Health Advocate Solutions

More on BS of CA----Signalling a Trend?

2011-03-14T12:03:00.000-07:00

By Steve Schulte of
<a href="http://www.healthadvocatesolutions.com/index.html%22%3EHealth Advocate Solutions</a>

Please respond or inquire at (213) 999-1227

Now that the threat by Blue Shield of CA to raise individual premium rates by as much as 59% is behind us, it's worth examining whether there are lessons in this case for the future of implementing healthcare reform.

Even as we progress, don't overlook the fact that BS of CA backed down under tremendous pressure---notably from CA Insurance Commissioner Dave Jones (an elective post). Expect to see similar acts played out in the coming months.

In my view there are, in fact, several lessons to be gleaned.

1.   MOST INSURERS WILL BE MORE INTERESTED IN PROTECTING THE BOTTOM LINE OF THEIR COMPANIES THAN IN OFFERING BETTER ACCESS, BENEFITS OR COST CONTROLS TO CONSUMERS.

Fine, you might say. Companies are meant to protect the interests of their shareholders.

True, but this canard underestimates the role that insurers are given in the new law. The responsibilities to set prices, determine benefit levels, assign medication pricing and so on. Lots of leeway and plenty of room to veer from the public interest. And, given their immense government relations engines assume the insurers will be writing many of the rules.

2.   DON'T EXPECT THE FEDERAL GOVERNMENT TO BE AN AGGRESSIVE INFORCER OF THE NEW HEALTHCARE REFORM LAW.

This is brought home clearly by noting a recent White House meeting between President Obama and several governors. The President made it clear he will go along with state variations from the new heatlhcare model in 2014 as long as these variations do not cover fewer people, cost more to consumers or add to the federal deficit.

The law originally allowed this breadaway in 2017, but legislation authored by Wyden of OR and Brown of MA allows for the earlier date. Expect lots of differences, confusion and loss of consumer protections.

Therefore, while one might wish that Secretary Sibelius or the President had helped to clear the air on the CA rate hike request, it was not meant to be. No doubt there are complex reasons for this, but it means the administration with probably not be a hero in this drama.

3.   THE INDIVIDUAL STATES WILL HAVE A KEY ROLE IN DETERMINING THE PRECISE ROLLOUT OF HEALTHCARE REFORM. ARE THEY READY?

One of the lessons from the Gulf Oil Spill was that the feds were not prepared or of a caliber to manage the horrific event. They simply did not have the capacity to respond and had to rely on BP and other companies.

I expect that many states will be in a similar position vis a vis the rollout of healthcare reform. States like Vermont, Massachusetts and Maine have set strong examples for better ways to manage and deliver care to their publics. Certainly Hawaii has been a strong leader as has Oregon, as least in how it handles Medicaid.

Still that means five states out of 50 have done a good job. Even if I have left some out of my lists that allows for lots of variance, inequity and cost control problems.

4.    THERE WILL BE AN ADDITIONAL THREAT FROM SOME INSURERS: A TWO-HEADED HYDRA THAT COULD SWAMP REAL REFORM.

On the one hand, some insurers will threaten to leave markets if state officials are serious about healthcare reform. Although a hollow threat from these bottom-feeding companies, other states hungry for business will welcome them.

It is certainly plausible that they are doing this indirectly right now by "cleansing the rolls" of sicker individuals (hence a rate hike....). Insurers might be hoping to drive clients with health problems to the state exchanges like the one being established in CA. But if this is true, what is insurance for?

On the other hand, with states in serious financial condition and cutting back on most social, health and educational programs is it likely that we could see more giant social dramas like the one in WI over collective bargaining being withdrawn from public employees? Think about it: healthcare affects far more people than collective bargaining.

Any way you look at it the states face enormous challenges here. It's hard to be optimistic and we badly need some success stories that provide good examples.

5.    WITH ALL OF THIS, IS THERE ANY CHANCE WE COULD SEE MOVES TO IMPROVE THE FEDERAL LAW IN TERMS OF BENEFITS, COVERAGE, ACCESS TO CARE AND SO ON?

This does not seem likely, at least in the short term. In fact, it must be noted that some Republicans and Tea Party members are ACTIVELY trying to repeal or at least to gut healthcare. The courts seem to be assisting. Expect the confusion to continue for a long time.

(Remember: the federal law does not mandate that insurers accept everyone regardless of condition until 2014. Also, there will be no sensible taxation of high premium (Cadillac plans) until 2018.)

Lots of reasons here to stay closely involved---and in touch with your legislators.

Your thoughts?

To respond to this blog, email steve6schul@yahoo.com

Can the Blue Shield Rate Hike be Justified?

2011-02-09T13:54:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

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On February 1 Blue Shield of California corporate headquarters released a statement announcing that they---changing their previously stated position---would abide by Insurance Commissioner Jones' (CA) request to delay any rate hikes for 60 days.

This delay of proposed rate hikes on individual policies (by as much as 59%) for 60 days will allow the Department of Insurance to review BS's effort to raise rates.

This was dramatic, given that, only a few weeks before, Blue Shield spokesman Tom Epstein had stated emphatically and brusquely that the company would NOT back down. This despite agreements from Anthem Blue Cross, Aetna and others to abide by the Commissioner's request concerning their new rate hikes for 2011.

Amidst the public outcry (and, frankly, anxiety) about BS's proposed rate hikes it is important to look more closely at whether the hikes can be justified. While some annual increase might be necessary for sound business reasons the current request is baffling.

First, BS initially responded to protests that they were retaining an outside auditor to review the hikes and would report unilaterally the outcome. It seems strange that such a move was not taken before announcing the hikes given their scope.

Second, the insurer says, predictably, that the costs are due to "rising medical and claims costs". But this seems unlikely, at least in being new.

Healthcare inflation is higher than the rate for other goods and services, but not 50+% higher. Additionally, it seems doubtful that individual claims could have risen at an equivalent amount in just several months. (BS and other insurers were given rate hikes in CA last fall.....).

So, if healthcare and claims cost changes cannot explain BS's decision to raise rates, what is the likely explanation?

Given the secrecy and lack of transparency with which most large corporations---and certainly insurers---operate, it's difficult to "get into the thinking" of BS actuaries, underwriters and financial experts who look out for the bottom-line considerations.

But some causes for the rate hike are very likely. These include:

1) Preparation by BS and other insurers for the health care law changes that will require everyone to be covered despite any pre-existing conditions (2014). Thus, a strong defense and indirect challenge from insurers since many more people---including many sicker people now excluded--will have to be covered.

2) A move to drive people off of current insurance policies so they will join state exchanges that will cover the "hard to insure" as these mandated exchanges (under the new health law) are set up. Higher costs would do just that.

3) A more cynical move to game the system by increasing prices and bureaucratic hurdles so that the average person will turn against the healthcare law---feeling that it is worthless and ineffective. AND, forgo insurance altogether.

Whatever the real reasons---and what I have cited are very likely causes---changing to universal healthcare coverage is complicated and difficult. No one should underestimate this.

But if insurers want to "keep skin in the game"---and avoid a press for, say, universal Medicare or a single payer system, they should be finding ways to INCEASE ACCESS TO COVERAGE, MAKE IT MORE AFFORDABLE AND EASIER TO OBTAIN rather than more difficult.

Clearly BS does not have this mindset. My advice: change direction and and work to help get everybody covered.

Plus, President Obama, Secretary Sibelius and Governor Brown (as well as other governors) should take note and join Commissioner Jones in fighting moves like this to increase rates in a lopsided and hostile fashion. Such attention would bolster public confidence both in the new healthcare law and in our current insurance system.

I welcome your comments.

Sources: LA Times, NY Times, Wall Street Journal, Kaiser Family Foundation.

To respond to this blog, email steve6schul@yahoo.com

Attacks on Healthcare Reform: the Mouse and the Roar

2011-01-01T21:18:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

Please respond or inquire at (213) 999-1227

Forget what you thought about everything surrounding the commercial craziness of the Christmas holidays: the silly season is about to begin in earnest.

More specifically, a new Congress will imminently descend upon Washington.

Despite the buffoonery and lack of credibility (and perhaps some lack of imagination)the past Congress, expect the new ideas with this new and improved group to take your breath away.

In case you marvelled at what Speaker Pelosi was able to cook up, see what you can find edible in Congressman Boehner's servings (slightly salty, of course....).

Let's focus for a few moments on a key campaign of the new House majority: gutting or dis-establishing healthcare reform. Don't know about you, but in my view "we the people" need access to affordable healthcare. Any platform that does not have universal (or at least extremely broad) access to care is a nonstarter.

