Archive for April, 2017

Do current discussions about Repeal and Replace of the ACA sound mythical to you? Like Unicorns- everyone’s heard of them but no one has ever seen one.

April 27, 2017

Repealing and Replacing the ACA may be more serious than Unicorns but if Republicans continue to talk about make-believe actions with make-believe deadlines they may soon cause results which likely will be negative. They may lull us all into a make-believe trance that causes us to forget just how hurtful the ACA truly is to America and our citizens!

As of this writing we have seen noting in writing from the Republicans about AHCA 2.0. We’ve heard about an “invisible reinsurance system” but no details and certainly nothing that would lead even the most avid supporter of ACA to think that the ACA is in any danger of change.

Your loyal author is trying to contain his cynicism regarding this Republican AHCA effort partly because I don’t like cynics but also because we still have tax reform and the border wall in flux which could lead to a cynic over-load. So I guess it’s healthy to maintain our optimism about the changes to our healthcare delivery system.

One of the most frustrating aspects of this matter of repeal and replace is that it just does not seem complicated to me. We’ve listed the specific items which need addressed to correct, improve and set the American healthcare system back on solid ground. If the Republicans were smart they would throw the AHCA bill in the shredder and start at least with a new title which includes “Repeal and Replace.

So, this week you won’t need to read too long because as of today I honestly believe that R&R will not regain center stage until this Fall. My theory is that then the Republicans will see the Insurer’s rates and coverage for 2018 and the elections of 2018 will flash brightly telling them they better get on it.

That’s it for this week.
Let us know what you think.
Though it is often frustrating, we are still in this together!

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf

Current status of ACA and Republican lethargy is giving advocates of a Single Payer System the platform and time to steer the conversation. What would Single Payer really look like?

April 20, 2017

Let’s discuss this in two dimensions. One which might look like Medicaid or Medicare but a second that might look like Canada. Both directions likely paint a picture that most Americans will not like nor accept. Hey, maybe this will be fun!

Let’s set the stage for a Medicare-like single payer system which can easily be imagined because we all know someone on Medicare. Generally, these folks also have a Medicare supplement as well as Part D Rx coverage so we view their coverage as 100% with no gaps.  Plus, the cost of Medicare Part B + Med Supplement + Part D Rx is usually less costly than a fully insured plan for the member. That sounds appealing doesn’t it.

But, many providers won’t accept Medicare payment levels and the many who do only do because their practice some how requires it. If every provider were to be reimbursed at Medicare levels many experts think that the quantity and quality of our Nation’s doctors and surgeons would be lower.

Would a Medicare-like healthcare system be as appealing to folks if the number of available providers were reduced by a third or possibly one half of what is available today? I doubt it would be but we do have a test population on which we can analyze the impact of fewer providers. Just look to the millions for Americans who have signed up on Individual plans during the past 3 years under the ACA. Most studies show the number of providers available in PPO plans to be 50% lower than just a few years ago. That’s 50% fewer Docs available for your treatment. Sound appealing now?

Let’s look at a Canada-style single payer system. First, set aside the stories of tens of thousands of Canadians coming south to the United States to get the treatments they need but can’t get at home. Many of our citizens simply could not afford to go somewhere else for care or to pay for the care from local providers not covered by the single payer system. It would be too much out of pocket for most of us so we would be stuck with the providers who decided to stick it out and practice in our home area.

Let’s assume an American living in the US needs treatment, such as cardiac surgery, under this Canada-style system and can’t afford to go any where else for the care. The person would see a primary care doctor first which might take 4-5 weeks then the primary care doctor might determine that the patient needs referred to a cardiologist which might take another 6-8 weeks. Of course during this time the member is experiencing the symptoms and possibly pain associated with his/her cardiac condition. But it continues.

The cardiologist might say “Yep, you are going to need cardiac surgery” so the cardiologist instructs the member to contact the appropriate surgeons in the area to schedule a surgery. Studies show that the wait time for surgery in this style of healthcare system can be from 3 months up to 10 months depending on circumstances. So from first visit to actual surgery could take up to a year. How many American will be satisfied with that level of care.

