Attacks Can’t Obscure Health Law’s Valuable Benefits

Download PDF version Report>> Attacks cant obscure benefits-Huff Post

Huffington Post Posted: September 23, 2010 09:04 AM
http://www.huffingtonpost.com/andrew-kurz/attacks-cant-obscure-heal_b_735873.html

Attacks Can’t Obscure Health Law’s Valuable Benefits

After decades of trying, health care reform is finally a reality. The Affordable Care Act (ACA) is sweeping in scope (it has more than 300 sections) and takes four years to implement. Critics say Americans don’t want it, but if that’s true, it’s only because of false claims by those who do not know what its provisions are or who are being spun by people who have an economic or political interest in blocking the law.

Health reform provides coverage to millions of people while correcting many current and serious defects. It isn’t perfect, but it has countless positive elements being ignored by critics. One key example is Section 2718, “Bringing down the cost of health care coverage,” which takes effect today (September 23). It brings sorely needed cost-control mechanisms while retaining health insurers’ ability to innovate. The provisions of section 2718 are eminently reasonable, and if the atmosphere were not so politically charged, they would receive strong bipartisan support.

Insurance accounting used to be straightforward. The hospital sent a bill. The insurer paid most of it, and forwarded the balance to you or your employer. With the advent of for-profit insurers, which now dominate the industry, accounting and classification of costs have become creative enterprises. Continue reading

Insurers’ Efforts to Shift Admin Costs to Medical Costs

Download PDF Report >>> Insurers’ Efforts to Shift Admin Costs

Senator Rockefeller recently came out with a report cautioning about health insurers efforts to shift Selling, General and Administrative (SGA) expenses to medical costs.  A shift would increase medical loss ratios (MLR) allowing insurers to keep more earnings. Two uncertainties affect predictions.  First is how plans are grouped and second is how one computes “medical costs” and “premiums”.  Below are reasonable interpretations of the new law that favor consumers, not insurers.

HOW ENROLLEES ARE GROUPED

The first order is to define “group.”  The more groups are combined, the greater the opportunity for balancing out gains and losses, which is the whole idea of insurance.  Continue reading

Consider Having only two Insured Groups – Self-Insured and Community Rated

Download PDF Report >>> Consider having two insured groups

Anthem’s recent announcement of rate hikes of up to 39% highlights a serious problem with the health insurance industry.  Despite public consternation, Anthem can justify the increase using legitimate risk analysis. The problem is not entirely Anthem. The problem is a marketplace in this country that defies logic, and has done so for decades.  All private health insurers including Anthem are benefiting from this absurdly inefficient market.

The U.S. is not one single homogeneous insurance market. Rather, it is multi-tiered divided between government and private.  Government pays almost 50% of all medical costs for the 30% of population on Medicare and Medicaid.  The private market is further divided into self-insured and risk segments, roughly split 50:50 by population.

The self-insured consist of large enterprises that have so many members that it costs more to buy insurance than to pay medical expenses themselves and have insurers only administer claims.  Insurers make a profit on administrative expenses, but nothing on medical costs.  Medicare operates the same way as self-insured, contracting membership and claims to insurers.  Insurers make nothing on any self-insured claims because the insurers carry no medical risk.

Service fees on self-insured groups of the top 10 insurers average 6% of insured premiums. Medicare overhead runs even less. Adding government and self-insured costs, some 75% of all insured U.S. health care is administered with expense ratios of about 5%.  Continue reading

Medical Quality Activity Definitions

Download PDF Report >>> Medical Quality Activities

On April 14, 2010 the Federal Register published a notice for comments to PHS Act Section 2718(c) directing the National Association of Insurance Commissioners (NAIC) to establish:

  1. uniform definitions of the activities including defining which activities constitute activities that improve quality, and
  2. standardized methodologies for calculating measures of these activities that to take into account:
    1. the special circumstances of smaller plans,
    2. different types of plans, and
    3. newer plans

These uniform definitions and standardized methodologies will be subject to the certification of the Secretary.

For years, FASB (Financial Accounting Standards Board) has provided guidelines for SG&A expenses that apply to all industries.  With this PHS Act directive, health insurers can convert some SG&A expenses into medical expenses to raise their MLR.  Since the law allows activities that improve quality to be considered medical expenses, some SG&A expenses will qualify.  What does and does not improve quality and not violate FASB standards is the issue.

Expenses can be divided into Continue reading

Democrats “Steal” Republican Health Reform Ideas

Download PDF Report >>> Democrats steal republican ideas

Now that the Patient Protection and Affordable Care Act (ACA) is law, one might expect people to learn what is in the law and settle down a bit.  However, Republicans continue to rail against it as bad law and even unconstitutional.

