There has been a lot of recent discussion about insurance companies’ sudden entrance into the health care debate. The Washington Post referred to the health insurers as Obama’s “top foe” last week, mainly as a response to actions taken by America’s Health Insurance Plans (AHIP), industry trade group, including an advertising campaign opposing health care reform and a controversial PricewaterhouseCoopers report commissioned by AHIP analyzing the recent Senate Finance Committee proposal.

Many others have criticized AHIP’s actions, claiming that AHIP is scared and attempting to block health insurance reform as a last ditch resort. Well, of course. The health insurance industry is reacting because the public option will put them out of business. Although they are not saints, the health insurers simply pay claims and charge premiums. In the end they make a 3% profit out of doing so. They also subsidize Medicaid and, to a lesser extent, Medicare-by paying doctors, hospitals, and more. The payment difference is not by choice-rather, free (and oligopolistic) market forces at work.

The idea that a public option will make health care more affordable can only happen in 2 ways: (1) pay doctors, hospitals, and others less. This may be a good idea, but there are consequences of monopolistic, heavy handed pricing tactics; (2) we can have taxpayers subsidize the public option.

The idea that the public option will save on administrative costs is not realistic. What does Medicare do for administrative costs? It contracts with Blue Cross and other insurance companies! If you still don’t believe it, go visit any major health insurer headquarters in CT (Anthem, Aetna, Cigna…). The places are half empty, having massively reduced costs over the last 5 years. “Profiteering” may be considered bad, but these insurers are very lean.

We don’t like HMOs, because they are too restrictive. We don’t like limited benefits so we pile on mandated benefits each year. We don’t like high deductibles, but we do like high tech cures. There is no ceiling and our solution? A public option? If our appetites are insatiable, NO option can solve the problem.

Senate Finance Committee Chairman Max Baucus

The recent proposed legislation by the Senate Finance committee, written by Senator Max Baucus, is a reasonable effort to bring subsidized health insurance to the uninsured. It also attempts to: (1) reduce administrative costs in the private health insurance market by eliminating rating and regulatory authority of state departments of insurance, (2) standardize plans across states, thereby standardizing mandated benefits, and (3) introduce health exchanges to reduce distribution costs. Unfortunately, the Baucus bill does not take on the core problem of increasing medical costs that is ultimately the cause of America’s growing uninsured population.

Congress needs a bolder bill rather than more subsidies, more income taxes, more premium taxes, more grants, or more pilot projects. The fundamental cause of rising medical costs is the fact that our medical services, technology, biotech, and pharmaceutical industries continue to mass produce huge advances in medicine and create unsustainable medical trends in the US. This medical trend also subsidizes our international counterparts with state-run programs.

And where’s the insurance industry? These are the companies with armies of actuaries and underwriters that constantly dig through medical trends, unit costs of medical expenses, premiums, claims, renewals, technology, etc. It is admirable that they have taken a low key approach while being absolutely bashed by politicians of all colors and stripes, but at some point if they want the private insurance industry to survive, they need to develop and communicate some recommendations on how the country can control medical costs.

At the end of the day, to keep our health care system solid, we will need to do a combination of four things:

1. Increase taxes,
2. Increase cost-sharing for both private and public beneficiaries,
3. Limit medical benefits, or
4. Govern and limit access to new medicines, technologies, and procedures.

Baucus’ bill recommends the first option but punts on points two, three, and four.

The proposed national health insurance plan has said it will price its products competitively or slightly below private insurance pricing. This could be a very tricky exercise. For example, in Westchester County, NY, a 25 year old male buying a PPO policy would pay between $1200-1500 per month. Up the stream in Stamford, CT, a 25 year old male could buy a similar policy for $100-$150 per month. Where will the government price its policy for 25 year old males? Will the government plan be subject to state regulations, state mandated benefits, state regulatory compliance, state premium taxes, graduate medical education fees, income taxes, or any of the other wide array of fees that today’s health plans pay? Actually, health plans don’t pay those fees. They pass them onto consumers, thereby raising the cost of health insurance.

A better question is how will the national health insurance plan save money over the competition? Reduced administrative fees? If all the national health plan does is reduce administrative fees, it will be an enormous failure, because today’s problem is not administrative fees. It is the 10-15% medical cost trend that occurs every year in both Medicare and private insurance. You can cut administrative fees that average 10-15% in the health insurance industry to 0, but a year later you’d have the same problem because the other 85% of the medical cost went up 10-15% and boom! You have the same problem.  So, before we jump onto the national health care plan bandwagon, we probably should know how plans are going to be priced, and, secondly, the cost of those plans, other than what they do in Medicaid and Medicare, which has ratcheted down fees to doctors and hospitals.

