Two More Unrelated Health Care Reform Items

In something as complex and pervasive as, say, changing the entire health insurance industry, the “big” things tend to divert attention from noteworthy items that deserve some attention, too. In my previous post I wrote about the inability of Congress to repeal the 1099 requirement contained in the Patient Protection and Affordable Care Act.  As I continue to clean out my (digital) files, there’s a few other items I’ve come across that deserve mentioning.

Anti-Trust Suit:

Back in October, the Justice Department filed suit against Blue Cross Blue Shield of Michigan claiming the health plan had used its dominant position in the market to force hospitals to charge higher prices to its competitors, a violation of anti-trust laws. According to New York Times, the complaint alleges the “most favored nation” clauses insisted upon by BCBSMi, which “require hospitals to charge other insurers a specified percentage more than they charge Blue Cross — in some cases, 30 to 40 percent more” result in “higher health insurance premiums for consumers and employers.” The clauses also prevent the medical providers from offering any other carrier a better price than they offer to BCBSMi. In exchange for the favorable treatment the suit asserts BCBSMi agreed to pay higher prices themselves.

A spokesman for the health plan was quoted by the New York Times as responding that it was against the insurer’s interests to pay more than they could otherwise negotiate and the “These kinds of low-cost guarantees are widely used in a variety of contracts in a number of industries.”

However the suit turns out, merely bringing the legal action will draw attention to what the Washington Post describes as the “concentration of power that dominant health insurers wield in many parts of the country.”  A study sponsored by the General Accounting Office last year found that the median small group market share of the largest carrier in a state was 47 percent. The dominance of a single insurer varied considerably from state-to-state: in Arizona the largest carrier had a 21 percent market share among small businesses; in Alabama the dominant carrier had a 96 percent share.

A government-run health plan, what was called the “public option” during the health care reform debate,  was President Barack Obama’s attempt to, among other things, provide competition to these dominant carriers. Of course, in bringing competition to Alabama (where arguably it is needed) he was also imposing a government-run plan on Arizona (where it apparently is not needed). Having failed to secure a public health plan in the PPACA, the Obama Administration is now using the courts to bring about greater competition among health insurers.

The courts will determine if what Blue Cross Blue Shield of Michigan does in its contracts are unfairly (and illegally) anti-competitive.  There’s nothing wrong with the Administration bringing suit to find out. That’s how America’s legal system works. But given a recent insurance industry study disclosing that hospital costs in California rose 159 percent over the past 10 years, in part because of the dominant position some medical providers enjoy in parts of the state, it will be interesting to see if the Administration gets around to exploring the anti-competitive activity that may be involved in their business practices.

Doctor Owned Hospitals

The Patient Protection and Affordable Care Act makes it extremely difficult, if not impossible, to create new physician-owned hospitals that bill Medicare for reimbursement. A group of Texas doctors sued to have this provision (Section 6001 of the new health care reform law for those keeping track at home) declared unconstitutional. U.S. District Court Judge Michael Schneider dismissed the suit, but the plaintiffs have pledged to appeal his decision according the Becker’s Hospital Review. The plaintiffs claim the provision, which also limits expansion of existing doctor-owned facilities and freezes the percentage physicians can own of a hospital, is “retroactive in effect.”

It was only last summer when Dr. Atul Gawande, writing in The New Yorker described the impact doctor-owned facilities had on making McAllen, Texas the most expensive town in the country in terms of Medicare spending. His article gained widespread attention and was cited by President Obama during a major speech on to the nation on health care reform. The PPACA attempted to address this cost driver. Doctors are suing to excise that provision. Whether they succeed or not, the law suit will (hopefully) bring additional attention to the advisability of having the those who help determine the amount of demand for care own the source of supplying that care.

And what both these items underscore is the important role courts will play in determining the nature — and affordability — of America’s health care system in the coming years.

18 thoughts on “Two More Unrelated Health Care Reform Items

  1. Since this post in on Unrelated Health Care Reform Items, I am going to throw out two quick questions that are also unrelated:

    1) Do any of you happen to know an ethical broker in the Pittsburgh area that you could recommend that I contact?

    2) Leaving aside ethics briefly, my understanding of the current insurance market (pathetic understanding, I will admit) is that there are certain rights afforded to group policies that are not afforded to individuals. Chief among these is that with group policies, health insurers are prohibited from medically underwriting. There is also some kind of limit on yearly premium increases on the latter, right?

