Preparing for Health Care Reform

The Patient Protection and Affordable Care Act is the law of the land. And it will stay that way for a long time. The new health care reform law will evolve, but it won’t be repealed. President Barack Obama would veto any outright appeal, which means a two-thirds vote in both Chambers would be required to overcome that veto. There’s not mathematical possibility, outside of a Karl Rove’s hallucination, in which that two-thirds threshold comes close to being met any time soon.

So the law is here to stay. However, that doesn’t mean the law won’t be changed. Legislation is like a blueprint, in this case defining the outline of health care reform. But as I’ve mentioned before, it is “the regulators, judges, businesses and civilians interpreting, implementing and simply trying to figure out how things are supposed to work” that make the law real. That process has only just begun. For example, one of the few elements of the law that takes effect in 2010 concerns the tax credits available to some small businesses to offset the cost of health insurance premiums they provide their workers. The IRS has begun providing guidelines on how this tax credit will work.

Another example: The Department of Health and Human Services has clarified an ambiguity in the law as to whether carriers must accept children for coverage regardless of any pre-existing conditions. HHS has decided children under 19 years of age are eligible for guarantee issue and carriers have agreed to go along with this interpretation. Good to know. And we’re being told in before the guarantee issue provision takes effect (in July for those keeping track).

There are a lot of guidelines, clarifications and new regulations still to come. But here’s the good news: like those mentioned above, they will be coming well in advance of the effective date of the health care reform package’s various provisions.

For health insurance brokers, uncertain of their role in the new world, this is good news. They will have plenty of time to prepare for changes in the health insurance industry before they take effect. And there are plenty of folks out there – associations, carriers, general agents, service providers, and even a blogger or two – who will be providing the information brokers need to deal with the coming changes. (Note: On April 13th at 10:30 Pacific Time I’ll be participating in an online conversation discussing health care reform and how brokers can prepare for it., This is a free webinar sponsored by Norvax. Also worth noting: the National Association of Health Underwriters has been offering a series of informative, insightful and helpful webinars for its members).

Of course, brokers have alternatives to preparing themselves for reform. They can stress out. They can panic. They can descend into anger. I hear denial can be comforting for awhile. But indulging in these reactions won’t accomplish much, especially in the long term.

Instead, brokers need to be thinking about the kind of agency that will survive and flourish in the years ahead. In my mind, this means spending the next few months refining one’s agency so it is both nimble and flexible. This will allow brokers to to adapt to a changing environment as new provisions of the law take effect, avoid the inevitable pitfalls created by new government bureaucracies or existing health insurance carriers, and to seize opportunities created by those same bureaucracies and carriers.

Notice I didn’t say “quickly avoid” or “immediately seize.” I’m not convinced victory will go to the swift this time around. Instead, I believe during this time of transition the advantage will go to the prepared, the informed and the thoughtful. Speed is required when change comes quickly. But when it comes to health care reform regulations will likely be in place six months or more before the legislative elements they refer to go into effect. This relieves brokers from the need to predict the future. Instead, prepared agencies will have at least some time to think about the developments as they emerge and figure out the right response. Given a choice between “quick” and “right” I’m going with the latter every time.

All of this means now is not the time to panic. Instead, now is the time to take stock of your business practices and determine which ones foster readiness – and which don’t. Now is the time to ignore the blathering of so-called news organizations that are more interested in whipping up partisan passion than informing insurance professionals or the public (yes, I’m looking at you Fox and MSNBC). Instead, plug into the vast support network out there, starting with NAHU, who are ready, willing and able to help you understand not just the letter of the new health care reform law, but how it is being brought to life.

12 thoughts on “Preparing for Health Care Reform

  1. As a broker, this may also be an opportunity to capture a new market now required to purchase health insurance. For those currently uninsured, under this Bill, penalties will apply if you do not have qualified health insurance coverage.

    The penalty for those who do not maintain coverage is as follows:
    $95 in 2014
    $495 in 2015
    $750 in 2016
    It will be indexed up in further years.

  2. There are some really good points here. There is no doubt that the next five years will be tough on all brokers. The biggest challenge is going to be staying up to date with all the changes that are coming. This bill is going to trigger several rounds of new bills and these bills will overlap with old bills creating a confusing legislative mess. Consumers and business owners are going to be very confused and as brokers it will be on us to try and bring some clarity. So while brokers will be needed more than ever during the transition at the same there is going to be increased pressure on the carriers to reduce administrative overhead which probably means reduced commissions and less broker support.

