Herding Cats

My friend Mitch, who lives in Montreal, was stuck overnight in Cleveland. Mitch used to live on Solon. He misses his friends, our shopping, and our health care – in that order. While visiting him at the airport Marriott, he once again regaled me with his stories of fighting for the attention of Canadian doctors and hospital staff. He hopes to return to the U.S. one day. He is counting on our system to still be here for him.

Mitch and my friends on the far right are very worried that we will one day have a single payer, rigid system like Canada’s. My one word answer is to RELAX. If you would like proof that their fears are in vain, I give you an article in yesterday’s Plain Dealer.

The story, a reprint of a New York Times article, was about medical marijuana. Medical marijuana is legal in some states, illegal in others. It is banned by some employers while ignored by others. The federal government has raided distribution centers while giving lip-service to states’ rights.

We are Americans. We could never tolerate an absence of choice. We would never accept a one-way, the only way, type of health care system. We are contrarians by nature. Our rules constantly change because we are constantly changing.

The short article included a brief description of Nick Stennet’s employment problem. Mr. Stennet told his employer about his health problems and his daily use of medical marijuana. He was later fired when, surprise, he failed the drug test. The lawyers should have a field day with this.

The laws in Rhode Island might be like the laws in Hawaii, but very different than those in Utah or Alabama. People in Maine choose to live in Maine, not New Hampshire. And California is constantly at war with itself. That’s us. This is the essence of the United States.

Rigid? Choiceless? Single-payer with no other options? That’s just not our style.

DAVE

www.bogartcunix.com

As Seen In The Plain Dealer

My last post on Health Insurance Issues With Dave generated a lot of responses. Some people were frustrated with yet another under-publicized provision of the Patient Protection and Affordable Care Act. Some used my article as an opportunity to complain about the Democrats, in general, and the President, in particular. But the phone calls all went something like this:

Dave, OK I’m scared. This doesn’t apply to me, right? I’m grandfathered.
No, it does and you aren’t!

There was an excellent article about the rules to be eligible to retain grandfathered status in the August 8th Plain Dealer Forum Section. It was written by Michael P. Coyne. The article tied in so well with my blog and my clients’ concerns that I felt compelled to write a Letter to the Editor. This appeared Saturday, August 14th.

Michael P. Coyne's article about "grandfathered" health plans (Forum, Sunday) shed some light on the challenges small businesses face with the Patient Protection and Affordable Care Act. Please let me add a real-world example.
A client called recently to verify that his plan still qualified as "grandfathered." It didn't. He employees about 25 skilled and semiskilled workers and has always provided health insurance. His June renewal with a major carrier included a rate increase of 23.7 percent. Luckily for his employees, another carrier with a little better coverage was less expensive. The employees won. The employer won. Everyone is happy -- except Washington.
You lose your "grandfathered" status if you change insurance carriers.
"Why should I be punished?" my client asked. "They now have better coverage."
The answer, of course, is simple. None of this is about coverage.

Is it really that simple? Yes. Unions can change insurance carriers without forfeiting their grandfathered status. Businesses can not. Will this affect the client’s employees and how he does business? Definitely. I’m positive that this legislation will have a significant impact on the payment and delivery of health care.

The rules may be written on the fly, but the outcome appears to be predetermined.

DAVE

www.bogartcunix.com

By the way, special thanks to those of you who followed ALL of the links in the last post. Even the most serious of topics needs a little levity.

Don't Cry Uncle, Stay Grandfathered

Grandfathered - The right to stay under the old rules and regulations that new policies must follow. The more onerous the new rules and regulations, the more desirable it is to be grandfathered.

The new rules are coming. In a rush to change the delivery and payment of health care as quickly and as irrevocably as possible, Congress made the Patient Protection and Affordable Care Act effective the day it was signed into law, march 23, 2010. The rules have yet to be written. The U.S. Departments of Treasury, Labor, and Health and Human Services are issuing interim final rules. Nothing is set in stone, except that all of the rules they create will apply to all group and individual health insurance policies that aren't grandfathered.

Policies on the books as of March 23, 2010 may be grandfathered, may be exempted from some of the new rules. Which rules? Who knows? The rules and regs are fluid. The insurers are being pressured to institute some changes "voluntarily".

How important is grandfathered status? There is no way to assess the value at this point, but the government is attempting to make it very difficult to maintain. So difficult in fact, that the rules to keep that status got my attention. When Washington erects this many roadblocks, and a damaged bridge isn't involved, you might want to see what is on the other side.

