Monthly Archives: September 2009

The Witch Hunt is on.

As someone who dedicates their life to best serving the needs of clients and making sure that they are adequately protected from the “real” holes in insurance, I am completely overwhelmed by the amount of disinformation and villianization of the entire health insurance industry.   I am equally shocked by the general lack of understanding of how the insurance system works, even on the most basic level. 

There is a growing and disturbing amount of propaganda appearing in conservative and liberal publications seemingly for no other purpose to sell media.    The lack of research people of authority or influence conduct before weighing in with an, all knowing, summary is, in my opinion, inciting.    
Over the past week, I have stumbled on to two enormous articles with, an apparent, intentional misrepresentations of facts and reason.  


On September 18th, the Chicago Tribune, featured a page-1, Jon Yates, article on the plight of a suburban family who’s 17 year old daughter had coverage rescinded.   The article went to great length to imply that the carrier, American Community, acted abusively, in rescinding coverage for this child.   The article implied that American Community had a pattern of rescinding coverage for those with claims.    I decided to make contact with the carrier contact and learned that the company spokesperson had been berated with hate mail and wishes of her death.  


Understated and minimized in the article was that the parents had “forgot to write down” a few things like dizziness, fatigue, persistent cough, and high cholesterol  lab work even though the same parents were concerned enough to repeatedly go to the doctor about those conditions.    The writer went on to say that the insurance company premium was $130 per month, while guaranteed issue insurance from Illinois Chip averages $7666 per year, and as much as $16,000 per year, implying that American Community baited the applicant into applying with the intent to cancel if a problem comes up.   The Truth was that the child could have paid as little as $157 per month for coverage with no preexisting condition clause and no more than $257 for the best plan offered by the State.    Lastly, while subtitled that “Illinois Director concerned about carrier’s number of rescissions”, it made small mention that the Illinois department of Insurance upheld all 11 of the rescissions over the past two years. 


On September 17th, A UPS Syndicated columnist pulled the same thing.  Titled “Pray for insurance”, she took issue with the insurer for cancelling her coverage after a cancer claim.  She wrote “It had obviously stayed up nights searching out a reason to rid itself of this tiresome journalist”.   (Wow, that would be terrible if a carrier did that.)   Oh yeah, by the way, the reason they cancelled her?   BECAUSE SHE WAS NO LONGER AN EMPLOYEE AT THE FIRM.  She had been terminated as an employee and was only an independent contractor, and no longer eligible. (Maybe her firm wrongly terminated her too)   She argued that she has paid for insurance for 50 years and thus apparently was entitled to coverage at a firm where she no longer was an active employee.  If she thinks she is an employee there and entitled to benefits, it’s an issue for the IRS.


The writer, Georgie Anne Geyer, went on to say that she was offered COBRA, which she referred to as “the government’s interim insurance system” for $454 per month, then Medicare, and a Medicare Supplement.    Well, Ms. Geyer, COBRA is not a government interim insurance system.   COBRA is Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985.  It allows you to stay on your employer’s health plan for up to 36 months after you leave your job.  You pay a 2% premium over the cost to the employer, with that 2% covering the administrative cost to collect money for you and administer your benefits.   Since you are apparently over 65, you received your coverage at an approximate 50% discount to the actual, incremental cost.   She went on to imply that because her 36 year old daughter has cancer, she may soon be out on the street if the insurance cancels her, which it hasn’t done.  She also incorrectly states that her daughter would not be eligible for Medicare, although 3 million people under age 65 are currently on Medicare.    This article is not news or opinion; it is a call to action, mob action.


While the 1st amendment insures the right of free speech, the Supreme Court of the United States has ruled in Schenck v. United States in 1919, and Brandenburg V. Ohio, in 1969, that inflammatory speech directing or incenting imminent and lawless action, was not protected by the 1st amendment rights.  The town hall meetings have shown that health care is a topic that results in visceral, emotional, and at times, violent actions.  It can’t keep going this way.  From my view, I would rather discuss proactive change than discuss reactive defense. 


