Friday, October 30, 2009
This announcement contains the usual annual increases in premiums and deductibles. For 2010, the Part A hospital deductible reaches $1,100 per admission. The Part B ambulatory deductible is $155 per year. The Part B monthly premium increases 15% to $110 monthly per participant. (The Part B premium has increased by 41% in just the past 5 years – from $78 to $110. Wow.)
It’s important to recognize that in setting the 2010 Part B premiums, CMS has followed current law. The law includes certain limitations on growth of physician reimbursements. The $110 rate for 2010 reflects these limitations. For 2010 the limitations would reduce present physician reimbursements by 21% (!) Congress has waived these limitations in each of the past 5 years and is expected to waive them again for 2010. Why is this relevant? Because waiving the limitations will require a recalculation of the physician cost, meaning that both the Part B deductible and the Part B premiums will be higher than shown here. Wonderful.
The remainder of this post contains a brief summary of Medicare benefits for 2010. If, or as, you scan this summary (I know, it’s boring) please ask yourself: "would I want to be covered by THIS plan, at THESE rates?"
1. Medicare has many deductibles, all of them are increasing. Values for 2010 are:
a. Part A inpatient deductible = $1,100 per confinement.
•Inpatient benefits are limited to 150 days per confinement.
•Medicare pays inpatient benefits at 100% up to 60 days per confinement after the $1,100 deductible
•Medicare requires a $275 per day deductible from 61-90 days
•Medicare requires a $550 per day deductible from 90-150 days.
•After 150 days – no coverage
b. Part B Medicare deductible for all other types of expenses = $155 per year
2. For these other types, Medicare pays 80% of allowed expenses after the deductible
3. Medicare does not limit the residual expenses (the 20% that you must pay)
4. Medicare will continue to reimburse 80% regardless how large your expenses may grow - and you will continue to pay your 20% - no matter how large that may grow.
5. Medicare does not have a health reimbursement or health savings account.
6. Medicare contains no limit to the share of your own medical costs that you must pay in any year
7. Preventive care is subject to the same deductible and 80% reimbursement
8. Medicare does not cover retail Rx – no prescriptions – unless you buy Part D for an extra premium
9. Medicare does not reimburse any expenses incurred outside the U.S.
12. The Medicare gross premiums (before subsidy) are $461 per month for Part A and $442 per month for Part B, a total of $903 monthly or $10,836 per person, per year. This friends, is what Medicare COSTS.
The Medicare benefits may seem, well, skimpy compared with the relatively high premiums. On the other hand, an older population is expensive to insure, given the numerous chronic conditions and other health issues that people accumulate over a lifetime. This cost is not decreasing, it is increasing. And the government’s response year after year is to reduce benefits (e.g., increase deductibles) and increase premiums - but not to attempt to manage the overall cost. What else could it do? Well, it could aggressively seek out rampant fraud; or implement specific disease-management programs; or help physicians and hospitals identify and eliminate wasteful cost in the system. That’s only three of many possibilities. Oh, but hey, I forgot – Medicare has such a wonderfully low expense ratio in part because it doesn't do these things.
Note: By law, for citizens and legal residents who have at least 40 quarters of Social Security earnings, Medicare subsidizes the cost of the premiums. For the typical Medicare participant, Medicare (i.e., taxpayers) subsidizes 100% of the Part A premiums, and 75% of the Part B premiums. As the result, the typical Medicare participant will pay about $110 monthly in 2010 for Part B. That's equivalent to 12% of the overall Medicare cost. Still, it's an increase of about 15% above the $96 monthly per participant cost of Part B for 2009.
Didn't think so.
But somehow, when it comes to health insurance, risk is suddenly a bad word? If we were to adopt rules which require healthy folks to pay the same as unhealthy ones, or men to pay the same as women despite having fewer claims, this would be acceptable?
Didn't think so.
But I'm not alone in this; the Independent Women's Forum recently surveyed some 800 of those females, and found something interesting:
"When asked the relative priority of healthcare to other issues, only 16% said healthcare should be top issue for Congress to address ... 51% of women are unsatisfied and 42% are satisfied with what they have read, seen, or heard about the proposals or legislation to change the way healthcare is covered and delivered here ... Most would prefer that any expanded involvement exclude them personally." [emphasis in original]
Three-quarters of those surveyed would prefer that their own healthcare be left untouched, or only slightly modified. What's even more telling is the reaction to the current meme that our health care system is in crisis: "43% of women say that Congress and the President should enact healthcare reform 'only when quality legislation is developed, even if it means there is no deadline.'" [emphasis in original]
It seems to me that if there was a groundswell of support for "leveling" that premium playing field, we'd have seen that reflected in these numbers, which we don't. "Leveling" those premiums, that is, removing the element of risk from the equation, changes everything. As I mentioned in the KHN article, "(i)f you don't base it on risk, you don't have insurance. You have income redistribution." I stand by that and, apparently, so do a lot of women.
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Thursday, October 29, 2009
The folks at Kaiser Health News found this for us.
Proponents of the Senate Finance Committee’s health care bill say the legislation will limit the amount that lower- and middle-income people must pay for health insurance to a maximum of 12 percent of their incomes.
But there’s a catch: The fine print shows that, over time, the premium costs could rise well beyond those caps. That’s because the cost of coverage would shift from a percentage of income to a percentage of the premium, no matter how high the premiums go.
That last line is revealing. "No matter how high premiums go".
Seems like we are back where we started.
But wait, there's more!
KHN also found this in the fine print.
As your premiums rise so does the cost of medical equipment.
The Medical Device Manufacturers Association is starting a $200,000 radio and print ad campaign aimed at stopping Congress from imposing more than $40 billion in taxes on their goods
Now, $40 billion may not seem like a lot to Washington types but we are the ones paying for it.
