Buried Deep Within The Law

December is my busiest month. The majority of my business clients prefer to renew or change their coverages as of January 1^st. New deductibles. New Benefits. New Year. So wasting forty-five minutes of my time by taking a meaningless class and test were not on my agenda. But there I was, staring at the computer screen, plowing through the mindless drivel that the federal government feels every agent needs to review annually. AML training – anti-money laundering for the uninitiated.

Long before then Speaker of the House Nancy Pelosi told her colleagues that they needed to vote for the Patient Protection and Affordable Care Act “we have to pass the bill so that you can find out what is in it, away from the fog of controversy”, we were given Uniting and Strengthening America by Providing Appropriate Tools Required To Intercept and Obstruct Terrorism Act of 2001. You know it as the USA Patriot Act. A reaction to 9/11, it was signed into law by President Bush on October 26, 2001. It wasn’t until years later that the American people and the Congressmen who voted for it learned about the government’s new ability to legally spy on US citizens and the provisions concerning torture. And for the financial services industry – AML, the anti-money laundering rules.

Section 352 of the USA Patriot Act includes the requirement that financial institutions establish anti-money laundering internal enforcement. Each company must:

Develop internal policies, procedures, and controls

Designate an AML compliance officer

Institute ongoing training

Install an independent audit function to test the program

The insurance industry regulations went into effect on December 5, 2005, over four years after the law’s passage. Some of the rules make sense. Some are the result of regulators gone amok. Let’s be serious. Prudential is not worried that I am going to take three non-sequentialed numbered money orders, each for $5,000, and open up a life insurance policy for some drug kingpin. Pru is petrified that a federal regulator would find an agent operating without an up-to-date AML certificate.

Rome is burning and we are too busy inspecting the fire extinguishers to have time to use them.

The Patient Protection and Affordable Care Act (PPACA) is a complex law. It has to be. You can’t rework a sixth of our economy with a short paragraph and an emoticon. The new fees (taxes) to give this a chance to succeed are just about to begin. Rules and regulations are being written and promulgated. The exchanges are to be up and running in less than a year. Everyday brings something new.

One of the new taxes, creatively named the Health Insurance Tax (HIT) is designed to raise $100 billion over the next ten years. This is a tax on health insurance companies levied, in part, on market share. A study conducted by Oliver Wyman for the industry group America’s Health Insurance Plans (AHIP) predicts that this excise style tax will result in significantly higher premiums. This should come as no surprise to anyone who has been paying attention.

Other new taxes and fees debut next month.

The major insurers are trying to learn not just what the new rules will be, but when these rules will begin. Does your current policy, purchased under a different set of regulations, end on December 31, 2013? Or, will you be allowed to keep your current policy till its annual renewal or even longer? Do you care? YES!

If you are young. If you are healthy. If you don’t need any of the new benefits required of all future individual (self-pay) policies such as maternity or habilitative care, you will want to hold on to your current health insurance with both hands. Will you be allowed to retain your current policy? For most of you the logical answer is “Not for long.” These are the issues I’m asked about daily.

Over the next ten months we will get a clearer picture of the new health insurance market, the policies, the distribution system, and eventually, the pricing. This has always been, first and foremost, about paying for medical services, not about the practice of medicine. But the delivery of health care will change as the money changes.

Look around you. It would be very crowded here in Greater Cleveland if our population grew at the same rate as our hospitals and clinics expanded. Kaiser Permanente, The Cleveland Clinic, and University Hospital must believe that they know how to make the Patient Protection and Affordable Care Act pay off for them.

The potential to build health care empires must be buried deep within the law. We, however, are probably just working the mine.