***NATIONAL CRISIS ALERT***
There are currently 47 million Americans who can't afford health care insurance! Everybody freak out! Legislate, Congress; for the love of God, legislate!!!
Wait, did I say 47 million? I meant 30 million. Yeah. And that's still a lot.
Did I just say 30 million? I meant . . . well, let's just look at the chart of who's insured by whom in the United States, shall we?
That sure looks to me like 46.3 million uninsured, which is really 47 million if you round up for no apparent reason. But who exactly are these uninsured? Here's a breakdown of just who the 46.3 million are:
9.4 Million: Illegal immigrants.
12.3 Million: People that already qualify for Medicare, but haven't signed up.
11.4 Million: People who can afford coverage and have no pre-existing conditions to exempt them.
13.2 Million: People who can't afford coverage or have exempting pre-existing conditions, but make too much money for Medicare.
OK, so how many should we count in our impending crisis which needs landmark, historic legislation? Illegals are out (they get care for "free" at the ER, anyway). The Medicare qualifiers are out, too, since they already could have coverage (no need for new legislation there). The 11.4 million that could have insurance but don't also don't need helping-hand legislation (though we can still legislate them; more on that later).
Who are we left with? The 13.2 million people who can't get coverage. I'll readily admit that's a problem (along with other facets of America's health care insurance advent), but I'm not here to talk about the problem (maybe a later blog will cover that). Since it has now all been "taken care of," I'm here to talk about the solution. Namely, the health care legislation so recently passed by Congress and signed by Obama known as:
The Patient Protection and Affordable Care Act
What a great name! After all, who doesn't want to protect patients and promote affordable care? Only baby-hating, fat-cat loving Conservatives, that's who! They'd rather help fund a rise in Scrooge McDuck's swimming pool than prevent the death of a child.
Typical Conservative Voter
Enter PPACA, the saviour of the uninsured and the promoter of health care for all! No more sick babies, no more people dying in the streets from the common cold, no more making money on the backs of the working proletariat while the insurance big wigs get rich and swim in big pools of gold doubloons!
Let's get down to some of the specifics of how the actual law will work. Here are some of the fun little gems hidden away in the 2500+ pages of legal gobbledygook (a big thank you to Michael Bertaut for slogging through it all; though, to be fair, it is his job for Blue Cross and Blue Shield of Louisiana):
1. It raises the wage cut off for Medicare.
2. Insurance companies must now accept anyone and everyone.
3. Insurance companies must not medically underwrite (at least, not in a way that would matter).
4. No pre-existing conditions!
5. No more than a 3x price increase for age.
6. No price variance based on gender.
7. No excessive profits (goodbye, doubloon vat!).
8. No excessive rate increases.
9. All insurance companies must adhere to the Federally Qualified Health Benefit Plan standard (with that many words in the name, it's gotta be good; and it's federal to boot!).
10. No negotiated rates for the ER.
11. Insurance companies must use the new Exchange Marketplace to sell insurance (added bonus: it's run by the government, makers of Madicare and Socialist Security).
Let's go over these one by one and see just how great this will be for the poor uninsured.
1. It raises the wage cut off for Medicare.
By raising the cut off wage for Medicare eligibility, this takes care of the 13.2 million people who can't get coverage now. Let's not consider the fact that Medicare is on track to go bankrupt by 2017. After all, if an entitlement program is going bankrupt, you ought to be able to afford 13.2 million more payouts, right?
2. Insurance companies must now accept anyone and everyone.
You are now guaranteed to be accepted for insurance; because, you know, there are no good reasons to preclude anyone from anything. Oh, and it's totally Constitutional to force a private enterprise, like and insurance company, to enter into a binding contract, like an insurance policy, with anyone and everyone. What could go wrong? Insurance companies probably just deny people because of their gender or race, anyway.
3. Insurance companies must not medically underwrite.
Insurance companies will no longer be able to price based on an individual's risk. No more underwriting! Well, they can still underwrite; they just can't use the information for anything relating to price or payouts. Anyone want to bet they'll now charge the lowest previously offered rates to everyone? Even if they do decide to make the blanket cost higher, though, good ol' Big Brother will be there to put the stops on any obscene profits, so we know we're protected. More on that in #7.