Happy Meals

According to a recent report, Americans are not only fat, but they are getting fatter. The report, done by the Trust for America’s Health found that adult obesity increased in 23 states and did not decrease in a single state during the past year. Also, the report stated that childhood obesity is now at or above 30% in 30 states.

The highest rate of obesity was found in Mississippi, with a rate of 32.5 percent for adults (and an astounding 44.4 percent rate of child obesity). Three other states join Mississippi as having obesity rates over 30 percent: Alabama at 31.2 percent, West Virginia at 31.1 percent and Tennessee at 30.2 percent. Interestingly, 8 of the 10 top states with highest adult obesity are located in the South; where as the northern state of Colorado has the lowest rate at 18.9 percent. This is the fifth year in a row where Mississippi ranked the highest for adult obesity rates.

The fact that Americans are getting fatter is a concern for the healthcare industry because with obesity comes disease and illness and higher health insurance premiums. Despite the increase in nutritional standards from four to 19 states in public schools within the past five years, it is evident that the obesity epidemic is still flourishing. More has to be done by government, families, parents and individuals in order to promote healthy eating and life-styles, exercise and appropriate nutrition.

Price Waterhouse Coopers annual medical costs trends report suggests that a 9 percent increase in health insurance coverage will occur in 2010. This 9 percent increase is primarily for businesses and their employer sponsored health plans. Though employers may suffer a 9 percent cost increase in health insurance coverage, employees might have to cope with an even larger increase in coverage.

PWC implies that some of the reasons for this increase in costs is due to employees being concerned about losing their jobs therefore using their health insurance as much as possible while it is still available to them. Another reason for this increase is increasing medical costs as employment rises. More and more uninsured people are turning to Medicaid causing health coverage costs to rise.

A survey done by PWC that involved over 500 employers concluded that 42 percent will increase health care costs for employees in the form of higher premiums, deductibles, and copays.

“As the economy recovers, employers will refocus on more sustainable longer term approaches to medical cost containment based on an increasingly shared interest between employers and their workers,” says Price Waterhouse Coopers Principal Michael Thompson.

Check out the U.S. News article at http://health.usnews.com/articles/health/healthday/2009/06/18/health-highlights-june–18–2009.html

On Wednesday June 17 the Senate Health, Labor and Pensions Committee began the public drafting of legislation that will overhaul the national health care system. This process will be a top priority for both sides of the Capitol for at least the next six weeks, if not longer. Democrat Senator Chris Dodd from Connecticut took lead over the health committee proceedings earlier in June when his close friend Senator Edward M. Kennedy became to ill due to his battle against brain cancer.

In his opening statement, Senator Dodd described how the bills will have a huge affect on all Americans and that all Americans should be entitled to enjoy good health. Senior Republican Senator Michael E. Enzi of Wyoming used his opening statement to criticize Democrats by saying their legislation efforts are a “wasted opportunity” since the committee should be trying to produce legislation that would reflect a broad consensus. Enzi also said that Democrats are rushing health care reforms along too quickly to do a good job.

Some of the main issues being discussed by the Senate concerning the reform are cost, the new public insurance plan which would compete with the private market and whether employers must provide health care for their employees.

Unfortunately for many people in New England, large changes are being made to insurance plans for the upcoming year. Important changes in the way CIGNA HealthCare plans to operate in the states of Massachusetts, Maine and New Hampshire will take effect on January 1st of 2010, the next contract year. CIGNA HealthCare has decided to withdraw from the HMO market and no longer offer the HMO Plans to any sized employers for coverage of any employees and their eligible dependents in those states.

These changes affect the CIGNA HMO and CIGNA HMO Point-of-Service Plans which are currently used by employers with more than 50 eligible employees as well as the stand alone HMO only network use by New Hampshire Small Group employers with 50 or less than 50 employees. In order to help ease the transaction clients can replace their HMO/POS Plans upon renewal with one of the other plans that CIGNA will continue to offer.

Clients and their employees will be notified of this termination in writing starting with mailings scheduled for the week of June 15th.