It matters little to most people whether that access comes through truly affordable and dependable coverage or diligent and efficient community clinics or insurance attainable by searching across state lines (as long as quality is standardized). Key outcomes matter: access, affordability, quality. Oh, and cost control would be nice as well.

In other words, the battle is not really about ideology. It may be Democrat or Republican depending on who's in charge at present and on the slavishness of Congressional representatives to their party (and local hack) dictums.

But any intellectually honest person would have to acknowledge that the desired results are achievable (or nearly so) in a variety of ways. In my view these lie along a spectrum of government-managed to market-reliant alternatives.

The recent bill is a pastiche relying heavily on regulation and government incentives. It is more government-related. But it is by no means pure. Please remember that the mandate started, for example, as a Republican idea. Or that cost controls are insufficient.

Those more "liberal" insist the government should guide rules and insist on these to improve coverage. Those more "conservative" want the market to rule. Great digression here would result from repeating the weaknesses in either general approach.

So, let me suggest we be quided as we follow this debate (cum mega-fireworks) by three principles.

One, anyone desiring coverage should have it. This is partly a question of affordability and proximity to care. But it is also dependent on a political commitment that all are deserving and therefore the means to good care (funding, structures, doctors and nureses, etc.)are provided for. If a proposal meets this objective---rather than insisting, for example, that only the well-off and well-heeled deserve good care---it is worthy of consideration.

Two,our national patchwork of a system does many things very well. But the system is byzantine, the insurer network is unruly and not well-regulated; costly and unnecessary procedures and hospitalizations abound. Any improvement on the current reform should address spreading best practices and focus on efficiency, effectiveness and cost control. Insurers need to be regulated---well before 2014.

Three, about one-fourth of our national output is concerned with health and welfare. That says a couple of things: a lot of Americans depend on government to help and, likewise, what the government does is not all wrong. Remember when anyone close to you turned down Medicare or Veterans benefits? Expensive, yes, but a good delivery system.

Further, the statistic says that this portion of the budget will grow and is dangerous to our national health. So finding ways to control costs is paramount. Standardized forms, streamlined processing and delivery of services, reliable electronic records, negotiated pharmaceutical prices, shared economic burden (copays, coinsurnace, taxed "cadillac" plans---all these become important. Ensuring access is only one aspect of the overall equation.

I would welcome hearing other ideas, but these three will be key quides to what is proposed seriously and what is not.

Also, let your Congressperson: Weiner, Frank, Feinstein, Rubio, Baucus, Sanders--whomever----hear from you. Or your Governor: Brown, Branstad or Kasich. These folks don't ----and, well, do----work in a vacuum.

Amidst the craziness DO stay tuned. Keep centered on what is most important.

Sources: NY Times, Bloomberg Business Week, Wall Street Jounal, Kaiser Family Foundation.

To respond to this blog, email steve6schul@yahoo.com

MANDATE? What Mandate?

2010-12-29T22:25:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

Please respond to (213) 999-1227

The current flap over the healthcare "mandate" (20 states and counting....) can be viewed in at least two ways.

First, some OPPOSE healthcare reform....period. They feel that we should be responsible for our OWN healthcare protection. Second, the mandate is ONE PIECE, but not the whole, of healthcare reform. Let's review both points of view.

In the first place, those who OPPOSE healthcare reform do NOT believe that each of us is entitled, by dint of citizenship, to basic healthcare coverage. Basic? Preventive, outpatient, meds, hospitalization for acute episodes of illness. No right, no quarantee.

OK. In the second place, some of us agree that the above OUGHT to be covered, but only for those of us who SEEK such care. Thus, a general MANDATE is not permissible. ONLY if we seek such coverage should we be eligible for care. (The young, etc., would not be covered and would be fully liable for their own care.....they have 'opted out'.....)

No deep analysis is required to see the difference. A mandate, which means that EVERYONE should be covered, is impermissible under this two-sided scenario. Impermissible because a) no permission was given by the citizen and b) ensuring the viability of the system overall is not a consideration.

One must understand that, from the point of view of health economists and health insurers, it matters little that the individual receives proper care. What matters is merely that the system can sustain itself. In such a care delivery system the "health of the system" is key. Therefore he mandate is an economic tool. Conclusion? Away with the mandate which ensures that everyone has to have coverage.

So, conservatives (simplistically...), who care little for universal coverage, decry the mandate. And, progressives, who care little for insurance companies, decry the mandate. Get it?

It is a small leap to see how the courts----and a Republican Congress---could take this route. Michael Moore and Ralph Nader will be cheering them on.

But, there is still hope for those who want universal coverage. Suppose the mandate fails the court test from conservatives that the Congress has the right to compel anyone to have insurance just so the system can work. What then? Well, what if we compel insurers to cover EVERYONE and make THEM figure out how to make this work financially? No need then for a mandate.....in this essentially PROGRESSIVE point of view.

From the CONSERVATIVE point of view Congress has no right to legislate the need for a commodity (health coverage).

From either point of view, healthcare reform COULD work without a mandate. On the one hand, we care little for universal coverage. If consumers could buy across state line---without defining "basic coverage"----they would find coverage they could afford.

From a VERY DIFFERENT point of view, we want universal coverage, but we put pressure on the insurers to get there rather than on the prospective insured. Rather than guarantee a windfall for corporate profits we make sure that all who wish to get "basic coverage".

Candidly, watching the current scrambling among insurers to raise rates, deny coverage and utilize other sordid tactics to wriggle out of the reach of healthcare reform it's very hard for me to be sympathetic to their entreaties. Bottom line: want universal healthcare coverage? Then find a way to enforce the rules and make it happen. Enticements be damned.

It is clearly a judicial issue whether the Congress can impel any of us to purchase a commercial product in order to make the public good of healthcare for all work. If the courts cannot find it in themselves to force this issue we must find another way to broaden access to care. (Remember: our courts say that corporations are "persons"....).

I say: healthcare is a right. Force the insurers to make it happen. Particularly if they oppose a single payer system where they would lose all independence. And, don't wait till 2014 to do so......

One more point. I am for universal coverage. I am not for a "free ride".

Those of us who support coverage for all must also support participation in making the sytem function financially. High deductibles, for example, are part of the future of any viable system that covers everyone. So is a reasonable "rating up" to cover the sickest (perhaps a ratio of 3:1 or 4:1). In this regard subsidies for the lower-income citizens makes sense as well.

So, in a way, the current fireworks over the mandate is just that: fireworks. Don't lose sight of the key issue here---how can everyone who is a citizen be guaranteed basic care? In fact, there are other ways to do just that.

Your thoughts?

Sources: NY Times, Wall Street Journal, Bloomberg Business Week, Kaiser Family Foundation

To respond to this blog, email steve6schul@yahoo.com

Worth Noting About Medicare

2010-11-26T14:56:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

Please inquire or comment at (213) 999-1227

The Annual Open Enrollment Period for Medicare is November 15 through December 31. During this time Medicare eligible people may select or change a Medicare Advantage (MA) or Part D plan.

Please note that this annual period will be changed to October 15 through December 7 in 2011. Unlike now and in previous years, Medicare eligibles will NOT be able to change MA plans during the following January 1 through March 15 slot. That time slot will become a disenrollment period for Part D.

Although most of us think we understand Medicare fairly well the program is COMPLEX and CHANGES ANNUALLY. In this blog I want to cover several points in this regard in order to help those interested in Medicare for themselves or others.

Let's begin with how Medicare is constructed.

There is Part A which covers hospital, outpatient and some hospice services. This is available to people turning 65 who have paid into Social Security for 48 months.

Part A can also be a)offered to people under 65 who have specific chronic conditions and b) can be purchased for those who don't meet the criteria through employment history. The Part A monthly premium in this case ranges from $254 to $261 per month.

Part B covers medical services predominantly. This includes preventive screenings available under Medicare. It has a monthly premium and must be ACCEPTED or DECLINED when one has Part A. Signing up after initial eligibility for Part B usually invokes a penalty.

With BOTH Parts A and B one can enroll in an MA plan. This is an alternative to (but at least equal in benefits to...)Original Medicare. It includes HMO, PPO and Fee for Service models that are marketed by private insurance companies.

Part C covers Medicare Advantage plans. It was added in 1994 to encourage people to enroll in managed care options since this was believed to save money on Medicare.

