[00:00] Bryan Hyde: Welcome to the Health Policy Podcast. I'm Brian Hyde, and I'm joined by Mike Smith, who is President Emeritus of The Brokerage, Inc. Mike, it's great to have you back on the program. We've had you on here before, but for those who are meeting you for the very first time, take a moment to tell us a little bit about who you are and what you do. [00:15] Mike Smith: Well, thanks, Brian. The Brokerage is a company that markets insurance products from coast to coast, all 50 states. Our job is to go out and recruit insurance agents to go out and sell products. So we act as a wholesaler in that capacity, which puts That puts us in a unique position of being in between the insurance company and the insurance agent as a marketing organization to try and bring solutions to the table that are affordable and suitable for our customers. [00:43] Bryan Hyde: You know, when it comes to health insurance, I don't often hear the word affordable except as it applies to things like the Affordable Care Act. But just for instance, my wife and I, when we sit down and discuss our options, you know, we're seriously trying to find what is going to actually fit our budget. And there's plenty of stuff that we see that will strain it. finding stuff that fits it, sometimes it feels like that's a bit of an uphill battle. [01:06] Mike Smith: There's no doubt about that. And I'm glad to know that you guys are at least trying to sit down and have that discussion because most people spend way more time planning a vacation, sometimes one that they can't afford, versus trying to manage their health insurance and healthcare benefits. But that, that's tough in this market. And that's why I wanted to visit with you and your listeners today is to try to help people understand what's going on out there. This is not a Trump thing or an anti-Trump thing. This is just a healthcare It's a healthcare cost thing. And the cost of the healthcare is reflected in the health insurance premiums. And therein lies the problem. We're trying to bring affordability to the equation. But on one hand, we've got such great healthcare, but on the other hand, it's very expensive. [01:52] Bryan Hyde: So this is one of the things that I guess I want to put out there right up front. You're not here today to provide all the magical solutions that will make everybody's stress and worry about affordable insurance premiums go away. But you are here to offer hope with the understanding that not every one of these problems is easily solved. So let's talk a little bit about the trends that are happening with the Affordable Care Act. Good heavens, that went into effect, what, 2010? [02:18] Mike Smith: That's when the law was passed, and then the first policies were written in January 2014. [02:23] Bryan Hyde: And a lot has changed over the years since then. Would you mind kind of walking us through some of the more notable changes and then just kind of bring us to where we are today and what people need to consider? [02:35] Mike Smith: Sure. I mean, without giving you the entire history of the Affordable Care Act, basically we had an influx of new insureds in 2014, people who did not currently have insurance. And that was great. Back then, we had about 50 million or so uninsured Americans. And over the last 15 or so years, that number has been cut in half, which is awesome. But it does also come with a price tag. We've seen companies that have come into the market and been burned by big claims, things like organ transplants that were unexpected. [03:04] Bryan Hyde: Yeah. [03:06] Mike Smith: affected, and then they've left the, the state or that market, and then they've come back into market. So it's been kind of a yo-yo effect of companies coming in and out of the market. During the COVID era, as many of your listeners may know, the advanced premium tax credits, which are also known as subsidies, were enhanced. So the enhanced premium tax credits gave people more opportunities to buy coverage, many with a $0 premium, and also to help them reduce their coinsurance and deductible out-of-pocket expenses. Those enhanced subsidies, Brian, expired at the end of last year, and that's why we've seen a significant spike not only in the premiums, but because the base premium was increased and the enhanced premium subsidies were decreased, we had a very negative double whammy effect. And then you combine that with the higher out-of-pocket expenses of deductibles and coinsurance, and that was enough to make a lot of people just fold the tent and say, we cannot afford this. And it's predicted that up to about 25% of the people that were enrolled as of December last year will be somehow uninsured during the year of 2026. And that's certainly proving to be the case. [04:19] Bryan Hyde: And this is not something that we can simply make into a, you know, a political blame game, right? I mean, it's not like this lies solely at the feet of the Republicans or at the Democrats. I mean, there are more factors at play here than just simply politics. [04:32] Mike Smith: There's no doubt about that. As I mentioned, a lot of the health insurance premiums are a direct reflection of the healthcare cost. And I have yet to hear a reasonable argument on either side of the political aisle about how we can address the cost of healthcare. And at some point, I don't want to say that we're going to have a national healthcare system, but it's kind of hard to ignore the fact that at some point we have to throw our hands up and say we've done everything that we can. So one of two things will have to happen. Either the government will just have to get out of the way entirely, which sometimes they find hard to get out of their own way, or they're going to just have to double down and do something that most people won't like, which would be to raise the taxes that we pay, both income tax and payroll tax, in order to afford somewhat of a Medicare for All system or a single-payer system. I'm not advocating for that, but at some point you have to think, is this really where we're headed? [05:28] Bryan Hyde: So let's talk