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Archive for the ‘Health Care’ Category

Can Kids with Preexisting Conditions Be Excluded?

Fri ,26/03/2010

After a year of wrangling over the Health Care Reform Bill, there are claims that the bill may not cover kids with preexisting conditions until 2014. That is not so. The Weekly Standard has championed this idea with an article titled Oops: Health Care Bill Does not Cover Kids Preexisting Conditions.(1) The language of the Bill was written by the Senate but the focus of the article is to blame President Obama . There seems to be some ambiguity in the way the bill is worded and insurance companies may be trying to use it as a loophole. One might wonder why this is just now being brought up. But, there is more to the story.

The Weekly Standard took its information from an AP news article. It is an example of cherrypicking as the Weekly Standard didn’t tell the whole story. The AP news article also goes on to quote HHS spokesman Nick Papas who said: “To ensure that there is no ambiguity on this point, the secretary of HHS is preparing to issue regulations next month making it clear that the term ‘pre-existing exclusion’ applies to both a child’s access to a plan and his or her benefits once he or she is in the plan for all plans newly sold in this country six months from today,” (2)

In spite of all the hullabaloo created by the Weekly Standard, the Christian Science Monitor says denial of insurance to kids with preexisting conditions will end this year. They say ” Six months from the day the bill was signed (let’s see … that’ll be Sept. 23, by our calculation), insurers will no longer be able to exclude children with preexisting conditions from being covered by their family policy. For current policies, that means insurers will have to rescind preexisting-condition exclusions.” (3)

The medical information site, WEB-MD has some answers about what reform will mean to consumers: Question: “What provisions begin soon? “Answer: “Starting this year, children up to age 26 would be allowed to remain on their parents’ health plan. People with pre-existing medical conditions would be eligible for a new federally funded “high-risk” insurance program. Small businesses could qualify for tax credits of up to 35% of the cost of premiums. Insurance plans would be barred from setting lifetime caps on coverage and would no longer be able to cancel policies when a patient gets sick. Health plans would also be prohibited from excluding pre-existing conditions from coverage for children. “(4)

So there is no “Oops” as the Weekly Standard claims. Kids with preexisting conditions will be able to get insurance coverage this year.

Update, 03/29/2010:  Apparently, this has been completely straightened out:

“After Health and Human Services Secretary Kathleen Sebelius wrote a letter warning insurers against using loopholes to avoid covering children with pre-existing conditions, AHIP President Karen Ignagni wrote back to say insurers will comply with all regulations.”(5)

(1) http://www.weeklystandard.com/blogs/oops-health-care-bill-does-not-cover-kids-pre-existing-conditions
(3) http://www.csmonitor.com/USA/Politics/2010/0324/Health-care-reform-bill-101-rules-for-preexisting-conditions
(4) http://www.webmd.com/healthy-aging/news/20100322/faq-how-health-care-reform-will-affect-consumers-employers?ecd=wnl_day_032410

(5) http://tpmlivewire.talkingpointsmemo.com/2010/03/ahip-responds-to-sebelius-letter-about-kids-with-pre-existing-conditions.php

Research credit: Barbara Moore

The Constitution, Social Security, & Healthcare Reform

Mon ,05/10/2009

The author once attended a retirement seminar sponsored by AG Edwards. The speaker tried to convince the participants that no matter how much money they had saved, they would eventually run out if they lived long enough. That is unless, of course, they let AG Edwards invest their savings. The speaker did not mention Social Security, and fortunately for those who put their money in stocks, Social Security was there as a safety net.

Social Security was created by the Social Security Act of 1935 in the midst of the Great Depression to provide for retired workers who had lost their life savings. Congresses right to create Social Security was established on the general welfare provisions of the Constitution and by  Article 1, Section 8 which establishes Congresses power to collect taxes and provide for the general welfare of the United States.  It says, “The Congress shall have power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and General Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.”

Several challenges to the Social Security Act of 1935 were decided in its favor by the Supreme Court. The most notable of these was U.S. v. Butler (1936) that held that the Spending Power Clause of the Constitution gave Congress broad power to tax and spend for what it determined to be the general welfare of the country. Because Congress has discretion to determine what is the general welfare, no court since Butler has ever invalidated a federal spending program on the ground that the general welfare of the country was not being promoted.1 Also, in Helvering v. Davis ( 1937), the Supreme Court defended the constitutionality of the Social Security Act of 1935 requiring only that the welfare spending be for the common benefit as distinguished from some mere local purpose. It affirmed a District Court decree that held that the tax upon employees was constitutional. 2

Social Security is certainly a government manage retirement program but it has not put private retirement funds such as AG Edwards out of business. Social Security provides a safety net so that no matter how fortunate or unfortunate you are in your choices and investments, you will never be destitute. Congress has the authority to create a government managed health care safety net for Americans. It would likely not put private insurers out of business but it would certainly provide a safety net for health care.

