The Blind Men And The Elephant



“You have no idea”, the doctor muttered beneath his breath.  He repeated the comment.  “You have no idea”.  Realizing that his statement had had little impact, the doctor decided that a stage whisper might be more effective.  “None of you have any idea”.  Success!  He had our attention.  It appeared that it was up to me to ask him what he was talking about.

The doctor explained the new reality of hospital emergency room care.  E/R units, equipped with suites of examination rooms, were now limiting patients for a specific period of time, 13 to 16 hours, to maximize charges.  If the patient’s conditions didn’t warrant admission, he/she was sent home.  It didn’t matter if the clock ran out at 2 PM or 2 AM.  When 16 hours hit, the patient was cut loose.

Payment dictates care.

The doctor is a first person observer of how the new law, the Patient Protection and Affordable Care Act (PPACA), has altered the delivery of hospital based care.  He declared himself an expert on the PPACA.

*   *   *

I got a call from a chiropractor.  His patient, one of my clients, was no longer covered for indefinite once a month visits.  The government (Medicare) has sharpened the definition of medically necessary.  The insurance companies quickly followed.  Conditions need to be clearly defined and treatment plans must have a beginning, a middle, and a predictable ending.

The chiropractor is a first person observer of how the Patient Protection and Affordable Care Act has altered the delivery of ongoing care.  He declared himself an expert on the PPACA.

 *   *   *

The psychiatrist described her newest challenge.  Treatment might be covered by Medicare and the insurers, but the tests to determine the most effective form of treatment might not.  What’s covered and what’s not seemed like a moving target.  The culprit had to be the PPACA.

 *   *   *

I am reminded of the story of the blind men and the elephant.  In the ancient Jain version, six blind men are asked to describe an elephant.  They each feel a different part of the animal.  Each is convinced that he, and he alone, understands the nature of the beast from his limited contact.

But the elephant is more than just the one part each encounters.

Insurance agents are first person observers of the PPACA.  We see who can now access and afford insurance and who has been exiled from the market.  We talk with doctors and hospital administrators.  We fight with our insurers over claims.  In February I was in Washington to meet with members of Congress and last week Columbus to talk with our representatives in the Ohio House and Senate.  But like my friends the doctor, the chiropractor, and the psychiatrist, we too are simply describing the parts of the elephant we’ve encountered.


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Psst, Would You Like To Hear A Secret?

Mayfield Heights-20150511-00515

Senator Ron Johnson (R-WI) has a secret.  The secret is that he is a realist.  As such he has to balance competing interests on a daily basis if he would like to keep his job.  And yes, he really wants to keep his job.

  • The most vocal members of his party want to repeal Obamacare (The Patient Protection and Affordable Care Act) immediately.
  • Americans, even Wisconsinites, seem evenly divided between repealing and reforming the new health care law.
  • Millions of Americans have directly benefited from key provisions of the law such as Open Enrollment, coverage for Preexisting Conditions, and the Tax Credit Subsidies.
  • The Supreme Court will rule on King v Burwell in next month.  There is a very real possibility that the court may eliminate the subsidies for those Americans who purchased coverage through the federal exchange ( as opposed to a state run exchange.

The Supreme Court may help the coyote catch the roadrunner.

Senator Johnson has a solution.  He has crafted a plan where Americans would keep their new coverage, and more importantly their tax credit subsidies, until after the next election.  By kicking the can down the road till 2017 he solves two problems.

  1. It is after (he hopes) his reelection
  2. A new Republican president will be able to put forward a real plan.

Are you interested in the details?  Do you what to know about the elimination of the individual mandate and other items on the Republican wish list?  This post provides links the The Hill and other publications.  Just don’t waste any time looking at the Senator’s website.  There is nothing to be found there.  See, this plan is a secret.

Senator Johnson’s most vocal constituents on the right can’t stomach anything less than complete repeal.  And his constituents on the left will treat the Johnson plan like a piñata.