For a little diversion, the ARRA - COBRA benefit whereby employers are required to pay 65% of COBRA premiums for up to 9 months is about to expire. Kaiser Health News delivers the bad news on the REAL cost of COBRA.
"The government's effort to help workers keep health benefits after they lose a job could wind up costing WellPoint Inc. and other insurers dearly in the fourth quarter. Indianapolis-based WellPoint said Wednesday it expects a spike in claims from a money-draining customer segment that includes people who continue their employer-sponsored insurance coverage under the federal law known as COBRA. Many insurers already face declining enrollment and rising costs related to swine flu cases. The expected jump in COBRA-related claims would make a bad situation worse."
"All these factors likely will contribute to future rate increases. Insurers normally lose money on COBRA enrollment because the people who keep their coverage generally do so because they need it for ongoing treatments or illness. WellPoint, for instance, spends between $1.50 and $2 on claims for every dollar it collects in premiums.
Spending $2 for every dollar they take in is what Medicare does. Problem is, Wellpoint and other carriers don't have the ability to tax our children and grandchildren to pay for the loss.
The more the government meddles in the free market, the worse things become for all of us.
Smaller cars, bigger health insurance, Poppa Washington.
UPDATE [HGS]: Not to pile on [ed: yeah, right], but it appears that the wildly successful Cash 4 Clunkers program ended up costing $24,000 per car. And it also turns out that only about 20% of the total vehicles sold under the program wouldn't have been moved off the lot anyway.
I can't wait to see what ObamaCare, er, uh ... PelosiCare will actually end up costing us, and how many folks will actually receive appropriate health care.
One might be wrong:
"Multiple people are telling RedState that the Democrats are blocking the public from attending their health care conference on Capitol Hill."
If that's true, and it's certainly credible (if unconfirmed), then we'll ask again: "What are they hiding?"
(There appears to be actual video of at least one Republican congressional staffer being turned away)
Well, not the bill itself, obviously, but if they're not interested in at least facing the folks who'll be affected by this risky scheme, one may be justified in a healthy does of skepticism regarding it. And for good reason: it seems to me that there are 3 key political considerations regarding the viability of PelosiCare (one can't really credit/blame PresBo for this, inasmuch as he chose not to put forth his own plan).
First, abortion coverage. On page 109 of the bill, we learn that plans will not be required to offer this coverage, but may elect to do so. I think that will be a potential deal-killer with the more liberal members of Congress, since they've been pushing so hard for it to be a covered expense. On page 110, we learn that some federal funds will be used to pay for abortions, which would seem to be a deal-killer for pro-life Members.
Perhaps the most divisive issue in this regard pops up on page 147:
"Nothing in this Act shall be construed to have any effect on Federal laws regarding
(A) conscience protection;
(B) willingness or refusal to provide abortion; and
(C) discrimination on the basis of the willingness or refusal to provide, pay for, cover, or refer for abortion or to provide or participate in training to provide abortion."
It seems to me that this section alone would be a non-starter for the left-wing.
The second political "grenade" would be coverage for illegal aliens. Here, too, Ms Pelosi et al have been disingenuous: the only reference to this issue in the bill is eligibility for federal tax credits. I could find nothing which prohibited, or even discourage, illegals from participating in the Insurance Exchange itself. Without some kind of guarantee that illegals won't be allowed to buy an Exchange-compliant plan, it seems unlikely that moderate or conservative Members would go along.
The last, and of course most troubling, political issue here is the inclusion of a Public Health Option. We've already covered this extensively, I'll add only that this effectively sets forth a nationalized health insurance program. And since the public is largely opposed to such, I don't see how Members in, for example, so-called Red states could afford to vote for it.
Oh, one more little tidbit: how would you define a "young adult?" If you said "a 27-year old," you win a cheroot. Carriers (in both the group and individual markets) will be required keep them on their parents' plan, regardless of health. How much do you think that will cost?
Wednesday, October 28, 2009
The information gleaned took into account a number of factors which previous studies have not, including demographic and market variables; this is important because other studies basically studied national trends, which don't give as precise a picture. It's also critical to understand that these are based on actual insured populations, not a hypothetical one.
"In all of the 14 states ... ObamaCare would drive up premiums for the small businesses and individuals ... Young and healthy consumers will see the largest increases."
Those increases, by the way, amount to double and even triple the cost of current rates. One example they gave struck close to home: that of a young (well, relatively: age 25) male living in Columbus, Ohio (just a scant 75 minutes away from IB Central). This young man's current monthly premium is $52 [ed: based on the county, age and sex, and guessing at underwriting, I presume this would be a high deductible, HSA type plan]; under the underwriting and pricing provisions of both the Senate and House bills (i.e. guaranteed issue and community rating), this gentleman's premium would jump to $134. Adjust the benefits (because ObamaCare requires lower out-of-pockets and more first-dollar coverages), and the bill tops out at a whopping $157, almost triple the current rate.
Families will see tremendous cost increases, as well: in the example cited by the WSJ, a typical family of four would see their premiums double. What a great idea in a floundering economy.
Of course, naysayers will claim that this is simply another industry shot at "reform;" after all, their excessive profits are at stake. This ignores the fact that companies like WellPoint would actually benefit from these increases: higher premiums mean higher profits, and richer plans means higher renewals. But why let logic and common sense enter the picture now?
Something else that no one seems to be discussing is that none of the plans currently under consideration substantively address the primary reason that insurance costs continue to increase: higher medical costs. In fact, richer plans (with lower deductibles and more "freebies") will guarantee greater costs, since the demand on providers will increase dramatically.
As Bob says: Smaller cars, bigger health insurance, Poppa Washington.
Here are just a few examples.
