Our Sick Healthcare System

An article from Health Underwriters:

Why Government-Run Public Plan is Misguided 

 

 

• Reforms to the private insurance markets are widely recognized as necessary. But 

the creation of a government-run public plan is a bad idea and a waste of 

resources that would likely displace tens of millions of happily insured Americans 

and exacerbate the worst elements of our current system: gross inefficiency, high 

costs, and bureaucracy. Creating a mammoth, complex, hugely expensive, ill- 

designed reform that is not likely to be popular when understood. 

• As a prominent Lewin study concluded, a government-run public plan would 

likely attract consumers not by virtue of superior performance on cost control and 

quality, but by its ability to exploit unfair advantages that would tend to shift and 

hide its costs away from enrollees and enrollee premiums.1 Nearly 6 out of every 

10 Americans (118 million) with private coverage could lose their current health 

care coverage, and 130 million Americans could end up on a government-run 

health care plan if the government sets payment rates at Medicare rates. 

• Expansion of government-run programs could also exacerbate the cost-shift that 

already drives up average health care spending by $1,788 (or 10.7 percent) 

annually per family.2 A government-run plan would exacerbate the cost shift 

because when government payment rates are too low, providers shift costs to 

private payers to make up the difference. 

• Existing public plans provide less coverage and restrict provider access more than 

the average employer-sponsored plan. The Congressional Budget Office (CBO) 

estimated that the benefit package for Medicare is 15 percent below the average 

employer-sponsored plan. Under Medicaid, specialists are often inaccessible 

without long waits. Under a new government-run plan, Americans will find it 

more and more difficult to make appointments with physicians and other health 

care providers. This is because lower payments will make it increasingly 

unaffordable for providers to see patients—particularly the increasing number of 

patients with public coverage. 

o MedPAC: 30% of Medicare enrollees seeking a new primary-care 

physician have difficulty finding one 

o MedPAC: 30% of physicians taking no new Medicaid patients 

• Public programs like Medicare moreover lag behind the private insurance industry 

in terms of containing cost and improving quality. Medicare just recently started 

refusing to pay medical care providers for ‘never events’ where a patient suffers a 

knowable and catastrophic mistake such as having the wrong limb removed. The 

private insurance market has been doing this for years. 

• A government-run plan like Medicare does not have to comply with varying state 

insurance regulations nor does it have to underwrite applications because 

                                                 

1 

 The Lewin Group, “The Cost and Coverage Impacts of a Public Plan: Alternative Design Options,” Staff 

Working Paper #4, April 6, 2008.   

2 

 Millman, “Hospital and Physician Cost Shift Payment Level Comparison of Medicare, Medicaid, and 

Commercial Payers,” December, 2008. 

 

Medicare is open to all seniors at the same cost. Reforming the insurance market 

could significantly reduce administrative costs for private plans. 

• Private insurers must build provider networks. These networks can include high- 

value providers and exclude low-quality providers. Except for certain 

circumstances, including criminal acts, Medicare is forbidden from excluding 

poor quality providers. It lets in everyone who signs up. So one question to ask is, 

will a public plan have Medicare’s indifference to quality -- or invest in the cost 

of a network? 

• Private insurers must negotiate rates. Medicare just fixes prices using a statutory 

and regulatory scheme. And anyone who imagines a public plan would be less 

costly than private plans must keep the following issue front and center: In the 

many procedure categories where Medicare’s statutory price does not cover full 

provider costs, shortfalls are shifted to private payers who end up subsidizing the 

public program. So, will a public plan negotiate rates or simply use fiat as a 

means of gaining subsidies from private insurance? 

• Private insurers must combat fraud -- or go out of business. Indeed, these payers 

have every incentive to invest in antifraud personnel and strategies down to the 

point where return and investment are equal. But anyone who thinks that a public 

plan could serve as a "yardstick" for the private sector needs to consider 

Medicare’s dismal record with regard to fraud, waste and other abuse. 

