Health Care Bill Repealed!!!

Health Care Bill RepealedWith the mid-term elections upon us, could we soon see this headline in the local papers or on the cable news scroll?  Don’t bet on it. While the GOP has made “repeal and replace” their mantra during this campaign season, there are quite a few roadblocks standing in their way.  Even in some corners of the GOP they are admitting that repeal is a longshot. But for argument’s sake, let’s say that somehow the bill gets repealed and the repeal bill gets past a presidential veto.  How would repealing the health care bill affect ordinary Americans?

Well, let’s consider that a number of provisions from the bill have already taken effect.  Undoing those provisions would be felt first. Consider:

  • All of those twenty to twenty-six year olds that were allowed onto their parents’ insurance would now have to be kicked off and told to find coverage elsewhere.  How will the parents’ of those young people react to that?
  • Under the health care law, children with pre-existing conditions cannot be denied coverage.  Repeal means that the insurance companies can start denying coverage to those children again.  How will parents deal with that?
  • Any plan that started (or was re-newed) after October 1 of this year had to begin offering preventative services with no cost-sharing (no deductibles or co-pays allowed) – now they will have to reverse all of that. How will people who’ve been able to get free mammograms, physicals and colonoscopys feel about having that benefit taken away from them? Remember, this provision applies to medicare too.  How will seniors feel about the government messing with their medicare coverage?
  • Speaking of medicare, the treasury has already mailed out $250 rebate checks to seniors with Medicare Part D.  Will they be forced to return that money? How will seniors feel about the ‘donut hole’ being re-instated?
  • Fully insured health plans (after Oct 1) have built in premium increases to account for the additional services and dependents being covered.  Will they reverse these increases or will policy holders be stuck with the higher premiums even though the additional coverage has been stripped out? 
  • Most insurance companies have already reduced their commission rates for brokers going forward.  Will the carriers reverse this or will brokers be stuck with the new commission structures?
  • Finally, after the health care bill is repealed, we will still be stuck with a health care system with ever escalating costs.  What will replace it?  Are we ready for another year or two of political debate on health care reform?

So will the politicians in Congress have the intestinal fortitude to repeal the law given the above?  Maybe, but I doubt it.  “Okay,” you say, “but what about the lawsuits that the states have filed stating that the individual mandate to buy insurance is unconstituional? At least we may be able to get the individual mandate taken out.”

Most legal analysts have said this is a longshot too, but again let’s assume it happens.  The insurance companies agreed to waving pre-existing conditions for everyone in 2014 based on the individual mandate which would go into effect in 2014 as well.  Why?  Because in order to waive pre-existing conditions there must be a way to avoid adverse selection.  And the only way to avoid adverse selection is to have everyone buy insurance.  If that requirement goes, expect the insurance companies to turn around and lobby Congress to remove the pre-existing condition provision.  If Congress removes that provision, they risk alienating a large portion of the public.  If they don’t remove that provision, insurance companies will lose a lot of money and/or get of the business of health insurance altogether.   

Given the unappealing consequences of repeal for politicians, I would say that we are now on the long, bumpy road of health care reform in this country.  The best bet will be for future Congresses to tweak the bill and try to improve upon it.  How they do that will be anyone’s guess.  In the meantime, subscribe to my blog for updates.


One for All and All for One

Health purchasing co-operatives for 501(c)3 organizationsIn the state of Illinois, there are a couple of laws on the books that allow for organizations to band together for the purpose of providing insurance coverage to members. There is an inter-governmental law that allows municipalities, counties, school districts and other units of government to form co-operatives to insure (or self-insure) various risks. These include work comp, property and health care. There is also the Charitable and Religious Risk Pooling Trust Act which allows for 501(c)3 organizations and religious institutions to insure (or self-insure) various risks including work comp and property – but not healthcare. Finally, there is a law that allows for private employers to come together and form a health insurance purchasing group in order to buy insurance for their organizations (this law does not allow self-insuring).

Why would any employer or organization want to combine with others to purchase insurance? The main reason most do it is to create a larger population group. A larger population results in more stable insurance rates, partly because of a smoothing out of claims experience due to the law of large numbers. It is much easier to predict the number and amount of claims in a group of 1,000 than it is in a group of 10. Additionally, it levels out the insurer’s profit margin for fully insured groups. An insurer builds in a larger profit margin on small groups because of the additional risk (lack of predictability) in insuring them. Again, the larger a group is, the more predictable the risk becomes, which in turn lowers the risk premium (profit margin) that an insurer needs to build into the contract. Self-funded co-operatives are able to remove this ‘risk premium’ entirely, resulting in an immediate reduction in cost.

A group purchasing co-operative could also benefit its members by using its group purchasing power to provide additional services, such as wellness programs, at a cost lower than small individual groups could get on their own. Currently, I am working with not-for-profit organizations in the Chicago metro area to form a health insurance purchasing co-operative. It is hoped that we can reach a sustainable number of participants over a set period of time so that the purchasing co-operative will become an attractive target for a large number of health insurers, or that the regulatory environment allows for the co-operative to eventually become a true self-funded entity. If you would like more information about this health insurance purchasing co-operative, please contact me.

Have You Found That Missing Sponge, Bob?

Accountable Care OrganizationsOne of the interesting things to come out of Health Care Reform is the push from insurance companies to get hospitals focused on quality.  As an example, some research indicates that a medical sponge is left inside a patient one tenth of one percent of the time.  That’s 1 in 1000.  Doesn’t seem like much of a problem right?  Well, maybe you’ll reconsider once you read this story in the Miami Herald.  Two words I never want to read again: festering sponge.  The point of the story for insurance companies is that while one surgery is expensive, two surgeries is MUCH more expensive.  In fact, Medicare and most private insurers will not pay the hospital at all for the surgery to remove the sponge.  This is just one example of making providers accountable.

The new health reform law talks a lot about Accountable Care Organizations, which you can find out more about at the Code Red blog.  The idea is to provide the hospitals and doctors with one lump sum up front to treat a patient’s condition.  If the cost of treating that patient is more than they received, they have to eat the difference.  But, if the hospital team is able to treat the patient for less, not only do they keep the difference but they may also get a bonus from the insurance company.  Blue Cross has recently entered into an accountability contract such as this with the Advocate Hospital System.  Hopefully, this will lead to better care for the patients and a way to rein in health care costs and in turn, insurance premiums.

So, what are hospitals to do about missing sponges?  While most hospitals count sponges going in and then coming out, there are new technologies available now.  The Mayo Clinic says that before they implemented a computer scanning system (like the kind used at Target or the grocery store), they were losing a sponge a month (!) inside of patients.  For the past year and a half, using the system, they haven’t lost one.  Think about that for a minute.  That means that there have been 12 fewer unnecessary operations over the course of a year, which probably equates to hundreds of thousands of dollars saved not to mention the malpractice awards.  You probably will be hearing a lot more about Accountable Care Organizations in the very near future.  In the meantime, why don’t you let us take a look at your current group health policy?

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