Wednesday, December 4, 2013

HCR -- Real Obamacare Arrives In January

Listening to news and commentary, one would think that Obamacare has been struggling along for years and if something isn't done soon to keep it alive, like a victim getting CPR pulled from a burning building, the whole enterprise is at the brink of death.

Nothing could be further from the truth. All we have experienced thus far is a couple of juicy tidbits -- kids on family policies to age 26, a few cheap freebies having little to do with needed care (other than trolling for new business, something insurance and providers do already -- they call it <i>screenng</i> or <i>preventive care</i>). Contraceptives are being passed out more freely. Big expense, you know, like those lollipops where bank tellers work. And MLR rules (Medical Loss Ratio) have kicked in, but the results are boring and small, and most consumers never heard of them. Aside from these, not much has already happened.

One of my favorite haunts, The Health Care Blog, published a post by Robert Laszewski, a policy expert with the insurance industry, which adds fuel to the panic fire with the title Is Working. But Is It Working Well Enough to Withstand the Enrollment Surge? Again, one would think another casualty from a battlefield or car wreck is facing the Angel of Death. But nothing could be further from the truth. When I saw that headline and nervous comments that followed I left this....
ACA changed the insurance rules and launched the notion of managed competition via “exchanges” which vary — because we haven’t any federal standards (other than what ACA established for the first time) — from state to state. Aside from that, not much is new. It seems the country is waking up from a nightmare and facing the outrageous costs of our broken healthcare system for the first time.

New Years Day is the date after which the new rules come into effect. As Mr. Laszewski said simply, “many hundreds of thousands of people [are] eager to get guarantee issue health insurance for the first time or replace a canceled policy by January 1.”

That date is not the end of insurance. That is the date it starts. It is true that group insurance plans typically have “open enrollment” periods that correspond with the calendar year, mostly because taxes and accounting systems are pegged to calendar years, with Medicare being the biggest gorilla in the health care jungle.

But the exchanges are not about group insurance. The exchanges are about what the industry calls the “individual” market, health care insurance sold to individuals any time they choose to enroll. The only thing that is different is that newly insured people must enter into one year contract agreements with insurance companies of their choice in much the same way they buy telephone service or finance a car or some other purchase. Individual health insurance is like homeowners, auto or term insurance, but the agreement is only a year at a time. In some cases the terms are quarterly. After that, anyone not pleased with the company they have can drop them like a bad habit and enter into a new agreement with another company. Unlike group insurance, individual insurance is not locked into the calendar year.

Most of the panic we are seeing is the result of many people “going naked,” without health insurance for a variety of reasons until they buy a policy (individuals previously uninsured now legally required to buy a policy, selected spouses dropped from group policies, individual policy holders receiving cancellation notices from policies no longer in compliance with the rules).

Newly hired employees typically work some period of time before eligibility for a new employer’s group insurance, and people who become unemployed — even if they are fired — are entitled to a COBRA extension of their group insurance (if they faithfully pay the monthly premiums, which are shockingly huge — the full amount with no employer subsidy), presumably until they either furnish their own individual coverage or join another employer’s group plan.

After January 1 the exchanges do not vanish. 

Individual insurance is not like group insurance. Unlike Medicare or company group plans that are “closed for new business” until the next open enrollment period, the individual insurance market, like that for other types of insurance, will still be soliciting business. Their sales forces will see to that. Depend on it.

This is not a rock concert that is gonna play only on New Years Day, after which if you missed it that’s just too bad. I don’t mean to make light of the problem for those with medical problems living uninsured until they finally get accepted by a plan. But for that group little will change other than their wait, like that of the airline passenger whose flight is delayed by bad weather, will be extended. But for most people getting individual group insurance, the game is not coming to an end but instead is just beginning.

Whether or not companies will be scrambling to get their policies listed with the exchanges remains to be seen. My guess is that the policies now being offered are bare-bones policies meeting only the strictest and cheapest of the various plan levels — bronze, silver, gold, platinum. But when the ball gets rolling, if the various state insurance commissioners and governing authorities are on the ball there should be competition among as many companies as possible wanting to get into the game to sell individual insurance policies.

Millions of Americans don't have a clue what "insurance" really means.
I have spoken briefly with a couple of young people who are not insured and have never even thought about it. It’s shocking how little many people know about the basics of insurance. After all, we are all insured already far more than we think about. Work related injuries and illnesses are covered by workers comp. Injuries on someone else’s property are covered by their liability insurance, Auto and other accidents are covered by a variety of insurances, I know that in Georgia one can get an “uninsured motorist” addition to auto insurance in case you are in an accident with someone driving illegally without insurance. So insurance terms — co-pays, co-insurance, deductibles, caps, reimbursements, out of network, POS, HMO, PPO — is like another language to those who have never had any experience with insurance. It's tough enough for those of us who are already insured. Why else do we need EOBs?

Any agent can tell you that before someone gets insurance they have to learn a lot they never knew about before. Insurance is NOT health care. It is a way to manage and balance the costs of health care. And those costs are not established by the insurance company but by the doctor or other provider. The owner of a new insurance policy for the first time is is in the same boat as someone who buys a PC and doesn’t know how to use a keyboard. He or she has a lot to learn.

January 1, 2014 is not the end. It is a new beginning.

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