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A Man with an Impactful Reach

Thenh Bo Bong – Circa 1977 Courtesy of Centerville Greenhouses, Inc.

With the recent passing of Iowa’s uber-popular Governor Robert D. Ray, I am reminded of his influence on our family four decades ago while growing up in Centerville. This impact was in the form of becoming educated about life outside of Iowa…and our country.

Growing up in a small Iowa town can have both positive and not-so-positive vibes…much of which relates to how we personally perceive whether we can have an impact on the community where we live, work and play. In 1972, after my parents purchased a greenhouse in southern Iowa, our family moved to Centerville from Fargo, ND. Some of my best memories come from those initial years of helping make the greenhouse a growing concern. It took a lot of hard work to transform a run-down, badly neglected facility into something we would be extremely proud of – and depend on for our livelihood.

Governor Ray, elected in 1968, was up for his first re-election the year we moved to Iowa. Given my age at the time, I knew very little about him, other than through newspapers articles or radio and television. I now have the luxury of knowing more about Gov. Ray and his policies, understanding that even though he was a fiscally-responsible Republican, he also embodied a progressive agenda that crossed party lines.

But he was more than that. Gov. Ray demonstrated a humanitarian response by accepting several thousand displaced refugees from Southeast Asia – a result from the horrible aftermath of the Vietnam war. The concern back then for some Iowans and Americans was that the refugees would take away ‘our’ jobs. Gov. Ray persisted, however, telling The Iowa City Press-Citizen in 2003, “I decided we couldn’t sit here in the middle of Iowa, in the land of plenty, and let them die…They had to risk everything, their homes and members of their family.”

New Arrival in Centerville

Around 1976, Gov. Ray’s compassionate action spilled over to Centerville – and to our family business. Through their own compassion, my parents felt it was their civic and moral obligation to reach out to a newly-arrived family from Laos, who spoke little-to-no English but desired to quickly assimilate into a new location and culture. As teenagers in rural Iowa, my siblings and I now had ringside seats to observe how refugees could reconstruct a new life of hopeful opportunity after having experienced tragic circumstances that occurred halfway around the globe. There are no social studies classes or textbooks that could be written to describe what we experienced working with this newly-hired employee – a tiny man in his forties with a wife and three children. His name was Thenh Bo Bong.

Thenh Bo Bong: Courtesy of the Centerville Iowegian 1980 Progress Edition

Although Thenh Bo spoke no English, his sons would act as his early interpreters. Over time, he would intently listen and watch his co-workers and quickly grasped the various jobs that needed to be performed at the greenhouse. I specifically remember that, despite the hot and humid summer months, he enjoyed having hot tea or water during our sanctioned morning and afternoon breaks. Though very quiet, primarily due to not speaking English, he always had an infectious smile and was very courteous to others – the language barrier could easily be replaced through other means. From this, I learned that effective communication can come in many forms, one of which, of course, is the spoken language. But the universal language, regardless of culture, is more easily demonstrated through our actions toward one another. Learning this invaluable lesson came from on-the-job training with our newest employee.

During the winter months, my sister, Mary, would pick up Thenh Bo (along with his two sons) at his home and deliver the sons to the junior high before taking Thenh Bo to the greenhouse. Mary herself, would then proceed to high school. Our parents sponsored Thenh Bo’s parents when relocating to Centerville, and also helped furnish their apartment with bedding, curtains and various other items. The tapestry of cultures, no matter how different, impacted many lives in this small town.

During his employment at the greenhouse, Thenh Bo and his wife had a newborn son, John, who was named after my older brother. When afforded the opportunity, it is amazing just how disparate cultures can intertwine with one another and, as a result, become more enriched. As I understand it, Thenh Bo’s children became well educated and, eventually, pursued their vocation in medicine.

The legacy that Gov. Ray leaves for us is both vast and immeasurable. If not for his efforts, we would never have met the Bong family to appreciate their culture and fully understand the realization that we truly do live in a world that is a better place because of acts of kindness (and boldness) that began through Gov. Ray.

I’m quite sure there are countless ‘Thenh Bo’ stories throughout Iowa and beyond. Each one of them unique. We’re thankful to Gov. Ray and Thenh Bo (and his family) for teaching us that it is through compassion and understanding that we can “sit here in the middle of Iowa, in the land of plenty”…and provide the less fortunate a chance to live and contribute.

Now THAT is an impactful reach!

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Did Iowa Mess Up Its Individual Health Insurance Market?

