The Value of the Broker/Advisor

February 12, 2010

On a cold, blustery  day in early January, with snow flying in the air, William walked into the office of an insurance broker that his friend had recommended to him. Bill’s friend had told him that the broker was a Medicare expert, and just might be able to help him with his problem. Bill, although he was well aware of his upcoming 89th birthday, still thought of himself as being fit and energized. It’s just that some things — a few things — were starting to get “away from him” a bit. Like forgetting to pay the premium on his Medicare coverage.

Luckily the broker was in and Bill begged for a few moments of his time. Bill’s problem was that his  Medicare Advantage coverage had been terminated.  In Bill’s right hand was a large ziplock plastic bag, stuffed with his prescription bottles. How was he going to pay for these if his coverage had been canceled?

The two sat down and Bill layed out his problem. He had been covered under one or another form of Medicare Part C  with Kaiser Permanente since he’d turned 65, but they had just disenrolled him for nonpayment of premium during the last quarter of the previous year. Without his Medicare Advantage with Prescription Drug coverage plan, how could he pay for his medications? Bill’s income from Social Security was small, and he supplemented it with a few extra dollars he got from running odd jobs.

Bill explained that he had gone into Kaiser the day before and had paid his back premiums, but that they didn’t reinstate him. The broker listened carefully to Bill. He could tell that Bill, while still “spry” was affected by  diminished capacity. The broker explained that Bill still had Medicare coverage, it was just that the Medicare Advantage plan had been canceled. He let Bill know that Kaiser does not participate with brokers, but that he would make a couple of calls to see what might be done. After all, it was still early in January — perhaps it was still early enough for someone at Kaiser to work something out. The broker called Senior Services at Kaiser first, but was told that there could be no exception.

Next the broker called Medicare. Again, no exceptions, but suggested that he call Social Security — they might be able to “figure something out.” The broker called Social Security. The Social Security agent at first resisted the conversation, asking what the broker expected  Social Security do if Medicare wasn’t willing to do anything. At last the broker got the agent to examine Bill’s income situation and agree to send paperwork to Bill so he could apply for extra help. If Bill qualified for “extra help” he could enroll in another Medicare Advantage plan, but that application might take a few months to process. If Bill could get extra help, he would be able to apply for new prescription drug coverage.

Strike Three? Finally, the broker sent an email to the head of  the state SHIP office. Later one of the SHIP consultants called and the broker layed out the situation again. The consultant suggested a procedure to file a complaint and let them try to work it out. The broker did this and sent it to SHIP — fingers crossed.

The SHIP consultant called back a week and a half later and informed the broker that Kaiser and CMS (Medicare) would reinstate Bill. The broker called to let Bill know, and lead him through the steps Bill would have to take to avoid this problem from ever happening again, by having the premiums withdrawn automatically from his Social Security check. The broker also helped Bill fill out an application for Extra Help with Social Security — which was approved, and came in just after the notification of Bill’s reactivation of his MAPD plan.

Bill asked the broker what he owed him. The broker thanked Bill for the offer, but there just wasn’t anything else he needed to do. As the broker shook his hand and wished him a good weekend, Bill’s voice broke and his eyes welled up. Well, remarked the broker, maybe you might see if you could send over a referral every now and again. Fortified, Bill said he sure would, and left with a big smile.

Well — the moral to this true story is that it was an insurance broker that was willing to help a person facing financial hardship by using his expertise to solve a problem — a problem that the carrier and the two most directly involved branches of government were not willing to correct. For the broker, there would be no opportunity to receive compensation  for the 15 hours of work that it took to resolve the issue. It was the broker’s expertise that was used to find the help  Bill needed by working with a local government agency that Bill was never told about and would never have found on his own. Are brokers valuable — absolutely!

R Allan Jensen
Denver CO

What Is The OEP?

February 11, 2010
Denver CO

The Annual Election Period, during which Medicare beneficiaries can analyze and remake their Medicare coverage options, is followed by the Open Enrollment Period. The OEP lasts until the end of March.

This “second semester” of the Medicare year has become increasingly busy for those brokers and agents that deal in the Medicare realm. Many seniors become anxious as the final quarter draws to a close (my New Years Eve celebrations consisted of a large number of “last minute shoppers”!!) — and in some cases this is unnecessary as the January 1st to March 31st Open Enrollment Period still offers options.  Let’s explore those for a minute::

First, a bit of review — the November 15th through December 31st period is called the Annual Election Period. During this period, a Medicare beneficiary can make significant changes to their Medicare coverages — i.e. changes to Medicare Advantage and Part D being the most notable.