Senator Johnson isn’t alone.  Senators Orrin Hatch (R-UT) and Richard Burr (R-N.C.) and Congressman Fred Upton (R-MI)are already touting the second version of the Patient Care Act.  According to Forbes, it’s terrific.  Much like the Johnson plan, details, the real specifics of how this will affect you, are hard to come by.  Their Press Release, however, is filled with glowing generalities and buzz words.

The Hatch plan solves many of the Republican issues with Obamacare by giving them new names.  Don’t like the Cadillac Tax?  The Hatch plan reduces “the distortions in the tax code that drive up health care costs (by) capping the exclusion of an employee’s employer-provided health coverage”.  Hate the Tax Credit Subsidies?  The Hatch plan would “Empower Small Businesses and Individuals with Purchasing Power (by providing) Targeted tax credit to buy health care”.

None of this is on Senator Hatch’s website.  There just isn’t space for stuff like that.  Besides, it’s a secret.

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The Disqualifier

Asking permission


The couple desperately needed health insurance.  Their current health policy, purchased through COBRA, was about to end and the woman was pregnant.  She was a former banker and he was a private money manager.  Even though I had found a way to solve their problem, they still had one question to ask me before they would allow me to help them.

“What type of annuities do you sell”?

There were some really terrible annuities on the market twelve years ago and they viewed the sales of these products as a disqualifier.  It wasn’t a problem for me.  I didn’t sell any annuities, the good or the bad ones.  They are still clients.

We all have disqualifiers, reasons why we won’t do business with certain people or companies.  Some are logical.  Some aren’t.  Some, like the example above, speak to an individual’s honesty and professionalism.  And some disqualifiers are simply excuses covering a darker motivation.

This edition of Health Insurance Issues With Dave will address my Number 1 disqualifier – REFERRALS.

The insurance companies are under intense pressure to control health care costs.  The Patient Protection and Affordable Care Act (PPACA) has instituted a number of changes in the marketplace.  Many of these changes have negatively impacted the way the insurers price and market their products.  The very design of the new policies can, at times, seem counterproductive.  Finding a way to control costs is a major priority.  Many insurers have embraced the concept of requiring referrals.

How does this work?  When you purchase a policy through some carriers you will be required to name a Primary Care Physician (PCP).  We are used to this procedure with a Health Maintenance Organization (HMO) such as HealthSpan, the former Kaiser Permanente.   But in this example we are talking about a traditional network driven PPO (Preferred Provider Organization).  It has been about twenty years since this was common in our area.

Your Primary Care Physician serves as your health care quarterback.  You will need a referral from him/her to have any treatment by a specialist, lab, or facility covered by your policy.  No referral – no coverage.

Your first question might be, “How much will my family doctor be paid for this additional responsibility and paperwork?”  The answer is NOTHING.  The government is projecting a shortage of over 20,000 primary care doctors in the next five years.  More and more services are being provided by physicians’ assistants and nurse practitioners.  Weighing down physicians with uncompensated paperwork is not a good idea.

What happens once you get your referral?  Let’s skip the issue of fighting to be referred to the doctor of your choice.  We’ll pretend that you have diabetes and that your doctor (Smith) is willing to refer you to your family’s endocrinologist (Jones).  Dr. Jones conducts a thorough examination and decides that he needs a few more tests and that you should see the ophthalmologist (Swenson).  Dr. Jones isn’t authorized to refer you and you can’t just make an appointment.  If you want the visits covered you will need to return to Dr. Smith to secure another referral.  And another.  And another.

Is the insurer hoping to control costs by eliminating unnecessary doctors’ visits and tests or is the goal to sidestep the payment of unauthorized care?  That’s what it looked like the last time this practice raised its ugly head.

You are your best advocate.  You should be in charge of your health care.

I refuse to market any non-HMO policy that requires a referral to see specialists.  Many of these policies are purchased by the unsuspecting public through  It is very difficult to determine whether a policy requires referrals if you are buying a policy on the government’s exchange without an agent present.  Too many will not find this out until their claims are denied.

