(the) Health Savings Accounts Blog

There is much hub-bub about the new healthcare reform. In particular, you hear a lot of chatter from proponents who claim that one of the biggest benefits is that 30 million (new) people will “now be covered.”

At first blush, it almost seems as though the Government is going to be giving away healthcare to those who need it. But make no mistake: The Democrat’s idea of “providing” healthcare to millions who don’t have it now, is to require those people to purchase it.

That’s right. The healthcare reform bill would mandate that most US citizens and legal residents purchase “minimal essential coverage” for themselves and their dependents. They can get this either through their employer, or, if their employer doesn’t offer health insurance, they can buy it through new marketplaces called “exchanges” that will sell policies to individuals.

But what if you don’t want to buy a new health care plan from a Government approved provider?

No worries. Your Democratic friends have thought that through. They figure if you don’t want to voluntarily buy “mandatory” insurance, then they’ll just fine you.

That’s right. You’ll pay a fine if you refuse to coopreate. And just to make sure you comply, the Democrats have funded up to 15,000 new IRS positions to help enforce that new mandate.

Spiffy, huh?

If you ignore this mandate and don’t get health insurance, you’ll have to pay a tax penalty to the federal government, beginning in 2014. This fine starts fairly small, but by the time it is fully phased in, in 2016, it is substantial.

An insurance-less person would have to pony up whichever is greater: $695 for each uninsured family member, up to a maximum of $2,085; or 2.5 percent of household income.

There are exceptions. Certain people with religious objections would not have to get health insurance. Nor would American Indians, illegal immigrants, or people in prison.

Did you notice that? Illegal immigrants will not be required to purchase coverage. Do you think they are going to be turned away from Emergency Rooms?

Why is Congress (Democrats only) doing this? It’s a pretty obvious way to expand coverage, for one thing. It sounds good – until you hear the details. Also, it will help bring in a flood of new customers for health insurance firms, including healthy young people who might not need much healthcare.

For insurance firms, those new customers could balance out the losses they might incur if they can no longer deny coverage to people with preexisting conditions. (Yes, that’s another change the bill makes.)

And remember, many people will not be buying this coverage purely on their own. Uncle Sam will be helping them. The bookend to the individual mandate is federal subsidies for insurance purchases, which reach deep into the middle class.

It’s all based on the poverty line.

Let’s start with people who are unemployed, self-employed, or work for businesses that don’t offer insurance. Beginning in 2014 (that’s right, this is four years away, after Obama’s first term – hmmm, coincidence?), these people would be able to shop for coverage in new “health exchanges,” a sort of online bazaar in which insurers would offer different government-approved plans.

Congressional budget experts figure that about 25 million people will shop for coverage in these exchanges. That’s a pretty big market. Of these, about 19 million are likely to be eligible for financial aid.

The cutoff level would be an income of four times the federal poverty level. For one person, that’s about $44,000 a year. For a family of four, the comparable figure is about $88,000.

Subsidies would be figured on a sliding scale, with those who make less getting a bigger boost and those nearer the top getting a smaller one.

The formula is pretty complicated. Basically, though, people who make three or four times the poverty level would get enough federal money so that they would not have to pay more than about 10 percent of their income for a decent health insurance package.

People who make less would have to pay a smaller slice of their income for coverage. For instance, individuals who make about $14,000, and four-person families with incomes of about $29,000, would not have to pay more than 3 to 4 percent of their incomes for insurance.

And those who make even less – under 133 percent of the federal poverty level – would be able to enroll in a newly expanded Medicaid program.

The federal subsidy would go straight to the insurer. It would look like a discount on the policy to the customer.

But what if you work for an employer who does offer health insurance? You’re not shopping for policies on the individual market. At least, not yet. Can you still get a subsidy?

Yes, if you make less money than the poverty cutoff level, you would still be eligible for aid. The federal government will in essence guarantee that you do not have to pay more than 9.8 percent of your income for your share of health insurance costs.

There’s something of a catch there, however. The main way the feds would ensure this is to steer you, too, into this new exchange. Your employer would give you a voucher equal to the amount of money it contributes to your policy. Then you’d dive in there and shop for plans with all the self-employed people. (Unsurprisingly, the Congressional Budget Office numbers indicate it does not expect that many people will do this; only about 1 million.)

The Department of Health and Human Services would be the umpire making calls as to who would and would not get subsidies. The legislation establishes a process for appealing HHS decisions.

We’re thinking the bill, if enacted, also would make HHS one very busy place.

And you think waits are long at DMV huh?

Some of the biggest losers in this economy are hospitals.