    My question, as an individual policy holder, is somewhat theoretical. What if some extremely well-heeled philanthropist, Bill or Melinda Gates, for example, created a corporation and paid minimum wage to anyone who wanted to be “hired” and furthermore group provided health insurance coverage to these hires. The work we would do in exchange for our employment could be anything Bill wants us to do for the minimum number of hours we would need to qualify for health insurance. Furthermore, we would all agree to pay Bill back for the entire cost of our health insurance PLUS the minimum wages and SS taxes, etc. we earn doing things like, say, calling up our friends and praising Microsoft.

    The bottom line: it would ultimately cost the Bill Gates “Corporation X” nothing since we are paying all our wages and insurance costs back to him.

    I am certain that even with all this rigamarole, many of us would end up paying significantly less for health insurance simply because it has switched from the Individual Category to the Group Category (and hence benefitted from various legal protections not given to individuals.)

    What is the problem with this scam, I mean, prudent business model?

    And how many of you know of individuals whose friends carry them on their corporate books for precisely this circumventing-the-cruelties-of-the-idnvidual-market strategy?

    Maybe one of you brokers, faced with the threat to your livelihoods, could figure out a way to create such an enterprise and charge a fee to your eager minimum-wage-earning-and-immediately-rebating hires like me to run it?

    • Hi Jim –

      There are all too many of these situations currently. It makes the cost of group health insurance rise, as you can imagine. When you said “scam, I mean, prudent business model?”, you were hinting at the answer you already knew.

      Group health insurance provides more privileges. The idea is that a member cannot simply CHOOSE to join the group, he/she must be an employee. That issue controls the “buy when you need insurance, drop it later” concept.

      This is one reason that association policies do not work for long. Many clients will say something like, “Hey, Ann, what if I get my colleagues in my industry together so that we comprise a larger group, and then we have greater purchasing power through volume.” Many association plans were built on such a premise. But the problem is that the price rises quickly. What happens is that businesses join the association in order to get the insurance. Of course, those businesses are desperate to find well-priced insurance because they have one or more sick employee. The cost rises. Then, businesses who might have joined the association drop the insurance because the price got too high, leaving just businesses that desperately need the association’s health insurance. The prices rise. On and on it goes. It’s called adverse risk selection. By setting up a “group” policy where there is no internal control over who can join, you become a “sitting duck” just waiting for misuse.

      The same thing would happen if a person created an employer-employee relationship like you described, where there was not really any internal control over who was being hired, but the employment was really a sham, just so the individual could qualify for GROUP health insurance. That type of business would be flooded with “employees” who desperately needed the insurance, the costs would rise, and the whole thing would spiral downward.

      Jim, thank-you for your well-thought-out question. It’s a question I’ve heard often. Unless you’ve been through this before, you wouldn’t be aware that the outcome would be so non-productive. Many bright minds have tried to come up with ways to give insurance to the masses without stringent internal controls. In the bottom line, however, it always comes out the same. If you provide “free access” to insurance that could pay thousands, hundreds of thousands and even millions of dollars in medical claims, you have two options for managing it. Either you must have internal controls, or you must pay exorbitantly high premiums. That’s why the “scam/prudent business model” you mentioned is illegal when there is not really an employer-employee relationship. It’s insurance fraud because it specifically circumvents the internal controls that are in place. When it’s done (and it’s done too often), it causes premiums to rise for all of us.

      • Ann, thanks so much for answering my question. I know of one guy who is basically a consultant for a Fortune 100 company who somehow has managed to get “hired” so he can get health insurance, even though his working arrangement hasn’t changed in any way (still works out of his house, etc.)

        I wonder how much of this kind of crony-ism is going on in the real world?

        I am curious, however. If person X were to apply for a job at a major corporation that offers decent health benefits to its workers, and person X is qualified for the position, perhaps even (for the sake of argument here), the MOST QUALIFIED, but he or she happens to have a spouse with a health problem, is it legal for the major corporation to refuse to hire him for no other reason than his or her spouse’s health?

        I am sure, in the real world, that the HR department could come up with all manner of reasons to not hire this person that ostensibly has nothing to do with his or her spouse.