The Open Enrollment Period lasts from January 1st through March 31st and is more restrictive. However, a beneficiary with a Medicare Advantage with Prescription Drug Plan (MAPD) can change to any other “like” plan one time during this period. (Think “apples-to-apples.” )

Changes to Part D prescription drugs plans are, however, substantially restricted. Stand alone Part D plans cannot be altered during the OEP.

That said, a beneficiary with a MAPD plan can change back to Original Medicare (that being parts A & B) and acquire a stand alone Part D plan. Moreover, someone with Original Medicare (which would include someone with a Medicare Supplement plan) can acquire an MAPD plan. There are other movement options as well, but I mention this because some of the anxiety created during the AEP is unwarranted.

After March 31st, what options are available to Medicare beneficiaries? Nearly all of these answers related to specific conditions that the beneficiary is experiencing. Here are some examples::

• A Medicare beneficiary has an MAPD plan. Since this type of plan is service area based (in general, service areas are geographically coincident with counties), when a person moves to another service area they have the option of changing to a plan that is availalbe in the service area of their new place of residence. This election period is an example of a Special Election Period. The timeframe for making this new selection is generally 60 days;
• A beneficiary is notified that the MAPD plan they have is being discontinued. This generates another type of SEP and permits the beneficiary to select another plan;
• A Medicare beneficiary is under a Medigap plan and just doesn’t like the coverage they have. The beneficiary can select a replacement plan from the same or another company, and make an appropriate application. The beneficiary needs to be aware that this new/replacement application can be medical underwritten and coverage can be denied. [note**there are state-by-state variations that may affect this situation]

R Allan Jensen

Christmas Cheer

December 23, 2009

Denver CO

Well, the Senate is closing in on their 3rd cloture vote to approve their health reform bill. Would you like a brief summary of what this 2000+ page bill does, not including Sen. Reid’s 300+ page manager’s amendment?

Here is an excerpt from the Galen Institute from 12/22/09 — enjoy!

Seniors:  Even though they are being told otherwise, seniors will pay the biggest price for reform.  Half of the reason that Sen. Reid got a favorable cost estimate from CBO is because his bill cuts Medicare by $471 billion over the coming decade.  An earlier report from the program’s chief actuary says cuts this deep would cause many providers to stop seeing Medicare patients or even to close their doors.

Everyone:  The federal government would, for the first time, require every American to have health insurance.  The government would stipulate what that mandatory insurance must cover and how much of their incomes people can afford to pay for it, and penalize them if they don’t comply.  While some would be eligible for subsidies or waivers, most Americans would face tax penalties of $750 a year or 2 percent of their incomes, whichever is higher, to force compliance.

People buying their own insurance: The CBO says that families purchasing insurance in the individual market would not see a reduction, but rather an increase, in their premiums by $2,100 in the year 2016.  That’s over and above the increases they already will be facing as health-insurance premiums continue to rise at about twice the rate of general inflation.  A family would pay $15,200 for health insurance by 2016 if Sen. Reid’s bill passes, and $13,100 if it doesn’t.

People who work for small businesses: Those receiving health insurance through their employers will continue to see higher costs, with premiums for a family getting coverage though a small business increasing to $19,200 by 2016 — about the same pace as they would without reform.

People who work for large companies: The White House boasted that under the Senate bill, premiums for employees of large firms would remain mostly unchanged. But that means they would continue to go up almost as fast as they have been, reaching $20,100 for a family and $7,300 for an individual by 2016.

All employers:  Companies also face an avalanche of new reporting requirements, penalties, and potential fines.  Firms face fines whether or not they provide health insurance if any of their workers get taxpayer-subsidized coverage.  And with subsidies available for families earning up to $80,000 a year, the exposure is significant.

Young people:  Most haven’t a clue that the federal government is about to slap them with a new mandate requiring them to purchase expensive health insurance.  Studies show that they would likely pay premiums two or three times the amount they would normally be charged based upon their age and expected use of health services.

Patients:  A new independent board will have the power to cut Medicare benefits, and its decisions can only be overruled by another act of Congress.  Private plans are likely to follow its recommendations.  Congress doesn’t want to be held directly responsible for the rationing decisions the board inevitably will make, but the voters will quickly figure it out.