I see the problem as a sin of omission rather than a sin of commission.  But sin is sin.  It’s a disqualifier.


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Another Bite Of The Apple

Apple 2


Are you feeling left out?  Do you long for the warm afterglow only experienced by the properly insured?  Are you ready to come in from the cold?  If you answered YES then you may be in luck.  The federal government has created a Special Enrollment (SEP) just for you.

This new SEP ends April 30, 2015.   This will be the last chance for many individuals and families to purchase health insurance coverage for 2015.  To qualify you must:

  • Currently be uninsured for 2015
  • Filed your 2014 tax return and paid the Patient Protection and Affordable Care Act (PPACA) penalty for being uninsured in 2014
  • State that you first became aware of the tax penalty while completing your 2014 tax return

Policies may be purchased on and off the Exchange.

Many of my clients have done the math and have opted out of the PPACA.  They are purchasing less expensive short term major medical policies and will pay the tax penalty if assessed.  Others will jump at this opportunity to finally purchase compliant coverage.

There won’t be another chance.

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Shopping At Garage Sales In Alternate Universes

Senate cufflinks

February 2015 – Washington DC

There are only two groups of tourists to our nation’s capital in the dead of winter, 8th graders with their teachers and chaperones and constituent visitors otherwise known as unpaid lobbyists.  It has been a long time since I had an 8th grader, so you know why I was wandering around the halls of Congress last week.

The National Association of Health Underwriters (NAHU) is the health insurance agents’ trade group.  NAHU holds a conference annually in Washington and I was here to listen to regulators, members of the Administration, and members of Congress address hundreds of agents from around the country.  I have to admit that I was impressed that not only did the new CEO of the Federal Marketplace ( come to talk with us, he even answered questions and promised to follow-up on specific issues.

And that was why we were in Washington.  At the risk of sounding almost altruistic, our main mission was to make the Patient Protection and Affordable Care Act (PPACA) work better for our clients.  Each of us has more than a few stories of clients who have benefited by the new law.  But, we can also cite plenty of examples of families and businesses who are no longer adequately insured due to correctable problems with the law and its administration.  Things have gotten better.  Last year was a disaster.  But I still spent almost 5 hours online and on the phone February 15th to enroll one family.  There is plenty of room for improvement.

Improvement requires the assistance of Congress.

I had appointments with members of both the House and the Senate in their offices.  These are always a crap shoot.  Sometimes you get to meet with the elected official.  Sometimes it is the legislative aide.  Some are prepped and ready.  And some are meeting with you out of courtesy.  There are only so many minutes in the day, only so many constituent visits our elected officials and staff can attend.  The halls were filled with Disabled American Veterans, a well coifed group of broadcasters, and a contingent of the blind.  The realtors and countless other groups, some with identifying name tags and some just with nice suits that were last worn at a relative’s wedding, preceded or quickly followed us into every office.  And each group came with a perfectly reasonable request, one of remarkable fairness that couldn’t help but move our country forward.

Our big get was a bi-partisan letter, authored by Congressmen John C Carney, Jr. (D-DE) and Daniel Benishek (R-MI), to Secretary Sylvia Burwell of the Department of Health and Human Services.  The key provision was the request to “create a dedicated customer service hotline for certified agents and brokers, navigators, marketplace assistors and state health officials to ensure that problems with enrollment are addressed quickly and effectively.”  In other words, we want to be able to call someone who has been trained to understand the issues and empowered to fix a problem once discovered.

One legislative aide finally asked me what else we wanted.

There are members of Congress, in both parties, who are dedicated to constituent service and have instructed their staffs to solve problems.  This blog has noted the help I have received from Senator Sherrod Brown’s (D-OH) office.  Other Democrats have little to no interest in problems.  They only want to hear success stories.  And some Republicans are collecting tales of woe.

