Compromise On Healthcare Bill Means Making Dramatic Position Changes!(Part I of IV)

[JimofPennsylvan]

PART ONE

America has a Health Care crisis with the number of Americans uninsured, underinsured and the number of American employers who are on the verge of dropping their employee health insurance because of costs. The bottom line on Health Care is America needs the Congress to pass good legislation in this area soon and major compromise is needed from both the Republican and Democrat parties to do this. Members of Congress have a serious duty to solve this crisis and political considerations are no defense in not doing this duty. Members of Congress on both sides of the aisle here need to start being guided by the merits of the issue and not by partisan ideologies! The following describes what this means.

I)
Republicans have to compromise and agree to raise significant levels of money to pay for the legislation and Democrats have to compromise and dramatically cut the costs of the excessively expensive current bills and not soak the wealthy to pay for the legislation and not be foolish with fees on businesses in the health care industry which will just be passed on to ordinary Americans. Democrats on this subject have to drop their contempt and listen to those Americans saying this legislation’s price tag has to be “what America can afford” not “what America needs” because America’s deficits and debts and all that they mean demand this; the Democrats need to accept that this legislation can only be a large down payment on the promise America should give on Health Care. The current bills and public discussions have offered many ideas on raising revenue to pay for this legislation; the following is a list of the only good ideas.

1) Employers that don't offer employer sponsored health insurance where the employer pays a sizable and responsible portion of the premiums will need to be charged a fee and it should not be the token fee that the Senate has been contemplating. Principle requires not only that employers pay a just wage to their employees, but also, that employers pay a sizable and responsible portion of their health insurance costs, in a developed and wealthy nation like America one would expect employers to provide their employees with these two major expectations from a job. Employers use the health of their employees, that is, the labor of their employees so it is fair to expect them to help pay for maintaining that health, that is, help pay for health insurance. It also needs to be remembered that America would not be the only country in the world that mandates employers pay a fair fee for the health care costs of their workers, in Germany employers are required to pay seven percent of an employee's wages for the health care costs of that worker and it certainly doesn't stop Germany's industries from being competitive and profitable. Critics of this revenue raising course make one somewhat valid criticism in their claim that this fee mandate may cause the loss of jobs or the suppression of hiring because of the financial costs on employers from this mandate. Congress on this issue should do what any good government does when they have a mandate and it may have a negative economic effect they phase it in over time; specifically, the Congress should phase the fee in over twelve years. If fazed in this charge may have a slight long term effect on employment, but that is not the dispositive factor on this issue doing the right thing is the dispositive factor on this issue - Congress mandates a minimum wage and experts tell us this has a negative impact on employment but Congress does it because it is the right thing to do. The House bill has a mandate of eight percent of a workers wages on those employers that don't provide employer sponsored health insurance - The House is right on this issue!

2) The Senate idea to raise some of the revenue needed to pay for this legislation by increasing the Medicare tax on high wage earners is a responsible and good idea. The initiative adds a .5 % increase in the Medicare tax (to 1.95%) for individuals kicking in for wage income over $200,000 for an individual and $250,000 for couples. It is legitimate because it is a very modest Medicare tax increase. It is only applying to wage income as opposed to investment income and all things considered these Americans can absorb this modest additional expense it is not going to affect their quality of life.


3) The Senate/White House idea of taxing insurance companies for the “Cadillac” health insurance plans they sell is a good idea. This plan is a tax on plans with a yearly premium over $8900 for individuals and $24000 for families, it is a 40% tax on premiums exceeding these limits. The goal of this initiative is not only to raise revenue but to stem the unnecessary use of health care services - these "cadillac" (generous coverage) plans tend to foster over use of health care services. America has a growing problem of a shortage of physicians, initiatives like this that work to curb unnecessary use of health care services would obviously help this problem and this initiative will drive businesses to use lower cost non-cadillac plans which will free up money for such businesses which they can use to increase wages and for job creating capital investment all desirous effects. A lot of hay has been made about unions getting an eight year exclusion on this "cadillac health insurance" tax for plans connected with collective bargaining agreements and with State and Local government employees. This is a completely bogus and unjust criticism. The workers this exclusion applies to are largely middle class Americans and if there is no exclusion they are going to get walloped with insurance premium increases (which they can ill afford) because the tax will be passed through to them, insurance company executives have said as much. Furthermore, these workers have sacrificed for years taking less yearly wage increases to maintain high quality health care insurance and so it would be unfair for the government to suddenly blind side these Americans with this “Cadillac” tax which will cause them an onerous financial burden.


