Today, the Senate is expected to vote on HR 4851, the Continuing Expansion Act of 2010. It will maintain Medicare payments on the level prior to the 21.3% cut which occurred April 1, 2010 because Congress has not yet permanently fixed the Medicare Sustainable Growth Rate (SGR) formula. Until now, CMS has been holding claims payments hoping for another Congressional fix; but the agency can only hold claims for 10 business days and must begin payments on April 15. If Congress approves this billl, it will kick the proverbial can down the road for another month, with another fix needed on May 1, 2010.
The question is why would our national physician organizations endorse a supposed comprehensive health reform plan that did not assure that physicians would be able to afford to continue to provide services to their patients? Did they not understand who their members are and that this is not a fiscally feasible business model for physicians? Why would such powerful organizations, with lawyers on staff, give up their leverage in bargaining for a permanent SGR fix for a politician's promise to take care of it at a later date? Did they all fail Negotiations 101?
At first, I too, believed that might have been the case, but that is perhaps too easy an answer. In hearing the coments of some of Democratic politicians (who eventually voted again the bill) regarding the arm twisting that went on behind the scenes, I heard one congressman say they were effectively told how lucky they were to even be invited to the table, otherwise they would have been the main course. Funny, I heard the same words from the leadership of one of our national physician organizations at the end of November. Coincidence?
Physicians representing national physician organizations may have been invited to the photo-ops, but at best, they were only give a crumb or two that fell on the floor with offers to study solutions to the malpractice problem. They were cleasrly not invited to the table to find solutions for healthcare delivery. Were they tricked into believing attendence was participation?
Given the Chicago-style politics in Washington today and the Chicago roots of our largest organizations, were they also strong armed? Did they willingly let the wool be pulled over their eyes? Was it Stockholm syndrome? Or perhaps the did fail Negotiations 101...
Showing posts with label Politicians. Show all posts
Showing posts with label Politicians. Show all posts
Wednesday, April 14, 2010
Friday, January 1, 2010
Social Safety Nets with Growing Holes
After much hoopla, Congress finally began its Christmas vacation last week.
House or Senate plan, public or private, it really doesn't matter - what the politicians seem to have forgotten is that any plan must be underwritten correctly and with the appropriate safeguards or it won't be solvent. For some reason, beneficiaries tend to get upset there is no money to pay claims.
The CBO takes a snapshot in time approach to financial analysis. This static accounting approach does not account for the way human beings react in the real world, a fact they readily admit with multiple disclaimer footnotes in all their reports. Rather, what is needed is an underwriting analysis of the proposals. Underwriters try to predict the future given past behavior, human nature, changing market conditions and nature of the risk pool. The fact that accountants rather than underwriters are determining the feasibility of our social welfare programs may explain why Medicare, Medicaid and Social Security are projected to have a combined deficit of well over $100 Trillion into the future.
Underwriting isn't sexy enough for the politicians, which is no doubt why they ignore it entirely. Underwriting is risk assessment, and sometimes risk management; the very words convey dullness and boredom. No, it's much more exciting for Democrats to accuse Republicans of wanting you to die, and die quickly, and for Republicans to say that Democrats want to kill Granny. But where does this leave the American people? Don't we deserve better?
House or Senate plan, public or private, it really doesn't matter - what the politicians seem to have forgotten is that any plan must be underwritten correctly and with the appropriate safeguards or it won't be solvent. For some reason, beneficiaries tend to get upset there is no money to pay claims.
The CBO takes a snapshot in time approach to financial analysis. This static accounting approach does not account for the way human beings react in the real world, a fact they readily admit with multiple disclaimer footnotes in all their reports. Rather, what is needed is an underwriting analysis of the proposals. Underwriters try to predict the future given past behavior, human nature, changing market conditions and nature of the risk pool. The fact that accountants rather than underwriters are determining the feasibility of our social welfare programs may explain why Medicare, Medicaid and Social Security are projected to have a combined deficit of well over $100 Trillion into the future.
Underwriting isn't sexy enough for the politicians, which is no doubt why they ignore it entirely. Underwriting is risk assessment, and sometimes risk management; the very words convey dullness and boredom. No, it's much more exciting for Democrats to accuse Republicans of wanting you to die, and die quickly, and for Republicans to say that Democrats want to kill Granny. But where does this leave the American people? Don't we deserve better?
Tuesday, December 22, 2009
On Sunday, under Cloak of Darkness, in the Wee Hours of the Night and in a Snow Storm, the Senate Voted on Health Reform
I am reminded of a phrase my grandmother used to say, “Fra dire e fare, ch’é un mare” - Between saying and doing there is an ocean in between. For all the talk about openness and transparency, it seems things could not be more the opposite given the government was shut down yesterday (Monday) due to the snow. Most all of what has been negotiated has been behind closed doors, with only the ruling party invited to participate. All the rhetoric about “If anyone out there has any good ideas, we want to hear them,” appears to be just hot air. Only one party actually got to bring any of their ideas to the floor for a vote. Despite the fact that Rasmussen has polled the public on healthcare reform and 57% do not want the government to do anything at this point, Congress seems determined to ignore the will of the people. Many have called their elected representatives to find no one answers the phone, email is answered by form letter that usually is not even relevant to what the person wrote. Local offices of elected officials are not taking calls from what my colleagues are reporting to me. Americans are frustrated because their voices are being flatly ignored.
