Other points of view:

Other points of view:

You can lead a horse to water, but you can’t make it drink. You can cover all with health insurance, but you can’t make people take care of themselves.

Here are examples of a few good changes (reforms) that have occurred over the last 30 years or so since I entered into the health insurance business. These changes gave people access and offered a way to help themselves:

1. COBRA – Allows employees to continue coverage if they leave employment;
2. Credible Coverage Rules – If you were previously insured, a new employer must cover your pre-existing conditions;
3. Health Savings Accounts – Encourage thrift and wellness by insured members;
4. Small Group Reform in most states – Permits rating up of, but not declining of, groups, thus guaranteeing access for all who choose to purchase;
5. Rating by Medical History – Good risks pay less (encouraging wellness) and bad risks pay more but have rate ceilings;
6. Medicare Advantage Plans – Insurance companies willing to offer coverage to Medicare-eligible individuals (take them out of Medicare) and the government gets to negotiate a cost which saves the government money. A market-driven solution.

I am in favor of reform that helps cover more people. I am in favor of covering people who want to be insured. I am in favor of requiring insurance companies to accept all who want coverage with rate caps.

I want enough reform to fix the things that are broken.

Mark Alder, President, Herbruck Alder - malder@herbruckalder.com - www.herbruckalder.com

News Flash! AARP Supports Health Care Reform

Now isn’t that curious? Their 40 million person membership is made up of folks over age 50 - a large percentage of whom are eligible for Medicare. I understand the need for Medicare reform, but AARP’s support for health care reform goes beyond supporting Medicare. I suspect they are supporting health care reform that will result in a cost shift away from their members and to the younger and healthier population.

Let’s focus on one aspect of their support of the Legislation which passed in the House last week – community rating. The Bill would not permit rating based upon medical history by health insurance companies. Older people have more medical history (generally speaking). Medical history chronicles usage and helps insurance companies evaluate risk. A good health risk should cost less because there is less history. A high risk should cost more for the same reason.

Age rating provides an adjustment for pooling, but medical rating adds a metric to encourage good behavior by us as individuals. Studies suggest that as much as 70% of health costs are lifestyle related. Shouldn’t we retain features that encourage good behavior? Needing less medical service is good because less usage (out of need) means less cost.

If concern is over the unhealthy paying too much, most states already have reformed pricing practices that prohibit insurance companies from charging too much. In this way and other ways, health insurance companies already do pool risk. This means they don’t charge as much as they might need to any given risk. To offset losses from the high risk group, they charge more than required on a low risk individual or group. This is pooling or spreading of risk.

Is AARP’s goal to have its members pay less? Probably so. But should the outcome result in those under age 50 paying more? Why not support legislation that reforms and improves Medicare?

Mark Alder, President, Herbruck Alder - malder@herbruckalder.com - www.herbruckalder.com

Pending Healthcare Reform Legislation

The pending healthcare reform legislation suggests that penalties will be levied to those not purchasing coverage. The proposed penalties are phased in and appear smaller than the premiums.

Follow this logic:

If:
Health reform brings penalties for those that don’t buy coverage,

And:
Some employers don’t offer, and some individuals don’t buy, coverage today because coverage is too expensive,

Then:
Won’t companies and individuals just pay the penalties?

We can only hope for income tax reform. I might choose to stop paying taxes.

- Mark Alder, President, Herbruck Alder - malder@herbruckalder.com - www.herbruckalder.com

My Quick Response to this Morning’s News

My quick response to this morning’s news. I intend to write our House and Senate leaders again.

The House went first and it passed. Now it’s the Senate’s turn. We may have health reform legislation yet this year. Based upon my understanding, this new Federal Legislation would trump State Legislation and bring new “reform” to prior health “reform” initiated at the State level. As such, higher costs are on the way.


Currently in Ohio, groups with 2 to 50 employees already cannot be denied coverage. Pre-existing conditions are covered immediately if individuals can show proof of prior coverage. Groups are rated based upon medical history and rated up with a guaranteed maximum cost. Many groups are not rated up because they are blessed with healthy employees or they have worked to improve the risk of their employees via wellness programs and incentives.

Groups over 100 are rated based upon their claims experience. Is this medical history? In the words of Sarah Palin – “You bet’cha!”

Without medical underwriting to give credit for small groups’ “good health,” pricing will rise dramatically for companies in states that have health reform already. If insurance companies can only use age demographics to renew large groups, costs will rise for companies that have been active with wellness and other risk management programs.

What rewards will accrue to owners and individuals for their personal contribution for keeping costs low? Few rewards for risk management; fewer still for personal responsibility. Will companies see a need to offer wellness programs in the future? Will employees be encouraged to eat right, eat less, and exercise more?

I am fearful that government, rather than market forces, will bring costs up for all; and medical rationing will be the only tool left to reduce costs. Less for more -- was this the goal?


- Mark Alder, President, Herbruck Alder - malder@herbruckalder.com - http://www.herbruckalder.com/

Public Option

The “left” favors it, and the “right” opposes it. The “it” is a Public Option for health insurance. I have written that I am not in favor of a Public Option. To be more specific, I am not in favor of a Public Option that does not fairly compete.

Competition is good. A Public Option is good if the rules apply to all who are competing for the health insurance business. This includes the government. If the government-run Public Option guarantees a “level playing field” then I will change my mind and be supportive of a government-run Public Option.

As of right now, here are a few of my concerns – in the form of questions:

1. Does the Federal Government have to comply with State law and coverage mandates --as the insurance industry does for its insured plans?
2. Does the Federal Government need individual State approval to write a national or regional plan -- as the insurance industry does for its insured plans?
3. Does the Federal Government need to have Statutory Reserve Requirements -- as the insurance industry does for its insured plans?
4. Will the Federal Government need to stop dictating pricing to providers (hospitals and physicians) and begin negotiating with providers -- as the insurance industry does presently?
5. Do the health insurance rates charged by the Federal Government need to be sufficient to cover their cost of doing business -- as most private businesses must do to stay in business?

These are not complicated questions. However, if the answer to these questions is “No,” then the Public Option is a Trojan Horse for a Single Payer System – and I am not in favor of a Single Payer System either.

- Mark Alder, President, Herbruck Alder - malder@herbruckalder.com - www.herbruckalder.com