The following, courtesy of Medical Mutual of Ohio, is a synopsis of the Interim Final Rule for the maintenance of the status of a grandfathered plan. The following changes will cause individual and employer plans to no longer be grandfathered:
* A merger, acquisition or similar business restructuring, if the principal purpose of the action is to cover new individuals under the grandfathered plan.
* A substantial elimination of benefits to diagnose or treat a particular condition.
* Any increase in cost-sharing percentage requirements (such as coinsurance) above the level in effect as of March 23, 2010.
* An increase in the fixed-amount, cost-sharing requirements (e.g., deductible or out-of-pocket limits) above the level in effect on March 23, 2010, other than copayments, that exceeds the sum of medical inflation plus 15 percent.
* An increase in copayments above the level in effect on March 23, 2010, by an amount that exceeds the greater of the sum of medical inflation plus 15 percent or $5, adjusted annually by medical inflation.
* A contribution rate decrease by an employer or employee organization of more than 5 percent below the contribution rate on March 23, 2010, for any tier of coverage and any class of similarly situated individuals.
* The addition of an overall annual limit on the dollar value of benefits if the plan was not imposing an overall annual or lifetime limit on the dollar value of benefits on March 23, 2010.
* The addition of an overall annual limit on the dollar value that is lower than the dollar value of the lifetime limit on March 23, 2010.
* Any decrease in dollar value of the overall annual limit (regardless of whether the plan had an overall lifetime limit on March 23, 2010), if the plan imposed an overall annual limit on the dollar value of all benefits.
* A change in health plan carriers (changing a third party administrator has no effect).

Almost any change made since March 23, 2010 disqualifies your plan from being grandfathered. Did you know that in April when you raised your deductible? Have you changed your copays lately? Even replacing the exact same benefits with a different insurance carrier causes you to forfeit your grandfathered status. This isn't about you, your business, or your employees. It certainly is not about making your current policy more effective.

Will there be any benefit to having a grandfathered health plan? I don't know. But, the government thinks that there will be a real value and Washington is working very hard to take it away from you.

DAVE

www.bogartcunix.com

Addicted To Other People’s Money

Three minutes. Citizens are allowed three minutes to address the Beachwood City Council at regularly scheduled meetings. This isn’t a Q & A. If the Councilmen deign to respond to the concerns raised or answer the questions asked, it will happen whenever they choose. The agenda designates this as Citizens’ Remarks. The microphone is yours. You have three minutes.

I used to attend every Council meeting. A special entry was added to the City’s agenda, Chamber Report, for me to address Council. But I am no longer the president of the chamber of commerce and I have other ways to spend two Monday evenings a month. I forced myself to attend last night’s (July 19th) meeting.

The City of Beachwood is ready to take a 33% income tax hike. Beachwood would jump from one and a half percent to two. City revenues are down in these tough economic times. The goal is to tax the people who work here, but can’t vote, as opposed to the people who live here and can. I was at the meeting to watch City Council sing and dance.

I had no intention of speaking at the meeting until I saw item 9 on the agenda:

An Ordinance extending a Contract with Medical Mutual of Ohio (MMO) for renewal of health insurance coverage for City employees, declaring the existence of an emergency condition regarding health insurance coverage and further waiving competitive bidding.

I read that paragraph several times. This was easily one of the most ridiculous things I had seen in thirty-two years in the insurance business. Ticked off, I waited for the Citizens’ Remarks portion of the meeting.

I began by clearly stating that I don’t work with municipalities. My interest was strictly that of a taxpayer. I noted that there are no insurance emergencies. The City had plenty of time to get bids from countless other insurers. Anthem? UnitedHealth Care? Aetna? They simply didn’t bother. Why would they? They’ve got us to pay the bills.

As the meeting dragged on, we eventually learned that the City never negotiated with the employees to accept a less expensive policy. The City never negotiated with the employees to increase their contribution. Beachwood hasn’t solicited for bids in years. The Mayor and Council can’t help themselves. They are addicted to other people’s money.

Other people’s money is a common addiction. I was thinking about it earlier yesterday as I was reading an email from Michelle Obama. Yes, I’m on her email list. She and other members of the White House send me emails all of the time.

Anyway, Michelle (she calls me David) wanted me to know about all of the great ways that the new health care bill was going to help my family and lower costs.

So much of what makes this law great is its emphasis on preventive care--right now, too many people aren’t getting the check-ups or the screenings they need to stay healthy. Twelve percent of kids haven’t seen a doctor in the past year. And 59 million adults--and 11 million children--depend on an insurance plan that does not cover basic immunizations.

Health reform is changing that. Under this new law, all new private plans will provide basic preventive services--things like childhood immunizations and checkups, mammograms, colonoscopies, cervical screenings, and treatment for high blood pressure--absolutely free of charge. No copay. No deductible. No co-insurance needed.