Currently in the US healthcare system people can go from diagnosis to surgery in a matter of hours if needed. Whether that speed is appropriate for all surgeries is irrelevant because that speed is what we expect and to which we are accustomed. We are all used to the pace of healthcare delivery in the US so will our citizens settle for a system that delivers less?

There, you have two examples of what a single payer healthcare system might look like in America. I realize that you might be skeptical of this opinion or these examples but can anyone name one function that Government took over that was more efficient than before? We can look at the care our veterans receive from the VA as the last-best example of why we must fix our private healthcare delivery system and avoid the inevitable pitfalls of single payer.

I normally would wax on about facts, figures and examples but I think enough is enough, don’t you? But, let us know what you think because we are all in this together.

So, let your Representative hear that we need some real action!
Until next week.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf

 

Federal Invisible Risk Sharing Program. Is this a smart amendment to the American Healthcare Act? It may be, let’s discuss and see!

April 13, 2017

The Federal Invisible Risk Sharing Program (FIRSP) appears, at first read, to have provisions that would allow insurers to reduce premiums from current levels and keep them lower in years to come. It lacks some detail that the Secretary “shall” determine but let’s discuss what it could provide. BTW, is it interesting to you that when the Government offers to reinsure the plan they call it “invisible”? Just wondering, that’s all.

The FIRSP amendment Sec. 2205, at its core, would establish a stop loss level for insurers offering health insurance products in the Individual market. The stop loss coverage would reimburse an insurer for claim costs exceeding $1,000,000 on any individual. It would act as re-insurance for insurers so that insurers could set premiums knowing that claim costs for individuals above $1M and costs for members with certain health conditions likely to exceed $1M could be passed off to the “government’s” high risk pool. It would tend to lower and contain premiums as the insurer would not be subjected to claims associated with catastrophic illness or accidents.

This should make pricing plans easier for insurers because, pre-ACA, insurers would often purchase reinsurance for their products to pass off  a portion of their risk, above a certain threshold. Insurers are familiar with the costs associated in these reinsurance arrangements which should help as they negotiate with the government’s actuaries on pricing.

The amendment states that a portion of the premium collected by insurers would go to the government’s pool to cover the government’s risk of paying for claims above $1M. The percentage that a plan will pay to access this reinsurance will need to be determined but it will give the government a taste of what insurers faced trying to price plans with unlimited lifetime maximum benefits. Pre-ACA insurer’s plans would have lifetime limits ranging from $2M to $6M depending on the region. That’s one reason the ACA’s unlimited lifetime benefit was so scary to offer for insurers.

What about the GROUP MARKET
Initially, it appears that FIRSP does not apply to employer sponsored plans in what’s referred to as the group market. The group market has traditionally been divided into 2 or 3 group sizes; small group (2-50EEs), mid-size (51-100EEs) and large employers having 100+ employees.  I would suggest that FIRSP is shortsighted if it only covers individual market and should be expanded. The average size of employers in the small group market is under eight (8) employees per group but employers with less than three (3) employees is common.

The FIRSP would help keep the premiums lower and stable in this market segment and therefore should be included. Of course actions to help in this market segment could cause employers to purchase their coverage directly from insurers and stay away from their state-run exchanges.

If FIRSP does not accommodate the group market then it would lead one to believe that the authors are not supportive of the small group market. That would lead one to believe that it is just a ploy to take a step closer toward single payer because the government would still be controlling the strings.

To include the small group market in FIRSP the reinsurance stop loss level could be increased above the $1M in the individual market and could be negotiated based on region of the country, size of insurer, PPO vs HMO and so forth. Again, a one size fits all approach does not need to apply.

The first draft of FIRSP leaves much to the states which is the Republican narrative these days but also suggests someone is saying “I don’t want to deal with it”. Leaving decisions to the states could be problematic for large populations like those in California or New York. It would be easy for the Feds to establish the means and manner in which reinsurance claims could be paid and thus avoid the liberal minded states tendencies toward single payer. Heck, let a good TPA handle it for the Feds and problem solved.