4. No pre-existing conditions!
See the last point.
5. No more than a 3x price increase for age.
Because someone who's nearing the end of their life would never use more than 3x the insurance of someone who's 19 and in perfect health.
6. No price variance based on gender.
Classically, insurance providers have charged women higher average premiums based on the archane belief that the female reproductive system requires more care, and the equally ridiculous belief that men are not able to have babies. So, guess what, guys? You guessed it, you now get to pay insurance as though you were capable of having a baby; or at least as though you required as many wellness visits to the OBGYN as women do.
7. No excessive profits.
Why should a business be allowed to make a profit? Well, maybe a little profit; but not too much. Don't worry. Uncle Sam is on the beat, and he's cracking down on people having money.
There are three basic parts to this portion. First, insurance companies will be mandated to pay 80% of their premiums on health care expense, and no more than 20% on overhead. If you're a Large Group provider, you can pay no more than 15% on overhead (you know, because large groups don't need overhead as much). Apparently employing people (i.e., overhead) is wrong. Any company spending less than 80% on health coverage will be forced to refund the remainder to their policyholders.
Second, no employee of a health insurance company may make more than $500,000. From now on, CEOs will be hired the right way; for their big ol' hearts instead of for their competence. We can all agree that no one ought to make more than $500,000 a year anyway. Except actors. And athletes. And maybe lobbyists, CEOs of other businesses, producers- let's just say we can all agree that health insurance CEOs don't need to make more than $500,000. You know, for the children's sake.
And finally, just in case there's still some room for a profit in there, our friends in Congress and the White House have mandated an $8 billion annual tax for the health insurance industry. Each health insurance company pays a percentage of the tax based on their percentage of market share; so if you have 10% market share, you get to pay $800 million a year to the Federal government for the privilege of being a health insurance provider in America. In 2014. It gets better; by 2017 it goes up to $14 billion. Funny that the health insurance industry only made $6.8 billion in profits in 2008, but still this ought to be a piece of cake for them.
8. No excessive rate increases.
What's the exact definition of "excessive?" I don't know, and neither does anyone else right now. But I'm sure that whatever definition Congress comes up with will be just fine.
9. All insurance companies must adhere to the Federally Qualified Health Benefit Plan standard.
This does a couple of great things. First, it takes control of what qualifies as a Health Insurance Plan out of the hands of those evil, greedy States and places it in the hands of the benevolent, philanthropic Federal government. Because that doesn't violate the 10th Amendment at all.
Second, it raises the minimum coverage bar for all insurance plans (you know, since they'll have so much extra money from the previously noted provisions). It's estimated that 20-25% of Americans will be forced- excuse me, will have the pleasure of purchasing policies with more extensive coverage than what they have now. I'm sure that'll come at no extra cost.
10. No negotiated rates for the ER.
Insurance companies often pay a different amount than the bill the ER gives them. This is because they negotiate the bill down with the hospital. Unfortunately, if the hospital refuses to agree to the lower rate (a rarity, but it still happens), the patient is stuck with the overage.
Solution? Force the insurance companies to pay whatever the ER charges. No recipe for corruption there.
11. Insurance companies must use the new Exchange Marketplace to sell insurance.
Right now, insurance companies overwhelmingly use individual and group brokers to sell their policies. They cite something silly about "money savings," or "cost effectiveness" for why they do it (capitalist double-speak for "making money by selling children into slavery").
This nifty little regulation does away with that. Insurance companies will have to work directly with the new Exchange Marketplace, which means they will have to internally hire a whole new department of sales and policy management professionals to be in compliance. Careful not to exceed that 15-20% overhead, guys!
Repercussions
So, to sum up, insurance companies will now have to take everyone who comes to them to purchase insurance, not charge based on any health indicator imaginable, not exceed 20% (15% for large group) overhead while adding more infrastructure, spend at least 80% of their premiums on direct health care, and come up with more than their 2008 profits to pay a shiny, new government tax.
I don't see how premiums will go up at all; thanks, government! Plus, it'll be super easy for insurance companies to stay solvent with all those new regulations.