I was in a Republican’s office (Don’t ask who!).  I was just one of seven in our delegation and I can’t even tell you why I had been included.  But I was there and my main job appeared to be to nod my head authoritatively.  I can do that.  His constituents brought a couple of important examples where the law of unintended consequences had caused significant harm to individuals and small businesses in his district.  He welcomed their report and arranged for his staffer to collect more.  It was at this point that I realized that he had no interest in solving any of these problems, just amassing a collection, a weapon for future debates and campaigns.

This was not the time to express my outrage.  (Cue up Mr. Cunix goes to Washington.)

I pushed my thumbnail hard into my index finger and looked around the room.  I saw awards and tchotchkes, the kind that you might find in most offices, and I was beginning to worry that I wasn’t going to be sufficiently distracted.  And then I focused on a picture on the wall right behind the Congressman.  There were eight Republican Presidents playing poker!  Really.  Teddy Roosevelt was glancing with admiration at Richard Nixon.  Reagan had a Bush on either side of him and Ike was standing in the background.  Abraham Lincoln had his back to us.  I don’t know if Abe Lincoln would play poker with Ronald Reagan or Richard Nixon if he had chance to come back to the living, but I do know that he would always sit with his back against the wall.  The name of the picture is Grand ‘Ol Gang.

Lincoln Memorial

My favorite Lincoln

The picture summed up everything I needed to say about this Congressman.  Republican first.  Not problem solver.  Not legislator.  But he is not alone.  There is a Congressman representing a district only a few hundred miles away with the corresponding picture of Democratic Presidents.  True Blues has Lyndon Johnson leaning over Harry Truman to talk with Woodrow Wilson.  JFK appears to be watching Jimmy Carter play poker with FDR and Bill Clinton.  And the picture’s owner is just as partisan, just as dedicated to his career.

Library of Congress

Library of Congress

Walking the halls of the utilitarian office buildings of the House of Representatives or the majestic buildings of the Senate, the Capitol, or the Library of Congress I began to wish that our elected officials simply aspired to be worthy of these buildings and the ideals that built them.  But these Congressmen and Congresswomen are no different than the men and women we revere from 50, 100, or even 150 years ago.  They had moments of greatness and reprehensible pettiness.  They lead and they followed.  Some of the giants of the Senate were not necessarily thought to have been giants in their own time.  Our grandchildren may one day be taught that George W. Bush and Jimmy Carter were great visionaries.  I doubt it, but it could happen.

And with that I joined a couple of my peers in one more meeting with a legislative aide.  She (the staffer) was fully up to speed on the issues and actually kept the broadcasters waiting.  And there were no poker pictures on the wall.



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Freeze Tag


Today’s edition of Health Insurance Issues With Dave may provide relief and cause panic.  Many of you will be relieved to know that the title is not a Frozen reference.  This is a Disney-free zone.  And way too many of you will become panic-stricken as I remind you that the Open Enrollment Period ends February 15th.

If you are under 65 and are not covered by the government or an employer sponsored group health insurance policy, you will have until Sunday night to either change your existing coverage or to purchase a policy.  A great national game of Freeze Tag begins at 12:01 AM Monday morning.  You are where you are until the government tags you again on November 15th.

Are you ready?  Are you in the right place?  FREEZE

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We’ll return to Health Insurance Issues With Dave after this quick ethics test:

You are standing at the corner of Mayfield Road and SOM Center at 2 AM.  The light is red and the crosswalk sign is against you.  There isn’t a car in sight.

  1. Do you cross the street?
  • Yes
  • No

Three people cross the street, two not even bothering to come to the corner.  A police car drives by and doesn’t stop to even warn the scofflaws.

2.  Do you cross the street now?

  • Yes
  • No

The above is brought to you courtesy of the U.S. Government and your friends at the Internal Revenue Service.  Would you like to rethink your answers?

The Individual Mandate is a core element of the Patient Protection and Affordable Care Act (PPACA).  The requirement of universal participation is an important component of any serious proposal that would extend coverage, without underwriting, to everyone.  It is an unfortunate part of human nature that many people would opt out of coverage until 5 minutes AFTER they suffered a major accident or experienced chest pains.

