[00:00:00] Welcome to the Health Policy Podcast. I'm Brian Hyde. I'm joined today by Mike Smith. He's the President emeritus at the Brokerage Incorporated. And Mike, it's good to have you on the podcast. Would you mind taking just a moment to tell us a little bit about yourself and about your background? Sure. Thanks Brian for having me. Uh, you know, I've worked at the brokerage for 33 years and started out as a basic service rep calling on insurance agents, trying to help them to bring health insurance solutions to their customers. And over the last 33 years, we've seen a significant number of change. So it's important to understand our role here at the Brokerages. As a marketing organization, our job is to help insurance companies. Like Blue Cross United and many others to go out and find independent agents. And then those independent agents are the actual customers of ours. They are the ones who go and sell the insurance to the people who are looking for the coverage. So in that angle, we are a wholesaler. However, what we've learned is that there's [00:01:00] so many people out there that need help and there's so few brokers that really want to deal with health insurance anymore. It's kind of forced our hand to change our stripes a bit. Now we actually have a retail division, so we, we are both a wholesaler and a retailer of health insurance, Medicare, and other type of products related to life help and accident. Let's talk a little bit about, uh, one of the big challenges that I know a lot of people are gonna recognize immediately when I say the letters a CA, the Affordable Care Act has. Uh, it's, I can't believe it's been with us now for almost 16 years. Talk to me a little bit about, uh, what that, uh, what the a CA was promised to do for, for health insurance. And then let's talk about what it actually did and, and what we're contending with today. All right. Let me preface my comment by saying I don't want to try to make this a political thing, and you know, but it's hard to ignore the politics of this because we are dealing with an industry unlike anything else in America, where healthcare consumes one outta $6. Of our gross [00:02:00] domestic product. There's nothing else like that. So it's very difficult when that amount of money is coming into one system or one industry that politics can't somehow cross into that. So that said, when the Affordable Care Act was promoted back in 2000 8, 0 9 and 10, it was promoted in such a way that it'll be more affordable. Uh, the, the insurance plans will be more comprehensive, that you'll be able to continue to see your own doctor. Some of this might sound familiar and we were optimistic, cautiously optimistic that those promises could be delivered, but at the same time, uh, we have a significant amount of history with Medicare Advantage and the parallels of what was developing with the Affordable Care Act and what was also occurring with me Medicare Advantage. Were frighteningly familiar, and so we kind of had a little bit of a headstart on getting into the a CA because we had that experience with Medicare Advantage. So the bill was passed March of 2010. There was a lot of [00:03:00] debate back and forth about how this would be implemented, healthcare.gov, which launch January 1st, 2014. That in itself was a gigantic debacle to the technology. That first year was a big, big challenge that we did not anticipate. But the good news is there were a lot of people, 48 million plus Americans that were uninsured at that point in time, that began to enroll in insurance for the first time. And we were excited about that because the sales were coming in, we were helping a lot of people. But then another unexpected event occurred where we started dealing with a bunch of people who didn't have insurance, and they didn't know the difference between urgent care and emergency rooms, or the difference between a copay and co-insurance. So we had to really step back and try to educate not only our brokers that we serve, but also all of the people that they were bringing to the table for the first time. So we, we went through a few of these learning experiences and then [00:04:00] 2015 or so rolled around and a lot of the insurance companies started reporting significant losses. I mean measured into the hundreds of millions to billions of dollars. And then we started to see some other unintended consequences with insurance companies that were eager to be in the business or suddenly exiting the business. Uh, companies that were having to answer to the bottom line, to the board of directors, to the stock market that just said, this is not an area in which we feel we can make a profit. So between say, 2015 to 2018, we saw a lot of. Large companies leave the market. Then we saw some smaller regional players that were trying to tiptoe into the market, and things settled down a little bit. After about 2018, some of the insurance companies started coming back to the market that actually left two or three years previous, and then we had CO. We all know how impactful that was on our society, and that brought us enhanced premium tax credits. And what that did [00:05:00] was elevated