 

Rep. Joe Wilson Disgraced his Office

Representative Joe Wilson summarized the lack of respect that exists in our country towards those with other opinions by yelling at President Obama “Lie” during his address to a Joint Session of Congress and the nation.  


While I am not prepared to offer commentary on a bill that has yet to be proposed, I would like to address the issue that Rep. Wilson addressed in that one word.   Rep. Wilson yelled when President Obama said that there would not be benefits for people here illegally.   The rudeness aside, was he right? 


HB3200 specifically states that House version of the health care bill explicitly prohibits spending any federal money to help illegal immigrants get health care coverage. Specifically the bill states “Nothing in this subtitle shall allow federal payments for affordability credits on behalf of individuals who are not lawfully in the United States”.  So what’s the issue?  Well… with individual insurance guarantee-to-issue with no preex clause, AND a carrier may not rescind coverage, an illegal immigrant would be permitted to participate and benefit from that law.   Ok, ok. That’s not a smoking gun that justifies the rudeness.

What is not in the bill is a provision or consideration that enables or outlines how that prohibition would be enforced nor is there any requirement for people to prove that they are here legally before receiving benefits.  Perhaps this is an omission that will be corrected, right?   Well….. A Republican amendment that would have required people to verify their legal status and eligibility for benefits was defeated by Democrats who argued that these requirements would be too burdensome for people entitled to benefits.   


Since I wasn’t in the Ways and Means committee meeting, nor have I personally reviewed the minutes of the meeting, I am going to source the defeated amendment statement:   (ERICA WERNER, Associated Press Writer Erica Werner, Associated Press WriterThu Sep 10, 6:00 pm ET)


Conclusion:  Rep. Joe Wilson, Rude and highly inappropriate under any circumstance.   Accuracy?: You tell me. 

Senate Health Care Bill Summary, Leaked

The Senate Health Care Bill has not yet been published, but a summary of the bill has been leaked.   The bill is probably passable with minor adjustments and lobbying efforts.  It will likely get the universal support of conservative Democrats, even some Republicans.  Those numbers will probably be larger than the number of defecting liberal Democrats who will undoubtedly be against the bill.  (Having Liberal Democratic objection, even boisterous at times, is a smart political move to gain Centrist support.)



I have argued since the introduction of HR3200 that the reason for the quick legislation was not about true reform, but rather addressing two issues that can’t be openly discussed in Washington. (ref:  Why is this happening now, so quickly? Is there a secret? 7/17/09). Those reasons?  A tax increase and rescission of the Medicare Revitalization Act of 2003, MRA 2003 was designed to slow medicare growth rates.  



Here are the two items that start in 2010: 



  • The scheduled 21% reduction in Medicare physician payment rates in 2010 would be replaced with a 0.5% increase. 
  • Big Business Fees – Clinical Labs: $750mm per year fee,  Big Pharma: $2.3 billion per year,  Medical Device Mfg.: $4 billion per year,  Health Insurance companies: $6 billion per year. 

Highlights of the rest of the bill, with specific interest to those with group or individual insurance plans, starting in 2013:



  • It will make individual insurance guarantee-to-issue in 2013. 
  • Fines for individuals without insurance starting in 2013.  Up to $3800 per family. 
  • Age control pricing: – no more than 500% variance from age 20 to age 64. 
  • Group pricing band mandates: – (1-50 ee’s) changes phased in over 5 years starting in 2013.   9 year phase in for groups of 50-100. 
  • 2 year tax credit for groups with less than 25 employees.   Up to 50% of cost. 
  • Employers with more than 50 employees not offering coverage pay $400 fee, per employee. 
  • Employers with more than 200 employees must enroll the member in their health plan unless other coverage can be proven. 
  • 35% Surtax on group medical benefits providing more than $8000 per individual, $21,000 per family.  Value of benefits will be disclosed on w-2.
  • Cross State Exchange to purchase coverage for individuals starting in 2015. 
  • Standardized benefit minimums.
  • Standardized coinsurance plans, from 65% minimum to 90% maximum. .Plus a “young invincible” plan to allow for low-cost coverage for young people.  
  • Maximized out of pocket limits not to exceed HSA limits. 
  • Co-ops – to allow buying power.  Incentives and funding for non-profits to form co-ops.
  • Medicare Advantage Plans remain.
  • HRA, HSA, and Flex Spending Accounts limited to $2000 max.  
  • Penalty on using HSA money for non medical expenses increased from 10% to 20%.