Doctors: Starting in March, doctors, hospitals, nursing homes, and others who treat Medicare patients will face a 21 percent cut in their Medicare payments.  This means doctors face a permanent lobbying campaign just to keep payments from being slashed.

Health-sector companies:  While few people have sympathy for health-insurance companies and drug plans, they, too,  will also face onerous new federal regulations and higher taxes — costs that can only be passed on to consumers in the form of reduced benefits or higher premium costs.

States:  While about 10 states receive special favors (as in, pay-offs) in the Reid bill, the others will wind up with higher costs for their already budget-busting Medicaid programs. Another 15 million people will be added to the rolls of this program, which was originally intended for low-income people.

Budget watchers:  The Reid bill would increase federal spending by $2.5 trillion in the first decade it goes into effect, but it is paid for by a combination of job-killing taxes and unrealistic cuts to Medicare.  No one — including the CBO — believes these “pay-fors” are sustainable.  As a result, the health overhaul bill inevitably will swell the federal budget deficit.

Health-insurance costs are likely to begin soaring right away, most of the new subsidies for insurance don’t kick in until 2014, higher taxes go into effect almost immediately, and seniors will find it harder and harder to find a doctor to see them and to get the care they need.

*****

Oh, and we should mention that taxes to pay for this begin in 2010, while everyone waits 4 years for the benefits to start — any wonder why the CBO scoring shows the first 10 years to be budget neutral. Ah — but wait until the second ten years.

This just might be one of those situations where senior and the young generations might find a common ground.

Well — add this gift under the tree and have a good Christmas.

R Allan Jensen

The Most Wonderful Time of the Year….

December 18, 2009
Denver CO

The holiday season is brimming with ample opportunities to embrace all sorts of pleasures, from chocolate and pastries, to presents and entertainment. Well, maybe not if your a broker or consultant for the Medicare community.

So, what exactly do we do during this festive time of year? Merry making comes second to work, work and, of course, work — at all hours. For those doing Medicare, the clock is literally ticking. Midnight on New Year’s Eve is it!

Medicare is the federal government program that provides health insurance for people over the age of 65. As the result of the Medicare Modernization Act of 2003, the period from November 15th until December 31st is the Annual Election Period during which Medicare beneficiaries can make wholesale changes to the sorts of coverages they use to reduce or eliminate the gaps in covering the cost of health care — gaps due to Medicare cost sharing and reimbursements that fall well below costs.

Plans to fill those gaps are offered either by Medicare Supplement plans, and the increasing popular, Medicare Advantage plans. Since MA plans are annual contracts with Medicare, and since the monies from Medicare to pay for MA plans changes, people receiving Medicare must re-evaluate their coverages for the next year during the AEP. So… as they often do  in the movies, let’s flashback a couple of months to pick up the story.

Toward the end of the first quarter of the year, Medicare (called CMS, which stands for the Centers for Medicare and Medicaid Services) issues a Call Letter, inviting health plans around the nation to submit their plan proposals for the following year for both Medicare Advantage and Part D, the Medicare outpatient prescription drug program. These proposals, called “bids” are generally due by early June.

Oh and now the fun begins!! CMS reviews these bids, iterating the proposals with the carriers, to achieve the final results. The idea is that published materials need to be available by October 1st, the date on which the plans must notify existing MA beneficiaries of changes for the upcoming year.

Of course, during these lazy summer months, the broker is busy having fun in the sun, right?! Au contraire, mon ami (to quote Q from Star Trek).

For the broker that serves the Medicare community, the summer is devoted to certifying and testing so that they can offer the products of various health plans to seniors for the coming year. There is a national test (which must be passed with a score of no less than 90%), and tests for individual health plans as well. Failure to pass these tests locks the broker out of the market for a year.

One of the most entertaining sections deals with marketing  and compliance parameters. CMS has implemented severe restrictions, from how a Medicare beneficiary can be contacted, to how information must be presented. One of my favorites is the Appointment Verification Form. This form records the agreement that is made prior to any appointment about what is to be discussed — no other matter can be discussed other than what has been previously agreed. If a senior wants to discuss their life insurance — no can do — they have to wait for a couple of days to cool off! Yep, that’s how hot Medicare is!