        But legally, can they ask about family member’s health status during interviews?

        Or can they fire you after the fact when they discover that you have a family member that has potentially expensive health problems?

        I am a masters swimmer and have placed as high as 3rd in the country and 4th in the world in the 200 and 400 m freestyle in my age group (currently 55-59). When I was new to all this, I asked if it would be possible to form a group for purposes of obtaining health insurance that required members to place in the Top 10 in the US in at least one event in the previous year.

        Surely, this is the reverse situation of what you describe–healthy people who want to get together to derive some sort of reward for spending lots of time staying in really good shape.

        Alas, I was told that the insurance industry hates it when adverse selection works against them. It doesn’t mind subjecting people like me to the downsides, but it does not want the shoe to be anywhere near the other foot.

        Do you have any advice whatsoever for people in my boat? I am healthy, my wife and kids are healthy, but the fact that Debbie (my wife) and I both take statins and antidepressants (both of which are generics and have kept us even healthier) has allowed us to be trapped in the “medical underwriting” purgatory.

        Honestly, it’s way too much to afford, but I am scared of dropping it altogether because then if one of us got hit by a bus…

        I can clearly see why the majority of brokers hate what so many refer derisively to as Obamacare. But if you were ever to find yourself in my position, I think you might find it to be somewhat eye-opening!

        • Hi Jim –

          You have mentioned your underwriting situation several times. If you were a resident of AZ, I believe that I could help you. The statins should be no problem if it keeps your cholesterol under control and if the cholesterol is not associated with other problems in the metabolic syndrome, such as high triglycerides, high insulin readings and overweight. The antidepressants may or may not be a problem… Since you are very healthy otherwise, the core issue is the cost of the medication and the potential risk of other medical costs. Underwriters have found out, by experience, that when a person takes an antidepressant, there may be underlying causes that will require more medical services. This may not be true in your case, but underwriters look in a manual and see what risk factor is associated with the usage of certain prescriptions, then they calculate your anticipated usage of medical services based on those assumptions.

          Your situation would take some work, but it may be negotiated with an insurer. If you lived in AZ, I would make that attempt on your behalf. Locate a reputable agent who is licensed in PA, and ask them if they will “prescreen” your application, and if they negotiate with an underwriter for an exclusion rider on the medication. It may be better for you to pay for your own medication, but lower your premium. Read the exclusion rider carefully. You might be willing to take an exclusion rider on cholesterol MEDICATION, but not on the effects of high cholesterol. After all, high cholesterol can cause heart attack and stroke.

          I am ignorant about the laws in PA. It might be that PA does not allow exclusion riders. (Note, high premiums will accompany attempts to have “everything covered”). If PA does not allow exclusion riders, try looking for a plan without prescription coverage. Normally, I caution clients to avoid limited plans. But, in your case, you are very analytical, and you could calculate the anticipated risk and the anticipated premium savings. Shop for your prescriptions and find the lowest price. Remember, prescription costs vary widely at different outlets. Also remember that you might need a prescription in the future that is expensive. Most people have no idea how much these prescriptions really cost. Boniva, for example, that is advertised by Sally Fields on TV costs $475 a month!

          Consider taking a high deductible or an HSA. Many times, the underwriting manual that underwriters use show different results depending on the plan design you choose. So, for instance, if you choose a $500 deductible plan with copays the underwriting decision may be a 50% rate-up of your premium. If you choose the $3500 deductible HSA plan without copays, the underwriting decision may be to issue the policy at a standard rate. The underwriter knows that you will be carrying much more of the up-front risk when you select a plan design with a higher deductible, and/or a plan design where you do not enjoy the right to get your prescription for a copay. Remember when we stated that the antidepressents alerted the underwriter that there may be medical services required for underlying causes? If you take a higher deductible plan without copays, the underwriter realizes that you, as the consumer, will be less likely to seek additional medical services unless those services are really necessary. This lowers your premium cost.

          And, about your other questions in your comment above, every creative idea has been tried – trust me! Some business owners hire their mother just to keep her on the insurance. I doubt that a person could be fired because their spouse was sick, but there are unscrupulous people out there who find a way… HR departments sometimes require physical exams before a key person is hired, but I’ve never heard of an exam for the potential employee’s spouse!

