Frequent commenter Nate Ogden is a TPA (Third Party Administrator) in Northeast Ohio. In that role, he sees exactly what medical care costs, because his firm arranges payment for it. And he has some very disturbing information about ObamneyCare©'s most recent paean to Big Pharma, the one that's been making headlines the past few days:
As Henry mentioned, I'm a Third Party Administrator, which means that I help employers with "self-funded" plans track and pay for health insurance benefits. Generally, we pay claims based on the agreement we have with the employer (client); when we go over a pre-arranged maximum, we turn to our reinsurer. Think of it as a really high deductible plan.
The key is that we have to know what things cost, and we have to know what's supposed to be covered. A lot of readers may not be aware that some 60% of all people covered by group insurance are in self funded plans, and that 85% (or more) of large employers, colleges and hospitals are self funded. Since the "insurer" in this context is actually the employer, not an insurance company:
1. They won't have access to "free" birth control
2. These organizations will be forced to pay for birth control
Here's why: When employers pay claims under a self funded plan, the majority of the time that is coming right out of the employer's general account. So while it may seem like it's "free" to the employees (just like it seems like it's "free" to folks on fully insured plans), it's really coming out of their raises, bonuses, even salary.
Which brings up the first big question, one that hasn't seen much (if any) press: What birth control is provided for free? Can we cover the generic 100%, or if their doctor prescribes something new at $500 per month are we stuck covering that 100% as well? Remember, it's not the insurance company getting stuck with the bill here.
We have seen this in the past when a med went from OTC (over-the-counter) or Compound to prescribed-only: cost skyrockets. And this is the other key point currently being drowned out by other issues:
Knowing that all insurers are required by law to pay 100%, Obama just eliminated all price pressure. No matter what the charge is, we are required to pay it. Why wouldn't manufacturers jack up the price of all birth control? After all, "[w]orkplace health plans will have to cover all forms of contraception approved by the Food and Drug Administration, ranging from the pill to implantable devices to sterilization."
Although much (most?) of the emphasis has been on birth control pills, IUDs are also quite popular. So how would covering them at 100% work out?
There are currently no generic versions of these devices available, and:
"Due to a recent price increase by the manufacturer, UMP has increased the allowed amount for the Mirena IUD from $515.85 to $742.42"
So how does an insurer, required by law to cover a single source Rx or device, prevent the manufacturer from increasing price?
This seems like a great opportunity for providers that implant the IUDs to ding insurance plans (well, those who pay for them, anyway): 100% benefit, no member liability. Why would doctors not suggest it and why would we expect members not to follow their guidance? At $9 a month for "the pill [ed: aye, but for how long will that price hold?], and up to $2000 for some IUDs and insertion? How does an insurer -- required by law to cover a single source Rx or device -- prevent the manufacturer from increasing price?
And when (not "if") they do jack up the price, what happens when insurers are required to pay 100%?
Doesn't this put the lie to all the talk of affordability and accessibility?
Thanks, Nate, for sharing your expertise and insights. I'd like to emphasize two key points you've made, because they really lie at the heart of this "debate:"
First, no health care is "free;" that is, it is paid for either by the patient or his insurance (often a combination of both). So when the President unilaterally says that "birth control" must be free, he means that either its manufacturers must charge zero for it, or that the cost must be passed along to other insureds (and, of course, the taxpayer).
The second issue is that, since there are no boundaries, there are no limits on how much the manufacturers can charge. Of course, there will be claims of "gouging," but who will make them? The consumer? No, because she has no skin in that game: it's "free" to her. By the government? Why? It is, after all, the government that has mandated this outcome.
Which brings us to perhaps the most important question of all: Whatever happened to personal responsibility?
As Henry mentioned, I'm a Third Party Administrator, which means that I help employers with "self-funded" plans track and pay for health insurance benefits. Generally, we pay claims based on the agreement we have with the employer (client); when we go over a pre-arranged maximum, we turn to our reinsurer. Think of it as a really high deductible plan.
The key is that we have to know what things cost, and we have to know what's supposed to be covered. A lot of readers may not be aware that some 60% of all people covered by group insurance are in self funded plans, and that 85% (or more) of large employers, colleges and hospitals are self funded. Since the "insurer" in this context is actually the employer, not an insurance company:
1. They won't have access to "free" birth control
2. These organizations will be forced to pay for birth control
Here's why: When employers pay claims under a self funded plan, the majority of the time that is coming right out of the employer's general account. So while it may seem like it's "free" to the employees (just like it seems like it's "free" to folks on fully insured plans), it's really coming out of their raises, bonuses, even salary.
Which brings up the first big question, one that hasn't seen much (if any) press: What birth control is provided for free? Can we cover the generic 100%, or if their doctor prescribes something new at $500 per month are we stuck covering that 100% as well? Remember, it's not the insurance company getting stuck with the bill here.
We have seen this in the past when a med went from OTC (over-the-counter) or Compound to prescribed-only: cost skyrockets. And this is the other key point currently being drowned out by other issues:
Knowing that all insurers are required by law to pay 100%, Obama just eliminated all price pressure. No matter what the charge is, we are required to pay it. Why wouldn't manufacturers jack up the price of all birth control? After all, "[w]orkplace health plans will have to cover all forms of contraception approved by the Food and Drug Administration, ranging from the pill to implantable devices to sterilization."
Although much (most?) of the emphasis has been on birth control pills, IUDs are also quite popular. So how would covering them at 100% work out?
There are currently no generic versions of these devices available, and:
"Due to a recent price increase by the manufacturer, UMP has increased the allowed amount for the Mirena IUD from $515.85 to $742.42"
So how does an insurer, required by law to cover a single source Rx or device, prevent the manufacturer from increasing price?
This seems like a great opportunity for providers that implant the IUDs to ding insurance plans (well, those who pay for them, anyway): 100% benefit, no member liability. Why would doctors not suggest it and why would we expect members not to follow their guidance? At $9 a month for "the pill [ed: aye, but for how long will that price hold?], and up to $2000 for some IUDs and insertion? How does an insurer -- required by law to cover a single source Rx or device -- prevent the manufacturer from increasing price?
And when (not "if") they do jack up the price, what happens when insurers are required to pay 100%?
Doesn't this put the lie to all the talk of affordability and accessibility?
Thanks, Nate, for sharing your expertise and insights. I'd like to emphasize two key points you've made, because they really lie at the heart of this "debate:"
First, no health care is "free;" that is, it is paid for either by the patient or his insurance (often a combination of both). So when the President unilaterally says that "birth control" must be free, he means that either its manufacturers must charge zero for it, or that the cost must be passed along to other insureds (and, of course, the taxpayer).
The second issue is that, since there are no boundaries, there are no limits on how much the manufacturers can charge. Of course, there will be claims of "gouging," but who will make them? The consumer? No, because she has no skin in that game: it's "free" to her. By the government? Why? It is, after all, the government that has mandated this outcome.
Which brings us to perhaps the most important question of all: Whatever happened to personal responsibility?
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