It is only under the threat of penalty that some people feel compelled to act responsibly.

Americans were required to have health insurance in 2014.  And not just any insurance.  Compliant, approved insurance.  The penalty free options for someone under 65 in 2014 were:

  • Employer provided group health policy
  • Individual policy purchased on the Exchange with an effective date of January 1, 2014 or later
  • Individual PPACA compliant policy purchased off the Exchange with an effective date of January 1, 2014
  • Individual policy purchased prior to March 2010 – Grandfathered
  • Individual policy purchased with an effective date between March 2010 and December 31, 2013 – Grandmothered
  • Medicaid, Medicare, or Veterans Administration provided
  • Granted a Hardship Waiver from the government

The Grandmothered policies are the special contracts that fall under the “If you like your coverage you can keep it” compromises of 2013 and the spring of 2014.  We are good for another year on most of them.

Those are acceptable options.  If you have one of these you don’t have to pay the Shared Responsibility Fee that I just mentioned in the blog and client update last week.  Are you in compliance?

Line 61 on Form 1040 is of little help.  Health care: Individual responsibility (see instructions) Full-year coverage (___).  Unless you purchased a policy on the Exchange, the government has no idea whether or not you had a compliant policy.  We just learned this past week that the insurers will not be providing Form 1095B confirming compliant coverage in 2014.  As UnitedHealth Care stated in an update to agents:

“The IRS has indicated that taxpayers will not need specific documentation to “check the box” in good faith and avoid the shared responsibility payment.”

The IRS has to trust us to voluntarily confess non-compliance. 

This is not a big surprise.  As I noted several months ago, the forms needed to verify compliant coverage have yet to be created.  Too complicated.  Too many moving parts.

Did you have any health insurance in 2014?  Did you save money and purchase short term coverage for the year?  Time for that ethics test.  Will you turn yourself in when the possibility of detection is almost nil?

Instead of simply waiting a year to impose the Individual Mandate, the Obama Administration has chosen to collect from the intensely honest or the poorly advised.  And in the end that is the real ethics test.  And the government failed.




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January 2015 Update

Punta Cana 2015

We are now two-thirds through this year’s open enrollment period.  This blog and client update will be published the week of January 19th once I return from vacation.  I am actually writing it on the 15th, the February 1st cut-off, from the beach of Punta Cana.  This promised to be the best week to get away.  The January 1st deadline, December 15th, is the new April 15th of health insurance.  February 15th, the last day to apply for open enrollment coverage in 2015, will also be very busy.  Today?  Not too bad.

Shared Responsibility Fee (The Tax you pay if you don’t have insurance) – It’s here.  It’s now.  And it will be enforced.  If you don’t have an official Patient Protection and Affordable Care Act (PPACA) qualified plan, a grandfathered policy, or in some instances a grandmothered contract, you are subject to this tax.  For 2015 it will be $325 or 2 percent, whichever is higher.

Tax?  So What! – According to a recent Gallup Poll, 35% of all uninsureds have decided that paying the Shared Responsibility Fee is better than buying the insurance.  Another 30% didn’t realize that they may be forced to pay this tax.

Short Term Major Medical – Against all odds, the insurers are doing record business selling non-compliant short term major medical policies.  These policies do not cover preexisting conditions and Preventive Care.  But, they are significantly cheaper and may have a deductible and out-of-pocket maximum that is thousands less than the standard PPACA compliant policy.  These policies also don’t suffer from the new, restrictive networks found with many of the major carriers.  It is hard to argue with a healthy 40 year old woman who wants to pay less when she purchases the policy and much less if she has to use it.

Pediatric Dental – All policies purchased off the Exchange must include Pediatric Dental whether or not any children are to be covered.  Companies like Medical Mutual of Ohio include this at no charge for adults.  HealthSpan and InHealth require a separate application for a no-charge Delta Dental contract.  Others have charged adults extra much the same way that men now have coverage for maternity.  The new Pediatric Dental includes medically necessary orthodontia.  The definition of medically necessary changes daily.  I’m waiting to see a claim paid before I tell you that this a real benefit and not just fluff.