          Your idea of rewarding healthy people is being tried, too. Insurers and business owners must be careful, though, because there are discrimination lawsuits from unhealthy people over it! However, insurers and business owners are finding creative ways to reward healthy people who do not increase the overall usage of health insurance.

  2. Alan

    I’m replying to your rely/post regarding the passage of AB1672.

    I have often wondered, with the current make-up of the CA legislature, if such a great piece of legislation could even be passed given the significant drop-off in the quality of our legislators. Even our chief CAHU lobbyist can’t believe who he has to work with in Sacramento.

    Do you think you can draw a line between AB1672 and what’s happening today with the creation of the exchanges and predict a positive outcome for brokers? I am also seriously concerned with the results of Nov’s election and who our new Ins. Comm. will be. He’s an unabashed supporter of single payer and probably not a particular fan of the broker community.

  3. I am giving this Comment the Title of “Game, Set, and Match”: While our host has been perpetually set in the “it’s early in the game” mode to my great frustration and occasional chiding, I have continued to hold out the slimmest of hopes that he was, in fact, correct in his assessment. Perhaps it’s the deluge of rain we’re getting here as I compose this but I think what it actually is, is the dawning realization that for agents here in the state of California the light at the end of the tunnel is in fact an oncoming train. To wit:

    http://newamericamedia.org/2010/12/va-court-ruling-unlikely-to-derail-health-care-reform.php

    http://davefluker.blogspot.com/2010/12/mlr-and-agent-commission-and-future.html

    Folks; it’s over. Both of the above links hit me like a 2×4 right in the forehead: The Exchange that is coming to California will be tantamount to dropping a hydrogen bomb on the California agent community. I don’t know how anyone reading posts like that can think to themselves that the agent’s place in the world of California health insurance will remain on solid footing post Exchange-launch.

    Here’s how I know with certainty that we’re toast here in CA: Please check out this http://blog.health-access.org/ and look at the article entitled: PCIP Enrollment Growing But Far From Capacity – an article on the utter failure that is PCIP and NOT ONE mention of how it failed due to the INCREDIBLY HIGH cost of the plan itself. It is just simply out of the grasp of the “other side” of this issue to contemplate the fundamental problems facing these kinds of guv run programs (and I include the MASS Connector in that assessment too). The powers that be in this state will have an Exchange. The insurance companies will be more than happy to let them. The losers in all this will be the agents and the consumers.

    Further down that same page? The post: Real–and perceived–threats to the new law…

    Agents here in CA read the last two paragraphs. THAT FOLKS IS REALITY STARING BACK AT YOU.

    It’s not right. It’s not wrong. It just is.

    • Curt: The first link you proivde goes to an article concluding that the PPACA is the law of the land and, while it may be amended, it’s not going away (a widely held conclusion with which I agree). The second is from an agent who has concluded that the California Exchange does not — and never will — work with agents (a not unreasonable fear, but far from certain). And the third article laments the low enrollment in the new California pool for pre-existing conditions (consistent with the problem many government-run health plans have faced). So the 2×4 that hit you is apparently your conclusion that: 1) health care reform is here to stay; 2) the exchange in California won’t be agent-friendly; and 3) government plans don’t always work as intended. Your conclusion: agents are doomed. (I can see how the first two points would lead to this conclusion, but I’m not sure how the third point does, but be that as it may).

      So, what’s are you doing about it, Curt? Are you getting out of the business? Are you diversifying? You anticipate brokers will no longer play a role in California’s individual (and perhaps small group) markets, are you doing anything to prepare for our demise? Even more important, what do you suggest brokers reading this blog do given your conclusions? Do you have any advice for them or are you just stating the facts (as you see them) and leaving it at that?

      Please don’t take offense from these questions. I disagree with your conclusions (and a fair amount of your interpretation), but I sincerely want to know what someone who has reached your conclusions does with those consclusions. You’ve shared your beliefs on this blogs many times (and I appreciate your making the time to do so), but I don’t recall you ever offering any advice or suggestions on how to deal with it. If you have and I missed it, I apologize. If you haven’t, I hope you will.

