It's All About Cost Control

Check out the video below. It really proves my point that it's all about cost control.

A medical billing advocate shows CNN's Elizabeth Cohen some of the wasteful charges she's seen in bills.

http://cnn.com/video/?/video/health/2010/03/01/cohen.health.care.bills.cnn

Massachusetts' "Reform" Mess

Great article…

Massachusetts’ ‘reform’ mess

By Sally C. Pipes

March 16, 2010

FEDERAL lawmakers pondering how to vote on Obama-Care this week should notice that Massachusetts is back asking Washington for hundreds of millions more to bail out its universal health-coverage system.

When it became law in 2006, the Bay State’s plan was supposed to fix everything — with much the same exact “medicine” as in the current national “reform” bills.

Everyone would have to buy insurance on threat of a $1,116 fine. Meanwhile, bureaucrats would redirect large amounts of federal and state money already sloshing around the state from supporting care for the uninsured to providing subsidized insurance for these same folks. Instead of using money to patch up problems caused by a lack of insurance, the state would use the cash to provide preventive care, saving even more money down the road.

So what happened? The state enrolled 55,000 more people in Medicaid, and folks flooded to the new free insurance and enrolled in their subsidized employer plans — but few bought private insurance.

So the total uninsured rate dropped from 10 percent of the state’s 6.3 million population to just 3 percent — but the savings haven’t materialized.

Of the 176,766 people enrolled in plans under the “Connector” authority set up by the state for individuals and small businesses to buy insurance, 87,838 are paying no premium and another 64,733 are subsidized. A mere 24,195, or 14 percent, are paying full fare.

This new insurance was supposed to be funded not by new federal money, but by redirecting the enormous amounts of money in the state’s uncompensated care pool. Yet the need to subsidize providers of care to uninsured hasn’t gone away — indeed, Massachusetts bureaucrats are seeking more money for the renamed Safety Net Care Pool. They want to keep hard dollar, openended subsidies flowing directly to hospitals and other institutions.

That’s why the state is now begging the feds for $473 million — to fund the safetynet programs that were supposed to be solved by their near-universal insurance.

And this comes on top of vast aid from Washington: The 2006 reform was itself an effort to save $385 million in federal funding.

Last year, Congress granted Massachusetts another $1 billion over three years to fund its system. In all, the feds are kicking in $21.2 billion over three years — more than $3,000 per person in the state.

Yet they’re already back asking for more, barely a year after the ink is dry on the deal that provided the last windfall.

The next step in Massachusetts is to impose global budgets for doctors — that is, to pay a flat fee rather than fees for service. In other words, to turn the entire state into a government-dominated HMO. (And the Bay State wants the feds to fork over another $135 million to help pay for the shift.)

In short, they don’t have a clue. The only thing they know is that they want more federal cash to keep the “reformed” system afloat.

Americans must understand that the Massachusetts mess is what ObamaCare will bring. In his latest request for more money, Gov. Deval Patrick’s administration actually asks for the added funds based on being a national model: “The legislation passed by each house of Congress bears a striking resemblance to the Massachusetts model.”

Be afraid. The only thing Massachusetts has demonstrated is its ability to get billions out of the federal government. But where will the country as a whole go for the extra money? Only two choices: Raise taxes on ourselves today or borrow our children and grandchildren into beggarhood.

Sally C. Pipes is president and CEO of the Pacific Research Institute and author of The Top Ten Myths of American Health Care.

Let me know what you think. -The Health Insurance Guy

Free Clinics

It is interesting to hear the prognostications of economists when it comes to health insurance. They often talk about the cost of care as a compared to Gross Domestic Product. They say the country will go bankrupt if we do not get cost under control. Our legislature in Washington tried to attack this issue with a 2000+ page bill to control about 20% of the nation's economy. The people shut this bill down. Currently, about 90% of Americans have individual or group insurance and, for the most part, are happy with their coverage, but unhappy with the expensive premiums. Are these expensive premiums the result of how much it actually costs to buy insurance, or are these premiums more expensive in order to cover the cost of the inefficient Federal and State programs?