• In fact, the total amount of Medicare fraud is unknown. The government does not 

measure or estimate fraud in its programs; instead, it measures payments made “in 

error.” According to Medicare's own most recent data, payments made in error 

amount to over $10 billion annually. (Medicaid's payment errors in 2007 equaled 

a whopping $32.7 billion, according to a report by the Department of Health and 

Human Services.) Others have claimed Medicare’s payments made in error are 

much higher. Even with the inclusion of the budget of the inspector general for 

the Department of Health and Human Services, Medicare spends less than one- 

fifth of 1% on antifraud measures -- a small fraction of what private plans invest 

in their efforts to build a network of honest providers. 

• And because of the vagaries of politics, in four of the past five years Congress has 

turned back Medicare’s pleas for $579 million of additional antifraud funding, on 

the grounds that these dollars subtract from the budget funds for curing cancer 

and anti-obesity campaigns. Based on experience, Congress will always 

underinvest in fraud. Yet according to a House of Representatives Budget 

Committee hearing in July 2007, return on investment for certain Medicare 

antifraud measures were estimated to be in excess of 13-1. Will a public plan also 

hemorrhage from fraud because of chronic Congressional underinvestment? 

o “The significant size of Medicare’s erroneous payments suggests that the 

program’s low administrative costs may come at a price.” MedPAC, March 2009 

o “The traditional fee-for-service Medicare program does relatively little to 

manage benefits, which tends to reduce its administrative costs but may raise its 

overall spending relative to a more tightly managed approach.” CBO, December 

2008 

Private administrative costs cover important services like disease management programs 

and research to determine which interventions actually work. It is ironic that the same 

advocates who frequently cite the need for the government to spend billions in taxpayer 

dollars to improve health outcomes are the same who decry the high administrative costs 

in health care plans. As Ezekiel Emanuel, an adviser to President Obama on health care 

(and brother of White House Chief of Staff Rahm Emanuel), wrote, “The idea that we 

could wring billions of dollars in savings [from cutting administrative costs] is seductive, 

but it wouldn’t really accomplish that much. For one thing, some administrative costs are 

not only necessary but beneficial. Following heart-attack or cancer patients to see which 

interventions work best is an administrative cost, but it’s also invaluable if you want to 

improve care.”3 Additionally, Medicare loses up to $60 billion to Medicare fraud each 

year due to inadequate scrutiny of claims. While private health providers pay (out of 

administrative costs) for programs to keep fraud to a minimum, the federal government 

invests little, and as a result taxpayers pay more. 

• None of these considerations should be interpreted as a defense of the status quo, 

or a denial of the fact that major health reform is needed.  

• The creation of a government-run public insurance plan would make the 

government the gatekeeper – the controller of prices and the provider of coverage. 

Health care decisions would increasingly be made in Washington and subject to 

political pressures that take into account neither patient needs nor economic 

realities. The cost of the program would be such that the effort to pay for it would 

become the central concern of American politics – crowding out other 

government priorities. As is seen around the world, health care is a central part in 

ballooning welfare states. 

• There are really only two ways to keep costs under control: by building a real 

marketplace in which cost-conscious consumers make choices in a more efficient 

delivery system or by imposing arbitrary limits, determined by the government, 

on care.  

                                                

3 

 Ezekial Emanual and Shannon Brownlee, Washington Post Op-Ed, “5 Myths on Our Sick Health Care 

System,”  November 23, 2008. 

Berlin & Denys Insurance: Health Insurance and Government Control

Berlin & Denys Insurance: Health Insurance and Government Control

Health Insurance and Government Control

Many people have been discussing the need for Health Care Reform in this country. Health Insurance premiums and medical service charges continue to rise at rates faster than inflation.
Some people believe that a government takeover is the way to solve the crisis. I would submit to you that government is one of the causes of the problem. This country was founded on the principles of self reliance and personal responsibility. The government is supposed to operate in the background as a benefit to the people and not as burden. Government intervention should be seen as a last resort. These days more and more people are looking for the government to fix their problems. I should not be forced to pay for someone else to go to the doctor.

I support Health Care Reform as long as the private sector is the solution. If you put aside the Constitutional questions of increased government you would then want to look at how the government has handled other things under their control. Would you like the same people that run the IRS, Medicare and constantly fund pork barrel projects to be in charge of your health care choices? In any county that has gone to a socialized medical system you will find rationing of care. They must control costs so they decide who gets what care. This means that you could be prevented from getting the treatment you need because you fall outside of their guidelines. Maybe you are too old or the treatment is too costly. See this web page and video.

