insurance

Screech! Crunch!

You’ve just been involved in an automobile accident. And the next sound you hear–even before the wailing of the ambulance–will very likely be the raised voices of the drivers involved arguing over whose fault it is.

Sure, there are a few level-headed types out there who calmly and quietly follow the prescribed procedure, exchanging names and policy numbers without further comment. But even those civilized drivers have arguments over fault–they just don’t begin the fight until the insurance claims are filed.

Last week, I told you about my own experience as an auto accident victim, and the tortuous 3-year process I had to go through just to get a marginal out-of-court settlement for my injuries. Forty percent of the money went to my attorney. If I had insisted on seeing my case through to trial, the ordeal would probably have lasted 2 more years, at least.

That’s because the courts are so clogged with auto accident cases. They increased 81% from 1982 to 1986, according to the Judicial Council of California. And according to the RAND Corp., they now account for 43% of all civil cases in the state.

It seems to me there ought to be a better way.

And it seems that way to some other people as well–people such as state Assemblyman Patrick Johnston (D-Stockton), and Judith Bell, director of special projects for the San Francisco-based Consumers Union, which publishes Consumer Reports magazine.

I don’t have any specifics to offer on what I think that better way might be. But they do. The California Trial Lawyers Assn. also has some suggestions for improvements, although the attorneys’ group would prefer to keep the current system intact and so far has not proposed legislation.

Johnston, who chairs the assembly’s Committee on Finance and Insurance, and Consumers Union have drafted a bill that would set up a no-fault insurance system modeled after a successful system in New York State.

We all heard the term “no-fault” bandied about ad nauseam last fall during the insurance industry’s $70-million campaign for Proposition 104, the so-called No-Fault Initiative. And our response at the polls was a resounding “No way!”–Proposition 104 lost by a 3-1 ratio.

Instead, we approved the Ralph Nader-backed Proposition 103–now only partially in effect while undergoing review by the California Supreme Court.

Proposition 103, however, makes no changes in the current tort system, which is based on the concept of fault.

Jeff Shelton, an aide to Johnston, says the new no-fault bill, AB 354, is designed to complement, not contradict, Proposition 103. And it has nothing to do with Proposition 104.

“AB 354 is to Proposition 104 what the Constitution of the United States is to the constitution of Russia,” Shelton says.

“Proposition 104 had 80 pages that had nothing to do with no-fault,” says Bell.

To understand how no-fault compares to the at-fault system, Shelton says, you first have to know a little history.

“The legacy of tort actions is that people should be required to compensate others when they’ve caused others harm through negligence. It began to develop during the Industrial Revolution as a defense against those who are hurt,” he says.

Wait a minute. A defense against victims?

That’s right, Shelton says. “The old English common law wasn’t so interested in negligence. The tort system requires not just that you prove I was the cause of your injury, but that I caused it as a result of a negligent act.”

In AB 354’s no-fault system, neither fault nor negligence would be a factor. If you’re injured in an auto accident, you file a claim with your own insurance company, “just like you would do now with your health insurance if you were sick, or with your homeowner’s insurance if your house burned down,” Shelton says.

“We think it would speed up the process. In New York when this system went into effect, the amount of time people waited to be paid was reduced from 2 years to 2 months, on the average.”

The Johnston no-fault bill also would require insurance companies to settle claims promptly or pay a 2% per month penalty for delays, along with attorney fees if their clients sue them as a result.

Because the insurance companies involved will never argue about who’s at fault in an accident, Shelton says, “many of the frictional costs we have now will be reduced.”

As with any no-fault system, some injured people will not be allowed to sue. But the Johnston bill’s claim limit is double that of Proposition 104–$50,000 total versus $10,000 for medical expenses and $15,000 for work loss. And its definition of what constitutes a serious injury, in which a victim can sue for pain and suffering damages, is much broader than under Proposition 104.

Still, the bill would remove about 80% of current cases from the court system, Bell says.

But wouldn’t an insurance company be inclined to cancel your policy if you make large claims against it? Mine did in 1986, after I filed a $6,000 collision damage claim.

That’s where Proposition 103 comes in, say Shelton and Bell, with its strict rules about the circumstances under which a policy can be canceled or not renewed.