Your author thinks that FIRSP makes sense but at this point it is just a band aid on the overall flawed AHCA. Any amendment, all by its lonesome, is like a bolt-on accessory for your crappy car. If your car engine does not run then bolting on fog lights and flashy decals won’t help much.
Sorry for over using the metaphors.

But, what do you think? Let me know.
And remember, we are all in this together.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf

Should expanding ERISA be a part of Repeal and Replace? Let’s discuss it!

April 6, 2017

The Employee Retirement Income Security Act of 1974, known as ERISA,  was enacted on September 2, 1974, and set the rules to establish minimum standards for pension plans for private employers. Probably due to in part to its name including “Retirement Income Security” people often think that ERISA regulates only pension plans, not true. ERISA also provides for the rules that impact employer sponsored employee health  benefit plans.

While its often misinterpreted, especially by legislatures and insurance departments, ERISA also included guidelines for individual employers designed to protect the member’s interests in their employer sponsored health plan. The term ERISA is often overused and misunderstood but ERISA could present a huge opportunity in the effort to reform (improve) our US healthcare delivery & finance system. To do so, it needs clarified, simplified and expanded.

Basically, ERISA made/makes it possible for individual employers to self-fund their employee benefit plans because it provides the regulations for “employee welfare benefit plans” which of course include employer-provided health care plans. Those employer benefit plans are designed to provide, through the purchase of insurance or in this case self insurance medical, surgical,  hospital care and other benefits caused by sickness.

ERISA’s overly broad and general language has made it difficult  for courts to apply the ERISA preemption provisions and provide clarity to employers, insurers, and state regulators. Basically, the preemption authority that ERISA provides says it “shall supersede any and all State laws insofar as they . . . relate to any employee benefit plan.”  There’s more and  I could go on but you get the point which is ERISA has “broad preemption” authority over state insurance commissioners and legislatures that could be both simplified and expanded to help resolve the dilemma of selling across state lines, lack of competition in many regions, cost and access for small employers.

The policy-wonks in Washington, at the direction of HHS, (and us) could easily “wordsmith” the ERISA language to overcome the pitfalls or obstacles that individual state insurance departments and legislatures have created. Here are just a couple ideas for the “wonks” to ponder:

  • Limit individual state’s authority through ERISA to simply monitor insurer financial stability and little else.
  • Prevent individual states from implementing burdensome regulations that stifle competition such as setting minimum or maximum stop loss deductibles.
  • Prevent individual states from regulating how re-insurers determine Aggregate factors in their stop loss plans.

An example of how expanding ERISA could help would be to overcome legislation such as California enacted known as Senate Bill 161. SB161 was created to stifle self-funding for employers with fewer than 100 EEs and push those employers toward the state-run exchange. SB161 mandates both the minimum Specific deductible (minimum of $40,000) and the Aggregate stop loss calculation ($5,000/covered member or 120% which ever is greater) both of which caused stop loss plans to be over priced and not competitive. SB 161 completely shut down the use of self-funding with stop loss on health plans for employers with fewer than 100 EEs. Therefore those employers no longer have access to lower cost opportunities for their employer-sponsored health plans.

There are ERISA experts, far wiser than your author, who may nay-say the ERISA expansion idea. But, why should it be difficult to modify a small piece of IRC code enacted 43 years ago. The healthcare delivery system has changed dramatically since 1974 so let’s simply add a few lines of code specifically aimed at solving the issues we face today.

Expand preemption language and other aspects of ERISA so:

  • Small employers are not arbitrarily restricted access to competitive alternatives.
  • Smaller insurers can compete with the big insurers.
  • More insurers are competing in areas where there’s just one insurer now.
  • Allow fully insured plans to easily sell across state lines.
  • Competition has a serious chance of lowering premium and overall costs

Let us know what you think. It’s a big subject that’s been misunderstood by many for 40+ years, including the courts and scholars, so there is room for discussion.

As I always say, we are all in this together, even though the conversations we hear coming from Washington DC seem to argue against that sentiment.
However, I remain confident that common sense has a chance to prevail because the premium paying public is fed-up with the current status and politicians will need your support in 2018.

BTW, thanks for the emails and positive comments. Talk soon.

Mark Reynolds, RHU
559-250-2000
mark@reynolds.wtf