If Joe Biden Asked, Here’s His Healthcare Policy

Joe Biden isn’t calling, but if he did….this is what his healthcare platform should be.
Note that this is not an endorsement of any political party or candidate (sheesh, we are required to do this, in our society these days).

a. Medicare school free. Physicians can elect to pay back via service. Medical schools object? No more research dollars, effective immediately.
b. Long-term care. New Medicare Part L. Looks and feels like Medicare Part D. Carriers are required to offer, and if they don’t, they don’t get to offer Medicare Advantage or Part D, either.
c. Medicaid must go to carriers, all of it, in a competitive bid, per location.There is something called “dutch auction,” where the highest acceptable amount is paid to the 2 accepted bid per location. This is how US Treasury bonds are auctioned now, I am not inventing the idea.
d. Rx: zero side deals. Most Favored Nations as soon as a prescription leaves the pharmaceutical. There are wayyyyyy too many toll-takers involved between the time the drug is produced to the time that the patient takes a medication (long-time subscribers know that I have been pleading Amazon to get involved in Rx distribution, they could single-handedly solve this in about a month).
e. Medicare Optional Buy-In at a younger age (50 is my guess, so that the AARP doesn’t continue with its wrongly-placed, academically wrong, and distorted slogan “No Age Tax.”). It is the case that Medicare is superior to the individual market, the employer-sponsored market, every other health insurance in the U.S.
If the employer isn’t smart enough to get employees to take the Optional Buy-In, it is wasting money, that happens today. That said, if the horse doesn’t want to drink superior water, so be it. Can there be exceptions? Yes, in which case the employees stays on the employer-provided plan.
f. States can elect to create re-insurance pools, and the CMS matches the amount. One way to lower premiums is to encourage risk by the carriers, by providing a “backstop” in case they start losing money. Note that this was inadequately funded under the original ACA, and on top of that, the federal government is trying to not make payments, after the fact (boo). The concept however is sound, because we need some way to lower health insurance premiums. The issue that every location is so different with respect to healthcare costs, so the health insurance premiums vary from state-to-state, wildly. So every state can choose to fund a re-insurance program, and the CMS matches the funding, to effectively double the re-insurance pool, for those locations that have voted to enact this path. Note: there are a couple of states that have enacted something similar to this, without my feature of “dollar matching.”
g. A twist to point f is that we can get financial markets to solve this overnight, with the government as the backstop, if an only if required. It’s complicated, but Wall Street investment bankers will figure it out. The reason that they have not done so already? There has been no viable backstop.
h. Make health insurance premiums tax-deductible. This may help appease the AARP. While I have been sharply and openly critical of the way that the AARP has campaigned as stated in point e, there is political and demographic reality.

Sigh, Joe Biden isn’t walking through that door….

Winner, Winner, Chicken Dinner on Healthcare Reform

Shockingly…Not For the Normal Reason

“If you long enough,” the saying goes. Well, Ted Cruz, Senator from Texas, has proposed an amendment to the BCRA (which is the Senate version of healthcare reform). I have said privately to others, that the person that unlocks the answer to healthcare reform can become President of the United States. I am sticking to that statement. This solution can solve many problems, and add-ons can be attached to address the rest.

Cruz’ Amendment

The way it works is simple.

  • Allow carriers to offer non-compliant plans. This will allow the healthiest to select plans that are appropriate for them, without the extra “stuff” that they reasonably do not need (a 28 year old male doesn’t require pre-natal or post-natal care).
  • Those carriers, however, are required to offer a compliant plan on the marketplace, without pre-existing conditions.

The Naysayers Are Easily Swatted Away

Of course, there are those that think this doesn’t work. Here’s a short list of objections (it’s not a complete list).

