March 23, 2011

It has been a full year since the Patient Protection and Affordable Care Act was signed into law. A lot has changed in the last year. Were any of those changes good for you?

In the last twelve months:
* Insurance Rates have increased.
* Changed and new policies now cover preventive care without copays or coinsurance.
* Children, Only policies were taken off the market.
* People who have significant preexisting conditions and who have been uninsured for over six months can purchase coverage.
* The Democrats lost the House of Representatives and a large number of state houses.

Confusion and uncertainty have dominated the last year. Polls show that a majority of Americans dislike the PPACA, but a majority also dislikes the Republican’s plan to repeal the law. Much like Iraq, the public doesn’t want to be here, but is afraid to leave without a plan.

A Plan. The government doesn’t have any idea how to reform the payment and delivery of healthcare. The people in charge do not appear to be up to the task. And, do all of our so-called leaders have clean hands? Are we being provided an accurate view of the problem and the possible solution?

Vice-President Biden sent an email today to me and millions of other Democrats. He was eager to celebrate this anniversary. The bulk of the email was the story of a young child born with significant health problems. According to our VP, the family is no longer worried about the child’s future due to the passage of this legislation.

I am glad this child’s parents are no longer worried. Of course, if the child is really that disabled, he would qualify for SSI benefits and his health would be covered by the government or the parent’s policy. Nothing changed.

Only in government is over-promising and under-delivering a given.

It has been a year. The Doc-Fix and the 1099 Problem are still unresolved. The Individual Mandate might not be constitutional. The Democrats and the President are stalling in the hope that the PPACA will become accepted, if not loved. The Republicans made a faint attempt at repeal and then returned to their #1 focus, abortion. Regulations and rules are now in the hands of the bureaucrats. The final result may be as clean and organized as the tax code.

The PPACA link in today’s blog is the current amended version of the legislation as of December 10, 2010. Millions have been squandered by insurance companies and major employers attempting to comply with the ever-changing regulations. Those costs will be passed along to you in higher prices for insurance, food, and other necessities.

We can only hope that there will be more clarity and an actual plan by this time next year.

When is a contract a contract? When is a promise a promise? The answer in 2011 is “It Depends”.

Public employees have contracts. Some of their contracts promised adequate wages with really good fringe benefits and generous retirements. Almost all of their contracts guaranteed stability. Governments; cities, states and the feds, and public institutions such as schools, often took the easy route. Our leaders and elected officials pushed these payroll costs back twenty or thirty years when funding would be someone else’s problem. This strategy was so popular at the steel mills and the auto plants that it had to be a good idea.

The future is now.

Vice-President Dick Cheney once said the deficits don’t matter. And they didn’t. To him. In 2011, after ten years of unfunded wars, unregulated banking, and reckless spending, we are in a real mess. We could reassess our priorities and then align our income (taxes) to pay our bills, but that would be difficult. That would take courage. Instead, we tear up contracts, de-certify unions, and cut heating oil subsidies for the poor.

What does all of this have to do with the delivery of health care? After all, this is Health Insurance Issues With Dave. In a word, everything.

The recent election gave us Republican governors in Wisconsin, Ohio, etc… Elected to create jobs and right their ships of state, these new governors have chosen a different path. They have decided to target their public employees and to eliminate the unions that represent them. We are being told that these contracts are too expensive to honor. We don’t have the money. Their jobs, and the incomes that paid their bills, will disappear. The pensions they were promised may be gone.

Why is this different than government’s promise of health care? We haven’t properly funded the health care we have promised to the poor and the elderly. We have deferred the expenses and punted every time a difficult decision has been on the table. A quick example is the Medicare Doc Fix.