  3. Theft by any other name…

    Insurance is by its nature a “sharing of risks.” Some call it “risk management.” Insurance is “credit in reverse.” You purchase a product you hope you will never need by sharing the risk that you will need it with other people who are doing the same thing. I carry homeowners insurance, but I have not had a claim since 1978 when I was burglarized. At that time money from other risk sharers was used to make me whole. Since then, thank God, I have not needed it, but my premiums go to aid the unfortunate policy holders who have suffered an unexpected loss. This is what is meant by sharing of risks. It is the unknown we are hedging against.

    Obama’s plan of forcing insurance companies to accept pre-existing conditions at the same premium as the risk-sharers is not “insurance.” It is welfare. Now, I agree, these people need to have health insurance, but they need to be put in a high-risk pool just as high-risk drivers have to buy their required auto insurance (if they want to drive) from a pool of similar drivers. This may be some place for the government to subsidize these unfortunate people without dismantling our entire health care system.

    I am a cancer survivor, cancer-free for 10 years now. At the time I was diagnosed with cancer, I had been paying into my employer-sponsored health insurance for 25 years. Of course I hoped I would never need it for anything major like cancer, just like everyone else who had the same insurance hoped they would never need it. And, of course, most of them did not get cancer. But we were all guarding against the worst case scenario. The insurance actuaries can figure how many of their insured are likely to get cancer. They don’t know who they will be, of course, but they know the approximate cost to the company. This amount is figured into the cost of the insurance. If they are suddenly required to insure many already diagnosed with cancer, which have not been paying into the sharing of this risk, all of their calculations go out the window. Obviously they cannot stay in business. I think this may be Obama’s intention so he can get the single payer plan that he wants. Also, the policyholders who have been paying premiums for years into a trust fund “just in case” will have this trust fund raided to pay health care on the newly-insured-already-sick members. When the long-term, premium-paying members incur that unexpected major illness, where will the money be to take care of them if it has been spent on the newly-enrolled, non-risk-sharers? This is not fair to the people who have been playing by the rules.

    And finally, ObamaCare cannot be compared to Social Security or Medicare because retirees paid into these two funds all of their working lives. Retirees are still paying into Medicare and paying income tax on Social Security (something FDR promised would never happen). Workers have been paying Medicare tax for years; they have a vested interest in this program. It is dishonest for money to be taken from this fund to pay for an entitlement program for another group of people. Of course, it is very similar to taking our insurance payments into a private health insurance trust fund and using that money to pay for new enrollees who have not “shared the risk.” Social Security would probably still be viable if LBJ had not robbed it for his Great Society. Now his IOUs are coming due and the government does not have the money to cover them because the money has been spent on people who never contributed to Social Security.

    Do you see a pattern here? …the taking of monies paid into a fund for our future protection and using it to fund other programs. Theft by any other name is still theft.

    Most of our problems today were caused by our elected officials, past and present.

  4. Alan,

    Good comments. There can be little doubt that this new law will challenge even the most technically oriented among us. While the timelines offered by NAHU and other respected organizations will be helpful there will remain much that will be confusing, seemingly convoluted, and “mysterious” about this new law for some years to come. Hopefully, this will provide the Agent/Broker with clear opportunities to assist the public, and public officials in understanding what will be necessary, when and why. This will become even more acutely necessary as the new law is amended.

    Also hoped for will be that the Agent/Broker will be properly compensated for the time it will take to educate and properly advise the public and public officials (I refer to public officials as when the Medicare Catastrophic Act of 1988 became law, our office, as well as many others around the country, had the surprising responsibility of educating the very people who were to be educating the public, about the new law). All the more reason for good Agents/Brokers to not allow themselves to become “Captive”, hold an independent status, and be able to advise the public without any “aroma” of conflict of interest.

    Again, Alan, good, and optimistic comments.

    Spence

    • Read your comments at the end of your link. You are absolutely correct. The will of the majority should “rule”.

      However, the majority didn’t want this Health Care Reform package, as passed into law. The minority did, and were able to “force their will” upon the people because they had the legislative prowess to do so.

      Thomas Jefferson would have been very disappointed, not only with the results of the coercion it took to pass this law, but with your subversion of his words in an attempt to strengthen your argument.

      I do not wish to see this law now overturned, but please, let’s keep the facts straight.

  5. I have only been a health insurance broker for 3 years, before that I taught school. It has been a long hard struggle to build my agency and I have learned alot of things the hard way. In any event, my vision for the future centers on wellness and prevention. I am very interested in learning more about the federal grant program or subsidy/tax credit? that employers will be eligible for starting in 2010 for providing wellness programs for their employees.

