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( 3 / 365 )On June 19th, the Education and Labor, Energy and Commerce, and Ways and Means Committees in the House of Representatives released a joint tri-committee draft health reform bill. Although there were some good ideas in the bill, let me focus on the area of Insurance Market Reform. The legislation requires changes to the individual and group markets that prohibit pre-existing condition exclusions, prohibit premium rating based on health status, gender, or occupation and limit rating by age, require guarantee issue and renewal of coverage, require a medical loss ratio of 85 percent, prohibit annual or lifetime benefit limits and limit annual cost sharing, establish a Benefits Advisory Committee to recommend a minimum benefit package and three additional standard benefit plans, and establish a risk spreading mechanism to minimize unequal risk selection in health plans.
Let’s focus on the 85% loss ratio… and why this is a bad thing. So the way this would work is that an insurance company must have an 85% loss ration or higher for every policy (group or individual). So for every dollar in premium, 85 cents must be paid out in claims…. Leaving 15 cents to cover administration, business expenses, etc… Hmmm, sounds fair…. But look further. As we all know with every other insurance policy we have, the people who don’t file claims premiums off set the people who do… it’s the concept of pooling. If you take that away, great, the healthy people will see premiums drop! Hey, I’m healthy, that works for me! But since they can’t generate much profit from my premiums, the sick’s premiums will have to increase substantially to cover the losses on their policy. So now the sick’s premiums just shot through the roof… but wait, the bill says insurance companies can’t set premiums based on health status… so I guess the insurance companies just have to loose money on every policy out there that has a loss ratio above 85%.... Guess where that leads us…. To insurance companies going out of business, no longer offering Medical, and eventually we’re all on the Federal Government Plan… Single Payer System, here we come!
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( 2.9 / 406 )Each day I try to do my best in keeping informed on all the HR news that effects my client's workplace. Here is what I found today that should be of major concern for employers. The DOL just published on its web site an application form titled "Expedited Review of Denial of COBRA Premium Reduction". I wasn't too surprised by this latest DOL request, however, I had to sit back and wonder how much of an administrative burden this is going to be for my fellow colleagues.
The form is made available for those who believe they were eligible for the premium reduction but their request for those benefits or the reduced premium had been denied. The 11-page application asks former employees and eligible dependents 10 questions about the individual’s eligibility, and specifically asks if the individual received notice informing him or her of the right to elect COBRA. In addition, it asks whether the individual received a notice informing him or her of the right to a premium reduction.
I'm sure some of you will be getting the call from your local offices or former employees asking for information to assit them with completing the form. Significantly, the DOL requests a description of the reason given for any denial of the premium reduction, attaching copies of all relevant documents. I have attched the link to the application below.
http://www.dol.gov/ebsa/pdf/COBRAapplic ... pplication
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( 3.1 / 380 )So I wondered how the health care players were going to reduce costs by 1.5% per year…. Looks like either the Whitehouse or the Media was mistaken. http://www.politico.com/news/stories/0509/22559.html
At least President Obama says a single payer system is not the option… I just hope the House agrees. It seems like a lot of their ideas surround a single payer system or a system so controlled by the government it might as well be a single payer system. Like in Texas, where a bill is making it’s way through the State Legislature that would cap the profit margins insurance companies can have. So if it passes, an insurance company can not price their premiums such that their loss ratio can be less then X percent. In other words, it would say that premiums for a set group must be set so that truly 80 cents of every dollar collected has to go out in claims (using random numbers to explain it better). If the insurance company really only pays out 75 cents, then the premiums must come down. What about the case where the insurance company paid out $1.20 for every dollar in. The issue here is everyone knows insurance is all about the non-users helping off set the users. So take away the ability to do that, and the healthy groups see lower premiums, but the sick groups… they get rates that go through the roof! Thoughts?
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( 3 / 294 )It's all over the news now, and there is so much to say on the topic. The Blues had a great piece they released with their opinions on health care reform, which I tend to agree with. One idea they suggested which I think is one we need is the ability for employers or group health plans to charge more for those who do not follow care guidelines. According to the Blues, 30+% of claims are generated from people not following the proper care guidelines they were given by a provider. The high blood pressure person who does not take their meds regularly, the asthamatic who doesn't use their inhaler like they should, etc... So if we just "nationalize" health care, but we don't find a way to "motivate" these people to follow care guidelines, we will never be able to control our costs. If you want to read the BCBS report, here is the link. http://www.bcbs.com/news/bluetvradio/pa ... g-america/
But in Washington, penalizing people is not the popular side to take... who wants to tell voters I voted to slap the unhealthy with higher premiums. Although let me be clear, that is not what they are suggesting, nor am I. They would not charge more because they are sick, or have a condition. The overweight person would pay the same as the "normal" weight person... the time you're penalized with higher premiums is when you do have a chronic condition and you do NOT follow the prescribed treatments. But those in Washington don't want to hurt anyone... so now another hot suggestion is "let's limit the tax credit employers get for their share of the employer sponsored health insurance premium." Washington thinks the tax payments could generate enough money to cover the roughly 40,000,000 uninsured. What they do not realize from their bubble is this is just a death spiral waiting to happen. Let's see, business owner no longer gets the tax breaks, and hey, in this economy, I don't need benefits to recruit, so forget it, they are more trouble then they are worth... so I'll drop them. Well, now the tax revenue didn't increase but the number of uninsured sure did... see a problem here?
How about the proposal for a government plan that people can pick to compete against the private companies.... although this one sounds interesting, because they say it will not be funded by tax dollars, just premiums paid by policy holders... but let's think this one through. The epitome of inefficiency will take on private companies to offer something better... let's be real here. To top it off they are saying the government plan would accept anyone wanting coverage... hmmm, do I see the sick going there since the private companies will charge more, it's what we in the business call a death spiral.
I could go on and on... but for now I'll stop. Please understand, I am in favor of reforming the system, something has got to change that's for sure. I'm just not sure we have the right answer yet, and Let's hope we don't jump to bandaids that only mask the problems.
Stay tuned for more updates and suggestions from Washington.
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