  • This will create a two-tiered system, where the healthy will flock to the skimpy plans, and the sick will flock to the compliant plans. Reply: carriers cannot cherry-pick the offerings, and will have to accept the losses on the compliant plans. Under this amendment, there is a way for them to recoup those obvious losses. Under the ACA, carriers simply pull up their stakes altogether, and stop offering insurance in markets where it is too costly and too risky to offer policies, which can be an entirely rational and calculated decision. (Reminder: health insurance carriers are not random-number generators, which are inventing the price of insurance).
  • This doesn’t solve the fact that lower middle-class, older people may not be able to afford health insurance. All that has to be done is to take the budget savings from the cut in Medicaid, and move it towards increased financial assistance for older Americans. A twist on this is being proposed already (link).
  • This doesn’t solve the Medicaid cuts. True, but a) the wider net of plans, and b) greater financial assistance will allow those that no longer qualify for Medicaid expansion to select weaker plans if they are healthy, or compliant plans if they are unhealthy, with greater levels of financial assistance.

  • One More Suggestion

    This doesn’t solve the problem from last week’s “See Me After Class.” The idea that Mr American understands that being insured not only helps himself, but the entire system, is something that people prove to be false, every day. Mr. American doesn’t understand this. It isn’t clear that this amendment will fix that.
    The result is that the spiraling cost of healthcare services is not addressed. However, the Cruz amendment is a notable fix to the healthcare reform proposals offered by both the House and the Senate.

After being assigned the corner of the class, with the dunce’s cap in tow, it’s a very surprising turn of events for Senator Cruz. He is the recipient of this issue’s See Me After Class award, and while I am shocked, we have to credit when credit is due.

The 2018 Individual Health Insurance Playbook

2018 Will Bring Sharp Premium Increases
The playbook, from GH2 Benefits, to almost everyone in the individual health insurance market, will be the following.

  • Those that are certain to incur VERY high healthcare costs, you purchase the best possible plan that you can afford, as soon as possible. There will be a short transition period, and no proposals suggest that you can be ejected from a plan, after the fact. That means: get in, when you can. That means as soon as possible.
  • Those in very good health, the exact opposite. You buy the cheapest acceptable plan. People wrongly believe that insurance exists to cover everything in every scenario. Wrong. It is priced and designed to cover the unknown, with the likelihood of a particular scenario in mind. For those in exceptional health, that likelihood (in the absence of a crystal ball), is low, and thus, the amount of money a person should be attempting to pay, should be as low as possible.
  • For those in very good health, the cheapest lottery tickets available should be purchased, just in case the most likely scenario (great health) turns out to be wrong.
The Challenge
For consumers, there are enormous problems with all of these. The calculation for the people under the first bullet point is difficult. The selection of “cheapest acceptable plan” for the second group can be fundamentally different if you live in an area that is not well served by multiple, competitive carriers. The issue with the third bullet point is that there is a VERY fragmented market for cancer, stroke, heart attack, hospital indemnity, personal accident insurance. The premiums and benefits are all over the place, and difficult to locate.Do you see what statement isn’t made? There is no statement here that says the effort isn’t worth it. The question is finding the most efficient solution, which is different than saying “easy” or “convenient.”
We will be busy.
The Extra Point
While this article reads “2018,” the point here is that these ancillary add=ons do NOT have an annual calendar date. That means they can be purchased at any time throughout the year. Consumers can do as they please, but the extra point is that by delaying, you are accepting the risk of being rejected in the future.
Accepting risk with an understanding of the implications is fine. Accepting risk without knowing or thinking through the implications is a mistake.
Disclosure: GH2 Benefits, LLC is aligned with multiple carriers, we cannot show you carriers/premiums publicly, you would need to reach out to us.

The Root of All Evil Around the ACA/AHCA Debate

People are confused, and the confusion starts right here.

Healthcare:

  • Eat fruits and vegetables
  • Go for an annual checkup, your physician is a scientist, and expert on your anatomy
  • Jack Daniels doesn’t fulfill the “drink lots of fluids” recommendation
Health insurance:
  • Financial contract, with specific terms and conditions
  • Parties selling health insurance aren’t riverboat gamblers
  • Premiums based on the probability of incurring healthcare costs
  • Assigning a price, based on unknown future events is determined by a well-known formula that looks like this:

Do These Lists Look Anything Like One Another?

They don’t, and do you know why? They are not the same thing. The link here is that the price of the health insurance is based on the cost incurred IF you require healthcare services. It is vital that people understand the order of the prior sentence. The sentence does NOT state that “the price of healthcare is based on price of health insurance.”

Want to see the same error in everyday terms?