Changes – A year into this and the biggest flaw of this system remains the ability to make any changes to an existing Exchange policy.  Your insurer cannot add on your new baby, cancel your policy, or even change your address.  Everything must go through the Exchange.  Whether you go online or call the phone center, you must still reopen the application and ALL BETS ARE OFF.  There is no guarantee that your subsidy, or even your eligibility won’t be jeopardized by the call.

I have called the national frustration number for clients.  We have verified, with the clients sitting in my office, that I am their agent, only to have the transaction muffed and my name disappear from the system.  This makes resolution that much more difficult a week or two later when we discover that the problem has not been fixed.

Winners – Unhealthy individuals, especially singles in their fifties earning approximately $30,000 a year, are some of my biggest winners.  Families with two or more children earning well in excess of the subsidy limits are also doing well under the new law.

Losers – The people most adversely affected by the PPACA are middle income workers where someone in the household has employer sponsored health insurance.  The rest of the family faces higher premiums and no assistance.  In truth, healthy Ohioans, even with a subsidy, are being priced out of the market.

I have been monitoring the progress of the PPACA through my clients, news reports, and Social Media.  I have found that most of the news follows a specific agenda – for or against the PPACA = for or against President Obama.  Social Media, especially Facebook, usually includes posts from the extremes, the incredibly unhealthy guy who now has amazing coverage for next to nothing or the young family forced to choose between unaffordable coverage or a Medicaid plan that may, or may not, send them to unfamiliar doctors and cross-town hospitals.

My clients, and those of my peers, have experienced the full range of benefits and problems of a new system created by a poorly written law and regulated by well-meaning if not always competent bureaucrats.  And as much as any failure frustrates us, we must admit that we can’t turn back the clock to 2009.  We must make it work for every American.

Insurance agents from around the country are scheduled to meet with members of Congress next month in Washington.  I have found similar meetings in Columbus with our state legislature both rewarding and frustrating.  This trip to the nation’s capital is worth my time and money if we can solve just one PPACA issue.

Feel free to comment on this post or to send me a private message if there is anything you would like me to convey to our elected officials during these meetings.

We will get through this together.


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When Trust Is No Longer An Option

No Money

The client was more than a little agitated.  She also wasn’t reticent about sharing her displeasure with me.  She and her husband had purchased excellent coverage for themselves and their employees.  Since this was about twenty years ago in the middle of the 1990’s, excellent really meant EXCELLENT.  Yet the tests performed in her doctor’s office had not been covered completely.  I looked at the Explanation Of Benefits and asked her when she had been in the hospital.

I wasn’t in the hospital!

The bill says that you were.  That’s why it wasn’t paid completely.  That test doesn’t require hospitalization.

I was in my doctor’s office at the Mount Sinai building.

The one in Beachwood by the mall?

Yes.  That’s where his office is.

That’s not a hospital.  My kids’ orthodontist is there.

What followed was a long and unpleasant phone call with Mount Sinai.  By labeling their medical office building a hospital, Mt. Sinai could substantially increase their fees.  Now all they had to do was get the insurance companies and the federal government to play along.

I may have been 6’4” and have played basketball weekly in the 90’s, but I couldn’t claim that I was NBA ready.  But if your doctor’s office and his stethoscope are owned by a hospital 10 miles away, it is time to send some flowers ‘cause you’re in the hospital.

Last Friday’s Plain Dealer had a Letter to the Editor from a father facing an unexpected bill for $162.54.  He had taken his two children to a MetroHealth satellite office for their flu shots.  The charge wasn’t for the shots.  The bill was for the facility fee, his family’s charge for sitting in the waiting room, walking past the water fountain, and breathing the air.  The total negotiated charge for the two flu shots was $258.  The facility fee was over half the bill.