the ability for more people to afford coverage. At the same time, the base premiums, regardless of the subsidized amount, the base premium. Had more than doubled between 2014 to about 2020. So when we say the Affordable Care Act, we almost have to call that the Unaffordable Care Act, because now all of a sudden we're seeing significant premium hikes. And if it weren't for those enhanced premium subsidies, a lot of people would've dropped their policy. But because of the enhanced premium subsidies, we saw, again, another uptick in enrollments. And not to mention a lot of the, uh, enrollments that could now start to happen on a yearly, an annual, or a month by month basis. It was not just a fourth quarter enrollment, but rather there was special enrollment periods that allowed people to jump in during the plan year. So we saw our, our numbers of enrollments continue to grow. So that was the good news. But [00:06:00] then there was December of 2025, a few short months ago where the enhanced subsidies expired. And for that reason, a lot of people saw significant premium hikes, some in excess of 100%. They simply couldn't afford it, and a lot of people elected to drop the plan and now are back on the uninsured role. So that's kind of a 30,000 foot overview of the past 16 years. You know, the crazy thing is as you're outlining that timeline. I'm distinctly remembering conversations that my wife and I have had as we've pondered our health coverage and, you know, and had to make changes because of, you know, the rising premiums. So, um, talk to me about you. You mentioned, you know, with the, those subsidies expiring at the end of last year. What are we looking at now in terms of the number of people who have dropped off the a CA? It's kind of a mixed bag and some surprises. We've seen some areas that have had significant decreases percentage wise of people that just simply could not afford their plan and drop their plan. And we were really [00:07:00] bracing for the worst case scenario here in in my home state, which is Texas. And Texas, as you know, has a very large. Population. So we were expecting that there, there may be 1 million or more people that would drop their coverage. We have about 4 million or so that are covered through the Affordable Care Act. But the surprise here is that Texas really did not lose the amount of people. In fact, you could say according to statistics, that we actually gained more insureds than we did before. So there's sort of a mixed bag there. We see other states like North Carolina, Georgia, Ohio, and others. That had some pretty significant losses, and the question then becomes where do they go for affordable coverage after that? And there's really not a good answer at this point in the marketplace. Okay, so we can, we can put it out there right, right up front here that, you know, if, if someone's looking for the magic answer, it hasn't been found yet. But let me ask you this, Mike, you know, where, where difficulties or challenges come up, [00:08:00] um, this is when people really become innovative. And I I'm just gonna ask, are you aware of, of people who are looking at this and seeing opportunity in ways to meet the needs of the market, um, as opposed to just seeing it as a roadblock? We are seeing some creativity and that's a dangerous word to use in my business because I have always operated by the old saying the big print giveth and the little print taketh away. And so creativity sometimes breeds a lot of small print, and that's where a lot of got you language can be found. But the good news is we have a number of health insurance companies in the United States that still want to be a part of the solution, and they're coming to the market now with different types of products, different type of funding mechanisms. Some of them may be a limited major medical plan. Others, uh, you may have heard of that are. The healthcare sharing programs, uh, there are short-term duration policies. Some of these plans can be written for up to 36 months in [00:09:00] certain states, so we are seeing some level of creativity at play. But there's not really a magic bullet here in this solution. I wish there were, and the fear I have is that if we can't come up with some form of a reasonable, affordable, suitable solution, that we may be staring down the pipe of a national healthcare plan sometime within the next decade. And I just have to ask the question, could that possibly have been by design? Absolutely. In fact, I'll just say, as I mentioned a minute ago, it's kind of hard to ignore the politics of this, but Obamacare, as it was nicknamed, I do believe, had a an intention of having some form of migration towards that national healthcare system. At the end of the day, when you find that there were some 48 or 50 million people that were uninsured, and that number gets cut in half, you have to ask. How did that happen? And the way that it happened was because of the advanced premium tax credits. Who is that that pays those [00:10:00] credits? You, me and anyone else that has payroll deductions that, or income taxes that are being paid and rever, you know, redirected towards the Centers