We have learned that the new health care law prohibits insurance companies from rejecting an applicant because of pre-existing conditions. We can see several consequences arrising out of this policy.
1. It will cause the premium of those who do carry insurance to increase. There is no such thing as a free lunch.
2. It will encourage people not to apply for insurance until they need to file claims (inspite the $2000.00 penalty's).
3. In the long run it quite possibly result in the demise of private health insurance, which may well be what the drafters of the legislation had in mind in the first place. Remember the debates of the single payer systems.
Friday, October 29, 2010
Wednesday, October 20, 2010
The musing of one wondering if the Swiss actually invented Swiss steak
In April 2009 during the big debates on health plans, we sat down and wrote our own which takes up about three and a half pages.
It was reviewed by a number of people including, a RN case manager, an engineer, two attorneys (one from East coast and one from West coast), insurance agent, CEO of a relatively small health care organization, and an individual whose own health care arrangement is secure enough that the law won’t affect him. All agree the plan is workable.
Since then, we have tried to find an actuary who would do the necessary study to produce a model set of numbers which could be used to estimate cost and savings. We have had no success.
We also submitted it to two congressional offices hoping to arouse some interest. We had no success there either.
Now, acting on the advice of two people whose opinions we value highly, we have decided to publish it on our blog. For better or worse, here it is. See below.
Further deponent say it’s not.
A Concept for “National Health Care Plan”
By J. D. Eiland
Cautionary Notes
1) I make no claim to have expertise in the health care field, the insurance field or the legislative field. The ideas presented herein are based on plain old horse sense accumulated over many years.
2) The figures used herein are not taken from any data base or statistical analysis; they are purely arbitrary and are used only for illustrative purposes.
General Description
1) All individuals over the age of 15 are entitled to establish a Health Savings Account. The amount placed in this account should be free from all taxes of any kind, federal, state or local.
2) The account should be established in financial institutions regulated by the federal government. Each account should be clearly identified as an HSA account, and the financial institution involved should be required to limit payments from it to licensed health care providers, licensed pharmacists, or recognized health insurers. This requires that the payee place its license number on the check.
3) Individuals should be encouraged to use part of the HSA to purchase high-deductible health insurance.
4) The amount in the HSA should be allowed to accumulate tax-free over the lifetime of the individual. Upon his/her death his beneficiaries should have the option of rolling the balance into their own HSAs or taking it as ordinary income, in which case it would be subject to the usual taxes.
5) Insurers should be authorized to place a lifetime cap of perhaps $700,000, pro-ratable according to the age of the insurer at the time of the enrollment, on payments. Beyond that cap the liability should pass to the federal government as insurer of catastrophic events or chronic health disabilities. To finance this part of the plan the federal government should receive some portion of monthly premiums paid by the insured. These amounts should be held in an actual trust fund. When the fund reaches a predetermined maximum, further collections can be suspended until additional funds are required to maintain that maximum. The suspension would pass through the insurance companies to the insured as a reduction in premium.
6) The purchase of a high deductible insurance should be voluntary but appropriate incentives should be established to encourage such purchases. (See discussion in later paragraphs).
7) As an example of the concept, assume the following: the total amount of the HSA contribution is $4,500. The insured uses $2,000 of this to buy a high-deductible medical insurance policy, with the deductible set at a minimum of $2,500. The insurer does not become involved until the HSA is exhausted.
Medicaid
1) As best as I can determine, the current Medicaid program covers about 50 million people and costs an average of $6,100 per person per year, or somewhat over $300 billion.
2) In lieu of Medicaid, current Medicaid patients would be given an HSA account equal to the maximum HSA contribution. For 50 million people, this would cost $225 billion. The difference would be used to finance other activities covered in later paragraphs. Current Medicaid patients should be instructed to select a preferred provider organization and to go to that organization for health care. They should no longer be allowed to use emergency rooms for non-emergency concerns. Nor should an ER be required to treat non-emergency ailments.
3) I recognize the reality that many current Medicaid patients are not dependable in arranging their own affairs. The welfare programs of the last 70 years or so, which have had noble ideals and have actually produced many benefits, nevertheless have created a permanent underclass of people who depend on the government or others to take care of their problems. Its time to change for the better and this is a good place to start.
4) Without some sort of incentive, current Medicaid recipients might be inclined to use the funds completely, regardless of whether medical necessity really required it. To prevent this, the former Medicaid recipients should be informed if any balance remains in his HSA at the end of the year. If so, he may withdraw half of it tax-free. Whether this should be done on an annual or accumulated basis will need to be determined.
Medicare
The Medicare program would continue in its present form for those over 50 years of age, when this plan is installed. Others would transition to the proposed health care plan. After age 65, and after the lifetime limit has been exhausted, these people would be placed in the catastrophic or disability category and their medical costs would be assumed by the federal government. If the insured is unable to meet the premiums after retirement he may apply for aid as described in the paragraph titled "Underinsured (Working Poor)" below.
