Author Archives: bloghealth

A vote was taken, and you lose

The number of updates to my Blog has dwindled over the past couple of weeks.  The Truth is that I just can’t keep up with the silliness from D.C.  


·         11% of Federal Employees entitled to the same medical plan that Congress and the President have, are uninsured.    Can’t afford it. 


 


·         The much maligned October 2009 study from PriceWaterhouse showing that the impact of health insurance costs if the bill passes, for a family, rising $4,000 more than if the legislation was not passed has caused trouble for the industry.   I agree that the study was overkill and not without questionable assumptions.   What I know is not overkill.  Without gender based pricing, which will no longer be allowed,  and with maternity benefits mandatory,  a 29 year old male in Chicago will instantly see his premium go, for a $500 deductible plan from a current $197 to more than $325 per month.   That assumes no inflation, no change in reimbursement rates to doctors, stable premiums, and a 15% discount for everyone having the benefits.   


·         Hay Dare!   The Canadian System – 


o   In 2005, the Supreme Court of Canada struck down the ban on Private Insurance stating “”Access to a waiting list is not access to health care,”.  I Suspect that any health care reform in the US will give you guaranteed access to a waiting list. 


o   In 2006, the national health policy goal, of 75% of those needing bypass surgeries. getting the operation within 180 days of diagnosis, was not even met by two provinces.  


o   Here’s an interesting Canadian Company. http://www.timelymedical.ca/about-us.html.  Why do they exist and can I get a US franchise?


o   The Code word to get an MRI in Canada is “Meow”.   See this Sept 2009 story from ABC’s 20/20 on YouTube.   


·         Medicare Advantage Plans – This is when seniors opt out of Medicare to take a private insurance plan that gives them all the benefits of Medicare plus additional benefits like drugs, dental, vision and hearing benefits.   A senior on “Medicare Advantage” Plans pays little or no premium to the insurer.  They don’t pay the $97 for Medicare Part B, they don’t pay the $125-250 for a Medicare Supplement.   These plans cost the government 14% more than straight Medicare.   That 14% will be cut, and benefits to those members will be cut.    It saves the government $100 billion over ten years, but it will result in those least able having to pay as much as $300-$400 month extra to replace those benefits.    


 


·         Cut the Deficit by $81 Billion says the CBO – What I don’t understand is why $900 Billion in new taxes, higher medical premiums to the public, and $500 billion in Medicare Cuts don’t result in $1.4 Trillion in deficit reduction.   How about we just cut $500 billion from Medicare and cut the deficit by $500 billion.   If that was doable, it would be done.  It’s not.   The $81 billion assumption assumes that in 2011, Medicare reimbursement rates will be reduced by nearly 26%, and that those reductions will stick, year after year.  Uh-Huh! 


 


·         Reasonable People will cancel their health Insurance December 31, 2012.   Get your letters ready.   


o   The president of the National Association of Health Underwriters, an organization representing more than 100,000 health insurance agents, on October 14th, 2009 told his audience that costs for insurance will rise at a greater rate than without legislation.   He also told that audience that he believes that reasonable people will continue to have health insurance after reform legislation.   I agree that that costs will rise.   I do not agree that reasonable people will retain health insurance.  


o   Assuming you pay for your own insurance, and currently pay about $15,000 per year in premium, why would you continue to pay for insurance?   If you don’t have insurance, you will pay a $600 fine, maybe.  (Maybe because the excise tax is only collectable on tax refunds and they will not accrue penalties or interest).  If you need insurance, you can get it, ON DEMAND, without a preexisting condition clause.   Hmmm… Spend $15,000 even if I don’t need it, or a $600 tax…. When I need it, I am guaranteed to get it.  Well, I must have missed the continuing education course that says “reasonable people” is synonymous for “sucker” in insurance-eze.


·         Health Insurance executives limited compensation.  The new health care bill will include a provision that limits the tax deductibility of wages for health insurance executives from earning more than $500,000 per year.   And who can blame Washington for that?  After all wasn’t it the health insurers that took $700 billion in bailout money?  Wait, that was banking.   Or was it that they went bankrupt and the government had to subsidize a Cash for Klutzes program?   No… not them either… Well it must be that they are responsible for the mortgage mess?   High interest rates?  Soaring oil prices?  Gotta be something right?      In a related story, the average Major League Baseball player salary rose to over $3,000,000 this year.   