for Medicare and Medicaid services that oversees the Affordable Care Act. So were there any winners in terms of, uh, what was promised versus what was delivered thus far for the a CA? Yes, there were a lot of very unhealthy people out there, some of which were facing, you know, some fatal diseases that needed to have, uh, kidney uh, replacements or liver transplants or other diseases, uh, va you know, things that are uncontrolled diabetes. And for the first time, they were given a health plan that they were able to go to the front door of their primary care doctor and not through the side door of the hospital emergency room. So there were a lot of winners, but that did come with a price tag. And as I mentioned, some of those price tags were high enough that a lot of insurance companies just simply did not [00:11:00] wanna weather the storm. So at the end of the day, if you're keeping score who won and who lost, I think there are probably more winners than there were losers by far. A lot of people were able to finally get that type of healthcare coverage that they needed, and it's important to distinguish the difference between healthcare and health insurance. A lot of these people were uninsured. They've always had access to healthcare, but it was through the emergency room door. Finally, we were able to encourage preventive care maintenance and things that people had not explored before with a policy that allowed them to be able to access that type of care and afford it. And again, in, in the interest of, I, I don't wanna put politics into this, but I have to ask for insurance companies that, that want to come forward with maybe some new ideas or new approaches. Do they have to partner with the government at some level if they want to have any prospect of succeeding? Not necessarily. And I mean, when you [00:12:00] say government, we have to split that into a two part answer of a state regulatory environment versus a federal regulatory environment. And Medicaid is a partnership between those two. So the idea here would be to try to figure out how is it that the government can partner with a state in such a way that doesn't cripple their Medicaid budget? And that's a difficult challenge on many states. The Medicaid budget is the number one line item. So then we have to look to the private insurance market and say, okay, what can you do to help? And I think a lot of the insurance companies would like to be a part of that solution. And we've explored a lot of hybrid versions to where maybe the government might be able to act as kind of a stop-loss company. In other words, the insurance plan might pay the first 50,000 or a hundred thousand dollars of risk. And then at some point when that risk is. Exceeded. Then the government health plan, a stop-loss plan can take over more of as a [00:13:00] catastrophic type of a program. So I think that there has to be some form of a partnership between the government plan, be that state and federal or both. And the health insurance plan. We see that kind of a relationship within the Medicare Advantage marketplace, and history is a good teacher, and there are good lessons that have been learned from the Medicare Advantage world that can be applied to the under age 65 world. The question then becomes how do you pay for these things? And it seems impossible to have that. True answer without some form of a payroll tax increase and also income tax re increase that would try to finance, because a lot of people that work, they want to buy health insurance, but if they can't afford it, they just don't enroll. But if they go to work and they're mandatorily told they have to pay these additional taxes, well those taxes could go in some way to help finance what we're talking about here. Okay. One final question for you, Mike, and that is. [00:14:00] The, the way things are right now with the current situation, is it sustainable or is is something gonna have to give at some point? You know, I'm, I'm gonna be realistic here because I've been doing this a while and I've seen the trends and when you partner up with all the different things related to the federal employee health benefit welfare plan, Medicare, medicaid, the Affordable Care Act, and you add all that up, and then you compare that to how many people get their health insurance through a private health insurance plan, the vast majority of Americans already are receiving their health insurance somehow financed by a tax pay. Dollar. So that trend has continued and does seem to continue. So at some point, I do think we'll have to acquiesce and admit that there's just not really a reasonable private market solution that we're gonna have to somehow partner up. I'm not, I'm not advocating for a national healthcare plan because we can certainly have an entire discussion about the pros and cons of that in other countries. Uh, [00:15:00] but it's hard to ignore the trends, and I'm afraid that at some point that probably will happen. Again, we are talking with Mike Smith. He is President Emeritus at the Brokerage Inc. Mike, thank you so much for joining us today on the Health Policy Podcast. Thank you, Brian. Thanks for having me.