That much talked about tax on "Cadillac" plans?
According to the Washington Examiner, if you carry a union card, you get a free pass.
Baucus is also weighing a tax based on the value of health care benefits that exceed a yet-to-be determined cap. A tax on benefits that exceed the cap by a mere $3,000 could amount to $750 in taxes annually for a worker who earns as little as $34,000, say experts.
But those union members serving under collective bargaining agreements would not be subjected to the tax, according to proposals under discussion.
Union workers enjoy some of the most extensive and costliest health benefits, and union officials complained their members would be unfairly burdened by a health care tax because their contracts cannot be changed quickly enough to avoid it.
Well you certainly don't want to tick off the unions. Remember what happened to Jimmy Hoffa?
But unions aren't the only ones getting sweetheart deals. It seems some Congressmen have their hand in the till as well.
The Examiner repeats what was reported earlier about Sen. Reid who is hanging on by his fingernails hoping to be re-elected next year. Not only did Harry cut a deal to exempt citizens of Nevada from paying the toll on Medicaid and SCHIP funding for the next 5 years, but others got their share of pork pie as well.
The states (which are already bleeding red ink) will have to pony up a projected $37 billion in new taxes to cover their share of Obamacare. This has riled Democrat and Republican governors alike.
But no fear. Some states will get a free pass at our expense.
Majority Leader, Sen. Harry Reid (D-NV) has cut a deal to exempt Nevada from these costs for the next five years. Generous Mr. Reid saw to it that Oregon, Rhode Island and Michigan got the same exclusion, using a formula known only to the Nevada Senator, because "they are suffering more than most."
Oh, come on Harry. Tell us your secret formula.
Health-care "reform" is good, smart and necessary, so long as it isn't fully applied to the states of the senators who are pushing it. The Democrats' growing problem is that somebody is ultimately going to have to pay, and Mr. Reid's bad example has given every one the same idea. "If Colorado has a fair claim on being treated the same way Nevada has been, of course we're going to ask to have that kind of treatment," promised Sen. Mark Udall, upon news of the Reid deal.
Depending on how many votes they have to buy, it might be that no one has to pay. Wouldn't that be nice?
Just more stupid government tricks.
Smaller cars, bigger health insurance, Poppa Washington.
Tuesday, October 27, 2009
First, we are big fans of Long Term Care insurance (LTCi); too many folks (wrongly) believe that Medicare will cover an extended stay in a long term care facility. It does not; in some cases, Medicaid will pick up part of the tab, but this can eat up the assets you've spent a lifetime accumulating, and your choice of facilities may be limited.
State-sponsored Partnership Programs are a step in the right direction: these encourage folks to purchase LTCi, and offset Medicaid's "spend down" requirements for those who purchase PP compliant plans.
A proposed Federal LTCi program, on the other hand, is a leap in the wrong direction:
"House health care legislation expected within days is likely to include a new long-term care insurance program to help seniors and disabled people stay out of nursing homes..."
Let's examine that premise:
The Feds can't even handle a simple flu vaccine distribution, but they can administer a new long term care plan? They have the experience and expertise to adjudicate claims? What happens when (not if) they're wrong? Will they raise those "modest rates?" Cut back on that "generous" $50 a day benefit? Or simply deny claims, as they do now with Medicare?
There's no question that folks in the middle class, and especially those approaching (or in) their Golden Years, will feel a major squeeze when it comes to long term care. But trusting the government to manage this effectively is non-optimal. What would work would be to expand the Partnership Programs, and for the industry and government to better publicize their existence.
Monday, October 26, 2009
I’m not talking about health insurance. I’m talking about health care. Health insurance is not the same as health care. Who calls their insurance agent when sick or injured? Who calls an actuary? Don’t real people call their doctor or go to the emergency room? Yet our so-called leaders go on and on about compulsory insurance as though insurance is what we need even though it’s obvious that health care is what we need. The public is being sold insurance when we should be buying health care. If anything needs to be made compulsory, it is health care – not health insurance.
Once this concept is understood, it's clear what must be done. First, all health care professionals become employees of the Federal Government, paid a living wage from public funds. Second, hospitals, clinics, labs and other facilities are nationalized and their staffs also become employees of the Federal Government. Fair compensation is paid to the former owners just as for the condemnation of any other private property for public use. Third, the Federal health care professionals examine any person who wants health care, and issue health care orders to anyone who is determined to actually need health care. Fourth, it is illegal to seek or receive health care from anyone except a Federal health care professional. Fifth, everyone in the country is included in the plan; however the full cost (plus an administration fee) for non-legal aliens' health care is charged back to their home country via the home country’s foreign exchange account maintained at the U.S. Treasury. Finally a system of regional Federal Health Tribunals will be established.
The Federal Health Tribunals are empowered to impose heavy fines upon individuals who shirk their civic duty to follow health care orders, including refusal to alter lifestyle when so ordered (e.g., exercise, stop smoking, lose weight). The Tribunals also have authority to order health shirkers confined until treated. Depending on the seriousness of the condition, the confinement may be in a hospital or if hospitalization is not required, to (a) the Governors’ mansion, (b) the home of any elected State or local official, (c) any residence maintained by a member of Congress, or (d) any private home larger than 3,000 square feet.
The Tribunals also have the power to order a provider who refuses to deliver care that is ordered by a regional Federal Health professional, to perform unpaid community service within the Tribunal’s region.
Refusal by a health shirker or a health care provider to comply with an order of a Health Tribunal will carry penalties similar to contempt of Court and may involve fines or imprisonment or both.
Making health care compulsory would address actual need. Public funds to pay for compulsory health insurance would not be wasted on “insurance” but would be spent directly for health care. Everyone would then be healthy, happy, and handsome, and all our children would be smarter than average. Overnight, our life expectancy would be the highest in the world and infant mortality would drop to zero.