MetroHealth is probably no better or worse than any of the region’s other major providers.  No better or worse because there is no way to determine what these charges will be until you get your bill.  Here is the result of my search of MetroHealth’s hospital charge information list.

The Cleveland Clinic began adding facility fees for outpatient services in March 2009.  The initial charge for an office visit was an astounding $55.  Why $55?  Because!  The Cleveland Clinic doles out information on a need to know basis.  And just because the money is coming out of your wallet doesn’t mean The Clinic thinks that you need to know.

This game of cat and mouse continues.  The government or the insurers block one path, the hospital administrators develop another avenue to increase cash flow.  This is not about doctors and it is not about care.

The government is now trying to limit facility fees charged by hospitals for Medicare patients treated in the Emergency Room.  The solution, one national fee regardless of the severity of the case, is hardly logical.  But the current system, “Let us charge whatever we want.  Trust us”, is neither logical nor sustainable.

Trust is no longer an option.  Giving the hospitals unfettered access to our wallets is no longer an option.  Unfortunately, we may have run out of options without finding a solution.




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The House Always Wins

Full House


The dealer wasn’t pleased.  There I was, sitting on a 9 and a 3, and I wasn’t taking a card.  “Are you sure”, he asked.  “Yeah, I’m cool.”  His up card was a queen.  He shook his head and continued around the table.  Finally, it was his turn.  He flipped over his down card, a six, and then busted on another face card.  The pit boss came over and gave our table a new dealer.  I told my friends that it was time to go and collected my chips.  They resisted, lost the next two hands, and then agreed to shift tables.

The House always wins.  You may not know how or why, but it does.

Since this is Health Insurance Issues With Dave, the House is the federal government and the cards are The Patient Protection and Affordable Care Act (PPACA).  The dealers and bit bosses?  That would be the regulators who dole out the ever-changing rules and regs.

This blog has contended that the passage of the PPACA began a ten year transformation of our health care payment system.  How we get there may either be by accident and reaction, or it may be entirely by design.  I’m not privy to that information.  This blog can only report on the status of our payment system and leave it for the readers to determine whether there is a pattern or just a random collection of factoids and moments.

We have just ended the first phase of this year’s Open Enrollment Period.  Here are a few things I’ve learned between November 15, 2014 and December 15, 2014.

  • Individuals and families saw a large price increase on subsidized health insurance policies.
  • The government aggressively pushed Americans to shop on the Exchange for cheaper policies.  They weren’t lying.  There really were cheaper policies.
  • More Ohioans were told that they shouldn’t buy insurance.  They should be covered by Medicaid.
  • Doctors who accept Medicaid are facing a significant fee cut.

Did subsidized policies take a big rate hike for 2015?  Yes and No.  Let’s look at a real example of a renewal.  Below is the 2014 and 2015 rate information for a woman in her early 50’s.  Her policy premium is reduced by over 50%.  Her deductible and copayments are also subsidized due to her income.

2014                                                                                               2015

$476.26                                   Premium                                   $524.92

265.00                                   Subsidy                                        265.00

$211.26                                   Net Premium                           $259.92

The policy increased 10%.  Though no one wants to pay more, 10% is not unreasonable.  But the client didn’t see 10%.  The client saw 23%.  The net premium is, for the client, the real premium.  Two minutes after you finish applying for coverage you cease to remember what the actual premium is.  The client only knows the net amount.  And now, even without a reduction in the subsidy, the policy is on the road to becoming unaffordable.  What are this woman’s options?  She can resign herself to paying more or she can purchase a lesser policy, a contract with a much higher deductible.

The client was on vacation in the Caribbean when he called me the morning of December 11th.  I have no idea how much the call cost him, but he had to talk to me.  His hotel room TV had American stations.  He saw a report urging everyone with a subsidized policy to go NOW to to renew.  Even though we had talked two weeks earlier, he was convinced that his coverage might end if he didn’t stop everything and try to access the Exchange.  I told him to relax.  And don’t forget the sunscreen.