The cost of “health care” drives the cost of health insurance. If the cost of care was less expensive, the cost of insurance would be less expensive. This being said, the private sector reacts to the price of health insurance and health care. When cost increase, the public market reacts, by limiting coverage and raising deductibles. The problem is that government-sponsored programs, like Medicaid and a host of other State and Federal programs, are unaffected by higher deductibles. So a privately insured individual moving to a higher deductible plan has a point of diminishing return when the savings are being gobbled up by government plans and the social welfare network. The government does not pay claims at market rates. These artificially low rates create an imbalance, and the health care providers increase the cost to the private payers in order to make up for the low reimbursements they receive from the government plans.

The State and Federal plans need to get their costs under control. Government programs need to create local clinics where they can control cost. Some will complain this type of change will create a two-tier system of health care delivery. Perhaps it will, but is that so bad? At least we will have a good clinic system that takes care of the folks who cannot afford health insurance with fixed cost. A national clinic program will lower the cost of government-run programs, which will lower the cost of private plans because the fee for service system will be replaced by a cost controlled State and Federal clinic program.

The Perfect Prescription for Fixing Health Care

Now that the debate has been sidelined with a loud message delivered by the people of Massachusetts and heard across the United States, it is time to get back to basics on health insurance and health care. There are certain facts about life that after raising four kids, and being married for 33 years, I have learned whether I wanted to or not. The first is that in the end, most people’s success in life comes down to personal responsibility, self discipline, and hard work. No matter what I have attempted, there does not seem to be a substitute for these three character building attributes. This applies to diet, exercise, saving or just plain hard work, it’s what makes the world go round.

When the economy is growing and there is lots of money to go around society will put up with certain behavior. When things get tight these behaviors are not accepted. This seems to be where we are now in the health insurance debate. Society is expecting people to be responsible. Society expects reform that is based on controlling cost and has a prescribed dose of personal responsibility in it, something that if we could bottle it up and sell it would be the perfect prescription for fixing health care.

The Health Insurance Guy

Great Interview, Steve Poizner Talks to KMPH’s Rob Johnson

I wanted to share with you California Insurance Commissioner, Steve Poizner’s interview with KMPH’s Rob Johnson because I respect his ideas, opinions, and feel his past experiences make him a really great candidate.

Republican candidate for Governor Steve Poizner spoke with Modesto's Rob Johnson of KMPH this morning to discuss his campaign for governor of California. In the interview, Steve discusses his budget proposal for California and Meg Whitman’s refusal to debate the issues, among other topics. To listen to the entire interview with Rob Johnson, copy and paste the link below.

http://www.youtube.com/watch?v=4sLDmhgcoJE&tr=y&auid=5806558

[Partial Transcript – Starting at 3:22]

ROB JOHNSON: I surely have to agree with you that one of Meg Whitman’s weaknesses is her openness to go into public debate and the interview that we did with her here on this program was pre-recorded from the afternoon before. And I think she’s a little concerned because she doesn’t have any political experience and I think she’s concerned, probably, about having to get out and answer tough questions and work quick on her feet when she’s standing in front of potential voters, and that’s got to say something too about her performance as governor if, on the campaign so far, that’s her behavior.

STEVE POIZNER: Well, these campaigns are tough, they’re grueling, and they need to be that way, and voters are watching carefully and they’re looking for the personal characteristics and the backbone and the vision and the stamina to actually be governor of this great state. And the fact is, Meg Whitman has a very interesting background and lots of great experiences in marketing positions at Disney and Hasbro and so forth, but the fact is, being in politics is just a different business. The fact is, being successful and effective in politics requires a different skill set. It’s not like being a CEO in a boardroom where you’re in command, barking out orders, hiring and firing people at will. Being effective in Sacramento requires cajoling skills and arm twisting skills and the ability to put together winning coalitions. In my case, the reason why I think I have such an interesting value proposition so to speak for voters right now is I’m the only one running that has 20 years of experience at starting companies from scratch. And that important entrepreneurial experience is very distinctive as compared to running big companies. And then in addition to my ability to bring jobs back to California and my 20 years of experience at running companies, I now have eight years of success in politics and public sector service. A year in the White House during the 9-11 crisis building a new homeland security plan, time in the classroom teaching kids in a low income area, running successfully statewide, being Insurance Commissioner now for three years, and downsizing my operating budget by 15% and creating a huge surplus at the Department of Insurance. This track record of success, both in the private sector and the public sector, will distinguish me in this race, and that’s what voters are looking for right now. They’ve had it with career politicians, and they also are not ready to turn the state over to a rookie either. So I’m ready to step forward here as a problem solver, really hit these problems head-on and get this great state back on track. ...

