Health Insurance Brokers to the GOP: “Et Tu?”


Health insurance brokers are appropriately worried about the impact health care reform will have on their livelihood. That’s human nature. Politics is about the management of self-interest. When it comes to health care reform, the list of concerned onlookers is long. Patients, doctors, hospitals, carriers, government bureaucrats, health insurance agents, employers, lawyers, dentists, chiropractors, pharmaceuticalfirms and, well, you get the idea. Anymeaningful change is going to require sacrifice by most all of these stakeholders.

When it comes to balancing all these competing interests, the partisan nature of American politics usually comes into play. Public policy flowing from the Democratic party tends to benefit some at the expense of others. The same holds true with the Republican party.

Health insurance brokers, for example, tend to rely on the GOP to promote policies supportive of their profession. One reason for this connection is political. I’ve no empirical data, but long experience in working with health insurance brokers leads me to believe that the majority vote Republican. Another reason, however, is ideological. Republicans tend to support market-based health care reform solutions and brokers are integral to making the market work. Brokers take competing health plans and interpret them to their prospects and clients. One method they use is to take the different explanations of benefits used by different competitors and put them into a consistent template. They serve as consumer’s advisers and, when needed, their advocates to assure they get full value from their health plans.

As President Barack Obama’s Administration works with the Democratic majority in Congress to fashion health care reform, many brokers are relying on Republicans in Congress to stand firm against a public plan (which most brokers believe would eventually drive private plans out of existence — and take brokers down the drain with them). And they are trusting Republicans will make the case for the value brokers add to the system.

This trust may be misplaced.

Last week four leading Republicans put forward “The Patients’ Choice Act.” The Act is their call to action for fixing what they refer to as America’s broken health care system while at the same time seeking to preserve much of the current market driven arrangement. The authors of the proposal, Senators Tom Coburn and Richard Burr and by Congressmen Paul Ryan and Devin Nunes, are leading voices within their party on health care reform. It’s not clear whether the Patients’ Choice Act is the official position of the Republican caucuses in Congress, but no other proposal has been forth by the GOP. And the media is certainly treating it as the “Republican health care reform plan.”

Not suprisingly, the GOP lawmakers explicitly reject a public health program. Indeed, while acknowledging other factors leading to runaway costs (new technology, an aging population) their document proclaims the primary reason America’s health care system fails so many patients is “government intervention.”

Nonetheless, there are several elements of the Patients’ Choice Act which occupy common ground with Democrats (more on these in a future post). Some of what’s in The Patients’ Choice Act summary is, suprising and even amusing. For example, Republicans have taken to accusing Democrats of seeking to move America to “European-style socialism.” Yet, in justifying some of their ideas the sponsors of the Act turn to similar programs working in — wait for it — Europe.

Some elements of the reform package are just foolish. For example, under the Patients’ Choice Act carriers to accept all applicants regardless of their health condition (often referred to as “guarantee issue”). However, explicitly reject requiring individuals to obtain coverage stating that “if individuals do not want health insurance, they will not be forced to have it.” In fact, they go so far as to suggest that individuals be able to purchase coverage at any time “through places of employment, emergency rooms, the DMV, etc.”

In taking this position it appears the the Republicans have adopted the greatest flaw in then candidate-Obama’s health care reform plan – and made it worse. Why would anyone purchase coverage before they need it? Any reasonable person would wait until they’re on their way to the doctor, stop by the DMV and purchase coverage. In case of an accident, all they would need to do is go to the emergency room (the most expensive place to receive care), sign up at the receiving desk and enter the facility as a fully insured patient. As soon as they’ve recovered, it would be safe to drop the coverage.

(I find it hard to believe the Republicans are taking such a naive view of insurance. And, to be fair, the Patients’ Choice Act is somewhat lacking in details. However, what I’ve described comes from the Republican lawmakers’ own document. If they are creating safeguards to prevent such gaming of the system, there’s no evidence of it yet.)