In an effort to make a dent in the fiscal mess that is Medicare, a decision was made in 1997 to control the escalating costs of medical care. The Sustainable Growth Rate was a payment formula designed to keep doctors’ rates in check. Unfortunately, the formula didn’t work in the real world. The adjusted payment rates would have forced a large number of doctors to not accept Medicare and to leave the system. One option would have been to correct the formula. Another option would have been to scrap the Sustainable Growth Rate and start over. Congress, Republicans and Democrats, chose a third option. They passed periodic fixes to the bill and pushed the tough decisions back for someone else to handle. The Sustainable Growth Rate was passed in 1997. How much have we saved to date? Nothing. The implementation is still getting postponed every month.

Is the Doc Fix a good idea? Would the Doc Fix solve Medicare’s problems? Probably not. But if Congress doesn’t get Medicare’s costs and funding under control, we will eventually be facing the same problems, and the same decisions, that the states are grappling with today.

Can the federal government be entrusted with more responsibility for our health care? What promises are too important to break?

DAVE

“Mr. Cunix?”

I recognized that voice.

“This is Belinda Prinz from Congresswoman Marcia Fudge’s office.”

Regular readers know that I have mentioned my Congresswoman a couple of times in my two blogs.  We also know that Congresswoman Fudge, or her staff, are regular readers.  Ms. Prinz even commented on the August 30, 2010 post, Choosing Sides.

Belinda Prinz must have drawn the short straw.  There is no doubt that she considered herself fortunate that she reached my voicemail instead of me.  Her assignment was doomed to failure.  She was on a fool’s errand and the longer she talked, the more apparent it became to her.

One of Congresswoman Fudge’s other staffers had called the Beachwood Chamber of Commerce and had talked with our Executive Director, Wayne Lawrence.  He suggested that she call me.  What did the Congresswoman want?

“We would like to know the name of a small business that can now provide insurance benefits to its employees because of the tax credits in the Patient Protection and Affordable Care Act.  We want to tell their story.”

Yes, Congresswoman Fudge is desperate to find someone, anyone, who has benefited from last year’s legislative train wreck.

Let’s think about this for just a second.  We would need to find a small business that

• Didn’t provide health insurance
• Wasn’t motivated by the tax deductibility of health insurance premiums
• Doesn’t pay its employees very well
• Is making enough profit that the tax credit is irresistible

Does that sound like any business you know?  Of course not.  Will Congresswoman Fudge or one of her cohorts find a couple of examples somewhere in this country?  I like their odds.  Still, it might be worthwhile to research the details when they trot out their success stories.

It is far easier to find the victims of last year’s legislation.  There are businesses that fear my phone calls, worried that this year’s renewal rates will be more than they can spend.  My restaurants and other clients that employ lots of unskilled and semi-skilled workers are very worried about the planned tax/fee/penalty to be assessed to businesses that don’t provide group health insurance.  The saddest and most immediate blow was dealt to parents.

Proponents of the Patient Protection and Affordable Care Act love to note that children are now guaranteed issue.  Insurance companies can no longer refuse to cover a minor due to preexisting conditions.  Fearing the inevitable dumping of unhealthy children from group (employer sponsored) policies to individual contracts, the insurance companies simply stopped selling Child, Only policies.

The few unhealthy uninsured children of families that neither qualified for group health insurance or Medicaid are still uninsured.  This will not change for another couple of years, if ever.  But the negative impact was immediate.

Janet (name changed) works for a large property management company.  Her employer’s new policy, as of February 1^st, will cost her only $60 per month.  That is the price for just her, the employee.  The premium for her and her two daughters would be just a touch over $500 per month.  Employers across the country are cutting back.  One way to save money is to pay only a portion of the employee’s health insurance.  If the employee wants to cover a spouse and children, he/she will be charged the difference.

A year ago I could have written great coverage on Janet’s two healthy daughters for less than $200 per month.  Janet would have stayed on the employer’s plan, placed the girls with Anthem or MMO, and saved over $2,000.  Janet even had the option of choosing a higher deductible and saving even more.  Today? Nothing! 

