Not That Kind of Date!

Health insurance brokers are literally crapping their pants right now as the Supreme Court has finally given us a date!

From March 26 through the 28th, the Supreme Beings that are the final arbiter on everything from abortions to equal rights will give a judgement on the law that threatens to leave my ilk and I unemployed.  If Las Vegas was giving odds I would probably guess the chance of an overturn to be at least 50/50.  But don’t let that fool you, it has to be a complete overturn which is considerably less probable.  Perhaps like 25%.  I arrived at that number using a simple statistics formula, however if I were to give a probability on the accuracy of my number I would simply remind you that I got  a C in statistics.

It is also important to know that the first argument will be if an argument is even constitutional which leads one to believe that this will be a complex process.  The reason is that the mandate part of the law (the main part of the challenge) is not even on the books yet so no one has suffered any loss or fine.  Then they will debate if the whole law needs to be overturned in case the mandate is unconstitutional or to just make the mandate illegal.

So with the dates locked in now, a final decision on the health care overhaul will likely arrive before July, right in the middle of when Obama is going to be campaigning.  The outcome of course is going to affect his campaign and his reelection prospects.

Of course, I would warn America not to get too excited as these numbers are not likely to move too much again until 2014.  And once 2014 rolls around, don’t expect a miracle either.  In fact, unless there is a strong mandate that compels all American’s to get coverage before they need it, than I predict either rates will move to unprecedented levels which will make the Medicaid rolls swell, or the health insurance companies themselves will be regulated out of business which will be a heavy shock to the system.  In either case, eventually we end up with universal health care until the deficit swells and no one will support our egregious consuming habits anymore.

One unintended consequence of this so called victory is that premiums will rise at least 1 – 2% to cover the expansion.  The expansion also highlights how poorly our economy is doing as these young adults continue to move home in record numbers.  Would we have seen this effect had unemployment been closer to 5%?

But still, we are here to celebrate the victory of 2.5 million more Americans getting coverage.

So what is behind the victory?  Well the law that paved the way for this victory was the provision that allows young adults up to age 26 to remain on their parents plan instead of where it used to be which was age 22.  So all the college graduates living at home have now found yet another way to siphon monies from their parents.   In most foreign countries it considered normal to live with your parents till much later in life so I imagine that as globalization changes our country even more we will see even more of this suckling.

And now listen to the gloating from Kathleen Sebelius who needs to take a less myopic view on this reform law.  (I support single payer, but I believe that Obamacare is a disaster.)

“Thanks to the Affordable Care Act, 2.5 million more young adults don’t have to live with the fear and uncertainty of going without health insurance,” Secretary of Health and Human Services Kathleen Sebelius said Wednesday. “Moms and dads around the country can breathe a little easier knowing their children are covered.”

And in what must be a good sign of fairness under the law, the majority of health insurance companies that are covering this surgery has more than doubled over the past year.  And who is keeping score?  One of the nation’s largest gay rights group who would have no reason to lie or exaggerate.

The exact numbers provided by the Human Rights Campaign in a report to be published Thursday is that 207 of the 636 businesses it surveyed for its annual Corporate Equality Index either are already providing transgender- inclusive employee health benefits or plan to at the start of the new year.  The previous year only had 85 companies that had coverage to pay for this procedure, and the year before that (2009) it was 49, and 10 years ago it would have been 0.

So why the sudden love for transsexuals?  Its because the Human Rights Campaign grades corporations on whether their medical plans cover the whole set of operations including counseling and genital construction (or reconstruction if that is your pleasure) and this plan must cover at least $75,000 worth of surgery.  And if the HRC gives you a 100% than you are listed in their preferred vendors guide for gay, lesbian, and transgender consumers.

Still, it is important to realize, that individual health insurance is probably never going to cover this so don’t be surprised when you bring your new insurance card to the gender reassignment doctor and he tells you gently that you are not going to be covered for your penis removal.  Many insurers still categorize sex reassignment surgery as cosmetic, even though the American Medical Association considers it vital for some people who have been diagnosed with gender identity disorders.