As with any health care reform proposal, there’s elements to like and to dislike in the the Patients’ Choice Act. What will be most troubling for brokers, however, is the GOP’s call for creating state-based exchanges. The benefits of such exchanges includes a “one-stop marketplace for health insurance. Individuals would get a hassle-free opportunity to choose the plan that best meets their needs through an Exchange.” Most brokers believe that’s their role in the current system. To have Republicans propose a state agency to take on this responsibility is disconcerting at best; a betrayal at worst.

Then there’s the “auto-enrollment” feature touted by the Republicans allowing individuals to obtain health insurance at the DMV and other locations. Apparently the GOP sees little value in having consumers work with licensed, regulated agents and brokers, not when there’s a clerk at the DMV available.

To be fair, the Republicans are not explicitly excluding brokers from their version of a new health care system. In fact, they are expected to remain a part of the system. In the GOP’s “Patients’ Choice Act Q&As they write, “Whether an individual uses an insurance broker, an internet [sic] comparison page, or calls a toll free number, individuals are provided the information needed to choose a plan tailored to their individuals [sic] needs.” This basically equates the knowledge, skills and expertise of independent brokers to what can be delivered by an Internet site or a customer service rep at the state Exchange. How comforting. Perhaps they are relying on the Exchange to standardize health insurance so much that professional guidance is no longer required. Although if coverage is that standardized, then perhaps calling their proposal the Patients’ Choice Act might be somewhat misleading.

The National Association of Health Underwriters, the primary professional organization for health insurance brokers, is working hard to educate lawmakers concerning the value independent brokers add to the system — value which should be preserved in whatever reform package emerges from Washington. To the extent the Patients’ Choice Act represents Republican thinking on health care reform, relying on the GOP as an ally in this effort could be a painful path to disappointment.

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Kennedy Calls for Substantial Government Role in Health Care


In the United States Senate, two committees will play a leading role in drafting health care reform: the Finance Committee chaired by Senator Max Baucus; and the Health, Education, Labor and Pensions (often referred to as the HELP) Committee led by Senator Edward Kennedy. The two chairman have pledged to work together in order to bring one bill to the floor sometime this summer. In the meantime, the committee members are developing policy options, staking out positions, testing the political waters, and all the various other chores required to actually produce legislation.

The Senate Finance Committee has put forward three health care reform option papers. They describe choices the committee will need to make. One option, for example, is to create a government-run health plan to compete with private carriers. Another is to do without a public plan and count on the market to promote competition.

The Senate HELP committee has been taking a less formal approach, but it too has now begun putting its collective thoughts on paper. The Washington Post reports that Senator Kennedy is circulating an outline of the health care reform package his committee is likely to propose. The HELP Committee is traditionally more progressive than the Finance Committee (needing to focus on the cost of things does tend to bring out the pragmatist in most lawmakers) so it’s not surprising that the package, as the Washington Post puts it, “[i]n many respects adopts the most liberal approaches to health reform being discussed in Washington.”

Among other provisions, the Kennedy proposal would create a government-run plan to compete with private carriers, require individuals to purchase coverage and employers to contribute to the coverage. According to the Post, the HELP Committee will propose allowing Americans earning up to 500 percent of the federal poverty level ($110,250 for a family of four) to purchase Medicaid (although according to Bloomberg.com the package sets a floor of 150 percent of the federal poverty level for Medicaid eligibility — currently states can set their own financial level for their citizens to qualify for Medicaid). Bloomberg.com also reports the committee’s proposal would expand eligibility for the State Children’s Health Insurance Program to “children” up to 26 years old.

Inclusion of the public plan will be especially controversial. Most Republicans and many moderate Democrats who have stated an opinion on the topic have said they could not support health care reform legislation that calls for creating a government-run health plan. The fear is that, by underpaying physicians, the plan will force doctors, hospitals and other medical providers to shift costs to the private plans. Since premiums reflect the underlying cost of medical care, the public plan would gain an unfair price advantage. The outcome, over time, would be private carriers would be forced from the market, leaving the public plan as the only option available.