4) Another legitimate and good means to raise revenue for this legislation is a manifestation of a Republican idea that hasn't been publicly embraced by them since President Obama took office. Republicans used to acknowledge that comprehensive health care reform legislation would require significant revenue raising and their idea for doing it was to do away with the taxable income exclusion for health insurance premiums on employer sponsored health insurance making the entire premium taxable income to the employee. And because obviously these American taxpayers’ bill would be going up for their taxable income would be increasing the Republican plan was to give the taxpayer a tax credit to offset the increased tax charge and the tax credit would be in the amount that if the American taxpayer had a high-deductable health insurance plan (which have lower premiums) it would be a wash, a complete offset, the taxpayer would have no increased tax bill. Any person of conscience knows that applying this plan today on working and middle class America would cause too much pain on those who didn't have high-deductable health insurance plans who would have an increased tax bill; however, wealthy Americans (individuals making over $200,000/yr and couples making over $250,000/yr) could afford this plan. Congress should implement this Republican plan for wealthy Americans and thereby raise a significant amount of revenue for the legislation.

5) Congress in the current reform bills has some good Medicare savings and could do significantly more. Congress should designate that only twenty percent (not all) of the balance of Medicare savings can be used for non-Medicaid spending in the bill. By balance of Medicare savings it is meant the bill has or should have increased Medicare expenditures which should "all" be used in offsetting the Medicare savings to be fair and responsible. Medicare expenditures, in part, include closing the "doughnut hole" in the Medicare prescription drug program and the permanent cancellation of the automatic Medicare cuts to doctors that Congress has to continually defer. Congress should only be designating this twenty percent, basically a minor amount, because to do otherwise is unseemly and inconsiderate to America's seniors; Medicare is far from a perfect health insurance plan, for instance, there is no out-of-pocket limit on hospital costs and it is just not right to be paying for new non-senior health spending government program off the backs of seniors and their less than ideal insurance program which would be the case without this limitation. Moreover, Medicare projected budgets should not be viewed as exactly reliable for many reasons so Congress should leave this 80% balance to address unforeseen contingencies; for one, many hospitals across America operate in the red if this problem gets worse a fix would have to include increasing Medicare rates for hospitals, plus, the Medicare rolls are projected to increase with the aging of the baby boom generation and with advances in science average life expectancy will likely significantly increase all affecting future Medicare budgets.
SEE PART TWO

 

[JimofPennsylvan]

PART TWO
II)
Congress should take all the revenue raising mechanisms in the above listed five categories and designate this total as the limit for non-Medicare spending in the bill and stay within this budget with no fuzzy math. The Congress should prioritize spending in the bill as follows. The top priority in funding is to help those Americans whose employer doesn't offer employer sponsored health insurance or are unemployed to buy or get health insurance starting with the lowest income Americans and moving to middle income Americans. If there isn't enough revenue to help all middle income Americans who deserve help Congress should just help now those they can – Congress can revisit this issue later. The Senate and House's idea to expand Medicaid coverage to people above the Federal Poverty Level is an excellent idea it will stretch America's health care dollars for Medicaid health care provider rates are lower than private insurance rates. Most importantly though the Federal government shouldn't ever expect the States to pay for more than twenty percent of this added Medicare expense because they can't afford it and States need to understand that they have to pay some of this expense because there has to be an incentive and protections for the states to keep the overall Medicaid expense as low as possible and this cost sharing mechanism is a tried and true strategy.

