We've been getting questions on what impact Health Care Reform will have on the self-employed. Like everything else connected to a law that was essentially passed before it was even written, the answer is a work in progress. So you know: I've been in the insurance industry for 30 years (I specialize in benefits for entrepreneurs & small businesses) and I must tell you this is the worst insurance environment I have ever seen. What I'm about to say is based on that experience, not a political opinion or personal agenda. Okay, so bias I gotta admit, but agenda - no.
That said...to date, here's what I've been saying:
That said...to date, here's what I've been saying:
Welcome, my dears, to the world of Health Care Reform (HCR). As you've all undoubtedly noticed, HCR does NOTHING to address actual health care cost drivers, e.g., doctor and hospital fees or negotiating power. Instead, our legislature took what appeared to them the easy way out: they imposed an extensive array of fresh mandates and restrictions on the insurance industry. The problem is that the government decision policy makers have no more understanding of how health insurance works than they have of setting and following a budget.
Each & every element of above 'graph carries a novella length explanation. The short answer is that every benefit the government dictates must still be paid for: no one is telling doctors & hospitals to work for free. (Nor am I suggesting they should.) So when HCR dictates that 'essential preventive services' must be provided at zero copay, SOMEBODY still has to pay the doctor & lab. When the government says that insurance companies must provide coverage to children with severe medical conditions (that have in CA typically been covered by Medi-Cal) SOMEBODY has to pay the bill. That somebody is the insurance company.
Okay, I can hear the lack of sympathy. Believe me, I understand. However, what's happening with HCR is that there is a whole slew of mandates already in effect (see partial list below) combined with the threat of revenue (i.e. premium) limits coming in 2014. The combination puts the industry in a vise between having to pay UNCONTROLLED & rising medical costs on one hand & a fixed revenue ceiling on the other. SO what the insurance companies are doing is plumping up their premium revenues as much as they can while they can. Keep in mind that insurance companies canNOT raise their rates arbitrarily; despite all the self-righteous disclaimers we get from Sacramento, every rate increase we consumers suffer has already been approved by the appropriate state agencies.
Where's that leave us poor suckers paying the premiums? Squeezed right out the middle like frosting. (For what it's worth, it's worse for brokers: insurance companies are slashing broker commissions on health insurance as part of their cost controls, so those of us in the industry are catching it on both sides. Whine....)
Is it going to get better? Two guesses. Second one doesn't count.
So. Will now hop off the soap box. Anybody with the intestinal fortitude to hear more, just post a note. This is a critical issue that is critically mis-understood.
CURRENT HCR MANDATES
Guaranteed Coverage for minor children (anybody tried to buy one of these lately? Good luck!)
Extended Coverage of children on parental policies to age 26
Zero Copay for essential preventive services
Unlimited lifetime maximum benefits on PPO plans (that's the de facto case on HMOs)
No rescission on policies except for fraud
Elimination of 'limited benefit' policies
80% Medical Loss Ratio rules (i.e., 80% of every dollar must be spent on paying providers)
NOTE:
Some of these changes are either neutral or actually GOOD things. In CA, for example, the law has prohibited policy rescission for any reason but fraud for a goodly number of years, 60 Minutes & the L.A. Times notwithstanding. NOT a major cost factor for us here in CA.
Likewise the elimination of 'limited benefit' policies has helped end the sale of pseudo-policies like those offered by certain associations for the self-employed. Such policies put caps on indvidual benefits (my personal favorite was the one that had a specific benefit for open heart surgery: a whopping $10,000). I've spent too many years listening to the horror stories of honest business folk who simply did not understand what those policies were - until it was too late. Those policies are part of the reason you read about folk landing in bankruptcy for medical bills even though they theoretically had health insurance.
Hope that helps a bit.
Best to you all,
Bonnie Milani
Hello Bonnie
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