Tell Me Something I Don’t Know

Download PDF Report >>> Tell me something I dont know

You know the good features in the Affordable Care Act. You know Republicans want to repeal it.  Fine, so “tell me something I don’t know”.

REPUBLICAN PROPOSALS

For instance, did you know that Nixon proposed a comprehensive health reform plan in 1974, or that Republicans countered Clinton’s health reform with their own in ‘93? What were some of their reforms?

Start with the ever-popular individual mandate. Republicans were strongly for it. Now they are solidly against it.  Banning exclusions due to pre-existing conditions?  They were for that before they were against it.   Continue reading

Comment in New York Times on Pre-existing Condition Insurance Plans

On March 17, 2011, TARA PARKER-POPE wrote an article titled New Pre-existing Condition Insurance Plans that are part of the Affordable Care Act.  She notes:

“Pre-existing condition insurance plans, mandated by the new health care law, opened for business last July, but many consumers still have no idea they exist, reports Walecia Konrad in this week’s Patient Money column.”

Mr. Kurz responded with comments on some guides through the legal labyrinth for obtaining individual health insurance.

 

Individual Mandate not necessary – But will you like the alternative?

Download PDF Report >>>Individual Mandate Alternative

SUMMARY

Of all the issues in the Patient Protection and Affordable Care Act (ACA or PPACA), one that has drawn an extraordinary amount of attention is the Individual mandate. Looked at in isolation, it may seem like an overreach. However, a broader view indicates why this provision or similar was included at all.

It is included because another section of ACA prohibits Health Insurers from rejecting people with pre-existing conditions as they do now. Some medical conditions may be avoidable, but the vast majority of pre-existing conditions occur through no fault of the individual. Insurance of all types is to spread risk, and the more skewed the risk the greater the need for insurance. Health costs are extremely skewed making health insurance vital to a modern economy.

ACA mandated that everyone buy insurance and that makes sense. However, the objection is forcing people to buy from a private company. There are several options to resolve that. One is to create a government-run insurer. That would eliminate forcing people to buy from a private insurer. A second is to make payment for any service obtained by an uninsured person a loan similar to student loans that could not be discharged for any reason. They would carry interest and be payable in full no matter the circumstances.

DISCUSSION

The percent of people with pre-existing conditions is small and to the majority of folks without such a condition, it may seem like a trivial matter. However, the number of people with pre-existing conditions is in the millions, and the cost to them has been and can be horrific. Medical expenses for these people have led to thousands of bankruptcies as health care costs sapped all their savings and more.

Insurers soon will be required to insure ALL persons regardless of medical condition. There is the very real risk of some people will avoid buying insurance, and then when they have an injury, or find they have a chronic condition like asthma or diabetes, they would only buy health insurance AFTER they know they have a medical condition.

One would think that any notion of personal responsibility would have all persons get insurance in order to spread health costs risks over the greatest population. The more people that buy insurance, the lower the cost per person. However, experience has shown that some people will NOT buy insurance if they feel they will not get sick or injured.

Fortunately, many employers offer health insurance for their employees, and by law, health insurers covering insurance through work (group insurance) MAY NOT exclude people with pre-existing conditions after some limited period of time, usually less than a year. However, the same did not apply to individuals until health care reform.

Note that employed individuals usually have access to health insurance.  Full time employees, that is. With rising costs, what have many employers done including some of the largest?  They have reverted to greater use of part time employees who do not enjoy the same privilege and access to health insurance as do full time employees. This is putting more pressure on reforming individual insurance plans.

People do not just dream up laws in a vacuum. Most fall into two categories. One is responses to maintain clean food, air and water, or help disadvantaged people, often the result of some abuse (social laws). The second are financial laws, like taxes or efforts to reduce taxes via special treatment for some (loopholes). ACA addresses the former by adding a financial provision, the individual mandate.

Everyone who works pays into social security and Medicare. Since Medicare is health insurance, there already is a mandate for working individuals to buy health insurance from the government. The only distinction is that Medicare is government-run insurance, while the ACA mandate applies to buying insurance from private companies.