  • The price of orange juice depends on the market price of oranges (correct)
  • The price of oranges depends on the price of orange juice (how can this possibly be correct?)

The Mistakes That Result Are Almost Never-ending

The fact is that uninformed people confuse and merge these two. It is clear (to me) when I read “facts” written by people, think-tanks, advocacy groups, etc, around the ACA/AHCA debate. The ACA and AHCA are laws to govern the health insurance market. They are not laws to govern the price of healthcare. The evil here is that partisans (from all angles) are intentionally manipulating the fact that people confuse and merge healthcare with health insurance, in order to affect your (uninformed) opinion.

Wanna see examples? Here’s the most obvious.

  • We accept healthcare experts’ (physicians) opinions to be health insurance experts.  Take a look at this article: High Medical Costs? Blame the Insurance Industry. (Link) Worse yet, this entire site is littered with type of opinion, none of which are written by experts in the equation presented earlier in this post.
  • Too frequently, confused consumers turn to the billing office of a healthcare provider for health insurance advice.
  • Journalists use imprecise language, which confuses everyday readers/listeners.

When the public wrongly accepts unqualified speakers and blindly accept their unqualified opinions as if they are fact, there is going to be a problem, without a reasonable solution. You don’t need to be an expert in healthcare or health insurance to understand this, it applies to any topic.

Simple Words of Guidance

When you see articles where the cost of healthcare is recklessly combined with health insurance, your radar should be on. When you see “experts” in healthcare giving an opinion on health insurance markets, and the regulation of those markets, your radar should be on. If you get confused, then refer back to this post.

If you are a party that tries to influence others by intentionally mixing healthcare with health insurance, “see me after class. (Link)

By the way, for those of you that think that I am a “physician hater”: I grew up in a physician’s household, don’t even think about using that rationale.

 

Inaugural “See Me After Class” Award

 Didya Know The Press May Distort Stuff?

The problem with the inexact presentation of facts is that it limits the ability for people to reach a practical, workable compromise. Everyday people cannot be reasonably expected to know these facts, unless they are spoon-fed. The source of that spoon-feeding is usually the press. “See Me After Class” awards are going to those that may look like they are presenting facts, but that presentation is skewed, calling into question the entire conclusion of the article, study, whatever. Does “inaugural” mean most “egregious?” No, there are worse examples out there, this is just one of many.

This is a paragraph from the link (here), “Insurers want to raise Obamacare rates as much as 53 percent.” The writer is Sarah Kliff, one of the internet’s most prolific reporters on healthcare policy on the internet. Vox.com is founded by Ezra Klein, formerly of the New York Times.

First, the caveats. It is not my principal position that people are stupid or uneducated. In fact, reporters with the resumes of Mr Klein and Ms Kliff are impressive. It isn’t as if the positions attained were simple to get. That doesn’t mean that they are experts in the pricing of financial contracts, and that doesn’t mean that the reporting of facts is even-handed. Omissions of facts is a very important part of debate on a topic that is worth almost 20% of the national GDP. 

Everyday people need to be VERY careful in scrutinizing information or “reports.”

Let’s Take a Look
This article starts with facts, i.e. that proposed individual health insurance rates have been proposed in a list of states, and the highest proposed increase is in Maryland, at a whopping 53%.

This is the next paragraph (everything in blue is an exact reprint taken from  the article), and my comments are in red.

The big question: Why are insurance plans requesting such big rate hikes?

It is incredibly hard to pinpoint which part of the rate increases are a product of the instability and uncertainty the Trump administration has created around Obamacare’s future — and which part reflects a marketplace that was already struggling.

There are some clear ways the Trump administration has driven up rates.For example: CareFirst, a big marketplace carrier in the DC area, has tacked 15 percent onto its rates because it does not expect the White House to enforce the individual mandate. DC Area = a small fragment of all markets nationwide. This is could easily be an outlier, especially after you present a much large carrier, with a nationwide presence, immediately thereafter, and have omitted other published financial data. Further, if this turns out to be unwarranted, and the carrier has not spent 80% of premiums on claims, then policyholders will receive a rebate based on Medical Loss Ratio rules.

