I think most people will agree on a few things: 1) healthcare needs reform, 2) healthcare needs to be more affordable, 3) everyone should have access to healthcare and 4) we want to keep our doctors. I think most Americans would also agree that we shouldn’t go into debt to do it, we shouldn’t add to the Medicare and Medicaid payrolls, we shouldn’t make it harder for people to pay for healthcare and to get healthcare, and that our physicians and healthcare providers should get paid a fair wage for their services (meaning they need to be paid fairly as opposed to Medicare’s/Medicaid’s rate).
Last night Obama took healthcare head on. His goals were to:
- Provide more stability and security to those with health insurance.
- Provide insurance to those who don’t have healthcare.
- Slow the rate of healthcare costs for families, businesses and government.
He stated that he needed employers and individuals to take responsibility. He made very clear that:
- If you have insurance via Medicare, Medicaid, VA or your job, nothing changes.
- Under this plan, insurers can’t deny you coverage for pre-existing conditions, no lifetime insurance cap, he’ll limit out of pocket expenses and he’ll require insurance companies to cover routine check ups and preventative care.
- More importantly, if you don’t have insurance, he’ll offer affordable choices via an insurance exchange where you can shop for health insurance at affordable prices and if you still can’t afford health insurance, he’ll offer tax credits.
In addition, this public option would have low premiums and it would be self sufficient and rely on only the premiums it collects and will be able to do all of this by avoiding some of the overhead that gets eaten up by private company profits, excessive administrative costs and executive salaries.
More importantly, the public option won’t add a dime to the deficit and he’ll pay for it by finding savings within the existing healthcare system that is full of waste and abuse. He’ll also make Medicare/Medicaid more efficient and the savings from this will pay for most of the plan and the rest will be paid with revenues from the drug and insurance companies that will benefit from the tens of millions of new customers.
Oh, and the plan will cost 900 “billion” dollars over the next ten years.
What’s wrong with this plan? Everything. Let’s take a look at what the goals are and what doesn’t make sense.
First, if you have Medicare, Medicaid or VA, nothing changes. Probably one of the biggest chunks of the Health and Human Services budget is Medicare and Medicaid. This new plan will do nothing to decrease the dollars spent on the largest chunk of the budget. If anything, it will increase it.
Second, he states that the inefficiencies in these plans will pay for the new plan. While none of us doubt that there are inefficiencies, do we really believe that in the past fifty years or so with all of the former Presidents and administrations taking on healthcare, that none of them tackled this issue? Does he also believe that this administration is going to be able to find 700 billion dollars in inefficiencies to fund this new plan? I mean, 700 billion dollars is a lot. (Why do I say 700 billion dollars? Because he states that inefficiencies in the Medicaid and Medicare will pay for the bulk of the new plan so if the new plan is 900 billion dollars, I chose 700 billion as a ballpark figure.)
Next, he says that insurers will be required to pay for pre-existing conditions, be required to cover routine maintenance, have no lifetime caps and limit out of pocket expenses. Most of this is nothing more than talk. Currently, we have in place procedures so that insurance companies can not deny you coverage for pre-existing conditions. The law requires that if you were previously insured, the insurance company provide you a “Certificate of Coverage” stating that you were insured the twelve months prior or something to that effect. Most employer based insurance plans today are also self funded plan, which means that the employer covers the cost of health insurance for their employees and because of that, most plans cover routine maintenance. So most of what he says here, already exists and is not new. Health insurance costs are also rising, so if he wants to lower out of pocket expenses, who is picking up those expenses, the employer who is already strapped and trying to pay for healthcare for their employees? Has he seen the amount these premiums are increasing? Employers are asking employees to pick up part of that tab so they can keep providing health insurance to their employees.
For those without insurance, and he excludes illegal aliens, he offers a public option where he is going to make insurance more “affordable” by offering low premiums and tax credits. I am not clear as to how our President would define “affordable”, given the amount he spent on his vacation in the last month, but we already have some low cost plans, available on the internet through ehealthinsurance.com, so how is this public option different or how can mandating that people have insurance really help make it more affordable than what is currently out there?
And what about those illegal aliens? Do we still deny them care or are we just letting them use the emergency room as uninsured patients? I guess that keeps their costs down since they don’t have to come up with healthcare premiums like everyone else. And if the public option isn’t funded by the government and instead is funded by the low cost premiums it collects, then what benefit is it to anyone to exclude them? At least, when they use the emergency room, they have some healthcare dollars to pay for it. Of course, I imagine it sounds better if you say you’ll exclude them.
