Sunday, May 09, 2010

Health Care Reform: My take

I spent last Thursday at an all day event talking about health care reform and how it is going to impact us, employers, in administrating our benefits. It sucks. I do believe that uninsured should have options. I do believe the uninsurable should have options. I do not believe the legislation that passed is the right answer.

Exchanges: When you buy a car, you buy car insurance. You can't expect to call up just after you got in an accident and get car insurance to cover that accident. The exchanges will not work that way. You, an uninsured person, could not bother signing up for health insurance and pay your $8.00/mo fine until you get sick. Then you can sign up with the exchanges and get coverage immediately that will cover that condition (since no pre-existing condition rules apply and you cannot be rejected). You could then drop back off the insurance once you're done receiving treatment. This is not a sound business practice. Potentially they will be paying out way more in claims than they're bringing in in premiums and since they will be hamstrung on increases by the government, they won't be able to continue to offer plans and/or stay in business.

Employer penalties: If your company employs more than 50 people, they must offer health insurance. Failure to do so results in a $2,000/year/person penalty. I can promise you that your health insurance costs your employer more than 2k per year. It might be easier and cheaper for your employer to chuck insurance altogether rather than deal with the rest of the governmental mandates that have come up.

If your employer's plan is too "rich" (EMPLOYER cost exceed certain limits) a 40% excise tax will be assessed to the insurance carriers. Like they aren't going to pass those on to the employer as higher rates? Yeah right. Insurance company rates are established by the company's experience and demographics. An employer who has a particularly poor year or two may find themselves on the receiving end of that penalty. Further, what difference does it make if an employer wants to offer a particularly rich plan to its employees? How is it good business to penalize companies for offering more for their employees? (If you start adding on riders such as infertility treatments the rates can go through the roof).

If your employer's plan is too poor they can be penalized. There are minimum standards required now. I'm not against this. Most employers plans are there, HOWEVER, similar to the talk amongst employers about dropping health insurance many are considering cutting plans to the bone to comply with the too rich rule. If costs to the employee are more than 9.5% of than their family's AGI, the employer can get dinged. If costs to the employee are between 8 and 9.5% of their AGI, the employer is required to offer vouchers so employees can go to the exchange. How in the hell is the employer supposed to know what the family's AGI is? We have no way of knowing that. So an employee could take our voucher (worth the value of the plan we offer) and turn around and get a lessor plan in the exchange (the minimum plan is a 60/40 coinsurance plan) and pocket the rest.

Employer insurance must cover clinical trials. They must also cover the fix if a clinical trial doesn't work or makes things worse. I know that clinical trials are necessary, however experimental treatments are expensive. Covering them will increase costs and see above about plans that are 'too rich.'

Starting Jan 1, 2011 Flexible Spending Accounts can no longer cover over the counter medications and in 2014, the max will only be 2500. There's this perception in DC that FSAs are the tax shelter of the rich. As I announce that change in my open enrollment meetings, it isn't the doctors lamenting that change.

And finally the CLASS act. This is a "voluntary" long term care policy that starting January 1 you will be autoenrolled in if your employer can offer payroll deductions. Of course they can. There are very few employers that cannot accommodate it. Therefore if we CAN do this, we MUST do it. So we have to autoenroll employees unless they proactively opt out. The government is counting on most people failing to pay attention to their paperwork to sign up for this plan. The plan pays out only $50/day for your Long Term Care needs. There is nowhere in the country you can get care for $50/day. And, for most young employees, you can get better rates from the independent market than what the government is offering them for.

Some things Health Care Reform doesn't address that perhaps they should...
Tort Reform. Medical lawsuits are out of control. I'm sorry for people who lose loved ones, but a million dollars isn't going to bring them back. Fifty million definitely isn't going to bring them back. Perhaps if there were limits on lawsuits, physician's medical malpractice insurance wouldn't have to be so high and perhaps their overhead wouldn't be so high and on down the line.

Tort reform would also decrease the use of defensive medicine. Defensive medicine is the provier's practice of recommending further tests or treatments that may not be helpful but is more of a way for the provider to cover his/her ass in case of lawsuit. Nice how that works, right? That raises everyone's medical costs.

I think there should be help for people who can't get it. I do think it is ridiculous that some people pay over a thousand dollars for family coverage. But this health care reform isn't it. However, given that there are 4 to 8 years between now and when some of these practices start (not all), who knows what the hell will happen.


Anonymous said...

Thank you so much for writing that. All this is just from an employer's POV and is just the tip of the iceberg of the silliness (idiocy) in this plan.

Yep, something needs to be done. Yep, this isn't it.

Richard Posey (currently self-employed and uninsured)

Leah said...

So glad you wrote about this, it's been hard for me to fully understand the nooks & crannies (I know, I know that's not good when actually voting). I trust your take on this ad I know you have far more knowledge than I do, and I trust you. I know that I'll have to reread this a few times to fully understand and I'm glad you posted it.