[Since this form was introduced, no meeting I have ever had with a Medicare beneficiary has ever gotten past the presentation of the verification form without a great deal of consternation and laughter. Most people say "this thing is so complicated I don't know what to ask about." Most of the time, we just agree to discuss everything the client wants to discuss, as long as it's about Medicare related matters. (almost all of these meetings, by the way, start with educational presentation -- no matter how long the person has been 0n Medicare!)]

Then of course, there is the need to attend seminars, or what we call “roll outs” either in person or via web conference. (Why is it that seminars always last at least 2 hours, even if there is very little to be discussed!) Brokers always hope that we can have all this organized by October 1st, which has proven a vaporous dream, at least in the last couple of  years. I figure that by October 1st, the average broker must invest at least 3 man weeks of time preparing — none of which produces revenue, by the way.

Then come the contacts. CMS does not allow brokers to contact prospective clients by phone or email. Only seminars and direct mail can be used (and we all know how efficient direct mail is!!). Most contacts come to us through referrals, community encounters, and some direct response.

This year, I arranged 10 global meetings to meet with my existing clients to discuss the coming year and to see what adjustments needed to be made. Clients could attend a meeting of their choice. Of course, there are also the dozens of other meetings with new clients that have to be arranged and conducted.

Every meeting ends with a sign off, “you know, it’s human nature that 20 minutes after you’ve left, you’ll have forgotten 80% of what we talked about. So…always call when you have a question!” Bon homme, and all that!

So that’s all there is to that! Well except of course all of the group renewals that happen on the 1st of the year, and the carrier rate actions on individual policies that go into effect on January 1st. Yep, this is a relaxing and stress free time of year.
Now, where is that eggnog?! Oh, not yet — there’s still two weeks left in AEP!!

R Allan Jensen

So Exactly What the Heck Is Going On?

December 4, 2009
Denver CO

The debate on the Senate version of health reform is now in full swing. Huge cuts in Medicare, huge increases in people eligible for Medicaid, mandated coverages and guaranteed issue, blah, blah, blah — and just about everyone that has a intellectually pure gene in their body is asking: “Is their enough money in the galaxy to pay for this?” (to quote a colleague of mine), and “Will any of this do anything at all to control the ever increasing trend in medical costs?”

In a column dated 12/3/09 in Kaiser Health News, author Joseph Capretta offers this:

Most analysts agree that what’s needed to address the cost challenge is real change in the way hospitals and doctors are organized and deliver care to patients. There’s abundant evidence that health care is needlessly expensive in many settings and regions. But getting at the inefficiency is much easier said than done. Indeed, the crucial question in the entire reform debate has always been this: what process has the best chance of bringing about continual improvement in the efficiency and quality of patient care?

Easier said than done, indeed! But is the answer to continue to allow a structure and system to perpetuate that contributes to medical cost increases that’s three times the rate of inflation the answer?

The true purpose behind these legislative efforts is finally being talked about on the public airwaves, and not just by talk show hosts: this edition of health reform is an ideological effort to place a large proportion of the public in the voter client camps of politicians, afraid of what will happen to their benefits if they were to vote those politicians out of office.

So what is an alternative? As this blog has posited in previous posts, the “man behind the curtain” in medical inflation that pulls all strings is the fee for service business, complicated and enhanced by governmental mandates on benefits. This is complicated by the fact that most Americans receive their health care coverage through 3rd party payer arrangements — employers, government — and therefore have literally no idea what (1) the care the demand and are allowing actually costs; and (2) what their healthcare coverage (ie. insurance) costs.

Capretta goes on:

Whenever Congress is in a budget crunch, the preferred route to savings is indiscriminate provider payment reductions. Politicians don’t want to be forced to pick winners and losers among their hospitals and physician groups. It is much easier to pass equal cuts for all licensed providers, no matter how well or badly they treat their patients. That’s been the history of Medicare and Medicaid for forty years, and there’s no reason to expect cost-control driven by the federal government will ever be any different.

The alternative, of course, is a decentralized process, where cost-conscious consumers choose from insurers and delivery systems that are competing on price and quality. The government can and should play an important oversight role in such a reformed system, much as it does in Medicare’s prescription drug benefit.

Exactly — the only real way of returning cost control to any semblance of normalcy is to place decisions for care into the hands of consumers using the tired and true method of the market, which is really saying the patient/consumer decides directly on what, why, and how much care to receive.