We are now in the midst of an economic downturn that has cost millions of Americans their jobs and their health insurance. What better time to enact health care reform.

(1) http://qanda.encyclopedia.com/question/butler-decision-428463.html

(2) http://en.wikipedia.org/wiki/Helvering_v._Davis

Will Privatizing CompSource Lower Costs?

Thu ,01/10/2009

The proper role of government in health care has been the source of many recent arguments on health care reform.  A similar argument has been going on at the state level in Oklahoma. According to a recent Tulsa World article1, “Workers comp proposal mulled “ , Oklahoma State Rep. Dan Sullivan wants to privatize CompSource Oklahoma because: “It’s a fundamental issue of what is the proper function of government . Is it to compete with private enterprise? We think not.”   According to Sullivan, the incentive behind the privatization is to lower workers’ compensation insurance rates as rates should fall because of increased competition.

 That rationalization seems weak. It would seem that providing workman’s comp to state workers is a proper function of  the state government.  CompSource Oklahoma  has been doing so for 76 years – apparently successfully. Many private businesses use CompSource. Why would they do so if private insurance companies can provide better service and lower rates?

 According to an expert in comp insurance 2: “ CompSourse  is an insurance carrier of last resort when all other insurance companies turn down a company for coverage.  If they privatize, the competing insurance companies cannot just dump the employers over to Compsource. I think there will be an overall price increase. Instead of having CompSource as a safety net, more companies will be put into the risk pool. The risk pool forces carriers to insure the higher risk employers.  This sounds good, except the downside is the rates are 40% -70% higher than the regular insurance market. “

 There you have it. If CompSource is privatized, it will cost the companies it now insures  and the State of Oklahoma more  to provide workman’s comp. That sounds like a bad idea. 

Privatization for ideological reasons often fails as a practical way to lower costs. Privatizing Social Security increased the cost to the government by 14% and created the infamous “donut hole“ that costs seniors an additional $25 billion annually. After the recent economic downturn, we should all be grateful that the plans to privatize Social Security failed.

Finally, Sullivan doesn’t know who would get the proceeds from the sale of CompSource. He says he plans to file a bill that its assets belong to the state in the hope that it will result in a lawsuit which will let the courts decide the matter. That seems like a stange plan from Sullivan, who promoted Tort Reform to end frivolous lawsuits.

(1)Tulsa World , August 7, 2009

(2) James Moore at J&L Risk Management

Health Care Polls Plagued by Bias

Mon ,28/09/2009

There is a science to conducting opinion polls.  The pollsters must ensure that they have a random sample of the population and that the respondents are not influenced by the  manner in which the poll is  conducted or how the questions are worded.  A recent article on Yahoo! News  “Health care polls leave pols dizzy” points out that one may find poll results to support almost any opinion on health care reform.1  The article states, for example,  that an  “ABC News summary of the results of eight polls from late July through mid-August found that support for a ‘public option’ ranged from 43 percent to 66 percent”.  This certainly presents a problem for our politicians in knowing where public opinion is on health care reform.

 To further confuse the issue, the Republican National Committee (RNC) has sent its own questionnaire to all Republicans, requesting their opinion on issues – including healthcare.   The survey included a four-page letter from Michael Steele, the RNC Chairman, clearly meant to influence the responses.  After assuring that the RNC’s  “core ideals remains sound and our goals remain worthy” the letter goes on to further polarize the issue by claiming Democrats plan “to give amnesty to illegal aliens, which could possibly bankrupt Social Security” and “to nationalize health care and have it run by bureaucrats in Washington, DC.”

 The three questions from the RNC survey on health care reform are listed below. The bias may be subtle – but see if you feel comfortable answering ”Yes” to any of the questions:    

 9. Do you support the creation of a national health insurance plan that would be administered by bureaucrats in Washington, DC?                                                                                                                                                      O Yes  O No  O No opinion     

  10.  Do you believe that the quality and availability of healthcare will increase if the federal government dictates pricing to doctors and hospitals?                                                                                                                                             O Yes     O No     O No opinion

11.  Are you confident that new medicines and medical treatments will continue to be developed if the federal government controls prescription drug prices and sets profit margins for research and pharmaceutical companies?                                  O Yes         O No       O No opinion

The validity of the RNC poll is further compromised by a request for funds accompanying the letter. What do you think? Does the RNC want the opinions of its members or results that will influence Republican legislators?