      • Alan – Your questions are eminently fair and I appreciate your interest in my Plan B – Let me first mention that the 3rd link I provided was my way of expressing my utter exasperation at what I see as the TOTAL disconnect from folks on the other side of this issue. They simply refuse to wrap their brain around this subject in a way that gives credence to the POSSIBILITY that the cure may be worse than the ailment. From what I can see, just about every agent posting here is ready willing and able to state that there were things about our industry (specifically carrier behavior) that needed fixing and that in some ways the Health Reform legislation provided some help in that regard.
        Unfortunately we are seeing a segment – who is totally in control here in CA – that simply can not acknowledge the possibility that all this will fall far short of the goal of Health Reform: To make health care affordable for everyone. It simply won’t do that Alan. We are seeing that EVERY single day in Massachusetts. The concept is flawed and as we all sit here in 2010 (soon to be 2011) we all know the Emperor has no clothes but our elected leaders simply can’t bring themselves to say it.

        As for your other question: What is my Plan B? Pretty simple Alan: I’m undergoing my own brand of job retraining. I will not put another cent of investment into this business. I will keep the “doors” open for whatever that entails. If business falls into my lap. Great. If not, that’s fine too. I’ll maintain a license and my CEs but after that…? Not going to break a sweat. Alan: lest you think I am internalizing this and making this all about me I can assure you I’m not. Here’s how I see this going: There will be more like me in the next couple of years….insurance professionals who will simply fade from existence….At some point (2013?) the folks at carriers who worked with agents like me…? They will be gone too… In point of fact, there will be a whole purging of personnel from the carriers. These people will simply not be needed in a world where your product is mandatory and the government has been kind enough to give you a central distribution point, will sell your product for you (And explain it to the buying public with their own sales – navigator???? – personnel.)

        Does it hurt to say the above – yes. But only partially. The best part of all this is yet to come: By the end of this decade, the Exchanges will have proven to be an utter failure at holding down the cost of health insurance. There will be hell to pay for Congress and whoever is sitting in the White House – the answer will dawn on them slowly but surely: They will need to offset the burden they have placed on the American consumer with the mandate for owning a health plan – so what will they do? They will pour more money this country doesn’t have into propping up the system in the form of larger and larger tax credits and buying assistance and sure as you can say Social Security and Medicare we will have a third money eating monster adding to the Federal deficit. But you know what Alan? This is all beside the point: This country is in debt beyond up to its eyeballs and one day in the not too distant future that chicken is going to come home to roost. The stock and bond markets will tank and then the whole concept of health insurance will simply be tossed over the side in favor of a state run system. With a population that will be mired in a fiscal situation that will make the “Great Recession” look like the “Good ol’ days” it will simply be the only viable way to offer health services to Americans.

        Alan you once chided me about the back and forth I got into with another poster here about the federal budget. Sorry about that but if you connect the dots on all this stuff – it all invariably leads to the same place: Our leaders are doing their level best to bankrupt us and they are succeeding beyond their wildest dreams. Health Care Reform will be the nail in the coffin.

        Alan I have a lot of respect for you so I’ve never taken offense to your comments in my regard. I understand that you have a constituency of hardcore believers you have to address here. In the same way that the folks over at Health Access California have their audience and their hardcore views you have yours. I get that. But the fervency of how hard you hold a viewpoint doesn’t necessarily make that viewpoint the right one. Lords knows if that was the case, the world would have truly ended come Y2K…remember that one, Alan? I guess what I’ve been trying to say here is that while they may not be 100% right over at Health Access California and the believers here at the Alan Katz blog may not be 100% correct and the truth lay somewhere in between, the sad truth of the matter is that Health Reform will – in large measure – lay waste to the agent community. So Alan: Even if you’re 50% right and some agent jobs are spared in the aftermath that’s still a whole lot of agents walking around with a tin cup and pencils needing to support their families.

        • Curt: Thanks for the frank and articulate reply. I greatly appreciate it. Given your perception of what’s coming your response to reform makes a lot of sense. I think we’re we disagree is on the inevitability of your predictions. I see things as much more fluid than you do. Maybe because I recall similar discussions with brokers when AB 1672 came along, wiping out Multiple Employer Trusts in California and establishing a state purchasing pool. As I represented CAHU during much of the negotiations over that law I saw how the intent of the legislation evolved over time. I think something similar will happen with the PPACA and the California Exchange. Maybe I’m wrong. I hope I’m not. In any event, I do appreciate your sharing with the readers of this blog.
          Alan

        • Curt and Alan,

          I just want to say to you both that I do empathize with the health insurance broker’s plight. To toil away in an industry for much of ones career, only to see it imperiled by forces that you have little control over, and perhaps even worse, to see your contributions devalued–this is a very tough nut to swallow.

