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
Monday, March 14, 2011
Wednesday, February 9, 2011
Can the Blue Shield Rate Hike be Justified?
By Steve Schulte of
Health Advocate Solutions
Respond to (213) 999-1227
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
Health Advocate Solutions
Respond to (213) 999-1227
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
Saturday, January 1, 2011
Attacks on Healthcare Reform: the Mouse and the Roar
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
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
Wednesday, December 29, 2010
MANDATE? What Mandate?
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
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
Friday, November 26, 2010
Worth Noting About Medicare
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
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
Thursday, November 11, 2010
Keeping Costs Lower----and Staying Healthy in an Uncertain Time
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
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
Thursday, October 7, 2010
Long-term Care and the Healthcare Reform Law
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
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
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