Janet has two options.  She can stay on her employer’s plan and work for the insurance or she and her two daughters can purchase a fully underwritten individual (non-group) policy.  She chose a high deductible health plan that will cost her $194 per month for the three of them.  Is this the best solution?  Of course not.  But Congresswoman Fudge and her friends killed the best solution last March.

I didn’t return Ms. Prinz’s phone call.  I don’t know of any businesses or employees who have benefitted from her boss’s efforts.  And I have no reason to believe that our Congresswoman has any interest in learning about the collateral damage.

Besides, we know they are reading this.  We just don’t know if they care enough to make any changes.

DAVE

Retiring Representative John Shadegg (R-AZ) has been a frequent guest on Morning Joe, MSNBC’s morning news and talk show. The show’s namesake and principle host is former Republican Congressman Joe Scarborough. Mr. Shadegg has always been particularly candid on Morning Joe. I caught his November 30th appearance.

Congressman Shadegg extolled the virtues of the Bush tax cuts. He warned of dire consequences if taxes reverted to the rates of the 1990’s, even if only for people making over a million dollars per year. Actually, he was most concerned about those in the top tier.

How would we pay for continuing these cuts? These tax cuts were temporary because we couldn’t pay for them nine years ago. But reducing the tax rate was supposed to be such a powerful economic driver that the resultant job creation would have more than offset the short term loss of revenue. That hasn’t happened yet. But, according to Congressman Shadegg, continuing the Bush era tax cuts will ensure a reduction in unemployment.

Congressman Shadegg’s empathy was highly selective, especially when it came to the unemployed. He was very concerned about the tax cuts that could create jobs, but not terribly worried about those people who are actually unemployed. When it came to extending the unemployment benefits for the victims of the worst recession in seventy years, Mr. Shadegg suddenly became focused on every dollar coming to and leaving from Washington. He was positive that we couldn’t afford to continue benefits to the out of work. He implied that it was a waste of money. He opined that the unemployed wouldn’t stimulate the economy since they would just hoard the money.

Mike Barnicle: “Let’s get back to what you said about unemployment checks. People don’t spend that money?”

Representative Shadegg: “No, they will spend as little as they can because they’ll hold on to it as long as they can. In reality, they don’t create jobs.”

Yes, this is Health Insurance Issues With Dave and yes, the above has everything to do with the delivery of health care in this country. Watching Representative Shadegg the other day reminded me of why I have always been concerned about single payer, government run health care.

If nothing else, the last ten years have shown us that you may have to be thirty years old to serve in the U. S. Senate, but you don’t have to be an adult. Ten years ago, at the end of a major financial growth spurt, instead of saving money for the upcoming lean period (think Joseph’s interpretation of Pharaoh’s dream), we cut taxes. When we were attacked and went to war, our youth were asked to sacrifice twice, first in blood and secondly by being saddled with incredible debt. We then invaded Iraq, but still didn’t ask the American public for any sacrifice.

Somewhere along the way we screwed up the housing market, forgot the real purpose of banks, and sold our financial soul to China. And now we have well over 10% of our workforce unemployed and we are debating whether their food and shelter are national priorities.

Ten years from now. Twenty years from now. At some point when we have all been herded into a government run health care system, will your surgery be a future Congressman Shadegg’s priority? Will this government program, unlike all other government programs, be properly funded?

You don’t have to like Medical Mutual, Anthem, or UnitedHealth Care. You may even be really ticked at the annual rate increases. But, your policy will perform as per your contract and the insurer will always have the money to pay your claim.

Keith Olbermann has been highlighting the current mess in Arizona. Governor Jan Brewer has eliminated coverage for transplants from the State’s Medicaid program. Arizona can’t afford transplants. The eighty-some people who were waiting for lungs, kidneys or livers aren’t her priority.

