Collateral Damage

It was 1986. A bank opened about ten new locations in the Cleveland area. Somehow or another I ended up as the life insurance agent for many of the branch managers. The bank’s marketing department decided to brand these guys as Financial Planners. I was sitting with one of my clients in his branch, a kiosk inside the Kmart at 260th and Euclid (did I forget to mention that all of these new branches were inside Kmart’s?) and laughed at the idea that he and his peers were Financial Planners.

A Financial Planner is a stock broker with delusions of grandeur or an insurance agent with low self-esteem.

It would be years and years before financial professionals like my partners Jeff Bogart and Kathy Browning would embrace the concept of fee based money management and financial planning would no longer be just another way to sell a policy, a loan, or an annuity.

I bring this up not to laugh at the wide variety of people, qualified or not, who call themselves Financial Planners, but to remind you, dear readers, that in America anyone can claim to be an expert on anything. And in this age of disinformation overload, your email inbox and Facebook news feed are a constant source of rumor, innuendo, and out right lies.

The health care debate is a prime example.

This blog has consistently contended that the Patient Protection and Affordable Care Act (PPACA) is a poorly written law that fails to address our biggest problem, the cost of care. Badly written laws lead to poorly crafted regulations which are a disaster in execution. The unintended consequences are the people who fall through the cracks, in essence, the collateral damage. Today’s post is about a couple of these casualties.

But it is important to note that the way to solve the inherent problems of the PPACA isn’t to scrap it (which isn’t going to happen) but to amend it. If you got lost on the way to Cedar Point would you turn the car around and take your kids back home, or would you stop, get directions, and get on the correct road? We need to correct our path. We need to amend the bill.

The politicians and functionaries that created and backed the PPACA either have a different, unstated agenda or are just lost. Twice in the last few months I have had to deal with the consequences of a health care bill that ignores health care and costs and instead focuses on insurance reconstruction. They are my examples of collateral damage.

The new law made insurance coverage on children guaranteed issue. We can’t deny any child coverage regardless of his/her preexisting conditions. So if we are taking the parents, we have to take the kids. That part is fine, but the other part, the part that was easily predicted by anyone who understands the process, was that the legislation eliminated “Children, only” policies. That is a huge problem.

Some employers don’t choose to pay for the health insurance coverage of dependents. I was able to save families, usually lower income or middle class, a lot of money by writing policies that covered just the kids. If there was an unhealthy child, he/she would stay on the parent’s coverage. That, however, is a discussion of choice and savings. What if there isn’t a choice?

What happens if someone is a single parent? What if that individual is severely ill or injured and after a year plus of treatment is granted Medicare? Who covers the kids? The quick answer – NO ONE. There isn’t a regularly priced major medical policy in the marketplace for a couple of healthy children. After considerable time and research I was able to find a short term catastrophic major medical policy. I have used this option twice in the last few months and shared the information with my peers.

The new Summary of Benefits and Coverage (SBC) regulations kicked in last week. We are just learning how this will impact employer based health insurance policies. We know that this regulation will help people find out what is and isn’t covered under their health insurance policies. We also know that it will prevent employers from changing policies quickly if their business environment forces them to cut costs. That second point is significant. Restructuring benefits, with the same insurer or with a different company, is how many of my clients were able to retain employee benefits during this last recession. What do we do now? No one knows.

The PPACA is a classic example of the blind leading the visually impaired. The experts in Washington, like many so-called Financial Planners, are self-anointed. Without a clear understanding of how their goals impact the average American’s realities, we have laws that may be well-intentioned, but have real, negative consequences for lots of us.

And do you know what we call those Americans, the ones who suffer from the mistakes of others? Collateral Damage.