Many of the corporations that expanded their insurance coverage this year are well known companies that appeal to consumers and need to maintain a good relationship with the gay and transgender community such as Apple, Chevron, General Mills, Dow Chemical, American Airlines, Kellogg, Sprint, Levi Strauss, Eli Lilly, Best Buy, Nordstrom, the U.S. division of Volkswagen, Whirlpool, Xerox, Raytheon and Office Depot.

Some companies like Office Depot, cover the procedure but only if it is ruled medically indicated, and not elective.  Office Depot also has started sponsoring gay rights events such as an annual leadership conference held by the National Gay and Lesbian Task Force in order to maintain their top ranking with the HRC.

The Human Rights Campaign also found that corporate America is far ahead of the public sector in terms of providing job protections for transgender people.

Half of the Fortune 500 corporations and 80 percent of the companies the campaign surveyed have equal employment opportunity provisions that prohibit discrimination on the basis of gender identity of gender non-conformity, according to the new index. Only 16 states, by contrast, have laws designed to protect transgender people from job and housing discrimination.

Aetna’s law suit alleges that Blue Cross was involved in raising their own rates to consumers and sharing the extra money with the hospital networks in Michigan that in return would charge the competitors of Blue Cross higher contract prices leaving the competitors of Blue Cross with no choice but to raise their premiums.

Check out what one of the guys from BCBS in Michigan named Andy Hetzel (VP of Corporate Communications) responded with;

“It’s a little sour grapes from a major national insurance company that is looking to take advantage of the presence of the federal national antitrust case to do something that they’ve been unwilling to do by making their own investments here,”

The Justice Department lawsuit of which Aetna is piggy backing on, alleges that the Blues forced 70 Michigan hospitals to give it the best prices in the state, while charging others much higher rates. The Michigan Attorney General’s Office supports the challenge.

And maybe Blue Cross of Michigan doesn’t care, but to me it is important to realize that Michigan’s economy is in the toilet, lest you forgot.  Unemployment in Michigan sets records!

Whats next for Aetna in Michigan?

Part of Aetna’s lawsuit claims that BC of Michigan is causing it to leave the market in early 2012 which kind of is bad news for East Coast Health Insurance.  We sell a lot of Aetna in Michigan as it usually more affordable.  And Aetna is not leaving without a fight.  They spent nearly $390 million in 2005 to acquire a Michigan-based health care network, HMS Healthcare, in hopes to building a statewide plan of services for employers and individuals buying Aetna insurance.   HMS operates in Michigan under the name PPOM and is based in Southfield. It is the second largest hospital and doctor network in Michigan.

Apparently Blue Cross feels this was not enough and that they can manipulate them out of the market.

Aetna in 2005 had better hospital rates than the Blues, the lawsuit charges. But after the Blues stepped up its strategy, several Michigan hospitals told Aetna they had to charge it much more because they “had no choice due to pressure from Blue Cross.”

One hospital executive even told Aetna, “I hope you understand but we don’t have any choice in the matter. Blue Cross is 30% of our business; we can’t (sic) put that in jeopardy’,” the lawsuit says.

The Aetna case is significant because other insurers and Michigan hospitals have stayed out of the fight with Michigan’s largest insurer, which covers about 60% of Michigan’s residents with health insurance. Only the city of Pontiac, an outstate business and a lone consumer have filed so-called piggyback lawsuits against the Blues alleging improper pricing practices.

And for the record, when BC of Michigan tried to get the suit dismissed the judge assigned to the case declined.

Asked why Aetna had stayed out of the legal fight before, Berenson the President of Michigan Aetna said: “As we look at the implementation of health reform, we felt that to insure a competitive marketplace… it is critical to file now in the state of Michigan.’’

Some people like David below doubt that brokers (like me and my company East Coast Health Insurance) even satisfy a need.  Read his charming thoughts;

Will someone please tell me what value a health care insurance broker offers consumers. In 2014, the exchanges will open up and anyone with a computer can go online to purchase a plan that suits their needs. Why do we need brokers after January 2014? In my view, they are just adding to the already outrageously high cost of health care that currently pushes over 50 million Americans out of the market and also made sure that another 25 million that are under-insured and don’t know what coverage they have until they go to use it and find out they’ve been seriously restricted. Face it folks, AHIP, the AMA and PhRMA have ruined America’s health care system. They had their chance to make things work for consumers and they chose profits ahead of consumers. Americans need Obamacare and, further still, they need a Robust Public Option included in every health care exchange. The sooner we make health care work for the consumer, the sooner we will take back control of America’s health care system.