This cannot happen overnight or with the wave of a policy wand. To do less, however, will, as Capretta remarks, make matters worse.

R Allan Jensen

The Statistics of Money

November 21, 2009
Denver CO

Now that the Senate has issued it’s secret health reform bill, we have also been treated to the cost estimate from the Congressional Budget  Office. The estimates for both Senate and House bills are each around  $900 billion over a 10 year period. (by the way, where did the arbitrary and magical budget target of $1 TRILLION come from?)

As much as the CBO works to be nonpartisan, there are several things  about the product of CBO analyses that most folks do not understand.

1. CBO may only consider impacts on the federal budget;
2. CBO analyses are limited to for a 10 year period;
3. CBO does not consider elements of spending that are not included in the bill being reviewed.

There are other considerations, but these are most germane to this discussion.

Now, just how useful are cost estimates that are produced by the  federal government? Let’s paraphrase Senator Ron Wyden, D-OR, who remarked this past  week that people inside the DC beltway continue to ignore the impact of  these proposals on individual premiums. We can certainly allow ourselves to be cynical based on a lot of real world experience, but let’s for now consider costs NOT included in the CBO estimate:

• The bill’s designers purposely pulled out the costs of an expanded  Medicaid program that will cost well in excess of $200 billion;
• The bill includes over $400 billion in new taxes;
• The bill includes over $500 billion in cuts to Medicare. Will the Congress keep those cuts in place or will they defer those cuts in some future session as they have done several times for provider reimbursements;
• The bill does not include over $200 billion in additional Medicare  provider fees that Congress is working to restore by permanently scrapping the Sustainable Growth Rate formula;
• The bill doesn’t begin most new features until 2014 even though it  would begin collecting new revenues in 2010. In short the CBO cost  estimate is not really covering 10 years, rather 6. While the CBO is  restricted to a 10 year analysis period, independent studies show that  federal budget deficits would begin to balloon after the initial 10  period;
• The CBO estimate does not include the cost burden for the States  due to dramatically increased Medicaid eligibility criteria;
• The CBO estimates do not include the extra costs of increased  premiums deriving from requirements in the bill, such as guaranteed  issue of insurance coverage to individuals without preexisting  condition limitations, or minimum mandated coverages. Based on experience with small group reforms in  the 1990s, these requirements will easily double premiums;
• Individual and employer mandates will impose thousands of dollars  of costs on personal budgets that millions of people do not currently  incur;
• The CBO analysis does not consider the hundreds of billions of dollars pledged to various representatives and senators to fund projects in their districts or states — payoffs using taxpayer money to “buy” their votes.
• The CBO estimates do not include the very great potential of higher medical costs which will occur because nothing is being done to modify the structure of the payment system for healthcare delivery in this country, which has already been shown to create incentives for higher billings.

This goes on, like the over 100 new bureaucracies that these bills would create, many of which would have to be duplicated in some fashion at the state level, costs of which are not estimated, but a top ten list is sufficient for now. Many, many more details of these bills have yet to be made public — literally dozens of new details are being exposed each day that goes by.

But stop and think this through for a bit — currently we spend over $2.4 trillion dollars a year on healthcare in the US. The new $1 trillion in expenditures being proposed, only a fraction of which may replace some of that coverage, and will add to our economic burden for healthcare. And exactly how does this improve the “crisis” of healthcare spending?

When we finally wake up to the reality that this process represents, which by the way will do nothing to arrest the meteoric inflation in health care costs, we will discover the actual costs for the short term of these designs will far exceed $1 trillion, and very likely, $2 trillion. Of course, this does not include the costs of losing our freedom to control our choices for health care, or the costs of the loss of innovation in the coverages we can choose from, or the economic damage sustained by the US by consuming funds without creating commensurate value.

R Allan Jensen

Time to Reflect? Will Real Reform Please Stand Up!

November 5, 2009
Denver CO

Just yesterday, we read that the Senate probably will not be able to “tackle” final healthcare reform proposals until 2010. Is this an opportunity to reflect? Hmm, let’s see.

First of all, be clear that what is afoot in Congress is not “health care reform.” The White House, Senate, and House have all decided they’d rather do “health insurance reform.” What’s the difference?

Health insurance is how we finance the health care we get from doctors and hospitals. Health insurance largely reflects the costs charged by health care providers, and only marginally affects the costs of premiums for that insurance.

