Health Care Reform: Haven’t We Been Here Before?

Legislation is like the framing of a house. For example, the recent health care reforms the President signed into law provides the basic structure for a new way of doing business. But that’s all. Similarly, when a contractor puts up the frame of a house it provides a sense of where things are headed, giving a clear sense of the broad outline of what’s coming. But without the carpenters, plumbers, painters and other craftsmen, it’s not a home. Same with legislation. Without the regulators, judges, businesses and civilians interpreting, implementing and simply trying to figure out how things are supposed to work, the legislation is merely a law, not a part of life.

Nothing like an overwrought metaphor to start off a blog posting, but there you go. What got me thinking about this was coming across some material I wrote in the aftermath of California’s comprehensive small group health care reform. Best known as AB 1672 the law took effect in 1993. The legislation included guarantee issue for all small groups, limits on how carriers could rate for risk and a state-run purchasing pool. In short, AB 1672 changed the way small businesses shopped for, purchased and renewed their coverage. Immediately after the legislation was signed into law there was tremendous consternation among health insurance brokers, carriers, and others. Clients had questions. Entrepreneurs wondered about their future. Executives needed to figure out how to adapt their businesses to the new world. Eventually, they did and have prospered.

With the passage of HR 4872 and HR 3590 (the bills embodying President Barack Obama’s health care reform plan) the anxiety, fear and confusion is palpable in ways very similar to the early 90s in California. Which is reassuring. Because we too often forget that we’ve all survived tectonic shifts in the business before. All states enacted some version of health care reform in the past couple of decades. Yet, for the most part, the transition worked out. (There are exceptions. The state reforms in Washington and Tennessee, for example, needed to be dramatically rewritten when they proved impractical and ineffective. And they were).

There was also significant consternation when the Health Insurance Portability and Accountability Act (much better known as HIPAA) became law in 1996. And many were concerned about the Children’s Health Insurance Program. And let’s not even get started on the fear generated when Medicare was first enacted in the 60s. In the end, however, the insurance industry, business community and the public adapt and even prosper. In short, it’s a familiar drill. Markets change. Regulations change. Products change. Been there. Done that.

Yes, President Obama’s health care reform plan will have much greater consequences than state laws and even HIPAA. The new law touches upon more people and a greater part of the economy than Medicare and Medicaid. Yet, it is far from the government takeover of health care that some critics contend. The new law does not create a single payer system. Nor does it do away with private enterprise. As Howard Fineman wrote recently in Newsweek, “If this (health care reform) is socialism, then Warren Buffett is Karl Marx.” (Please note, this is not an invitation for a host of screeds on the Obama Administration, Republicans, Democrats, television pundits, the mainstream media or the state of American politics. We’ve had more than enough comments along those lines on this blog already. If you absolutely have to, go ahead, but please do not feel obliged to add to the heap).

Yes, the new laws will require change. But keep in mind, insurance companies, and health insurance companies in particular, have long been one of the most regulated industries in the country. Those regulations will change because of the new law. There will be more of them. But it’s not like regulations are being imposed for the first time.

Yesterday (well, in 2008) governments at all levels accounted for roughly 45 percent of health care spending. Tomorrow (let’s say 2014) it will be somewhat more. But it was going to be more even without reform.

Think of it this way, if the government was taking over health care and the health insurance industry, would there be so many people spending so much time figuring out how to deal with the reforms? Brick walls are pretty easy to identify and to deal with – find a new job. Instead we have a much more challenging task: we have to be ready to adapt the way we do our jobs to an uncertain future, but a future that includes a role for us.

And when I say “uncertain future,” I mean uncertain. That’s because, as in the stretched metaphor above, legislation is just the starting point, the framework, for defining that future. There’s a lot more to come. The good news is, for the most part, the regulations, court decisions, carrier policies, etc. will bring some clarity and certainty to the situation.

What will the exchanges look like? The law says there will be exchanges, they will be run by the states, and that nothing prevents brokers from selling their products. There’s more, but it’s more framework along these lines. How the exchanges actually work is unknown at this time, but we’ll be learning more over the next few years.

And even when the regulations come out there’s this nasty thing called reality that tends to make its presence known. The best laid plans of mice and regulators are no match for 300 million Americans. What will give health care reform shape and substance is how Americans use the new system; what parts they seize and what aspects they ignore.