Part D is the prescription drug coverage for Medicare. It can be purchased with Original Medicare or a stand-alone Medigap plan. It cannot be purchased with an MA-PD (prescription drug) plan since this would be duplicative coverage.

The new healthcare law made some changes to Medicare. In my view NONE of these reduced Medicare benefits.

The new law gradually reduces the SUBSIDY that has been given to MA plans so they could maintain lower premiums and thereby encourage people to join.

This amounted to about a 17% premium subsidy and did not apply to Original Medicare. So the new law simply corrects an imbalance and this change will save about $65 billion over ten years.

Additionally, the new healthcare law adds the following to Medicare coverage: a) pharmacies will cut brand drug costs by 50% in the donut hole this year---gradually "closing the hole" in future years; b) mandates more free diagnostic care for new enrollees and c) rolls back Part B premiums to 2009 levels (about $97 per month).

In order to save the hallmark and important program that Medicare has become since 1965 (the "safety net" for many) it is clear that changes will be needed soon to ensure financial viability.

It is important to understand that, in terms of policy and politics, Medicare symbolizes a sacred trust between Americans and their government. This bond needs to remain strong.

So, while I reject reducing benefits, I do understand the need for reshaping the financial underpinnings of Medicare.

For example, President Obama's deficit reduction commission (chaired by Alan Simpson and Erskine Bowles) will most likely recommend gradually raising the age limit for eligibility (now 65 and 66, respectively, for full Social Security)and most likely incrementally raise the Social Security tax rate.

Two comments: a) the age limit increase will still allow exceptions for those who require coverage earlier and b) any tax change should retain progressivity. These changes will keep the system financially strong for years.

But of key importance is implementing the annual recommendations of the panel of experts who review Medicare practices and pricing nationwide every year. This group recommends best practices, ways to cut costs and eliminate ineffective and unnecessary procedures and outlines proven methods for improving health outcomes.

A similar panel was created by the new healthcare law to review all healthcare, but, unfortunately, it's recommendations to Congress will only be advisory. If the bulk of recommendations from these review panels were accepted every year Medicare and healthcare waste and inefficiency would be cut literally by millions of dollars annually.

One more consideration for the beneficiary. Since the premiums for Medicare Advantage plans will probably go up as a result of the levelling of federal support it is worth looking at staying on Original Medicare and getting an affordable Medigap plan instead of going to an MA plan.

Medigap plans help pay the copays for Part B and supplement Original Medicare benefits. These private plans are ranked from A through N and offer a differing range of benefits. Look carefully before choosing.

As you can easily see, Medicare is both complex and an extremely valuable program. Take some time to get full advantage of Medicare benefits if you qualify for the prgram.

Sources: Center of Medicare and Medicaid Services (CMS), Kiplinger magazine, the New York Times, Kaiser Family Foundation.

To respond to this blog, email steve6schul@yahoo.com

Keeping Costs Lower----and Staying Healthy in an Uncertain Time

2010-11-11T12:03:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

Please comment at (213) 999-1227

This time of transition that will last till 2014 when everyone must be covered (assuming the Administration or Congress doesn't exert unexpected leadership before then...) poses some huge problems for both the insured and the uninsured. This blog will address both groups.

As background, there are several important things about the current private insurance market to note and to keep in mind.

First, insurers are already reacting against healthcare reform and its new responsibilities. They are denying more applications in the individual market (about 14 million in this group nationally), denying more claims and raising rates rapidly---especially for individuals. As a licensed agent I see evidence of this almost every day. (Is Secretary Sibelius aware of this?)

Second, the emphasis on high deductible policies is increasing---both for individual purchasers and for businesses buying small group coverage (2 to 50 employees). From 2006 to 2010 high-deductible plans ($1,000 or more per year)for employment-based policies shot up from just under 7% of total plans to just under 20%.

Third, if one purchases a higher deductible plan to reduce monthly premiums one should absolutely consider a health savings account (HSA). Originally a Republican idea that has greater benefits for those with a larger income, this concept now definitely advantages those who want the high deductible-lower premium combination. There are tax advantages in addition to the outright premium cost savings with HSAs.

Fourth, the danger---and trend---with getting a higher deductible plan is that one avoids routine exams and diagnostic tests that make health-sense in order to avoid paying out of pocket. This includes blood panels, colonoscopies, mammograms and so on. The Kaiser Family Foundation, among others, notes this tendency to avoid routine care with some alarm. Is it a sign of what's to come?

If I were to buy an individual policy I would definitely scout for a high-deductible HSA plan. This would require me to set aside an amount of cash (most likely the amount of the deductible) in a private bank that sets up such accounts. I can only use this account for health expenses---including putting my long-term care premium through the HSA.

Then, for all of my medical transactions---deductibles, prescription meds, needed diagnostic tests, doctors visits, and so on---I would use this new account. What I put into the account will be deducted from my taxes the following year, plus I can roll over any unused amount to the following year as well. At age 65 I can no longer use the HSA but I CAN use any unspent funds for longterm care expenses.

This clearly makes more sense than either paying a higher than necessary premium or foregoing the tax advantages an HSA provides.

Just make sure to get the routine visits and any needed diagnostic testing and immunizations. Judge what you may need by knowing your risk factors and family history. Discuss this information with your physician. In this way you can maintain good health and control your medical expenses in the long run.

Remember that the true cost of a health insurance policy is not just the premium and not even the premium + deductible + copays (all out of pocket). It is certainly the latter, but it is also the quality of health coverage benefits you get from your policy. In a word, you are not just avoiding the huge health disaster but are working to stay healthy. Strive to avoid health events that are preventable.

It should also be noted that, in choosing my high-deductible plan, I check carefully to see what I will pay for brand meds, hospital and outpatient visits, specialists---whatever is most important to me in getting coverage. Most high deductible plans will allow for a small number of annual office visits at a very low cost and perhaps will allow both generic and brand drugs with no separate deductible. Soon they will be required by the new laws to offer more preventative services. Just make sure to check before you buy the policy.

For all of these reasons I recommend against buying a policy on-line, no intermediary, just to get the "lowest" premium. Countless sad stories will reinforce why this is a bad idea generally. Get information, yes; buy a policy on-line, never.

So, even in this time of uncertainty when insurance pressures and costs are rising it is still possible to get coverage, maintain high benefits and control costs. Just make sure you do your homework and, preferably,find some expertise to help give you make the right choices.

Sources: LA Times, NY Times, Wall Street Journal, Kaiser Family Foundation, UCLA Center for Health Policy

To respond to this blog, email steve6schul@yahoo.com

Long-term Care and the Healthcare Reform Law

2010-10-07T17:01:00.000-07:00

By Steve Schulte of
Health Advocate Solutions

(213) 999-1227

Most people understand two things about long-term care coverage.

First, this type of insurance covers custodial (non-medical) care after disability and second, there are approximately 78 million Baby Boomers, many of whom will need such care over the next decade or two.

But there are other, deeper and more complex aspects to long-term care coverage that everyone ought to understand. At least everyone who is either in their mid-forties and up or who has aging, perhaps failing, parents. This defines the population most in need of long-term care insurance (LTCi).

Let's first look at some of these more complex aspects of LTCi to deepen our understanding of the issues. Then let's see how both the market and healthcare reform might affect LTCi.

One, is long-term care affordable for the typical citizen? Since the issuance of LTCi is age and health-related the annual premium increases as one ages into the mid-fifies and on. However one does not need a full-coverage policy to get the benefits of LTCi. Policies can be adjusted to personal needs and resources.

In addition, when compared to the monthly cost of nursing home placement with disability (about $212 per day in CA) the cost of LTCi looms as a very important asset protection and coverage. The annual premium, for, say a 60 year old Californian would be about $5,800 per year. Compare that to the cost of one year in a decent facility---around $75,000.

There is no comparison in this light. A good LTCi policy would protect one's property and assets. (This cost nationally translates to about $200 billion annually out of pocket.)

Two, what does long-term care cover? LTCi is designed to pay for non-medical expenses: nursing and attendant care, bed occupancy, durable medical equipment and so on. This care---custodial care---is not paid for by health coverage or Medicare---and, except for low-income recipients, not by Medicaid. So, think of the care other than medical or hospitalization one might need after severe disability. This is what LTCi covers and it will have to be paid for in one way or another if one becomes disabled.

Three, if I have some assets---say a pension or real estate, how do I decide if I need LTCi in addition and how much should I get? If you consider yourself very wealthy and unencumbered by debt you may well be able to take care of any long-term care needs that arise. The amount will---statistically---need to represent the daily facility premium for your state X 365 days X three years or more. AND, you have to assume that your assets will not disappear or significantly shrink in value over time.