I have a colleague in Pennsylvania who likens the fundamental issues of health care reform to a hungover fellow looking in the mirror following a major bender the night before. The mirror (a metaphor for an insurance company) simply reflects the image. If the fellow wants to change the image, he ought to think about drinking less and getting to bed early.

By turning away from health care reform the aforementioned policymakers have guaranteed that costs will only rise, and because of the structures considered, much faster than they have in the previous 10 years. And here’s the coup de grace: these same policymakers will blame their failure to achieve true reform on the insurance companies, big Pharma, and other industry lobbyists. Well sorry folks — this is a dog that won’t hunt!

Health care reform requires a change in the medical malpractice environment so that doctors practice a good deal less defensive medicine, leading to lower costs. Is that in the reform? No — the policymakers bowed to pressure from the trial lawyers.

Health care reform requires that the medical treatment environment for the fastest growing cohort of Americans become more efficient. Medicare, which currently serves 45 million Americans and will serve over 70 million in the next 15 years, was modified several years ago to slowly reduce reimbursements to providers through a mechanism called the Sustainable Growth Rate formula. The idea was that providers would become more efficient using network methods and other methodologies. Is this in the reform packages? No –  Congress has voted each time when the SGR would result in reimbursement cuts, to either eliminate the cuts or forestall them to a later date. The policymakers also “bought off” the AMA by promising to provide over $200 billion of funding to override yet another impending reimbursement cut.

Yet at the same time, they have included cuts in overall Medicare of nearly $500 billion.  Yep, I do believe I can start to smell what their cookin’.

Health care reform requires a change in the fee-for-service reimbursement mechanism practiced by Medicare, and by trickle down consequence, nearly all private insurance plans. Is that in the reform package? No — the policymakers feel that by cutting the budget of Medicare that they can somehow force those providers being reimbursed by Medicare to cut their costs. That’s a blunt axe that will fail to cut anything. In fact, it’s simply more likely that providers will cease to see Medicare patients at all — which, by the way, is already what we are currently experiencing at an accelerating pace.

Health care reform requires that mandated policies and inefficient cost mechanisms be eliminated from public policy. Is this included in reform? No — many costly federal policies such as EMTALA, which requires hospital emergency rooms to treat all who present for treatment regardless of their ability to pay, have not even been discussed.

Proposed reform legislation avoids the whole issue of illegal immigrants who are sure to remain covered under federal policies including EMTALA.  By pretending that these individuals don’t exist for the purposes of funding health care expenditures is ignoring costs of over $100 billion/year. These costs will still appear and will have to be paid.

Health care reform requires providers to avoid unnecessary and duplicative procedures and tests. Is this in the reform proposals? No — without the reform of malpractice law to change the attitude toward defensive behavior, these wasteful costs will continue unabated. Moreover, a good deal of money supporting the current health insurance reform proposals has been provided by several large drug manufacturers who also stand to secure their position under the current practice behavior.

Do any of the reform proposals seek to address the $50 billion waste due to more than 2 million hospital acquired infections? No. Only the barest of lip service is paid in all of these pieces of legislation to establishing incentives to improve the quality of care; to reduce the administrative burdens caused by compliance with various regulations and non-standardized provider/insurer interactions; to faster, standardized implementation of interoperable electronic medical records; to the growing shortage of primary care and gerontology physicians, and on, and on, and on.

For some years now, politicians have used the term “obstructionist” to castigate those who want to stop their proposals. When those of us who have been at the center of this debate call for “real reform” we mean the sorts of things detailed above — not what is being written into legislation by this Congress. This means that what is currently proposed has to be obstructed if “actual, real reform” ever has a chance to be enacted. So if being an obstructionist is bad, well then let’s think about misbehaving — for our own good.

R Allan Jensen

Not Just Yet!

October 8, 2009
Garbage In, Garbage Out
Denver CO

Today’s news trumpets a new analysis from the Congressional Budget Office regarding the health care reform “bill” in the Senate Finance Committee.The word is that, joy of joys, the committee’s proposals actually cost less than expected and meet nearly all of the president’s goals for reform.