It seems our elected officials do not realize healthcare is not like any other issue. People go back to work for healthcare coverage. The definition of a good job is that it has good benefits, especially health benefits. For most people this is a giant security blanket. They will take a lesser paying job in order to get coverage.
What is most disturbing is the fact that Congress fails to appreciate that the uninsured are not a static group of people. According to a 2004 CBO report, “About 30 percent of Americans under age 65 who become uninsured in a given year remain so for more than 12 months, while nearly half obtain coverage within four months.” Given that most are only transiently uninsured, one must ask. “What is the purpose of remaking 1/6 of the economy and financing it with high taxes to build a system that is not scheduled for implementation for four years, for people who will not likely need coverage by then?”
Politicians, beware passing any of the currently proposed healthcare bills. Failure to recognize that this unlike any other matter before Congress, will surely mean peril in next fall’s election and beyond.
It seems our elected officials do not realize healthcare is not like any other issue. People go back to work for healthcare coverage. The definition of a good job is that it has good benefits, especially health benefits. For most people this is a giant security blanket. They will take a lesser paying job in order to get coverage.
What is most disturbing is the fact that Congress fails to appreciate that the uninsured are not a static group of people. According to a 2004 CBO report, “About 30 percent of Americans under age 65 who become uninsured in a given year remain so for more than 12 months, while nearly half obtain coverage within four months.” Given that most are only transiently uninsured, one must ask. “What is the purpose of remaking 1/6 of the economy and financing it with high taxes to build a system that is not scheduled for implementation for four years, for people who will not likely need coverage by then?”
Politicians, beware passing any of the currently proposed healthcare bills. Failure to recognize that this unlike any other matter before Congress, will surely mean peril in next fall’s election and beyond.
Monday, November 23, 2009
HR 3962: Why is Government Insuring the Already Well-Insured?
HR 3962 provides current retirees with protection against reductions in retiree health benefits now offered by companies or employee organizations. Historically, this has been a popular benefit with unionized companies, particularly in manufacturing. This bill does not mean that such plans must continue the same benefits for current employees. Most retiree health plans will not be able to as they tend to be underfunded given usage patterns and health status. With the Cadillac health plans provided, these employees are accustomed to going to the doctor for every sniffle. These retirees also tend to have metabolic syndrome - obesity, diabetes and hypertension, as well as, cardiovascular disease and tend to need joint replacements to a greater degree than the general population.
However, retirees need not worry because under this bill the US government becomes the reinsurer of retiree health benefits. This means the US taxpayer will underwrite future benefits for these folks. Here's how it works: If the retiree has a large claim, the plan will pay the first $15 thousand in medical expenses. The government will pay 80% of the next $75 thousand in claims up to $90 thousand in claims. If there is a $90 thousand claiming a given year, the US Government will reimburse the plan $60 thousand or in this example 2/3 of the costs. Benefits will be paid from the Retiree Reserve Trust Fund, with $10 billion from the US Treasury. It would seem these people are better off than most retirees. What reason would our politicians in Washington have for being so generous with our tax dollars for people who already have retiree health benefits?
According to this legislation, the DHHS Secretary can stop taking applications for participation in the program or reduce payouts at any time to ensure the government reinsurance program does not exceed the appropriated funds. This gives the government considerable leverage over private retiree health plans. It also gives the government considerable leeway in how to administer the trust fund, who may receive reimbursement and at what levels should the fund run out of funds. Given this $10 billion is a one time appropriation according to the CBO budget analysis (Page 11), what happens when the money does run out? This would seem to place the current politicians in Congress in a powerful position for future elections with one of the most active and well-mobilized voting blocks.
However, retirees need not worry because under this bill the US government becomes the reinsurer of retiree health benefits. This means the US taxpayer will underwrite future benefits for these folks. Here's how it works: If the retiree has a large claim, the plan will pay the first $15 thousand in medical expenses. The government will pay 80% of the next $75 thousand in claims up to $90 thousand in claims. If there is a $90 thousand claiming a given year, the US Government will reimburse the plan $60 thousand or in this example 2/3 of the costs. Benefits will be paid from the Retiree Reserve Trust Fund, with $10 billion from the US Treasury. It would seem these people are better off than most retirees. What reason would our politicians in Washington have for being so generous with our tax dollars for people who already have retiree health benefits?
According to this legislation, the DHHS Secretary can stop taking applications for participation in the program or reduce payouts at any time to ensure the government reinsurance program does not exceed the appropriated funds. This gives the government considerable leverage over private retiree health plans. It also gives the government considerable leeway in how to administer the trust fund, who may receive reimbursement and at what levels should the fund run out of funds. Given this $10 billion is a one time appropriation according to the CBO budget analysis (Page 11), what happens when the money does run out? This would seem to place the current politicians in Congress in a powerful position for future elections with one of the most active and well-mobilized voting blocks.
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