The push was hard and heavy.  The Administration begged, advised, even ordered Americans to go onto to access cheaper insurance.  And yes, there were cheaper policies, some much cheaper.

Ohioans have three types of cheaper policies:

  1. Medicaid like policies sold to unsuspecting consumers
  2. The new federally funded co-ops
  3. Even higher deductibles

Many consumers were surprised by all of the new choices on the Exchange, such as Ambetter and CareSource.  One client, living in zip code 44118, was really excited about the premium until she discovered that the only available hospitals in Cuyahoga County were St. Vincent’s and Metro.  Really?  Would you really pay for insurance that didn’t include either The Cleveland Clinic or University Hospital?  Many insurers have switched to a skinny network.  Anthem’s individual policies no longer have The Cleveland Clinic in their network, but they still have University Hospital.  But neither?  I don’t think so.  But it is cheaper.  Herding the poor, and the people who make poor choices, into lesser coverage is part of the transformation process.

Major insurers are encountering another type of competitor.  New insurance companies are being created out of whole cloth.  Brand new.  No old debt.  No legacy clients, unhealthy and going nowhere.  These new companies are not only unencumbered by a past, they weren’t even stressed with funding.  We funded them.  The federal government loaned just under $2 billion dollars to create a dozen insurance co-ops to compete with the insurers.  Ohio has InHealth, a company that appears to be offering coverage at reality-based pricing.  Some states, such as Montana and Illinois, have co-ops staking out unsustainable territory at the very bottom of the rates on the Silver Level contracts.  This may damage the future choices of the people in those states, but it saves the federal government money since the subsidies are based on the second lowest Silver rate available.

We were worried about the uninsured.  What we need to address the UNDERinsured.   Each rate increase pushes more and more people to Bronze level policies with few or no office copayments or prescription cards.  Most of my unsubsidized clients are migrating in that direction.  It is the type of policy that I have.  But I also have the corresponding Health Savings Account.  I can withstand the hit.  People purchasing family policies with a $12,000 deductible are often doing this to save a couple hundred dollars per month.  They aren’t putting the money away.  And since they aren’t, there is no way that they can afford to have a small claim.

Yes, a small claim.  If you have incur a $200,000 bill and your insurance pays almost all of it, it is safe to say that the hospital will work with you to collect the little bit that is left.  But if you have an accident and run up a $5,000 bill, you have a problem.  All the insurer did was negotiate the final price.  You are on the hook for the whole bill and you may not find the hospital to be nearly as generous and forgiving.

There is talk about a new level of underwhelming.  COPPER.  One way to make insurance cheaper (and by design/default the entire system less sustainable) would be to offer even lower levels of insurance.  The Copper level might have a $18,000 to $20,000 family deductible.  Less premium now, more bankruptcy later.

The last lesson I learned this time out was about Medicaid.  Insurance rates have increased, in part due to all of the new benefits built into the PPACA.  Even the philosophically opposed have found themselves forced to seek subsidies as the premiums have overwhelmed their finances.  I am finding many young families and most families with multiple children are not qualifying for a subsidy.  No, they are being herded into Medicaid.  It is too early to tell if this is another flaw in the government’s software or if these people are really screwed.  I cannot get the State of Ohio to return a phone call, but their website appears to extend eligibility to higher income amounts if there are children in the home.

This becomes a bigger issue as primary care doctors are about to take a pay cut on Medicaid patients.  As we force more people into Medicaid, many who once had not only their own insurance but also their own doctors, we now will further limit their access to doctors and hospitals.

The first phase of this year’s Open Enrollment was a very long month and this has been a very long post.  But this is no time to suffer from a short attention span.  The transformation I perceive will take place because insurance becomes unaffordable, because the insurance you can purchase won’t be worth having, and because people never aspire to be treated as if they are poor.  And those pressures will usher in a Single Payer (think Medicare-like) system.  Whether that is by design or by accident is up to you to determine.  I just know that the house always wins.


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