CFPB-related materials. It’s important for us to keep our finger on the pulse of all-things CFPB since they have both rulemaking and law enforcement authority over debt collection agencies. 

Every day our collectors get on the phone and talk to consumers. They educate them on their accounts, offer financial solutions, overcome objections and stalling tactics, and negotiate payments.  They do all of this while mindfully stepping through the minefield of compliance.

What does this mean? It means that a while ago, after a problem with the collection industry was identified, corrections were put into place and the pendulum began to swing.  Remember the FDCPA and the Dodd-Frank Act I talked about in a previous post, the laws that were put in place to protect consumers from deceptive collection practices?  Well, they aren’t the only laws we obey to stay compliant, there are many, many more: TCPA, HIPAA, HITECH, FCRA, SCRA, GLBA, Age of Majority, and Bankruptcy laws.  Off the top of my head I can also come up with: Open and Closed Border laws, Interstate Collection laws, and Statutes of Limitation.  I could keep going, but you get the gist, there are a lot of laws we need to understand and apply with each interaction to make sure we are counted as one-of-the-good-guys by our clients and the FTC, DFI, and the CFPB (the governing bodies that oversee our industry).  Why a minefield?  Because if our collectors are not mindful about everything they say, they could be in danger of breaking the law. 

As an example, let’s start with something basic. As I mentioned earlier, The FDCPA bans collectors from engaging in deceptive collection practices.  Easy, right?  You’d think so, wouldn’t you? Just. Be. Honest!  But here’s the thing, back when my kids were growing up I’d council them on all sorts of financial matters:  I taught them how to balance a checkbook and why it was important to do so. I showed them how to set up a budget so they’d know where their money was going. I taught them to save for a rainy day. And I counseled them on the importance of paying their debts especially if they wanted to improve their credit worthiness.  Did I deceive my kids? I didn’t think so, surely that was not my intent, yet if I was a collector and my kids were consumers I was attempting to collect a debt from, I could be sited for deceptive practices. 

Why?  According to an ACA International article “From Collector: Know the Score,” The Consumer Financial Protection Bureau wrote in a 2013 bulletin that they (CFPB) had concerns that statements made by collection agencies (and debt buyers, etc.) regarding the effect payments may have on a debtor’s credit report or overall creditworthiness may be deceptive.  Quoting the ACA International article, “…The CFPB’s bulletin provides examples of potentially deceptive claims, such as when collectors tell consumers that paying debts will improve their creditworthiness.”

When I first read that sentence my reaction was incredulous laughter. Seriously? But, after reading the entire article, I could see the point the CFPB was trying to make. They have concerns that consumers might interpret statements like that to mean that if (or when) they pay off a specific delinquent debt their credit score will improve right away. In most cases, this really isn’t going to happen. Typically it takes time to rebuild a credit score. In the ACA article they caution collectors to be careful not to imply to consumers that repayment programs could improve their credit report unless they really understand the facts.

We sent that recommendation to the collection floor—we certainly do not want to deceive anyone—even inadvertently.   

Your take-away?  The next time you see the media or politicians referring to the “lawlessness” of the collection industry I hope you’ll remember how heavily regulated our industry actually is, and the minefield we dutifully traverse every day, working to stay compliant.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.

Statistics Never Lie, but They Can Also Fail to be Totally Truthful

According to a recent report from The Atlantic Information Services on Blue Cross and Blue Shield Plans, almost half of consumers purchasing Obamacare compliant individual health plans do NOT receive a tax-payer provided subsidy from the government in order to afford a plan. 50% do NOT receive help paying for an Obamacare plan.  This statistic struck me as being a rather high percentage. In the midst of this current Obamacare open enrollment, including well-publicized and significant health insurance premium increases across much of the country, we heard the federal government spokespersons tell us that despite the large premium increases, 85% of those consumers enrolled in the Obamacare exchanges will see little premium increase because they receive subsidies.  85%? I thought it was 50%?  It turns out both the AIS Report and the federal government spokespersons are technically correct and truthful.  Statistics don’t lie.  But they can fail to be totally truthful.

Yes, 85% of consumers enrolled in the Obamacare exchanges do receive a subsidy to help with those large premium increases. However, this is one of those statistics that is true, and a fact, yet it is also one of those statistics that simply does not complete pi (pun intended).  There are at least a few million consumers purchasing Obamacare plans off the exchange.  So, a reporter from  Atlantic Information Services recently sat down and called a good number of Blue Cross plans and asked a simple question: “How many of your Obamacare individual health insurance policyholders get a subsidy and how many do not”?  The report covers 26 state Blues plans.

Why is this report important? Because consumers who do not get a subsidy must pay the full premium and absorb all of the big rate increases, as well as pay their full deductible and copayment increases. Some of these increases have been very significant, even thousands of dollars annually in many cases.

I will not bore you with all the exact figures and statistics state by state, but suffice it to say, when the tallies were completed in the AIS report the totals were stark: 2.3 million Blues plans consumers with subsidies and 2.4 million without subsidies.

After this AIS report was issued and distributed, Charles Gaba at ACAsignups.net estimated the on and off exchange enrollment for these plans based upon his accurate data at the end of the first quarter 2016. “Roughly 48% of all individual policies sold by these Blues carriers are subsidized, while another 48% are ACA-Compliant but unsubsidized.” The remaining 4% of plans are grandfathered plans that will soon be extinct and are unsubsidized.

This report indicates a significant number of individual health insurance plan purchasers have been negatively impacted by large premium increases and large increases in their out-of-pocket costs. The health insurance consumers purchasing unsubsidized plans are now leaving unpaid invoices with their medical providers because their costs are skyrocketing, yet there is no subsidy available.

Medical providers can rely on A. Alliance to recognize how statistics fit into the big picture. We understand medical providers are seeing more patients with unsubsidized plans and realize the unsubsidized patients make up  50% of individual health plan purchasers, not 15%.  These patients are absorbing the full increases in premiums and in out-of-pocket costs, making them more likely to skimp on care and payments to their providers. This emotional and financial dilemma for providers and their indebted patients makes the choice of a medical collection agency very crucial.  Financial counselors at A. Alliance are experienced diplomats in the delicate art of medical collections. Your patients are as important to us as they are to you. This is why our ACA certified Professional Collection Specialists will always act professionally and show your patients the respect and dignity they deserve. We are dedicated to maintaining a positive balance between results and relationships.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 10 years.