I call on Congress to scrap the current plans under debate and proceed forthwith to craft legislation making health care compulsory.
(A) provide to all eligible individuals health insurance coverage (or comparable coverage) that does not impose any preexisting condition exclusion with respect to such coverage for all eligible individuals;
This can be found on page 38 of the Baucus bill. Over the next few pages are a few surprises . . .
INSUFFICIENT FUNDS.—If the Secretary estimates for any fiscal year that the aggregate amounts available for payment of expenses of the high risk pool will be less than the amount of the expenses, the Secretary shall make such adjustments as are necessary to eliminate such deficit, including reducing benefits, increasing premiums, or establishing waiting lists.
That little tidbit appears on pages 39 - 40.
So if the Secretary, the one who administers your high risk health insurance, runs out of money it is his/her responsibility to correct the problem by reducing your benefits, increasing your premiums or establishing waiting periods (presumably for new entrants although this is not clear).
Change you can believe in.
Unfortunately, the law's definition of "underwriting" was overly broad, and has led to some presumably unforeseen problems:
"However, DMAA believes the definition of “underwriting” included in the interim final regulations far exceeds Congressional intent and will have dramatic and unintended consequences on programs designed to support at-risk and chronically ill individuals."
Although there's no persuasive evidence showing that wellness programs actually reduce health insurance costs, a lot of employers offer, and carriers encourage, their use. One of the factors in designing such programs is a tool called an HRA, a Health Risk Assessment. These are essentially questionnaires which help identify employees' problem areas, and can help providers design programs targeting them. Until now, one of the areas often included in HRA's were genetic factors. The problem now is that GINA effectively prohibits an HRA from asking about one's genetic "background," or from using that information if it is disclosed. This means that providers may not be able to design an appropriate wellness plan.
So, the aforementioned DMAA Care Continuum Alliance is requesting that these new rules be put put on hold, and that the definitions be revisited.
For those readers who are interested, the interim regulations are here.
[Thanks to Dan Vorhaus for his help]
"Health insurance profit margins typically run about 6 percent ... Profits barely exceeded 2 percent of revenues in the latest annual measure."
The actual profit margin appears to be 2.2%; contrast that with railroads (12.6%) or communications equipment (over 20%), and the caterwauling about those eeeevil insurance companies seems, well, misplaced.
[Hat Tip: Ace of Spades]
Sunday, October 25, 2009
Saturday, October 24, 2009
It may also end up on NPR; we'll let you know how that goes.
By the way, I referred to "so-called gender rating" because I'm somewhat of a stickler for correct grammar; as my former teacher explained, "words have 'gender,' people have 'sex.'" Her point was that, when identifying whether or not one is male or female, the correct term is "sex," not "gender."
Enjoy the article!
The bad news is that I've been unable (so far) to import comments from our previous system, but we'll keep working on it.
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Friday, October 23, 2009
Turns out, not so much:
What, you may ask, does this have to do with insurance?
Glad you asked. It's pretty simple, really: if the rocket surgeons in DC got this so bone-achingly wrong, why would anyone believe they could get health care right?
[Chart courtesy Innocent Bystanders]
UPDATE: On a related note, all those TARP (Toxic Asset Relief Program) dollars that went to bail out ailing financial institutions (like AIG)? Bet you thought that, like all good gummint programs, there was some adult supervision.
You'd lose that bet:
"In his 256-page report to Congress, [TARP Inspector General Neil]Barofsky notes that the Treasury Department's failure to implement anti-fraud measures, or even to require TARP recipients to report how they used the billions Congress and the Treasury Department gave them, makes it highly unlikely that the $317 billion outstanding -- nearly half the TARP total -- will ever be returned to taxpayers."
What's that sound?
And these are the same folks who want to control ALL health care funding for EVERYONE.
The same folks who ran out of money in 2 weeks under the Cars for Clunkers program are now admitting the Cash for New Home Buyers tax credit may have sprung a few leaks.
To spur home sales, Congress decided to provide a tax credit of $8,000 for first time home buyers. Like Cars for Clunkers, the program has performed as promised by spurring home sales over the last few months. This is good news for realtor's, lenders and of course the folks who now are proud owners of a new home courtesy of the American taxpayer.
But Houston, we have a problem.
According to USA Today there are a few folks who applied for the tax credit that were not entitled to the credit.
Treasury Inspector General for Tax Administration J. Russell George told a House panel that more than 19,000 people filed 2008 tax returns claiming the credit for homes they had not yet purchased. George said his office had identified another $500 million in claims, by some 74,000 taxpayers, where there were indications of prior home ownership.
He told a House Ways and Means oversight subcommittee that they also found 580 taxpayers under the age of 18 who claimed $4 million in first-time home buyer credit. One was 4 years old.
That's 93,580 people who applied for the credit but weren't entitled to it. At $8,000 each that's more than $700 million in bogus tax credits.
Sounds like fraud and abuse to me.
About 1.4 million tax returns have been filed to take advantage of the credit at a cost to the government of about $10 billion.
My calculator indicates roughly 1 out of every 14 returns were fraudulent.
Our friends in Washington are not making a good case for extending the public trust.
Medicare fraud and abuse is 10 - 35% of the total amount spent. The housing tax credit is in its' infancy and they have already identified at least 7% of returns are fraudulent.
What's wrong with this picture?
Of all the finger wagging and charges levied against the health insurance industry, I don't recall one politician charging the industry suffers from waste due to fraud and abuse.
There is criticism about profits which average 3 - 4% of total premiums and about carriers refusing to issue coverage to people with serious medical problems, but nothing about fraud.
Change you can believe in.