Does this mean that America’s doctors will be providing free exams? Will labs dedicate entire months to free blood work? Will pharmacies dispense free blood pressure medications? Of course not. Our medical providers expect to be paid for their time and efforts. Rightfully so. These tests, services, and products aren’t free. Your insurance will pay for them. And you will pay more for your insurance.

Nothing is free save your mother’s love. But when you are addicted to other people’s money, you lose sight of the real cost of anything. There is always someone there to pick up the tab. And eventually the addicts forget that there is a cost. But actions have consequences. Goods and services and not free.

Beachwood, and countless other municipalities around the country, will get a crash course in effective budget management. They may even be forced to make some tough decisions. The new health bill has already begun to force business owners to make tough decisions. The only Americans unaffected are like my email buddy, Michelle, the ones addicted to other people’s money.

DAVE
www.bogartcunix.com

The Blind Squirrel

Should all businesses provide health insurance benefits to their employees? As a guy who makes his living selling group health policies to employers, you might think that I would answer with an emphatic “YES”. In theory, all businesses should provide benefits. In practice, not necessarily.

Sunday’s Plain Dealer included an article about the White Castle hamburger chain and the unintended/intended consequences of the recent health care legislation. According to the article, White Castle has been providing health insurance coverage to its full-time employees for a very long time. And, they are more than generous, paying 70% to 89% of the cost. By these measures, White Castle is a good corporate citizen.

But it is not enough. The Patient Protection and Affordable Care Act imposes a $3,000 per employee penalty on companies whose workers pay more than 9.5% of household income in premiums for company provided insurance. “White Castle estimates that this new rule could cost as much as 55% of its yearly net income."

Before we go any further, it is important to note that a recent study found that 78.9% of all statistics were created at the moment of their citation.

So I may not be certain about the actual pain White Castle may experience. Of course, when Nancy-Ann DeParle, Director of the White House Office of Health Reform, is quoted later in that same article that 97% of the nation’s companies won’t pay any penalties, I am equally skeptical.

Let’s talk real numbers. There are lots and lots of people earning $9 an hour. Is that right? Should they be paid more? I don’t know. You hire them and let me know. Today we’ll simply work with reality.

$9 an hour times 35 hours per week times 52 weeks per year equals $16,380. This person could only be charged $30 per week to participate in the company health plan. Anything more and the employer is charged $3,000 per employee. Restaurant worker, Retail employee. Clerk. There are a lot of people earning less than $20,000 per year. Their employers have a problem. Or a choice.

Will employers absorb even more of the rising health insurance premiums? Will employers make do with fewer workers? Or, will businesses cancel their private insurance and pay the lower $2,000 per employee penalty for not providing coverage?

The cheapest option, even less than providing high quality health insurance to its employees, may be to pay the $2,000 per employee penalty and to cancel the benefits. This just funnels more people into the government plan.

The article also quotes Steven Kreisberg of the American Federation of State, County, and Municipal Employees Union (AFSCME). Uniquely unqualified to address the concerns of any business, Mr. Kreisberg assures us that the young and healthy will simply opt out of their employers’ plans. The employers would then save premium dollars by paying $2,000 per employee per year for nothing. Forgetting that businesses hate to spend money for nothing, we still understand that taking the young and the healthy out of the employers’ groups will only make their premiums skyrocket.

The structure of these penalties only make sense if the ultimate goal is a government run health care system.

There were other experts and ax-grinders quoted in the Plain Dealer article. One was the number one Republican in the House of Representatives, John Boehner (Oh). Mr. Boehner is the George Hamilton of national politics. While Mr. Hamilton’s movies feature his tan and a lightweight plot, Mr. Boehner’s TV appearances tend to feature his tan and his lightweight logic. I have always thought that his job was to keep the seat warm till a real leader emerges. I am not a fan.

Imagine my surprise when I read this quote from Mr. Boehner. “The irony is that in the name of expanding health care coverage, the administration is making it harder than ever for unskilled workers to get started in the workforce.”

Sure the populism is feigned. But truth is truth. In a rush to achieve a goal with little thought to the consequences or collateral damage, this administration has begun to implement its health care takeover. And, as per Mr. Boehner, it is true. Even a blind squirrel can eventually find a nut.

DAVE

www.bogartcunix.com

The Shell Game

The recently passed Patient Protection and Affordable Care Act forces the State of Ohio to re-address our uninsured. Of particular interest is our population of high risk uninsured. These individuals are very unhealthy and have not been insured for over six months. The previous options available to our high-risk pool were both mediocre and expensive. Still, many of our unhealthiest accepted the available state mandated option. Today we are talking about those who did not.

According to the report published in the Plain Dealer this past Saturday, the federal government has allocated $152,000,000 to help cover these Ohioans until the new rules kick in, about four years from now. Medical Mutual of Ohio, a local not-for-profit, won the contract to manage the policies.