The next Congressional priority should be for those non-high income Americans who won't qualify for the expanded Medicaid program, Congress in this bill needs to help them buy private insurance with a tax credit or a voucher (a voucher is preferable because it will lower peoples’ monthly insurance bill – thereby garnishing higher participation rates because more people will see getting such insurance as affordable). Two things to keep in mind, in the current Senate and House health care bills the help for this group of Americans is to buy very generous coverage plans (plans that are heavily regulated with free preventive care, etc.) which are very expensive Congress should be helping these people buy high deductable health insurance plans which are much cheaper so the governments money will go much farther. In addition, one of the problems with the current bills is that the bills mandate these assisted Americans pay something which is anywhere from like five to nine percent of their income toward the premiums for their insurance. Some families that would fall into this assisted group interviewed about this proposal have said things like where is my family going to get this amount of money to pay this premium cost our budget is already stretched too thin. Congress when they draft the assistance plan in the bill have to come in with real low premium charges for these families like $30.00 per week low (think Medicare levels of premiums); otherwise, it is not affordable for these Americans and the government won't see the desired participation rates.
The Small business tax credit to help small businesses provide employer sponsored health insurance in the Senate bill is a good idea. The program is designed well, there seems to be a great effort taken to rein in the cost of the program. A prudent assessment would conclude that this program will save or provide employer sponsored health insurance for a lot of American workers! This tax credit should have the same spending priority as helping middle class Americans afford health insurance described in the preceding paragraph.
III)
One major concern about this legislation amongst the American people is that all the mandates in it not inordinately increase health insurance premiums. On this issue, Democrats have not been straightforward and accurate with the American people. Democrats represent the legislation will lower or at worse minorly (like at max 6%) increase insurance premium costs. This is a complete and utter false claim. Health insurance industry officials say the legislation will increase premiums in many states like twenty to thirty plus percent and states that have enacted many of the legislation’s mandates in fact experienced such levels of premium increases. It defies common sense these Democrats’ representations here, good judgment calls for listening to industry officials who will be setting the premiums not bureaucrats in the Congressional Budget Office with their far out assumptions. To the Democrats credit they have proposed mandates in the bill which will stop many insurance industry abuses and help remedy industry shortcomings. However, Democrats need to compromise and agree to show restraint on the implementation of some of these mandates otherwise the American people’s “premium escalation” fears will come true.
One area of mandates that the Democrats need to take another look at because of cost concerns deals with the mandates that insurance companies can’t reject people for an insurance policy for a preexisting condition and that insurance companies have to use community pricing (except for age) when it comes to insurance premiums, they can’t underwrite premiums based on an enrollee’s health status. These dual mandates are obviously going to be very expensive for insurance companies because people with pre-existing conditions, e.g. heart disease, use a lot of health care which will drive up claim costs for insurance companies. What Congress needs to do is draw up a list of pre-existing conditions that are going to be costly for the insurance companies and that will cause insurance companies to raise their premiums an inordinate amount and allow insurance companies to reject these individuals for insurance policies with these listed preexisting conditions. For these rejected individuals, the Federal government needs to create a high-risk insurance pool program so they would have a place to buy health insurance. This program needs to be a federal program paid for by the Federal government, states don’t have the money for such programs, where the Federal government would be subsidizing the health insurance for these individuals so their insurance will be affordable. The current bills have such a pool but it is only supposed to act as an interim solution until the health exchanges get up and running. The legislation should empower the Secretary of HHS to periodically propose to Congress, Congress’s removal of select pre-existing conditions off this restricted list based on the situation that the private insurance industry can cover these select pre-existing conditions and it won’t cause inordinate premium increases. Eliminating this list needs to be the goal, the government has many responsibilities which require government expenditures subsidizing insurance for people with select pre-existing conditions isn’t one of them if it can be helped. Funding this high risk pool would be a top priority even be a higher priority that subsidizing health insurance for the middle class.
In regard to many of the other good mandates in the bills like no unreasonable yearly claim limit caps and no lifetime caps, the Democrats have to start fully appreciating the effect they will have on increasing premium prices. Democrats would go a long way to demonstrating they get it by in the legislation agreeing to phase in these mandates over a good length of time, like twelve years. This would cushion the insurance premium increases on individuals and small businesses who can hardly afford onerous premium increases. One thing Democrats absolutely must change course on in this legislation is this mandate that insurance companies give to their enrollees “free preventive care”; where are the Democrats’ heads with this initiative do they think money grows on trees or there is no cost associated with this mandate – this is a costly mandate on insurance companies and Democrats need to wake-up to that fact. The logic of this mandate has some merit, that is, that early testing can pick-up health problems before they become expensive health problems so it is desirous to have a health system that brings about people participating in early testing; obviously free testing would do this. The Democrats could move the system to this goal and demonstrate that they are sensitive to the cost by in the legislation mandate that preventive care must be exempt from a health insurance plan’s deductable this would help the American consumer somewhat because his or her insurance company would be paying part of the tab for this care. Eventually, the Congress could achieve this goal by mandating that insurance companies tack on a penalty fee to people’s premiums for people who don’t get needed preventive care, use the stick approach as opposed to the carrot one. Democrats need to drop this defense they often use on the effects of mandates where they say if Americans like their health insurance they can keep it, the legislation grandfathers all current insurance plans. Consumer advocates and state and local advocates will find ways to neutralize the grandfather provision because they will have to live with the fallout of not having the mandates apply and the sad stories that result of Americans whose health insurance company failed them; the American people see through the smoke screen the Democrats are trying to hide behind here.
SEE PART THREE