Thursday, October 22, 2009
Of course, such a plan would be a waste of money for our Friends to the North©, right? After all, they already have free health care, and lots of it.
Or maybe not:
"A group in British Columbia has offered medical waiting-list insurance to members whose government treatment is on hold."
Yup. Although we've detailed Canada's major shortage of actual health care over the years, even we hadn't quite grasped just how little is actually readily available to the average Canuck. Much as our AAA offers roadside assistance to stranded motorists, the British Columbia Automobile Association wanted to offer its members bedside assistance to those stranded on the side of the rocky Canadian health care road.
Folks who bought the policy and subsequently endured a 45 day wait for a covered expense were guaranteed access to a private clinic in BC, or even in the good ol' U S of A.
Or would have been:
"The program, which took two years to develop, never got beyond the pilot phase ... The association shut it down when critics howled and government officials checked to see if such a program was actually legal in Canada."
"Actually legal in Canada." If that doesn't send Arctic chills down your spine, then you're not paying attention: it is apparently illegal in Canada to actually try to help oneself gain access to health care. Yet that's exactly the kind of system that many proponents of a nationalized health care system want to impose on us.
Tell me again why that's a "good thing?"
In the midst of Obamacare, Kennedycare (remember him?), Baucus bills, and so forth, everyone claims to have the answer. Truth is, they don't.
The politicians promise to make health care and health insurance more affordable. Problem is, the way they are going about it won't accomplish either. So now both sides, politicians and health insurance companies, are pointing fingers saying the other side lied.
If either side really knows the truth, they aren't telling it.
But the folks at Reason.com have as good a handle on the issue as anyone. Here are some excerpts.
“Every time we get close to passing reform, the insurance companies produce these phony studies as a prescription and say, ‘Take one of these, and call us in a decade,’" declared the president. “Well, not this time.”
Who say's it's phony?
If the studies had in fact supported what he and Congress are saying, that covering sick people without regard to the cost of treating their condition can be done for the same or less money than is charged now, he wouldn't be wagging his finger at the health insurance companies. This is like Billy Clinton wagging his finger and saying "I did not have sexual relations with that woman, Ms. Lewinsky."
Sure, prez, we believed you too.
Forget the studies. Let's look at this logically.
Currently in all but a handful of states, health insurance companies are allowed to review your medical history and decide if they can afford to insure you or not. This is like the mortgage business in a way.
You fill out paper work, provide supporting documentation that indicates you are a good risk and can indeed pay back the loan, and you get your money.
This is the way business was done before Congress, ACORN and Fannie Mae pushed the banks into making loans to people that did not qualify. We learned our lesson . . . supposedly . . . so now we are back where we started. The idea of giving loans to just anyone didn't work so now you have to PROVE you can qualify.
Except now the same folks in Washington who thought it was a good idea for banks to loan $400,000 to a panhandler living on the street now want the insurance companies to give health insurance to people who are also not a good risk. Not only does Washington want the carriers to do this, but they are telling the public their premiums will go down, not up to accomplish this feat.
The president is right that we should always be skeptical of studies that find in favor of the groups that sponsor them. And these two insurance industry-sponsored studies do have their flaws. But the finding that guaranteed issue and community rating mandates increase insurance premium prices has been corroborated by other academic researchers. For example, researchers from MIT, the Brookings Institution, and Brigham Young University reported in a 2008 study published in Forum for Health Economics & Policy that community rating regulations increased premiums for high-deductible policies for individuals by as much as 17 percent and families by as much 33 percent in the nongroup market. In addition, the researchers found that the “guarantee issue regulations that accompany community rating regulations in New Jersey are associated with premium increases of well over 100 percent for individual and family policies.” And as my colleague Peter Suderman recently pointed out, Massachusetts, the one state that combines an individual mandate, community rating, and guaranteed issue, now has the highest premiums for family insurance plans in the country.
Be skeptical, but don't ignore other studies that were not funded by the industry and done BEFORE health care reform was a gleam in PresBO's eye.
Ask the folks in Massachusetts how much their premiums declined once health care reform was enacted.
Wag that finger, Barry.
When is a premium increase not a premium increase?
I guess it depends on what your definition of is, is . . .
According to the New England Journal of Medicine, the director of the Office of Management and Budget, Peter Orszag, cites evidence that $830 billion is being spent this year on unnecessary care. That represents about 30 percent of all health care spending. Of course, insurers have a big interest in trying to reduce unnecessary spending, so they hire flocks of administrators to negotiate lower rates and to monitor medical spending charged by doctors and hospital administrators. Government health care programs like Medicare don’t have to negotiate; government agencies just fix prices, which means they fail to combat waste and fraud effectively.
That's an interesting way of stating it. Medicare doesn't have to correct waste and fraud, they just dictate what they will pay.
By the way, that 30% figure (which I believe to be exaggerated) is for what is termed "unnecessary care". Since most people are covered by health insurance, and most people are in a managed care (PPO, HMO, etc.) plan there really isn't that much that could be considered unnecessary. Health insurance companies are pretty good watchdogs and are quick to refuse payment for care that is not medically necessary.
If you want to understand why health insurance is expensive you have to examine where 85% of the dollars go. That is, look at claims.
A lot of talk is thrown about regarding monopolies, but no one is really talking about monopolies on the health care side.
As hospital mergers produced local monopolies, they were able to increase their prices substantially. “I find that hospitals increase price by roughly 40 percent following the merger of nearby rivals,” Leemore Dafny, an economist at the Kellogg School of Management at Northwestern University concluded in a 2008 study. Insurers with relatively few patients could not bargain effectively with the new local health monopolies, and so dropped out of those markets.
Health insurance companies will do their best to hold down the price paid for services, but in the end, the carriers need the docs and hospitals. Unless carriers can deliver medical providers in their network the carriers have nothing to offer.