Everyone should have access to medical care and should pay the cost for that care. Health Care Reform, if done correctly, can reduce the costs and help many more people to be able to obtain coverage. You should be afraid if you hear "Relax I am from the Government and I am here to help!"

Health Insurance - Different types

Many people have a very basic understanding of health insurance. The information below, from our website http://www.berlindenys.com, gives a few more details. If you have any specific questions, please feel free to give us a call at 800-946-3303 or send us an email at agency@berlindenys.com. Why Do You Need Health Insurance? Evolution Types of Insurance Fee-for-Service (Indemnity Plan) Health Maintenance Organizations (HMOs) Preferred Provider Organizations (PPOs) Point-of-Service (POS) Where Do People Get Health Insurance Coverage? Group Health Insurance Health Insurance Medicare Medicaid

Why Do You Need Health Insurance? Today, health care costs are high, and getting higher. Who will pay your bills if you have a serious accident or a major illness? You buy health insurance for the same reason you buy other kinds of insurance, to protect yourself financially. With health insurance, you protect yourself and your family in case you need medical care that could be very expensive. You can't predict what your medical bills will be. In a good year, your costs may be low. But if you become ill, your bills could be very high. If you have insurance, many of your costs are covered by a third-party payer, not by you. A third-party payer can be an insurance company or, in some cases, it can be your employer. Evolution Health care in America is changing rapidly. Twenty-five years ago, most people in the United States had indemnity insurance coverage. A person with indemnity insurance could go to any doctor, hospital, or other provider (which would bill for each service given), and the insurance and the patient would each pay part of the bill. But today, more than half of all Americans who have health insurance are enrolled in some kind of managed care plan, an organized way of both providing services and paying for them. Different types of managed care plans work differently and include preferred provider organizations (PPOs), health maintenance organizations (HMOs), and point-of-service (POS) plans. You've probably heard these terms before. But what do they mean, and what are the differences between them? And what do these differences mean to you? Types of Insurance Fee-for-Service (Indemnity Plan) This is the traditional kind of health care policy. Insurance companies pay fees for the services provided to the insured people covered by the policy. This type of health insurance offers the most choices of doctors and hospitals. You can choose any doctor you wish and change doctors any time. You can go to any hospital in any part of the country. With fee-for-service, the insurer only pays for part of your doctor and hospital bills. This is what you pay: A monthly fee, called a premium. A certain amount of money each year, known as the deductible, before the insurance payments begin. In a typical plan, the deductible might be $250 for each person in your family, with a family deductible of $500 when at least two people in the family have reached the individual deductible. The deductible requirement applies each year of the policy. Also, not all health expenses you have count toward your deductible. Only those covered by the policy do. You need to check the insurance policy to find out which ones are covered. After you have paid your deductible amount for the year, you share the bill with the insurance company. For example, you might pay 20 percent while the insurer pays 80 percent. Your portion is called coinsurance. To receive payment for fee-for-service claims, you may have to fill out forms and send them to your insurer. Sometimes your doctor's office will do this for you. You also need to keep receipts for drugs and other medical costs. You are responsible for keeping track of your medical expenses. There are limits as to how much an insurance company will pay for your claim if both you and your spouse file for it under two different group insurance plans. A coordination of benefit clause usually limits benefits under two plans to no more than 100 percent of the claim. Most fee-for-service plans have a "cap," the most you will have to pay for medical bills in any one year. You reach the cap when your out-of-pocket expenses (for your deductible and your coinsurance) total a certain amount. It may be as low as $1,000 or as high as $5,000. Then the insurance company pays the full amount in excess of the cap for the items your policy says it will cover. The cap does not include what you pay for your monthly premium. Some services are limited or not covered at all. You need to check on preventive health care coverage such as immunizations and well-child care. There are two kinds of fee-for-service coverage: basic and major medical. Basic protection pays toward the costs of a hospital room and care while you are in the hospital. It covers some hospital services and supplies, such as x-rays and prescribed medicine. Basic coverage also pays toward the cost of surgery, whether it is performed in or out of the hospital, and for some doctor visits. Major medical insurance takes over where your basic coverage leaves off. It covers the cost of long, high-cost illnesses or injuries. Some policies combine basic and major medical coverage into one plan. This is sometimes called a "comprehensive