Mr. Obama, Health Care Overhaul: Alternatives Beyond Insurance?

With a new President in office, whose words of creating access to health plans as good as his own are still lingering in the air, consumers should not wait to see what happens because insurance companies are already on the move.

AHIP, the gigantic insurance company lobbyist already has its proposals in place, nicely bound in its plan to expand coverage renamed and rehashed version of the same old thing, maximize insurance company dollars from consumers and the federal government and encourage everyone else to have a health savings plan that will not even cover premium expenses let alone sufficiently cover the RISK of the cost of getting needed medical care.

With Obama's push for technology, the plan will also attack every individual with mountains of disclosure and evidence that they will have to provide in order to obtain health insurance, maintain health insurance and rely on their coverage not to be denied.

(See AHIP website: http://www.ahipbelieves.com/press-releases/health-insurance-access-proposal.html)


Why wait and see?
When the federal "bailout" package was proposed, many calculated how many hundreds of thousands of dollars each American would receive if they each received a check instead of the money going to banks. But of course, it's too late now, the bailout is part of us and all we can do is become angry as the money goes to companies who are burning through these billions the same as prior billions. But it's not too late in the health insurance field.

Look at the AHIP proposal: I remember when Alan Greenspan as the Fed Chairman spoke. I like others, was wowed and cowed by his complex language and economic nomenclature. It wasn't until the hearings at which he recently testified that I realized that the "complexity of the problem" is an excuse put forth by people trying to pull the wool over our eyes. At those hearings, Alan Greenspan, the man of confusing words and nomenclature ad nauseum answered "what happened?" very simply with: I don't know.

So I am emboldened by the "complexity" of the health insurance problem to state that it is not complex, it is simple. Insurance companies maximize profit by taking in maximum premium dollars and paying out nothing. In the case of premium dollars, already less than half of every dollar paid by any consumer is used for utilization, the purchase of medical services. By reducing this already stunningly abysmal amount of actual services we obtain for every dollar we pay through increased copayments, exclusions and deductibles, insurers can squeeze out more profit from paying consumers.

Consumers, however, are reaching the end of what they can pay. This creates a dilemma for insurers. They can trim their expenses, including those of salaries and new office furniture or they can keep raising prices and lose more "paying customers" who can't afford the charges or they can tap into new customer bases.

The bailout will show that stopgap solutions will not work unless they protect the money being pumped into businesses that fail. Bailout dollars being pumped into banks and financial concerns that keep doing business as usual are doing business as usual that caused them to go belly up to begin with. The ridiculous notion that CEO's must be paid according to contracts with their employers MUST be paid with bailout dollars is a problem that would have been easily avoided by demanding voiding such contracts as a CONDITION for getting federal dollars OR letting the companies go under and then reopening them under a new corporate name unbound by contracts made by the prior company. Neither of these things happened and people now sit around annoyed by the fact that free money is being used freely. Regarding the AHIP proposals, the most significant omission of their "plan" is that there is no concession in what insurance companies will do in terms of the two most important things that consumers need: Stipulations that include legislatively mandated provisions of what every government subsidized health insurance plan must cover so that insurance operates like insurance, sufficient coverage of the RISK of expense of needed medical services for any of its insureds and stipulations that insist that every insurance company raise its utilization rate (the amount paid out to insureds for medical services) be at least 60% of every premium dollar paid (we are currently at around 43% according to AHIP's own study).

So is AHIP proposing anything new with its proposals? NO. Insurance companies are still proposing to increase their profits using the time-tested means they have destroyed our health insurance system with: 1) Reduce coverage and charge more 2) expand customer base 3)get someone to pay premiums

Here are AHIP's proposals and (in my opinion) the truth of these plans will now be apparent:

1. EXPAND SCHIP programs to increase eligibility for government sponsored insurance: This one is obvious. These plans have not worked within many states because of LACK OF FUNDING of the governmentally created and run programs. Expanding eligibility for participation in programs that have not received enough funding (research the State Children's Health Insurance Plans) is motivated by the need for insurers to INCREASE CUSTOMERS WHO CANNOT AFFORD WHAT THEY SELL (INSURANCE) SO GET SOMEONE ELSE (THE GOVERNMENT) TO PAY FOR IT.

2. EXPAND Medicaid coverage for uninsured adults: SAME proposal as above. Since adults cannot afford to buy their product, get the government to pay for the insurance product for adults. EXPAND CUSTOMER BASE

3. Establish Universal Health Accounts for purchase of health care coverage through pre-tax dollars with federal matching grants: This one is a RAISE INSURANCE PRICES provision. Current products include health savings accounts that permit families to save around $5800 a year in a pre-tax savings account and allows for use of such amounts to pay premiums, medical expenses. Of course, during the McCain debate, McCain himself indicated that such amounts of pre-tax dollars will probably not cover most people's premiums let alone medical expenses. So AHIP doesn't care where the money comes from, let's increase the dollars in the account so that consumers can pay insurance company rates through GOVERNMENTAL matching. Has everyone been included in matching programs such as 401 K's? Only those with sufficient INCOME to allow for the taking out of such amounts...the rich. Here too, the accounts will work to benefit the rich and will leave the less rich scrambling to reduce their incomes in the maximum amount ($5800) in order to obtain the maximum government matching dollars all to pay for health insurance.