Does anyone else see this as a recipe for the insurance companies to "fail," so that the big, nice government can swoop in and save us via single payer (i.e., government run, universal health care; like they have in
Cuba)?
I must be paranoid. After all, President Obama never said, "I happen to be a proponent of a single payer universal health care program. [. . .] A single payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately." No.
Never.
"But wait, Skipper," you say, "those evil insurance companies will get a mandated extra 11.4 million customers, so they'll be fine to pay the taxes that will help keep Medicare solvent." Silly socialist. How did you find your way onto my blog? There's a forum post going unwritten at MoveOn.org as we speak.
For those of you who haven't been paying attention to anything other than the latest Twilight movie, let me tell you something scarier than this picture:
Now high school sucks blood instead of just sucking.
If this law stands, you will be forced to purchase health insurance or be fined by the government. The IRS is, as we speak, hiring 16,500 new employees to enforce this measure. I can't believe I just wrote that as a fact in the USA, but I'll try to move on and save that tirade for another day.
So, back to the socialist's point. Remember all those people who can afford health insurance but don't purchase it? Won't the insurance companies (sorry, evil insurance companies) pick up an extra 11.4 million customers off of this deal? That, surely, will cover the lowered profits, additional infrastructure and oversight, and the new tax burden.
Not so fast. Let's assume all 11.4 million purchase insurance at the going rate for a basic FQHBP coverage policy (see point #9 above). The average cost for a private plan conforming to FQHBP standards is in the neighborhood of $5,500 a year. This would net the health care carriers an additional $62.7 billion ($5,500 x 11.4 million) a year in premiums.
Classically, health insurance providers have a profit margin of 1.5-4%. Let's assume they would maintain the highest level profit margin of 4% for each of these new, 11.4 million customers. That's $2.5 billion profit. Add that to the $6.8 billion in profits from normal business (assuming, of course, they have no drop in profits), and you have $9.3 billion; more than enough to cover the fun new tax. That's right, as long as each and every person in that pool of 11.4 million purchases insurance, the profit margin on premiums is 4%, and the new regulations don't cut into insurance companies' existing profits (even though the new regulations are designed to cut down existing profits), the insurance companies will be able to cover the new tax in 2014. Not in 2017, mind, but I'm sure it'll be fine by then.
So, what happens if people decide not to purchase the $5,500 insurance plans? Well, those naughty citizens get a big, fat fine. $750 a year, or 2.5% of their Modified Adjusted Gross Income (so, they would have to make $220,000 a year to hit a $5,500 fine).
Let's hear that again: if people don't purchase a $5,500 annual premium, they'll have to pay $750. That'll teach 'em! I'm sure all 11.4 million will be begging for a $5,500 insurance plan once they see that $750 fine . . .
It gets better. Remember that part about insurance companies having to take all comers and not being able to deny pre-existing conditions? Here's how that plays out in the real world. Let's say you're one of the 11.4 million who will have to pay for private health insurance or be fined by the Federal government, and you decide to pay the fine instead of getting health insurance. But then you get sick, or break your arm, or something to that effect. Looks like you gambled and lost, right? Wrong.
Since insurers will no longer be able to deny policies to anyone, you can simply purchase insurance after you get sick or hurt. They can't say no, nor can they preclude your infirmity as an exempted, pre-existing condition. So you purchase health insurance when you need it, use it, and cancel your policy when you're done using the services. This is already happening in Massachusetts, which has a similarly formed State mandate for health care.
Follow the logic, here, and tell me where this leads. The only thing I can see at the end is a government takeover of the health care industry. Oh, that and intrusion on a never before seen scale on American soil since the British empire.
Am I just paranoid? Are any of you OK with the Federal government making health insurance a basic human right, running the health insurance companies through legal mandate, forcing private citizens into business contracts with "private" companies with threats of fines and possible jail time (if you don't pay the fine), and legislating overarching standards not enumerated in Article I, Section 8 across all 50 States?
I do not believe that this is the change people voted for. Does health care need to be overhauled? I think so. But this is not the way things are done in a free society. This is not in holding with the principles of freedom, liberty, and individual sovereignty upon which our Republic was founded.
If this is being done in our society, and this is obviously not how things are done in a free society; just what kind of society are we headed for?