Though Medical Marijuana has been proven to help relieve pain for cancer patients and other sufferers, under federal laws it is still considered illegal. Charles C. Lynch, owner of a medical marijuana dispensary in California, was sentenced to a 1 year prison term. While state laws may allow for the disbursement of medical marijuana, federal laws doesn’t even though the Obama administration promised not to prosecute anyone if they have complied with state law.

“I find I cannot get around the one-year sentence,” Judge George H. Wu, the judge at Lynch’s hearing, said of federal sentencing laws. Though Judge Wu understands the state law and the many ways Lynch tried to oblige these laws, he had trouble finding a loophole that would avoid sending him to prison. A mandatory of five years is the sentence for this sort of crime, but the Judge reduced it due to Lynch’s lack of previous criminal history.

Many legal experts believe that this case highlights the conflicts between state and federal laws. Federal law prohibits the development, sale and use of marijuana for medicinal purposes, but 13 states allow it. The 13 states that allow it include Alaska, California, Colorado, Hawaii, Maine, Michigan, Montana, Nevada, New Mexico, Oregon, Rhode Island, Vermont, and Washington.

“He is caught between California’s voter-approved medical marijuana system and the Bush administration’s single-minded effort to smother it,” said Stephen Gutwillig of the Drug Policy Alliance. “That Attorney General Holder changed federal policy three months ago only makes this miscarriage of justice all the more disturbing. Charlie is like a forgotten prisoner of war, abandoned after a truce was declared.”

At a press conference today, the World Health Organization announced the first full-blown flu pandemic in 41 years. WHO Director-General Margaret Chan declared the pandemic “globally as being moderate in severity” and a spokesman stated that the term pandemic refers to the “measure of the spread of the virus, not the severity of the virus.” Still however, the pandemic is not to be taken lightly. Chan noted: “This virus is entirely new and it is spreading easily. As of today, nearly 30,000 confirmed cases have been reported from 74 countries. With few exceptions, countries with large numbers of cases have good surveillance and procedures in place. Further spread is considered inevitable.” Surprisingly, the virus affect mostly younger people between the ages of 30 and 50. Chan stated: “This pattern is significantly different from other epidemics of seasonal flu, in which most deaths are in frail, elderly people. Most severe cases have been in people with underlying chronic conditions, such as asthma, cardiovascular disease, diabetes, auto-immune disorders and obesity.” The pandemic is generally not considered life threatening as Chan told the audience “he overwhelming majority of patients experience mild symptoms and make a rapid and full recovery. Worldwide, the number of deaths is small. Every death is tragic, and we have to brace for more.” In wealthy countries, especially, the pandemic is not considered very threatening at all to its citizens.
The issue of course lies in less wealthy countries, where health standards and regulations are not nearly as structured and extensive. Chan made it clear in the conference that all countries need to come together and help each other through this global issue. Chan noted: “Calling a pandemic is also a signal to the international community: This is a time where the world’s countries, rich or poor, big or small, must come together to make sure that no countries, because of poor resources, should be left behind without help.” Mexico has had many surprising and unpredictable outbreaks of the virus, but Chan told reporters that Mexico is coming to a “steady state.” They are only seeing “sporadic cases and small outbreaks. This virus is very unpredictable. This doesn’t mean Mexico should let down its guard. The virus can come back in a second wave.” While the disease is not a severe threat to wealthy countries like the United States, it is the duty of every country to do what it can to help prevent this disease from becoming a significant global problem.

Senator Edward Kennedy’s new long-term care insurance program proposal will help healthy young adults and disabled senior citizens. The bill will provide assistance to disabled people so they can continue to live in their homes, all at an affordable monthly premium. The bill would also extend children’s coverage under their parents’ health insurance until age 26.

The bill would also allow U.S. citizens to buy long term care health insurance for as low as $65 a month from the government. The legislation would also revamp our current health care system with new government rules for insurance companies including guaranteed coverage for people with preexisting conditions to other rules that could limit profits.

The plan is designed to help disabled persons pay for services that would allow them to stay in their homes and not have to move into a nursing home. The disabled people begin paying premiums while they are still working in order to use the services when they are retired. For students and young workers, premiums could be as low as $5 a month.

Unfortunately the costs for the long term care plan would exceed $1 trillion over the next 10 years it is enacted. Though they do not yet know how to cover the costs, one way includes a tax on employer-sponsored health benefits.