Health Care Reform Webinar: What Employers Should Know

Date: Wednesday, October 14, 2009
Time: 12:00 – 1:00 PM EDT
REGISTER HERE
Health Care Reform is being debated in the US Congress. 
•Employer mandates, individual mandates, premium subsidies, minimum benefits, etc.
•What will it mean to your business?


This webinar will bring you concise and useful information concerning the health care reform bills in Congress.
The webinar will include a side-by-side comparisons of the bills.

The health care reform bills being debated in the Congress:

•Change the delivery of health insurance for individuals and for employers
•Change the way that employer-provided health plans are funded
•Create minimum standards for employer contributions based upon income
•Create minimum standards for out-of-pocket expenses based upon income
•Create federal health insurance premium subsidies for individuals and for employers based upon income
•Implement mandates for coverage with penalties for individuals and for employers
•Create new taxes on benefits based on premiums and income levels
•Change the limits on HRA/FSA/HSA accounts
•And much more
REGISTER HERE

Yahoo News: Maine Senator Olympia Snowe: Crucial Vote in Health Reform

Quiz time: Which of the following provisions has been tucked into the most closely watched health-care bill on Capitol Hill thanks to Senator Olympia Snowe of Maine? Is it a) an annual checkup for every Medicare beneficiary, b) a special health-insurance marketplace in every state that would cater to the needs of small businesses or c) new tax credits to help modest-size firms buy coverage for their workers?... read the full article.

The Baucus Plan: State Insurance Regulation, National Plans by Ezra Klein on 9/16/09

One of the big questions with insurance offerings is who regulates the plans, and how. Currently, regulation is done at the state level. Republicans don't like this, and neither do Democrats, and neither do insurers. It means every insurer needs to offer different plans in every state. Fragmentation and inefficiency, thy name is America's health-care system....Read Full article here

Please Don't Call It Health Reform by Professor Enthoven

Dr. Alain Enthoven is the Marriner S. Eccles Professor of Public and Private Management, emeritus, at Stanford University.

"Once again the President did not put forth serious proposals to reduce the growth rate in health expenditures in his speech last night. Obama likes to talk about the iconic systems: Mayo, Intermountain, Kaiser Permanente, and Geisinger, but the Democratic bills do practically nothing to promote their growth or systems like them.

The House Tri-Committee and Senate HELP Committee bills offer none of the fundamental reforms that would be likely to change the system or significantly slow growth in expenditures. Rather, what they offer is continuation of our present traditional employer-based, non-competitive fee-for- service system. They don’t respond to the President’s call for reforms that would lower the growth trajectory, or even that would not add to the fiscal deficit.

What went wrong?

Read Professor Enthoven's entire op-ed piece here: Click Here

Wall Street Journal - Is Health Care Reform Unconstitutional?

When I recieve care from my local doctor, I do not cross state lines.
The "commerce clause" of the U.S. Constitution allows the U.S. Congress to regulate interstate commerce. 
But is health care interstate commerce?

To read:  Wall Street Journal: Is Health Care Reform Unconstitutional?

Health Insurance Reform as compared to Health Insurance Reform

Health "insurance" reform.
Health "care" reform.
These are 2 very different things.

The term "insurance" means to spread financial risk.  If the risk of a heart attack is 1 in 100, and the cost of the heart attack is $100, than if you collect $1 from each individual you have spread the cost of the risk.  Health insurance is the mechanism to spread the financial risk.  Health insurance is not a vehicle by which everyone gets everything covered at no cost.  There is an impossibility.

Insurance reform: The major insurance companies, commonly referred to as BUCA (Blue Cross, United, CIGNA, & Aetna) have already conceded to the 3 insurance reforms outlined by the Obama administration: guarantee issue, elimination of pre-existing conditions, and community-rating.  This is valuable health "insurance" reform, and it is a done deal if the Democrats want it.  This reform will make insurance available to everyone regardless of their age or health.  It will move insurance carriers away from underwriting and towards the management of benefits and wellness.

Health Care Reform:  How are providers reimbursed?  How is care delivered?  How is quality of care assured?  Where is care delivered?  Will Medicaid be expanded?  Will their be subsidies for lower income individuals to purchase health insurance? These are all questions about health care, not health insurance.  The bills proposed in Congress make significant changes in the delivery of care.  This is not a done deal.  There are many disagreements - even within the Democratic party.