Consider this: there’s nothing in the law that says doctors have to give up their private practices. Yet as the New York Times reports, fewer young physicians are opening up private practices, instead preferring to become salaried employees of hospitals and health systems. The article notes older doctors are following suit. These doctors are reacting to regulations (and to the economy and a host of other factors). But what they’re doing is beyond and besides what current laws require. Similarly doctors, insurers, brokers and consumers will make decisions beyond and besides the new laws.

People who know they are going to be impacted by the new law want to know what those impacts are. The anticipation of change, like the anticipation of a shot or dentist visit (or worse, a shot during a dentist’s visit) is usually worse than the actual shot and/or visit. But for now, anticipation is all we have. The framework is there. The details are not.

So what to do? Worrying simply adds to the stress. Fretting is non-productive. Nothing is going to come as a surprise. And nothing will come suddenly. So the smart thing to do is to prepare.

How to get prepared? I’ll offer my thoughts in upcoming posts.

15 thoughts on “Health Care Reform: Haven’t We Been Here Before?

  1. Another good piece from the NY Times–of course it’s not an editorial.

    http://www.nytimes.com/2010/04/07/business/economy/07leonhardt.html?ref=health

    As for the framing of the house, I believe none of us need to be able to read tea leaves to get an idea of what the future will hold. I think reading the bill and subsequent clarifications and amendments will make the incentives and disincentives contained within fairly clear. For example, if the 21% Medicare cut to providers that went into effect on April 1 is not reversed by Congress, we would likely see a blatantly 2-tiered system for seniors arise, an upper tier for those who can afford to pay for boutique practices (or more likely, boutique multi-specialty groups), and a lower tier which would be more clinic-like for those who cannot.

    • Doc,

      I always read your posts with interest. I followed that link, BTW…interesting article (the NYT has pieces that aren’t editorials or opinion pieces? Hmmm…).

      IMO, nothing of what has been passed into law by our “All knowing” President and Congress will mean anything until the day comes, if ever, when those who pass law that the electorate must follow, are subject to following, adhering to, and living under that same law.

      Think about that. Were President Barack Obama and the Democratic Leadership in Congress required to live under the same Health Care Reform program that we the citizens are now required to obey, would its structure, benefits, the Medicare takeaways ($500Billion in funding, physician reimbursement cuts, eventual loss of Medicare Advantage Plans, etc.), taxes on Cadillac Plans, taxes on the Super Rich who earn an astronomical $200K per year (not really considered such a whopping sum today), and if they had to work at their professions as “Professional Politicians” for the same period of time as we in the real working community must (30 years, not just a term or two, a few years) before they qualified for $15K per month retirement pay; would Health Care Reform Law look as it does now? I very strongly doubt it…

      • Spencer: A couple thoughts:
        First, The New York Times, unlike much of cable television news, clearly demarks what’s editorial and what’s reporting. That’s why it’s so highly regarded.
        Second, most office holders eventually leave office while they still have productive years left. So they will live under health care reform they’ve enacted. In the course of your comments you’ve provided insightful perspectives on elements of the bill. And while I don’t always agree with your criticisms of it, I respect you and your opinions. Couching them in attacks on the mainstream media (nothing is more mainstream than the New York Times) and in bromides against Congressional perks, hides the substance of your remarks.

        I’m much more interested in why you think taxing the value of plans above a specified threshold (the taxes on Cadillac Plans you refer to) is a bad idea than whether the pensions lawmakers receive are overly generous. First because I’m sure you have legitimate and thoughtful concerns. Second, because since 1984 members of Congress do pay into Social Security. And in 2007 the average pension for federal lawmakers was less than $64,000 — and less than $37,000 for those elected after 1984. Please see Snopes.com

        • Alan,

          I just returned to the desert after a quick trip to Seattle for an unexpected funeral. On the return flight I sat next to a fellow who employs 40 and was just informed by Regence Blue Shield that they would not be renewing his employee’s group medical as it doesn’t meet the contractual obligations required by the new Obama Health Care Plan and he would need to negotiate a new plan. He wondered aloud to me why the President and Congress are allowed to pass law that all others must follow, exempting themselves.

          I, too, wonder and am troubled by that disparity. While I may have been off the mark of some of my points and stand corrected, on others, such as Health Care options available to those who exist in a loftier stratosphere than we common folk, it should be troubling to everyone reading this blog that our Congress (and other nationally elected officials) do not have to abide by the very laws that are passed for the electorate to live by. We do not have a system of Royalty in the US, as they do in Great Britain, and those who make law should most certainly be expected to follow that law, even before the electorate, were that possible.