The individual health insurance market in most every state is, at best, precarious. Iowa is no exception – a conclusion reached recently by national consultant, Wakely Consulting Group, one of many organizations that I collaborated with in 2012 when analyzing the Iowa population for implementing a state-based health insurance marketplace. Their report, “Analysis of Alternative Policy Decisions in Iowa’s Individual Market,” sheds light on how a concoction of earlier decisions can undermine fragile markets. In short, the individual health market is a tangled mess.

The Affordable Care Act (ACA) established state-based marketplaces that allowed Americans without employer health coverage to purchase health insurance regardless of preexisting conditions. Such sanctioned ACA plans would also provide minimum essential standard-of-benefits.

The premium paid by those qualified to enroll in these plans varies, primarily based on factors of age, tobacco use, family size and geography. Other factors – such as pre-existing conditions, health status, claims history, duration of coverage, gender, occupation, and small employer size and industry – cannot be used to impact insurance premiums. Individuals earning a certain amount of income (100-400 percent of poverty), can receive subsidies to pay for their coverage, while others above this threshold must pay the full premium themselves.

The whole idea of insurance risk is to cover as many insureds as possible, safeguarding that there will be enough ‘good’ risks to help offset those considered to be ‘bad’ risks. When the Iowa marketplace was launched in 2014, Iowa had four insurers competing in the individual marketplace. Today, Medica is the only insurer that sells ACA-compliant health plans in Iowa. To sustain its business in Iowa, Medica had to increase the premiums in 2018 by 50 percent – which did not impact those receiving premium subsidies but slammed those who earn above the subsidy limit.

On top of this, the state’s largest insurance company – Wellmark Blue Cross and Blue Shield – maintained a large block of pre-ACA grandfathered plans (policies in effect before March 2010) and grandmothered health plans (policies written after 2010 enactment but before 2014) within its block of individual health business. The state of Iowa allowed Iowa carriers to maintain both blocks of business outside the sanctioned ACA marketplace.  According to the Wakely report, “Iowa’s ACA individual market in 2015 represented approximately 40 percent of the total non-group market…while the other 60 percent were covered under the two transitional plans.”

From its analysis, Wakely’s conclusion is that had Iowa NOT allowed for grandfathered and grandmothered plans (an option for each state to decide), the enrollment in the ACA-compliant plans would have increased by 55,000-85,000, while the change in premiums would have dropped by 8-18 percent. Had this happened, I’m sure there would have been new ‘winners’ and ‘losers’ on the amount of premiums individuals would be required to pay.

Lessons Learned?

The likely lessons learned from Iowa, according to Wakely and The Commonwealth Fund, is that further segmentation of the individual market between healthy and unhealthy enrollees wreaks havoc for those who do not receive subsidies that offset massive premium growth. Adopting policies to expand the risk pool and maintain a balance between healthy and unhealthy enrollees, using state-level reinsurance programs can be beneficial to state-based marketplaces.

As mentioned in the Commonwealth Fund analysis, “…premiums in the state’s (Iowa) individual market are already among the highest in the country, with an average annual marketplace plan premium in excess of $10,000 in 2018.” The middle-class consumers – entrepreneurs, independent consultants, farmers, and early retirees – who earn too much to quality for subsidies become ‘losers’ in the insurance risk game.

Granted, with the advent of new association health plans and short-term medical plans that can legally shed many ACA requirements and theoretically become more cost competitive, many of the healthier middle-class insureds may qualify for these plans – but what about those with pre-existing conditions?

The policies we generally make in healthcare are too often made from situational circumstances that cause knee-jerk reactions that may appear to be expedient, but ultimately exacerbate an already complex problem.

Scottish writer, Walter Scott, put it quite succinctly:

O, what a tangled web we weave…when first we practice to deceive.

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Association Health Plans – Will They Deliver?

Whoever coined the phrase, “The more things change, the more they stay the same,” hit a bullseye – especially as it relates to association health plans (AHPs).

The theory behind AHPs is quite simple: Enable small businesses to join together at an association level and pool their employees as a group to take advantage of the additional value (e.g. purchasing power) and reduced administrative expenses enjoyed by large group plans. In short, gather a large number of small employers to give them the buying power to keep health premiums down.

An AHP can be established under one of the following ‘umbrellas’:

  • Professional or trade association – offering health coverage is incidental to why the association exists for its members
  • Professional Employer Organization (PEO)
  • Captive Association of an insurance company
  • Multiple Employer Welfare Arrangement (MEWA)
  • ERISA Association Health Plan

AHPs are not new. They have been around for decades. Some have been successful, while others have failed – some failing in fraudulent proportions. Expectations by small employers are commonly high that AHPs will tamper down health premiums to a more affordable level compared to other available insurance options. These expectations, however, are often unrealistic and can harm those who think there is a ‘free lunch’ involved when purchasing this coverage. But, as with any consumer market, it is definitely ‘buyer beware.’