“The insurance industry is congenitally weak in bargaining with supply side of the American health sector,” explained Princeton University health economist Uwe Reinhardt on a recent NPR Money Planet segment. Reinhardt believes that insurers largely dance to the fiscal tune whistled by hospitals and physicians.
Medicare on the other hand (as pointed out earlier) doesn't negotiate, they just state what they will pay on a take it or leave it basis.
I will also disagree with the premise that open competition across state lines will lower the cost of health insurance.
Consumers cannot purchase insurance policies that are not licensed by their state insurance commissions and which do not incorporate all the mandates imposed by those commissions. Congress and the states should open up competition between insurance companies by enabling “regulatory federalism” that would allow individuals and employers to purchase health insurance from other states. As a report from the free-market Cato Institute notes, regulatory federalism would force state insurance commissions to compete among themselves. The result would be that “states that impose unwanted regulatory costs on insurance purchasers would see their residents’ business—and their premium tax revenue—go elsewhere.”
If someone in Georgia wants to purchase a policy from Ohio (a lower premium state), under the current way of doing things that would not be permitted. Premiums are lower in Ohio for a number of reasons but one of those is the cost of health care. Health insurance companies pay less to doctors and hospitals for care in Ohio than in Georgia. If someone from Georgia were to buy an Ohio plan, at Ohio rates, the policy would be significantly under-priced.
For the carrier to offer the OH product in GA they would have to raise rates to reflect the higher cost of care in Georgia. This will wipe out most of the premium differential.
We don't need more carriers in Georgia to bring costs down. What we need is the ability to offer good major medical plans that don't have to comply with state mandates.
Speaking of mandates, the various bills put forth in committee in Congress ADD coverage, they don't take it away. It's kind of like saying you will get all you can eat at a buffet but only pay dollar menu prices.
Life doesn't work that way. Except in Washington where you can wag your finger and claim others are lying about what you really did.
Thanks to Rick Bronstein for the tip!
"The law, which will take effect on Nov. 1, compels the Oklahoma Department of Health to publish data online on all abortion patients -- including the woman's race, marital status, financial circumstances, years of education, number of previous pregnancies, and her reason for seeking the abortion."
If there's any silver lining here, it's that patients' names aren't being published, so there's no way to link a particular person to a given procudure. Still, it's hard to see how publsihing the data itself helps anyone; absent context, what's the point?
According to the state Representative who authored the bill, the purpose is "stepping up education that targets demographics with high rates of unwanted pregnancies." What kind of education, one may ask? The article doesn't say, but it's likely linked to funding of some sort (perhaps Medicaid?). Granted, the Hyde Amendment prohibits federal funds from paying for abortions, but this seems a stretch.
HIPAA (the Health Insurance Portability and Accountability Act) is pretty stringent when it comes to protecting personal health information (PHI); omitting names from the published data would seem to adhere to the letter of these requirements. But it's not hard to imagine that in small, rural communities (of which I'm sure The Sooner State has at least its share) it would be fairly easy to link up demographics with specific people. While I'm not a proponent of abortion, this seems to me to be an unnecessary and potentially dangerous government intrusion on one's privacy.
Wednesday, October 21, 2009
No one was injured (the most important thing), and her car was driveable, but we felt it was unsafe and started looking around for someone to repair it. Since it is such an old car, we don't carry collision insurance on it, so the repairs would have to be done on "our dime." Needless to say, we were not looking forward to the experience (or the bill).
My good friend Bill Montgomery recommended Chuck's Body Shop in nearby Fairborn, Ohio (about a 20 minute drive away). I called Chuck's, and explained our dilemna to Rick (who seems to run the place). He assured me that this was not going to be a budget-busting repair, and we took the car in. Rick eyeballed it, came up with a rough estimate, and we then went inside, where he carefully looked up all the parts he'd need, ran the numbers, and (this was the cool part) came up with a final tally that was within a few dollars of his top-of-the-head guesstimate.
We've just returned from picking it up, the repairs having been done when Rick had promised, at the price we had agreed upon. No surprises.
Well, there were one or two:
After replacing the hood, he noticed that its shiny newness would look rather strange next to the rest of the front-end's 16 year old patina, so he buffed out the fenders and doors to soften the transition. And when he was washing the car for final delivery, he noticed a decent-sized rust spot on the roof, which he sanded out and touched up.
Needless to say, we were both thrilled at the condition of the car, and the obvious pride that Rick and company (justifiably) take in their work. If you're in the Dayton area and need body work for your vehicle, I can unequivocally and enthusiastically recommend Chuck's.
Tuesday, October 20, 2009
In an email I received yesterday, Aetna says that it's finally had enough of agents and employers taking advantage of the low rates afforded to and by high deductible health plans. The point of these plans is to encourage and empower consumer participation in health care decisions, making more economically and medically efficient choices regarding health care. The problem is that some folks are "gaming" the system by wrapping these plans with substantial first-dollar benefits, thereby defeating the purpose, and diluting the net gain.
Okay, let's try that in English, instead of insure-speak:
By choosing a high deductible, "no frills" health insurance plan, consumers (whether that's an employer group or folks on individual policies) enjoy lower premiums. That's because the insurer doesn't have to adjudicate a lot of small, routine claims and can thus save money on administrative costs. It also encourages consumers to make conscious decisions about health care, because they now have "skin in the game." These premium savings help the consumer more easily absorb the occasional catastrophic claim, because they've sent less money to the insurance company.
A classic "win-win" scenario.
Except when it isn't:
Apparently, a number of employer (or group) plans have been providing first dollar coverage to their covered employees. So that if, for example, the plan has a $1500 deductible, the employer is ponying up $500 or $1000 of that on the employees' behalf (or reimbursing them when claims are made). Thus, the employee has little or no incentive to make careful health care decisions, since the lower-cost high deductible plan ends up working pretty much like the high-cost co-pay plan it replaced.