Surprised? You shouldn’t be.

You might think people aren’t getting sick as much during the recession. But what is really going on is that more and more people are losing jobs and their health insurance that went along with those jobs (so much for Ted Kennedy’s theory, eh?). And of course, even people with jobs are finding it harder to pay rising premiums.

So — they go without treatment and testing.

Turns out, hospitals need a certain number of people to fill those beds. Otherwise, they lose money.

Here’s a story about one hospital in Boston bracing for losses up to $20 million this year.

COMMENT:
When hospitals lose money, they start charging even more to the people who are sick enough to get admitted. That cost is then passed on to insurance companies, which in turn, pass on higher premium costs to their insured clients.

See? See how this game works? Funny thing though — why are people always blaming the insurance companies??

Am I the only one not shocked by that headline recently in many major newspapers?  Of course, health insurance is expensive for the unemployed – it’s expensive for the EMployed too!

(here’s that article from the Washington Post)

But in fairness, the article focuses on the cost of COBRA plans – which have ALWAYS been prohibitively expensive for people who need them!

COBRA guarantees continued benefits for many people who have lost their jobs where they had group insurance (too many details to cover with COBRA, but that’s the jist of it).

So why is it so much MORE expensive than the group plan someone had prior to being unemployed?  Actually, it isn’t any more expensive.

Under COBRA, the (former) employee is simply forced to pay the full price of the plan.  Formerly, that same (former) employee was only paying a relatively small portion of the premium, which they still found to be “too expensive” of course.

Are there any alternatives to COBRA?

Yes!  Several insurance companies offer “short term” policies that are much less expensive than COBRA.  The catch: they are not guaranteed insurable plans, so you must qualify for coverage.  But, qualification is much easier than for full blown major medical plans.

Here is a link to the leading provider of short term health insurance, Time Insurance Company, an Assurant Health company: Short Term Health Plan Quotes

From that link, you can get your own quotes and apply online. Coverage can be in effect as soon as – tomorrow!

If you have any questions about this or any other health plans, please feel free to contact our offices, either via phone or email.

A new report issued by the CBO indicates Obama’s health care reform plans may cost as much as $1.2 trillion through 2010 and still not result in viable savings.

Some of the main findings include:

• Rising health care costs “pose a serious threat” to the economy, but some of the more popular cost-control policies promoted by lawmakers will do little to help
• unless changes are made, the USA will spend 25% of its total economy on health care by 2025, up from about 16% now
• the number of uninsured could jump 20% in 10 years, up from about 45 million in 2009 to 54 million
• some plans promoted by President-elect Barack Obama and many other lawmakers such as wide adoption of electronic health records and better preventive care could improve health but would likely result in only modest savings or even increase the federal government’s costs over 10 years

If we really want to cut the cost of healthcare, according to the CBO, the key, number one thing that must happen is:

• reduce payments to doctors, hospitals and other medical providers — this could save hundreds of billions of dollars over 10 years

“By far, the biggest savings are cutting what we pay to people in the health care system. Everything else is really small,” says Robert Laszewski, a health policy consultant and former insurance industry executive”

In other words, we need to pay physicians, nurses, and other healthcare providers — LIKE SCHOOL TEACHERS.

Now, why didn’t I think of that?

Now that Democrats have control of America, they are not wasting any time introducing health care legislation.

Universal coverage plan introduced by Baucus

Sen. Baucus of Montana has introduced a plan for universal coverage that would be built on the current system. Employer-sponsored insurance would still play a big part, but it would start requiring employers to provide it if they don’t do so now. It also would require individuals to buy health insurance if they aren’t covered by an employer’s plan. Those who can’t afford health insurance would be subsidized by those who can.

This is not Hillary-Care II. It’s a modified version of Romney-Care, the Mass. health plan put into place under then-Gov. Mitt Romney — a Republican (some say only by title).

Hold on to your horses. This fight has just begun.

Disclaimer: This article is not intended as a political commentary. My own political philosophy has become an apolitcal one over the years. Somehow, we manage to survive no matter who is in the White House. So long as there is enough tension in the Congress, nothing too wild and wacky is ever going to pass. So this article is merely my attempt to alert the public about what I perceive to be the benefits of one “plan” and the drawbacks of the other. That being said -

John McCain’s health care plan is right for America.

In a campaign where both candidates claim to be the agent of change, McCain wins that accolade, hands down, at least when it comes to health care. But he has done a miserable job in enunciating his plan.

I urge you to consider this editorial from the Wall Street Journal. It is written by Dr. David Gratzer, MD, a fellow at the Manhattan Institute.