A few statistics: many Baby Boomers will live longer lives than their parents----into their mid and late eighties. One in two will need some care after old-age disability. This period of incapacitation when extended (complete disability) usually lasts two-and-a-half to three years plus prior to death.

One in eight Baby Boomers will likely have some form of dementia or Alzheimer's. More disabled and elderly people in the future will want to remain in their own homes. Retaining quality of life and independence throughout this period of life---and not being a burden on others---is key.

About 10 million Americans need long-term care today---and about 7 million have long-term care insurance. Of the first number about 80% will be cared for at home. It is common for family members to do this--without reimbursement but at very high cost.

The new healthcare law (thanks to the late Senator Kennedy among others) will bring two important changes to this field. First a new, voluntary LTCi benefit will be established through the workplace. Anyone 18 or older will be able to enroll. Second, Medicare benefits will be changed so they will be more available to those staying at home.

The average benefit under this program is predicted to be at least $50 per day. As we have seen this will not be sufficient for most people---but it is a start. The need for long-term care coverage is at least being recognized and those who participate in the program will have a floor upon which to build their coverage. Note: five years program participation will be required to become vested.

Most likely private insurers will soon offer new programs to supplement the CLASS (Community Living Services and Supports) coverage---much as they did when Medicare was started. Yet average estimates are that fewer than 10% of employees will buy CLASS coverage.

Clearly much more education will be needed to ensure adequate LTC coverage for those who need it. To the extent that private coverage becomes the norm, stress on Medicare and Medicaid programs will be reduced. It takes no speculation to see that this area will in the next several years become a huge financial burden: for individuals,for families, for communities and for the federal government.

Sources: Washington Post articles, the New York Times, Bloomberg-Business Week, Kaiser Family Foundation, course manual: California Partnership for Long-term Care

To respond to this blog, email steve6schul@yahoo.com

Watch the Individual Coverage Market....

2010-09-09T08:31:00.000-07:00

By Steve Schulte of
Health Advocate Solutions

(213) 999-1227

To get a feeling early on for how well healthcare reform legislation is working watch how insurers cover individuals and families.

Why? Because here---other than the senior market that is pretty well covered under Medicare---is where the "hard to cover" reside.

In the 1990s many states were under pressure to cover "small groups". This generally meant groups of 2-50. In covering these groups insurers had to observe certain standards, for example, they could not deny coverage to anyone who was legitimately part of such a group as long as everyone signed up in an "open enrollment period".

The insurers maintained some control by strictly enforcing these open enrollment periods---and by reviewing rates for the entire group periodically. This usually resulted in higher premiums for the group overall.

But individuals and families with unemployed adults had no such protection---if you will, no such "safe haven". Single persons, the self-employed and families above the poverty level but with no adult wage-earner were out of luck. Not surprisingly, two large high risk groups could be found there: hard to cover individuals with more health risks and people 55-64---right up to eligibility for Medicare.

The federal and state governments in the last few years have expanded programs such as Children's Health Insurance (S-CHIP) and Healthy Families to assist lower income children (and some adults) above the eligibility levels for Medicaid (Medi-Cal). That left individuals and older citizens even more vulnerable.

So, watch how these two groups get covered under the new legislation. Granted, everyone has to be covered without regard to health status by 2014. But in the meantime? In California, for example, big insurers Anthem Blue Cross and Blue Shield have just announced that rates for this group will increase by 13-17%---for now. (That is an amendment to the 39% rate hike Anthem had announced for individuals earlier this year. Until Obama and Sibelius stepped up to the plate.)

The insurers are taking advantage of these groups because they have more leverage here. Less pushback. To verify this, check out the rates in the state "high risk pools": extremely high rates for a most vulnerable population that has already been denied coverage at least once.

Is there a way around this? How about finding ways to wrap individuals into larger purchasing groups and mixing them with small groups, for example? That would help even out the risks they pose.

Or, why not impose the coverage mandate before 2014 (requires a change in the law) and then fold individuals and unemployed older workers into Medi-Cal (or a large purchasing group) early?

All this is possible. But the insurers prefer to hedge bets and raise rates rather than to try to truly assist some of those who need coverage the most.

To see if healthcare reform is working, watch this picture.

Sources: Los Angeles Times, Kaiser Family Foundation, MR/MIB (CA high risk pool).

Next time: Healthcare Reform and Long-term Care Insurance.

To respond to this blog, email steve6schul@yahoo.com

Politics v. Implementation; Socialism v. the Free Market

2010-08-09T14:01:00.000-07:00

By Steve Schulte of
Health Advocate Solutions

(213) 999-1227

"You're a socialist!" "Your hands-off free market has failed!"

Sound familiar? The din of endless---and noninformative---epithet hurling.

There is no "bright line" between those who support healthcare reform wholeheartedly and those who adamently decry the legislation. Opinion runs more on a spectrum of views.

There are good reasons for this, with better or less good information being only one. Only a portion of the disagreements have to do---in the long run---with informed political viewpoints. At the end of the day the pragmatic streak in American political life values what works well. This points to how the law is eventually carried out in our own neighborhoods: implementation.

For example, with any public policy change one has to distinguish early on between the "politics" of the policy (why and how it passed) and its "implementation" (how it will work in the real world). But it is essential to stress the difference.

It is huge bureaucracies---state and federal---that will implement healthcare changes---along with private insurers and providers. But whether the philosophical direction looks good or silly and wasteful years from now will point to how Democrats and their particular views succeed or fail in our eyes. That ulitmately reflects philosophical and political views.

Early on most argued in favor of providing broader access to healthcare in this wealthy, highly industrialized country of ours. Thats' where agreement ended.

Some argued for letting every household help themselves once they were able to do so (self-reliance and the free market all the way). Others wanted a single payer system which contains the range of options from government ultimately paying for the bulk of the care to the complete startup of a new healthcare system without insurers---much like Cuba, for example. (Just a whiff of socialism?)

Enter "socialism" versus "capitalism". Two words that were bandied about heavily during the Congressional healthcare debates, but which have far more complex meanings and histories than most care to admit. Even if they know.....

As a departure, let's take a look at the words and the concepts behind them. Perhaps there will be some light there.

Both capitalism and socialism are legitimate political concepts. Each addresses both an economic theory and a political idea. Ways of dealing with everyday problems that people face in finding work, educating their kids, having enough food and so on. No budging on this shared legitimacy.....sorry. There's plenty of history for both schools and they both can show valid experiences.

Capitalism emphasizes self-ness, knowing one's needs and desires---and energetically pursuing them. As a consequence, mysteriously perhaps, the rest of the population benefits. Democracy and capitalism often work well together. But one cannot ignore the busted businesses, the unexpected layoffs, the inequality. Sometimes Know-Nothings show up for the fun during elections. Think of healthcare. All part of capitalism.

At the simplistic rhetorical level, one could hold the view that capitalism makes people selfish and self-absorbed, unmindful of what others need to share a good life.

Socialism, on the other hand, does not trust the individual. A larger force--the state, perhaps---has a better grasp of the common good. With its wiles and planning and force the state seeks for ways to find better, more equal distribution of goods and benefits. But, stagnation, apathy, monochromatic output and, sometimes, totalitarianism---these too go with socialism. Bright red, then, but not pure. Think: the charges against state-run healthcare systems or how bad the Soviet economy ran down.

So, again, at the simplistic rhetorical level, one could feel that socialism makes people dependent automotons, fearul of their government and wary of being on their own.

It would be nice to think that our very own American healthcare debate was so innocent as to be between clear concepts of capitalism and socialism. Ah, but that is a distraction.

Twenty-first century America has its economic theories and political ideas, but these barely escape taint from corporatism, the bottom line, multi-million dollar lobbying and greed. Too bad, too. In a way, pure capitalism or outre socialism would be welcome at this party.

If only our debate had a Eugene V. Debs or two; perhaps a Michael Harrington or an Upton Sinclair. And no political debate would be complete without Adam Smith. Or several. Where are our present-day Jefferson and Hamilton?

So, at the end of the day, we Americans often get shrill dabates, name-calling----and, usually, something slightly different than the over-simplifying sides originally demanded. We get compromise. Sometimes this works well (e.g. Medicare) sometimes it does not (e.g. anti-poverty efforts).

The bottom line: most of the name-calling is pointless and uninformed. There certainly are strong philosophical and political differences that can be traced and debated here. That debate is essential to a healthy, well-running democracy.