After the exhaustion of the lifetime limit the insured will no longer pay premiums, but would remain eligible for the federal government's reinsurance plan.
Underinsured (Working Poor)
For this group the federal government would provide funds sufficient to finance an HSA in the maximum amount. Funds for this could probably come from the savings in Medicaid. There should, of course, be predetermined standards of eligibility. The same incentive described above for the former Medicaid recipient should also apply for the underinsured.
Uninsured
This category includes those who are financially able to purchase health insurance but who choose not to do so. In this case, a negative incentive will be provided, as described below. People should understand that the whole program is voluntary. They should also understand that if they choose not to participate and then incur medical bills beyond their ability to pay, the creditors may then go to federal court and obtain a federal lien on all property belonging to the debtor as well as 20% of his monthly income. As a federal lien, the creditor could obtain action no matter where the debtor moved in the United States or no matter how he tried to dispose of real property. This lien should be superior to and survive all legal actions, including bankruptcy, and it might also apply to property transferred after the debt is incurred.
Other Provisions
1) The lifetime cap should apply to the individual, not to the insurance company. Therefore, if an individual changes insurance companies the new insurer would establish a cap of $700,000 minus all amounts previously paid by previous insurers. For this purpose insurers would be required to furnish each other with such information. The purpose of this provision is to prevent manipulation of the system by anyone - insured, insurers, or the federal government.
2) The insurance community should establish an insurance clearing house similar to a bank clearing house. With such an institution, providers could send to it their request for payment which would then reroute the claims to the appropriate insurance companies. This could involve the use of a preprinted forms provided by the insurance company to each insured (similar to a pad of checks) and the provider would nearly have to add its name and billing data, attach its supporting documents, and forward all claims to one addressee. This should alleviate, if not eliminate, the concern about the single-payer concept. Appropriate time limitations could be placed on the clearing house and the insurance companies. For example, the clearing house might be allowed 72 hours to reroute the claims to the appropriate paying companies, and the paying companies might be required to either pay within twenty-one days or notify the provider of any objections within those same twenty-one days.
Closing Thoughts
1) The incentives discussed under the Medicaid and underinsured headings should probably be extended to everyone, for the sake of simplicity and ease of administration.
2) The insurers should retain the administration of all claims including those filed with the federal government. This would provide simplicity, continuity of information, and consistency and would relieve the federal government of the burden of establishing another bureaucracy. The insurance company could be paid a processing fee. The fee would be paid from the health plan trust funds of the federal government.
3) This discussion has not addressed the question of whether there should continue to be group insurance, or whether it could be handled on an individual basis. That question should be settled by agreement among the insurers and the federal government.
4) Insurance companies should be allowed to compete across state lines, subject to normal regulation by the states.
5) Properly structured, a system such as this probably would result in a reduction of health care costs.
Original April 2009; Revised October 2010
It was reviewed by a number of people including, a RN case manager, an engineer, two attorneys (one from East coast and one from West coast), insurance agent, CEO of a relatively small health care organization, and an individual whose own health care arrangement is secure enough that the law won’t affect him. All agree the plan is workable.
Since then, we have tried to find an actuary who would do the necessary study to produce a model set of numbers which could be used to estimate cost and savings. We have had no success.
We also submitted it to two congressional offices hoping to arouse some interest. We had no success there either.
Now, acting on the advice of two people whose opinions we value highly, we have decided to publish it on our blog. For better or worse, here it is. See below.
Further deponent say it’s not.
A Concept for “National Health Care Plan”
By J. D. Eiland
Cautionary Notes
1) I make no claim to have expertise in the health care field, the insurance field or the legislative field. The ideas presented herein are based on plain old horse sense accumulated over many years.
2) The figures used herein are not taken from any data base or statistical analysis; they are purely arbitrary and are used only for illustrative purposes.
General Description
1) All individuals over the age of 15 are entitled to establish a Health Savings Account. The amount placed in this account should be free from all taxes of any kind, federal, state or local.
2) The account should be established in financial institutions regulated by the federal government. Each account should be clearly identified as an HSA account, and the financial institution involved should be required to limit payments from it to licensed health care providers, licensed pharmacists, or recognized health insurers. This requires that the payee place its license number on the check.
3) Individuals should be encouraged to use part of the HSA to purchase high-deductible health insurance.
4) The amount in the HSA should be allowed to accumulate tax-free over the lifetime of the individual. Upon his/her death his beneficiaries should have the option of rolling the balance into their own HSAs or taking it as ordinary income, in which case it would be subject to the usual taxes.
5) Insurers should be authorized to place a lifetime cap of perhaps $700,000, pro-ratable according to the age of the insurer at the time of the enrollment, on payments. Beyond that cap the liability should pass to the federal government as insurer of catastrophic events or chronic health disabilities. To finance this part of the plan the federal government should receive some portion of monthly premiums paid by the insured. These amounts should be held in an actual trust fund. When the fund reaches a predetermined maximum, further collections can be suspended until additional funds are required to maintain that maximum. The suspension would pass through the insurance companies to the insured as a reduction in premium.