 

[JimofPennsylvan]

PART THREE
IV)
During the development of these current bills, there was a big struggle between the health insurance industry and Democrats which essentially went like this. The industry said to the Democrats you want us to cooperate with all these expensive mandates your going to put on our industry well if you want this you are going to have to provide us with more customers, more business, so we can afford these mandates. Essentially, the Democrats and the industry came to agreement on this arrangement. The Democrats to fulfill their part of this arrangement added provisions in the bills to create financial penalties on Americans who didn’t have health insurance to incentivize Americans to buy health insurance. Republicans and libertarian Americans have gone ballistic proclaiming it’s not right to force Americans to buy a product even if it is a good product like health insurance.
Democrats and Republicans both have to come together and do the right thing here. Insurance industry officials have, in part, a compelling position these mandates are expensive somehow they have to be paid for and the best way, the less painful way, is to expand the health insurance customer pool as great as possible so these cost can be spread across a high number of people so their “increase premium” impact will be blunted. The critics espousing libertarian views need to be told their views are garbage, they are not considering the seriousness of the issues here, thirty-five thousand Americans die every year because of no insurance or under-insurance, the uninsured are breaking the health care system in America; health insurance is not like any other product, for one, it is a vital foundational column to our nation’s health care industry and the nation must maintain the integrity of this column so the government needs to take action here. Critics have one valid criticism it is terribly wrong to financially penalize Americans for not buying health insurance when they can’t afford to buy such insurance, it is unjust. The answer to this whole problem is Congress in the legislation only place financial penalties on Americans for not having insurance that can readily afford it, this would include lower and middle income Americans who will be getting government subsidies and higher income Americans (individual incomes of $90,000/yr or greater and family incomes of $120,000/yr or greater). This financial incentive system coupled with Congress showing restraint on the implementation of the insurance mandates should make the legislation something which the health insurance industry can live with.

V)
The Democrats have to agree to take a meat clever to spending in the current bills and get rid of unnecessary and/or wasteful spending in the bills if they want to produce a good piece of legislation. The following are examples of spending which need to be cut.
1) The “Insurance Exchanges” in the bills got to go! This will be an enormously expensive initiative to America’s health system probably costing hundreds of millions of dollars a year. The Senate bill which seems to be the more favored bill by Democrats essentially calls for fifty exchanges to be setup or regional exchanges are permitted. Whether it’s fifty or ten to fifteen, these are very expensive bureaucracies Congress will be creating. Each exchange will need large staffs of “information technology” professionals, insurance experts, lawyers, managers, clerks and facilities for said staff. Not only will the Exchanges themselves be costly, but the “Exchange” initiative will add a significant cost on insurance companies because these companies will have to have staff designated to get the Exchanges to approve their insurance plan products and offer it on the exchange. Who will ultimately be paying these costs, that’s right, the American consumer with higher premiums!
Moreover, the Insurance Exchange idea is an unnecessary idea because if one thinks about it what do these Exchanges do what is their essential function. They provide the means to create large pools of enrollees for insurance companies so they can spread the risk of claims amongst a larger group of enrollees and thus offer lower premiums to enrollees. Congress can largely achieve this same goal by just insuring that the legislation mandates communal pricing for insurance premiums by insurance companies as opposed to underwriting individual plans based on an enrollee’s health status.
2) The Reinsurance Plan For Early Retirees Program is an unnecessary expenditure. This program will reimburse employment based plans for medical claims for early retirees, one supposes that the purpose of the plan is to lower the financial burden in terms of premiums on working employees in the plan from early retirees in the plan. The bottom line is that there is no compelling reason for this program; are the premiums that the workers in these plans currently paying so onerous so much higher than people not in such employment based plans that they warrant relief and will the relief actually occur and will it be meaningful. This is a five billion dollar program, Congress should consider expenditures like this matter they begin to add up to make a real difference in the legislation.
3) The Senate health care bill is 2407 pages long and a person could legitimately write a 2407 page book on unnecessary spending in the bill, the bill is inundated with it whether it involves “permanent adjustment to the Federal Medical Assistance program for states recovering from a major disaster” to “tuition forgiveness programs for people working in the health care industry” . The Democrats have to truly appreciate that all these spending items in the bill add up to a lot of money, too much for a country with our financial books. In addition, the Democrats need to be sensible in Washington when a program is created it is tough to end it because people that have a vested interest in the program lobby for its continuance and in fact often successfully lobby for its expansion, with all these spending initiatives in these bills the Democrats are likely creating financial cancers on the Federal budget which will extremely hurt America long-term.