We will hear lots of noise, obfuscation, even some ignorance. But with such a complex subject we need something more.

Let's start by separating out what one person thinks is correct versus what another might---and focus for a while on how to carry out this law so that both patients and providers are better off. At the end of the day it's what works well for the public good that counts.

To respond to this blog, email steve6schul@yahoo.com

Individuals and Small Business Under Healthcare Reform

2010-07-22T06:37:00.000-07:00

By Steve Schulte of
Health Advocate Solutions

(213) 999-1227

Job-based insurance has been on of the most resilient struts of the American healthcare system since the post-World War II years.

This major accomplishment of the postwar activist labor movement in the United States supported the rising prosperity of countless American families. Employer-paid insurance was a major wage concession to workers through the 50s, 60s and 70s along with rising national prosperity. At its height about 60% of workers under 65 received their coverage through their employers.

This began to change during the 1980s and the Reagan presidency.

Several important factors have led to this shift: a rise in corporate mobility and transitoriness, increasing globalization of markets, rising home-based entrepreneurship along with more convenient and accessible technology. All contributed greatly to this significant shift.

So, during the recent healthcare debates, a key point of contention was whether insurance should still be employer-based (owned by employers....) or shifted to individuals through a mandate. The opposing, multiple sides to this debate are fascinating in themselves.

Take two examples. Remember that when Mitt Romney was governor of Massachusetts the healthcare legislation he signed contained an individual mandate along with employer sanctions to provide coverage. This was seen as a concession to conservative pragmatism: people should provide for themselves.

Hillary Clinton adopted this plank during her campaign for president. Her supporters (including economists) saw it as a cold-eyed look at a changing workplace (more working and single women, for example) as well as a sound way to make a larger insurance market function well. Candidate Obama was opposed.

The idea of an individual mandate became caught in a fierce battle between House and Senate members: the House members siding more traditionally with union and liberal sentiments who favored employer-based insurnace. The Senate committee chaired by Senator Max Baucus promoted the mandate at the expense of employer mandates. A strong compromise carried the day which highlighted the individual mandate as a key part of reform.

Second, while there was Congressional agreement that expensive "Cadillac" plans would be taxed, the compromise struck primarily with union and business representatives was to delay this tax until 2018. So, while more expensive plans will be taxed to help those who require subsidies, the impact of this shift will wait.

Even though cost-savings was a key objective of healthcare advocates in Congress, this important savings plank of taxing expensive plans was allowed to be put off for several years.

So, now that healthcare reform has been passed---and we have added coverage mandates and taxed benefit packages, what else can individuals and small businesses expect to see? Here's a quick overview:

1) By July 1 each state had to set up a high risk pool to cover those who were otherwise ineligible for coverage (30 states already had such pools). If states could not or would not do this the Department of Health and Human Services established a national exchange to cover these individuals.
2) The individual mandate will extend to both individuals and to businesses. People with incomes under 400% of the federal poverty level (FPL), those whose lack of coverage is temporary, those in prisoners, Native Americans and some religious groups will not be subject to the mandate. There will be no criminal penalties for not getting insurance.
3) Younger people will have to have insurance, but will most likely be able to purchase a "basic plan". This will be a high deductible, lower benefit plan that is estimated to cost between $136 and $198 per month.
4) Each state will have at least one "exchange" by 2014. This will allow individuals to compare prices and buy coverage; at first businesses with fewer than 50 employees will be able to utilize exchanges. Even employees whose choices are severely limited by their employers who offer coverage will be able to use the exchanges to find better choices. By 2017 businesses with more than 100 employees will be able to utilize the exchanges.
5) Exchange choices will be graded based on amount of financial coverage offered by a plan. This will work so plans will be labelled "bronze", "silver", "gold" and "platinum" to signify that the plan pays for, at a minimum, 60% of the cost of benefits, at most, 90%.
6) Individuals will pay a tax penalty of 1% of income or $95 if they have not gotten insurance coverage by 2014. By 2015 this penalty will increase to 2% and will reach its maximum of 2.5% or $695 (whichever is greater) by 2016.
7) Subsidies will be available (on a sliding scale) for those who make less than 400% of the federal poverty level---or $88,000 for a family of four. Vouchers will be available to those who make less than 400% of the FPL or who must spend more than 9.5% of their incomes on coverage. They will be eligible for the equivalent amount of coverage their employer would have offered to them.
8) Employers will get a tax credit---starting in 2013---for 35% of the premiums paid for employee insurance. To qualify these employers must pay at least 50% of insurance premiums of their workers. The aid will grow to 50% of the premiums paid by 2014 (35% in the case of tax-exempt groups).
9) For employers of 50 or more who do not offer coverage---or whose employees seek coverage in the exchange as an alternative to what's offered---the penalty will be $2,000 times the number of full-time employees beyond the first 30. This will also apply to any employer who does not offer at least a "bronze" equivalent plan (60% of benefits paid for) or whose employee spends more than 9.5% of their income on their coverage. The penalties are triggered when the employee goes to the exchange to seek coverage other than that offered by the employer.
10) Finally, employers will be encouraged to retain on their plans employees who are between 55 and 65.

One more note, while this is somewhat complicated and will take over four years to roll out, the changes promise to enroll millions of new people. In addition, the exchanges may, over time, substantially alter how insurance is offered and purchased. It undoubtedly will take five years or so to see the full impact.

Sources: The Washington Post, Kaiser Family Foundation website, The New York Times.

Next time: Politics versus Implementation. And.....Socialism.

Coming Soon: Seminars on the Impacts of Healthcare Reform and Long-Term Care Insurance

To respond to this blog, email steve6schul@yahoo.com

How Healthcare Reform Will Use Medicaid

2010-07-19T19:30:00.000-07:00

By Steve Schulte of
Health Advocate Solutions

(213) 999-1227

Take just a moment to recall part of the high drama around whether there should be a public option as part of final healthcare reform legislation. Then, recalling that the arguments for this item failed, it is sobering to note how two huge government entitlement programs in addition to Medicare---Medicaid and CHIP---will be harnessed into implementing reform.

Medicaid (Medi-Cal in California) is the huge entitlement program traditionally funded by the federal government in large part, but administered by the states. Hence the good and bad news for Medicaid's involvement in reform. Coverage and funding, but within a balkanized system.

Just a few examples will suffice to illustrate problems: varying state levels of funding, varying state benefit packages, differing views of abortion rights, a patchwork of physicians and allied providers who would provide coverage, inequities in service and access, a method of paying for prescription drugs that is different than the rules used by Medicare. On and on.

Most policymakers saluted the passage of Medicaid soon after the passage of Medicare (which in 1965 under the leadership of Lyndon Johnson assisted the elderly--with a few exceptions for specific conditions). However, despite its virtues, Medicaid soon evolved into a "second tier" of care. Many eschewed its benefits even when eligible because it was seen as "healthcare for the poor".

Now, to expand care throughout most of the citizenry over the next few years this giant program---along with CHIP (the Children's Health Insurance Program) will become part of a vast expansion of healthcare coverage (perhaps 33 million new enrollees over time).

While good efforts will be made to ensure equal care nationwide it is easy to predict that in two to five years the fracturing, inefficiencies and unevenness of our current healthcare system will still be all too evident. Part of the way to a single payer system, in other words, with few of the benefits. Some would argue that this is the cost for attempting to maximize state variability and private market heft.

Some details:

The new law expands Medicaid eligibility to 133% of the federal poverty level ($14,404 for an individual; $29,326 for a family of four). This will add about 16 million individuals to the 35 million already enrolled in Medicaid nationwide. The Congressional Budget Office (CBO) estimates that states will have to then pay an additional $20 billion over what they now pay into the program now between 2010 and 2019.

People who are under 65 and not now eligible for Medicare will also be swept up in this expansion. Children currently in CHIP and who are between 100% and 133% of the federal poverty level will be included hereafter in Medicaid as well.

To attempt to capture as many uninsured as possible and to try to build a seamless coverage model, those between 133% of poverty and 400% will be offered subsidies so that they can purchase insurance through the state-based Health Benefit Exchanges. Thus the most sweeping expansion of enrollment through the new healthcare legislation.

As one can quickly see, however, some delivery differentiation still, some breaks in the system still. But this structure avoided a public option and still more intrusion by the federal government into the healthcare market.

It often slips beneath the public radar that private insurers are enlisted to offer products under both Medicaid and Medicare. That is, delivery is usually private (outside community clinics, for example) and reimbursement as well. Again, more fragmentation and differentiation in an already complex coverage system.