(1) http://news.yahoo.com/s/politico/20090928/pl_politico/27640

The Health Care Debate's Red Herrings

Tue ,15/09/2009

The debate on the healthcare has been filled with red herrings. Swallowing red herrings makes people irritable and they often say things in anger without thinking them through. If we trace the red herrings to their source, we would probably find that they were created by those who have the most to gain from the failure of health care reform. However, health-care reform is too important to let it be sidetracked into pointless arguments.

One of the red herrings popped up dramatically in the President’s address to Congress. When President Obama pointed out that the Health Care Reform Bill would not provide coverage for illegal aliens, Senator Joe Wilson (R-SC) shouted out “You lie.” Clearly someone had planted a red herring as the health-care bill specifically says on page 146: “Sec 246 — NO FEDERAL PAYMENT FOR UNDOCUMENTED ALIENS: Nothing in this subtitle shall allow Federal payments for affordability credits on behalf of individuals who are not lawfully present in the United States.”

The problem with illegal immigrants arose from a truly bipartisan and humanitarian effort.  In 1986, two major pieces of legislation were passed by the Democratic Congress, approved by the Republican Senate, and signed into law by President Reagan. The 1986 Immigration Reform and Control Act provided amnesty for 1.5 million undocumented aliens. Its purpose was to halt illegal immigration, but we now have 12 million illegal immigrant so it has apparently failed. The connection to health care came also in 1986 with the passage of the Emergency Medical Treatment & Labor Act which ensured public access to emergency services regardless of ability to pay. Those without money or health insurance now use the emergency room as their primary healthcare provider. The cost of that is staggering, and much of the cost is eventually paid by citizens in the form of higher taxes and more expensive medical services. Illegal immigrants have become a serious problem, but it is not one that can be corrected by the health-care bill.

There are strong feelings on both sides of the abortion issue. Health care reform is too important to those on both sides to let it become a battlefield for ideological differences. The Health-care Reform Bill does not provide public funds for abortions. The bill does not mention abortion. There are those who wish to insure that public funds are not used for abortion and their wishes should be respected. There are those who think providing health care to women who are now uninsured would surely reduce the number of unintended pregnancies and they are right. There are methods of birth control acceptable to every religious faith. Certainly, providing health counseling to women, good prenatal care for expectant mothers, and excellent health care for babies are goals that everyone can share.

 Tort reform is another red herring. The malpractice system is clearly broken. Doctors are afraid to admit error for fear being sued, malpractice insurer will not pay a claim without an admission of error, and an injured patient has little recourse but to sue.  A University of Michigan1 study has shown that malpractice lawsuits could greatly be reduced if doctors would admit their errors, apologize, and compensate the patient fairly for their mistakes.  It has been estimated that litigation costs and malpractice insurance add about 1-1.5 % to total health-care costs.2 The malpractice system needs to be fixed but doing so will not substantially reduce medical costs or help the uninsured. Perhaps malpractice insurance co-ops for doctors should be considered.

 Unfortunately, the cost of health care reform is not a red herring.  Most estimates put the cost at slightly less than $1trillion over 10 years. To put that in perspective, that is about the amount spent in seven years on the Iraqi war; the amount spent in one year to bail out the banks, insurance companies, and the auto industry; or half the amount spent over 9 years to provide tax cuts to those in the highest income tax brackets.3 (See note below.) Healthcare reform could easily be paid for by letting the 2001 tax cuts expire . The United States has a graduated income tax scale based on the idea that those who profit the most from the resources and opportunities our country offers should pay more in taxes. Perhaps seeing that every citizen has health care would let us feel good about paying more in taxes.

(1)   See: http://www.msnbc.msn.com/id/32011837/

(2)   http://www.upenn.edu/pennnews/sourcesheet.php?id=529

(3) Citizens for Tax Justice, using data from the Congressional Budget Office, calculate  that  the 2001 tax cuts have cost  about $2.1 trillion in lost revenue and another $0.4 trillion in  interest  on  the deficit created. Letting the tax cuts expire would  save about  $2.5 trillion over the next 10 years which would pay for Health Care Reform twice over.    See  http://www.ctj.org/pdf/bushtaxcutsvshealthcare.pdf  for their figures.

Research Credit:  Barbara Moore

Your Family's Health Depends on Health Care Reform

Mon ,31/08/2009

“Your family’s health depends on the health of everyone.”