VI)
It is an egregious scandal and it is something that ordinary Americans should find extremely offensive and intolerable and anyone that believes themself to be a leader in America should stand up and speak out against and this refers to the shenanigans that occurred with the Senate Health Care Reform bill on the subject matter of the “public option”. This refers to the facts that it was represented to the American people that the “public option” was dropped out of the Senate Health Care Reform bill. This “public option” this creation of a government run insurance program for the general public which anyone with a miniscule amount of sense believes would put our country on a path that will drive private health insurance companies out of business and leave the American people’s fate in a single-payer government run health system with all the flaws of a typical government run bureaucracy. It was represented wide spread in the media that the public option was out of the Senate bill, Senator Lieberman and a couple of other Democrat Senators were opposed to it, and Senator Lieberman negotiated for his necessary vote to overcome a filibuster on the bill that the public option be dropped. Well look at the Senate Majority Leader Harry Reid’s website where it has a portal to the Senate Health Care Reform bill passed on December 24th 2009, specifically look at Section 1323 page 183 of that bill where it establishes a “Community Health Insurance program”, the “public option”. Some people in high places in our country deserve to be taken out to the wood shed and taught a lesson for perpetrating this “fraud” on the American people!
SEE PART FOUR

 

[JimofPennsylvan]

PART FOUR
VII)
Democrats are absolutely right the legislation should have initiatives to lower premium prices, one good initiative in the bills is known as a “medical loss ratio”. This is simply a requirement on insurance companies that they must spend a certain percentage of the premiums they take in on paying medical claims, it acts as a curb on premium prices because there is no point in collecting higher premiums from enrollees if the medical loss ratio regulation will require the insurance company to reimburse enrollees because the total claims paid out didn’t meet the regulation threshold. Insurance companies and their allies have to understand that health insurance isn’t a luxury, it is a necessity and the price of it is spiraling out of the affordability range for individuals and businesses so the Federal government has to take this action to help stabilize health insurance premiums – this is a reasonable and fair regulation!

Democrats need to have a change of heart and support in the legislation allowing Americans to buy health insurance across state lines, this will absolutely make a difference in lowering health insurance premiums for many Americans. Currently, in some states there really isn’t meaningful competition in the health insurance industry one or two businesses sell most of the plans. There really isn’t an issue that this idea will lower premiums for many Americans. On the flip side, Republicans have to be candid and reasonable about this whole initiative. They proclaim this initiative should be in the legislation because it will lower premiums but how about telling the American people the full ramifications of this initiative. The full ramifications is that there will be insurance company winners and losers, the winners will be adding more customers and the losers will be losing a lot of customers. With respect to the losing companies this will mean they will be laying off a lot of employees. This initiative also means that many insurance companies will be moving to states that have a favorable health insurance regulation culture which will make it easier for them to sell lower priced health insurance plans and thus gain more customers - resulting in these insurance companies laying off a lot of employees from the states they are moving from. Republicans don’t want to talk about the significant increased unemployment that will come from this initiative and that is shameful. Congress really needs to include this initiative in the legislation but phase it in over a long-period of time to cushion the impact this will have in terms of American workers in the health insurance industry losing their jobs. To this end, Congress could authorize in the bill that once the legislation is enacted Americans can buy health insurance in neighboring states and four years from enactment Americans could buy health insurance in any of the nine closest states to their state and eight years from enactment an American could buy health insurance anywhere across the country.

VIII)
It was recently announced in the media that the White House in the legislation was planning to give to the Federal Government the power to block insurance premium increases at their discretion to stop the inordinately high yearly insurance premium increase America has been seeing and the insurance premium increases that will be stemming from this legislation. This is a terrible idea. It puts at risk and threatens insurance companies ability to make a fair profit which will likely drive them to cut back coverage and be more aggressive in not covering health care claims which is not an improvement of America’s health care system, it is making the system worse. Further, it will likely drive some insurance companies out of the health insurance business and act as a deterrent for other insurance companies getting into the business because of worries government regulation will take the profit out of the business all reducing competition in the health insurance industry which is not a good thing for American consumers.

I don’t know the extent the following has been publicly verbalized but Washington politicians should realize that many ordinary Americans are thinking that if Washington can not pass some meaningful legislation on an issue like the health care system where it’s a major issue and the system is in crisis than our political system is broken and the blame falls on the leadership of both parties. Which likely translates that there will be profound change coming to Washington from the hands of the American people!