A summary of Health Care Reform with key articles

Tomorrow President Obama goes on national TV and before a joint session of Congress to re-clarify his position on the necessity of meaningful health care reform.   With two months of fear mongering from the right, and industry nationalizing calls from the left, I believe that President Obama will attempt to deliver a more centrist view of the issues and the needs as he sees it.  


 


There is so much misleading and exhausting information out there that any clear message may be successful if only because centrists are tired of the rhetoric and hyper-claims from both hard liberals and staunch conservatives.  


 


With a new direction at hand, this seems like a good time to review the key articles on the blog so that you can follow the progression of the arguments and assess how accurate my view has been. 


 


As stated here before, the goal no longer appears to be about fixing health care, but rather SAYING that you fixed health care.   Both sides will give themselves a hearty pat on the back claiming victory, and very little will be accomplished except a tax increase and the undoing of the 2003 Medicare Revitalization Act.  A villain will be identified and addressed (insurance companies), but ultimately this won’t mean much to many.   I believe that we should be debating a Single payer system versus an open market, self limiting system that would manage costs by incenting physicians to lower their cost structure.     


 


Here are my key articles from the past couple of months. 



  1. Why Health care reform is being pushed so hard ( July 17th)  : http://bloghealthinsurance.com/2009/07/17/why-is-this-happening-now-so-quickly–is-there-a-secret.aspx
  2. A view of insurance under HR3200 and why so many centrists ended up objecting (July 21)  http://bloghealthinsurance.com/2009/07/21/my-outlook-of-how-the-health-reform-bills-as-they-exist-would-work-on-a-year-to-year-basis.aspx
  3. Who is uninsured?  It will be interesting to see who is really helped by the next legislative piece.  ( July 22)  : http://bloghealthinsurance.com/2009/07/22/healthcare-reform-would-have-to-include-immigration-reform.aspx
  4. A market study of the Ambulance industry under HR3200 ( August 4th) – http://bloghealthinsurance.com/2009/08/04/the-public-option-flash-point.aspx
  5. My summary of what changes would make a significant difference in reducing costs for all.   This bill, if passed would reduce costs for all and make insurance much more affordable to those with income limitations.  (August 19th).  – http://bloghealthinsurance.com/2009/08/19/health-care-reform-part-2.aspx

 


 


 

Health Insurance Co-op / Exchange. The Debate for Next Week

Next week President Obama will address a joint session of Congress in an attempt to get some form of health care legislation passed.   It’s reasonable to believe that liberal democrats will be miffed that President Obama may not publicly support the Public Option anymore.  Instead he may press forward with a more limited scope plan that will address some of the major issues.      


 


Likely to get enough support to pass will be, even with some bipartisanship, will be:



  1. Elimination of the preexisting condition clause.  (In general a good thing, but will raise costs for all since less healthy people will now have easier access to coverage.   Some form of non-enforceable mandate to have coverage will accompany it.   If structured incorrectly or without meaningful enforcement, there could be substantial incentive to go uninsured until you need it, counteracting    In addition, it may create an unfunded mandate to States.
  2. Revocation of upcoming Trigger reductions in Medicare reimbursement rates to providers.  Effectively killing the Medicare Modernization act of 2003. (Again, a necessary reality.  Designed to moderate Medicare growth rates equal to the rate of overall inflation, the principals were ill-conceived and have resulted in cost shifting as opposed to cost reductions)
  3. New Federal Subsidies for lower income people to get health insurance.  (With the higher cost of coverage, will it help?)
  4. Higher Taxes to pay for items #2 & #3.