about some of the options that are available. You mentioned, you know, maybe up to 25% of these Americans may see a reduction in terms of their insurance. What are the options that you see out there that give you some hope, or at least that people should take heart that all is not lost here? [05:48] Mike Smith: There are options outside of the Affordable Care Act, some of which include what's known as a short-term duration health plan. Those are policies that can be written by anywhere from 4 months to up to 36 months in some states. And while that may not be a perfect solution, it's probably going to be around 40 to 50% less in most cases than what an Affordable Care Act plan may be. Those do include a little bit of underwriting and people might be declined. So at least there's an option for some healthy people. The other option we see out there that's emerging right now is the healthcare sharing plans, some of which are based on healthcare sharing ministry type things where a policy may require you to belong to a certain faith and exclude things like abortion, for example. Other health sharing plans are basically just saying, hey, we will put a whole big pot of money in a hat, and anytime somebody has a claim, we'll just go into that hat and pull out money. And that's kind of the way insurance got started back at Lloyd's of London many, many centuries ago. So, those are 2 options that we see. But, you know, I would also encourage for your listeners who also may own a company or are employed by a company to consider a group health insurance plan. The good thing about a group health insurance plan is that it can be paid for and deducted through the employer. And then, of course, the employee that receives those healthcare benefits off of the health insurance policy receive that on an income tax favored basis. So, there are ways that efficiently employers can help pay a dividend here as well as offer that to their dependents. And then lastly, one thing I may encourage people to do is to consider a high deductible health plan combined with a health savings account where they can put money into a health savings account that can then accrue interest if they would like to keep it in that and just not touch it. they can use it as a savings account. And then when they take money out to pay for things like dental or vision or prescriptions or other out-of-pocket expenses, and even certain Medicare premiums can be paid for on a tax-favored basis, at least there's some degree of efficiencies. But I will say this is a challenging market that requires creative thinking, but it has to be balanced with suitability and compliance at the same time. [08:05] Bryan Hyde: Mike, maybe you can, can help me understand this too. The, the health share organizations you were talking about, my understanding is, uh, those— the, the premiums that people pay into those health share companies are not tax favored like, like in a group plan would be. [08:24] Mike Smith: Yeah, that's correct. I mean, in some cases the premiums may be deducted, but I would always, you know, turn that back to a certified accountant, someone who's in that lane. I mean, as an insurance agent, we get into a lot of different things regarding medical records and pharmaceutical and even tax law sometimes, but I would just say, speak with your tax advisor on ways that you may be able to set up some type of an individual coverage health reimbursement arrangement. These newfound ICHRA plans are pretty innovative in that they allow for certain eligible expenses to be paid through the employer reimbursement. So the employee would enroll in an ICHRA, individual coverage health reimbursement arrangement, and then they can have certain eligible expenses, which include certain health insurance premiums as well as out-of-pocket expenses, to be reimbursed through that vehicle. [09:13] Bryan Hyde: Okay. [09:15] Mike Smith: So, there's a number of ways that we can help employees and employers to buy health insurance on a more tax-efficient basis. [09:23] Bryan Hyde: Mike, you had mentioned too that one of the trends is that we may be leaning more and more towards a government-run healthcare system. I want to kind of switch to Medicare, Medicaid, and that kind of stuff. I know Medicaid is a massive program in just about every state. more or less a de facto government-run system by virtue of, you know, who's paying for it? [09:47] Mike Smith: You know, Bryan, it really has been that. I mean, in Texas, for example, where I live, it is the number one line item in the state budget. And as you mentioned, it's probably the same for many of the other states too. And, you know, realistically, the Affordable Care Act, where we were able to provide people with subsidized premiums and get people enrolled at a $0 premium, we didn't really say that that was Medicaid because it truly was health insurance. But at the end of the day, when you see how it's funded, it's taxpayer funded and so is Medicaid. So in essence, the Affordable Care Act was sort of a Medicaid expansion in disguise. You know, with respect to your comment about Medicare, we do see other plans in the Medicare world that are $0 premium plans. Many of them are Medicare Advantage plans. But even those plans behind the scenes are are financed over the course of a period of, say, 20 or 30 years of your working life, where you have money taken out of your paycheck to pay for things like Medicare and Social Security. That money goes to Medicare. And then when you enroll in one of those $0 plans, you're still paying for it. You have to pay your Part B premium, which is a couple of hundred dollars. And then the insurance company is still receiving another $800 or so behind the scenes on your behalf that you paid for all while you are working. So we can see that there's the government hand in many of the financing behind Medicare, Medicaid, and the Affordable Care Act. So that said, when you look at it, we've got a significant amount of people that are already covered, whether that's through the Federal Employee Benefit Welfare Plan or any of the other