Do you know what they are doing now?  Selling minimeds!  Minimeds exist mostly to rip off people as they won’t cover any meaningful expenses should you need them too.  People can and will die from this coverage.  If I had my wish I would kick these shysters out of the business merely to validate our argument that brokers do provide a benefit.  By the way, if anyone that works for a minimed shop or carrier actually has a minimed on themselves I will pay them $500.  That’s how sure I am that while they sell this garbage all day, they carry real coverage on themselves.

In the end the consumer advocates won by arguing that commissions are clearly administrative costs and removing them would make it easier for insurers to avoid paying the required rebates to consumers. Those rebates will go out next year to individuals and small-business policyholders whose insurers fail to hit spending targets this year. The rebates could come in the form of reduced premiums or actual tax free rebate checks.

The rebates just became tax free as under an earlier rule, rebates to employers would have been taxable, so the final rule legislates that any rebates given for employer policies should be in the form of lower premiums or “in other ways that are not taxable.”  It will then be up to the employer or group policyholder to “ensure that the rebate is used for the benefit of subscribers.” In addition, the rule requires insurers to provide notices of rebates not only to the employer, but also to the enrollees.

“If your insurance company doesn’t spend enough of your premium dollars on medical care or quality improvement this year, they’ll have to give you rebates next year,” said CMS Acting Administrator Marilyn Tavenner, who is in her first day as chief of the agency. “This will bring costs down and give insurance companies the incentive to focus on what matters for patients – high quality health care.”

Just to be clear though, we are not dead yet as the final rule does not explicitly address the plea from brokers and agents, instead leaving the calculation of administrative costs unchanged from the original draft.

While many will argue that the broker commission is a benefit to consumers and that it will slow premium growth is partially correct.  Though partially in my opinion amounts to less than 10%.  Anyone that believes health care and health insurance costs rise due to health insurance companies needing to make profits is completely incorrect.  However, insurance companies will likely stop doing business with hospital and providers that let fees continue to rise.  We are seeing Aetna and UHC currently battling hospitals in North Florida on this very matter.

In conclusion, it is not necessarily the health insurance companies that are corrupt but the hospitals.  If you don’t think that the medical field is becoming a bubble check out its growth over the last 10 years.  It is likely to make the housing crash look like a fart next to Staten Island.

As of 2010, 12.7% of Florida children are uninsured which is a significant drop from the 16.7% it was in 2008.  The current total of uninsured children in Florida is 506,934, says the report by researchers at the Georgetown University Center for Children and Families.

Actually over this period, the news was good in 34 states, as they all had success in reducing the rate of uninsured children.  Nevada however, perhaps not surprisingly has the highest rate of uninsured kids at 17.4%.   The best state?  The one with Governor Romney’s public health plan in Massachusetts which is only 1.5%.  Seemingly, the Massachusetts public plan has fared significantly better than the wild west system in most of the rest of the world.  Texas leads the nation in number of uninsured kids with nearly 1 million although it was able to lower its uninsured rate to 14.5 percent from 17 percent.

The national rate for the uninsured

Nationally, the uninsured rate for children fell from 9 percent to 8 percent from 2008 to 2010, as the number of uninsured children fell by 960,000, the study said.

The drop is probably coming from the new health care reform law and of course the community, state, and federal grants that are being advertized on billboards and television.  However, in Florida most of the expansion is credited to the economy which is literally causing new Medicaid enrollment qualifiers daily.  In other words, someone loses a job or takes a job that leaves them below the poverty line.

CHIP which is a government program that helps families that don’t qualify for Medicaid get their children health insurance also has lowered it barriers to entrance for families.  In Florida that program is known Florida Kid Care.  For instance, just recently the state lowered the penalty for failure to pay CHIP premiums from 6 months loss of eligibility to 60 days.