Wall Street Journal - Health Reform and the Deficit

"The CBO's deficit projections are based on the optimistic assumptions that the economy will grow at a healthy 3% pace with no recessions during the next decade; that there will be no new spending programs after this year's budget; and that the rising national debt will increase the rate of interest on government bonds by less than 1%. More realistic assumptions would imply a 2019 deficit of more than 8% of GDP and a government debt of more than 100% of GDP."

To read more:  click here for the Wall Street Journal article

Mandating Coverage - Can You Force Individuals to Buy Health Insurance?

In Massachusetts, the law mandates that individuals purchase health insurance or pay a fine of $1,068 yearly.  According to the new data from the state, 68,000 taxpayers chose to pay the fine rather than purchase health insurance.  That is 3% of the state's population.

If we assume that the same would occur under a federal insurance mandate, then even if we create a federal mandate for health insurance, over 10 million individuals would ignore the mandate.

Why?
Because at the end of the day, health insurance is a value-based decision.

There are individuals who based on their income and their assets will not see value in purchasing an insurance policy that cost several thousand dollars yearly, to protect them from a financial risk (the cost of care) that they do not fear.

Government or Free Enterprise - who will fix healthcare first?

Where is the long term solution to the rising costs of healthcare?
- Government actions? or..
- Free enterprise?

Many U.S. industries, pressured by overseas competition, were forced to use the power of the internet, computers, GPS, etc. to find efficiencies.  Their survival depended upon it. 

The healthcare industry has not been forced to reinvent. 
The answers lie within reinvention.

X-rays should not cost $200.  The technology is over a century old.  MRI's should not cost $2,000.  The technology is decades old.  The majority of office visits are not necessary.  Many times the work could be done via the telephone or the internet.  The visit and the cost of the test are about revenue for the provider, not the time and efficiency of the patient or the system. 

The government can try to re-create the business model healthcare.
The government can try to change the financial motivation of the system.
But the government cannot create or invent new technology or new information systems.

However, free enterprise is already re-inventing the model.
Free enterprise can move quicker, react quicker, and correct quicker.
The answer is to our healthcare woes is in the reinvention of the business model.

Read a great article here: Why Not Fix Health Care Technology First?

Why Taxing High Priced Plans will never work

The Baucus Bill (as explained in the previous post) taxes health plans which premiums are above $8,000 for an individual and $21,000 for a family.  The bill banks on raising over $200 billion in new tax revenue with this new tax.

But this will never happen.

The employers and the employees who can afford these plans will stop buying these plans, and there will be no premiums to tax.  They will simply move to plans priced below these amounts, in order to avoid the tax.

If you can afford $21,000 for a family insurance plan, then you can afford to buy a lower priced plan with a higher deductible.  And you will.  Because the savings created by avoiding the tax will cover the cost of the increased deductible.

The Baucus Bill: Taxing Insurers by Ezra Klein

The Baucus Bill: Taxing Insurers by Ezra Klein on 9/16/09

The big revenue item in Baucus's bill is the so-called "excise tax" on high-cost insurance plans. The bill envisions a 35 percent surtax on plans costing more than $8,000 for an individual, or $21,000 for a family. According to the Kaiser Family Foundation's 2009 survey of health benefits, the average insurance plan cost $4,824 for an individual and $13,375 for a family. So this is taxing plans quite a bit costlier than the average, and only a small part of them. For instance: Imagine a family plan that costs $23,000. The tax is not 35 percent of $23,000. It's 35 percent of $2,000, or the value of the plan that falls above the limit.

But this hides a couple of things. First, some plans are very expensive because they're more generous. But some plans are more expensive because they're in wildly expensive markets. New Yorkers, for instance, are going to feel the brunt of this tax a lot more than, well, Montanans will.

Second, the plans exposed to the tax cap are going to become progressively less generous over time. According to CBO, the excise tax only raises $219 billion in the first 10 years. But in the second 10 years, the amount it raises grows by 15 percent every year. That's higher than inflation, obviously, but also higher than health-care costs. The reason is that the tax is pegged to the Consumer Price Index, which grows a lot more slowly than health-care costs. Thus, insurance plans will get more expensive faster than the tax cap will rise, and more of them will get hit by the excise tax. That's not going to be popular, but it will raise a lot of money, or barring that, offer an incentive for people to choose lower-cost plans.