programs I just mentioned financed by a taxpayer dollar. At some point, where's that going to tip over to the point where everyone is in that type of a plan? [11:37] Bryan Hyde: I also want— I don't want to put you into the, the role of having to be now a, uh, you know, a health coach or something like that, but, um, you mentioned healthy people will likely find it easier for some of those short-term policies. Um, talk to me about what people might consider in terms of taking a little more responsibility for their own health and, and not trying to use their health insurance as a way to catch up for all the bad decisions or bad lifestyle choices they've made over the years. [12:05] Mike Smith: Yeah. Well, you know, we could probably all cite an example of someone who, you know, we knew that was perfectly healthy all their life. And then one day as a nonsmoker and a jogger and they ate, you know, chicken breast without the skin, and all of a sudden they got cancer, they got lung cancer. How'd that happen? Well, they didn't ask for it. We have to think that in some cases, some people are just genetically disposed, disposed to where that's going to happen. But what about the people who don't really take care of themselves, that are not necessarily exercising and don't really care what they eat and drink more regular Cokes than they probably should. And they're just obese or they have self-inflicted diabetes, things of that nature. You know, we— it's a free country. You do what you want. And I'm not here to tell people how to live their life. But at the same time, that does come into the equation that either you're going to have to pay more for the insurance or you're going to end up dying sooner. And I would just encourage anyone that's out there listening to take better care of themselves. That may not be the silver bullet answer for everyone, but it certainly does play a role in that. You know, when you go to the doctor and you're going to have to pay $200 for an office visit, if you can't afford that, then you're going to get sicker. And then if you can't afford to take your medicines, then you're probably going to get sicker. And I'm not saying that taking a medication is the answer to all of our ills, but at some point people do have to play a personal role in making sure that they're taking care of themselves the best they can. [13:33] Bryan Hyde: And let's, let's also talk about, you know, where challenges arise, entrepreneurs are going to see opportunity to help fill a need that is there. In terms of, you know, the number of people who may see themselves uninsured or unable to afford, you know, affordable health insurance, sounds like that would be a great opportunity within the insurance industry. Is there anybody there, you know, trying to step up and innovate and to to provide solutions? And do they run into roadblocks? Are there barriers that they run into that prevent them from being able to come forward and move up? [14:12] Mike Smith: Well, the only roadblock would be insurability. And if a person has reasonable health, then they may be able to purchase something that's a limited major medical plan that would give them the ability to go and see a doctor on a regular basis or to have preventive care checkups or to afford medications. So there are some policies out there that would be less than $100 per person. And, you know, that's safe for someone age 50 or under. But the challenge is always going to be affordability. And that's where we struggle as an industry, is to come to the table with solutions that are going to be affordable for people's budgets. We fight with regulators and legislation and different people that make the laws in which we have to live with. But at the same time, we're doing what we can to get creative and innovative in a manner that brings value. And that's the And that's the real challenge right there is that most people thankfully will not go into the hospital each year, but they will consider going to a doctor for a flu shot. Or maybe they get that cold or the seasonal allergies and they need to go and have a boost and they can't afford to go to the doctor. Well, that's a real problem. So then what are your options? They do have different clinics that people can go to that serve the low-income population or the uninsured population. And that is not just an emergency room. That is actually a local clinic that a person can go to where they may be able to receive a certain level of care at a very low cost. I just encourage people to not let the problem linger. And if they feel that they're getting sick, don't become sicker, because certainly sicker becomes a lot more expensive. [15:49] Bryan Hyde: Okay. And one final question for you, and that is, for people who really want to examine the options that are available to them, what are some of the resources you would direct them toward to, to get a better feel for, for what's out there? [16:04] Mike Smith: Well, you can always call and talk to a local insurance agent. There's an agent that's out there willing to help just about anybody, and that doesn't cost anything. If you just pick up the phone and call and say, hey, I've got a few questions, what are my options? There's no cost in doing that. And mostly health insurance agents are going to be certified, meaning that they've gone through qualified training. They know what types of markets— what's available in Tennessee may not be available in Idaho and so on. But at least the person is trying to reach out to someone who is licensed and is an insurance professional. My best advice is just pick up the phone and call somebody and reach out and say, here's my situation, what can you do to help me? And people may be actually surprised at what's available in their market. [16:50] Bryan Hyde: Again, we're talking with Mike Smith. He is President Emeritus of The Brokerage, Inc. Mike, I appreciate you shedding some light on what's happening with the ACA and, and some of the options available. Thanks again for joining us on the Health Policy Podcast. [17:03] Mike Smith: My pleasure. Thanks, Brian.