A no-fault system might also reduce insurance premiums, Bell says. In New York, rates have increased only 4% a year since no-fault was instituted. In California, however, rates have gone up 42% since 1985.

But Gary Chambers, president-elect of the Orange County Trial Lawyers Assn. and a member of the state association’s governing board, says insurance companies don’t need cost-saving measures to reduce rates.

“I would like to see Proposition 103 go into effect before we start legislative efforts to help the insurance companies,” Chambers says. Proposition 103 mandates a 20% rate rollback, although that provision has been stayed pending the court’s review.

“No-fault was rejected overwhelmingly by the voters last fall,” Chambers says. “They don’t want it.”

But Chambers agrees that the system needs help. He thinks the first step in speeding things along is “more courtrooms. Statistically there are no more lawsuits per capita in California than in 1915, but there are one-third as many courtrooms available (per capita). The legal system has not kept pace.”

Chambers is also an advocate of mandatory arbitration and other efforts to streamline the process, as have been made in some counties. “In Riverside and San Diego counties they have an accelerated trial program, in which a case is put on a computer system to make it move and avoid the delays,” he says.

It’s Got 12 Gold-Plated Cylinders

We see cars on the road in Orange County that cost more than houses do in many parts of the country–Ferraris, Maseratis, Rolls-Royces. They’re not exactly a dime a dozen here, but status cars are common enough that most of us barely take notice when they pull up next to us. But what’s the ultimate county status car? We would like your opinion, whether it’s in your garage or merely in your dreams. Be as specific as possible when it comes to model, year, color, options, etc.

The Road to Romance

Sure, you’ve heard of life in the fast lane, but how about love in the fast lane? How many of you indulge in a little freeway flirting now and then? And how many have actually dated that attractive stranger one lane over. We’d like to hear.

Send your comments to Life on Wheels, Orange County Life, The Times, 1375 Sunflower Ave., Costa Mesa, Calif. 92626. Please include your phone number so that we can contact you. To protect your privacy, Life on Wheels does not publish correspondents’ last names when the subject is sensitive.

Reporting from Washington — As they wrestle with how to replace the Affordable Care Act, Senate Republicans face a critical choice between cutting taxes or preserving health coverage for millions of Americans, two competing demands that may yet derail the GOP push to roll back the 2010 healthcare law.

House Republicans, who passed their own Obamacare repeal measure this month, skirted the dilemma by cutting both taxes and coverage.

Their bill — embraced by President Trump — slashed hundreds of billions of dollars in taxes, a key goal of GOP leaders and the White House as they seek to set the stage for a larger tax overhaul later this year.

At the same time, the House legislation cut more than $1 trillion in healthcare assistance to low- and moderate-income Americans, a retrenchment the nonpartisan Congressional Budget Office estimates would nearly double the ranks of the uninsured over the next decade to more than 50 million.

In the Senate, coverage losses on that scale are worrisome to many rank-and-file Republicans whose states have seen major coverage gains under Obamacare. That makes the preservation of benefits one of the biggest challenges confronting Senate Majority Leader Mitch McConnell (R-Ky.) and other GOP leaders.

“Coverage matters,” Sen. Bill Cassidy (R-La.) said last week on MSNBC’s “Morning Joe” program, noting the importance of preserving Medicaid spending in the current law. “To someone [who] is lower-income, you’re going to need those dollars to cover that person.”

Yet moderating cuts to Medicaid and other government health programs without driving up budget deficits could force Republican senators to also dial back the tax cuts that many in the GOP want.

“It’s not that complicated. … If you want to use money for tax reform, you can’t have it for health coverage,” said Gail Wilensky, a veteran Republican health policy expert who ran the Medicare and Medicaid programs under President George H.W. Bush. “You can’t do both.”

McConnell convened a group of GOP senators — quickly panned for including only white men — to develop Obamacare replacement legislation, though the panel largely excluded Republican lawmakers who are most concerned about coverage, including Cassidy. McConnell has since said that all Senate Republicans would be involved in developing an Obamacare replacement.

The trade-off between cutting taxes and preserving Americans’ health protections reflects, in part, the legislative procedure that congressional Republicans have chosen to repeal the Affordable Care Act.