The advantages of health care reform have been lost in the politics and arguments about the Health Care Bill.  Here are some advantages :

Productivity. We would have happier and more productive citizens. Most people receive health care insurance from their employer.  There is a good reason for that. Healthy people are happier, perform better, are less likely to be hurt on the job, and miss fewer days of work  Offering healthcare benefits lets companies attract and retain better-qualified employees, shows that management cares about the workers, and is a great morale builder.  Couldn’t the same principles work on a national level?

Jobs. It would create job openings. One great way to create jobs would be to provide health benefits to those who wish to retire early. There are about 45 million baby boomers who are now between 55 and 65.  Many of them have the resources to retire early but feel they must continue working to retain their health care benefits.  Health care reform would let them retire early, opening up more jobs.

Bankruptcies could be  reduced by better health coverage. A Harvard study found that about 50% of all bankruptcies in the United States are caused by illness and unpaid medical bills. Bankruptcies affect everyone because the health providers, banks, businesses, and credit card companies who lose money in the bankruptcy pass the cost on to the rest of us. Bankruptcies were a big factor in our recent housing crisis that negatively affected us all.

Reduced Insurance Rates: The health care bill, as passed, requires that 80% of the premiums collected by insurance companies be paid back in benefits. Currently, the overhead for private insurance companies ranges from 15% to 35%. Those companies with high overheads will have to find ways to reduce their rates or be replaced by the more efficient companies.  Companies that pay back less than 80% will have to give refunds to their policy holders at the end of the year.

Healthier Americans. Your family’s health depends on the health of everyone. Unless you are a hermit, you will likely come into contact with thousands of people during this next winter. People without health care are less likely to receive immunizations and are much more likely to have untreated communicable diseases.   This is particularly important since a Swine Flu epidemic is a possibility.

The advantages of health care reform are obvious to those with no health insurance.  Remember, except for the Grace of God, that could be you.

Health Care Co-ops a Poor Option

Wed ,19/08/2009

Healthcare co-ops are now being promoted as a way to keep government out of healthcare. They might be effective at doing that but it is questionable whether they would be effective at providing health care reform. Most people don’t know about healthcare co-ops because they are not really an option for their healthcare. Senator Kent Conrad (D-ND) has proposed a co-op system in which the government would provide $6Billion in seed money to doctors, businesses and hospitals to form the co-ops. Eventually the co-ops would have to become self-supporting with premiums paid by members. Senator Conrad should be commended for his effort to find a bipartisan compromise but health care co-ops will do little to bring about health care reform.

 During the depression, the Farm Security Administration encouraged the development of rural health cooperatives, and at one point, they had about 600,000 members. Unfortunately, few co-ops survived after the FSA removed its support in the late 1940s. One that did is the Group Health Cooperative in Washington State and it is an example of a successful co-op. It has its own hospitals, hires its own Doctors at salary, and tightly manages its costs and membership. It took eighty years for the co-op to get where it is today and it is unlikely that a start up co-op could achieve the same success in a short time. When the seed money runs out, new co-ops would likely disappear and we will have spent $6Billion with little to show for it. Many health care co-ops have gone bankrupt. An example is Sunkist Growers , once a licensed insurance co-op that covered about 23,000 people. It fell into insolvency because claims outpaced income in 2001 and it left employers and medical providers holding the bag for about $11 million in unpaid medical claims.

Some healthcare co-ops negotiate with private insurance companies to provide insurance for their members. Their advantage is that they provide group insurance rates to small businesses, farmers, and individuals who might otherwise have difficulty negotiating favorable insurance rates.  Their disadvantage is that their rates, co-pays, network providers, and pre-existing condition policies are very much like any other private insurer. One such company is the Farmers Health Cooperative in Wisconsin which cooperates with Aetna and functions much like a PPO.  It has been successful because its members are reasonably healthy people. Co-op health care has mostly been successful in such small demographic niches. Jamie Court, president of Consumer Watchdog, says that “if co-ops attract high-risk people, who would otherwise go uncovered, it could bleed the co-op’s funding dry.”

Government is already providing health care. It is a strange spectacle to see Medicare recipients, Veterans, Congressional Representatives, and Senators decry socialized medicine when they, in fact, benefit from public subsidized health care. Would they be willing to put aside their present health coverage and go on a co-op system? I think not!  The Health Care Reform Bill, H.R. 3200, is a reasonable bill and it should not be replaced by a health co-op system unlikely to be successful.

Research Credit: Barbara Moore