The pluses: rapid enrollment, use of already-in-place payment rules, fairly easy creation of "basic coverage" models, swift implementation of new, higher payment levels for pedicatricians and primary care physicians and a platform to reduce overall program costs---including reducing payments that now go to hospitals which treat large numbers of the very sick and indigent (Disproportionate Share or DSH hospitals).

But, in the long view: could we have done better with a public option?

This concludes my coverage of how Medicare, Medicaid and CHIP will be used in expanding U.S. healthcare coverage. Next I will turn to individual and employer changes.

Resources: Kaiser Family Foundation website and reports; the New York Times; the Washington Post series; Medicare.gov

Coming Soon: Seminars on the Impact of Healthcare Reform, Long-term Care Insurance, Medicare

To respond to this blog, email steve6schul@yahoo.com

How Medicare Will Work With Healthcare Reform

2010-07-09T15:30:00.000-07:00

By Steve Schulte of
Health Advocate Solutions
(213) 999-1227

One often hears charges---expressed fears, really---of "big government" hurled as an uncomplimentary epithet.

Yet few Americans truly understand the concept as it applies to our national health (apply both meanings here...).

How many, for example, understand that, of the entire federal budget, 20% is spent on defense ($715 B), 21% on health-related expenses (Medicare, Medicaid and CHIP; $753B) and 20% on social security alone ($708B)? The latter two percentages will grow dramatically in the next decade as Baby Boomers (born 1946 to 1964) age and become eligible for social entitlement program benefits.

Medicare provides healthcare coverage today for about 39 million Americans; Medicaid for about 33 million----many of them children and low-income working people. Medicare alone is expected to enroll up to 77 million people by 2030.

These few facts alone indicate why massive healthcare reform was so necessary. Set aside for a minute whether one thinks such reform is wise, whether it went far enough, whether it was done right, whether it will work.

Social entitlement programs and defense account for a total of 61% of the nation's expenditures. Put simply: reform was necessary to keep our huge economy from sinking. And our invaluable human capital from falling further behind in the world economic race since bankruptcies from health costs had risen to 1 in 4.

On the other hand, one can fairly argue that these huge (and growing) social programs alone should be cut. But, in fairness, one then has to lay out how a wealthy and powerful industrialized nation takes care of its elderly, sick and dependent in other ways.

It is not at all surprising that the large, well-established government vehicles of Medicare and Medicaid would be harnessed into helping with the implementation of healthcare reform.

Due to their size and the complexity of their involvement in healthcare reform I will devote two separate blog postings to Medicare and Medicaid. Let me begin with Medicare.

At one point, remember, Medicare expansion was considered as a viable form of the "public option". In fact, historically, back to 1965, many hoped that Medicare would become the basis of universal coverage. Instead it became a social entitlement program that sought to remove the scourge of end-of-life poverty for all older Americans. The results have been astounding.

Medicare is a hugely successful program---redtape, fraud, variations in benefits and service notwithstanding. It is rare indeed to hear that someone has refused to accept Medicare when they became eligible. (I do know of one case....). For the most part, if someone has Medicare they have great health coverage.

Therefore, it would have been immensely sensible---and no doubt more efficient in the long-run---to have tied Medicare to an expansion of healthcare coverage. Say, make it available to those 55 to 64 as was proposed.

This, of course, did not happen. There were fears that Medicare as it now exists would be trimmed per benefits and increased per cost. The truth is more complex and quite different.

There will be NO direct cuts in benefits. In fact, benefits overall will be INCREASED. There will be cost changes, but these need to be carefully understood before one asserts---incorrectly, I would argue---that Medicare will become more costly (as opposed to being a more expensive program overall as the numbers of clients grow).

In fact, Medicare costs, like healthcare costs, like the deficit will be CUT both in this decade and more over the next. Too bad: the cuts could have been---and may still turn out to be---even greater.

So let's look specifically at the changes the law will bring to Medicare:

2010: Those who have Part D prescription drug plans AND who enter the 100% cost responsibility area ("donut hole") will get a $250 rebate. Federal market basket benchmarks for inpatient/home health/skilled nursing/hospice care will be refigured. A Federal Coordinated Health Care Office will be set up to improve care for Medicare/Medicaid patients (dual eligibles).

2011: The federal coordinating body for Medicare/Medicaid (CMS) will set up an important new agency: the Center for Medicare and Medicaid Innovation. Reduce annual Part D premiums for those making less that $85,000/$170,000 (couples); freeze the income threshold at these income levels also for Part B premiums. Change (even out) the reimbursement for disadvantaged-area/population hospitals that take Medicare.Require pharmaceutical companies to give a 50% reduction of the cost of brand drugs within the "donut hole".

Also: prohibit Medicare Advantage plans (HMO/PPO and private)from changing cost-sharing ratios that differ from Original Medicare PLUS start reducing federal subsidies for these plans. Start a 10% subsidy for primary care physicians and surgeons that practice in disadvantaged areas. Start phasing in Part D subsidies for the "donut hole" share which will be cut to 25% by 2020 for generics. Eliminate cost-sharing for many preventive services.

2012: reduce Medicare payments to hospitals that exceed readmission goals. Create the new Medicare Independence at Home demonstration programs to reduce institutionalization. Continue reducing Medicare Advantage payments; begin bonus payments to high-quality Advantage plans.

2013: Begin phasing in subsidies to Part D patients for brand drugs in the "donut hole" (reduce cost-sharing to 25% by 2020). Begin pilots for "bundling" payments for acute/inpatient/physician/outpatient/post-acute costs---moving towards set payments for entire episodes of care (potentially huge cost savings...).

Begin increasing the Part A tax rate on wages by .9% (to 2.35%) on earnings over $200,000 or over $250,000 for couples filing jointly. Eliminate the Part D tax deduction for employers who subsidize those payments for retirees (was a double deduction...).

2014: require Advantage plans to have an 85% delivery efficiency ratio. The Medicare Independent Advisory Board (15 members) starts submitting cost-reduction and efficiency improvement plans to Congress annually.

2015: Reduce by 1% payments to certain hospitals for hospital-acquired conditions (MRSA, etc.).

So, much complexity, lots of detail. However, there are REAL changes here---improved benefits, reduced cost, a more even playing field overall. Again, no loss of benefits while providing a net reduction in Medicare spending of $428 billion between 2010 and 2019.

Sources: New York Times; CMS website; Kaiser Family Foundation Website; Center on Budget and Policy Priorities website; Washington Post series.

Next time: Medicaid and Healthcare Reform

Coming Soon: Public Seminars

To respond to this blog, email steve6schul@yahoo.com

Has the Battle for Reform Paid Off?

2010-01-20T14:15:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

The day after Brown was elected in MA and a furious debate rages----cum mea culpas and finger-pointing.

What happened? Why did it happen? Was this a rejection of healthcare reform?

It's probably too soon to sort out some of this, but a couple of things should be clear: voters are angry about the Washington "game as usual" (yes, Democrats, too) and the healthcare bill in its current form has lost extensive popular support.

For the record, I would give Pelosi and Reid credit for getting the bills through their respective chambers as the President requested. But, now that this has been done, it't time to get focused and tough and vote out a bill that really reforms.

Having said that, the bills in front of us are too compromised, too skewed with pork, too soft on insurers and do not cover enough people fast enough. It hurts to write this since I know we desperately need big reforms in healthcare. I still believe that most thinking and working Americans agree.

So, now what?

It helps that President Obama, Senators Reid (NV) and Wyden (OR), Representatives Frank (MA) and Weiner (NY) all have called for a slowed process, no "jamming" a bill through and waiting till Brown is seated for MA.

Next, it's time to put all the interest groups who have muddied and harmed the process so far on notice: the people want reform. Make it real, strong, transparent and relatively simple.

To unions: yes, taxing hugely expensive plans is a good way to control costs. Stop looking for favoritism from Democrats. Pitch in here.

To liberals: move to portability for those who are insured. It's a nice, although quaint, idea that insurance should be the responsibility of employers. Businesses can help pay for care, but why should they choose which plans their workers get---and why should they own them and get all the tax advantages.

To insurers: yes, to a national insurance exchange. Better lowering the age for Medicare eligibility to 55. A robust public option would be terrific. Granted you don't like ANY of these ideas. Too, bad. We need expansion of coverage, competition, reform. Oh, and yes, there should be an end to the insurance company exemption on federal trade sanctions.

To Americans: real healthcare reform----no barriers to coverage, basic plans, everyone IN, cost controls, emphasis on quality and "best practices"---will cost more money than the country spends on healthcare now. But, everyone will be covered and longterm costs will go down.