That process, known as budget reconciliation, allows Senate Republicans to pass their Obamacare repeal with a simple majority, rather than the 60-vote super-majority that is usually required to pass controversial legislation. (Republicans have only a 52-48 majority in the Senate.)

But to qualify for budget reconciliation under Senate rules, the bill must reduce the federal deficit over the next decade.

Tax cuts alone typically do the opposite, driving up budget deficits.

The tax cuts in the House Republican healthcare bill total more than $600 billion over the next decade, according to independent analyses by the Congressional Budget Office and the congressional Joint Committee on Taxation.

They include most of the major taxes enacted in the 2010 health law to fund the law’s program for extending health insurance to more than 20 million previously uninsured Americans.

On the chopping block are taxes on medical device makers and health insurance plans, which together account for about $165 billion in tax cuts over the next decade.

Couples making more than $250,000 a year (and single taxpayers making more than $200,000) would see two tax cuts, including one on investment income, that the budget office estimated would cost the federal government nearly $300 billion over the next decade. (That estimate may be revised down as House Republicans delayed one of the tax cuts in the final version of their bill.)

Also eliminated would be a host of limits on tax-free spending accounts that many Americans use for medical expenses. Republicans argue these taxes are unnecessary and even undermine efforts to control healthcare costs.

“It’s bad for economic growth,” House Speaker Paul D. Ryan (R-Wis.) told Fox News during the House debate.

The tax on health plans, for example, is widely seen as contributing to higher premiums, as insurers customarily pass the costs along to consumers.

But eliminating so many taxes isn’t cheap.

So the Republican healthcare bill — known as the American Health Care Act — slashes hundreds of billions of dollars in federal healthcare spending, including an estimated $880 billion in federal money for Medicaid, the state-run government health plan for the poor that currently covers more than 70 million Americans at any one time.

That would in effect cut federal Medicaid spending by more than a quarter over the next decade, an unprecedented reduction that independent analyses suggest would force states to sharply limit coverage for poor patients.

The House bill would also reduce insurance subsidies now available to low- and moderate-income Americans who get health plans through Obamacare marketplaces such as HealthCare.gov.

The reduction in federal aid would, in turn, dramatically increase the number of uninsured Americans. Overall, the Congressional Budget Office has estimated that 24 million fewer people would have health coverage by 2026 under the original version of the House bill.

By contrast, the wealthiest Americans stand to get a large tax break. By 2023, families making more than $1 million would see their taxes decrease by an average of more than $50,000, an analysis by the independent Urban-Brookings Tax Policy Center suggests.

That means that in a country of more than 300 million people, nearly half of all the tax breaks in the House healthcare bill would go to only about 780,000 households.

The combination of tax breaks for wealthy Americans and historic reductions in assistance to low-income patients has fueled widespread criticism of the House GOP healthcare legislation, particularly on the left.

“The math is pretty clear,” said Edwin Park, vice president for health policy at the liberal Center on Budget and Policy Priorities. “They are sharply cutting Medicaid and insurance subsidies to pay for tax cuts.”

Whether GOP senators will be able to moderate the reductions in healthcare assistance remains unclear.

The early version of the House bill was projected to reduce the federal deficit by about $150 billion over the next decade, according to the Congressional Budget Office analysis.

That number has likely shrunk slightly, as House Republicans added more spending to the legislation before it passed last week. An updated budget analysis is expected next week.

But under the budget rules adopted by GOP lawmakers this year, Senate Republicans will not be able to add any spending into their legislation without enacting cuts elsewhere or shrinking the tax cuts further.

That is because according to those rules, their bill must reduce the deficit by as least as much as the House bill.

Obamacare vs. Trumpcare: A side-by-side comparison of the Affordable Care Act and the GOP’s replacement plan »

Obamacare 101: A primer on key issues in the debate over repealing and replacing the Affordable Care Act. »

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@noamlevey

Democrats just crumbled like soft-bake cookies.

The so-called resistance party has given up the shutdown fight, ensuring that millions of Americans will face Republican-created skyrocketing healthcare costs, and millions more will bury any hope that the minority party will find the substance and leadership to run a viable defense against Trump.