Well folks, there are some things to remember here. First, note this comment from Politico today:

POLITICO’s Chris Frates: ‘While the media and lawmakers often shorthand a CBO letter as a ‘score’ or ‘cost estimate,’ today’s CBO letter is neither. Because the bill is still in ‘conceptual,’ or layman’s terms, CBO’s letter today was a ‘preliminary analysis.’ For it to be an official cost estimate, the bill has to be translated into legislative language. And CBO goes to great pains in its letter to make the distinction: ‘CBO and JCT’s analysis is preliminary in large part because the Chairman’s mark, as amended, has not yet been embodied in legislative language,’ the letter says.

‘The distinction is part of the reason that Finance Committee Republicans pushed to have the conceptual language translated into legislative language, so the committee would have the more official cost estimate. But Democrats opposed the idea because it could have taken a week or more for CBO to draw it up. Today’s analysis was done in about five days. As for the term ‘score,’ well, it’s not one recognized by CBO. Rather it’s lawmakers’ and the media’s shorthand for a cost estimate.

That’s right — this bill is not even written into legislative language yet, nor is it even out of committee yet — which means it really cannot be analyzed accurately. Further, this “bill” once sent to the Senate floor will be subjected to dozens, if not hundreds, of amendments which will undoubtedly affect the CBO’s analysis. And even further, this “bill” will be competing with the legislation from the Senate’s HELP committee, which was v0ted out of committee prior to Senator Kennedy’s death.

And even further down the road, this “bill” will be subject to conference committee negotiations if it does pass out of the Senate, where it will run into the extremely different reform legislation that came out of 3 House committees this summer.

So, don’t take this latest CBO analysis all that seriously — wait for what comes out of CBO down the road. If all of the reform proposals to date are any indication, the outlook for federal financial neutrality is not encouraging.

And finally, all of this fire and smoke covers up some extremely important issues:

• none, that’s right NONE, of these proposals address in any significant way the underlying cost of care, which translates into a future of higher than consumer inflation cost increases;
• this is going to dramatically affect (read, “hurt”) senior programs funding;
• alternatively, a lot of younger people are going to find that they will be having much less take home pay — read on;
• these various pieces of legislation will transfer massive amounts of funding support to the states, which even before the economic downturn were having enormous problems handling programs such as Medicaid;
• for all of the arguments over the definition of a “tax,” the facts are that individuals and businesses under these proposals will pay substantially more for their health care benefit than they are paying now, either through increased cost sharing, losses of benefits and/or jobs, direct taxes, and penalties.

So now we are seeing what legislatures do — rushing to pass “something” whether it’s any good or not. This process will produce nothing more than a pig with a lot of lipstick.

BTW — read this piece from the 10/7/09 Wall Street Journal. All of the proposals being presented for reform have been tried before — at the state level — and they don’t have a good track record::  http://bit.ly/3vQAjC

R Allan Jensen

Hey — Anyone Seen A Doc Lately?

The Laws of Unintended Consequences
September 9, 2009
Denver CO

I had the “fortune” of attending a pretty decent university, which operates to this day under a military structure. While the education and experience were second to none, one “unfortunate” aspect of the system was that the students tended to react to the disciplinary structure in much as same a child might to unreasonable strictures. As we used to say, “Well, if you want to treat us like children, don’t be surprised if we act like children.” As a result, some of the most unanticipated behaviour came about, a lot of it rather hysterical, but some tragic. Such is an example of the law of unintended consequences.

I have been absent from these blog pages for some weeks while I’ve observed the ongoing circus, yes — circus, being performed in the nation’s capitol over not only health care reform, but also a number of other issues related to national defense, the environment, and financial policy.

The seesaw, very nearly chaotic, nature of the healthcare debate has made handicapping the outcome an odds making exercise for bettors with nerves of steel. Of course this is a battle of political ideology over what makes sense for the people, and it is absolutely stunning what miniscule mental effort is being extended to the likely outcomes of some of the proposed policies.

Since I have been involved in reform research for several years, including serving on a statewide public commission, I have been attracted to the thoughts of what will occur to the supply side of the health care industry if even just a few of these proposals are adopted. Specifically, doctors, clinics and hospitals.

Does it surprise anyone that working people will adapt to conditions, including restrictions and regulations, that would restrict their income or their very ability to survive in their chosen profession? Do we not see workers protest or even strike when their benefits or incomes are reduced. Why then should we think that doctors would not behave the same — people always act in their best interests!