          I think there are many, many Americans in similar boats these days–their jobs being downsized, eliminated, shipped overseas, what have you.

          As some long time readers of this blog may recall, my personal situation has made me less than a fan of the old status quo with regards to health insurance. I feel very much stuck with an individual policy that I can no longer afford but can’t drop unless I want to “go naked” because of pre-existing conditions.

          I realize that I may be in a minority here, but I am wondering, Alan, if you might consider addressing a future column to the plight of Americans with “pre-existing conditions” caught in a trap for the next couple years (and quite possibly longer, if the Supreme Court ultimately rules in a way that makes the reform efforts unworkable.)

          I am very close to dropping my family’s health insurance entirely because we just can’t afford it anymore. Do you have any advice on what we can do?

          I would probably try to get my sons, who have no pre-existing conditions, affordable policies. But for my wife and me–who, I should add, are both quite healthy but take antidepressants and statins–it’s over $20,000 a year now in premiums alone.

          If we drop our coverage and one of us gets seriously sick (heart attack, cancer, etc.), I know we can’t be turned away at the ER, but is there any kind of safety net beyond this? And would we be expected to sell our house to pay hospital bills, or is the family home safe?

          We live in Pennsylvania, by the way.

          Sorry if this question seems very personal, but you guys are in the business of knowing the healthcare system, and I am wondering if you might be able to offer some counsel to a guy who can no longer pay to access this system the “responsible way.”

        • Jim,

          Find a competent Pennsylvania agent before you do anything. Rules in each state are different. In many states, it is currently impossible to get a child only policy – thanks to the reform bill.

          Please be aware after 2014, your premium may drop, but for the people who have no pre-existing conditions may have theirs raise to the point that they can’t afford coverage anymore.

          The reason the bill is a failure in my book is that it did nothing to solve the affordability issue. It just shifts the burden from the unhealthy to the healthy.

        • I didn’t set out to post 3x here Alan but I just wanted to say that reading Jim’s post really hit me pretty hard. I think Jim’s comments are perfectly representative of what my commentary was about: AGENTS by and large are gravely concerned about getting their clients both coverage and affordability. We are not – nor have we ever been! – blind to the situation folks like Jim find themselves in. As I said, there were parts of PPACA that needed to be in place but then we read about Jim’s plight – and Bob’s response and it perfectly represents the ultimate tragedy that is PPACA:

          It will do nothing to make healthcare affordable. There is absolutely nothing in PPACA that put a hard enough cap on rising insurance costs to filter down to make life for folks like Jim more tolerable. Look: You can take MLR and slash it even further to 10%! If you are allowed to raise your premiums ad infinitum you will continue to book (record!) profits! PPACA has made it mandatory for Jim to buy health insurance. Though he talks about opting out now, he won’t have that option in the future. He will be mandated by law to own a health plan. He may end up with a virtually useless plan but he will have been forced by law to buy that plan. The insurance company still wins.
          The insurance companies are already moving towards a day when agents will disappear from the equation. PPACA – while fiddling with MLR – has also mandated the Exchanges – there’s your new sales channel. I actually think that in some states (Texas?) where the Exchanges may be little more than informational portals, the insurance companies will be agitating for more of the California model. And why not? What better environment in which to sell your ever more costly product? The most left leaning Exchange you can think of – California! – will actually have the perverse effect of maximizing insurer’s profits.

          And Bob also touched on another sad fact: The VERY affordable premiums we are seeing for our Nation’s young people wherein they can get a HSA plan for less than their cell phone bill and start saving money in tax advantaged Health Savings Accounts? Gone. Their premiums will start looking like the same cost for the tricked out sports car they can’t afford or are denying themselves because they are being responsible. At a time in life when we should be encouraging these young people to save (And by the way – healthy savings accounts for the young would likely a curative for a terrible real estate market!!!!!!!!) we’ll be reaching into their wallets BIG TIME. And what about middle income families? The same ones Obama swore to protect? Guess what? YOU are going to get hit big time too. Your kids college fund will go towards health plans and at the same time college costs are rising by leaps and bounds (Goodbye higher education for the masses and a guarantee for continued world leadership by the USA!) If you’re trying to level the playing field from one end (Jim’s) you are definitely going to wallop someone on the other end (Jim’s kids.). The utter tragedy here is that Congress and the President who can’t even figure out how to do the most simplest things (cough cough AFGHANISTAN!!! cough cough) presumed to think they knew all there was to know on something as monumentally complicated as health care reform.