If anything, I don’t believe that mandating health insurance will result in a decrease to the Health and Human Services costs. I do believe that it will make it a lot harder for those without many resources, namely the poor and disabled, to make ends meet.
I think that requiring people to have insurance, will do nothing more than increase the Medicaid and Medicare rolls which is not the effect he wants to have. If people can’t afford healthcare, I don’t believe that requiring healthcare when they don’t have the money will result in them purchasing healthcare. Instead, I think they will choose the no cost option and apply for Medicare and Medicaid. Furthermore, when they do, they will initially increase the costs because they now have access to healthcare and may have medical conditions that required treatment that they were unable to afford previously.
His next point for the public option was that this insurance plan would pay for itself. Not only would it offer low premiums but those premiums would cover the healthcare costs for that pool of people. Sound too good to be true. Let’s think about this for a moment. We have a lot of people who for one reason or another didn’t have health insurance and let’s assume it’s because they couldn’t afford it. Now, they are required to have healthcare and they’ll pay a low premium. Having gone without healthcare for a few years, I would imagine this pool is going to have more claims than average and have more than routine maintenance claims. If this is the case and we have a spike in healthcare costs for this pool, what happens to this public option? Does it now go bankrupt because the medical costs to insure these people exceeds the premiums? And who will bail them out? Who runs this program?
And finally, he states that insurance companies are going to benefit from the tens of millions of new people enrolling in their plans. Huh? So let’s think about this. You have poor people and middle class people who have lost their jobs and many others who can’t afford health insurance. So now that the government is mandating healthcare, people who previously couldn’t afford any healthcare will now have dollars to “shop around” for coverage in what has been billed as the biggest recession in years? It just doesn’t make any sense.
So let’s go back and look at some of the goals for this plan. He states that the goal is to provide insurance for those who don’t have it. Is he really providing an option for people who can’t afford healthcare?
His speech reminds me of a situation that occurred many years ago at work. I had been hired to revamp the entire Client Services department for a national PPO. I was paid a salary plus a bonus that was based on client retention. This company struggled for years in retaining clients and if they were to grow, they really needed to retain these revenues. What made this particular job more challenging was that there were hundreds of different benefit plans since this PPO was a claims repricer as opposed to an insurance plan which meant that we had to look up each employers plan. And did I mention, this was before pcs were used in the offices?
There was one employer in particular that was a non-profit. It offered a 100/0 benefit plan meaning if the employees went to a doctor or hospital that was “in-network” the plan paid 100%, however if the employee went “out of network”, the plan paid nothing and the employees would foot the entire bill. The employees that worked for this company were poor and lived in the inner city. Our phones were ringing off the hook to hear from employees who could not afford to go out of network. They were also worried because they wanted to see the same doctors and hospitals that they always had seen. Adding to the mix, many of them only spoke Spanish. Oh, and did I mention, most of them didn’t have a car and relied on public transportation to get them to their jobs. All of these challenges only made it harder for them.
This was a difficult situation because the employer was trying to offer health insurance to their employees but trying to conserve costs hence the 100/0 plan. These employees wanted and needed health insurance. Just requiring that these employees go “in network” wasn’t enough. We needed to do more to help them. We needed to understand their barriers to being able to go “in network”.
One day we got a call from a woman who worked for this employer. She did not drive, had a chronic health condition, took the bus to work and this was the only insurance she had. She could not afford to go “out of network” but couldn’t find a doctor or hospital that was close to her in her neighborhood that she could walk to. She was really upset. One of my employees worked with her and found out where she lived. She then was able to locate the nearest hospital and physician group close to this woman. Because this woman didn’t drive, she located the nearest bus route that ran from this woman’s house to this facility. She provided the woman with this information and the woman was able to get healthcare “in network” and have everything paid at 100%. It was a win-win situation for the employer and the employee. That year, I set a record and had a 98% client retention rate and both myself and my staff received bonuses.
What was important about this story was that just requiring the employees to go in network isn’t enough, kind of like Obama requiring people to get healthcare. You have to get into their lives to understand what the barriers are to access before you can come up with real solutions. And that’s the reason, I give this healthcare speech an “F”. He didn’t come up with any real solutions on providing healthcare coverage or reducing costs because he doesn’t understand the barriers to access. At the very least, if he were really serious about finding inefficiencies in the budget, why not start there and come back to us in two years with the savings from these plans and talk about how we might revamp healthcare with these savings.
And finally, I don’t disagree that everyone needs healthcare but I don’t think that his plan is the solution. I’ll talk more about what I think the real goals should be, what I think are some barriers to access and offer some solutions in my next post.