 


If the “public option” is abandoned in favor of, THE HEALTH INSURANCE EXCHANGE, the savings in premium will be offset by non-covered expenses.  The argument that opening up insurance across State lines will lower cost, is virtual certainty.  The reason that the cost would be lower probably won’t be as openly discussed. (At least not by Republicans)   In an interstate insurance situation, the States with the least amount of benefit protection and greatest amount of tort regulation are sure to dominate.  (A sub-desire of conservatives to impose tort reform)  For example, If Illinois mandates mammograms with maternity and fertility coverage and Nebraska has none of those mandates, the Nebraska plan would be much cheaper.    Continuing that line of thinking, if you have guaranteed access to coverage, people will flock to the lower coverage parameters.  If higher-coverage insurers only attract only high-users there is no base of membership to spread risk around and the cost of better coverage will become unaffordable or disappear altogether.  Liberal Democrats are sure to argue against an Exchange, and they are probably right to do so.


 


The second new term, also favored by Republicans, would be buying Co-ops.   The Congressional budget report showed that total insurance Administrative costs range from 7% for large groups to as much as 32% for individuals.    The 32% number is skewed to high number because of the minimum fixed cost involved in maintaining a single policy.   When you see an ad on TV showing a premium of $60 per month, an administrative cost for that policy @ 32% is about $19.   Conversely, if a group premium is $1200 per month for the family, 7% is $84 per month.    Individual plan premiums are consistently priced, significantly below the average premium of a group health plan.      In a new structure, those rural areas and areas where the average income is lower may have more limited access to benefit advisors who can no longer afford to provide them information on choices available.   Co-ops also would offer more opportunity for abuse and misrepresentation of fees.  For example a Chamber of Commerce could form a co-op, charge management or association fees in addition to administrative expenses from the insurer, providing less visibility on the true administrative costs to the member. 


 


If limited to a choice between the Public Option, The Insurance Exchange across State lines, or the Co-op, I favor the co-op.  I make that choice because it would not diminish a State’s right to protect its citizens. Ultimately, none of the options above are going to lower costs of healthcare, although all the plans offer some legislative correction to some market issues that have not effectively self corrected.     

Health Reform on the Wrong Track

While the status of the “public option” is still unclear, it does seem that both parties seem to be more focused on discrediting each others ideas and plans, rather than promoting things good for the American People as a whole.   The desire for an acceptable plan to a greater number of people may lower the common denominator to make any reform different, but not substantively better.    


 


The unfortunate reality is that science and technology have advanced beyond the point of being able to pay for it.   The Congressional Budget Office report in December 2008 on health care, which contains lots of conflicting data, did point out that by the year 2082 (Yes, 2082), that health care will cross the 50% of Gross Domestic Product line.   A laughable statistic, but indicative of the path we are on.    It is a reality that some body, either public or private, will have to ration care at an ever increasing level.   In that both State and local governments are built to say “Yes” instead of “No”, and we elect legislators based on the amount of “YES” that they bring back to each of us,  I prefer that a for-profit system as a better way to control costs.   The example of true market-forces health care is cosmetic surgery.  In general, procedures available 10 years ago, cost far less today.     In a competitive system with multi-carriers, if carrier “A” says No, you can move to carrier “B”.  In a public system, you can’t move from the US to France or Canada. 


 


The Public option, as presented in HR3200 does not offer cost control or provide reason or incentive for providers to be more price competitive.  It does not lower their costs to provide service. It does not reduce their collection costs from members. The public options main driver of viability is the belief by many, with limited statistical evidence, that the government can operate more cost-effectively than private industry.   In addition, the Public Option shifts more people to mandated reimbursement rates below provider costs, forcing those providers to either raise prices to non-Public option members, or to drop from providing service to members with a government plan.   Gerald Ford’s WIN campaign in 1974, (Whip Inflation Now) designed to temper 6% inflation, proved that forced government price shifting, and delays of market forces, have devastating counter effects later.  (Inflation averaged 10% per year for the next 8 years)


 


If the goal of health reform is to offer better access to health care AND control costs, the Public Option is the wrong flash point.    The real debate should be between a single payer system and a free market system as described in http://bloghealthinsurance.com/2009/08/19/health-care-reform-part-2.aspx