        • Alan – Just a quick epilogue to my comments above about a Plan B – I just started process of setting up another biz – an LLC – I was told: Are you sitting down? That the State of CA has shut down most its operations and that the processing time for LLCs can now be measured in MONTHS.

          So in a state with MASSIVE unemployment the State’s idea of job creation and generating business tax revenues is….impeding the creation of small businesses here in the State.

          Good grief, you can’t make this stuff up.

  4. With regards to your second point, conflict of interests seem to me rife in the medical industrial complex today. We recently opened a restaurant in an area that is flanked by numerous doctors’ offices and discovered that staffers here rarely, if ever, have to buy food for themselves. Drug reps–usually attractive younger woman–can cater (“bribe”) doctors by bringing free lunches to their offices, provided they also offer an “educational” component to the meal.

    Now this report from the Wall Street Journal, usually a champion of laissez faire practices, on the unbelievable boondoggle to urologists who refer prostate cancer patients treatment to centers that offer intensity-modulated radiation therapy. Just two referrals per month, in fact, can increase the doctor’s earnings by over $345,000 a year.

    I realize that the public option is long gone and a pipe dream at this point. But I am not sure exactly how the current system can be restructured to provide incentives for cost-effective care when the incentives now are so skewed in the opposite direction.

    Prescribe new Drug X (even though it works a little worse than old generic Y) so that we can charge $8 a pill vs. 12 cents a pill. If you do this, you and your staff will never have to buy lunch again!

    Or recommend IMRT (at $40,000) for your prostate cancer patients instead of watchful waiting (cost: a couple doc visits a year)–and you can increase your personal earnings by over $300,000 a year (even if your patient is ill served by this referral.)

    I am still unsure how costs can be controlled when the beneficiaries of the gravy train don’t want to see it slowed down in any way, and furthermore these beneficiaries have racked up enough profits already to make sure they can keep their political ventriloquist dummies well paid to vote the “right” way.

  5. Hey Jim the McCarran-Ferguson Act was enacted in the 1940s the last time the federal government tried to take over insurance as a federal as opposed to state regulated industry. It was because of the Southern States something or other anti-monopoly thing the feds had challenged a few years before. Anyway, it caused such a disruption in the insurance industry they reversed the federal takeover, unless it was absolutely necessary. Sound familiar? History sure does repeat itself. The reason I know this is because I just got my P&C license and they went over this. You know, just in case health insurance goes to hell, gotta have something else to fall back on. I am guessing your doc brought up McCarran-Ferguson now because the feds used that “absolute necessity” clause put into the act.

  6. Thanks for the insight on this post. It is hard to say exactly where health insurance will be in the foreseeable future, the courts really do play an important role in determining that.

  7. Alan

    I had commented a few weeks back on a most recent doctor visit I had and how I learned from my doctor and what you further clarified as far as earned and unearned income on indivduals making more than $200k filing single or $250K filing jointly and how that could increase the amount of taxes they would pay on a sale of a home, considered capital gains or possilby dividend income or other unearned income.

    My doctor also had brought up the McCarran–Ferguson Act which he stated allows Insurance Companies of being exempt to Anti Trust Suits, can you comment on that? I was not aware of this act and did’nt have a response for him.

    Thanks,
    Jim

    • Hey Jim the McCarran-Ferguson Act was enacted in the 1940s the last time the federal government tried to take over insurance as a federal as opposed to state regulated industry. It was because of the Southern States something or other anti-monopoly thing the feds had challenged a few years before. Anyway, it caused such a disruption in the insurance industry they reversed the federal takeover, unless it was absolutely necessary. Sound familiar? History sure does repeat itself. The reason I know this is because I just got my P&C license and they went over this. You know, just in case health insurance goes to hell, gotta have something else to fall back on. I am guessing your doc brought up McCarran-Ferguson now because the feds used that “absolute necessity” clause put into the act.

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