Republicans might well review a bit of their own history.  In 1993, President Clinton attempted healthcare reform and like today, Republicans railed against that plan.  However, 23 Republicans co-sponsored a counter proposal, the “Chafee bill”.  That bill even received the endorsement of the AMA and the U.S. Chamber of Commerce.  The table below highlights 19 key areas and compares the new law with the 1993 Republican proposal.  Note that nearly all the key elements that include the most contentious items were initially proposed by Republicans.

In three areas, the current law includes items not in the Republican proposal: Medicaid expansion, prohibiting insurers from setting lifetime spending caps, and extending coverage to dependents.  In two areas, the Republican proposal includes items not in the law: Medical malpractice reform, and equalizing tax treatment for insurance of self-employed.  With the possible exception of Malpractice reform, none of these were major areas of contention. Continue reading

Observations on Health Care Reform

Download PDF Report >>> Observations on Reform

Today, Obama signed the bill to repair bad parts of the health bill, and all are now the law of the land. Things might have gone better if this were called “Insurance reform” as that section caused the most heated debate.  Underlying the disagreements are two opposing philosophies. Those who think access to health care is a privilege will disagree with this reform.  Those who think that access is a basic right tend to agree.  Below are some observations about the whole messy process.

Everyone is entitled to their own opinion.   No one is entitled to their own facts. These last 14 months have seen far too many allegations passing as facts, and when repeated often enough, has many believing they are facts. Having spent so many months researching real facts from nonpartisan sources, most of the critics’ allegations are simply untrue.

One often repeated charge is that Democrats rammed this through and excluded all Republican attempts to participate.  One reason this process took so long is that Senators Baucus (Democrat) and Grassley (Republican) took months longer to reach agreement on their committee bill that was a bipartisan effort and more than 200 Republican ideas are included in the final bill.  Republican input is substantial and to say they had no voice is just politics, not fact.

Another reason is the Republican Party opted for a strategy to “just say no” to any partisan Obama bill and to appointments requiring Senate approval.  They even called the health bill, Obama’s Waterloo months before they knew what was in it. Withholding of appointments and repeated 100% NO votes attests to their non cooperation.  After months of joint effort, even Senator Grassley voted against his own committee bill.

Minority Leader Boehner complained that this bill would be Armageddon and Senator McCain said he would no longer participate.  Such hyperbole would be humorous save that far more inflammatory comments have stirred up unruly conduct in the public while leaders on the right remain mostly silent.

The majority of Americans disapprove this bill. One truth is political bickering has turned off the majority people. But it also depends on how the questions are worded.   Non partisan Kaiser Foundation asked about 12 specific benefits.  Over half favored 11 benefits, with 60%+approval on 6 benefits.

The individual mandate is unconstitutional. What people do not realize is federal law requires everyone be treated in emergency rooms, regardless of their ability to pay.   If you have mandatory expenses, you need mandatory income. Republicans initiated the idea of mandate during Hillary care and Democrats objected much like Republicans do now.  But like a card table, take out a key leg and the whole table falls down.  Healthcare is far more complex than four legs and all need to work together or reform collapses.

Republican governor Romney who passed universal health care for his state wrote in 2006 (and which it and the new law are quite similar) “Some of my libertarian friends balk at what looks like an individual mandate. But remember, someone has to pay for the health care that must, by law, be provided: Either the individual pays or the taxpayers pay. A free ride on government is not libertarian.”

This is a government takeover of healthcare. Somebody might want to remind those folks that 100 million people and ½ of all medical costs are already on government health care. While reform calls for an expansion of Medicaid, the bulk of reform retains the current mix of private and government insurance.  What IS reformed are the health insurers who over time have engaged in more and more nefarious acts that favor profits at the expense of the health of their insured.

Insurance reform is the number one issue for the public and this statute goes a long way, albeit gradually, in making those egregious acts illegal.  Controls on insurers are what all other industrialized nations do and their costs are about half ours.

Government will dictate coverage and ration care. There is some truth to that.  However, today, health insurers dictate coverage and too many care more about Wall Street than people’s health.  In fact, some 45,000 people die each year because of lack of access to health care.  If one wants to complain about death panels and health care rationing, look no further than your for-profit health insurer of today.

Buried in those thousands of pages are new data reporting standards and requirements that will allow comparison of medical practices.  Since half of all costs are already taxpayer funded, why shouldn’t the government make an effort to eliminate waste by encouraging effective practices and discouraging non-effective ones.  Contrary to “popular” opinion, the bureaucrats analyzing those practices are not political flunkies, but doctors and medical personnel.