But other factors leading to the 2018 rate increases aren’t so clear-cut. Lots of insurance plans have said in their rate filings that they are worried about a “shrinking market” or sicker enrollees that will drive up premiums. Here’s what Anthem (Anthem is a national carrier, one of the nation’s 5 largest, and publicly held, meaning that its statements are subject to securities regulation), for example, told regulators in Connecticut about why it wanted a 33.8 percent rate increase:

“We are forecasting that the individual market will continue to shrink and that those individuals with greater health care needs will be the most likely to purchase coverage and retain their coverage, thereby accelerating the trend of increased morbidity. … This dynamic is driven by a guaranteed issue market with rating constraints and an individual mandate penalty that continues to be far less than the cost of coverage for most individuals.”

It’s true that before Trump’s election, insurance plans worried that the people signing up for coverage were sicker than they had expected and that enrollment numbers weren’t as robust as forecasters had expected. Where is the example where Aetna has reported $900 Million of losses in individual markets over the past 3 years alone, and there is no mechanism by which to recover those losses? Humana and UnitedHealthcare have reported results which are very similar in scope and scale to Aetna. Where are the examples where Marketplace carriers have made, on average 2-3% profit on individual health insurance over the past 3 years (reported by the Commonwealth Fund, a think-tank, and shown in this Newsletter in prior editions), and accepted all of the risks inherent in being the seller, such as unlimited lifetime maximum benefits?  It’s also true that the uncertainty around the law’s future — whether the administration will, for example, continue doing outreach around Obamacare enrollment — has exacerbated those concerns. If your stated evidence was the only information available, then yes, your conclusion may be feasible. But since you have completely ignored the other widely available data by the largest carriers and think-tanks in the nation, your conclusion of “exacerbated” doesn’t seem warranted.

At no point is there any mention of the fact that the risk corridor is now gone, and the risk corridor protected carriers from losses. The costs of the losses were borne by the US Government, which has not reported the size of those losses. In addition, where is the part that says that the comments in red above, occurred even with the risk corridor (reinsurance) in effect. That extra layer is now gone. The omission of this fact displays either an incomplete knowledge of the facts, or an intended distortion of facts.

At this point, it seems fair (your omission of facts is equal to fair?) to say that some part (unless you are in position to quantify, you shouldn’t be assigning “parts,” that means that it could be 1% for one part and 99% the other, is that your defense here?) of the 2018 rate increases are due to the Trump administration and some part are due to the law itself. It seems clear to me that the Trump administration is making Obamacare more expensive, which I’ve written about at greater length here. Attributing a particular amount of the increase to Trump, however, is going to be awfully difficult, if not impossible. So the only fully-reasoned sentence is here, at the very bottom of the article? In fact, if you added the information in red, the other conclusion could be “this is entirely possible,” and the primary reason for rate increases is ongoing difficult in individual health insurance markets which we have ample evidence to support, with a secondary, speculative reason being the proposed AHCA. 

SEE ME AFTER CLASS
Don’t worry, you won’t be the only one, and the others that are required to see me after class will be omitting and skewing actual information just as badly as you have.

The ACA War: Truths and Myths

The Problem Is You Only Get Partial Address of Issues. Except Here.

The reasons you get only a partial list? There are actually many, but these are the most annoying.

  • Person has another agenda which doesn’t acknowledge that there are valid counter-arguments that fundamentally destroy the entire argument being made
  • Person is under-qualified or not fully informed

Unfortunately, the result is that the reader (that is you) is left with only partial truths, and extreme views (Obamacare is a disaster, Obamacare repeal will kill thousands). This list doesn’t care what you politics are, it doesn’t care where you live, it doesn’t care how much money you have, it doesn’t care if you are sick. Personally, I am disgusted at the distortions being presented to you, defenseless against the cross-fire. Let’s move on.