 


Well at least insurance agents will exist – In early bills; Insurance agents will be replaced by Government “Navigators”.   No it’s not a big Lincoln SUV.   It’s the term for the new 800 number outsourced to lots of “BOB’s and SUE’s” to help you with your insurance options.  That provision looks like it’s out of the current bills.   At least people like me will be here for a while to help you send in your cancellation letters to the insurance company.   (But not until 12/31/2012!)

Look for the “Public Option” to again gain traction in the next few weeks.


 


 

Major Shift on Health Care Reform?

Is a major shift in Health Care legislation direction afoot? 

Over the past couple of weeks, Health Care legislation has moved down the list of today’s top stories.  
Thanks, in part, the Health and Human Services “Gag Order” prohibiting insurance companies from telling their members that the $124 billion cut in financing will lead to a reduction of benefits,   http://abcnews.go.com/Video/playerIndex?id=8645242  for the lack of recent discourse.   It’s not allowed.   ( If you didn’t know about that you are encouraged to see the ABC news story link)

After ABC’s Stephanopoulos took on President Obama’s definition of the word “tax” on his Sunday Morning News Program, the Senate Democrats have modified one of the key components of the Baucus bill lowering the “tax/not a tax penalty for not having insurance from a maximum of $3900 to $1500-ish (depends of the report).    Aside from the estimated $30 billion in New Taxes, It appears that the reactive consequences of the bill are now being considered.


For purposes of Illustration, I will use Chicago area pricing, and assume 0% inflation.  


·         Currently a 28 year old male, non smoker,  can get a $500 deductible 80/20 health plan from Blue Cross with a $20 copay and Rx card for $ 223.31


·         A 28 year old female, same situation, without maternity would pay $292.00


·         If that Female wants maternity coverage, her cost would be $642.98


Under the new law, Males and female would be charged the same price and maternity would be mandated coverage.   Thus under the new bill, all 28 year olds, would pay $433.15.   This nets out to be a 94% increase for males, and 48% for females over current rates.   


While you might argue that the cost for maternity would come down with more people in the pool, the question remains “why would anyone buy insurance?”.   There won’t be a larger pool.  


Under the new law, an individual would have guarantee issue, no pre-ex clause, access to insurance.   An individual could choose to pay a “tax/no tax” penalty of $500-$750 per year and then,  IF they needed insurance, buy coverage at the hospital.    Reasonable people will not buy insurance.   There is no reason too.   Get it only if you need it, and then you have guaranteed access with no pre-ex clause.   Wow!  That’s Great, huh?  


Under the bill, the only people with insurance will be the poor and those over age 65 on Medicare.   Currently those that have the means, who are uninsured, are viewed as practicing bad behavior.   Under the new law, you would be practicing foolish behavior to have insurance.   It appears that Washington is beginning to recognize that consquence.


So who wins here?   Apple, of Course !   200 million new apps to auto-enroll you in insurance if you need it.   There’s an App for that!


 

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


 


 

A Foundation for a different health reform option



Although HR3200 may be dead, we are at an important crossroads that calls for reform activists to try again.  As a fervent Capitalist, I’d like to propose the foundation of what I believe is the cornerstone for healthcare reform that will control costs without limiting choice.

The primary reason that HR3200 and virtually every other bill that is being crafted will bring nothing but complaints is because it perpetuates the single most flaw in our US health care system, Hyrdraulic funding.   For the past 30 years, the primary goal of Medicare, Medicaid and Private Healthcare companies was to obtain “discounts” from the cash price.  This elimination of this system is the contingent and primary pillar of my reform proposal.    

Do away with discounted hydraulic funding of healthcare models.   Under my reform proposal, provider can charge what he wants, within standard deviation averages, and must charge that same amount to the member or insurer regardless of the type of insurance the member has or doesn’t have.


Using existing Medicare Pricing models and PPO network data, all providers are assigned a rate category based on the rates that they charge for a procedure.  Rate Categories are separated into 6 rate tiers with additional sub-regional adjustments.    The provider would be given notice of their rate tier as determined by their current charges.   The provider would be notified of their preliminary tier 90 days prior to the effective date of the program.  The provider would have 30 days to review their tier and request a change of tier.  If they do not request a change, the provider will have that rate tier starting 90 days later.   Forty five days prior to the beginning of the rate period, providers will be sent their final charge scale which will recalculate the scales based on provider tier change requests.