If this sounds like an HRA (Health Reimbursement Arrangement), you're not far off.
Aetna finally figured out that a lot of their insured groups were doing just that, and using the savings to subsidize the higher out-of-pocket, thereby defeating whatever cost savings the plan might have engendered. And they're putting the kibosh on it:
"In recent months, Aetna has seen an increase in "underlying" or "wrap-around" plans that have not been disclosed prior to premium quoting.
We define an underlying or wrap around plan as any plan that either partially or completely subsidizes any member cost sharing outside of a federally-qualified Health Reimbursement Account (HRA) or Health Savings Account (HSA). Member cost sharing includes but is not limited to co-pays, deductibles and/or member coinsurance balances. (Employee funded Flexible Spending Accounts are not considered underlying plans) .*" [emphasis in original]
The offending employers have been kicking in 50% - or more! - of the underlying deductible, which has resulted in adverse selection, reduced health care savings, and increased "trend" (one factor in rate increases). This in turn has led to tainted risk pools and reduced end-user (consumer) savings, and presumably higher than expected rate increases at renewal time.
So what, you may ask, do they propose to do about this?
Going forward, they'll be requiring employers to "attest that no such underlying plans are present and that they are not funding the deductible in excess of 50% annually whether through an HRA or HSA." It's a separate form that must accompany all applicable new group applications. The form will essentially require the employer to promise not to pay more than 50% of the plan deductible. And this new rule has teeth: if the employer lies on that form and ends up subsidizing in excess of that 50% cap, it faces "rate increases, non-renewal, or termination."
Which, of course, begs the question: how would they know?
And that's a great question. I called Aetna this morning, and was told that, much like Blanche DuBois, they'll be relying on the employers' honesty. In other words, that they'll drop a dime on themselves. Uh-hunh.
While it would be easy to dismiss this out of hand, I must admit that I don't know how they'd track this, either. One would think that patterns could be seen in offending groups' claims, but perhaps that's not yet feasible. It's a shame, really, because it unfairly affects those groups who do choose to play by the rules.
Monday, October 19, 2009
Bob and I frequently offer advice and opinion at a consumer-related bulletin board; folks post questions or describe insurance problems, and we (along with a few others) try to help out.
One of the other "regulars" there is a gentleman named Jay, who is an active, involved and knowledgeable insurance regulator. Jay brings an interesting perspective to the board: although he doesn't sell insurance, he has a unique, "insiders view" of how it works (and how it doesn't). Recently, a poster asked about whether or not Blue Cross/Blue Shield was a not-for-profit venture. Jay was kind enough to recount some of the history of that organization, and has agreed to let us share that with our readers:
This is a pretty close history. Back in the Depression days (the FDR one), doctors and hospitals were concerned about getting paid during the hard times. Obviously, medical care was needed, even during the Depression, so the states provided "seed" money to start BC/BS plans in the states. These were initially organized by the doctors [Blue Shield] and the hospitals [Blue Cross] in the states, sort of like the state medical association.
What the public generally doesn't know is that each plan is a separate entity, and some states have, or had, several Blues operating. Ohio had plans in Cleveland, Columbus and Cincinnati at one time. Illinois had plans in Chicago and Rockford. These were organized under special sections of the state insurance code....not the same laws that governed "commercial" insurers like Prudential or Mutual of Omaha. They got special treatment because of the public need to continue medical care and keep facilities open. They were all non-profits to start with under this organizational model.
Then, in the 1980's I think, the Blues in Chicago was the first to convert to a "for profit" and reorganized as a mutual insurance company. This was not without much controversy and consternation. Repayment of the seed money to the state, or other charitable purposes was required. The Illinois Blues in Chicago was my very first exam back in October 1974, 35 years ago [ed: Jay was a child prodigy: he was a mere 5 years old at the time]. They were still non-profit, but somehow had several hundred million dollars in cash sitting in bank accounts. Other Blue plans followed suit after Illinois, and a couple other state plans broke the ice and ceased being organized as non-profits.
Nearly all have now converted to either stock or mutual insurance companies and have surrendered the special treatment they once enjoyed under the various state insurance codes. The North Dakota plan is still non-profit and there may be a few others left.
Some of the perks for being a non-profit were substantial; exemption from state taxation, agents didn't have to be licensed to sell Blue plans if that was all they sold, many other very favorable accommodations due to the crisis in the depression.
Thanks, Jay! Readers with additional questions or information are encouraged to share them in the comments; we'll be happy to pass them on.
Sunday, October 18, 2009
Joe's son and my daughter are both freshman at the home of the Blue Demons, and both of us were looking forward to connecting while we were there. Our schedules finally meshed this morning when our families met for brunch at the Student Center.
Regular readers know that I turn to Joe when there's an accounting issue or, for example, the Stranger Owned Life Insurance debacle. He brings a unique sense of humor to an otherwise dry topic, and has become a good "blog buddy." It was truly a pleasure to meet Joe and his lovely family, and we're looking forward to seeing them again as our students wend their way through their undergraduate careers.
Saturday, October 17, 2009
Notice I said MOST states.
According to the Christian Science Monitor at least four states will have their Medicaid bills paid for by Washington.
Last month, Reid improved the health bill for Nevada by winning assurances that Nevada would be one of only four states to be fully funded by the federal government for the first five years of expansion of Medicaid – a key element in plans to expand health coverage.
This is the same Harry Reid who said $54 BILLION is not a lot of money.
Seems Sen. Reid isn't real popular in his home state of Nevada and is polling in the mid 30's heading towards the election next year. You don't suppose ole Harry is trying to BUY an election with OUR money do you?