The ACA is a tax. 100% true.
Let’s be clear: the ACA is a tax. If you have been led to believe otherwise, and believed otherwise, then you are entirely mistaken. When the Supreme Court affirmed the legality of the ACA, it said so in a very elegant way. Basically, the Supreme Court majority opinion boiled down to “The ACA is a tax, and the government has the Constitutional right to tax. Repealing taxes is not a court’s issue, it is an issue for elections.”
Does the tax have a rationale? Yes, in much the same way that the requirement to purchase auto insurance has a rationale, the requirement to purchase health insurance has a rationale. The difference, however, is that the cost of the financlal downside to not having health insurance is MUCH larger, on average, than the cost of not having auto insurance. Simply ask a person with an incurable disease that has health insurance, “What would’ve occurred if you had not had health insurance?”
Eliminating the Individual Mandate Will Cause Insurance Premiums to Rise. Uncertain.
This is what is keeping insurance companies awake at night. The risk here is if If you eliminate the requirement to purchase health insurance, who is going to cancel? The healthy. That leaves ONLY the unhealthy as the remaining policyholders. That means that the cost of claims will exceed the premiums by an enormous degree. Given that insurance premiums are calculations based on predictions by the carrier who is responsible to pay for claims, the price of health insurance can ONLY go higher in the future.
There is an important caveat here. If unhealthy are forced to enter into “high-risk” pools, as described below, then that could be a counterbalance against the healthy, who will most certainly cancel their insurance.
ACA Repeal Would Allow Insurance Companies to Run Amok. Untrue.
The problem with the hysteria is the fact that people are taking an inch and stretching it a mile. The idea that insurance companies would get fatter is untrue.
  • Simply keep the Medical Loss Ratio intact, to limit the profit margin and require a rebate of premiums that was not used for claims. That is the system currently in place.
  • Ever hear of competition? By the way, the prospect of repealing or substantially modifying the ACA (and Medicare) probably makes the mega-mergers among health insurance carriers unlikely, because that would potentially reduce competition, precisely at the wrong time (that is a new opinion by me).
A tax credit can fix this. Uncertain.
The question is whether or not the proposed tax credit will create an incentive enough for people to purchase health insurance. For those who have severe medical conditions, the answer will be yes, because they are a buyer at almost any price. For those that are healthy, however, the answer is entirely uncertain, and it will depend on the rest of the tax code, the person’s understanding of the financial downside, and his/her financial situation.
No “pre-existing condition” clause has made health insurance more expensive: 100% true.
Sellers (health insurance carriers) had to establish a price, stick to it, and it didn’t matter how sick someone was, the seller had no choice but to accept every new policyholder. For those with astronomic medical expenses, this is a guaranteed loss for the seller. Even if 64.5 years old, a premium of $1500 a month would pale in comparison to the amount of benefits that the health insurance company would have to pay to doctors and/or hospitals. The problem here is that there were not enough healthy buyers to offset this loss. Whoever wrote the ACA didn’t properly incentivize the healthy enough, so that they would buy health insurance, i.e. if anything, the tax penalty for not purchasing health insurance was too low.
We can fix this with “high-risk pools” or “reinsurance.” Maybe, and 100% False, in that order.
This illustrates the inconsistency of logic. A “high-risk” pool would be created so that those with pre-existing conditions could still purchase health insurance. Really? If sellers are withdrawing from exchanges because they don’t want to sell to those that “may be” sick, then why would they want to sell to those that are certainly sick, i.e. the people applying under the high-risk pool? A tax credit will not be high enough for these people.
The same complaints about the ACA (high cost, narrow networks) will occur. The exact same complaints that “prove” the opponents’ points. The fact is that high-risk pools have existed in the past, and the problem with them was that the networks were narrow, and the cost high. That said, will that allow the healthy to purchase health insurance at lower premiums? Yes. Since the answers vary here, the answer is maybe.
Reinsurance cannot work.
To review, reinsurance is “insurance on insurance.” A health insurance company would itself buy insurance, to limit the downside to itself. The reason this cannot work is that if it could’ve worked, then it would’ve already existed. Why do we know this? The reason is that Wall Street would’ve created an investment (an asset-backed security), where the asset is the reinsurance. There are no natural buyers of this risk, because if there were, then Wall Street would’ve found them, re-packaged the risk, and would’ve already sold it to them. The mere fact that it doesn’t already exist is all the evidence required.
Update: there are proposals that the government will provide the reinsurance. If that is that case, then that will leave US taxpayers holding the risk. So, the most sophisticated investors in the world will not touch this risk, the answer is to leave the risk with the least-informed, the public. The problem with this is that the Medicaid problem (“open-ended check”) will have a new partner, reinsurance of high-risk pools.
Allowing Carriers to Sell Across State Lines Will Fix This. False.
This has been tried in the past, and didn’t work, in Maine and Georgia. Why?
Building networks is not child’s play. You have to get doctors, hospitals, and other healthcare providers to all agree to “sign up” to a network. Let’s say you are a health insurance company in Texas. You don’t have the resources to sign up and reach agreements with doctors and hospitals in neighboring Oklahoma, much less in Alabama. They have to agree to a way of being compensated for their services, while the cost of living will vary across regions. Let’s say “they could calculate this.” Really? They would also need to be able to correctly predict the number of policyholders, per location. Almost impossible. This alone is a death bell to this idea.
The only conceivable exception would be for the largest national carriers to execute this, because they already have people in place to reach out to healthcare providers. Even then, it isn’t clear that the healthcare providers would agree in a scale large enough to create competition among multiple carriers.
The Number of Uninsured is Lower. True.
Does this matter? To hospitals, no doubt. They are required to serve patients, and fewer uninsured means a greater chance of being compensated. We can debate about the trees, but this is the forest.
The unanswered question is: has the lower number of uninsured meant that the costs to the system are lower?
The problem that the supporters of the ACA have is that they cannot answer this question, which is an important one, because since the ACA is a tax, the question a taxpayer should rightfully ask, “what did I get for paying the tax?” The idea is that few uninsured will “bend the cost curve” so that overall, systematic healthcare costs will decline. Here is a question that the supporters have not answered.
Medicaid Expansion Has Been Helpful for Many. True.
This cannot be a debate. For those that live in states that implemented Medicaid expansion, the ACA has, in certain cases, made health insurance affordable to those that would not have been able to purchase it. For those who live in states that have not implemented Medicaid expansion, they have not reaped the obvious benefits.
Medicaid expansion recipients have received a) lower premiums, and sometimes, b) lower cost-sharing responsibilities (deductibles and out of pocket maximums). Point b) here is under immediate threat, with an answer coming in February (as of this writing).
(Update) Eliminating Medicaid expansion, which is how people paid lower premiums, and had reduced cost-sharing, will mean that many people will cancel their insurance. Who are those people? The people that believe “I’m not getting my money’s worth.” Who are those people? The healthy. That leaves the unhealthy or the very risk-averse as policyholders. This is the feedback loop involved, because if the Individual Mandate is eliminated (see above), then the healthy, whether they receive Medicaid expansion or not, will predictably leave. The question is whether or not the tax credit is enough to incentivize people to stay with their insurance, because if it is not, then the population of policyholders will be the unhealthy, leading to much, much higher costs, and much higher premiums in the future.
Repealing the ACA Will Threaten Medicare. Uncertain.
Read the clip in the Medicare Section.