 Percentage of Providers will be divided into rate tiers in the following ratios:


·         Tier 1: 25%, Tier 2: 20%, Tier 3: 20%, Tier 4: 18%, Tier 5: 15%, Tier 6: 3%.


 


Providers priced in Tier 6 will not have any pricing limit or average charge, but will be classified as Private Healthcare providers.   If the provider is a tier 6 provider for the following year, similar to the Section 4507 declaration as provided under the 1997 Balanced Budget Amendment, the provider may not accept reimbursement from any insurer.  In this plan, the rule would extend from Medicare only, to all public or private insurers, except under emergency situations.  To see a Tier 6 provider, the consumer must sign a private contract with the provider acknowledging that no insurance will pay any part of charges from that provider.  A provider found to be in Tier 6 may elect, at any time, to be a Tier 5 provider.  If that election is made, the provider may not revert to Tier 6 for a period of three full years. 


A provider would be able to request a mid-year rate tier change at any time, with a 90 waiting period.   A provider may only request a change of tier once every 5 years.   No more than 25% of providers in any tier may change from their tier from in any given year to prevent pricing model manipulation.   Each provider would be required to prominently post their rate tier.


Under this new system, both Public and Private Insurers would have fee-certain levels to insure and members would clearly understand their obligation and share of costs. 




Medicaid and Medicare reimbursement rates would be set at 100% tier 1 levels.  Any member on Medicare or Medicaid would be able to see level 1 provider and receive 100% reimbursement for services provided, eliminating the need for providers to collect any additional funds from their members and reducing their cost to provide service.    This would allow all consumers on Medicare to be able to choose cost effective providers and receive 100% coverage with no deductible to 25% of providers.  If a low income Medicare recipients did not have a supplement, they could have thousands of dollars of out of pocket costs even if they tried to go to lower cost providers.  This puts additional burden on not only the member, but the provider who must make up the lost revenue on others.       


Medicare would reimburse Tier 2 providers at 80% after a small deductible, similar to current Medicare structure with declining percentages of reimbursement and increased deductibles, based on the rate tier of the provider, through Tier 5.  Members could then purchase supplemental insurance, based on their needs and desires to have insured benefits.  Medicaid eligible individuals would then be able to purchase for little or no premium, depending on % of Federal Poverty Level (FPL) a Medicaid policy covering level 1 providers.    Insurers can compete for Level 1 policies with reimbursements similar to Medicare Part C exchanges. 


Private insurance companies would develop products for members based on reimbursements at levels of providers.  A plan might be $5 copayment at Tier 1, up to $50 at Tier 5.   Deductible might be $100 at Tier 1, to $2500 at Tier 5.   


A governmental health board would set maximum out of pocket limits for insurance policies  to make sure that insurance companies are forced to provide benefits that do not leave providers with large receivables. 


Why this would work.


Currently insured members have no direct control to seek out cost effective providers.   Under a posted number system, a member could seek out, and directly benefit from, seeking out lower tier providers.   If a member needed an MRI, they might have to wait a couple of weeks to get a level 1 scan on a non-emergency basis, but could get a level non-emergency scan that day.  The insured member has control and Medical providers could decide on priority.    


Providers who want to be busy will feel pressure to lower their operating costs without reducing service.    The argument that the “free market” system hasn’t worked is flawed in that we do not currently have a free market system.  We have a system dominated by insurers’ public and private who cannot incent members to choose less costly providers.  Low income and Medicare members are guaranteed to have at least 45% of all providers available at coverage levels at or better than current levels.   


Our current hydraulic funding of healthcare with phony pricing schemes designed to maximize reimbursements has driven providers to have more finance people than medical people on staff.  Anyone who has ever had an inpatient hospital expense where the bill might be $20,000 to start and is then discounted to $4000 by Medicare or private insurers, knows that this system is broken.


Guaranteed Access to Individual coverage.  Individual Pre-existing Condition elimination, No Mandate.  Incentive and Tax Penalty based:   Both are implemented conditionally.  