No word on who the other 3 states are that will be paid off to support Obamacare.
Friday, October 16, 2009
Just another stupid government trick.
Under the proposal, the share of legal nonelderly residents with insurance coverage would rise from about 83 percent currently to about 94 percent. Roughly 23 million people would purchase their own coverage through the new insurance exchanges, and there would be roughly 14 million more enrollees in Medicaid and CHIP than is projected under current law. Relative to currently projected levels, the number of people either purchasing individual coverage outside the exchanges or obtaining coverage through employers would decline by several million.
So 14 million, some of whom may have private coverage now, will find themselves getting second class health care through the welfare system. Americans who voted for change you can believe in will find themselves at welfare offices signing up for SCHIP (Peachcare in Georgia) and Medicaid.
Since Medicaid and SCHIP pay providers 20 - 25% less than private health insurance moving in this direction will actually be less expensive than putting these people on private plans. That means Congress is pretty shrewd in playing to those who are looking for a handout from the working class. Just like Oliver Twist, those who receive care through Medicaid will be coming back asking "Please, may I have some more?"
In most areas less than half the physicians are willing to treat Medicaid patients, so one wonders if putting more people on welfare medicine will put a bigger strain on the system.
Currently, those of us with private insurance are paying higher medical bills, and in turn, higher health insurance premiums, to subsidize the shortfall that results from treating Medicaid patients. As more go on the dole, expect the cost of our health care to rise and likewise so will health insurance premiums.
Medicaid and SCHIP are federal programs that are at least partially funded at the state level. Each state will have to raise taxes to cover the cost of expanded Medicaid and SCHIP roles. How much is anyone's guess but Tennessee's Democratic Governor Bredesen had this observation.
Gov. Phil Bredesen warned Tuesday that pending federal health care legislation could cost Tennessee far more than the $735 million “best estimate” his administration previously has cited.
The $735 million would stretch over five years, but “in addition, there are huge unknowns for the states in this reform,” Gov. Bredesen said, estimating that those costs, if realized, could exceed another $3 billion from 2014 to 2019.
You need to know that any estimates by the CBO do not include cost shifting and tax increases at the state level. Neither do they include increases in health insurance premiums.
When you add it all up you have to wonder just how much this whale is actually going to cost the taxpayers. Just another stupid government trick.
Congress is playing tricks with your money, but then, why is this news?
In an effort to make Obamacare "deficit neutral" Congress proposes $500 billion in Medicare cuts over the next 10 years. CMS (Center for Medicare Services) already has in place a 21% cut in physician fee's to kick in on January 1, 2010.
CMS has proposed cuts in physician fees every year for the last (I lost count) several years and each year, under pressure from physician groups, somehow finds the money to wipe out the cuts and even pay a little more than the year before.
But this time they really mean it. Physicians are getting rich on Medicare and the country needs them to man up (or woman up as the case may be) and take one for the good of the country.
So how will Congress make Obamacare deficit neutral and keep the $500 billion in forecasted savings?
By passing a separate bill allowing physicians to remain whole.
Majority Leader Harry Reid (D-Nev.) on Wednesday morning quietly set in motion legislation that could cost more than $200 billion over 10 years – without cuts or revenue to offset the spending -- on a separate track from a larger healthcare bill that President Barack Obama and Senate Democratic leaders have vowed would not add to the budget deficit.
How is that for being sneaky?
They cut Medicare by $500 billion in one bill and increase Medicare funding by $200 billion in a completely separate bill.
Obama and Democratic leaders in Congress has been adamant that “paygo” would reign when it comes to new spending or tax cuts. The healthcare reform bill, with a cost ranging from just over $800 billion to just over $1 trillion, would also be subject to that standard.
But lawmakers and the White House have sought a means to exempt the physician payments from paygo requirements. Congress has acted time and again to protect doctors from pay cuts and would inevitably to so again.
Because of that, many Democrats argue, the fact that the budgetary baseline assumes those cuts and characterizes as a fix as new spending does not reflect reality.
Since when does anything in Washington resemble reality?
The congressional budget resolution contains provisions that originated in the House allowing Congress to pass a physician payment fix without paying for it.
How does one "fix" the payment problem without really, you know, paying for it?
And folks thought Enron had creative accounting. This makes Bernie Madoff seem like a rookie.
Bet you didn't know that in 2008 the IRS collected $194 billion in taxes to fund Medicare but then CMS paid out $391 billion in benefits to Medicare beneficiaries.
Health care reform will be a piece of cake. Just pass the legislation and then don't pay for it.
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And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).
You can submit your post via Blog Carnival or email.
ALSO: We're scheduling fall Cav's now, please let me know if you'd like to host one.
Thursday, October 15, 2009
But wait, there's more! "Behind the façade are a host of goodies and architecture for more to come, including a new sort of real-time epidemiological study tool."
Well, "bird" flu requires tweetment, while "swine" flu responds to a simple oinkment (I'm here all week, try the veal).
A valid point.
I, for one, believe there is.
Dr Roy ponders the impact of these choices on the future of health care reform efforts.
■ Joanne Kenen, blogging at New America, has a message for folks who are disappointed in the current crop of reform legislation: "go back a year to what we thought the best case scenario was at the time, and realize how far we've come."
■ Louise Norris, co-blogger at Colorado Health Insurance Insider, is concerned about Cover Colorado (a state effort to extend health insurance coverage to the uninsured). As Louise explains, part of the problem is that they'd like to "attract healthier applicants and perhaps improve their loss ratio." The challenge is how to do that.
And consider hosting an HWR yourself: Julie and Joe make it easy, painless and fun. Just click here to volunteer. I guarantee you'll have fun (or double your money back!).