Thinking through all that, though, I have trouble seeing this tax survive in the long run. There seems a substantial chance that it will become like the AMT, and Congress raises it year after year to escape consumer backlash. As I've argued before, the excise tax is a way to seem like you're taxing insurers rather than taxing health-care benefits, even as the practical effect is the same. But though the excise tax might prove easier to pass, I wouldn't be surprised if it's harder to sustain than a cap on the tax deduction. Congress will cross that bridge when, and if, it comes to it, I guess.

Government Controlled Reimbursement Levels - Unfair advantage #2

Currently, Medicaid and Medicare can set the amount of reimbursements paid to providers.  No one else has this power.  Not the private insurance companies nor any private individual. 

Currently, Medicaid and Medicare reimburse the providers at levels lower than the actual cost of care.  Hence, the providers must over-charge private insurance companies and private individuals to make up the difference.

This is referred to as "the cost-shift."

A new "public plan option" would have the same ability to set the amount of reimbursements.  This will further drive up the health care costs charged to private insurance companies and private individuals.

Many proponents of the public plan option, including President Obama, speak about the public plan's ability to "keep the insurance companies honest".   If the public plan can ignore the real price of health care, and force providers to accept reimbursements below the actual cost of care, isn't that dishonest?

The Role of Profit in Healthcare

Is there a role for profit in healthcare?

Peter Drucker wrote:  "Profit is not the explanation, cause, or rationale of business behavior and business decisions, but rather the test of their validity. If archangels instead of businessmen sat in directors' charis, they would still have to be concerned with profitability, despite their total lack of personal interest in making profits.  Economic profit (not trick-accounting profits) is proof that you are making a valuable contribution to society."

Health insurance companies, as well as healthcare providers, exist as profit businesses, not-for-profit businesses, and non-profit business.  It is not possible to eliminate profits.  Profits must exist in order for the business to be sustainable.  You can choose the level of profit margin or choose where the profits are distributed, but they cannot be eliminated. 

Insurers, as well as doctors, hospitals, pharmacuetical companies, medical equipment companies, home health care, nursing homes, etc. - all need profits. 

 We cannot legislate profits away, nor would we want to. 
However, we should legislate a competive and fair market.

The "Public Plan Option" - unfair advantage #1

Concerning the "public plan option", MoveOn.org writes: "Included in the (insurance) exchange is the public health insurance option—a nationwide plan with a broad network of providers—that will operate alongside private insurance companies, injecting competition into the market to drive quality up and costs down."

This is a bold statement.  Is it true?
The public fair can only work if it is given advantages that the private insurers do not have. 

Today, health insurance is controlled by the states, not the federal goverment.  Hence, it is illegal for private carriers to create a nationwide plan.  If the public plan is allowed to create a nationwide plan, it would have a significant advantage over the private insurers.

Newt Gingrich on Health Care Reform

To read Newt Gingrich on health care reform:  Click Here

Quick Side by Side Comparison of the 3 major Health Care Reform Bills out right now

http://wonkroom.thinkprogress.org/2009/09/08/baucus-plan-table/

President of BGNE, Robert Gaydos on WCAX Local News in Vermont talking about Health Care Reform

http://www.wcax.com/global/video.asp?clipId=4135616&topVideoCatNo=63459&autoStart=true

Baucus Health Plan Outline from Reuters

http://www.reuters.com/article/rbssHealthcareNews/idUSN0825019320090917

Employer Mandates

Employer mandates are troublesome.

It might make sense to create a mandate that employers must offer health plans to their employees. It might level the playing field, and allow more people access to health plans that would appear lower cost since the plans would subsidized by employers' contributions and/or tax subsidies.

But when the employer mandate also mandates the employer contribution level, it becomes troublesome. Several of the health reform bills propose that employers pay a minimum of 60-72% of the health premiums. However, how do you peg a percentage to an unknown number that is increasing at an unknown inflation factor?

Senate Finance Committe release their health reform bill

The Senate Finance Committee, Chairman Senator Baucus (D-MT), released their health reform bill today. The highlights were released last week. Clearly, this bill is more moderate than the House bills or the Senate H.E.L.P. committee bill.

The Baucus bill does not have an employer mandate, and in place of a "public plan", it offers Co-ops as a solution.

Will this bill get legs?
Will President Obama comment on this bill?

The key in the senate is to reach 60 votes, and to accomplish this, the Democrats need at least one Republican Senator. Senator Olympia Snowe (R-ME) and Senator Susan Collins (R-ME) are the only Republicans that seem inclined to consider joining the Democrats on any bill currently in debate.

Employers should review this bill. The fact that this bill is already being criticized by both the left and the right illustrates that this bill is moderate.