plan." Check your policy to make sure you have both kinds of protection. What Is a "Customary" Fee? Most insurance plans will pay only what they call a reasonable and customary fee for a particular service. If your doctor charges $1,000 for a hernia repair while most doctors in your area charge only $600, you will be billed for the $400 difference. This is in addition to the deductible and coinsurance you would be expected to pay. To avoid this additional cost, ask your doctor to accept your insurance company's payment as full payment. Or shop around to find a doctor who will. Otherwise you will have to pay the rest yourself. Questions to Ask About Fee-for-Service (Indemnity) Insurance How much is the monthly premium? What will your total cost be each year? There are individual rates and family rates. What does the policy cover? Does it cover prescription drugs, out-of-hospital care, or home care? Are there limits on the amount or the number of days the company will pay for these services? The best plans cover a broad range of services. Are you currently being treated for a medical condition that may not be covered under your new plan? Are there limitations or a waiting period involved in the coverage? What is the deductible? Often, you can lower your monthly health insurance premium by buying a policy with a higher yearly deductible amount. What is the coinsurance rate? What percent of your bills for allowable services will you have to pay? What is the maximum you would pay out of pocket per year? How much would it cost you directly before the insurance company would pay everything else? Is there a lifetime maximum cap the insurer will pay? The cap is an amount after which the insurance company won't pay anymore. This is important to know if you or someone in your family has an illness that requires expensive treatments. Health Maintenance Organizations (HMOs) Health maintenance organizations are prepaid health plans. As an HMO member, you pay a monthly premium. In exchange, the HMO provides comprehensive care for you and your family, including doctors' visits, hospital stays, emergency care, surgery, lab tests, x-rays, and therapy. The HMO arranges for this care either directly in its own group practice and/or through doctors and other health care professionals under contract. Usually, your choices of doctors and hospitals are limited to those that have agreements with the HMO to provide care. However, exceptions are made in emergencies or when medically necessary. There may be a small co-payment for each office visit, such as $5 for a doctor's visit or $25 for hospital emergency room treatment. Your total medical costs will likely be lower and more predictable in an HMO than with fee-for-service insurance. Because HMOs receive a fixed fee for your covered medical care, it is in their interest to make sure you get basic health care for problems before they become serious. HMOs typically provide preventive care, such as office visits, immunizations, well-baby checkups, mammograms, and physicals. The range of services covered vary in HMOs, so it is important to compare available plans. Some services, such as outpatient mental health care, often are provided only on a limited basis. Many people like HMOs because they do not require claim forms for office visits or hospital stays. Instead, members present a card, like a credit card, at the doctor's office or hospital. However, in an HMO you may have to wait longer for an appointment than you would with a fee-for-service plan. In some HMOs, doctors are salaried and they all have offices in an HMO building at one or more locations in your community as part of a prepaid group practice. In others, independent groups of doctors contract with the HMO to take care of patients. These are called individual practice associations (IPAs) and they are made up of private physicians in private offices who agree to care for HMO members. You select a doctor from a list of participating physicians that make up the IPA network. If you are thinking of switching into an IPA-type of HMO, ask your doctor if he or she participates in the plan. In almost all HMOs, you either are assigned or you choose one doctor to serve as your primary care doctor. This doctor monitors your health and provides most of your medical care, referring you to specialists and other health care professionals as needed. You usually cannot see a specialist without a referral from your primary care doctor who is expected to manage the care you receive. This is one way that HMOs can limit your choice. Before choosing an HMO, it is a good idea to talk to people you know who are enrolled in it. Ask them how they like the services and care given. Questions to Ask About an HMO Are there many doctors to choose from? Do you select from a list of contract physicians or from the available staff of a group practice? Which doctors are accepting new patients? How hard is it to change doctors if you decide you want someone else? How are referrals to specialists handled? Is it easy to get appointments? How far in advance must routine visits be scheduled? What arrangements does the HMO have for handling emergency care? Does the HMO offer the services I want? What preventive services are provided? Are there limits on medical tests, surgery, mental health care, home care, or other support offered? What if you need a special service not provided by the HMO? What is the service area of the HMO? Where are the facilities located in your community that serve HMO members? How convenient to your home