We currently have an estimated 12 million uninsured that are entitled to free or minimal cost subsidized healthcare.   It is not reasonable that all individuals purchase insurance or enroll in low income programs.   Additionally an additional, 7.3 million uninsureds earn in excess of 400% of FPL. (Source: US Census Bureau)    Without a single payer system financed by taxation, a system must address the 3-4% of the population that will continue to be uninsured or may try to beat the system, even with tax penalties.    >>


As a result, the program would offer all uninsured’s an opportunity for guarantee to issue insurance with an initial 24 month pre-existing condition clause.  A waiver of the preexisting condition clause can be elected at the initial enrollment period by selecting the preex waiver fee.    The preex waiver fee is a 24-month rate surcharge of 15% above standard rates.  The 15% preex waiver fee is only available during the initial year of the program and applicable only to those without current insurance.  


Each person will be offered a once in a lifetime waiver of their pre-existing condition clause.   If an individual does not obtain individual insurance or is enrolled in group insurance after the initial period, and if they find themselves uninsured in the future, they exercise can elect the once-in-a-lifetime waiver.   The waiver cost starts at 5% in the first month after their initial enrollment period.  If in the future, if the member is uninsured and attempts to get insurance, electing the preex waiver, they pay a 5% surcharge plus additional 0.5% surcharge for every month they were uninsured,  starting at the initiation of the program, continuing for 10 years. 


The member does not have to elect the preex waiver and can wait for an underwriting decision before electing the waiver.  The insurance carrier may offer coverage without a preexisting condition clause without the waiver election.   If coverage is offered to a previously uninsured member, the carrier may not rescind coverage as they can now, but may retroactively assess the surcharge if the member misrepresented their prior health history.  If the member rejects the assessment, the carrier may rescind coverage under the same two year period that they can now.  >>


If someone was uninsured at the initiation of the program, enrolled in coverage, and wanted insurance with no preex clause at the program initiation, and if standard premium was $100, they would pay a $15 surcharge for 2 years.   If that same person waited for 2 years and wanted a waiver of coverage, you would be 24 months after the initiation period, at 0.5% per month; you would have 12%+ base 5% or 17% surcharge for 10 years.  The surcharge would follow the individual even if the individual changed individual carriers.  If the member obtained group coverage and remained continuously insured during the term, the surcharge would not extend to the employer policy, and the time would continue to accrue during that time.  If and when the individual loses their group coverage during that 10 year period, the surcharge would continue until the 10 years is up.  Pricing for individual policies can range from 5% above or below standard pricing, based on medical underwriting, exclusive of uninsured, time-surcharges.  An individual may bypass underwriting by electing the maximum medical rating of 5%. >>


Every year an individual will be allowed to elect new coverage without evidence of insurability during an annual open enrollment period.  The annual election period would be based on the surname of the individual to spread out the enrollment month.  If you wish to change carrier in between your annual open enrollment period, you may, but you would be subject to the underwriting 5% rate up or discount. The insurer may decline you except during your open enrollment period.   In addition, an insurer may decline your ability to buy enhanced coverage but must offer you comparable coverage.   State insurance boards would decide what is considered comparable coverage between carriers. >>


Individuals losing group coverage may elect comparable coverage, with no preexisting condition clause or being subject to time-surcharges, unless previous time-surcharge exists, as long as they elect coverage within 63 days of the loss of coverage.   Coverage would be retroactively effective to the day following their loss of group coverage.  >>


Uninsured Income Tax Penalty:  Individuals without insurance would pay a 4% surtax on every dollar of income earned, per person in the family, up to 8% of income to the Federal Health Pool.  If you are uninsured during part of the year, the surcharge would be of .5% per month, per person, up to 8% maximum.     

Employers and Group Health Insurance –  Employers of all sizes are required to contribute to employee insurance benefits.  No exceptions.  The minimum wage will be lowered by $0.50 per hour.   Employers are mandated to contribute the greater of 5% of gross earnings, or $1 per hour, towards healthcare benefits for their employees up to maximum $500 per month, per employee.   An Employer is not restricted from providing more than $500 per month in employer subsidies.   This benefit level is applicable for all employees working more than 20 hours per week, or earning at an annual rate in excess of 125% of Federal Poverty Level.  


For employees working less than 20 hours, the employer must contribute 5% of their income into the federal health pool. 


Where group insurance exists, and is not elected by the employee, regardless of reason, a tax surcharge of 2% of that employee’s income must be paid into the federal health pool.