          An attack against the MSM was not my intent…I read the NYT, WA Post, watch CNN and read the Daily Beast. I find them all to be fine. My comment simply reflected my “smarting” from the realization (often reinforced this past year and change) that our media, as with our apathetic electorate, seem not to care that our lawmakers aren’t held accountable and made to follow those laws we must. Is it that 60% of the Senate are lawyers, and 40% of the House, and as such they “govern” with impunity, or is it that they have never been required to “walk in our shoes”? Either way, I find it to be highly disingenuous.

          No question, we will have to live with the results of this past year of legislation jammed through into law. Repealing this mess would be throwing the baby out with the bathwater, and simply because the Democrats already did that is no reason for the rest of us to toss the twin out the window as well.

          Taxing Cadillac plans, in my opinion, is beyond ludicrous. Why should any individual who values their family’s well-being more than another be fined 40% of the increased premium, or be taxed any amount? This is America; I don’t receive a portion of the exact same food apportioned anyone else, I don’t drive the same car, I don’t hire the same type of attorney, doctor, dentist, insurance agent, send my children to the exact same kind of school or church, don’t wear the same clothes, don’t bank in the same bank or carry the same kind of investments as may others. I shouldn’t be penalized because I choose to carry better insurance, either. In long term care, some carry $3000 per month benefits, some have a lifetime benefit period, and some carry half of that, while others carry more. Should we draw a line of demarcation there as well, and penalize those who carry more than the average? Should we all be mandated to carry $500K in life insurance, and those who choose to carry more be penalized? This doesn’t apply to material goods only, it is supposed to apply to the kinds of nutrition we follow, our theological paths, our career paths, and our philosophies of life.

          I’ll confess to you, Alan (and I, as with you, value and respect your words highly), that this disconnect with the electorate having a choice as to the level of health care benefits carried, troubles me.

          Just a final thought, I do believe that given all of our issues, this is without question, the best country in the world in which my wife and I would choose to live. We’ll work through our problems, we always do. That in mind, I would sure like to leave this world a better place for our children, grandchildren, and great-grandchildren, and not see them burdened with economic woes from which the USA will never recover.

        • Alan,

          I wish that I had followed your Snopes link. I would have more fully understood the Pension Rules and Social Security Rules regarding the Members of Congress. I stand corrected.

          However, having “googled” as much as I have, I cannot find an answer to my question regarding Congress’ having to live under the same Health Care Reform Law they just passed, or if they continue to have a different set of rules for health care coverage. Nor have I found an answer to whether or not they must pay a penalty if they carry a “Cadillac” plan (though I would assume that if they must follow the same rules as the rest of us the penalties would apply). Nor is the question of their being taxed if earning more than $200K (per family per year) addressed, that I can find.

          Regarding Medicare, the Snopes site doesn’t seem to expand on the issue of the Members now being subject to the same Medicare rules, or whether or not they can “double-dip”, I.e. have Medicare Part A and be covered under a Retired Federal Employees Health Plan, such as Aetna or “The Met”, in addition to having Medicare Part A (assuming that if they can be covered under Part A automatically, and be covered under a separate Major Medical plan they would have no need to pay for Medicare Part B). I think that in this area of discussion these questions need to be answered in order to judge whether or not “Members” are in fact, subject to the legislation they pass into law.

          Your knowledge of this area is important to understand before further comments are appropriate, in my opinion.

          Spence

          • Spense: Wow. That’s a level of detail about the federal benefits program I must confess I’ve never descended into. This might be something your local Congressional delegation can answer more readily than Google can.

            As far as Congress and the Cadillac plan, as I understand it, what’s available through the Federal Employee Health Benefit Plan Program does not meet the definition. Meaning Cadillac plans are richer (or more expensive, depending on how one looks at it) than what’s available to members of Congress. If I’m wrong about that, I’m sure someone will correct me, but that’s my understanding.

        • I for one believe in the the tax on “Cadillac” health plans. I feel it would have ended up becoming a great incentive for health insurers and employers to keep plans “reasonable” and create a balance between over-utilization of health plans and the costs associated with both primary and acute care issues.

          This “Cadillac” tax went wrong when the current administration gave the Unions a free pass on the tax. With this, there are now, no economic advantages for the unions to bring their plans more in line with the private sector. Which I feel impacts both the private and government sectors’ ability to be “flexible” and “nimble” when responding to uncontrollable economic forces.