Sunday night, eight turncoat Democrats sold out every American who pays for their own health insurance through the affordable marketplaces set up by President Obama.

As has been thoroughly reported in past weeks, Republicans are dead set on making sure that insurance is entirely out of financial reach for many Americans by refusing to help them pay for the premiums with subsidies that are part of current law, offered to both low- and middle-income families.

Republicans — for reasons hard to fathom other than they hate Obama, and apparently basics such as flu shots — have long desired to kill the ACA and now are on the brink of doing so, in spirit if not actuality, thanks to Democrats.

Trump must be doing his old-man jig in the Oval Office.

The pain this craven cave-in will cause is already evident. Rates for 2026 without the government subsidies have been announced, and premiums have doubled on average, according to nonpartisan health policy researchers KFF. Doubled.

Insurance companies are planning on raising their rates by about 18%, already devastating and symptomatic of the need for a total overhaul of our messed-up system. That increase, coupled with the loss of the subsidies beginning at the start of next year, means a 114% jump in costs for the folks dependent on this insurance. Premiums that cost an average $888 in 2025 will jump to $1,904 in 2026, according to KFF.

But it’s the middle-income people who will really be hit.

“On average, a 60-year-old couple making $85,000 … would see yearly premium payments rise by over $22,600 in 2026,” KFF warns, meaning that instead of paying 8.5% of their entire income toward health insurance, it will now jump to about 25%.

Merry Christmas, America.

While the eight Democrats who broke from their party to allow this to happen are directly responsible (thankfully our California senators are not among them), Democratic leadership should also be held accountable.

A party that can’t keep itself together on the really big votes isn’t a party. It’s a a bunch of people that occasionally have lunch together. Literally, they had one job: Stick together.

The failure of Democratic leadership to make sure its Senate votes didn’t shatter in this intense moment isn’t just shameful, it’s depressing. For all of the condemnation of the Republican members of Congress for failing to uphold their duty to be a check on the power of the presidency, here’s the opposition party rolling over belly up on the pivotal issue of healthcare.

As California Rep. Ro Khanna put it on social media, “Senator Schumer is no longer effective and should be replaced. If you can’t lead the fight to stop healthcare premiums from skyrocketing for Americans, what will you fight for?”

If the recent elections had any lessons in them, it’s that Democrats — and voters in general — want courage. Love or hate Zohran Mamdani, his win as New York City mayor was due in no small part for daring to forge his own path. Ditto on Gov. Gavin Newsom and Proposition 50.

Mamdani put that sentiment best in his victory speech, promising an age when people can “expect from their leaders a bold vision of what we will achieve, rather than a list of excuses for what we are too timid to attempt.”

Before you start angry-emailing me, yes, I do understand how much pain the shutdown in causing, especially for furloughed workers and those about to see their SNAP benefits cut off. I feel for every person who doesn’t know how they will pay their bills.

But here are the facts that we can’t forget. Republicans have purposefully made that pain intense in order to break Democrats. Trump has found ways to pay his deportation agents, while simultaneously not paying critical workers such as airport screeners and air traffic controllers, where the chaos created by their absence is both visible and disruptive. He has also threatened to not give back pay to some of those folks when this does end.

And on the give-in-or-don’t-eat front, he’s actually been ordered by courts to pay those SNAP benefits and is fighting it. Republicans could easy band together and demand that money goes out while the rest is hashed out, but they don’t want to. They want people to go hungry so that Democrats will break, and it worked.

But at what cost?

About 24 million people will be hit by these premium increases, leaving up to 4 million unable to keep their insurance. Unable to go to the doctor for routine care. Unable to pay for cancer treatments. Unable to have that lump, that pain, the broken bone looked at. Unable to get their kid a flu shot.

In many ways, this isn’t a California problem. The majority of these folks are in southern, Republican states that refused to expand Medicaid when they had the chance. About 6 in 10 subsidy recipients are represented by Republicans, according to KFF, led by those living in Florida, Georgia and Mississippi. But Americans have been clear that we want access to care for all of us, as a right, not an expensive privilege.

Which makes it all the more mystifying that Democrats are so eager to give up, on an issue that unites voters across parties, across demographics, across our seemingly endless divides.

But I guess that’s just how the cookie crumbles.