Socrates Is Right: This War is Political  
The logic runs that “The ACA is making Medicare go broke, so we need to look at everything together.” That presumes that the solution will be better, and as you can read from this article, it is entirely unclear that a simple repeal of the ACA will make things better.

HERE IS THE PROBLEM. WE CANNOT GET AROUND THIS DIFFERENCE.
“People Should Individually Decide” Presumes This

  • People understand the risk they face
  • People understand the effect their choice has on othersThe question is whether the general population is qualified to understand these, to make the proper determination? What is entirely rational for the healthy (to not buy, at almost any price), hurts the systematic healthcare costs.
The problem here is that an unqualified decision here has costs to the overall system, the effect is NOT ONLY on the individual him/herself. The result is the vicious cycle we have at the moment. There is NO WAY to isolate these sides. NO WAY. The healthy go to the same physicians as the ill. The healthy go to the same hospitals as the terminally ill.Those who cannot afford to pay, those who rely on government assistance go to the same hospitals. So the end result is that those that cannot pay, but require assistance, receive Medicaid. Medicaid is severely restrained, and therefore hospitals and doctors do not receive full payment for their services. Who do they charge? The ones that can afford it. And around and around we go.For those that believe that government exists to protect those that cannot decide correct for themselves, the ACA, warts and all, is necessary. For those that believe that people should be left alone to decide, the ACA must go. Both supporters and opponents are unlikely to convince the other. The result? War.

