Thursday, September 30, 2010

Did Retirees Go "Thump?" [UPDATED]

As in this little ditty. Some folks believe so, others (myself included) aren't so sure. Here's the "problem:"

Nearly all plans in force as of September 23, 2010 will be subject to certain ObamaCare© provisions, whether or not they're deemed to have been "grandfathered." These include:
■ Extending coverage to "kids" up to age 26, regardless of their student, marital, financial or residence status (although this does not apply if "Junior" is eligible for coverage at his job)

■ No caps on "essential health benefits" (including ambulatory patient services, hospitalization, and maternity and newborn care, among others).

■ No lifetime maximums on plans (grandfathered plans may still impose annual caps)
Notice that "Nearly all" caveat above: it doesn't apply to retiree-only plans. This is important, because it's not clear whether this is a slap in the face for retirees, a sop for their former employers, or something else entirely. Recall also that many of these same retiree plans benefitted from some $5 billion of our tax dollars to offset costs.

In the event, retiree-only plans are exempt from the list cited above. This is something of a two-edged sword: on the one hand, such plans may be spared (for now) some of the major rate hits, er, hikes that will come about as a result of implementing these additional benefits. On the other hand, a lot of these folks have children in the affected demographic, and at least a few aren't at all happy that they can't keep their kids on (or add them back onto) the plan.

It's not clear to me that either side has a legitimate beef; or, perhaps, both sides do. The end result is that these plans are exempt from the new rules, and will have to live with the consequences. The only real question is whether or not that's a "good thing."

MIKE ADDS: If PPACA is a huge benefit to insureds, and simultaneously a meaningful relief to the budget, why exempt anyone, especially retirees who are the most expensive to cover ?

[Including retirees under PPACA would capture those retiree expense savings which would be highly beneficial to the federal budget. Isn't that so? Or maybe the savings are not so certain after all? Which is it?].

How likely an explanation is "politics" when 65% of the country opposes the whole law?

[And by the way, where was AARP on this? Doesn't AARP claim to be the retirees advocate? What was AARP advocating all this time? I'd say AARP seems to be quietly sneaking away to hide the knife they stuck in the backs of retirees!]

Excluding retiree plans from PPACA requirements can be seen as consistent with

1. Siphoning off $500 billion from Medicare, much of which will come from benefits and the rest from

2. Medicare Advantage - which is under all-out assault. (eg Harvard-Pilgrim Health Plan in Massachusetts exiting from the Medicare Advantage business entirely? H-P has about 22,000 Medicare Advantage subscribers. It seems likely that more plans--particularly smaller ones--will do the same.)
I think the treatment of Medicare is a clear retreat from the social contract expressed when Medicare was born--i.e., Americans agreed to be taxed when young so that we will have protection from medical costs when old. Uh, I guess that meant "unless it gets too expensive." Now, in reality this may be the only reasonable course and it may be inevitable, but it is being dishonestly presented. There is no admission that this administration intends to reduce Medicare cost by reducing benefits as a deliberate strategy. Older Americans are just not worth keeping alive beyond a certain point--a certain price point, I guess. And there is no one explaining (or even asking!) how "fraud and waste" will be reduced when the CMS budget for fraud detection is about the same as in prior years. Instead this administration asserts with a straight face that the new law "preserves and strengthens" Medicare.
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