On June 19, the Labor Department unveiled the AHP final rule that allows small businesses and self-employed individuals to band together to buy health insurance. This rule is the latest action by the Trump Administration to encourage competition in the health insurance markets with the intent to lower the cost of coverage. The rule redefines how an association can be established for the purpose of offering health insurance to its members. The rule was in response to the executive order issued by President Trump on October 12 that directed federal agencies to expand the availability of AHPs, short-term limited duration insurance policies and Health Reimbursement Arrangements (HRAs).

The final rule broadens the definition of an employer under the Employee Retirement Income Security Act of 1974 (ERISA), allowing more smaller groups to form association health plans and bypass rules under the Affordable Care Act (ACA). In contrast to earlier AHPs that typically required association members to share an economic or other common purpose beyond purchasing health insurance, the final rule allows new AHP members to connect via common geography alone or by business and professional interests.

Iowa’s New Legislation on AHPs

To provide new options for small employers to purchase lower-cost coverage, on April 2, Iowa Gov. Kim Reynolds signed legislation (Senate File 2349) to become law effective July 1. This new law authorizes associations or related businesses to form MEWAs, which will be regulated by the Iowa Insurance Division (IID). The IID requested comments from the public for rule-making relating to MEWAs on April 4, with an April 27 deadline.

The purpose of insurance is to appropriately manage the risks of those who are insured while ensuring the plan remains solvent. Proper local regulation of insurance is paramount to ensure the plan is fundamentally financially stable, and that it attracts the ‘good’ risk of insureds (in addition to the ‘poor’ risks).

10 Key Features Regarding the New AHPs

  1. Main purpose of forming an AHP can be to offer health insurance to its members, although the final regulations require that a group or association of employers have at least one substantial business purpose unrelated to the provision of health coverage or other employee benefits.
  2. Applicability Date of new AHPs can be phased in on September 1, 2018 for fully-insured plans and January 1, 2019 for existing self-insured AHPs. New self-insured AHPs can begin on April 1, 2019.
  3. For the first time, working owners without other employees (including sole-proprietors) and their families will be permitted to join AHPs.
  4. Preexisting medical conditions will still be covered by new AHPs – sick individuals cannot be discriminated against. Additionally, AHPs may not cancel coverage because an employee becomes ill.
  5. Premiums can vary depending on industry of insured, gender, age and location.
  6. Essential health benefits covered by ACA are not required to be included in new AHP plans. For example, mental health and substance abuse disorder services can become optional under new AHPs.
  7. Maternity benefits must be covered in new AHPs for employers with at least 15 employees. Employers with fewer than 15 employees can opt out of this benefit.
  8. Occupation ‘discrimination’ can happen whereby individuals could be charged different premiums based on their occupation or other factors not related to their health status – if their employer chooses to do so.
  9. State insurance officials have the authority to oversee AHPs – even for those headquartered in other states.
  10. During the next five years, national AHPs are estimated to siphon as many as 4 million people from individual and small group plans, including 400,000 people who previously did not have insurance coverage.

Free Lunch?

Finally, will AHPs ‘deliver’ to small businesses and individual owners with no employees? It depends.

If there is too much ambiguity in the final rules and state/federal regulatory oversight practices, unscrupulous individuals will find loop holes to take advantage of innocent clients. AHP detractors are rightfully concerned that skimpy plans offered by AHPs may attract younger, healthier individuals and small employers, leaving individual and small group markets outside the AHP with poor risk – and eventually higher insurance premiums.

Yes, there are no free lunches available when purchasing health insurance coverage. With AHPs, there will be both winners and losers – depending on how the insurance markets are carved up within each state. Regulatory oversight will be critical to allow for common sense consumer protections, while still allowing for creative innovations.

The good news is that the new rules allow existing and successful AHPs to continue to function in their normal routine that has allowed for stability over the years. One Iowa-related AHP that I have long admired is the Iowa Bankers Benefit Plan. It has truly acted in the best interest of its members (40 years and counting) and continues to provide the stability that employers hope to achieve when purchasing health coverage.

Of course, fixing the ‘delivery’ of healthcare would fundamentally lower the cost of ALL health insurance plans – regardless of how and where it is purchased.

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