This is not free insurance. The individuals will be required to pay some yet to be determined premium. What does one hundred fifty-two million get you? The State’s best guess is 5,000 insureds. Based on my knowledge of the current premiums and benefits available to these individuals, that number might be a touch optimistic.

In a post dated June 29, 2009, The Real World, I noted that Governor Strickland’s budget included a premium reduction for the open enrollment policies available to Ohio’s unhealthiest citizens under age 65. The cost for this would be borne by Ohioans who pay for their own health coverage. We would, according to the State’s actuary, pay 5.5% more to help our neighbors acquire insurance. My clients can attest to their rising premiums.

The one hundred fifty-two million dollars is part of a total five billion dollar four year program. Let’s pretend that 5,000 is a real number. For our purposes, let’s pretend that all of these numbers are real, the federal government really has five billion dollars, and we really get our hundred fifty million. 5,000 beneficiaries would get only $30,400 towards their coverage. This is only $7,600 per year, a little over $600 per month. Is that even close to the actual cost of insuring these individuals?

The current Medical Mutual of Ohio premium for the Ohio Standard policy for a 60 year old male in Cuyahoga County is $1,403.08 per month after the recent rate reduction. We already know that that is not sufficient to pay claims. Will our soon to be insured make up the $800 per month difference? And, will the new federally designed policy be as awful as our current contract or will it be more generous and costly?

This, of course, does not even begin to address the fact that there are far more than 5,000 Ohioans who are both very unhealthy and in need of a different way to pay for their health care.

There was a time, not so long ago, that we were told that one of the main reasons we had to go to war was because of the way the Taliban treated the women of Afghanistan. We have been told that the purpose of health care reform was to cover the uninsured. The selectivity of our focus and actions make both arguments seem specious. Our government is perfectly happy to ignore the abuses of cooperative tyrants who provide us with cheap oil. And we have yet to show any real interest in devising, and FUNDING, a program to truly cover our unhealthiest and uninsured.

What we have is a shell game. More and more costs are being shifted to those of us with private insurance. All the while the federal government attempts to block insurers from raising rates to cover the true costs. Books must balance, at least in business.

My predictions of a few months ago still stand.

DAVE

www.bogartcunix.com

A Knight In Shining Armor

Dr. Ballard made the cover. The current issue of Cleveland Scene featured a story about Robert Ballard, M.D. It appears that Dr. Ballard, age 69, was recently fired. This was not the first time he was fired or defunded, just the most recent and, in his mind, most surprising. Scene depicts him as a good doctor, a caring physician, a practitioner committed to Wellness. He just wants a salary. Is that so awful? Forty-three years since his graduation from a Cleveland medical school and he still hasn’t grasped how and why he gets paid. In essence, he is the poster grandparent for single payer health care.

I bring up Dr. Ballard because of Scene’s cover. There, in four color, is the unemployed doctor dressed in a lab coat walking his dog. I have developed a real appreciation for lab coats.

You can’t be a real doctor, or even a real fake doctor, or even a good stage prop without a lab coat.

I was in China for nine days this past April. My tour took me to Beijing, Shanghai, Suzhou, and Hangzhou. I was at the Great Wall (amazing pictures), a Ming Tomb, and the Buddhist Temple LingYin. Other cultural/shopping destinations included a jade factory, a silk factory, and a Cloisonné factory. You get the idea. We also stopped in the offices of the purveyors of Traditional Chinese Medicine.



The doctor explained the efficacy of Traditional Chinese Medicine and we were each given the opportunity for a free exam. No blood tests. No sample jars or paper cups. The doctor diagnosed each person, one at a time, by simply taking the patient’s pulse. Then he prescribed the appropriate herbs each inevitably needed.

The doctor took my pulse and asked about my blood pressure medication. “None”, I replied. He was baffled. Me? I was totally relaxed and trying hard not to laugh. I love a good sales pitch. No blood tests. No tests at all. Why was he wearing a lab coat? Our doctor was in costume for his American audience.

My fascination with lab coats can be traced to the recent health care debate. My local Congresswoman, Marcia Fudge, was hoping that her vote was going to be news. It wasn’t. Our Congressional Representatives, even those in safe districts, need to make the six o’clock news now and then, if only for their egos and fundraising. The “White Coat Doctors”, Doctors Organized for Health Care Solutions, were ready to play their part. This is the group that instructs its members to keep their lab coats in their cars and to be ready at a moment’s notice. Their job is to show up at the press conference, coats on, and to nod approvingly. It took tens of thousands of dollars of education for these people to be stage props. But if you call them, they will ride in, like knights in shining armor.

DAVE

www.bogartcunix.com