Medicare Deadline Approaches: Special Notes

December 7 Approaches Quickly

The Annual Election Period runs between October 15 and December 7. During this period, you can change your Medicare Advantage or your stand-alone prescription plan. Further, you can change your mind, as many times, as you want, through the end of December 7. The last plan selected is the one that will be in effect on January 1, 2017.

Medicare Advantage Plans Evolve

Depending on the Medicare Advantage plan, you may be required to have a Primary Care Physician, whose referral is necessary in advance of seeing a specialist. Generally speaking, this is an HMO. For HMOs, it can be the case that you would be responsible for the entire cost if the healthcare provider is not part of the network. There is also a twist, called HMO-POS, where in some instances, you can receive healthcare services from providers that are outside the network.

There’s more. There has been an increasing number of HMO and HMO-POS plans that will allow you to visit a specialist, who is inside the network, without a referral. This may be called “Open Network” by your Medicare Advantage provider.  

As always the case, PPOs will allow you to receive healthcare services from providers outside the network, but you must keep in mind that your out-of-pocket expenses will very likely to be higher, when compared to using providers inside the network. In addition, it is usually the case that your health deductible will be much higher when you use providers outside the network.

Dental / Vision

Many Medicare Advantage plans have very basic dental and vision benefits embedded within the plan. However, these benefits are usually very light. For example, it is usually the case that major restorative dental services are not included.

Many (if not most) Medicare Advantage plans also include an enhanced dental/vision option. This year, there are additional restrictions, mandated by the CMS (Center for Medicare and Medicaid Services), that disallow the marketing of these enhanced features in advance of a person enrolling in a Medicare Advantage plan. However, if a consumer proactively asks, then the question can be answered.

Medicare Advantage and Observation Status

The newly-enacted “two midnight rule” should make the controversy that surrounds observation status and skilled nursing facility care less difficult to manage. To review, if you are a patient in a hospital for a period that crosses two midnights, then you are presumed to be admitted on an inpatient basis, in which case you are covered by Medicare Part A, and if you stay over 3 midnights, then that will allow you to receive skilled nursing care  (or home health care) for the first 20 days, without charge.

Unfortunately, that does not completely solve the issue. For example, you could be admitted to a Skilled Nursing Facility directly, without hospital admission. While not the most probable outcome, these types of circumstances can occur more than originally believed. The point? Certain Medicare Advantage plans eliminate the requirement for inpatient hospital stay altogether, and beneficiaries in those plans can receive skilled nursing facility care without fulfilling the 3-day inpatient hospital stay altogether.

The General Point

These are just a few simple examples of details embedded in Medicare Advantage plans. It is an admittedly incomplete list. However, the general point is that the details within the Medicare Advantage plans can offer features (or risks) that may mean that using the time, between now and December 7, to review the plans available to you, a worthwhile use of time.

The Big Short and Obamacare

Wait, Isn’t The Movie About Housing?
Yes, that’s true, but it is more about the jobs of the characters in the movie.

Remember the Scene With the Chef?
Roughly speaking (very roughly), the Chef was taking different ingredients, mixing them together and selling soup. Yeah, if you have a background in fixed income derivatives, then I am taking a shortcut here. Anyways, the chef was mixing up the ingredients and selling soup. This process is one that Wall Street and investment bankers do all the time, with every financial contract in existence. They have computing and academic resources, that are basically unlimited.

Wall Street Does This All The Time
The general point is that Wall Street finds ingredients and tries to create soup all the time.
In The Big Short, the ingredients were mortgage contracts that people took out to recklessly speculate on the housing market. We can all agree that a mortgage is a financial contract. Fact is, there are a lot of other financial contracts in the world.
For example:

  • Credit card receivables
  • Auto loans
  • Student loans
  • Commercial mortgages (on commercial buildings)
  • Sub-prime auto loans

Wall Street collects the ingredients, and finds out if it can sell “soup” from the collection of ingredients, and the price that it can sell the “soup.” If the cost of ingredients is lower than the price it can sell “soup,” then it makes and sells as much soup as it can, given the availability of ingredients. There are many different types of soup in the world, and the ingredients are not mortgages, but rather, contracts in the bullet-pointed list.  That is what every chef would do, and that is what they are paid to do.

