As your benefits advisor, I would like to take this opportunity to provide you a summary of the key components of the health care reform legislation and how it may impact you and your business. I expect that given the number of years that it will take to fully rollout these reforms, there will continue to be changes to many elements of the legislation. However, for the first time in over a year, we have a much clearer view of the changes that will potentially take place. This bill will:
• Mandate that everyone must have insurance.
• Result in more than 30 million additional people becoming insured.
• Provide for subsidized coverage for people that can’t afford it and increase the number of people that will qualify for Medicaid.
• Make cuts to Medicare Advantage Plans and change their payment formula.
• Increase taxes and fees to many individual Americans and Corporations.
• Make many changes to the way Insurance Companies do business from not allowing them to use pre-existing conditions to limiting their rates based on medical loss ratios.
Many of these elements do not phase in for many years. Those that are most immediate and are expected to occur in 2010 are:
• Tax credits for certain small businesses.
• Elimination of pre-existing conditions and an increase in dependant coverage to age 26.
• Creation of a temporary reinsurance program to provide coverage for retirees over 55 who are not eligible for Medicare.
• The further creation of a temporary national high risk insurance pool.
• The prohibition of lifetime limits on benefit payments.
• Closing the so called “doughnut hole” by providing immediate tax credits for Medicare patients who face a gap in prescription drug coverage.
The real impact in the health insurance system won’t occur until the year 2014. During the interim, there will be the phase-in of additional new taxes that will provide added government revenue to pay for these changes. The four most significant changes occurring in 2014 are:
• Insurers will be required to take all applicants.
• Insurance will be mandated for all Americans.
• Tax credits to help pay premiums will start flowing to middle-class working families. The most aid – including help with copayments and deductibles – will be made available for those individuals and families on the lower end of the income scale.
• Insurance exchanges will be created to help administer subsidies for those individuals that require them.
When fully implemented, I believe that the majority of working-age Americans and their families will continue to have employer-sponsored coverage as they do today. In addition, through mandates and other subsidies, the number of people insured can grow by more than 30 million.
Please be assured that I will work to help you navigate through the various changes of this legislation to ensure that you and your employees are always offered the most choice and greatest value of benefits available in the marketplace. This will be a long road and I pledge to be with you every step of the way.
Meanwhile, if I can be of assistance to you in any way, please do not hesitate to call us at 866-745-9555
Sincerely,
J.C. Lewis Insurance Services
Earlier this year Anthem Blue Cross of California (owned by Wellpoint Inc.) announced that it would be raising its insurance premiums by up to 39% this year. Is this increase justified, or are they just trying to increase premiums before the Federal government regulates premiums if the Healthcare reform bill passes?
The facts don’t seem to warrant the large increase in premiums requested by Anthem Blue Cross. WellPoint CEO Angela Braly says its customers’ healthcare costs only went up 8.9% last year. In fact, even 8.9% seems high, given what actuaries at the Department of Health and Human Services indicated in a recent report. To be fair, the increase in premiums anticipates a large increase in healthcare costs in the coming year.
Another reason given by WellPoint Inc. for the large increase is the poor economy. When times are tough, healthy people don’t buy healthcare insurance, so that means that the insured pool is smaller and sicker, requiring more healthcare. This is probably a valid argument, but the Healthcare reform bill would remedy this problem by mandating that everyone buy healthcare insurance.
Consumers and legislators are complaining loudly about the proposed increases. Two members of the House Energy and Commerce have asked for an investigation into this premium increase. A hearing is set for February 24, 2010 in the House chamber. WellPoint Inc. executives are asked to be present to relate the facts that warrant this increase.
WellPoint Inc., the nation’s largest health insurer by membership, had a net income of $2.7 billion, or $5.95 a share, in the fourth quarter of last year, compared with profit of $331.4 million, or 65 cents a share, for the same period the previous year. This is an eight-fold increase over last year’s income. This would indicate that the insurance business has been good during the past year.