          Everyone has witnessed how the unions are not flexible regarding health benefits. And it really baffles me when GM spends over $1,500 per vehicle on healthcare while Toyota pays about $200 per vehicle.

          (http://knowledge.wpcarey.asu.edu/article.cfm?articleid=1486)

          The same disparagement happens in government sector employees who are covered through Union benefits when comparing to similar positions in the private sector.

          While I agree our healthcare system(s) need(ed) reform – it just seems that too many “special interests” were put above “real” issues that would address the skyrocketing cost(s) of healthcare.

          True healthcare reform would have also addressed transparency of healthcare costs as well as real tort reform.

          It would also have put more focus on America’s “Lifestyle Crisis” and how we Americans need to take control of our eating habits – our gluttonous and instant gratification society is root of our healthcare’s current status.

  2. Well you you may want to read on my blog how Germany Health care slided into a feudalistic system (I intentionally avoid the term socialism which is more used than understood). I hope, as you stated in this post, everything will return to buisiness as usual in America and I hope, too, you will be more aware of such undemocratic developments as in Germany. Germans are less sensible in that matter they elected Hitler, choose socialism in one part, and now inaugurated feudalism in Health Care sacrifying basic human rights. German Health Care once the best in the world now is only a shadow of itself with physicians fleeing Germany.

    • I checked your site and left the following post:

      “My father escaped Hitler in 1933, came to America in 1938 and set up a Medical Practice in Seattle, WA. He swore by the German system of Health care until the early ’90s when he spoke to a colleague in Germany. His colleague told him that I was correct (I have researched other countries’ systems for many years) and that the system had badly deteriorated. After further research and conversations with other German colleagues, dad told me that I was indeed correct. The German system had failed, as has the Italian system, the French system, the British system, and virtually all other government run systems in Europe.

      You have presented a good commentary, and accurate analysis.”

  3. Unfortunately, the government entities that become entrenched in such a massive regulation of health care will see themselves as far more competent and able to provide health insurance services to employers than private sector brokers/consultants. They will subsume all commissions under the guise of efficiency and use them to pay for more unionized bureaucrats. Anyone who thinks differently and isn’t preparing themselves for this eventuality is foolish.

    • Some have questioned past “Thumbs up or down” on specific posts.

      I’ll admit that this one has me puzzled. Why would anyone give a thumbs up or down to a post that merely provides a link to a letter sent from Sen. Chuck Grassley (R) to HHS Secretary Sibelius, a D, demanding to have answers to proven, photos included, Medicare fraud?

      Are there some, of the Democratic ultra liberal, very “Progressive” persuasion, who are that afraid of having the truth come to light? Not that it would be the first time, mind you (Union deals cut behind closed doors,in secret, Big Pharmacy deals cut behind closed doors, in secret, Ben Nelson’s bribe, cut behind closed doors, secretly, Blanche Lincoln’s deal cut behind closed doors, in secret, on and on and on); but this letter, clearly validated and not “Secret”, being made available on this blog, is offensive?

      Wow. Now that is truly enlightening. Amazing, that as the GOP is shooting itself in the foot, there are those who favor the Democratic Party to the extent that they would make fools of their own Democratic Progressives, in objecting to a obvious case of fraud, committed under the Democratic Leadership’s charge, being made public.

      Stunning. Truly stunning.

      Good link, JimK. Good information. Thank you for the link.

      Spence

  4. Re: Healthcare Reform; Haven’t we Been Here Before.
    Thank you for the insight. It is comforting to find someone with the same perspective as myself regarding the future of the health insurance broker. There is so much doomsday prophecy going on right now that it is is nearly impossible to find calm and logical interpretations.
    The way I see it; this bill is so confusing and complicated that the consumer and business will need our services more than ever. It’s difficult to predict exactly what we’ll be doing with our daily work activity five years from now but it’s pretty certain that the demand for service and expert advice will be skyrocketing.
    I wholeheartedly agree with your advice….we need to learn as much as possible and stay on to of all the changes. We can provide even more value to our customers than ever before.

    • I believe in your post 190% Dennis. Education and absorbing info and timelines is where I have tried to put my brain instead of predicting the unpredictible. I guess in the end of the day we also need to believe in ourselves. Most people I know who make this broker thing really work are pretty resourceful and hard working people who do care about the well being of our clients. I personally believe there is a path that supports people who help people. We have something working in our favors when we do things that truly are helpful to other people. My two cents. A little faith …

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