What Does This Have to Do With Obamacare???
What in the world does this have to do with Obamacare? One major objective of this Newsletter and the central idea to Medicare Mayhem is to correct this wrongly-held thought. Health insurance is not healthcare, health insurance is a financial contract.
Now, re-read the prior paragraph. If Wall Street could’ve collected “ingredients” that were health insurance contracts, and made a soup of those ingredients, and that soup would be profitable, it would’ve already done so. There can be ZERO doubt that Wall Street has considered this path, it has every motive to be a chef, it knows that there are many buyers of soup (investors), it is simply that the price of the ingredients would be too high, and thus, the soup would be unprofitable.

The reason that the soup would be unprofitable is that one of the ingredients that it would require would be the ingredient that is basically the anti-poison ingredient. That ingredient is described in the prior article.

From the prior article, ‘The answer is yes, there is a layer of “backstop protection,” just in case.’ Soup buyers want to have that ingredient to protect themselves from poison, and it isn’t available at a price to make soup profitable. What is the “poison” described here? Poison are the huge losses that health insurance carriers can suffer when their estimates are systematically wrong.

SO, if you understand what the chef actually was doing, and how he was doing it, you can understand why it was almost certainly the case that the ingredients were not good enough to sell soup. For Obamacare, that meant that the ingredients were not good enough, meaning that the price of health insurance contracts was too low, given the risk. The buyers of soup would not buy soup because the quality of the ingredients was not high enough or the price of the anti-poison was too high.

The bottom line: the soup could not be made if the ingredients were health insurance contracts.  If it could’ve been made, it would already exist. Motivated chefs and natural buyers of soup exist around the world. Given that it doesn’t exist, something MUST be wrong with the ingredients. Those ingredients? Health insurance contracts.

Back to The Big Short
Last point, which also illustrates how wrong The Big Short was in describing the participants. In addition to portraying the reckless speculators on housing as exotic dancers, it portrayed the buyers of soup as the crazed people betting on Selma Gomez playing blackjack.

That could not be further from the truth. The frenzied crowd was highly educated, had access to a global menu of “soups,” and could put the chefs in competition with each other. In many cases, the frenzied crowd had better information about the availability and price of soups than the chefs. Do you remember the scene that revealed this information? NOPE.

Not Easy
Viewers were left with an incomplete, highly skewed set of information, which is why I have spent a lot of time dissecting the movie for you, because this is what you face all the time in varying degrees when you read financial articles, watch CNBC, and listen to elected officials. It’s difficult enough to start with, and it’s made a lot harder by these partial, or biased, presentation of facts.

Here’s the Netflix link.
Here’s the Amazon link.

Employers Cutting Health Benefits for Spouses

Unpopular Opinion Alert!

This isn’t really news, but it is mentioned in this post. The reality is that this may make financial sense for the employer, and surprisingly for the employee as well.

Why?

a. The spouse can cost more than the employee depending on the specific plan. The math of money may be better for the employee’s family, if the spouse finds his/her own individual insurance. This is especially true if the spouse is eligible for Medicare.

b. People may wrongly conclude that employer-provided health insurance is always using pre-tax dollars. That is not always the case: the employer saves on payroll taxes for the amount it contributes, and the MOST that the employee can save is the “income tax rate” that he/she ultimately pays. The bottom line is that the employee is simply deferring taxes, or has an effective “discount.”

SO, it comes to a “math of money” question.

a. What good is it if the price is 35% higher, and your tax rate is 15%?

b. The PPACA makes it impossible for carriers to exclude you based on health information.

c. You will qualify for a life qualifying event if an employer cancels your eligibility during a period that is NOT the Open Enrollment Period (which keeps moving).

The landscape has changed because costs are higher, there are tax incentives at small employers that use SHOP, and the PPACA has eliminated the worry of a spouse being refused coverage by a carrier. When you add these together, the only conclusion we can draw is that it makes sense to check it out yourself.