You WON'T get everything you might think you need. I won't either. You will be asked to share the costs. Insurers, hospitals, medical device manufacturers, employers, pharmaceutical companies--and yes, you, will help pay for reform.

But real reform is what we asked for. It is badly needed.

And, finally, after the MA election it is still possible and necessary. Let's pull together and get it done. Soon.

To respond to this blog, email steve6schul@yahoo.com

Expand Coverage----AND Control Costs? How To Do That?

2009-12-31T00:09:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

A REFLECTION: (written previously)

I have long been a fan of the "robust public option".

Two reasons: if properly done this public option would inject badly needed competitive forces (think: rain in the Sahara Desert....)into the healthcare market place. It would also create a platform for best practices to be imposed upon a balkanized, unruly and highly inefficient market.

Pretty strong, I know. But we as Americans need healthcare reform---including expanded coverage---so badly that anything less would be acceptable.

The dance in the U.S. Congress has been pretty intriguing as well as hard to follow over the past few weeks.

Just yesterday (12.8.09) a committee of 10 Democrats (Republicans seem bent only on destroying any chance for meaningful reform in real time)apparently recommended a yet NEW permutation of the concept of "public option". The result of their negotiations has been submitted to the the Congressional Budget Office (CBO) for a financial reality check.

So, in an attempt to keep track, let's review. In late summer the House passed a strong public option plan with their legislative proposals (three). Good so far. However, the House plan raised a couple of primary concerns. Would it really be an option since only about 15% of the currently uninsured would have access to the plan? And, would it control costs---or just EXPAND already expensive healthcare coverage?

The Senate then got bogged down in a process of searching for 60 votes that would pay homage to a "public option". This created a liberals versus moderate Democrats drama for several weeks. (Abortion funding was a sideshow.) Reminder: Republicans were not playing here. Except perhaps for Senators Snowe and Collins from Maine.

With the outcome increasingly uncertain Majority Leader Reid convened his committee of 10. He exhorted them to find a compromise that could muster the desired 60 votes. Needless to say, a pretty tall order.

What the committee has apparently recommended (since we don't yet know for sure) includes an expansion of Medicare for those 55 to 64 and an expansion of Medicaid so that it would incorporate a broader income swath. That is, people with incomes significantly above the poverty level could qualify. Certainly federal subsidies would be required to expand both programs to new legions of uninsured and unemployed. Thus, the CBO report's keen importance.

If my facts are accurate to this point, several questions bubble up.

Do we still have a "public option"? Will a greater number of senators expand an expansion of current (successful) programs to cover some of the uninsured? Will expansions of Medicare and Medicaid control costs and raise quality standards for care delivered? Will the new compromise meet Obama's goals of covering more Americans and not adding to the current deficit? What will liberal House members do in response? Remember: any Senate agreement must be reconciled with House proposals before a final bill can be presented for the President's signature.

So a LOT rides on reconciliation.

To respond to this blog, email steve6schul@yahoo.com

Questions: Will Healthcare Reform Work?

2009-11-30T09:09:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

If you pay some close attention both to casual conversations around you as well as to any polling, the confidence in the ultimate success of pending healthcare reform is mixed. In fact, many pundits (not just on Fox News...) and a few polls are showing that concern about a mixed economic recovery has pushed aside the sense of urgency for healthcare reform form many people.

There are lot of reasons for this growing suspicion. Concern about job stagnation and the growing deficit (which the Congressional Budget Office has demonstrated will be eased over 10 years by a strong healthcare reform measure); distrust of the Congress; concern about the influence of powerful lobbyists; even some fading in the luster of President Obama's star.

But most likely something else is a major cause of the uncertainty. That is: the dizzying complexity of healthcare reform (given our fractured, inefficient and inquitable system now). This, combined with the sheer enormity of the reform bills themselves (which few have read)is stirring great anxiety about the final outcome.

There may be good reason for this, too.

Over the past several weeks--and continuing throughout the process---there have been many mixed signals from Congressional reform proponents as well as major players. Partly this is due to the meandering and lurching political process. But it is also due in part to disinformation campaigns and the attempts to address key interests (not our typical consumer....) that will ultimately be affected by any outcome that results from the current deliberations.

Let's take a look at a few concerns in this regard and consider them one at a time.

Costs will only continue to increase---perhaps will even accelerate---after reform passes. Actually that depends. One of the key goals for reform stated by President Obama was that reform be "budget neutral". As cited here, the CBO has suggested that the final reform package being considered by the Senate might reduce the overall deficit by as much as $80 billion over 10 years.

But the actual opportunities to actually save money through reform are much more complex. Take for example part of the touted $300-400 billion that would come from savings in Medicare "efficiencies". Approximately one quarter of that would come from cutting current subsidies (about 17% per individual premium) from Advantage plans. These are plans that were devised under Part C in the mid-90's to urge seniors to shift to managed care plans.

So, today, Advantage plans (usually PPO or HMO plans)marketed by Blue Cross, Blue Shield, Kaiser Permanente, Aetna---and so on, are all subsidized by the federal government. These are also the same companies that are concerned about competing with a "public option", but never mind! The point is that uninformed seniors and agitated health plans and insurers will fight very hard against this reform that would both cut cost and help pay for overall reform.

Next, why not tax high-premium plans? These are the so-called "Cadillac plans". Doing so would accomplish two things. Again, it would raise needed revenue to pay for reform (and thus help to keep Obama's promise about revenue-neutrality), but it would also act as a brake on higher premiums and extravagant benefits. By the way, what is being defined is "Cadillac" is a premium that would cost more than $8,500 per year for an individual. Does your premium cost that? The term has nothing directly to do with the actual benefits provided by the plan.

This last point is controverial in and of itself. But I refer to expensive and unnecessary cosmetic surgery, extreme cardiac procedures that will likely prove ineffective and countless other measures that go way beyond what most of us would consider to be important benefits. I also mean lots of emotionally based but unnecessary---even harmful---interventions given to people who are in a terminal state and nearing the end of life.

Remember that what is at stake here is healthcare for everyone: primary and secondary care, prescription medications, some dental and home care, behavioral health, pre- and postnatal care, and so on. To balance the difference between "Cadillac plans" and care for everyone some argue that there will be "rationing". But, as everyone knows, "rationing" already exists for those who cannot afford care. It just depends on who is defining the term.

Expect, once again, very powerful interests to oppose the tax I am endorsing here. Some unions for one, since they have negotiated substantial benefit packages in lieu of pay increases in some cases. But also large insurers. The bigger the premium, the larger the profit. The concept is pretty simple. Unfortunately, many Democractic lawmakers are indebted to---perhaps committed to---unions. Not a bad thing in general. But here this works against truly effective reform.

One last example. It appears that, while insurers will have to cover everyone, the Congress has determined to give these companies time to do that. Why? Because the companies do not want to have to conform to this principle till everyone has to have coverage. Since it will take both the federal and state governments time to get everyone covered---and to enforce this provision---the insurers get more time to comply with the new sanctions on them. So, such provisions may not be in effect until as late as 2014.

Once again, the consumer loses. Many people will not actually realize a key promise of reform for several years. Why? Because insurers, not the consumer, are being accommodated. At the very least this is gross government inefficiency in terms of getting reform implemented. At best it is more coddling of "the market" which has already failed to deliver for millions of Americans.

Note: both Reid and Pelosi need a certain tally of votes to get final legislation passed. As the discussion here shows, how they do that will help determine whether the outcome will "work".

I urge you to write your legislators NOW and be heard on these important issues during the next few critical weeks.

To respond to this blog, email steve6schul@yahoo.com

6 Current Myths We---And the Congress---Must Confront Now

2009-11-10T12:23:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

In the disorienting mixture of headiness and distraction that naturally follows the House's historic passage of healthcare reform over the weekend, it's important to get perspective---fast. That is why former President Bill Clinton is going to speak with Democratic senators.

Without some perspective, clarity and new urgency it's not at all clear that healthcare reform will pass the Senate this year. Or, if it does, that it will be---in the quaint phrasing of that politician of an earlier time–John Nance Garner–worth a bucket of warm spit.

This country needs far-reaching reform. Polls show us demanding such reform by wide margins. But, under the surface, there is also anxiety about cost and the rising deficit, distrust of government, derision of politicians. And, more disturbingly, there are orchestrated and highly financed efforts that are working tirelessly to make sure that any reform is either stopped outright or arrives stillborn. This fight is epic and no-holds barred.