The HELP Committee’s proposal will fuel this fear. Bloomberg.com writes that Kennedy’s proposal would allow the public plan to pay health care providers just 10 percent more than Medicare pays them — which would still be less than the actual costs medical professionals and hospitals incur in treating Medicare patients.

One of the more far reaching ideas Senator Kennedy is calling for are the creation of “gateways” to facilitate the purchase of affordable health insurance. These gateways might at first seem to be similar to the health insurance exchanges many in Congress are calling for, but they go further. In an opinion piece published by the Boston Globe, Senator Kennedy writes he will seek to create “gateways to better health across America. You can contact the gateways online, by phone, or in person to figure out what policy works for you.” Going even further, the “gateways would “negotiate with insurance companies to keep premiums and copays low and help you with your premiums if you can’t afford them.” In this regard, the gateways seem to be a throwback to the Clinton Administration health care reform plan of the 1990s. Central to that effort was the concept of “managed competition” in which purchasing pools would negotiate the cost and coverage of health care available in a community.

While Senator Kennedy repeats the frequently cited mantra of “if you like your current coverage you can keep it,” the elements of his health care reform plan would all but guarantee that your current coverage won’t be around for long.

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27 Senators Call for Public Health Insurance Plan


Twentyseven Democratic Senators have signed onto a “sense of the Senate” resolution demanding that a government-run health plan be included in whatever health care reform bill emerges from Congress. Staking out the liberal position for what will be one of the most controversial elements of this year’s health care reform debate, the Senators define a public health insurance option as “essential to reform” according to a report on Politico.com.

Of course, there are government-run plans and then there are government-run plans. As Politico reports, Senator Max Baucus, chair of the Senate Finance Committee, has said that while he expects any comprehensive health care reform legislation emerging from his committee to include a public plan this shouldn’t frighten opponents. “There are says to skin a cat. There are ways to find a solution,” the site quotes him as saying. One option under consideration, for example, is a “‘fallback’ plan, which would trigger a public insurance option if private competition proves inadequate in a geographic region.”

Most Republicans and many moderate Democrats have said they would oppose a health care reform bill if it includes a government-run health plan to compete with private carriers. Whether they would accept the idea of such a plan as a “fallback” is unknown.

Among those co-sponsoring the resolution are several important players in the health care reform debate. For example, Senator Edward Kennedy chairs the Senate Health, Education, Labor and Pensions Committee which will, along with the Senate Finance Committee, is drafting health care reform legislation. And Senators Dick Durbin and Charles Schumer are members of the Democrat’s leadership team in the Senate. Missing from the list are any members of the Moderate Dems Working Group — 18 Democrats (including one independent) who may seek to block inclusion of a government-run plan in health care reform legislation.

The 27 Senators listed by Politico as co-sponsoring the sense of the Senate resolution are:
Jeff Bingaman (D-N.M.)
Barbara Boxer (D-Calif.),
Sherrod Brown (D-Ohio)
Roland W. Burris (D-Ill.)
Benjamin Cardin (D-Md.).
Bob Casey (D-Pa.)
Chris Dodd (D-Conn.)
Dick Durbin (D-Ill.)
Kirsten Gillibrand (D-N.Y.)
Tom Harkin (D-Iowa),
Daniel K. Inouye (D-Hawaii)
Ted Kaufman (D-Del.)
Edward Kennedy (D-Mass.)
Frank R. Lautenberg (D-N.J.)
Patrick Leahy (D-Vt.)
Carl Levin (D-Mich.)
Claire McCaskill (D-Mo.)
Robert Menendez (D-N.J.)
Jeff Merkley (D-Ore.)
Barbara A. Mikulski (D-Md.)
Jack Reed (D-R.I.)
Bernie Sanders (I-Vt. – an independent, Senator Sanders caucuses with Democrats)
Charles E. Schumer (D-N.Y.)
Jeanne Shaheen (D-N.H.)
Debbie Stabenow (D-Mich.)
Tom Udall (D-N.M.)
Sheldon Whitehouse (D-R.I.)