ALTERNATIVE ONE

In the state run insurance exchanges to which any health insurer can join, add a government-run health insurer. Then the individual mandate does not require buying from a private insurer. However, if an individual decided against all private insurers they would have to buy the government-run insurance plan, just like Medicare and clearly legal.

However, politics intervened. Draft legislation DID INCLUDE a government-run insurer. They called it the “Public option”. It would operate on the same level field as private insurers and not be subsidized in any way. Private and government insurers would compete for business. Still, critics objected, and politicians stripped this provision from the final bill.

Why the objections?  Perhaps it was fear of competition.  To understand the public option, all one has to do is look at Medicare. Different in that it would cover people under 65 years old. In addition, women over 65 do not get pregnant, so there would be some differences in coverage.

What few know is government manages Medicare entirely through private health insurers. Insurers use a term Medical Loss Ratio (MLR) do describe how much of a premium dollar goes to pay health care costs. For Medicare, the MLR is over 95% meaning over 95 cents per premium dollar goes for health benefits. For private insurers, not so much. Their average MLR is in the low 80% range, and for individual insurance, which Medicare is, the MLR is even lower. How can private insurers compete with someone whose costs are less than one quarter of their own?

The honest answer is they cannot, at least not as currently structured. However, where does the constitution guarantee private enterprise continued profitability or even existence? “Destructive renewal” is a term used by business to explain competition that virtually by definition requires companies to fail as other more efficient companies market their goods and services for less; or whose new goods and services make prior ones obsolete (think cassette tapes).

It is worth noting that private health insurers used to have MLR’s in the mid 90%, but that was 30 years ago when nearly all insurers were non-profit.  Over time, for-profit insurers became more prevalent, and as they did, they had to show a profit for their investors. Some admin efforts were devoted to marketing. Some to reducing costs. Some to profits. The net effect, however, is that far fewer dollars went for health care costs and more went for overhead and profits. Yet some of these same companies administer Medicare contracts for less than 5 cents on the dollar. What is apparent is that insurers could cut back on what it now costs them to weed out people with pre-existing conditions, but more efficiency are needed to compete.

ALTERNATIVE TWO

Set the ground rules for individual insurance similar to that of group insurance obtained through work. If a person elects not to purchase insurance, and gets sick or injured, a person could still buy insurance but the law would allow pre-existing exclusions to extend for one year. Also like group insurance, if a person previously had health coverage, and not more than 60 days elapsed without coverage, then the person could buy health insurance with no waiting period.

This alternative needs to have a bit more teeth to be effective. This is because there is a law that hospitals have to treat EVERYONE, regardless of ability to pay, and a healthy person could delay for years purchase of health insurance. They would only buy insurance when they get sick.

The current Medicare drug program provides a template for solving this issue. If a senior fails to purchase drug insurance, the premium continues to rise for as long as one remained uninsured. One can apply a similar index to health insurance. But how does one provide assurance of payment? Since the person required services, it should be legal to require the person to purchase insurance to pay for those services, and if the person is unable or unwilling to pay, the government could advance a loan similar to student loans.

That loan would bear interest, need to be paid over time (though shorter than for student loans), and could not be discharged by bankruptcy. If not paid by retirement, payments would be deducted from that person’s social security, just like student loans.  Gone is the mandatory requirement. Replacing it is an automatic loan that the individual must repay in full with no exits.

Since the government would initially pay the hospital, it also could determine the ability to pay of the person getting treatment. If that person was indigent, they could be put on Medicaid, and no medical loan would be created.  If the person’s income were within the subsidized amount, they would have been eligible for had they carried insurance, the loan would be reduced by the amount of the subsidy. Since the hospital is paid in full, there would be no cost shifting to those who bought insurance.

ALTERNATIVE THREE

As noted above, a law requires hospitals to treat EVERYONE, regardless of ability to pay. One could rescind that law and force everyone to either have insurance, pay for service, or be denied service. But few would be willing to take that backward step. From a practical standpoint, this is not a viable option.

Download PDF Report >>> Individual Mandate Alternative

Individual Healthcare Mandate Was a Republican Idea

Download PDF Report >>> Mandate was Republican Idea

SUMMARY

There has been much controversy about the Patient Protection and Affordability Care Act (PPACA or ACA) that became law in 2010.  Some concern is over how it was passed, though that is more about form than substance.