4. This next one is the proposal of a $500 tax credit for low-income families who get health insurance for their children. This one is interesting because it helps insurers EXPAND CUSTOMER BASE AND since these families will already be eligible for SCHIP payments, is an additional incentive for parents to enroll their children in health insurance programs...sort of like paying parents to send their kids to school. You buy insurance and we'll give you a tax credit.

5. The Insurance Industry seeks to expand its customer base through government money. Their first calculation of what is needed will be the establishment of a $50 billion Federal Performance Grant to help states in expanding coverage through programs that the states will finance with FEDERAL dollars.

We can sit around and wait and see what happens as legislation gets proposed and passed that will further protect insurance companies or we can start communicating some concerns now:

Concerns: 1) If less than 50% of every insurance premium dollar now goes to obtaining needed medical services for the person paying that dollar, why can't we PASS LEGISLATION THAT ESTABLISHES SOME HIGHER AMOUNT REQUIREMENT FOR THE UTILIZATION RATE? Is it unreasonable to expect that 50% or 60% of the money we pay to purchase insurance goes to getting what we pay for? Clearly, Insurance companies are not against government action and support, just read the above, they're only against government oversight and regulation.

2) Why is there not a single proposal that includes LEGISLATIVE MANDATES: Those things that all these government supported insurance plans SHALL cover. We have learned from the bailout that just throwing money at these companies is stupid. Insurance plans that get what they want: Government dollars must be bound by realistic legislative mandates including: low co-pays for doctor visits, dental coverage, emergency room coverage and catastrophic coverage in amounts nearing 100%. EVERY OTHER COVERAGE FOR CHILDREN is an extra and EVERY ONE OF THE ABOVE COVERAGES EXCLUDED makes the product a waste of money. Health departments give inoculations, schools provide physicals. Kids need doctor's for earaches, sore throats, fevers...this is all co-pay dependent. Kids need to see a dentist. Kids need to have access to an emergency room and in the event of catastrophic illness, kids need to have the care they deserve.

3) Legislative mandates should be part of every handout, including Medicaid. Expanding Medicaid is great but using government dollars to get care for uninsured adults must, for reasons in number 2 also hold insurance companies accountable for the money they receive.

4) Health Savings Accounts are a tax preferred program for the rich allowing them to dump up to $5800 into a pre-tax account to use for medical services which are NOT verified by insurance companies (that's right, the honor system). These accounts are a disaster and although pushed through with HIPAA which promised to expand their use, like the rest of HIPAA have worked against consumers and in favor of insurance companies. I have written about these plans before without the new twist included by AHIP which is "matching funds" from some government source. What will these "matching funds" do? They will allow insurance companies to raise their prices and the deductible amount of their lousy plans by using the new $10000 baseline. The matching will start off as an "incentive" and will end up being the amount that every insured needs to buy the insurance product. Teaser rates and insurance, we've all seen it before.

5) Federal government funneled to states to expand their insurance coverage will end up being an ongoing nightmare as States are asked to foot bigger parts of their bills over time and as insurance companies add new charges to their base price that reflect the availability of federal dollars directly paid or paid through the states. This multi-billion dollar bailout is a bad idea.

As consumers we need to support changes that support insurance company reform: a) compliance with legislative mandates at the state or federal level that require all insurance companies to cover RISK, not wellness programs or preventive care which are finite costs and therefore are not properly what insureds pay for when they pay premiums. All preventive and wellness coverage is an extra, not an instead of when it comes to the risk of covering the expenses of medical illness. b)use of technology cannot be misdirected in terms of reporting requirements that put the onus on consumers and reward doctors for putting patient information online. Start by using technology requirements to force insurance companies to verify the accuracy of charges submitted to health savings accounts and making sure that money is used for authorized payments. Next insist on insurance company audits that reduce internal fraud. c)insist on a utilization rate that makes at least 60% of every consumer dollar paid in premiums go to that consumer's medical expenses, not to insurance company overhead, bonuses, salaries and office design.

The most important thing for consumers to learn from the lobbyist position of AHIP is that insurance companies DO NOT and NEVER HAVE believed in the free market, they believe in regulations and funding that expand their customer base, expand their profits, expand their opportunities for payment, and that includes AND ALWAYS HAS a lot of governmental protection and money.

Finally, if you still are not persuaded, ask yourself why we need insurance companies if the insurance industry wants the federal government to pony up money for medicaid, SCHIP, Medicare, matching funds for health savings accounts in addition to grants to states to pay insurance companies? The answer is obvious. Insurance companies are contracting with the government to administer government plans without the restriction of having to comply with government rules... like the defense contractors who got rich off the war in Iraq. While sub-contracting is not a bad idea, however, the sky is the limit approach to how much they can charge for this service, the lack of requirements in what health insurance must supply and the refusal to stay within some reasonable profit margin make this proposal a money pit for consumers and the government.