In all probability, Well Point is simply trying to increase premiums and thus revenue ahead of the mandates required by the Healthcare reform bill, should it pass. These include:
- The requirement to accept persons with pre-existing conditions
- Regulations on rates and premiums
- Mandated coverage required in each policy
The executives at WellPoint Inc. have determined that their profitability will be adversely affected by the Healthcare reform bill, so they are just trying to remain viable as a company. By obtaining a premium increase before the regulations and mandates of the Healthcare reform bill take effect, the executives of WellPoint Inc. are looking to stay viable.
Interestingly, President Obama’s proposal that he unveiled a couple of weeks ago had a provision that would retroactively address just these types of situations. The constitutionality of any retroactive regulation would probably be challenged in court.
Healthcare reform was the major piece of legislation that President Obama tried to pass in the first year of his administration. Obama campaigned for president on the promise that he would reform healthcare in America, and the American public agreed with him, that they wanted the healthcare system reformed. Opinion polls taken in the fall of 2008 indicated that over 60% of the public was in favor of healthcare reform, yet by the autumn of 2009 over 60% of those polled were against the healthcare reform bills before congress. What happened to foster this large swing in public opinion in less than one year?
The huge drop in public support for healthcare reform can be attributed to a combination of factors, both substantive and political.
The fact that the bill was over 2000 pages long caused many people to fear the worse in the bill. When it became clear that few, if any, in congress actually knew what provisions were in the bill, but were going to vote for it anyway, many Americans became concerned.
As the public discovered what was actually written into the bill, the opinion of the voting public against the bill grew steadily stronger. Some of the major points in the bill that turned voters against it were:
- Requirements for everyone to buy health insurance or pay a fine
- Increase in taxes starting in 2010 but benefits not starting until 2013 or 2014
- The fact that several provisions were probably unconstitutional
While Americans want something done about the ever increasing healthcare costs, this bill did not really address any of the factors causing healthcare costs to continually increase:
- Regulations that require specific coverage in every healthcare policy
- Defensive medical testing because of unlimited liability to lawsuits
- No accountability in the entire healthcare system
- Limited competition for insurance companies due to government regulations
The political process which was required to pass the bill was very appalling to anyone who was paying attention to the process.
When the Unions and government employees were exempted from the tax on “Cadillac” healthcare plans, many voters smelled a rat. When the people passing this bill were exempted from its provisions, the American public took notice. When republicans were essentially locked out of any debates on the content of the bills and weren’t allowed to add amendments to the bill, the American voters voiced their opposition to the process. The number of, and dollar amounts, of bribes doled out to obtain the required number of votes needed to pass the bill may have been the deciding factor that caused public opinion to drop below 50%.
This frustration came to a head in the special election for the Senate seat in Massachusetts. The voters there elected a Republican candidate, in a predominately Democrat state, who clearly campaigned against the Healthcare reform bill. Other politicians viewed the outcome of this election as a clear sign that the public did not support the healthcare reform bill, and concerned about their own re-election, withdrew their support for the bill.
The American public rejected the Healthcare reform bill of 2009 for a combination of reasons:
The substance of the bill took too much control out of the individual’s hands. Government intervention in insurance policy coverage requirements, doctor re-reimbursement, and testing procedures all felt too much like socialized for most Americans to handle. Increases in taxes and fines for non-compliance angered many voters in today’s economic climate. Too many voters saw the cost far outreaching the benefits in the healthcare reform bill.
The politics involved in the passage of separate bills in the separate chambers of congress proved to most voters that the bill was about power and politics, not the American public. They correctly saw that the Healthcare reform bill was mostly a power grab by the Obama administration. The American public was not ready to turn over an industry that represents one sixth of the economy to the government. Not after the government essentially took over two American automobile companies, major banks, and major investment firms.
In hindsight, which is always 20/20, the Obama administration tried to do too much, too fast, and too secretively.
The healthcare industry still needs to be reformed, but the American public clearly said this bill was not the solution.