In a nutshell, McCain’s plan aims to provide tax credits to individuals who purchase their own coverage. He also wants to allow people who live in states where premiums are high to purchase plans in other states where rates are much lower. And yes, his plan encourages high deductible health plans designed to work in conjunction with a health savings account.

At the heart of McCain’s plan is the recognition that employer-sponsored plans are growing increasingly scarce — for a variety of reasons, of course, but scarce nevertheless.

Encouraging people to buy their own plans through tax-incentives has at least 3 advantages, including:

1. Portability (employees who change jobs often lose their coverage)
2. More choice (most employees have only 1 plan to choose from at work)
3. A more mobile workforce (people would no longer feel compelled to stay at Job X for health benefits)

By contrast, Obama proposes more of the same-old, same-old, only with more regulation.

A noted economist has observed that this approach fails to address the underlying problems in the current system. In short, it would do nothing to decrease national health care spending, and in fact, would increase it.

That economist is Jason Furman, of the Brookings Institute. You may recognize the name — Mr. Furman is now economic policy director of Senator Obama’s campaign.

No plan is perfect. Ultimately, I predict that Medicare will become our version of “national health care.” We’ve already seen suggestions to lower Medicare admission age to 55. Something along those lines will eventually come to pass.

But regardless of how we get there as a nation, one thing is for certain: We are not going to be paying less for health care in the future. That being the case, individuals deserve the same tax-breaks enjoyed by corporations for decade when they purchase their own health care plans. And opening access across state lines is an idea that seems to have little, if any downside.

Thanks for reading. Your thoughts and comments are welcome.

C. Dean Richard, JD, MSBA
“the HSA king”

Oops.  Looks like we left a sponge in his abdomen.  Maybe that’s what is causing his post-surgical reaction.

You think? Maybe?

Under a new federal Medicare rule, hospitals will now have to pay to clean up their own mistakes. Although implemented on a baby-step basis, it’s a (baby) step in the right direction.

Here’s the link to the hospital-acquired conditions story

COMMENT:
One has to wonder how high the cost of health care would be today if hospitals (and by necessary implication, physicians and their assistants) did not (negligently) cause so many health related problems.

The fact of the matter is, hospitals are a good place to get sick — or even sicker.

Everyone is getting on board with high deductible plans.

A new survey reports 18% of workers carrying high deductibles this year, compard to 12% last year, a whopping 50% increase year-to-year.

In Georgia, employers and employees are actively encouraged to participate in high deductible plans by the Legislature, which earlier this year passed legislation to do just that.

Here’s a link to the article.

According to recent reports, employees are paying an average of $3,354 in premiums for family coverage, more than double the amount they paid in 1999. The total cost for family coverage now averages $12,680 a year, up 5 percent from 2007.  Needless to say, these costs are making it more and more difficult for the average Joe to keep up with the cost of health care coverage.

As the New York Times article states:

Virtually all large employers offered coverage, but only 62 percent of small companies did. People working for big companies were also paying less — about $3,000 a year for family coverage — compared with $4,100 for those in small companies.

Faced with the choice of dropping coverage altogether, many small companies have opted for health plans that ask employees to pay much more in the form of deductibles and out-of-pocket expenses. One in three workers in small businesses has annual deductibles of $1,000 or more, in contrast to one in five in the previous year’s survey.

The article jumps to the conclusion that government intervention is closer than we may think.

COMMENT:
Typical left-wing perspective from the Times, but the numbers don’t lie either. As more and more small companies are dropping coverage all together, they are opting for individual coverage. And all individuals who are taxpayers are eligible for health savings account plans.

These plans can save a bundle, especially when the employer sponsors a health reimbursement plan. Ask us for more details.

Several LA county hospitals are being accused of massive Medicare fraud by recruiting homeless people and having them admitted with fake health conditions, solely for the purpose of milking Medicare.

Read the article from the LA Times here

COMMENT:

My only concern with this story is that the investigation was begun a couple of years ago by Rocky Delgadillo, the hell-bent LA prosecutor whose visions of grandeur are equaled only by his thirst for power and publicity. You may remember Delgadillo as the bumbling prosecutor who insisted on putting Paris Hilton behind bars for a low level “crime.” Despite his public rantings about how everyone deserved to do the same time for the same crime, he was at a rare loss for words to explain how his own wife somehow managed to skirt jail time for the same crime Ms. Hilton was serving time for.

Nevertheless, the feds are involved (FBI investigation) so this one should prove interesting.

But is it not amazing how stupid people can be? Why spend so much time and effort trying to think up clever new ways to rip off the government?