(Example 1:  Full time employee, 170 hours per month, earning $2,000 per month:  5%=$100,  $1 hour=$170,  employer contributes minimum off $170) 
(Example 2:  Full time employee, 170 hours per month, earning $20,000 per month: 5%=$1000 per month, but maximum required is $500.  Employer must contribute at least $500, but may contribute more.) 
(Example 3: Part time employee: 10 hours a week, $8 per hour, 43 hours per month:  Employee not eligible for benefits, employer pays $17.20 into health pool)
(Example 4:  Full time employee: Group plan exists, waives coverage for any reason, earns $2,000 per month:  Employer pays 2%, $40 per month into federal health pool).

>>


Employers who do not provide health insurance benefits pay the greater of 5% of gross earnings or $1 per hour towards healthcare benefits for their employees up to a maximum $500 per month.


Group Health Insurance can be underwritten by carriers with a plus or minus 7.5%maximum rating based on medical conditions within the group.   A group medical plan may have no more than a 6 month preexisting condition clause. The preexisting condition clause is not applicable for those that had prior coverage, with less than a 63 day gap of coverage.   Individual and group coverage is creditable towards that 6 month preex period. Employers may not have a waiting period for coverage in excess of 60 days plus the time period to the next monthly period that the employer has coverage.  >>


Subsidies:  Individuals and families are eligible for direct to insurer subsidies in declining scale up to 400% of Federal poverty level.   Those subsidies are available to employees who elect employer or individual coverage.    >>


Age Band and gender pricing applicable to groups and individuals:  No more than a 150% price difference may exist for the lowest cost individual to the highest cost individual based on age and gender, per plan.   If a 20 year old male was $100 per month, a 64 year old male would be no more than $250 per month.   If the 20 year old male was $200 month, the same plan could not cost a 64 year old more than $500 per month. >>


The Public Option: Form an Agency of the US government in corporate structure like Fannie Mae.  Must operate and provide benefits in all regions.  The plan pays a 5% of premium for members, to the residential State of the member to offset regional costs and loss of employment costs.   Contingent on the existence of mandated pricing tiers, the government option can write their own rules and plan benefits competing on a level playing field with private insurers.   As a privately owned government backed corporation, it would have a profit requirement.  >>


Health Insurers whose claims payments average less than 77% over 24 months pay a tax surcharge equal to 35% of the difference to a 77% loss ratio.  >>


Plan limitations and regulation:  Each state can mandate their own coverage requirements.  Maximum out of pocket exposure for price level 3 providers may not exceed 10% of the FPL per individual.  Dependent children who are unmarried, are eligible for parent coverage until age 26 regardless of student status.   >>


The Federal Health Pool:  Will reimburse provide additional revenue to Medicare and Medicaid recipients.    


I believe that the net effect of this plan would be:>>


·         Lower cost healthcare.>>


·         Simplified pricing by providers. 


·         Reduction in provider overhead due to simplified filing and reduced collections cost.


·         Protection to insured employees from an employer selecting plan benefits that they can neither afford premiums or afford to pay their out of pocket expenses to providers.


·         Incentives to the consumer for choosing more cost effective providers but the opportunity to see any provider.


·         Incentives to providers to choose their market and charge a fee structure of their choosing.


·         Guaranteed access to insurance for individuals and employers. 


·         Reasonable protection to those that make a mistake or are unintentionally uninsured.  Penalty to those that try to beat the system.


·         Insurance funding for the poor spread out.


·         Incentives to employers to not only offer insurance but incentives to get participation and offer cost effective plan options.   If benefits are too rich, participation may suffer, and the employer will pay additional taxes as a disincentive to offer excessive benefit programs. 


·         Reduced cost structure for employers who already offer benefits to employees. 


> >


Who will probably object to this plan.  >>


·         The Government –  By no longer being able to pass on mandated, significant provider reimbursement discounts, Medicare will no longer have private insurance subsidizing their costs.     (They will cover those additional costs by additional Health Fund Revenues)>>


·         Those that believe that the government should have no rules except Constitutional requirements.  >>


·         Uninsured Wealthy individuals. >>


·         Ultra High income / Net worth seniors who may find their Medicare supplement costs increase. >>


Moderate Republicans and Democrats need to have an alternative.   I look forward to my subscriber’s criticisms and input to improve this broad outline.