    My efforts have already been directed into the wellness arena. My first big group of 50 (4 dental office locations) I partnered with the owner in the idea that prevention and wellness is the key to keeping the rates down. He sponsored a biggest loser contest where he is giving out hefty cash bonues. I send out monthly challenges with a point system for tracking healthy habits like drinking water or eating RAW vegetables & fruit. I sponsor a lunch for the winning office where I provide healthy options like nachos loaded with RAW vegetables.

    My personal goal is become certified as a personal trainer so that I can walk the walk and talk the talk. I am working on partnering with my local gym with ideas on how to promote work place health. My focus is on getting healthy and staying healthy and living a lifestyle that promotes that because prevention is the most effective cost reducing tool that we can implement to circumvent the rising cost of care.

    My question: Do you have any information on the requirements for the grant or subsidy that will be offered to the small business at the end of the year? What does the employer have to implement to be eligible for the tax credit? Are we talking smoking cessation programs? weight loss programs? putting a weight room in the office?

    Also, one more question: if all children all eligible for health insurance in 90 days regardless of health conditions,can the child still be rated up for the risk?

    Thanks for your help. I always enjoy and am enlightened from reading your posts.

  6. It is said that this healthcare bill signed by Obama mirrors the bill in Massachusetts.

    From what I’ve been reading, the healthcare system in MA is a mess…sky high rates, waiting times are longer to see a doctor, people are only buying health insurance when they get ill, then are dropping the coverage after they are taken care of, primary physicians are not accepting new patients, insurance companies are having a difficult time covering their costs, etc.

    Methinks this is all going to lead to single payer.

    Which in turn may possibly be the demise of private health insurance companies, and health insurance agents and brokers will be extinct.

    I hope this is not the case.

    What say you, Alan? Do you see single payer in the US?
    How do you see this all playing out?

    Thank you in advance for your thoughts!

    • I don’t think America will have a single payer system any time soon. Certainly not for a generation or two. Think of the controversy surrounding the passage of a system in which private health insurance companies are at the center. Yet even this approach gets called “socialism” by some and a “government take-over” by others. An actual government takeover is simply not acceptable in this country.

      My take is that prices will continue to increase and the public and office holders will begin to focus on the underlying cost of medical care. There are several items in the bill that will provide a platform for dealing with the challenging of restraining health costs. At the same time, the practice of medicine is more likely to move toward an integrated model than as opposed to the current stand-alone practice model. So we’ll see changes in America’s health care system down the road, but we won’t see a single payer system.

      At least that’s my guess.

      • Well stated, Alan.

        While I do believe that there are a large number of the electorate who would like to see a “Single Payer System” be implemented in the US, I also think that a larger number will fight, strenuously, to prevent that from occurring, certainly for a very long time (as you said, generations).

        That said, “things can happen” when we cease being observant; your blog plays an important role in allowing us to “keep watch” (I’m good with the cliches today). The diversity of opinion apparent here, is also a plus in helping us to “keep our eyes on the ball”…okay, I’ll stop. 🙂

        Spence

  7. Alan,

    While I agree we should prepare ourselves for how best to serve our clients in light of the new law, I strongly believe this law and its attendant costs will do far more harm than good. This law creates a new, hugely expensive entitlement at a time when the head of the CBO yesterday stated we are on an unsustainable course. (When was the last time future costs of any gov’t program were even close to projected government estimates?)

    For that reason, I will continue to fight. I will work hard to elect fiscally responsible candidates and help to defeat every incumbent possible. I strongly believe that BO’s policies will become more and more unacceptable to voters and he will be a one term president. I think many incumbents see the writing on the wall and are getting out of Dodge. Look at Stupak’s announcement today.

    I am hopeful parts of the bill will be deemed unconstitutional and under new Congressional leadership, they’ll be forced back to the drawing board and produce something more realistic and a lot less expensive.

    Maybe I’m just naive, but I believe we can avert this disaster waiting to happen with a new conservative President in 2012 and a more conservative Congress.

    Gary

    • That’s great, Gary. I’m not suggesting people rollover and just accept the legislation as it is. Striving to change it through the political process is the American way. What’s unAmerican are threats against lawmakers, planning violent actions, physically assaulting those who disagree with us, and demonizing opponents. You and President Obama disagree. You should work to defeat him in 2012. That’s the way the Founding Fathers planned it.

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