6) The purchase of a high deductible insurance should be voluntary but appropriate incentives should be established to encourage such purchases. (See discussion in later paragraphs).
7) As an example of the concept, assume the following: the total amount of the HSA contribution is $4,500. The insured uses $2,000 of this to buy a high-deductible medical insurance policy, with the deductible set at a minimum of $2,500. The insurer does not become involved until the HSA is exhausted.
Medicaid
1) As best as I can determine, the current Medicaid program covers about 50 million people and costs an average of $6,100 per person per year, or somewhat over $300 billion.
2) In lieu of Medicaid, current Medicaid patients would be given an HSA account equal to the maximum HSA contribution. For 50 million people, this would cost $225 billion. The difference would be used to finance other activities covered in later paragraphs. Current Medicaid patients should be instructed to select a preferred provider organization and to go to that organization for health care. They should no longer be allowed to use emergency rooms for non-emergency concerns. Nor should an ER be required to treat non-emergency ailments.
3) I recognize the reality that many current Medicaid patients are not dependable in arranging their own affairs. The welfare programs of the last 70 years or so, which have had noble ideals and have actually produced many benefits, nevertheless have created a permanent underclass of people who depend on the government or others to take care of their problems. Its time to change for the better and this is a good place to start.
4) Without some sort of incentive, current Medicaid recipients might be inclined to use the funds completely, regardless of whether medical necessity really required it. To prevent this, the former Medicaid recipients should be informed if any balance remains in his HSA at the end of the year. If so, he may withdraw half of it tax-free. Whether this should be done on an annual or accumulated basis will need to be determined.
Medicare
The Medicare program would continue in its present form for those over 50 years of age, when this plan is installed. Others would transition to the proposed health care plan. After age 65, and after the lifetime limit has been exhausted, these people would be placed in the catastrophic or disability category and their medical costs would be assumed by the federal government. If the insured is unable to meet the premiums after retirement he may apply for aid as described in the paragraph titled "Underinsured (Working Poor)" below.
After the exhaustion of the lifetime limit the insured will no longer pay premiums, but would remain eligible for the federal government's reinsurance plan.
Underinsured (Working Poor)
For this group the federal government would provide funds sufficient to finance an HSA in the maximum amount. Funds for this could probably come from the savings in Medicaid. There should, of course, be predetermined standards of eligibility. The same incentive described above for the former Medicaid recipient should also apply for the underinsured.
Uninsured
This category includes those who are financially able to purchase health insurance but who choose not to do so. In this case, a negative incentive will be provided, as described below. People should understand that the whole program is voluntary. They should also understand that if they choose not to participate and then incur medical bills beyond their ability to pay, the creditors may then go to federal court and obtain a federal lien on all property belonging to the debtor as well as 20% of his monthly income. As a federal lien, the creditor could obtain action no matter where the debtor moved in the United States or no matter how he tried to dispose of real property. This lien should be superior to and survive all legal actions, including bankruptcy, and it might also apply to property transferred after the debt is incurred.
Other Provisions
1) The lifetime cap should apply to the individual, not to the insurance company. Therefore, if an individual changes insurance companies the new insurer would establish a cap of $700,000 minus all amounts previously paid by previous insurers. For this purpose insurers would be required to furnish each other with such information. The purpose of this provision is to prevent manipulation of the system by anyone - insured, insurers, or the federal government.
2) The insurance community should establish an insurance clearing house similar to a bank clearing house. With such an institution, providers could send to it their request for payment which would then reroute the claims to the appropriate insurance companies. This could involve the use of a preprinted forms provided by the insurance company to each insured (similar to a pad of checks) and the provider would nearly have to add its name and billing data, attach its supporting documents, and forward all claims to one addressee. This should alleviate, if not eliminate, the concern about the single-payer concept. Appropriate time limitations could be placed on the clearing house and the insurance companies. For example, the clearing house might be allowed 72 hours to reroute the claims to the appropriate paying companies, and the paying companies might be required to either pay within twenty-one days or notify the provider of any objections within those same twenty-one days.
Closing Thoughts
1) The incentives discussed under the Medicaid and underinsured headings should probably be extended to everyone, for the sake of simplicity and ease of administration.
2) The insurers should retain the administration of all claims including those filed with the federal government. This would provide simplicity, continuity of information, and consistency and would relieve the federal government of the burden of establishing another bureaucracy. The insurance company could be paid a processing fee. The fee would be paid from the health plan trust funds of the federal government.
3) This discussion has not addressed the question of whether there should continue to be group insurance, or whether it could be handled on an individual basis. That question should be settled by agreement among the insurers and the federal government.
4) Insurance companies should be allowed to compete across state lines, subject to normal regulation by the states.
5) Properly structured, a system such as this probably would result in a reduction of health care costs.
Original April 2009; Revised October 2010
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