The President and Congress have a lot of issues to tackle in the next few weeks during the lame duck session. Tax Cuts. Unemployment Benefits. Estate Taxes. Don’t Ask, Don’t Tell. A war or two. And, Harry Reid wants to talk about gambling. They all have their own agendas. Compromises will be made. Some bills will be signed.

And somewhere in Arizona there is a young woman with Cystic Fibrosis waiting for a lung…

DAVE

www.bogartcunix.com

The “grandfathered” rules have changed. Let the celebration begin! Ok, maybe not.

New information was released this week further detailing which companies can or can not remain grandfathered. This is an amendment to the interim final regulations that were issued on June 17, 2010 by the Department of Health and Human Services, the Department of Labor, and the Department of the Treasury.

This is the link to the thirty-five page summary.

This is the quick version of what changed: Businesses are now allowed to change insurance companies as long as nothing else substantially changes.

My posts of August 2nd and August 16th provided a quick list of requirements to retain your grandfathered status and how difficult that may prove to be. A key point of contention was that unions could change insurers, but small businesses and individuals could not, even if the insurance company left the market or made significant changes to its products. This amendment reverses that for businesses, but not for individuals. Heck, it’s a start.

The rules, this one, the set issued in June, and all future regulations, are subject to change or reversal. Long term planning is based purely on educated guesses.

The enforcement regulations and delineation of potential penalties will quickly follow.

My prediction: The forms, the cost to remain in compliance, and the penalties will all be far more expensive than simply opting out of private insurance for small business. Paying an annual “No Insurance” penalty (TAX) to the federal government will be cheaper and easier.

You are now up to date. This really is the blind leading the blind. No one really knows how this is going to play out. We are all guessing. Some of us may be better guessers than others, but no one really knows for sure. The recent election may have a real impact on the Patient Protection and Affordable Care Act or it may not change a thing. That can be said of every variable. All we can do, as business owners, as employees, as health care consumers, is to pay attention and hope for the best.

It is time to review the process.

March 23, 2010 – Congress passed and the President signed a far-reaching piece of legislation that affects 1/6 of our economy and the health and well-being of every American.
June 17, 2010 – The Departments of Health and Human Services, Labor, and the Treasury issued rules that apply to all business and individual health insurance policies, RETROACTIVELY from March 23, 2010. The rules also allowed for Public Comment.
June 17, 2010 – Some businesses and individuals learned that the changes they have made, or have been forced to make, preclude grandfathering from the new regulations. Businesses enact new plans accordingly.
November 16, 2010 – New rules. You might have been grandfathered after all, but now that you have made other changes, you aren’t!

Sometime in the next three to six months – Final rules will be issued.

Next Steps:
* Compliance
* Enforcement
* Penalties

Once the rules are final, how will the government and your insurance company know that you are complying? My guess will be FORMS. The Patient Protection and Affordable Care Act, with the onerous 1099 requirements, is a printer’s dream. Clients are already asking if there will be notarized affidavits required to certify their status. Not yet, but that could be coming soon.

Change can be useful. Change can be difficult. Ill-conceived, disorganized, rushed change is bound to cause unnecessary stress. Yes, this really is the blind leading the blind, but we appear to be going around in circles and there isn’t a whole lot any of us can do about it. Relax. Concentrate on your business. This isn’t war. Bullets aren’t flying. We will get through this. Together.

DAVE

www.bogartcunix.com

Today’s Health Insurance Issues With Dave is being replaced by the latest New York Times column from David Brooks. The Title is National Greatness Agenda. It is, on the surface, more about politics than health care or health insurance. Dig deeper dear reader. If we are not more responsible, if we don’t get our government’s finances under control, none of these new government mandated and totally unfunded programs will survive.

As the health care debate reignites, it is time to once again demand transparency, accountability, and clear, definable goals.

We may all agree that we are a great nation, but are we willing to work towards National Greatness?

http://www.nytimes.com/2010/11/12/opinion/12brooks.html?ref=davidbrooks

DAVE

www.bogartcunix.com