Regarding substance, critics have claimed that this is a government takeover of healthcare and an over-reach into private affairs.  One item getting particular attention is a mandate that all people buy health insurance or pay a fine. Some, including judges, say this is unconstitutional, others say it is not.  Insurers are not happy either, not because there is a mandate, but because the mandate does not go far enough to deter potential abuse.

The purpose of this analysis is not to debate whether the ACA is unconstitutional or an over-reach into private affairs. Its purpose is to highlight that much of ACA was actually promoted and supported by Republicans in years past.  In some respects, Democrats “stole” Republican ideas, not once, but twice. Continue reading

Affordable Care Act Revisited

Now that Republicans have introduced in Congress a law to repeal ACA, it is fair to ask what is in this legislation that is so objectionable.  Critics have complained that the 2,400 page Affordable Care Act (ACA) is too over-reaching and must be repealed. While the ACA is admittedly large, the sample page (standard 8.5 inch wide paper) is indicative of the 2,400 pages. The actual content is but a small fraction of a typical page of text. 

AHA legal text sample

One is encouraged to read the article Affordable Care Act – Contents that provides an outline of all the provisions of the AHA. Less than 20% of the act deals with health insurers and insurance coverage where most of the controversial issues exist. Over 80% of the act is relatively non-partisan, non-controversial that attempts to solve many less obvious though not less serious  issues facing America’s health care system.

A good review of the contents themselves was published by the Association of American Medical Colleges (AAMC).  As a note of caution, these articles are aimed at their members and may prove a bit technical to the general reader. A number of different reports that can be viewed Analysis of Health Care Reform Provisions or downloaded. Take politics out of the discussion and the provisions don’t seem nearly as objectionable.

Sure, the ACA has faults and can certainly be improved. But no legislation is ever perfect.  Finally, one can ask in light of pressing national issues of  jobs, whether Americans want to revisit the long drawn out process to carry out Republicans’ promise to “repeal and replace” the entire act.

Surgical “Check Lists” Improve Quality, Lower Costs

Read Full Analysis at >>> New England Journal of Medicine – Check Lists

As most anyone who has ever looked into an airplane cockpit while boarding, the pilot and crew were going through a check list to insure nothing in preparation for the flight was overlooked, assuring safety to the crew and all the passengers.

This check list method, it was found, can similarly provide favorable impacts on surgical outcomes. A January 29. 2009 article by the New England Journal of Medicine noted some of the benefits from using this process.  To quote from the background of the article:

“Data suggest that at least half of all surgical complications are avoidable. Previous efforts to implement practices designed to reduce surgical-site infections or anesthesia-related mishaps have been shown to reduce complications significantly. A growing body of evidence also links teamwork in surgery to improved outcomes, with high-functioning teams achieving significantly reduced rates of adverse events.

In 2008, the World Health Organization (WHO) published guidelines identifying multiple recommended practices to ensure the safety of surgical patients worldwide.  On the basis of these guidelines, we designed a 19-item checklist intended to be globally applicable and to reduce the rate of major surgical complications.”

Read Full Analysis at >>> New England Journal of Medicine – Check Lists

Leapfrog Group Rates Hospitals

Additional consumer information regarding healthcare choices is one step in improving the healthcare system.  Among the organizations providing this type of data is Leapfrog Group.  Their website says it best.

From Leapfrog website:

The Leapfrog Group is a voluntary program aimed at mobilizing employer purchasing power to alert America’s health industry that big leaps in health care safety, quality and customer value will be recognized and rewarded. Among other initiatives, Leapfrog works with its employer members to encourage transparency and easy access to health care information as well as rewards for hospitals that have a proven record of high quality care.

The Leapfrog Hospital Survey is the gold standard for comparing hospitals’ performance on the national standards of safety, quality, and efficiency that are most relevant to consumers and purchasers of care. Hospitals that participate in The Leapfrog Hospital Survey achieve hospital-wide improvements that translate into millions of lives and dollars saved. Leapfrog’s purchaser members use Survey results to inform their employees and purchasing strategies. In 2009, 1206 hospitals across the country completed The Leapfrog Hospital Survey.

Go to Website >>> Leapfrog Group