This will cut Medicare benefits. Hard as it may seem today, the government had grave initial concerns that few people would sign up for Medicare.  To encourage participation, Medicare offered private insurers a “bonus” of 15% above Medicare’s own costs to entice seniors to sign up.  Today, 25% of seniors are in Medicare Advantage programs.  Private insurers are free to modify that coverage and add benefits, but also free to charge more for any enhancements.

What reform does is gradually reduce that 15% “bonus” as it certainly is not needed to encourage seniors to sign up. But it does so in an intelligent way, allowing efficient insurers to keep more of the bonus while discouraging inefficient ones.

Closing Medicare Drug “doughnut hole”. There is bipartisan support for this provision as there was in the initial Bush statute.  What few remember is that there was zero funding included in that Republican bill and its 10 year costs about equal the current reform bill. Republican complaints of adding to the deficit or raising taxes are rather hypocritical given their history of deficit spending.

Download PDF Report >>> Observations on Reform

Affordable Care Act – Table of Contents

Download PDF Report >>> Senate bill TOC

The Affordable Healthcare Act for All Americans is without a doubt, a large and complex piece of legislation at just over 2,400 pages.  But how big is 2,400 pages when wide margins, lines numbered, text double spaced, large font,  multiple levels of indent, and more than a few references to other documents?  The sample page below (standard 8.5 inch wide paper) is indicative of the 2,400 page document. The actual content is but a small fraction of a page. AHA legal text sample

Aside from the claims of too lengthly and complex, Republicans argued that this was a Democratic bill rammed through congress.  Interestingly, AHA includes more than 160 Republican amendments accepted during the month-long mark-up through just one committee (HELP), one of the longest in Congressional history.

Critics have claimed it’s a government takeover of our health system.  It may be news to those critics but half of the health system is already government-run.  And the great bulk of the reform bill deals with steps to improve existing government systems that has hardly drawn any attention.  The following provides a quick breakdown of the law sections.  The PDF report that can be viewed/downloaded shows the entire table of contents.

There are 10 “Titles” or major topics in the bill.  Only the first, at 374 pages, less than one sixth of the entire bill deals with changes to how the private sector handles health care. Yet, this is the section that has garnered nearly all the criticism. The bulk of Title I deals with prohibiting abuses by the insurance industry, which, if you ask on an issue by issue basis, most people will agree with the new provisions. Nothing in the bill involves a “takeover” of private insurers.

The next three Titles [II,III,IV] deal with improving Medicare and Medicaid programs and comprise 852 pages, one-third of the bill.  These Titles address reduction of waste, fraud and abuse, and pilot new payment methods towards a “results” oriented method common in most other industrialized countries.  There are few objections to this section.

Title V, at 256 pages, addresses anticipated shortages of primary physicians and other healthcare workers due to services that will be required by aging baby boomers.  This is totally opposite the “death panels” that ration healthcare that unfortunately got too much press for a falsehood.

Title VI uses 323 pages to improve transparency and integrity, yet more efforts to reduce waste, fraud and abuse in both the public and private health sectors. Who objects to efforts like this?

Title VII  improves Access To Innovative Medical Therapies, with focus on lowering the cost of drugs

Title VIII addresses ‘‘Community Living Assistance Services and Supports Act’’ or CLASS Act. This title The purpose of this title is to establish a national voluntary insurance program for purchasing community living assistance services and supports.  Moving people from higher cost hospitals and nursing homes to assisted living lowers costs, a laudable goal.

Title IX includes the revenue provisions that include provisions to raise revenue to pay for the expanded coverage.

The final Title X addresses 1) Medicaid and CHIP, 2) Support for pregnant and parenting women, and the major section 3) Indian health care improvements.  None are controversial issues.

Title I——-Quality, Affordable Health Care For All Americans [374 pages – 14%]

Title II——Role Of Public Programs [221 pages – 8%]

Title III–—Improving The Quality And Efficiency Of Health Care [501 pages – 19%]

Title IV–—Prevention Of Chronic Disease And Improving Public Health [130 pages – 5%]

Title V——Health Care Workforce [256 pages – 9%]

Title VI–—Transparency And Program Integrity [323 pages – 12%]

Title VII-—Improving Access To Innovative Medical Therapies [65 pages – 2%]

Title VIII—Class Act [53 pages – 2%]

Title IX—–Revenue Provisions [93 pages – 3%]

Title X——Strengthening Quality, Affordable Health Care For All Americans [373 pages – 14%]

.

Download PDF Report >>> Senate bill TOC