and workplace are the doctors, hospitals, and emergency care centers that make up the HMO network? What happens if you or a family member are out of town and need medical treatment? What will the HMO plan cost? What is the yearly total for monthly fees? In addition, are there copayments for office visits, emergency care, prescribed drugs, or other services? How much? Preferred Provider Organizations (PPOs) The preferred provider organization is a combination of traditional fee-for-service and an HMO. Like an HMO, there are a limited number of doctors and hospitals to choose from. When you use those providers (sometimes called "preferred" providers, other times called "network" providers), most of your medical bills are covered. When you go to doctors in the PPO, you present a card and do not have to fill out forms. Usually there is a small copayment for each visit. For some services, you may have to pay a deductible and coinsurance. As with an HMO, a PPO requires that you choose a primary care doctor to monitor your health care. Most PPOs cover preventive care. This usually includes visits to the doctor, well-baby care, immunizations, and mammograms. In a PPO, you can use doctors who are not part of the plan and still receive some coverage. At these times, you will pay a larger portion of the bill yourself (and also fill out the claims forms). Some people like this option because even if their doctor is not a part of the network, it means they don't have to change doctors to join a PPO. Questions to Ask About a PPO Are there many doctors to choose from? Who are the doctors in the PPO network? Where are they located? Which ones are accepting new patients? How are referrals to specialists handled? What hospitals are available through the PPO? Where is the nearest hospital in the PPO network? What arrangements does the PPO have for handling emergency care? What services are covered? What preventive services are offered? Are there limits on medical tests, out-of-hospital care, mental health care, prescription drugs, or other services that are important to you? What will the PPO plan cost? How much is the premium? Is there a per-visit cost for seeing PPO doctors or other types of co-payments for services? What is the difference in cost between using doctors in the PPO network and those outside it? What is the deductible and coinsurance rate for care outside of the PPO? Is there a limit to the maximum you would pay out of pocket? Point-of-Service (POS) Plan Many HMOs offer plan members the option to self direct care, as one would under an indemnity or PPO plan, rather than get referrals from primary care physicians. An HMO with this opt-out provision is known as a point-of-service (POS) plan. How the plan functions (i.e., like an HMO or like an indemnity plan) depends on whether individual plan members use their primary care physician or self direct their care at the "point of service." To illustrate this point, this is how these plans typically work. When medical care is needed, the individual plan member essentially has up to two or three choices, depending on the particular health plan. The plan member can choose to go through his or her primary care physician, in which case services will be covered under HMO guidelines (i.e., usually a co-payment will be required). Alternatively, the plan member can access care through a PPO provider and the services will be covered under in-network PPO rules (i.e., usually a co-payment and coinsurance will be required). Lastly, if the plan member chooses to obtain services from a provider outside of the HMO and PPO networks, the services will be reimbursed according to out-of-network rules (i.e., usually a co-payment and higher coinsurance charge will be required). Because people who belong to POS plans are responsible for deciding how to access care within the various options, it is important that they understand the financial implications of these choices. Where Do People Get Health Insurance Coverage? Group Health Insurance Most Americans get health insurance through their jobs or are covered because a family member has insurance at work. This is called group health insurance. Group Health insurance is generally the least expensive kind. In many cases, the employer pays part or all of the cost. Some employers offer only one health insurance plan. Some offer a choice of plans: a fee-for-service plan, a health maintenance organization (HMO), or a preferred provider organization (PPO), for example. Employers with 25 or more workers are required by Federal law to offer employees the chance to enroll in an HMO. What happens if you or your family member leaves the job? You will lose your employer- supported group coverage. It may be possible to keep the same policy, but you will have to pay for it yourself. This will certainly cost you more than group coverage for the same, or less, protection. A Federal law makes it possible for most people to continue their group health benefit plan for a period of time. Called COBRA (for the Consolidated Omnibus Budget Reconciliation Act of 1985), the law requires that if you work for a business of 20 or more employees and leave your job or are laid off, you can continue to get health coverage for at least 18 months. You will be charged a higher premium than when you were working. You also will be able to get insurance under COBRA if your spouse was covered but now you are widowed or divorced. If you were covered under your parents' group plan while you were in school, you also can continue in the plan for up to 18 