[9:18]

ROB JOHNSON: You’re not counting on getting any money from the federal government, you’re not counting on $7 billion coming from the federal government to help us.

STEVE POIZNER: No, that’s pretty much fantasy. I mean, I agree with the Governor that the federal government owes us some money. For example, we spend a billion a year covering the costs of illegal immigrants in our prisons. Now the government should pay us for that, but the fact is we’ve been trying to get that money for decades now, so the likelihood that we’re going to get any kind of federal bailout again -- we already got billions and billions in bailout money -- the likelihood is pretty small. And frankly, every time we get bailed out, it just covers over the real problem. It’s time that we balance our own budget. These one-time revenue shots really just procrastinate the inevitable. We’ve got to deal with our own problems here. ...

The Health Insurance Guy

Using HSA's to Our Benefit

Individual insurance premiums should be tax deductible both in California and Federally. This would cut the cost if the State let people write off the premium by 10%. I could never figure out why group insurance is tax deductible and individual is not. We want people to be responsible and buy health insurance so let’s make it tax deductible.

There are only two States that do not allow the Health Savings Account deposits to be expensed on the State income tax return. One is California. I think this should be changed right away. The Health Savings Account is the best way to get to where we want to go by making people more aware of the cost of health care. As people save money, the Health Savings Account will lead to more transparency in pricing. People with Health Savings Accounts will also have an incentive to stay healthy so they do not have to spend their savings. Also, I would guess as folks accumulate more money in their accounts, they can go to higher deductible plans and save money on their insurance premiums. This is exactly where the free market wants to go. The State and Federal legislators are against HSA’s because they promote individual responsibility and take control away from the government.

Contributions to Health Savings Accounts should be tax deductible to anyone who wants to help their family member or neighbor out. I would help my friends cover the deductible if they needed it, and I should be able to write it off like I was putting money into an IRA plan. I am sure this is less expensive than sending the money to the State or Federal Government, having them process it, and then having it sent back for claims. Money deposited in a Health Savings Account is the most efficient money of all. There is no commission to the distribution system or profit for the health insurer. The government never touches it and it goes directly to the provider 100%. Someone tell me a more efficient way to go.

The Health Insurance Guy

Good job, New York.

Did you know that while New York has about ½ as many people on Medicaid as California (In California, it is called Medi-Cal), it receives $3 billion more dollars than CA in support from the Federal Government per year? Per capita New York has about $7500 per person per year while CA has about $1850 per person per year.
Get this, California pays about $3 billion more in Federal taxes than New York in total per year. It goes to Washington and then Washington gives this money to New York for their health subsidy.

Are you shocked? Why does this happen? It happens because the subsidy is like a 401k plan. The more the State puts in the more the Federal Government matches it. California contributes about $1250 a year while New York contributes about $5500 per person per year. This costs CA about $3 billion a year. New York has taken advantage of this program. California needs to do a better job. Our legislators are wasting billions.

The Health Insurance Guy

Mandate-Light Coverage

Sacramento and Washington D.C. are full of lobbyists whose job it is to represent the industry who is paying their salary. You can imagine how important it is for certain industries like Chiropractic, Acupuncture, Alcoholism and Drug Addiction, Mental parity and others to get mandates that health insurance must cover their particular area. Over the years the lobbyists have been successful and these mandates increase the cost of insurance. Most people simply want coverage for illness and accident. So these mandates are coverage they do not need. Cal-Basic would be a “mandate light” individual health insurance plan that would be available to people who lost their jobs in addition to COBRA. The insurers are fine with this concept. The premiums would be much lower for the laid-off employee while they looked for another job.