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Coming Soon: A Down Payment on Health Care Reform


The battle over the State Children’s Health Insurance Plan (SCHIP) was one of the most emotional battles of between Congress and the White House during the Bush Administration’s waining years. Twice, bi-partisan majorities of Congress passed the reauthorization legislation. Twice President George Bush vetoed the bill. Although the votes for an override were available in the Senate, it narrowly lost in the House. That’s now about to change. Congress is working hard to have a reauthorization of the State Children’s Health Insurance Plan (SCHIP) ready for the new president’s signature as soon as possible — it will be tough, but possibly even on inauguration day.

SCHIP provides health insurance for children in households that earn too much to qualify for Medicaid, but are unable to afford private coverage. States administer the program and, within federal guidelines, may adjust eligibility. They also pay a significant portion of the program’s cost. Currently, about six million children are covered in the popular program.

Congress twice voted to expand the SCHIP program in late 2007, but could not muster enough votes in the House of Representatives to overcome President George Bush’s vetoes. That was then. Now Democrats have stronger majoirites in both the House and Senate. Even more significantly, President-elect Barack Obama is a supporter of the expansion.

According to the Associated Press, discussions on how to approach the SCHIP reauthorization have been underway in Washington. Although there was some thought of including SCHIP expansion in the forthcoming economic stimulus package, the decision seems to have been made to move forward with the stand-alone bill. While not promising to have the legislation ready for signature on inauguration day, House Speaker Nancy Pelosi promised “we’ll be done soon,” according to AP.

The first test for the SCHIP reauthorization will be in the House Energy and Commerce Committee. The Committee’s chair, Congressman Henry Waxman, called passing the legislation a “down payment on national health insurance.”

Passage of the SCHIP reauthorization would be more than a symbolic breaking with the past. The current recession is placing greater demands on safety net programs like SCHIP. In addition, states pay a significant portion of the coverage provided by SCHIP (from 17 percent to 35 percent depending on the state). Knowing where the program stands — and how much funding they can expect — is of critical importance to state lawmakers struggling with their own hemorrhaging budgets.

How Congress will pay for expanding the program still needs to be worked out. In 2007 the legislation included a 61-cent per pack tax on cigarettes. This was expected to allow the program to insure as many as 10 million children.

SCHIP is a critical component of the patchwork quilt that is America’s health care system. A majority of both Democrats and Republicans agreed it should have happened over a year ago. That it took a new Congress and a new President to get the job done demonstrates how hard achieving comprehensive and meaningful health care reform will be. But to use Congressman Waxman’s terminology, it’s a down payment well worth making.

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Health Care Reform 2009: Required Reading


Health care reform will be painful enough without requiring home work, but such is life. Here then is the required reading list for understanding the 2009 health care reform debate, where it’s going, and why.
(Note: a second list of health care reform required reading was added June 2, 2009 and a third list was added on August 11, 2009)

1. Critical: What We Can Do About the Health-Care Crisis by Tom Daschle withScott S. Greenberger and Jeanne M. Lambrew.

Former-Senator Daschle will be leading President Barack Obama’s health care reform effort, both in his position as Secretary of Health and Human Services and as Director of the Office of Health Reform inside the White House. Ms. Lambrew will be serving as Deputy Director of the Office of Health Reform. That there even is an Office of Health Reform highlights the importance of this issue to the incoming administration. That the Director of this office is also a Cabinet Secretary enhances the prestige — and clout — of both the office and its leader.

This makes understanding soon-to-be Secretary Daschle’s outlook on health care reform, well, critical. His book, Critical serves as a blueprint to his thinking. Although the book was written before the identity of the Democratic nominee would be, Senator Daschle was an early supporter of Senator Barack Obama. It’s not surprising that his proposal ties-in well with the then presidential candidate’s health care reform proposal. Senator Daschle’s book, however, goes further.