What's at stake is the first time in 40 years (since Medicare passed after strenuous political maneurvering---sound familiar?) that a similar major healthcare overhaul has been within sight. The passage of Part D (medication coverage) and Part C (urging seniors to choose managed care plans) do not count. They were minor skirmishes that resulted in victories for major healthcare industries. They were no "people's victories".

But for effective and far-reaching healthcare reform to pass some key myths must be confronted. Each of these myths obscures the goal---making quality, affordable healthcare accessible for all (or nearly all) Americans. These myths arise from the American psyche of distrust in government. They also arise, fullblown, from the anxieties of status quo healthcare players who sense the landscape may be shifting. In any case, these myths need to be confronted directly and overcome. Then healthcare reform may be able, finally, to emerge.

Myth #1: Reform must be incremental. What is being considered now is too big, too costly. Well, this one is ideological. Yes, there is a huge deficit looming. We need to deal with that. But why must healthcare access and reform be sacrificed for this battle? Why not military contracting? Why not tax relief for wealthy Americans? Why not giant farm subsidies? The list goes on. Just one example serves here. At the beginning of THIS century we could have spent $800 billion on healthcare reform. Instead, we chose tax relief for the wealthiest Americans. That battle still rages.

Myth #2: A strong government option will be inefficient and it will drive private insurers from the "free" market. To get a handle on this one needs to remember two things: the government is ALREADY in healthcare. CMS (which runs Medicare and Medicaid) covers about 92 million citizens who get their healthcare through Medicare and Medicaid. That does not count the Veterans Administration and its huge healthcare empire.

Some grumbling, sure. But when was the last time you heard someone wanting to turn in their Medicare benefits? Or turn down Medicare? Second,do you really believe private insurers are lining up to cover single mothers, people with severe pre-existing conditions, the frail elderly? That's why the government needs to get involved here. Now. To set standards and to ensure the "weak and needy" get covered as well. The market will NOT do that alone or without motivation.

Myth #3: Medicare will suffer under reform because, in order to fund the new legislation, billions will have to be drained from Medicare thus draining current coverage. Nonsense. Reform will cost somewhere near $1 trillion over ten years. BUT only about a third of that will come from Medicare. How? Interesting question. Right now (because of Part C...) managed care companies---who market Medicare Advantage plans---are subsidized by the federal government to entice them to ensure elderly Americans. Each individual plan is subsidized to about 15% of the total annual premium. Why is this necessary or fair? Can't these companies compete? If we cut only this portion that would scoop up at least $100 billion to help pay for reform. The rest of the Medicare savings would come from new efficiencies in delivery and hospitalization. Why, to take one example, does it cost more to treat a Medicare patient in Los Angeles than in Hawaii? (Don't say "the weather"...)

Myth #4: Private insurers and hospitals don't have the margin needed to cover the uninsured and those with pre-existing conditions. They will go broke. Really? And yet they are getting--by mandate---up to 50 million new customers? Sounds pretty phony. Further, insurance companies set premiums in part by what is called a loss-ratio. That tells them how much of their total premium they might have to pay out for care in any given year. An 85% loss ratio, for example, would allow a full 15% of total premium dollars to be used for marketing (expensive...), salaries, administration and so on. VERY FEW private insures have an 85% loss ratio. Many are from 65% and up. They are not only NOT in trouble. They are highly profitable, ineffiecient and unethical. Let the government set a target loss ratio and have them learn to compete. Some of US have managed to survive so far without adequate coverage....

Myth #5: This is moving too fast; it would be better to wait, figure this out, take smaller bites. To us humans change always feels slightly giddy. Unnerving. Disorienting. Political change is not that different. (A black president???)But change always happens fast. It's always rude and sudden, sometimes it upends our sense of equilibrium. Once we have adjusted we do just fine.

In addition, healthcare reform can't be done incrementally. Everyone must be in or there will not be the best economic efficiencies. Everyone must be able to get coverage or the insurers will continue to "cherry pick" the healthiest to cover. One big, simultanious effort is needed to reform this broken, inefficient, unfair system.

Enough studies. Enough committees. We may not have all the answers, we no doubt will have to make changes and adjustments down the road. But we DO know what's needed. Let's move on that and trust our best instincts. And, yes, do what' right. We know how to do that, too.

Myth #6: The President and the Congress need to make major concessions to conservative Democrats and Republicans so "we can get something". That's "the change we can believe in"? Remember, the Democrats helped to elect many of those conservatives. And, truth be told, is this about the next election or the next majority or about the welfare of American citizens?

Sorry for the strong rhetoric, but ask yourself: will this opportunity, if lost, come back again in 10 years? 15? 20? One more thing. To get these votes we have to set back abortion rights for perhaps 15 years? Whether for or against abortion, are you in favor of it being available only to the well-off and tony? Take us back to the Fifties?

Lastly: do you really think that Lieberman, Nelson (NE), Cantor, Boehner, McConnell, Bailey-Hutchinson...and on and on will vote for ANY significant reform? Remember,this is not just about policy and sick old people and the deficit. It's about ideology. About business as usual. About privilege.

So how badly do YOU want reform? Let you elected representatives hear from you today.

To respond to this blog, email steve6schul@yahoo.com

Many Versions of the Public Option---and Why It Matters Which One

2009-11-01T16:45:00.000-08:00

By Steve Schulte of
Health Advocate Solutions

If you feel confused at this point about the health reform debate---as well as what a "public option" means you are not alone. This issue is confusing on a good day.

As the debate seems to be moving us ever closer to reform we are right to ask: what kind of reform?

It seems right now that there is general legislative agreement on key insurance reform issues. For example, coverage will be mandatory with some tax relief for those individuals with lower incomes and for certain lower-capitalized small businesses. Insurers will be expected to cover everyone----with pre-existing conditions or not. These things will be done through a variety of mechanisms: federal insurance regulation, coordination with the states, expansion of Medicaid (for example, to include some able-bodied adults, especially parents)and, as indicated, through use of the tax code.

The big debates center around: cost, whether healthcare inflation can be contained over time---and whether there is to be a public option.

The cost issue entertains a consensus of sorts: the final bill must be somewhat less than $1 trillion dollars over the next 10 years. Everyone seems to agree on this. It would also be great if the federal deficit gets lower over the 10 years ahead. That seems to be possible right now.

The second big issue---public option or not?---is much more complicated and its outcome harder to predict. What seems to be moving ahead in order to get enough votes for final passage is a govenment model (public option) that would set basic coverage standards and that would then have CMS (the agency that runs Medicare and Medicaid) negotiate prices with insurers, doctors, hospitals, manufacturers, etc. States would have the chance to opt out of offering this model after two years or so.

In contrast to this variation of the public option the so-called "robust" public option would do all of the above except that it would have insurers base their offerings on the prices set by CMS every year. (This works pretty well for Medicare right now by the way. Lots of company contracts follow this route.)But this model is opposed, not surprisingly, by insurers and their supporters in Congress. These all say that the robust public option would drive them out of business.

Given how small is the percentage of the population that would probably choose the public model this is extremely unlikely. Market reform might be the result. But isn't that what we want?

There are other "public option" models. For example, stick with the first model listed, the currently popular-with-legislators one, and don't let the states opt out. Or, let them opt in later. We now have at least four public option models on our table.

As I wrote previously, Wyden of Oregon has an interesting concept. He is for the public option. However, rather than limiting it to about 10-12% of the uninsured as is envisioned at this point, Wyden wants it offered all over the country. To everyone. Even if their employer contributes to only, say, two choices. Now that would most likely open up competition.

Finally, there is an idea that some Republican lawmakers prefer. It says that insurers should be able to do business anywhere in the country and that anyone, anywhere, should be able to buy their product. This could also blast open competition. But standards are different in every state so it would seem a public option is still needed to guide what a plan must contain and how it can be marketed.

Leaving aside the public option debate, how about cost control? Well, criticism that the current proposals don't go far enough seem correct. Wyden's model would clearly force cost constraints---as well as service differeniation--among the players. So would allowing CMS to set pricing. And, of course, the President already let the pharmaceutical companies off the hook when he declared that the federal government would not negitiate pricing with them. Mistake?

Unfortunately the issues here are very complex. We might want to see a bill written in 10 pages rather that nearly 2,000, but we are probably naive.

However, much is still at stake. As the train leaves the station it will be interesting---and it will matter---in which direction it finally gets going. Will we get the healthcare reform we expect and deserve?

To respond to this blog, email steve6schul@yahoo.com