A shocking if not predictable research project by the University of Minnesota has identified a loophole in the health reform law that will allow employers to push their portion of health insurance premiums towards the government.

Essentially, hidden incentives in the current health care reform law will lead to employers pushing only their sick and older (higher premiums) employees to the exchange to bring down their overall premium or premium per employee average.  The only companies however that will “enjoy” the loophole are companies that self insure as companies that do not are forced to offer coverage to everyone.

The researchers are saying that unless the loophole is closed the financial viability of the exchanges will become unsustainable.  The exchanges which are the centerpiece of the Obama plan are intended to make it easier to comparison shop for health plans and also to expand access to coverage for the uninsured.  However, the exchanges should only be open to the self employed unemployed or those that are not offered coverage through their job.  Due to this loophole however the exchanges will also be open to those that are employed by companies that self insure.  Currently 6 out 10 workers that have health benefits get them from a self insured employer.

There is some good news to the question of if employers would skip out entirely on insuring their employees and that is the data shows that most employers will offer coverage as opposed to paying the fines.

The bad news though that is the report will show that these plans offered by self insured companies will be structured to only appeal to healthy, low-risk employees by not offering benefits that the government exchanges or;

• Limit the number of specialists in a provider network. The exchange could be more attractive to someone who needs a specialist for an expensive chronic condition.

• Couple high premiums with discounts for participating in wellness programs. Employees who are not in the best of health may not want or be able to participate in wellness discounts, such as going to the gym three days a week.
• Raise deductibles and co-pays. Substantial co-pays or deductibles are unattractive for someone who frequently sees a doctor for a chronic condition. High co-pays don’t matter as much for those who see a doctor infrequently.

Health insurance brokers like me have been waiting over a year now to begin this debate and many of us are on the edge of our seats as we wait to find out what the future (if any) holds for our battered industry.  The main sticking point of course is the individual mandate that requires all Americans to obtain health insurance coverage.

There are currently four pending cases from lower courts that challenge the mandate and the courts will similarly decide if other aspects of the law are Constitutional.   The private conference is scheduled for today, Thursday November 10, 2011.  A decision will be likely be released on Monday but it could come earlier, even this afternoon.

Once they decide to hear the case (likely), by springtime arguments would begin and with any luck June will bring a ruling.  And then if we are lucky, they will also have time to compliment my hair.

Of the four lawsuits, the lawsuit brought by 26 states is likely to get the nod based on the fact that the federal government has been reviewing that one and it has the most prominent legal questions.

Other questionable aspects of the law that the court will likely review include the Medicaid expansion and the new employer requirements.  The main other issue is called the Anti-Injunction Act which itself bars reviewing the individual mandate until the law goes into effect in 2014 as obviously no one has anything to complain about yet until the “damage occurs” so to speak.

It has been a precedent until now that Americans must file a tax before they can challenge it in court — applies to the health law’s penalties.  At the end of the day though there has been much dissension on this issue from other courts.

The Last Big Question

Will the justices take up the severability question separately?  This is a question of assuming the individual mandate is ruled against, does anything else go with it?  Maybe the entire act becomes illegal.  The Obama people will likely want to spend considerable time arguing this as a hedge in case one part is struck down as in the baby and the bathwater.  The current Obama argument specifies that only two insurance reforms can be combined under the mandate — requirements that insurers accept all applicants even if they have pre-existing conditions and apply so-called community rates.  Obviously everyone else wants the whole bathtub and the house thrown away with the baby.
Will one of the justices recuse?

Advocacy groups have tried to put public pressure on Justices Elena Kagan and Clarence Thomas to remove themselves from the case. Opponents of the law argue Kagan should recuse because she may have been involved in the strategy against the lawsuits while she worked in the Obama administration. Supporters of the law argue Thomas has a conflict because his wife is working to defeat the law. Neither have indicated yet that they would recuse themselves from deciding the case — and neither is expected to. But it would be noteworthy if they didn’t participate in this week’s discussion on how to move ahead.