For several years, doctors have matriculated medical schools into specialties instead of general practice in greater and greater numbers — why?! Simply because revenue promises to be greater. The consequence, as doctors age and retire, is the loss of tens of thousands of general practice physicians throughout the country, with the brunt of such losses hurting rural and non-urban areas the most. We are well into this trend, which shows no sign of abating. Another specific trend is that our med schools graduate less than one-third into of the practice gerontology that our aging population will need.

What will happen, as college graduates contemplate their futures, if physicians of the future are confronted with the prospect of working for government capped pay rates? Might not a good number of these people look for for other professions to practice, resulting in fewer physicians?

In her 9/1/09 Medscape/WebMd article, Nancy Terry refreshes us on an old idea that is gaining traction. Doctors as locum tenens. A Latin phrase that basically translates as “substitute”, it is not an unfamiliar idea to many people — temporary employment. For some years docs have worked as “locums” to supplement retirement income or to bridge transitions to new locations or family changes. More and more, however, docs are reporting that they are viewing locums work to step outside of the current system of health care delivery. A number of pressures can lead to such a decision, but the key element is the overall reduction in productive physician hours within the industry.

Unintended consequences are the result of decision and policy makers not spending enough time contemplating the long term effects of their actions. In today’s political environments, too often assumptions are made that “oh, nothing will change” and that is exactly the atmosphere that dominates in Washington DC.

Deals being contemplated today will reduce access to qualified medical practitioners because policymakers want political outcomes and care little about how those will impact the people.

Does Janus Have 2 Faces, Or Is It Just American Public Opinion

R Allan Jensen
Denver CO
July 14, 2009

OK — referencing Janus in the title of this blog is probably technically incorrect. Janus, a minor Roman god, which is usually depicted as having two faces, was considered to represent the nature of humans to look at the past, while also looking to the future. In today’s news, we are treated to the conflicting views of the American people as represented in a USA Today/Gallup poll. (Disclaimer:: I have not read the poll questions)

The gist of this poll is that most Americans responding want healthcare reform this year, but no one wants to pay any more for it OR have their choices of care limited as a means of controlling costs. Not more than a few weeks ago, as I have commented on in an earlier blog, supposedly 60% of the public wanted healthcare reform, while 75%-plus  said they are perfectly happy with their current healthcare coverage (the latter statistic is confirmed in multiple, independent polls).

So-o-o …… we are once again treated to the dysfunctionality of a public policymaking body playing political checkers with a major domestic issue. All the while these policymakers are missing  the real target, purposefully backing away from tackling the real causes of high health care costs in favor of a slapdash solution to getting more folks into a public entitlement plan, aimed at underpinning future election chances.

Today as well, we see the introduction of legislation in the US House that will make health care a right for Americans (and by that be sure you read, anyone in America, be they a citizen or not) —- read, provided by the government.

A good bit of this is based on two major fictions that have been introduced to seduce the public into thinking this all somehow makes sense, but neither of which actually addresses the problems that lead to health care being costly.

The first fiction was introduced in the ’90s, that being that there are milions and millions of uninsured in the country who cannot get healthcare. Unfortunately this is one of those untruths that subscribes to the famous observation by Churchill that “a lie will travel half way around the world before the truth can get its boots on.” Indeed before actual academc studies came out in the early 2000s that showed this to be false, most people now believe that there are millions of uninsured who cannot get healthcare and are denied even the most urgent care. Oh, and did I mention that all of these uninsured cost each of us thousands of dollars? Wow, two tall tales for the price of one!

Second, and this fiction is somewhat new, goes like this — a government run plan will give the private health insurance companies “healthy” (I’m sure the pun is intended) competition. This sounds so good to the common American loyalty to the principle of price competition, but how is that exactly? How can the organization (the government) that mandates to all insurance companies and hospitals that they must pay for certain services and operate in particular ways, but which exempts themselves from the same mandates, not help but cost less. Competition, or just a big, loud, duplicitous bully?

So here’s a little something to gnaw on — if government health plans and their management was so awesome, why is it that all of their programs suffer from massive financial shortfalls, even while under reimbursing providers by as much as 30-40% (some states’ Medicaid programs under reimburse  services by as much as 70%). What is the net effect of this — (1) fewer and fewer providers are seeing recipients of government healthcare programs and, here’s the real ironic twist, the rest of us pay for this under funding by higher premiums on our health plans and higher provider cost structures for non-government payers. Now this has been studied extensively, and is not fiction — we all pay 30% more for care because of government purposeful under funding of their health benefits.