Core to his solution for what ails America’s health care system is the creation of a Federal Health Board. Modeled after the Federal Reserve Board, it’s aimed at removing effort to control health care costs one step away from the day-to-day politics of Capitol Hill. “I believe a Federal Health Board should be charged with establish the [health] system’s framework and filling in most of the details. This independent board would be insulated from political pressure and, at the same time, accountable to elected officials and the American people. This would make it capable of making the complex decisions inherent in promoting health system performance. It also would give it the flexibility to make tough changes that have eluded Congress in the past.”

Specifically, Senator Daschle would have the Board set the rules for the national health exchange he would create. Through its own research and helping to prioritize research by other federal agencies, the Board would help promote “high value” medical care by “ranking services and therapies by their health cand cost impacts.” Senator Daschle would also have the board ”align incentives with high-quality care.” This would be done through evaluating new technologies as well as by aligning provider payments made by the federal government with health outcomes, rather than with services delivered. Finally, Senator Daschle would ask the Board to assist in “rationalizing our health-care infrastructure” by issuing an annual report identifying where investments are needed across the country — and where they’re not.

In addition to providing a blue print for the Obama Administration’s future health care reform proposals, Senator Daschle does an exceptional job of describing the history of America’s health care reform efforts from 1914 through the present day. As a participant in much of that history, his review can’t help but reflect his own biases, but Senator Daschle ably places today’s debate in an appropriate context.

What’s most encouraging about Critical is that it signifies a clear understanding of the central role controlling medical costs holds in reforming the system. This doesn’t mean Senator Daschle won’t seek to change the health insurance industry. He calls for expansion of federal programs, including a government program that would insure most individuals and small groups. For insurance agents, what is most disconcerting is that Critical never once mentions the role agents play in the current system nor what role Senator Daschle foresees agents playing in his vision for a future system.

Nonetheless, Critical is important reading as Washington prepares to address America’s health care challenges.

2. Key Issues in Analyzing Major Health Insurance Proposals, by the Congressional Budget Office, published December 2008.

The Congressional Budget Office provides critical input to lawmakers on the expected impact of their legislative proposals. A negative analysis ruling can — and probably should — kill a bill; a positive one can help build momentum and support. Key Issues is not aimed at instructing members of Congress what to do about health care reform. Instead, it lays out how the CBO intends to evaluate whatever proposals Congress generates. As the report notes, “This document does not provide a comprehensive analysis of any specific proposal; rather, it identifies and discusses many of the critical factors that would affect estimates of various proposals.”

The budgetary impact of any health care reform proposal will be critical to its eventual success. The CBO document lays out in significant detail how it will go about measuring that impact. In doing so, the CBO provides a host of statistics, graphs and data that will be bandied about during the debate.

As if all this wasn’t enough to make Key Issues a must read, Peter Orszag was Director of the CBO when the report was prepared. Mr. Orszag will be Director of the Office of Management and Budget in the Obama White House. In that role, he will have a great deal to say about the financial impact of various reform plans. Given his involvement, it’s not unfair to expect the Administration’s analysis to closely mirror the Congressional analysis described in Key Issues.

3. Roadmap for Implementing Value Driven Healthcare in the Traditional Medicare Fee-for-Service Program,” by the Centers for Medicare & Medicaid Services.

The upcoming reform debate will be peppered with calls for “transparency,” paying for “value, not services” and for making commercial coverage as cost effective as Medicare. So it makes sense to see what the folks who run Medicare are thinking about concerning these issues. This report is CMS’ effort to help lawmakers “create rationale approaches to lessen healthcare cost growth and to identify and encourage care delivery patterns that are not only high quality, but also cost-efficient.” The report describes the programs and demonstration projects already put in place by CMS to “foster joint clinical and financial accountability in the healthcare system.”

The CMS report is a tougher read than the other’s on this list. But given that any reform proposal will need to tackle skyrocketing medical costs, the report is worth the time.

I’ll add to this list in later posts, but these three items are a good place to start. And remember, if you think the reading list for health care reform is bad, just wait until you see the final exam.

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