Cal Basic would be available on the open market as the lowest level plan an insurer could sell. Insurers have already done the actuarial analysis on this type of program. It would cost about $60 to 75 dollars per month for someone under age 30. The guaranteed issue rate for the age group under age 30 would be about $544 per month.

A plan like this would lower the ranks of the uninsured by lowering the cost of purchasing catastrophic insurance and open markets for consumers with pre-existing conditions.

The Health Insurance Guy

Tax on Taxes

The Federal and State government have learned how to tax citizens indirectly through their health insurance premiums. Sometimes the tax is to fund the State’s high risk pool, or some other special program the State has created. The Federal government is promoting special taxes on the insurance companies. Of course, the insurance companies simply need to increase rates to cover the new tax. The problem is that the person that pays the tax indirectly is unaware of the tax payment. In the case of individual plans which are not tax deductible, these hidden taxes propose a preposterous situation where citizens are paying “tax on taxes”. If you are in the 30% tax bracket and are paying a $20 tax included in your premium, it costs you 26 dollars to pay the tax. This needs to be fixed, raising taxes inside a health insurance policy is not right and costs every citizen extra money in their health insurance premium. No one should pay tax on taxes.

The Health Insurance Guy

Simple Changes, Big Benefits

There are certain simple law changes that could greatly improve the Health Insurance market in California and other states. Health insurance is a multiple discipline industry, including underwriting, finance at the consumer level, and finance at the State and Federal level. In the next few blogs, I will make suggestions that would make the free market more competitive, create access to all people regardless of pre-existing conditions, and make health insurance easier to maintain through one’s lifetime.

The first subject to address is those points in time, when due to current law and contracts certain people could lose their insurance because of a technicality or circumstance beyond their control. For instance: Why does someone’s dependent need to come off their insurance at some random age like 18 if they are not students or 23 if they are? I have communicated with the insurers about this stipulation, and they cannot tell me why it is there. The young and healthy dependents are good risk for them. A parent should be able to keep their child on their family health plan as long as they pay the premium with no limit.

Another point of contention is when a person with an individual policy gains employment and group insurance from a company. The insured gives up his individual policy to take on the group insurance. If the employee is laid-off or loses the job for some reason he has the option of COBRA which can cost twice as much as the individual plan they gave up to get on the group plan. In many cases the laid-off employee cannot afford the COBRA. If a person gives up their individual plan to take a group plan and then loses his job, the group insurance company should have to offer that individual an individual plan that is issued at the same underwriting rate as his previous individual plan when he took the job. I would recommend a basic plan defined by the State with a low cost (not loaded with expensive mandates). The insurer is already on the hook for the individual but this gives the laid-off worker an option to take a lower cost individual plan instead of the expensive group coverage. I will talk about the low-cost plan (Cal Basic) in another blog.

The Health Insurance Guy

Why is everything a crisis?

Have you noticed how the politicians refer to everything as a crisis? I was checking out all of the crises they have predicted over the last few decades. In the early seventies they were concerned with the population crisis. They were predicting mass starvation and economic destruction, didn’t happen. Later in the seventies they actually predicted global cooling along the same lines as they are predicting global warming now. They wanted to do all kinds of attacks on the private sector to save the world from global cooling, didn’t happen. Then in the 80’s they were predicting the USA had lost its momentum and that Germany and Japan were going to slaughter us in the global economy. Then, of course, in the 90s, the biggest scam of all: Y2K. This was going to be the end of the world, planes would fall out of the sky. The US spent billions on trying to figure out what was going to happen, and of course not much happened. In the 2000’s it has been all about global warming, but it has been shown that scientists were fixing the data to create false results. I guess there was a lot of money in it for someone. Now the politicians are saying how we have a health care crisis and we have to socialize everything so they can save us from ourselves. Give me a break. The politicians do not trust the free market, and they think they are smarter than the consumer. If things become too tough the market will adjust. I do not have faith in the politicians. The next subject will be on health reform in California that can really work and does not raise taxes.
The Health Insurance Guy.