months under COBRA until you find a job that offers you your own health insurance. Not all employers offer health insurance. You might find this to be the case with your job, especially if you work for a small business or work part-time. If your employer does not offer health insurance, you might be able to get a group health benefit plan through membership in a labor union, professional association, club, or other organization. Many organizations offer health insurance plans to members. Health Insurance If your employer does not offer group health insurance, or if the insurance offered is very limited, you can buy an individual policy. You can get fee-for-service, HMO, or PPO protection. But you should compare your options and shop carefully because coverage and costs vary from company to company. Individual plans may not offer benefits as broad as those in group plans. If you get a non-cancelable policy (also called a guaranteed renewable policy), then you will receive individual insurance under that policy as long as you keep paying the monthly premium. The insurance company can raise the cost, but cannot cancel your coverage. Many companies now offer a conditionally renewable policy. This means that the insurance company can cancel all policies like yours, not just yours. This protects you from being singled out. But it doesn't protect you from losing coverage. Before you buy any health insurance policy, make sure you know what it will pay for...and what it won't. To find out about individual health insurance plans, you can call insurance companies, HMOs, and PPOs in your community, or speak to your insurance agent. Tips when shopping for individual insurance: Shop carefully. Policies differ widely in coverage and cost. Contact different insurance companies, or ask your agent to show you policies from several insurers so you can compare them. Make sure the policy protects you from large medical costs. Read and understand the policy. Make sure it provides the kind of coverage that's right for you. You don't want unpleasant surprises when you're sick or in the hospital. Check to see that the policy states: the date that the policy will begin paying (some have a waiting period before coverage begins), and what is covered or excluded from coverage. Make sure there is a "free look" clause. Most companies give you at least 10 days to look over your policy after you receive it. If you decide it is not for you, you can return it and have your premium refunded. Medicare Medicare is the Federal health insurance program for Americans age 65 and older and for certain disabled Americans. If you are eligible for Social Security or Railroad Retirement benefits and are age 65, you and your spouse automatically qualify for Medicare. Medicare has two parts: hospital insurance, known as Part A, and supplementary medical insurance, known as Part B, which provides payments for doctors and related services and supplies ordered by the doctor. If you are eligible for Medicare, Part A is free, but you must pay a premium for Part B. Medicare will pay for many of your health care expenses, but not all of them. In particular, Medicare does not cover most nursing home care, long-term care services in the home, or prescription drugs. There are also special rules on when Medicare pays your bills that apply if you have employer group health insurance coverage through your own job or the employment of a spouse. Medicare usually operates on a fee-for-service basis. HMOs and similar forms of prepaid health care plans are now available to Medicare enrollees in some locations. The best source of information on the Medicare program is the Medicare Handbook. This booklet explains how the Medicare program works and what your benefits are. To order a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850. You also can contact your local Social Security office for information. Some people who are covered by Medicare buy private insurance, called "Medigap" policies, to pay the medical bills that Medicare doesn't cover. Some Medigap policies cover Medicare's deductibles; most pay the coinsurance amount. Some also pay for health services not covered by Medicare. There are 10 standard plans from which you can choose. (Some States may have fewer than 10.) If you buy a Medigap policy, make sure you do not purchase more than one. You need to shop carefully before deciding on the best policy to fit your needs. You may get another booklet, Guide to Health Insurance for People with Medicare, to help you in making the right choice. To order a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850. Another good source of information on the same topic is The Consumer's Guide to Medicare Supplement Insurance. To order a free copy, write to: Health Insurance Association of America, 555 13th St., N.W., Suite 600 East, Washington, D.C. 20004. Medicaid Medicaid provides health care coverage for some low-income people who cannot afford it. This includes people who are eligible because they are aged, blind, or disabled or certain people in families with dependent children. Medicaid is a Federal program that is operated by the States, and each State decides who is eligible and the scope of health services offered. General information on the Medicaid program is given in the Medicaid Fact Sheet. For a free copy, write to: Health Care Financing Administration, Publications, N1-26-27, 7500 Security Blvd., Baltimore, MD 21244-1850. For specifics on Medicaid eligibility and the health services offered, contact your State Medicaid Program Office.